U.S. Commercial Stocks Slightly Decline

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

Exports Expected to top 4.5 BCF/D in 2017

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

Italy: Nord Prices Trade a Huge Discount versus PUN

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

Gas Prices Lead Coal Higher

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

EUAs Correlated with Fuels, EU ETS Reform Talks Continue

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

Fed Projections Suggest Interest Rates Will Stay Lower for Longer

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

U.S. LPG Prices Outperform

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

U.S. Prices and Margins Soar

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

All Eyes on Corn

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

Japan Runs Rise, Inventories Draw

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

Structural Tightness Raises the Floor for Gas Prices

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

Financial Stress Builds

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

Production Reaches a Record High the Week Ending June 10

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

Weather Volatility Increases

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

Iraq Oil Monitor, 2Q16

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

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

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

Global Equities Decline on Heightened Brexit Fears

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

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

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

Domestic Gas Producers in Romania Could Be Challenged by Imports

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

Nigeria Devaluation Will Lower Oil Production Costs

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

Despite Weaker Oil Market, Coal Prices Continue to Gain

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

Asian Refiners Shift Yields to Cope with Strong Gasoline Demand

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

Stabilizing Hydro, Destabilizing Finances Threaten Brazil LNG outlook

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

Asian Demand Update: Acceleration in Growth Continues

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

The information above is part of PIRA Energy Group's weekly Energy Market Recap - which alerts readers to PIRA’s current analysis of energy markets around the world as well as the key economic and political factors driving those markets

The International Marine Contractors Association (IMCA) has published ‘Guidance on drug & alcohol policies and testing’ (SEL 040). It is downloadable free of charge to members and non-members alike.

Within its 28 pages there are sections on ‘Who should be tested? - Reasons for testing’; ‘Tests for drug and alcohol abuse’; ‘Urine testing’; ‘Breath testing’; ‘Record keeping’; ‘Problems with testing’; and ‘Cut-off levels’ as well as a useful glossary of terms and guidance on further information.

The document addresses the importance of a broad multi-disciplinary approach, with the involvement of different departments, including Occupational Health, Human Resources, and Legal as well as operations departments.

“Naturally, the focus of a drug and alcohol policy should be on prevention,” says Richard Benzie, IMCA’s Technical Director. “Education of the workforce will help them ‘buy into’ the process, making it easier to implement policies and procedures relating to drug and alcohol testing.”

Diamond Offshore Drilling, Inc. (NYSE: DO) and Trelleborg's Offshore operation have announced a Joint Development Agreement to develop, manufacture and market Helical Buoyancy™ riser technology developed by Diamond Offshore. This innovative, patented riser buoyancy design reduces riser drag and mitigates Vortex-Induced Vibration in offshore applications and enables improved operational efficiency.

This solution is an alternative to adding fairings or strakes to the drilling riser and can reduce deployment time and operating expense. The Helical Buoyancy design also improves safety in challenging environments by eliminating the need for personnel to work below the drill floor to attach a separate apparatus.

Diamond Offshore’s Ocean BlackLion. Photo courtesy: Diamond Offshore

The "helical" design is the result of several years of development by Diamond Offshore utilizing Computational Fluid Dynamics and high Reynolds Number Wind Tunnel testing. Diamond Offshore will work with Trelleborg on further application engineering, data acquisition, testing and development of Helical Buoyancy applications across the offshore drilling market.

"Development of this new technology for riser buoyancy is even more important as drilling moves into deeper waters," said Ron Woll, Senior Vice President and Chief Commercial Officer of Diamond Offshore. "We continually look for ways to improve the economics of offshore drilling for our customers, and this new buoyancy design will enhance drilling efficiencies in high-current environments."

"At Trelleborg, our goal is to perform at every level to deliver innovative and reliable offshore solutions and we welcome this opportunity to team up with Diamond Offshore on this exciting venture," says Alan McBride, Vice President at Trelleborg's offshore operation in Houston.

In conjunction with this agreement, Diamond Offshore has ordered Helical Buoyancy from Trelleborg for drilling risers on the Ocean BlackRhino and Ocean BlackLion, two of Diamond Offshore's sixth-generation drillships currently under contract in a high-current area in the Gulf of Mexico.

"This technology advancement is the result of Diamond Offshore's engineering expertise and thought leadership and should benefit the broad offshore drilling industry as it gets adopted," said Woll.

BP Egypt announced on June 9, another important gas discovery in the Baltim South Development Lease in the East Nile Delta.

The Baltim SW-1 exploration well, drilled in water depth of 25 meters by operator IEOC (Eni), reached a total depth of 3750 meters depth and penetrated approximately 62 meters of net gas pay in high quality Messinian sandstones. The discovery, which is located 12 kilometers from shoreline, is a new accumulation along the same trend of the Nooros field discovered in July 2015 and currently producing 65,000 barrels of oil equivalent per day. Further appraisal activities will be required to underpin the full resource potential of the discovery.

Hesham Mekawi, Regional President of BP North Africa, commented: “We are pleased with the results of the Baltim SW-1 well as it is the third discovery along the Nooros trend and confirms the great potential of the Messinian play and its significant upside in the area. Our plan is to utilize existing infrastructure which will accelerate the development of the discovery, and expedite early production start-up. This announcement is another example of BP’s commitment to unlock resources in order to bring critical gas production to Egypt.”

BP holds a 50% stake in the Baltim South Development lease, and Eni, through its subsidiary IEOC, holds 50%. The well was drilled by Petrobel, a joint venture between IEOC and the state partner Egyptian General Petroleum Corporation (EGPC).

• BP has a long and successful track record in Egypt stretching back over 50 years with investments of approximately $30 billion, making BP one of the largest foreign investors in the country. In Egypt, BP’s business is primarily in oil and gas exploration and production. BP is working to meet Egypt’s domestic market growth by actively exploring in the Nile Delta and investing to add production from existing discoveries.

• To date, BP Egypt, in collaboration with the Gulf of Suez Petroleum Company (GUPCO), BP’s joint venture (JV) Company with the Egyptian General Petroleum Company (EGPC), has produced almost 40% of Egypt’s entire oil production, and currently produces almost 10% of Egypt’s annual oil and condensate.

• In addition, through joint ventures with EGPC/EGAS and IEOC (ENI) the Pharaonic Petroleum Company (PhPC) and Petrobel BP currently produces close to 30% of Egypt's total gas.

• The West Nile Delta (WND) Project is a strategic project for BP. BP is the operator of the project. The West Nile Delta project, involves the development of 5 trillion cubic feet of gas resources and 55 million barrels of condensates. Production from WND is expected to be around 1.2 billion cubic feet a day (bcf/d), equivalent to about 30% of Egypt’s current gas production. All the produced gas will be fed into the country’s national gas grid. Production is expected to start in 2017.

• BP has made a series of discoveries in Egypt in recent years including Taurt North, Seth South and Salmon and Rahamat, Satis, Hodoa, Notus, Salamat and Atoll.

• BP is a 33 per cent shareholder of a natural gas liquids (NGL) plant extracting LPG and propane, United Gas Derivatives Company (UGDC) in partnership with ENI/IEOC and GASCO (the Egyptian midstream gas distribution company).

• BP is also present in the downstream sector through Natural Gas Vehicles Company (NGVC, BP 40 per cent) which was established in September 1995 as the first company in Africa and the Middle East to commercialize natural gas as an alternative fuel for vehicles.

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

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

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

Mark Adeosun, Douglas-Westwood London

Ninety-six Crowley Maritime Corporation owned or managed vessels recently received the Chamber of Shipping of America (CSA)’s annual Jones F. Devlin Awards in recognition of their outstanding safety records in 2015. Each year the CSA grants Devlin Award certificates to manned merchant vessels that have operated for two or more years without incurring a Lost Time Injury (LTI), specifically highlighting the skills and dedication of the crewmembers responsible for safe vessel operations.

Capt. Seven Gilkey, master, USNS Invincible and T-AGOS / T-AGM Port Captain and Program Manager, Capt. Jonathan "JC" Christian, accepting the awards on Crowley's behalf.

Crowley’s 2015 Devlin Award-worthy vessels together have achieved an impressive total of 639 years of service without an LTI. Of the 96 awarded, 23 have gone without incident for 10 or more consecutive years, including the following notable vessels: Valdez Star, 25 years, and Gus E, MV Chief, MV Guide and Roger G, each with 17 years; MV Aku, MV Veteren, MV Vigilant and Tug Nanuq, each with 16 years and Cape Edmont with 15 years. Crowley’s vessels have earned Devlin Awards annually since 2005.

“We have been holding these annual award ceremonies since 1958,” said Kathy Metcalf, CSA President. “This was the 58th anniversary of the program. For that initial year, we honored six vessels having a total of twelve years operation with no lost-time incidents. This year, awards were conferred on 1522 vessels that operated 10,084 years without a lost-time incident. This extraordinary record is directly attributable to the professionalism of our seafarers and the dedication of shore-based company personnel to safe operation.”

Additionally, the Crowley-managed, USNS Impeccable (T-AGOS 23) ­– a Military Sealift Command (MSC) Impeccable class, ocean surveillance ship - was given a Citation of Merit for heroically rescuing 11 fishermen struggling to stay afloat on a sinking vessel that had been adrift for five days in the South China Sea. Capt. Seven Gilkey, master, USNS Invincible and T-AGOS / T-AGM Port Captain and Program Manager, Capt. Jonathan "JC" Christian, accepted the award on behalf of USNS Impeccable, which is currently at sea, from Rear Admiral David Callahan, Commander, US. Coast Guard District eight.

“Safety is at the top of Crowley’s core values and strategic goals. The vessels receiving Devlin Awards exemplify this Crowley core value, because they live it every day – for themselves, their families and Crowley,” said Crowley’s Mike Golonka, vice president, government services.

Statoil, along with its partners, has finalized a 19-month exploration drilling program offshore Newfoundland. The purpose of the drilling program was to increase the robustness of the Bay du Nord project and to test new areas of the Flemish Pass Basin.

Nine wells were drilled safely and efficiently by the Seadrill West Hercules in the Flemish Pass Basin, located approximately 500 kilometers east of St. John’s, Newfoundland and Labrador. The results have improved Statoil’s understanding of the frontier Flemish Pass Basin.

The West Hercules drilling rig. (Photos: Ole Jørgen Bratland)

The drilling program included four exploration wells in close vicinity of the 2013 Bay du Nord discovery, as well as three appraisal wells on the discovery. In addition, two exploration wells were drilled in areas outside the Bay du Nord discovery. The program was conducted in a harsh offshore environment; however, with strong operational and HSE performance, setting several records on drilling speed during the campaign.

The drilling program has resulted in two discoveries of oil at the Bay de Verde and Baccalieu prospects in the Bay du Nord area, both of which add to the resource base for a potential development at the Bay du Nord discovery.

The appraisal and near-field exploration of the Bay du Nord discovery has reduced key reservoir uncertainties and confirmed that the volumes are within the original volume range of the 300 to 600 million barrels of recoverable oil initially estimated by Statoil in 2013, but potentially towards the lower end of the range.

“We are encouraged by the discoveries in the Bay de Verde and Baccalieu wells and the results of the appraisal wells,” said Erling Vågnes, senior vice president, Statoil Exploration, Northern Hemisphere. “Based on the improved understanding of the Flemish Pass Basin petroleum system, we are maturing further prospects that may add volumes to Bay du Nord.”

“The Flemish Pass Basin offshore Newfoundland is a frontier area, where only 17 wells have been drilled in the entire basin – in an area that is 30,000 km2,”said Vågnes. “This drilling campaign has been critical both to maturing the Bay du Nord discovery as well as evolving our knowledge of the greater basin and Newfoundland offshore – which remains a core exploration area for Statoil.”

The drilling program began in November 2014 and was extended by one month to incorporate the drilling of Baccalieu, a well on a license awarded by the C-NLOPB in the 2015 land sale, which Statoil was able to progress from access to well-completion in four months.

Statoil’s assessment of the commercial potential of the Bay du Nord discovery is ongoing. “The recent drilling program has been critical to Statoil’s continued assessment of Bay du Nord, and work is underway to evaluate the results related to proceeding with a potential Statoil-operated development in the Flemish Pass Basin,” said Paul Fulton, president, Statoil Canada.

International engineering and operations support services contractor ODE, part of the DORIS Group, has successfully installed new pontoon and crane facilities on the Dudgeon Offshore Wind Farm base in Great Yarmouth.

As a leading global manufacturer of syntactic foam-based solutions, Trelleborg’s offshore operation has been awarded a purchase order from a major European Drilling Contractor for Drill Riser Buoyancy Modules (DRBMs). As a trusted partner, this is the 6th order from this contractor for their new build rig series.

Photo courtesy: Trelleborg

Alan McBride, Vice President of Trelleborg’s offshore operation based in Houston, says: “We are thrilled that our long standing relationship with this contractor has grown into a wonderful partnership. This additional order strengthens the relationship between our two companies and we are confident in our ability to deliver the buoyancy solution required to meet their needs.

“As the trusted supplier of choice for this opportunity, Trelleborg has been able to provide the entire stock of buoyancy needed for this exciting new build program and we look forward to delivering the buoyancy by the end of 2016.”

Trelleborg has a long-standing commitment to developing sophisticated syntactic based materials designed specifically to exceed market requirements and meet the demands of increasing service depths for the offshore drilling segment.

In order to reduce a drilling riser’s net weight in water, and ensure that the structure and drilling vessel are supported, Trelleborg offers a range of DRBMs, fitted around the length of the riser pipe, improving the riser’s buoyancy and protecting it from service damage.

Hoover Container Solutions has announced three new changes to its senior management team, supporting its continued global growth. Joseph Levy has been appointed senior vice president and chief financial officer; Johan Wramsby has been appointed senior vice president and chief operating officer; and Arash Hassanian has been appointed senior vice president, global sales and marketing.

Levy will manage Hoover’s complex banking relationships, worldwide IT efforts, merger and acquisition activity, integration initiatives and extensive consolidation of international financial reporting. Levy has more than 25 years of capital investment experience and has served on the Hoover Materials Handling Group board since 2008.

Joseph Levy

Wramsby will be responsible for North American operations, which include manufacturing, service, technology and transportation. He will also be responsible for the continued integration of the TechOil and Hoover Offshore businesses. Wramsby has been with Hoover for 15 years, previously as financial analyst, controller and chief administrative officer.

Johan Wramsby

Hassanian will manage and oversee worldwide efforts to drive sales, marketing and business development. He will continue to ensure consistent global marketing messaging and branding, while managing operations in Malaysia, Brazil, the UAE and Australia. He will ultimately transition management of those businesses to operations once they reach a substantial size. Hassanian has been with Hoover for more than a decade, serving as purchasing manager, international business development director and vice president of international sales and global marketing.

Arash Hassanian

Hoover’s chairman and chief executive officer, Donald W. Young, said, “Within Hoover, upper executives guide our company towards our strategic goals, focusing on differentiating our product lines of fluids, cargo and waste supported by technology and services. Since 2010, Hoover has grown from two locations to 15 global locations; from 65 employees to more than 300 employees; and from $20 million to more than $100 million in revenue. As part of this ongoing process of growth, we have evaluated our organization to ensure optimum structure and processes that will deliver the highest value to our customers and shareholders. These appointments recognize the significance of each of their contributions to the organization’s success.”

Delmar Systems, Inc., a worldwide supplier of offshore mooring and subsea services, announces an expansion of products and services with the acquisition of privately owned InterOcean Systems, Inc. InterOcean will be operated as an affiliated entity of Delmar.

Since 1946, InterOcean Systems is the leader in the design and manufacture of high quality oceanographic and environmental equipment and systems, including its proprietary Rig Anchor Release (RAR), acoustic technology and releases, METOC buoys, current meters, transponders, transducers, hydrophones, subsea winches, and other specialized equipment including its proprietary remote oil spill detection system – Slick Sleuth™.

“Delmar is committed to providing the offshore industry with quality products and services,” said Brady Como, Delmar’s Executive Vice President. “InterOcean’s products, services, and long- standing customer service will enhance Delmar’s product offering beyond the traditional oil and gas industry customer base. Their excellent reputation for quality and innovative products will be a great addition to Delmar. We welcome the dedicated professionals as InterOcean has a long standing reputation serving the specialized marine equipment industry on a global basis.

“The synergies between Delmar and InterOcean make this combination of strengths a key benefit to our mutual customers,” says Mike Pearlman, President and CEO of InterOcean. “Our dedicated professionals look forward to continuing the tradition of providing the very best service and quality that has led to our success the last 70 years in business.”

InterOcean Systems will continue to operate with its existing management from its San Diego, CA headquarters as an affiliate of Delmar Systems, Inc., offering the same products and services the company has been known for the last 70 years.

Headquartered in Broussard, LA, Delmar Systems, Inc. has provided mooring and subsea installation services for over 48 years to every oil and gas region around the globe, with offices strategically located to serve the offshore industry in the world’s most challenging offshore environments. For more information on Delmar Systems www.delmarus.com.

Mermaid Maritime Public Company Limited (“Mermaid” or "Company") has announced that its Indonesian business unit PT Seascape Surveys Indonesia (“Seascape”) has entered into a one (1) year charter-in contract with PT Nusa Perkasa Permai for a DP2 dive support vessel (“DSV”), the ‘Mermaid Nusantara’. The vessel is expected to be delivered to Seascape in August 2016.

Photo courtesy: Mermaid Maritime

Formerly ‘Windermere’ and renamed as ‘Mermaid Nusantara’, the vessel comes with a 15 man built-in saturation diving system and air diving system, 120 beds and a 50 ton crane. The vessel will undertake inspection, repair, and maintenance contracts as well as performing saturation diving for construction support, ongoing field maintenance and call out repair.

Mermaid had previously chartered-in this vessel and deployed the vessel to support its various subsea projects in 2015. The re-chartering of this vessel comes at the back of anticipated continuing demand for subsea services in both Indonesia and the rest of the South East Asian region. This latest charter also comes with a one (1) year extension option which, if exercised, would extend the charter through to July 2018.

This charter-in of the ‘Mermaid Nusantara’ is an opportunity for Mermaid to continually secure a dedicated DSV for the South East Asian market and also to materially increase the revenue and profit of Mermaid in the Eastern Hemisphere. Being Indonesian flagged, the vessel will be in prime position to secure any potential work in Indonesia.

Mermaid has already secured subsea contracts worth circa USD 10 million that will utilize this vessel for a scheduled duration of approximately 70 days, and is actively bidding for more work utilizing the vessel in the South East Asian region.

Hess Denmark ApS has awarded a contract to DNV GL to provide asset integrity inspection management of its South Arne field including Risked Based Inspection (RBI) services and Non-Destructive Testing (NDT) inspection services. The contract continues an 18 year partnership between Hess and the leading technical advisor to the oil & gas industry.

The asset integrity inspection assessments will address:


• The process systems using pressure-retaining equipment and piping

• The concrete gravity base and tower

• The steel structure, both topsides and subsea

• Oil export pipeline and offloading buoy

Kjell Eriksson, Regional Manager – Norway, DNV GL Oil & Gas

“DNV GL has been contracted to provide integrity inspection on the South Arne field since 1998. The renewal of this partnership demonstrates the importance of high quality service delivery in a cost pressured market. Further, the contract shows Hess’s confidence in DNV GL’s ability to deliver efficient solutions which can help manage operation costs for the South Arne field,” says Kjell Eriksson, regional manager for Norway, DNV GL – Oil & Gas.

The contract has an estimated annual value of 10 MDKK and is based on both KPI, lump sum and rate based remuneration principles.

Det norske oljeselskap ASA (Det norske) has entered into an agreement with BP p.l.c. (BP) to merge with BP Norge AS (BP Norge) through a share purchase transaction, to create the leading independent offshore E&P company. The transaction will significantly strengthen the combined company’s operations, cost efficiency and growth potential, enabling the company to initiate dividend payment. The company will be named Aker BP ASA (Aker BP) and will be headquartered at Fornebuporten, Norway, with Aker ASA (Aker) and BP as main industrial shareholders.

“We are proud to announce this merger to create Aker BP, the leading independent offshore E&P company. Aker BP will leverage on Det norske’s efficient operations, BP’s International Oil Company capabilities and Aker’s 175 years of industrial experience. Together, we are establishing a strong platform for creating value for our shareholders through our unique industrial capabilities, a world-class asset base and financial robustness. We look forward to taking advantage of the attractive growth potential on the Norwegian Continental Shelf through this industrial partnership with BP and to deliver on Aker BP’s dividend story,” says Øyvind Eriksen, Chairman of the Board of Directors in Det norske.

Aker BP will be jointly owned by Aker ASA (40%), BP (30%) and other Det norske shareholders (30%). As part of the transaction, Det norske will issue 135.1 million shares based on NOK 80 per share to BP as compensation for all shares in BP Norge, including assets, a tax loss carry forward of USD 267 million (nominal after-tax value) and a net cash position of USD 178 million. In parallel, Aker will acquire 33.8 million shares from BP at the same share price to achieve the agreed-upon ownership structure.

“We have been in close dialogue with Folketrygdfondet, Det norske’s second-largest shareholder, which supports the transaction. From our start as an exploration company, we have developed the company into a fully-fledged E&P. With BP, we are taking another leap forward with the creation of Aker BP,” says Eriksen.

The transaction will strengthen Det norske´s balance sheet and is credit accretive through a 35% reduction in net interest-bearing debt per barrel of oil equivalent of reserves. Aker BP aims to introduce a quarterly dividend policy. The first dividend payment is planned for the fourth quarter of 2016, conditional upon the approval of creditors.

“BP and Aker have matured a close collaboration through decades, and we are pleased to take advantage of the industrial expertise of both companies to create a large independent E&P company. The Norwegian Continental Shelf represents significant opportunities going forward and we are looking forward to working together with Aker to unlock the long term value of the company through growth and efficient operations. This innovative deal demonstrates how we can adapt our business model with strong and talented partners to remain competitive and grow where we see long-term benefit for our shareholders,” says Bob Dudley, Group Chief Executive of BP.

Aker BP will hold a portfolio of 97 licenses on the Norwegian Continental Shelf, of which 46 are operated. The combined company will hold an estimated 723 million barrels of oil equivalent P50 reserves, with a 2015 joint production of approximately 122,000 barrels of oil equivalent per day. Det norske and BP had at the end of 2015 a combined workforce of approximately 1,400 employees.

“Aker BP will have a balanced portfolio of operated assets and a high quality inventory of non-sanctioned discoveries. The company has potential to reach a production above 250,000 barrels of oil equivalent per day in 2023,” says Karl Johnny Hersvik, Chief Executive Officer of Det norske.

Aker BP has the ambition to leverage on a lean and nimble business model and will gain access to state-of-the-art technological know-how and capabilities, through the industrial collaboration with BP.

“We will implement simple processes across the combined entity, and build a fit-for-purpose organisational structure, with corresponding capacity and competence from both organisations. We expect to realise significant cost cuts and synergies, which will be implemented in close cooperation with employees and suppliers,” says Hersvik.

Øyvind Eriksen will remain Chairman of the Board of Directors and Karl Johnny Hersvik Chief Executive Officer of the combined company.

Please find presentation of the transaction and videostream here.

The transaction is subject to approval by the relevant Norwegian and European Union authorities. An extraordinary general meeting of Det norske will be scheduled to approve the transaction. BAHR and Arctic Securities has acted as advisors to Det norske on the transaction.

Facts about BP Norge:

Facts about Det norske:

A recently signed agreement will see Saipem lead the industrialization and commercialization of SPRINGS®, an innovative subsea water treatment technology designed for deep water application, developed in collaboration with major oil & gas company Total and water treatment specialist company Veolia.

SPRINGS® (Subsea PRocess and INjection Gear for Seawater) is a nanofiltration-based sulphate removal unit designed for subsea use in deep water environments. Saipem has entered into an agreement with partners Total and Veolia for the co- ownership and exclusive commercialization of the technology. A deepsea test was successfully completed last year to prove the validity of the process in a relevant environment offshore West Africa.

A cost effective alternative to conventional topsides water treatment and injection units, SPRINGS® moves the sulphate removal process subsea, thus enhancing the economics of oil recovery by:

• eliminating water injection sealines

• producing savings in terms of topsides weight and deck space, freeing up vital topside space for production equipment

• easing brownfield retrofits, especially on FPSOs

• making distant, deep injection wells economical.

Saipem’s Chief Executive Officer, Stefano Cao, commented: “The signing of the agreement is in line with Saipem’s commitment to develop innovative technologies and deploy its capabilities in the subsea environment with a view to reducing Clients’ overall costs and enabling new business opportunities.”

A cross-industry project led by DNV GL to halt the boom in subsea documentation shows that implementing a standardized approach can significantly reduce engineering hours. The two-year collaboration led by DNV GL has concluded in a publicly available Recommended Practice which can reduce the amount of subsea documentation and enable documentation reuse in a typical subsea field development project.

Image courtesy: DNV GL

DNVGL-RP-O101 ‘Technical documentation for subsea projects’ details a required minimum set of documentation transferred between E&P companies, operators and contractors for the construction, procurement and operation of a field. The outcome will reduce the volume and variety of documentation exchanged between the parties in a project, thereby making project execution more cost effective.

According to a contractor in the JIP, subsea documentation increased by a factor of four between 2012 and 2015. Previously, a contractor in a typical subsea project would deliver around 10,000 documents, with each one averaging three revisions, resulting in up to 30,000 transactions between two actors. Today, projects can deliver 40,000 documents, with three revisions resulting in 120,000 transactions. Handling time has also doubled per revision. A big project may require a contractor to have 25 people just on document control.

“We like solid documentation in DNV GL, but this massive explosion in paper hasn't tangibly improved performance, safety or environmental impact – it’s just escalated costs without adding value,” says Bente Helén Leinum, Project Manager, DNV GL – Oil & Gas.

“A benchmarking exercise by one JIP participant showed that adoption of the RP could deliver a 42% potential reduction in engineering hours. The savings come from reduced reviews by reusing documents, having more standardized documents and avoiding unnecessary reviews of non-critical documents. Another supplier estimates that the potential cut in documentation can be as high as 75-80% through increased use of standardized documents,” continues Leinum.

Jan Ragnvald Torsvik, lead engineer of Life Cycle Information at Statoil and co-chairman of the project, comments: “All JIP partners have invested considerable time and the outcome is a fantastic achievement that will dramatically cut waste in the handling of technical information in projects. We have already learned that this standard’s approach in utilizing package-specific requirements has a positive impact on standardization and efficiency. We are already seeing the benefits of implementing a draft version of the RP in Statoil’s Johan Sverdrup project last year,” he continues.

“The RP encourages more reuse of subsea documentation and will deliver more predictability throughout the value chain. It provides clear expectations for all parties involved, and duplications, misunderstandings and unnecessary work can be avoided,” says Tommy Lien, Senior LCI Process Coordinator, Aker Solutions.

JIP partners were Aker Solutions, Brightport, Centrica Energi, DEA Norge, Det norske oljeselskap, DNV GL, ENI Norge, GCE Subsea, FMC Technologies, GDF SUEZ E&P Norge, Kongsberg Oil & Gas Technologies, Lundin Norway, Oceaneering, OneSubsea, Statoil, Subsea 7, Subsea Valley and SUNCOR Energy Norge.

Observers: The Norwegian Oil and Gas Association and Petroleum Safety Authority (PSA) Norway.