Jeremy Cresswell: Latest fracking research disturbs
The onshore shale gas and oil revolution has transformed the fortunes of the domestic US petroleum extraction industry.
Exceedingly good news for ADTI
Eight seniors from the failed oil & gas well project management specialist ADTI have transferred to wells management and performance specialist Exceed in a strategic move.
Opinion: 28th round… without the wells there is no true future
Quelle excitement! The latest UK offshore car boot sale results; or rather the 40 or so 28th Round licence offers that required a bit more deliberation because of environmental sensitivities.
Spotlight: CENSIS – what’s it all about?
Over 140 companies are already working directly in sensor system technologies in Scotland, with quite a number in offshore oil & gas. Read the website blurb and it says that the Innovation Centre for Sensor and Imaging Systems (CENSIS) was described as a game changer for Scotland in April 2013. One of a family of eight technology innovation centres set up around that time by the Scottish Funding Council, CENSIS was to be a catalyst to an apparently “already rapidly growing technology market”.
Hard times but $426billion MMO must go on
More than $426billion is forecast to be spent over the next five years on offshore oil and gas maintenance, modifications and operations (MMO). However, analysts at Douglas-Westwood warn in a new study of the MMO market that a 12% decline in expenditure is expected this year. This is due to the delay of some major modifications by operators and a reduction as some aspects of MMO that are not directly associated to production are cut and further pricing pressures are applied by oil & gas operators. “Despite this, the long-term outlook for MMO expenditure is positive and expected to reach 2014 levels by 2017,” says DW.
UKCS – Little change in another quiet year
At the time of writing, some seven E&A (exploration & appraisal) wells are active, with this representing no change since last month. Of these current seven, five are exploration and two appraisal in nature, with two in the Gas Basin, four in the Central North Sea and one in the Northern North Sea. To date this year, eight wells have spudded, representing an increase of one since the last report. Currently, some 30 mobile rigs are active on the UK Continental Shelf, with seven on E&A drilling duties and 23 on D&P (development & production) operations. In addition, 12 are in port, with five awaiting to resume contracts, and seven stacked, two of which are available.
Goldman warns that offshore rigs market will get even worse
Goldman Sachs, one of the banks at the heart of the 2008 Western financial implosion and multiple scandals and which presumes to pronounce on the fate of others, has issued a scathing commentary on the future of offshore drilling prospects. In a note by one of its analysts Waqar Syed (plus team), Goldman tells the world that 2017 is going to be really tough. “Industry is retiring floating rigs, but without rising demand, rig retirement will not solve the problem,” says Waqar Syed. “Total marketed floater supply for end of 2015 stands at 280 rigs (313 total supply at the start of the year, less 31 rigs cold stacked already, less 21 rigs that we expect to be cold stacked, plus 19 scheduled newbuilds) of which 235 rigs are contracted (84%), while about 209 (74%) are currently working.
Damen to build game-changer fast standby vessel
Dutch ship designer, builder and repairer, Damen, has broken into the oil & gas standby (ERRV) market for the first time with its remarkable Twin Axe workboat. It was only a matter of time as a number of these vessels are successfully servicing the needs of North Sea windfarms. They are weatherly, fast and have the ability to carry significant loads. It is Groen Offshore, Guard & Support that has broken with oil & gas tradition and gone for something totally different to convention.
Helix’s Q5000 heading for US, but Q7000 may be delayed
Helix Well Ops’ new well intervention semi-submersible, the 35,000-ton Q5000, is en-route to the US Gulf of Mexico following its handover by the Jurong Shipyard in Singapore. The company’s latest asset is due to stop off at Mauritius, Namibia and Curacao before eventually arriving during the summer. Based upon the successful Q4000 design, the Q5000 is a much larger second generation intervention semi with enhanced capability for subsea intervention, construction and life of field services. The company had been planning the new-build for a number of years prior to placing orders for not just one but two intervention semis . . . Q5000 in 2012 and Q7000 the following year, though there is talk of the latter being pushed back to 2017 because of deteriorating market conditions.
Sparrow’s Kerr: From apprentice to boardroom
Almost 30 years have passed since Ewen Kerr walked out of Oldmachar Academy into the big wide world. He had wanted to work . . . something engineering-related; ideally training to become a draftsman. The North Sea seemed logical; after all it had been booming, only his timing was awful as the province had just been hit hard in the 1986 oil price crash. “My father was head engineer at John M Henderson’s here in Aberdeen,” recalls Kerr. “So maybe it was a genetic thing. But with the North Sea in recession, I couldn’t get a job. I ended up working in a bank for a year or two as it was all that was available. “I had done my Highers and I could have gone to university but I wanted to work. I made that choice. Whether it was right, well, you can look back and wonder. But I’ve done OK. “The career advice I got wasn’t very good . . . and that was to go and work in a bank because I couldn’t get a technical job. And to be honest, looking back, banking was a really good grounding. I even started doing my banking exams . . . economics, finance, that sort of thing; a good grounding for running a business.
Opinion: Numbers game… and perceptions too
I’m thinking that this commentary could end up irritating some of the UK offshore industry’s leadership. If that is the case then so be it; but there’s a lot about the North Sea oil & gas industry that’s worrying one helluva lot of people whose lives hinge on its health. Some 5,000 jobs gone, it is said; thousands more to go, it is said too. My first concern . . . beef if you like . . . concerns just how much of the UKCS production capacity is rendered non-viable by basement oil prices. And the reason is that I seem to be hearing different numbers from different people, all of whom appear to claim to quote Oil & Gas UK’s latest dataset, viz the 2015 Activity Survey.
Aqualis Offshore sets up shop in Granite City
Despite the intense negativity that currently grips the UK North Sea, international marine & offshore engineering consultancy Aqualis Offshore has decided to open for business in Aberdeen. “We know that job cuts currently is a common theme in the oil industry, but we are taking a long-term approach,” the Norwegian firm’s CEO David Wells told Energy. “Entering Aberdeen was the obvious next step of our expansion strategy. The city is the oil & gas centre of the UK and packed with oil companies, rig operators and oil services players who constantly need support from senior engineers and mariners for challenging offshore projects and integrity problems. That is exactly what we offer.” The Aberdeen office is located in Grandholm Village, which is on the site of the famous Grandholm Mill. It is led by general manager Martin Brown, a chartered naval architect with 25 years’ experience from offshore projects on the UKCS and elsewhere around the world. He has worked as a consultant for many years, lately for Noble Denton.
Opinion: Women on top!
I don’t know how many of you have noticed, but women are taking over at the top of the energy hierarchy in the UK. Whilst I’m still waiting for a female to topple various of the male-dominated fiefdoms that still rule in the boardrooms of oil majors and independents active on the UK Continental Shelf, five key trade, regulatory and government positions are now held by women. They are Amber Rudd ... newly appointed energy secretary, Susan MacKenzie (HSE), Maria McCaffery (RenewableUK), Dr Nina Skorupska (Renewable Energy Association) and Deirdre Michie (OGUK). This could do more than anything that has ever gone before to finally get some balance into the boardrooms and executives of the UK energy industry ... both upstream oil & gas and power generation. The shift should be welcomed. A bit less testosterone in the UK energy sector ought to be good for us all.
OTC 2015: Deepwater resources vital and viable, even at today’s prices
Life might be tough in the oil & gas industry right now, but the chief upstream strategist at oilfield analysts IHS told OTC delegates at an OTC gathering that a staggering amount of new oil production was needed to meet forecast demand. Bob Fryklund said that 50million barrels per day of additional production would be needed to meet projected demand by 2040 ... that’s about 55% more than today. He said that it was possible to see about 20million barrels per day of that figure; after that it became more difficult to identify how the gap would be filled.
Transocean to scrap historic Cold War ship
Transocean's list of offshore rigs scheduled for disposal - ostensibly destined for cutting up - has grown up to 19 with further units likely to join the scrapping queue. The list so far comprises: Deepwater Expedition, GSF Article III, GSF Explorer, DSF Seven Seas, Sedco 710, Sovereign Explorer, Sedco 700, Sedco 601, JW McLean, GSF Arctic I, Falcon 100, Sedneth 701, Sedco 703, Sedco 709, C K Rhein, Jr, SF Aleutian ey and Sedco 70, plus Transocean Legend and Transocean Rather. Expentation is that roughly another 10 will be weeded out this year before Transocean bosses are satisfied that the fleet is back in balance.
Goliat: Relief as floating production unit unloaded in Norwegian waters
Last month’s arrival of the Goliat floating production unit in Norwegian waters on the back of a Dockwise heavy lift ship is a milestone for a project that is running around two years behind schedule and massively over budget ... at least 50%. It had been expected onstream late 2013, then this slipped into 2014 and now it is supposed to be later this year, fully 15 years since the oilfield was discovered in 2000. Goliat is located on production licence 229, which was awarded in the Barents Sea Round in 1997. The licensing round was initiated by the authorities in order to promote interest in the Barents Sea as an oil & gas region.
LR Senergy boss talks about losing it all and the road to success
Having been made redundant as a result of the oil price collapse in 1986, colourfully determined James McCallum is no stranger to the personal and corporate pain caused by volatility in commodity price. However, it was redundancy that encouraged him to eventually set up his own company, so unleashing his own entrepreneurial streak. This was to lead to the creation of the building blocks for Senergy, now LR Senergy – a global diversified energy services business with over 600 people. Here he explores with Energy why the current crisis is a defining moment in time for the oil & gas industry; it is a time when others may be pushed into their own adventures . . . by getting fired by an employer bent on slimming down . . . cost cutting. McCallum: “As the oil price hovers around $50, we are embarking on a crucial period that will define the industry’s future. Spiralling costs of exploration and production in the industry are price differentiating energy plays and it is clear the current cost base cannot be sustained.
OTC 2015: Getting uber-tough on well control
As if to spice debate at this year’s OTC (Offshore Technology Conference), the US Department of the Interior has told the oil companies and their supply chain that it’s about to get tough on well control. The decision wasn’t unexpected, but the timing is neat, especially given the Mexican offshore tragedy on April Fool’s day in which four workers perished and more than 40 were injured as a result of a platform, part of the Abkatun-Pol-Chuc offshore field complex, blowing up. While the cause is not yet clear, it would appear that it is not well-related as operator Pemex restored production in large part from the field within days, recovering some 80% of output shortly thereafter. Nonetheless, the very fact that there has been another dangerous offshore incident within the Gulf of Mexico region, moreover one originating from a company with a poor safety track record, suggests that the US will now be ultra-twitchy about the HSE record of any oil & gas installation or its operator in waters adjacent to its own patch.
OTC 2015: New $150million subsea venture launches
Aberdeen and Houston are at the heart of a new subsea venture with $150million of private equity money at its disposal.
Dutch to launch tidal converter prototype
Last October, a group of European offshore companies including Bluewater, Damen and Van Oord joined together to develop and build an innovative tidal energy converter that could be deployed worldwide, especially in coastal locations where electricity supplies are poor. Bluewater is especially known to the Aberdeen oil & gas community as a production ship fleet owner and operator. The BlueTEC prototype is ready for deployment and will be “launched” on April 9 at Den Helder by the consortium. It will be moored near Texel in the Waddenzee where there is ample tidal energy to harness. The BlueTEC tidal platform features an innovative modular design and uses a new type of permanent mooring system. It vaguely resembles an old style midget submarine and is equipped with one or more pairs of underslung three-bladed turbine generators.
Former Treasury adviser hammers renewables in new research
It is claimed in a new report churned out by the Centre for Policy Studies that renewables-based power generation subsidies have destroyed the UK electricity market. Author Rupert Darwall, a former Treasury special adviser, spouts that the costs of intermittent renewables are “massively understated”. He asserts that current UK energy policy represents the “biggest expansion of state power since the nationalisations of the 1940s and 1950s”, that it is “on course to be the most expensive domestic policy disaster in modern British history” and that, by “committing the nation to high-cost, unreliable renewable energy, its consequences will be felt for decades”. And: “To keep the lights on, everything ends up requiring subsidies, turning what was once a profitable sector into the energy equivalent of the Common Agricultural Policy.” In addition to their supposed higher plant-level costs, Darwall states that renewables require massive amounts of extra generating capacity to provide cover for intermittent generation when the wind doesn’t blow and the sun doesn’t shine.
Stateside analysts see a lot of pain for drillers
Transocean, Diamond Offshore and Ensco are the drilling contractors deemed by stock analysts at Seeking Alpha to be most at risk this year. They face the threat of significant contract rollovers but that “actual long-term contracts will not be terminated”. According to Seeking Alpha, as of March 12 there were 11 new-build floaters scheduled to be delivered to US account this year and which do not have work. “Some of these rigs have been already delayed until 2016 or will certainly be delayed if they do not have a firm contract,” it says.
Opinion: Shell pounces on BG Group – who’s next?
Ah, I’ve been waiting for this to happen ... the mega-mergers derby to begin, the starting gun being the current oil price slump. And it turns out to be Shell that got out of the gate first, which might surprise a few stock market pundits who know far more than ever I will about deal making or indeed horse making form than I ever will. However, unless you count the company’s $4.5-5billion takeover of Enterprise Oil in 2002, then Shell was conspicuously absent from the Mega-mergers Cup Race sparked by the late 1997 through 1999 oil price slump that sparked consolidation among a crop of listed Western oilcos and big supply chain brands. Naturally, there’s been a heap of punditry spewed so far as a result of Shell deciding that it wants to pick off BG Group. However, even I can see a number of good reasons for this particular deal, particularly on the assets portfolio front. And so-on and so-forth.
No new orders as screws tighten on offshore drilling market
No orders have been placed for new drilling rigs so far this year, though the boom for yards is far from over due to their massive collective backlog built up in recent years. RS Platou drilling analysts say that order books as “still apparently solid”, though neither the yards nor drilling equipment manufacturers are likely to be as “comfortable as their order-books indicate”. “Yards will be questioning whether their order-books are large enough to bridge the current down-cycle,” say the analysts. “According to current order-book (before delays) 81% of units will be delivered in 2015 and 2016.
ONS Norway event cancelled after oil price decline
ONS Norway has been cancelled. The Stavanger-based ONS Foundation blames low oil prices, low activity and great uncertainty in the industry have meant that too few exhibitors have registered for the show, which was to have been staged in August, just weeks before Offshore Europe. The foundation said that the exhibitor registration was good until early in the year before it stagnated. There have also recently been a number of cancellations by companies that are struggling. “Too few exhibitors means that we cannot create a meeting place with the famous ONS quality that exhibitors expect and deserve. We must take the consequences,” said CEO Leif Johan Sevland, a former mayor of Stavanger.