On December 2, Chevron announced that oil and gas production had started at the Jack/St Malo project in the Lower Tertiary trend, deepwater US Gulf of Mexico.
Jack and St Malo are among the largest fields in the US Gulf and were discovered in 2004 and 2003. They are located in Walker Ridge blocks 758, 759, and 678 in more than 2,100m of water, some 435km south-west of New Orleans.
Drilled to a total depth of 8,839m (29,000ft), the Jack-1 exploration well encountered more than 350 feet (107 metres) of net oil sands pay in a Lower Tertiary Trend.
Unconventional oil and gas (UOG) operations in the US that involve fracturing may be harming human health.
By inference, research being carried out at the University of Missouri may sound alarm bells in the UK and wider EU where shale gas extraction (and oil) industry has yet to start.
Up to now in the US, discussions have largely concentrated on potential air and water pollution from chemicals used in these processes and how it affects the more than 15million Americans living within one mile of UOG operations.
Money and lots of it . . . public and private . . . is needed to initiate a credible wave and tidal energy power generation sector in the UK, which a new report claims could be worth up to £76billion to the economy.
However, the idea that the oil and gas supply chain can kick-start the market “is not easily realised” because it is “too expensive”, according to a new report by the Glasgow-based ORE Catapult initiative.
It claims that this is because the oil and gas supply chain designs and makes equipment to “operate at extreme depths, in benign tidal flows, and low oxygenated waters”.
Oil prices have crashed and the North Sea is hurting badly, with the likelihood that this is going to be a prolonged downturn . . . at least for the bulk of this new year, if not longer.
Capital investment in the North Sea could halve by 2017 unless there is urgent reform of the tax regime in light of a big drop in the price of crude oil, according to Oil & Gas UK, which is hoping for good things from the Treasury before the May election following promises made early last month.
And Wood Mackenzie has estimated that 32 potential European oil field developments worth more than $85billion (£55billion) are waiting for approval and could be at risk if oil prices continue to slump. A high proportion of those projects have a break-even price higher than $60 per barrel and many are in the UK sector.
North Sea “close to collapse” says the man from Brindex. I am of course referring to remarks made to the BBC by its chairman Robin Allan, who then goes on to say that the UK’s offshore industry has been in such territory before.
The 1986 oil price crash was a shocking event and did terrible damage at the time. However, it also marked the start of a turning point as the North Sea gradually started to mature. Various initiatives in the 1990s designed to tackle key issues like rocketing costs helped and they were timely given the next slump that started with a gradual oil price slide in 1997, bottoming out in late 1998 at less than $10 a barrel for a few days.
The decision by Wood Group PSN to chop the rates paid to its limited company offshore and onshore contract workers and freeze the pay of most onshore employees here in the UK comes as no surprise.
Wood Group PSN is right to take a stand, especially on the issue of independent contractors, given the rates that they have been able to command over the past decade or so.
OK, this is the second reduction that the group has sought to impose on the so-called IR35 brigade, bringing the total cut announced this year to approaching 20% for some.
Wow ...12,000 new entrants to join offshore oil and gas industry in next five years headlines the industry report. Brill!
But, over the same period, around 9% of the current workforce, for long said to be around 450,000 but now discovered to be 375,000 will disappear.
I’m curious about the apparently sudden drop from 450,000 to 375,000 direct and induced. It doesn't seem to be explained.
That’s a heck of a reduction and begs the question as to the accuracy of the old overall workforce number. I have to assume that the methodology that generated the 450,000 figure a decade or so ago was as rigorous as the one that EY has applied for this latest study.
It looks as if the UK Treasury has a fiscal plan that might work for the UK Continental Shelf and the industry appears broadly receptive.
But there were multiple warnings issued to Treasury chief secretary Danny Alexander in Aberdeen that time is running out and that he must deliver concrete measures by the Government’s Spring Budget.
Indeed, this urgency is made all the more acute by the revelations that Opec swing producer Saudi Arabia is now apparently content to let the oil price drop to around $60 a barrel and that it be a long, rough ride for everyone.
The gathering of industry leaders and media at Oil & Gas UK’s offices to listen to Alexander and Tory colleague Priti Patel (exchequer secretary) was large.
Wave energy company Aquamarine Power has announced plans to “significantly” downsize its business.
It means an undisclosed number of jobs will be lost.
According to CEO, John Malcolm, “this will involve retaining a core operational and management team to run the business and continue maintaining our Oyster 800 wave machine at the European Marine Energy Centre in Orkney”.
Oh well, the North Sea is being kept on tenterhooks for a few more hours, with Treasury first secretary Danny Alexander scheduled to deliver the supposed main news today tomorrow.
All chancellor Osborne was prepared to do was trail a few crumbs without even mentioning the North Sea fiscal review, let alone whether it will be the cornerstone of the Alexander delivery, though it of course will be.
Just three measures were mentioned in his Autumn Statement address: “I can tell the house today that we will go ahead with an immediate reduction in the rate of the supplementary charge from 32% to 30%, we will expand the ring-fenced expenditure supplement from six to 10 years and we’re introducing with immediate effect a new cluster area allowance.”
It is now abundantly clear the offshore drilling markets have slithered into a serious downturn, according to offshore research analysts at RS Platou.
In a nutshell, they warn that around 120 rigs need to be scrapped to prevent a prolonged downturn in the fortunes of drilling contractors.
They say: “Our current estimates point to active utilisations for jack-ups moving to 82% and even lower for floaters (75%) by 2016.
Toronto-based MCW Energy Group claims it will begin producing cleaner, cheaper oil from oil sands next year at a newly built processing plant in northeastern Utah.
It said that a new system that dispenses with the use of water is behind the claim.
MCW said the system will enable oil sands to be produced cleanly “without creating the toxic wastelands that have resulted from oil sands projects in Western Canada."
A future where electricity comes mostly from low-carbon sources is not only feasible in terms of material demand, but will significantly reduce air pollution, it is claimed.
An international team led by Edgar Hertwich and Thomas Gibon from the Norwegian University of Science and Technology (NTNU) have conducted what is said to be the first-ever global comprehensive life cycle assessment of the long-term, wide-scale implementation of electricity generation from renewable resources.
The study has assembled and scaled up the assessment of individual technologies to the whole world and assessed technology implementation to 2050, taking the environmental impacts of production into account.
According to CanOils’ new report The Canadian Oil Sands Outlook 2015 the Canadian oil sands industry looks set to have capacity to produce over 3million barrels per day by the end of next year, with production likely to approach 2.5million bpd.
Of these figures, a higher portion than ever will be controlled by non-Canadian operators, with the trend of greater influence year-on-year by internationally-held companies continuing into the coming year.
Assuming all scheduled new projects and expansions actually come onstream by December 31, next year will see a 16.6% increase in overall production capacity compared with this year.
China can double its use of renewable energy from 13% to 26% by 2030, according to research by the International Renewable Energy Agency (IRENA).
The growth in renewable energy use would represent nearly a fourfold increase in the share of modern renewables between 2010 and 2030. A study, Renewable Energy Prospects: China, prepared by IRENA in association with the China National Renewable Energy Centre, also says China can expand renewables from 20% to 40% by 2030, making it the world’s largest renewable energy power user.
Last month at PETEX in London, the hunt for shale gas resources in the UK was a hot topic and among the companies offering their expertise and wares at the show was CGG, currently being stalked by fellow French group Technip, and US energy services giant Baker Hughes, which arch rival Halliburton ha made a $35billion bid for.
While companies such as these cannot easily answer the social and political questions, or indeed even wish to engage that way, they can contribute to the debate on technical feasibility and potential.
And both Baker and CGG are well equipped to do this.
Firstly, and according to CGG, we in Europe and not just the UK have the opportunity to benefit from the latest developments in North America. Integrated workflows, which bring together a broad range of geoscience data, have shown great potential for the comprehensive reservoir characterisation required to optimise drilling and completion activities in heterogeneous unconventional resource plays.
In May, Transocean revealed a plan to hive off its eight North Sea midwater rigs into a spin-off company to be called Caledonia Offshore Drilling to be based in Aberdeen.
The offshore drilling assets scheduled to move across to Caledonia included the Sedco 704, Sedco 711, Sedco 712, Sedco 714, Transocean John Shaw, Transocean Prospect, GSF Arctic III and JW McLean.
While the company has pressed ahead with creating the subsidiary, plans for full separation have been sunk by the slump in oil prices and the impact of that on its performance.
We’re mostly aware of the saying “May you live in interesting times”. However, it was not uttered by Chinese philosopher Confucius (551-471 BC); rather it is a 20th Century faux Confucian saying attributed to Frederic R Coudert at the Proceedings of the Academy of Political Science in the US, 1939.
Research reveals that what he actually said was, “May you live in an interesting age”.
While the “interesting times” bit appears obscure as to origin, US President Kennedy used it in a speech in June 1966: “There is a Chinese curse which says ‘May he live in interesting times’.”
Barely half a year after being spun-off as a separate business by Noble Corporation, Paragon Offshore has pounced on Prospector Offshore Drilling, taking control by buying up more than 55% of its stock.
News of the acquisition broke on November 17, with Paragon planning to sweep up remaining shares via a mandatory offer. However, within hours of the announcement, it appears to have gained control of nearly 90% of stock.
On November 24, Paragon called for an extraordinary general meeting of shareholders, based on the fact that it owned 89.99% of its quarry’s shares.
It seems to me that oil and gas company bosses are in danger of becoming the new “bankers”, taking salaries and bonuses that smack of rank greed.
Helge Lund may be a top flight guy, and I have met him on about three occasions, but that does not get him off the hook.
To remind, a spokesman for BG said the £13.5million part of the overall pay deal, which includes a £1.5million salary, was at the top end of Lund’s potential pay in the job.
The figure is more likely to be around £9million, the “median CEO package for the global oil and gas industry”, he added.
Anyone connected with the North Sea is bound to know that oil prices have been sliding since the summer. As I write this, Brent is hovering just above $80 and there are predictions that it could drop into the $70a range and possibly down another level to around $65.
Jobs are being shed and BP has embarked on a cast-cutting drive as are other operators, notably Chevron and Shell.
Given the timing of the BP announcement this week, it smacks of oil price knee-jerk, rather than the cost reduction imperative spelled out in the Wood Review.
Contractors like Wood Group PSN started the process months ago, the primary target than apparently being the one-man band contractors ... otherwise known as the IR35 brigade. That has a strategic Wood Review ring to it.
UK Offshore Licensing Rounds attract attention and the government settled into a routine of offering ‘car boot sales’ and then saying that the latest offering has attracted even greater interest than before.
And so, when energy minister for the time being, Matthew Hancock, yesterday took the wraps off who is being provisionally offered what is the 28th Round, the predictable words were trotted out: “This successful licensing round, which is on track to be one of biggest rounds ever in five decades, is a boost for the UK economy and shows that our long-term economic plan is working.”
How come certain big American brands are looking to exit and are virtually absent as bidders? How come practically everything on the UKCS is for sale; in large measure because of a fiscal regime long past its sell-by date and the penchant for Treasury to treat the North Sea as a milch cow?
That said, there is quite a bit of interest as companies look to the future.
German company Schottel says it has successfully tested its hydrokinetic turbine design in Strangford Lough, Northern Ireland.
The full-scale tests included 260 operating hours under realistic conditions. The results show that one turbine with a rotor diameter of 4m generates 50kW per second at a rated water velocity of 2.75m per second. Ten hours of operation provide enough electricity to supply an average household for a month.
The Strangford Narrows, Northern Ireland is a strait between the virtually land-locked Strangford Lough and the Irish Sea and features strong tidal currents.
