Daily Archives: October 27, 2011
Cairn Energy PLC, the Edinburgh-based oil and gas exploration and production company, has successfully deployed Centek’s Itsfu Auto Fill Sub in drilling operations in its 2011 Greenland Drilling campaign. The Itsfu provides controlled drill string filling in one third of the time of alternative methods and prevents uncontrolled, hazardous spillage of well drilling fluids onto the rig floor.
“After learning how the Itsfu works, we are now able to fill 10 stands of 5 7/8″ TT585 connection string in around three minutes,” said John Boyle, Drilling Manager, with Cairn Energy. “This saves both time and ensures the immediate area of the rotary table remains clean compared with conventional filling practices.”
Around every 1,000 feet of running in, the drill string must be filled with fluid to equalize the pressure inside and outside the pipe to avoid it collapsing and to balance the well. The filling process interrupts running in, so speed is very important.
Every 10 stands the Itsfu is made up to the drillpipe by means of the integral swivel and the charge pump is started. The gooseneck outlet is automatically closed by a plastic disc to prevent air entering, and the closed-system drillpipe can now be filled in around one third the time of conventional methods. Once the drill pipe is full, the plastic disc comes free, discharging fluid from the gooseneck as a tell-tale. The mud pump is switched off, and with no pressure or air present, the Itsful fill-up tool can be readily removed by hand from the drillstring, without fluid spurting, and hoisted back to its storage area.
“The Itsfu offers real savings of time as it minimises spillages and cleaning up,” said Cliff Berry, Sales and Marketing Manager at Centek Limited. “Also because it screws into the drill pipe at the rotary table rather than by disconnecting the top-drive, the next pipe stand can be made ready while drill string filling is in progress.”
The Itsfu is drill-team friendly and as simple to install as a circulating sub. In addition, as the top drive is not involved in filling, there is no danger of damaging the top drive saver sub threads and the top drive is also available if needed in the open hole.
The Itsfu is available to drilling teams now and can be rented on a daily basis.
- Cairn draws a blank at second Arctic well (guardian.co.uk)
- Cairn Energy setback in Greenland (bbc.co.uk)
- Cairn Energy stays optimistic with Arctic drilling (cbc.ca)
Hercules Offshore, Inc. today reported a loss from continuing operations of $17.0 million, or $0.12 per diluted share, on revenue of $163.0 million for the third quarter 2011, compared with a loss from continuing operations of $16.1 million, or $0.14 per diluted share, on revenue of $157.6 million for the third quarter 2010.
John T. Rynd, Chief Executive Officer and President of Hercules Offshore stated, “Activity levels in the U.S. Gulf of Mexico Shelf are on the rise, as operators increasingly focus on liquids rich drilling opportunities. Concurrently, several jackup rigs have departed for international opportunities, resulting in a tight environment for rig availability in the region. Hercules Offshore has been the primary beneficiary of the improving fundamental trends in the shallow water U.S. Gulf of Mexico, which have accelerated during the third quarter. Average dayrates in our Domestic Offshore segment have increased by nearly $10,000 per day over the past year, with leading edge rates suggesting further upside for our domestic jackup fleet.
“Our International Offshore segment was recently successful at securing several contracts, including attractive, long term extensions for the Hercules 261 and Hercules 262 in the Middle East. These contracts are a testament to our strong performance and relationship with the customer, Saudi Aramco. Tempering our international success was the recently announced damage to the Hercules 185, where we are anticipating approximately six months of downtime for repairs.”
Domestic Offshore revenue increased to $60.2 million in the third quarter 2011 from $25.1 million in the comparable period in 2010. Approximately 70% of the revenue increase is attributable to the acquisition of the Seahawk rigs, while higher utilization and dayrates on the legacy fleet contributed to the remaining revenue growth. Average revenue per rig per day increased by $9,722 per rig per day to $49,060 in the third quarter 2011 compared to $39,338 in the prior year period. Utilization in the third quarter 2011 increased to 74.2% from 62.9% in the third quarter 2010. However, operating days rose by more than 90%, largely as a result of the acquisition of the Seahawk rigs. Domestic Offshore operating expenses increased to $53.2 million in the third quarter 2011 from $38.7 million in the third quarter 2010, due to costs associated with the acquired Seahawk rigs. Domestic Offshore recorded an operating loss of $12.8 million in the third quarter 2011 compared to an operating loss of $32.1 million for the respective prior year quarter.
International Offshore revenue declined to $49.0 million in the third quarter 2011 from $74.4 million in the third quarter 2010. The decline was primarily driven by new contracts at lower market rates on the Hercules 208, Hercules 258, Hercules 260 and Rig 3, as well as the downtime related to transition between contracts. The reduction in revenue related to these aforementioned rigs was partially offset by the increased utilization on the Hercules 185. Overall, average revenue per rig per day declined to $96,388 in the third quarter 2011 from $138,344 in the third quarter 2010, and operating days declined to 508 days from 538 days, in the respective periods. Third quarter 2011 operating expenses were $29.1 million compared to $31.1 million in the third quarter 2010, as lower costs associated with new contract terms on the Hercules 258 and Hercules 260 were partially offset by higher costs on the Hercules 185. International Offshore general and administrative expenses during the third quarter 2011 include an $8.0 million benefit, compared to a $1.5 million benefit during the third quarter 2010, from the reversal of an allowance for doubtful accounts related to payments received from a customer in Angola. Operating income decreased to $12.9 million in the third quarter 2011 from $26.9 million in the third quarter 2010.
Inland revenue for the third quarter 2011 increased to $8.1 million from $5.7 million in the third quarter 2010, primarily driven by an increase in average revenue per rig per day to $31,008 in the third quarter 2011 from $21,357 in the third quarter 2010. Utilization of 94.9% during the third quarter 2011 is comparable to 97.5% for the prior year period. Third quarter 2011 operating expenses were $3.5 million, which includes approximately $2.6 million in gains for asset sales, compared to $8.3 million in the comparable period in 2010. Year ago results include an accrual of approximately $3.0 million related to a multi-year state sales and use tax audit. Inland recorded operating income of $0.9 million in the third quarter 2011 compared to an operating loss of $8.6 million in the third quarter 2010.
Domestic Liftboats generated revenue of $16.7 million in the third quarter 2011 compared to $24.6 million in the third quarter 2010. Year ago results were positively impacted by coastal remediation work related to the BP-Macondo incident. The absence of the BP-Macondo related work led to a decline in utilization to 69.8% during the third quarter 2011 from 91.6% for the prior year period. Average revenue per liftboat per day was down slightly to $7,443 in the third quarter 2011 compared to $7,684 in the third quarter 2010. Operating expenses were essentially flat at $11.4 million in the third quarter 2011. Operating income for Domestic Liftboats was $0.6 million in the third quarter 2011 compared to operating income of $9.4 million in the comparable prior year period.
International Liftboat revenue increased modestly to $28.9 million in the third quarter 2011 compared to $27.8 million in the third quarter 2010, largely due to higher utilization, which rose to 64.1% in the third quarter 2011 from 56.6% in the prior year period. This was partially offset by a decline in average revenue per liftboat per day to $21,325 from $23,176 in the same periods, respectively. Operating expenses increased to $14.1 million in the third quarter 2011 versus $13.0 million in the prior year period due to higher labor and maintenance costs. Operating income for International Liftboats was $8.5 million in the third quarter 2011, compared to $9.4 million in the same period of the prior year.
Discovery Offshore S.A. Investment
Since Hercules Offshore’s initial $10 million investment in Discovery Offshore S.A. (Oslo Axess: DISC), which gave the company an 8% ownership stake, the Company has completed several purchases of Discovery common stock, totaling approximately $24.2 million. The most recent purchase on September 13, 2011 increased Hercules’ holding in Discovery to 18.4 million shares, corresponding to 28.0% of Discovery’s share capital.
Headquartered in Houston, Hercules Offshore, Inc. operates a fleet of 49 jackup rigs, 17 barge rigs, 65 liftboats, two submersible rigs, and one platform rig. The Company offers a range of services to oil and gas producers to meet their needs during drilling, well service, platform inspection, maintenance, and decommissioning operations in several key shallow water provinces around the world. Hercules Offshore currently holds 28.0% of share capital in Discovery Offshore, a pure play, ultra-high specification jackup rig company.
- High-Spec Jackup Market: Hercules Offshore increases stake in Discovery Offshore (mb50.wordpress.com)
- Bermuda: AOD to Increase Water Depth Capacity for its Jack-ups (mb50.wordpress.com)
- Shallow Gulf Waters Get Lonely; Hercules Offshore Holds Hope That It Can Dominate in Aging Energy Field (gcaptain.com)
- Push for permits in Gulf of Mexico (mb50.wordpress.com)
Rolls-Royce, the global power systems company, has achieved a significant milestone in the deployment of tidal energy technology with confirmation that its prototype tidal turbine, located subsea off the Orkney Islands, Scotland, has successfully generated and fed over 100 megawatt hours (MWh) of electrical power into the national grid.
Robert Stevenson, Rolls-Royce, Vice-President – Power Ventures said: “Rolls-Royce has injected its world-class engineering expertise and incubation processes to deliver this innovative renewable energy project. Reaching the 100 megawatt hours milestone highlights the significant potential of cleaner, greener tidal power as part of a diversified UK energy mix. Having proven the capability of tidal energy, Rolls-Royce is well placed to meet any future demand with larger, more efficient technology on a commercial scale.”
As a reliable and predictable energy source, deep water tidal stream power generation could make a valuable contribution to meeting the electricity demands and carbon emissions reduction objectives of many industrialised nations, including the UK, Canada, Australia and the U.S.A. For example, Rolls-Royce tidal technology could generate up to 30TWh (terawatt-hours) of UK electricity, equivalent to around 7.5 per cent of existing UK electricity needs or enough to power 3 million homes.
Harnessing the Energy of Tidal Streams
Installed as part of the Deep-Gen III project, co-funded by the UK government-backed Technology Strategy Board, the Rolls-Royce prototype tidal turbine is currently deployed at the European Marine Energy Centre’s (EMEC) offshore test site off the Orkney Islands, Scotland. It is the first EMEC located project to both receive Renewable Obligation Certificates and to reach 100 MWh of supply to the grid.
The tidal unit’s three-bladed turbine is attached by a tripod to the seabed and can operate, fully submerged at water depth of 40 meters. Its innovative design allows the turbine to continually rotate to face the incoming tide at an optimal angle. In addition, the turbine unit is semi-buoyant and can be easily towed to and from the point of operation, minimising installation and maintenance costs by avoiding the need for specialist vessels.
Neil Morgan, Head of Energy at the Technology Strategy Board said: “This is a significant milestone for the UK marine renewables industry. The UK is well-placed to exploit tidal stream energy resources and, if commercialised on a large scale, this technology could be an important part of the renewable energy mix we’ll need in the future, and could create jobs and exports for the UK.”
As part of the Energy Technologies Institute funded ReDAPT (Reliable Data Acquisition Platform for Tidal) consortium project, Rolls-Royce is currently building a 1MW tidal turbine demonstration unit that will be deployed in mid-2012 at EMEC in Orkney. The project will deliver detailed environmental and performance information never before achieved at this scale in real sea conditions. Rolls-Royce is also working with a number of developers in advancing demonstration arrays, systematic arrangements of turbines, which will lead to large scale commercial deployment.
Dr David Clarke, ETI, Chief Executive said: “The U.K. is already a world-leader in this exciting renewable sector. However, the long-term viability of tidal technology depends on it becoming competitive with other renewable energy sources. Continued investment and new partners are urgently needed to maintain momentum and bring the technology to scale.”
- Orkney Islands: glimpse of a renewable future (guardian.co.uk)
- More funding for wave and tidal (bbc.co.uk)
- Wave and tidal power almost ready for mass consumption (climateinsight.wordpress.com)
- Scotland Plugs Tidal Power into Electricity Grid (forbes.com)
- Wave and tidal power almost ready for mass consumption, says Alex Salmond (guardian.co.uk)
Following last night’s big meeting — which is being greeted with a strong rally — here’s what to watch next:
We would expect the next 24 hours to be driven by how the Sarkozy call to China President Hu Jintao goes, how investors analyze the sustainability of Greek debt under this program, and the reception that the EFSF proposal will get. We are a bit surprised by the enthusiasm given the lack of detail and lack of surprise. We are also wondering how seriously investors will take the EFSF guarantees (which only apply in the event of a default), given that the banks were strongly encouraged to declare the current restructuring voluntary. Investors may fear that the EFSF – guaranteeing – governments will similarly contrive to avoid paying out on their first-loss guarantees.
- Europe’s new debt crisis agreement: the good, the bad, the ugly (curiouscapitalist.blogs.time.com)
- EU to leverage EFSF to 1 trillion euros: report (marketwatch.com)
- Watch for Sarkozy-Hu Jintao headlines (forexlive.com)
- Europe crafts debt deal that pleases markets (seattlepi.com)
Nexen Petroleum UK Ltd., a subsidiary of Nexen Inc., announced today it has received approval from the UK Department of Energy and Climate Change (DECC) to proceed with the Golden Eagle area development – a GBP 2 billion (C$3.3 billion) investment (GBP 750 million net to Nexen) that is expected to produce an estimated 140 million barrels of oil equivalent (gross) of proved and probable reserves over an 18-year period.
The Golden Eagle development encompasses both the Golden Eagle and Peregrine reservoirs located in central North Sea blocks 20/1N, 20/1 and 14/26a, approximately 43 miles from Aberdeen. The development plan for Golden Eagle incorporates a combined production, utilities and accommodation platform linked to a separate wellhead platform. Plans call for 20 development wells (16 platform-based and four subsea) to be drilled. The development will also include associated in-field and export pipeline infrastructure.
Detailed design engineering has commenced and fabrication is scheduled to start in late 2011. Pipeline and subsea installation is expected to begin in early 2013, to be followed by drilling later that same year. First oil production is forecast for late 2014 and the development is expected to have an initial gross production rate of up to 70,000 barrels of oil equivalent per day (boe/d), about 26,000 boe/d net to Nexen.
“This is a great day for the UK oil and gas industry. Regulatory approval marks a major milestone in the development of Golden Eagle, which is one of the largest oil discoveries in the UK North Sea since our Buzzard discovery,” said Phil Oldham, Managing Director of Nexen Petroleum UK Ltd.
During construction, the Golden Eagle development is expected to create employment for more than 2,000 workers. Once operational, the facility is expected to employ more than 400 people and provide thousands of indirect jobs throughout its 18-year production life. More than two-thirds of the contracts for products and services for Golden Eagle are to be sourced in the UK, a total benefit estimated at more than GBP 1.4 billion.
The project’s design, construction and operation will reflect the results of a comprehensive environmental impact assessment, which has also been approved by the DECC.
“Continuous improvement in safety and environmental performance has been built into our project planning. Safe, responsible energy development is our priority,” said Oldham.
Nexen holds significant acreage adjacent to the Golden Eagle development and continues to explore and appraise the UK North Sea to identify future opportunities and potential synergies with the Golden Eagle infrastructure. This includes participating in an active UK North Sea exploration and appraisal campaign and investing in other development projects in the region.
Nexen is the second largest oil producer in the UK. In 2010, the company’s UK-based business produced approximately 110,000 boe/d, primarily from the Buzzard field. The company currently provides employment for about 1,200 full-time and contract staff at its offices in Uxbridge and Aberdeen and at its offshore facilities.
Nexen Petroleum UK Ltd. is the operator of Golden Eagle and holds a 36.54% working interest in the field. The remaining interest is held by Maersk Oil North Sea UK Ltd. (31.56%), Suncor Energy UK Ltd. (26.69%) and Edinburgh Oil and Gas Ltd. (5.21%).
Nexen Petroleum UK Ltd. is a subsidiary of Nexen Inc., a global energy company listed on the Toronto and New York stock exchanges under the symbol NXY. Nexen is focused on three growth strategies: oil sands and shale gas in Western Canada and conventional exploration and development primarily in the UK North Sea, offshore West Africa and deepwater Gulf of Mexico.
“Statoil delivered strong financial results in the third quarter of 2011, reflecting operational performance in line with expectations and strong oil and gas prices throughout the period,” says Helge Lund, Statoil’s chief executive officer.
Statoil presented the long term strategy and long term growth outlook on its capital markets day in June 2011, where revitalisation of the NCS with high value barrels and expansion in unconventionals are among key building blocks.
“The giant Aldous/Avaldsnes discovery clearly reaffirms the strong potential of the Norwegian continental shelf, and we continue our long-term effort to position Statoil as an industrial player and operator within unconventionals through the offer to acquire all shares of the Brigham Exploration Company,” says Lund.
The quarterly result was mainly affected by a 30% increase in the average prices for liquids measured in NOK, a 13% increase in average gas prices, a 13% increase in lifted volume compared to the same period last year, and a net impairment loss of NOK 4.8 billion mainly related to the refinery business.
Net income in the third quarter of 2011 was NOK 9.9 billion compared to NOK 13.8 billion in the same period last year. The decrease stems primarily from lower gain on net financial items and higher tax rates, and was only partly offset by higher net operating income. The tax rate for the quarter was 76.6%.
Adjusted earnings in the third quarter of 2011 were NOK 43.1 billion, a 62% increase compared to NOK 26.7 billion in the third quarter of 2010.
Adjusted earnings after tax were NOK 11.4 billion in the third quarter of 2011. Adjusted earnings after tax exclude the effect of tax on net financial items, and represent an effective adjusted tax rate of 73.5% in the third quarter of 2011.
Total equity production was 1,764 mboe per day in the third quarter of 2011 compared to 1,552 mboe per day in the third quarter of 2010.
Highlights since second quarter 2011:
Successful exploration, highlighted by the Aldous/Avaldsnes oil discovery in the North Sea, one of the largest finds ever on the Norwegian continental shelf. Statoil holds a 40% interest in both licences. In total, 9 discoveries on 13 completed wells by 30 September.
Further expanding in unconventionals, through a merger agreement between Statoil and Brigham Exploration Company for Statoil to acquire all the outstanding shares of Brigham through an all-cash tender offer. If the tender offer is successful, the acquisition adds 375,000 net acres in the Williston Basin with potential for oil production from the Bakken and Three Forks formations. The transaction builds on Statoil’s stepwise build-up in the United States and establishes Statoil as an operator in unconventional plays.
Maturing the project portfolio, including August start-up of the Pazflor development in Angola. Statoil has a 23.33% interest and Pazflor is expected to contribute with 47 000 barrels per day in equity capacity when plateau is reached in the first quarter next year.
Industrial progress, as plans for development and operation (PDO) are submitted to the authorities for the Skuld field in the Norwegian Sea and for the subsea gas compression project at Åsgard, to maintain production from the Mikkel and Midgard reservoirs. PDO for Stjerne and Vigdis North East has been approved.
Participating interests in two exploration licences in Camamu-Almada basin offshore Brazil have been farmed down 10% and 15% respectively to Gran Tierra Energy. The agreement is subject to approval by Brazilian authorities and other conditions.
1 billion Norwegian kroner = 182.23900 million U.S. dollars
- USA: Statoil Signs Energy Partneship Agreement with UT (mb50.wordpress.com)
- Norway: Statoil Gets Clearance to Use Island Constructor (mb50.wordpress.com)
- Statoil Buys Brigham for $4.4 Billion to Get Bakken Shale (businessweek.com)
- Statoil buys Texas-based Brigham for $4.4B (seattlepi.com)
- Norwegian giant in it for the long haul with Texas shale venture (mb50.wordpress.com)
- Deal Profile: Statoil to Buy Brigham for $4.4 Billion (blogs.wsj.com)
- Statoil Q3 profit drop 25 percent on higher costs (seattletimes.nwsource.com)
It has said it aims to lease a floating storage and regasification unit (FSRU) of at least 130,000 cubic metres of LNG under long-term contract or acquire it under a build-operate-transfer transaction.
Klaipedos Nafta, which is in charge of the project, said on Wednesday it would review the proposals and would invite those meeting the qualification requirements to hold negotiations.
The company did not disclose the names of three bidders.
U.S.-based Cheniere Energy , which wants to supply Lithuania with LNG, was reported in May to have expressed interest in taking a part in the Lithuanian terminal project.
The government hopes that the LNG terminal, estimated to cost about a billion litas ($400.3 million), would help to cut energy dependence on Russia’s Gazprom , now the sole supplier of gas to the Baltic state, and reduce prices it pays for gas.
The final deal on the FSRU procurement is expected to be signed by the end of the year.
- USA: Cheniere, BG Ink LNG Sale and Purchase Deal (mb50.wordpress.com)
- GDF Suez Sees Strong China LNG Demand (mb50.wordpress.com)
- Petronet in Talks to Buy Capacity at US, Australia LNG Terminals (mb50.wordpress.com)
- Jamaica: Bids Open for LNG Project (mb50.wordpress.com)
- These Shippers Won’t Sink Your Portfolio (dailyfinance.com)
- Cheniere rallies on LNG export deal with BG (marketwatch.com)
- Canada: Kitimat LNG Wins Export Licence (mb50.wordpress.com)
- Japan hopes to buy LNG from U.S. by 2015 (mb50.wordpress.com)