Category Archives: OCEANS & SEAS
In a dramatic stroke of luck for the Kremlin, this morning there is hardly a person in the world who is happier than Russian president Vladimir Putin because overnight state-run run OAO Rosneft announced it has discovered what may be a treasure trove of black oil, one which could boost Russia’s coffers by hundreds of billions if not more, when a vast pool of crude was discovered in the Kara Sea region of the Arctic Ocean, showing the region has the potential to become one of the world’s most important crude-producing areas, arguably bigger than the Gulf Of Mexico. The announcement was made by Igor Sechin, Rosneft’s chief executive officer, who spent two days sailing on a Russian research ship to the drilling rig where the find was unveiled today.
Well, one person who may have been as happy as Putin is the CEO of Exxon Mobil, since the well was discovered with the help of America’s biggest energy company (and second largest by market cap after AAPL). Then again, maybe not: as Bloomberg explains “the well was drilled before the Oct. 10 deadline Exxon was granted by the U.S. government under sanctions barring American companies from working in Russia’s Arctic offshore. Rosneft and Exxon won’t be able to do more drilling, putting the exploration and development of the area on hold despite the find announced today.”
Which means instead of generating billions in E&P revenue, XOM could end up with, well, nothing. And that would be quite a shock to the US company because the unveiled Arctic field may hold about 1 billion barrels of oil and similar geology nearby means the surrounding area may hold more than the U.S. part of the Gulf or Mexico, he said.
For a sense of how big the spoils are we go to another piece by Bloomberg, which tells us that “Universitetskaya, the geological structure being drilled, is the size of the city of Moscow and large enough to contain more than 9 billion barrels, a trove worth more than $900 billion at today’s prices.”
The only way to reach the prospect is a four-day voyage from Murmansk, the largest city north of the Arctic circle. Everything will have to shipped in — workers, supplies, equipment — for a few months of drilling, then evacuated before winter renders the sea icebound. Even in the short Arctic summer, a flotilla is needed to keep drifting ice from the rig.
Sadly, said bonanza may be non-recourse to Exxon after Obama made it quite clear that all western companies will have to wind down operations in Russia or else feel the wrath of the DOJ against sanctions breakers. Which leaves XOM two options: ignore Obama’s orders (something which many have been doing of late), or throw in the towel on what may be the largest oil discovery in years.
And while the Exxon C-suite contemplates its choices, here is some more on today’s finding from Bloomberg:
“It exceeded our expectations,” Sechin said in an interview. This discovery is of “exceptional significance in showing the presence of hydrocarbons in the Arctic.”
The development of Arctic oil reserves, an undertaking that will cost hundreds of billions of dollars and take decades, is one of Putin’s grandest ambitions. As Russia’s existing fields in Siberia run dry, the country needs to develop new reserves as it vies with the U.S. to be the world’s largest oil and gas producer.
Output from the Kara Sea field could begin within five to seven years, Sechin said, adding the field discovered today would be named “Victory.”
The Kara Sea well — the most expensive in Russian history — targeted a subsea structure named Universitetskaya and its success has been seen as pivotal to that strategy. The start of drilling, which reached a depth of more than 2,000 meters (6,500 feet), was marked with a ceremony involving Putin and Sechin.
The importance of Arctic drilling was one reason that offshore oil exploration was included in the most recent round of U.S. sanctions. Exxon and Rosneft have a venture to explore millions of acres of the Arctic Ocean.
But what’s worse for Exxon is that now that the hard work is done, Rosneft may not need its Western partner much longer:
“Once the well is plugged, there will be a lot of work to do in interpreting the results and this is probably something that Rosneft can do,” Julian Lee, an oil strategist at Bloomberg First Word in London, said before today’s announcement. “Both parties are probably hoping that by the time they are ready to start the next well the sanctions will have been lifted.”
And here is why there is nothing Exxon would like more than to put all the western sanctions against Moscow in the rearview mirror: “The stakes are high for Exxon, whose $408 billion market valuation makes it the world’s largest energy producer. Russia represents the second-biggest exploration prospect worldwide. The Irving, Texas-based company holds drilling rights across 11.4 million acres in Russia, only eclipsed by its 15.1 million U.S. acres.”
Proving just how major this finding is, and how it may have tipped the balance of power that much more in Russia’s favor is the emergence of paid experts, desperate to talk down the relevance of the Russian discovery:
More drilling and geological analysis will be needed before a reliable estimate can be tallied for the size of the oil resources in the Universitetskaya area and the Russian Arctic as a whole, said Frances Hudson, a global thematic strategist who helps manage $305 billion at Standard Life Investments Ltd. in Edinburgh. Sanctions forbidding U.S. and European cooperation with Russian entities mean that country’s nascent Arctic exploration will be stillborn because Rosneft and its state-controlled sister companies don’t know how to drill in cold offshore conditions alone, she said.
“Extrapolating from a small data sample is perhaps not going to give you the best information,” Hudson said in a telephone interview. “And because of sanctions, it looks like there’s going to be less exploration rather than more.” In addition, the expense and difficulty of operating in such a remote part of the world, where hazards include icebergs and sub-zero temperatures, mean that the developing discoveries may not be economic at today’s oil prices.
Maybe. Then again perhaps the experts’ time is better suited to estimating just how much longer the US shale miracle has left before the US is once again at the mercy of offshore sellers of crude.
In any event one country is sure to have a big smile on its face: China, since today’s finding simply means that as Russia has to ultimately sell the final product to someone, that someone will almost certainly be the Middle Kingdom, which if the “Holy Gas Grail” deal is any indication, will be done at whatever terms Beijing chooses.
MacGregor, part of Cargotec, has won a contract to deliver a 250-tonne SWL active heave-compensated (AHC) subsea crane for the 120m construction vessel, Island Intervention. The crane was ordered by Marine Procurement Ltd, part of the US company Edison Chouest Offshore.
An existing vessel operated by the US/Norwegian partnership between Edison Chouest Offshore and Island Offshore requires greater lifting capability; a MacGregor 250-tonne SWL AHC subsea crane fulfils the upgrade requirements. Island Intervention is currently operating in the North Sea for the US/Norwegian partnership between Edison Chouest Offshore and Island Offshore. The vessel works in the offshore construction market and was delivered by Norwegian yard Ulstein Verft in 2011; its current lifting capacity is 140 tonnes.
“The vessel simply needs a bigger crane for the jobs that it undertakes,” says Frode Grøvan, Director, Sales and Marketing for Advanced Load Handling. “The order confirms the trend that we see of subsea modules getting larger and heavier, therefore requiring operators to equip their vessels with ever more capable cranes.”
“At MacGregor, we have the expertise necessary to ensure that retrofit projects like this run smoothly and successfully, with downtime kept to a minimum.”
- Huisman to Deliver Well Intervention System for Helix’s Q7000 (mb50.wordpress.com)
Helix Energy Solutions Group’s new T1200 burial and trenching unit is quickly establishing a positive track record following the completion of an oil and gas project in the North Sea. The T1200 features a 1,200hp jet trenching spread, capable of burying product in water depths to 3,000m (10,000ft).
T1200 was deployed to bury a 14km long (8.7 mile), 10 inch export pipeline that included a 3 inch piggyback methanol line. The project specialization called for the line to be buried 2m (6.5ft) deep, with one meter of covering fill. The subsea trenching unit’s water jetting system trenched and simultaneously buried the pipeline under 1.4m (4.5ft) of sand in a continuous run that took just 48 hours.
The successful project is the T1200’s first oil and gas operation, and proves the versatility of the asset which has also been deployed to trench and bury high voltage undersea cables used to transport electricity from offshore wind farms to onshore power stations.
The T1200, operated by Helix ESG’s robotics subsidiary, Canyon Offshore, performed its first trenching job in early July 2012 at the Sheringham Shoal offshore wind farm trenching and burying an approximately 700m (2,300ft) long power cable between the wind turbines. Out of the 80 sections required in the field, the T1200 trenched and buried 37.
The T1200 was built in the UK by Forum Energy Technologies’ Perry Slingsby Systems ROV brand. The T1200’s design was based around the time proven T750 trencher( also owned and operated by Canyon Offshore) but has over 50 percent greater power and the capacity to trench larger diameter products (36 inches) to burial depths of 3m (10ft) depending on soil strength.
- ROV Support Vessel Grand Canyon Completes Sea Trials (Norway) (worldmaritimenews.com)
On October 3, 2012, at approximately 2:45PM AKDT, the Kulluk began drilling at Shell’s Sivulliq prospect. Shell has noted that the occasion is historic in that it’s the first time two rigs have been drilling simultaneously offshore Alaska in over two decades. The Noble Discoverer has been drilling at Shell’s Burger prospect in the Chukchi Sea since September.
“In the weeks ahead we look forward to operating safely and responsibly, putting Americans to work and adding to Shell’s long, successful history of drilling offshore Alaska,” said Pete Slaiby, VP Alaska.
Bought by Shell in 2005, the Kulluk was speciﬁcally designed and constructed for extended season drilling operations in Arctic waters.
- Shell starts exploratory drilling in Beaufort Sea (fuelfix.com)
- Shell begins second drilling operation in Alaska’s Arctic seas (fuelfix.com)
- Shell prepares for Beaufort Sea drilling (fuelfix.com)
Helix Energy Solutions Group’s newbuild charter ROV support vessel, Grand Canyon, recently completed sea trials and is ready to begin operations in the North Sea. During the sea trials the vessel’s propulsion system, dynamic positioning system and all her cranes were tested.
The vessel recently completed its outfitting in Norway after the initial hull construction was completed in Turkey. Grand Canyon is capable of launching five ROVs at once and will be operated by Helix ESG’s robotics subsidiary, Canyon Offshore.
The vessel will be the new home for another recently completed asset, the T1200 trenching unit. Used primarily to bury large diameter power cables leading from offshore windfarms, the T1200 is also capable of working on oil and gas projects to bury production pipelines.
The Grand Canyon was designed to provide a high capacity, stable working platform for lay, burial and general offshore construction work while still retaining a shallow draft, which is crucial when operating close to the coastline, and common in the renewable energy sector.Grand Canyon’s DP3 capability allows her to operate in any sector, providing offshore support in a wide variety of roles.
The vessel’s deck structure is specifically designed to accept trenching and flexible pipe or cable lay systems for safe and efficient mobilizations. A key focus throughout the design and build of Grand Canyon was to optimize the vessel and equipment design to facilitate efficient mobilizations.
- ROV Support Vessel Grand Canyon Completes Sea Trials (Norway) (worldmaritimenews.com)
- North Sea Rig Rates May Push Higher as Midwater Market Heats Up (gcaptain.com)
- UK: Helix Well Ops Charters Skandi Constructor from DOF Subsea (mb50.wordpress.com)