Category Archives: Oil & Gas – offshore
The petroleum industry includes the global processes of exploration, extraction, refining, transporting (often by oil tankers and pipelines), and marketing petroleum products.
A naming ceremony was held for the subsea vessel ‘Island Performer’ in Norway on Friday, June 27, 2014.
The Island Performer, owned by Island Offshore, is getting ready its her work for FTO in the Gulf of Mexico.
The vessel is equipped with a large intervention tower over the main moon pool, a 250-tonne AHC Offshore Crane and two deep-sea work ROVs.
With a length overall of 130m, and width of 25m, the vessel can accommodate 130 people.
The Island Performer is particularly developed to suit the scope in the FTO contract in which Riser-less Light Well Intervention and Inspection, Maintenance, Repair are main tasks.
|This week the SubseaIQ team added 6 new projects and updated 29 projects. You can see all the updates made over any time period via the Project Update History search. The latest offshore field develoment news and activities are listed below for your convenience.|
Ocean Installer has been awarded a subsea installation job in the Gulf of Mexico with one of the world’s leading international oil and gas companies on its largest deepwater producing field which sits in over 1800m water depth.
This is Ocean Installer’s first SURF contract in the GoM and marks a milestone for the company in the region.
The project, which involves the installation and testing of umbilicals and associated equipment, will be managed from the Ocean Installer Houston office with onshore preparations starting immediately. Offshore work will take place this summer and Ocean Installer will be utilising the Subsea Construction Vessel (CSV) the Normand Clipper, which is on a long-term charter from Solstad Offshore.
“This is our first SURF job in the GoM and we are very pleased to have secured this work only a year after we established our Houston office and less than four months after introducing our first vessel in the region. We are now looking forward to working closely with our client to execute the project in a safe, high quality and efficient manner,” says Mike Newbury, President of Ocean Installer in the US.
Ocean Installer opened its Houston office in April 2013 and the Normand Clipper arrived in Houston in January. The vessel has been well-received in the market and has since its arrival experienced good utilisation executing several jobs in the regional spot market.
Press Release, May 02, 2014
This week the SubseaIQ team added 4 new projects and updated 22 projects. You can see all the updates made over any time period via the Project Update History search. The latest offshore field develoment news and activities are listed below for your convenience.
Jan 31, 2014 – Production from the Guendalina field remains down according the 4Q 2013 Operational Update provided by Mediterranean Oil & Gas (MOG). Low manifold pressure necessitated the shut-in of the GUE 3ss well in August 2013. Eni, the field operator, determined that the reservoir was in good condition and that a blockage in the production string was causing the poor performance. Remedial operations were undertaken in December but progress was hampered by poor weather conditions in the Adriatic. Intervention operations were completed Jan. 11, 2014 and the well returned to a low-production rate. The flow rate will improve as the well cleans up. Eni and MOG maintain 80% and 20% stakes respectively.
Project Details: Guendalina
Asia – SouthEast
Jan 31, 2014 – In December 2013, Roc Oil submitted a Field Development Plan (FDP) to Petronas concerning the Bentara field in the Balai Cluster offshore Malaysia. The FDP outlines a two-phase development and approval is being sought for the first phase which involves early production utilizing the existing wells and facilities established during the pre-development phase. The company expects the FDP to be approved during 1Q 2014.
Project Details: Balai Cluster
Jan 31, 2014 – Salamander Energy sees production from the Bualuang field recommencing in early February after it was stopped in November 2013 when bad weather caused the Rubicon Vantage FPSO to drift off location and damage the production riser. Since then, divers have completed a full inspection and replacement riser and spool materials are being moved to location. While progress is being made, poor weather conditions have slowed repair efforts. A development drilling program being carried out by the Atwood Mako (400′ ILC) has not been interrupted by the event and two production wells have been drilled since the shutdown. Salamander’s production forecast for the field remains unchanged and is expected to average between 13,000 and 16,000 boepd.
Project Details: Bualuang
Jan 31, 2014 – Pan Pacific Petroleum was advised by Premier Oil, operator of Block 07/03 offshore Vietnam, that the Ocean General (mid-water semisub) spudded the 07/03-CD-1X wildcat well on Jan. 28, 2014. The well is being drilled in 426 feet of water and is expected to reach the proposed depth of 12,522 feet. The well is designed to test the Miocene clastic reservoirs of the Silver Silago prospect.
Project Details: Ca Duc (Silver Sillago)
Jan 31, 2014 – Through an agreement with Mubadala Petroleum, KrisEnergy acquired a 60% operating interest in Block G3/48 in the Gulf of Thailand. The block covers an area of 1,126 square miles with water depths ranging from 65 to 165 feet. Partners in the block include Tap Energy (30%) and Northern Gulf Oil Company (10%). The agreement is subject to the customary regulatory approvals.
Project Details: Pathum
MidEast – Persian Gulf
Jan 31, 2014 – Technip was awarded an engineering, procurement, construction and installation (EPCI) contract by Dubai Petroleum Establishment (DPE) concerning the Jalilah B field development project. Work scope includes construction and installation of the Jalilah B platform, the addition of 13 new risers on existing platforms and the installation of 68 miles of 6 to 24-inch pipeline. The project will be executed from Technip’s fast-track center in Dubai and is scheduled for completion in the second half of 2014.
Project Details: Al Jalilah
Europe – North Sea
Jan 31, 2014 – Lundin Petroleum is in the process of completing a sidetrack well at its Torvastad prospect in license PL501 near the Johan Sverdrup discovery. Well 16/2-20A is being drilled by the Island Innovator (mid-water semisub) to investigate the potential of an up-flank continuous Jurassic reservoir. Oil shows were seen in the main target but reservoir quality was poor. Lundin operates the license and carries 40% stake. Its partners include Statoil (40%) and Maersk Oil Norway (20%).
Project Details: Torvastad
Jan 30, 2014 – Through an oversubscribed share placing, Parkmead Group was able to raise $66 million in an effort to bolster some of its activities in the UK North Sea. Parkmead, operator of the Athena field in License P1293, will use a portion of the funds to enhance production from the field. The group plans to carry out a workover of the P4 well. If successful, the operation could increase field production to 9,000 bopd. Locations are also being evaluated for an additional production well that has the potential to add 1,100 bopd to the production stream. Proceeds from the placing will also allow the group to test several prosepcts in its portfolio such as Skerryvore, Possum, Blackadder and Davaar. Well planning is already underway for Skerryvore.
Project Details: Athena
Jan 30, 2014 – Operator Faroe Petroleum announced an oil and gas discovery at its Novus prospect in license PL645 in the Norwegian Sea. Well 6507/10-2S was drilled by the West Navigator (UDW drillship) to a depth of 9,701 feet. A 39-foot net gas column and 41-foot net oil column were encountered in high quality Garn reservoir. Secondary targets in the Ile and Tilje formations proved to be water wet. Results from pressure and fluid sampling indicate the discovery reservoirs hold between 6 and 15 MMboe. Additionally, the results will be integrated into the existing geologic model of the area to de-risk the remaining prospects and leads in the license.
Project Details: Novus
Asia – Caspian
Jan 31, 2014 – Production activities at the West Chirag platform are underway according to the BP-operated Azerbaijan International Operating Company (AIOC). The platform is part of the Azeri-Chirag-Guneshli (ACG) development in the Azerbaijan sector of the Caspian Sea. On January 28, 2014 oil began flowing from the J05 development well. Production will increase throughout the year as additional wells are brought on line. As a whole, the ACG fields have produced over 2.3 billion barrels and, with future development, is expected to be a viable project for many decades. The West Chirag platform was installed in 557 feet of water and has a designed processing capacity of 183 thousand bopd. Startup of West Chirag is the final phase of the Chirag Oil Project and is expected to greatly enhance the deliverability of the ACG development.
Project Details: Azeri-Chirag-Gunashli
Jan 31, 2014 – Karoon Gas reports that total depth has been reached at the Grace-1 exploration well in license WA-314-P offshore Western Australia. The well was drilled by the Transocean Legend (mid-water semisub) to a measured depth of 16,630 feet. High gas levels seen while drilling and pressure samples taken from logging while drilling (LWD) equipment Karoon and ConocoPhillips (the operator) to run wireline logs over the zone of interest. Logging and sampling results are expected during the coming weeks.
Project Details: Grace
S. America – Brazil
Jan 31, 2014 – Shell announced its intention to divest 23% of its interest in the Parque das Conchas development to Qatar Petroleum International for approximately $1 billion. Once the agreement is approved by Brazilian regulators, Shell’s operating interest will be reduced to 50%. Parque das Conchas currently produces at a rate of 50,000 boepd since the Ostra and Argonauta B-West fields were brought on-stream in 2009 as part of Phase 1. Phase 2 was completed in October 2013 when oil production commenced at Argonauta O-North. In July 2013, Shell and its partner ONGC (27%) made the final investment decision regarding Phase 3 and will consist of subsea facilities tying the Argonauta O-South and Massa fields to the Espirito Santo FPSO.
Project Details: Parque das Conchas (BC-10)
Thursday, January 30, 2014 by Reuters – John Kemp
LONDON, Jan 30 (Reuters) – Cutting the cost of everything from salaries and steel pipes to seismic surveys and drilling equipment is the central challenge for the oil and gas industry over the next five years.
The tremendous increase in exploration and production activity around the world over the last ten years has strained the global supply chain and been accompanied by a predictable increase in operating and capital costs.
When oil and gas prices were rising strongly, petroleum producers and their contractors could afford to absorb cost increases.
But as oil and gas production have moved back into line with demand, and prices have stabilized, the focus is switching once again to cost control.
“Operational excellence,” a euphemism for doing more with less, is back in fashion and set to dominate industry thinking for the rest of the decade.
Paal Kibsgaard, chief executive of Schlumberger, one of the largest service companies, has been emphasising “smart fracking” and other ways to raise output and cut costs for two years.
Speaking as long ago as March 2012, Kibsgaard warned: “In the past ten years, exploration and production spend has grown fourfold in nominal terms, while oil production is up only 11 percent.”
“In this environment, we believe our customers will favour working with companies that can help them increase production and recovery, reduce costs, and manage risks,” he added.
Schlumberger’s website and those of its main competitors Halliburton and Baker Hughes all prominently feature technologies and processes intended to cut costs, such as dual-fuel diesel-natural gas drilling and pumping engines.
It is just a small example of profound industry shift from an emphasis on increasing production to controlling spending.
Issuing a shocking profit warning on January 17, Royal Dutch Shell ‘s new chief executive pledged to focus on “achieving better capital efficiency and on continuing to strengthen our operational performance and project delivery.”
On Thursday, the company cut its capital budget for 2014, and announced it was suspending its controversial and expensive Arctic drilling programme.
Shell is catching up with peers like BP and Chevron , as well as perennially tight-fisted Exxon, in promising to stick to a tighter spending regime and return more value to shareholders .
The problem is not unique to oil and gas producers. Miners like BHP Billiton, Rio Tinto and Anglo American have all axed projects and pledged to tighten capital discipline after costs spiralled out of control.
The worst over-runs have been on so-called megaprojects – investments costing over $1 billion, sometimes much more. In fact, the bigger project, the worse the cost overruns and delays have tended to be.
Pearl, Shell’s enormous gas to liquids project in Qatar, is now regarded as a success, but was seriously delayed and went wildly over-budget.
Other megaprojects like Chevron’s Gorgon LNG in Australia and the Caspian oil field Kashagan – which is being developed by an industry consortium including ENI, Shell, Total, Exxon and Conoco – have been similarly late and bust their original cost estimates.
It is convenient, but wrong, to blame poor project management for all the days and cost overruns. Some decisions have been flawed, but on projects of this size and complexity, at least some errors are to be expected.
Megaproject managers in 2013 were not, on the whole, worse than in 2003. Unfortunately, the economic and financial environment has become much less forgiving. When projects start to go wrong it has proved much harder to limit the delays and damage to the budget.
By their nature, megaprojects are so big they strain the global construction and engineering supply chain and pool of skilled labour. Megaprojects create their own adverse “weather,” pushing up the cost of specialist labour and materials worldwide.
Attempting to complete even one or two megaprojects with similar characteristics at the same time can strain the global supply chain to the limit. Attempting to complete several simultaneously is a recipe for severe cost escalation and delays. The multi-commodity boom over the last decade created a “perfect storm” for the megaproject industry.
While there is not an exact overlap, massive offshore oil fields like Kashagan, LNG facilities like Gorgon, floating LNG platforms like Prelude (destined for Australia), gas to liquids plants and even simple onshore shale plays like North Dakota’s Bakken, are all competing for the same limited pool of skilled engineers, construction workers and speciality steels.
The result has been a staggering increase in costs and wages. And once a project falls behind, there is no slack in the system to hire extra workers or procure additional or replacement components to get it back on track.
Supply Chain Responds
Rampant inflation and delays have been worst on megaprojects because they require a much higher proportion of very specialist components and the supply chain is least-elastic.
But even simpler projects like shale oil and gas have been plagued by a rapid rise in costs as they stretch the availability of drillers, rigs and pressure pumping equipment, as well as fracking sand, fresh water and guar gum.
Between the end of 2003 and the end of 2013, the number of employees engaged in oil and gas extraction in the United States increased by 70 percent, from 117,000 to 201,000, according to the U.S. Bureau of Labor Statistics.
Soaring demand for specialised workers has produced an entirely predictable surge in wages.
Employees in North Dakota’s oil, gas and pipeline sectors were taking home an average monthly salary of $9,000 in the fourth quarter of 2012, and staff at support firms were making an average of more than $8,000, according to the latest data from the U.S. Census Bureau.
Their colleagues in Texas were doing even better: average salaries in the oil and gas extraction industry were over $15,000 per month, and $11,000 in pipeline transportation.
That made them some of the best-paid employees in the United States. Only financial services employees in New York ($28,000), Connecticut ($25,000), California ($17,000) and a few other states were routinely making more.
Rising wages and other prices were the only means to ration scarce workers and raw materials. But they were also the only way to attract more workers and supplies into the industry.
It takes a long time to train new drillers, petroleum engineers and construction specialists, and give them the experience needed before they can assume positions as experts and team leaders.
Similarly, the expansion of specialist construction facilities and manufacturing firms for items like oil country tubular goods takes years; and companies will only expand or enter the industry if they are convinced the upturn in demand will be durable rather than fleeting.
While the boom in oil and gas prices dates from around 2003 or 2004, the big expansion of exploration and production spending started much later, around 2006 or even 2007, and it has only filtered down to the labour pool and the rest of the supply chain much more slowly.
It is the long delay between an increase in demand for oil and gas, an increase in production and exploration activity, and an expansion of the whole supply chain, which explain the deep cyclicality of the petroleum industry and mining.
Extreme cyclicality is hard-wired into oil, gas and mining markets. Companies like Shell which have tried to ride through the cycle by ignoring short-term price and cost changes to focus on the long term have eventually been compelled by their investors to fall into line.
In the next stage of the cycle, oil and gas prices are set to remain relatively high but are unlikely to rise much further. For exploration and production companies, increasing shareholder value therefore means increasing efficiency and bearing down on costs, including compensation and payments to suppliers and contractors.
For the supply chain and oil-industry workers, capacity and the availability of skilled labour will continue to expand, while demand is set to stabilise or taper off. Major oil companies and miners have already cancelled some projects. Costs, wages and employment will fall, or at least start rising much more slowly.