Rosneft has pulled out of negotiations to buy Canada-based oil services company Trican Well Services’ Kazakhstan business.
Trican’s 2015 fourth-quarter report released February 24 noted the firm had “discontinued negotiations with Rosneft regarding the sale of the Kazakhstan business.” Debt-laden Trican is anxious to offload its international operations to concentrate on its home market, most recently selling its US fracking unit to Keane Group for US$200 million last month.
Weak market conditions saw Trican’s international division, which includes operations in Kazakhstan, record a C$873,000 (US$646,000) gross loss in the fourth quarter of last year, down from a C$1.178 million (US$871,700) profit in the corresponding 2014 period.
Last week, Trican confirmed receipts from the Keane deal would be used to pay down its considerable debt, which stood at round US$235 million after the transaction. Rosneft entered the picture in August 2015, when it bought Trican’s Russian pumping services arm for C$197 million (US$145.3 million).
Rosneft expected the purchase to make its oil recovery, downhole and well cementing operations more efficient. The oil producer may have concluded that Trican Kazakhstan would add little to the expertise already gained from the Russian division, especially given the downturn that has struck Kazakhstan’s industry in recent years. Kazakhstan’s ageing fields are steadily becoming less economic with the collapse in crude prices. National oil output fell by 1.2% in 2014 and 1.6% last year. On January 15, Kazakh Minister of Energy Vladimir Shkolnik told Novosti- Kazakhstan he expected output to drop by 3.1% this year to 77 million tonnes (1.55 million barrels per day).
Confidence in the industry has eroded with the collapse of the tenge, which has lost half of its value against the US dollar since Kazakhstan’s central bank decided to move to a free float in August 2015. Astana is counting on the Kashagan project, the largest oilfield in the Caspian Sea, to revive industry fortunes. Kashagan was launched in 2013 but closed two weeks later when a major pipeline leak forced operators North Caspian Operating Co. (NCOC) to overhaul the entire project. The Kazakh government has said the field will be relaunched in December this year, although NewsBase believes this is unlikely.
Edited by Joseph Murphy
Lloyd’s Register releases drone guidance
New guidance approach supports industry in the safe and effective deployment of next generation drone and unmanned aircraft systems (UAS) technology that can significantly improve productivity gains through reducing risk exposure, survey times and in-service inspection costs of offshore, marine and onshore infrastructure.
‘Eyes in the sky’ technology opens the way to rapid, safe and repeatable inspections that will lead to long-term benefits for energy and marine operators seeking high levels of integrity, compliance and commercial advantage.
Lloyd’s Register’s first phase of its guidance notes for drones and Unmanned Aircraft Systems (UAS) is launched today, giving operators in the energy and marine industries confidence in using UAS for offshore, marine and onshore surveys and in-service inspections.
“We are developing these guidance notes to provide a consistent approach to risk in UAS and drone deployment, offering practical operational considerations relating to regulations, personnel, quality, safety, hardware, software and operations,” says Lloyd’s Register’s Chief Technology Officer, Nial McCollam.
McCollam highlights: “Technology and innovation in the area of digital data, sensing technologies, unmanned systems and robotics are here to stay. We see an exciting and important journey ahead, and anticipate our efforts to increase and continue.”
UAS, commonly known as drones, provide an effective alternative to traditional methods of in-service operational assessment and survey, especially structures and assets at significant heights, difficult to access locations and hazardous environments.
Major operators such as Shell and Maersk Drilling are among early adopters of innovative technology with safety and quality as a priority.
The guidance notes from Lloyd’s Register will be updated regularly to provide industry with the latest practical information on issues such as how best to use UAS for inspection in confined spaces which is particularly relevant in energy and marine applications where Class surveys are needed, and which also improves safety for human life.
Topaz Energy wins new Caspian marine contracts from BP
UAE-BASED Topaz Energy and Marine said last week that it had secured contracts from an arm of BP for the use of support vessels in the Azeri section of the Caspian Sea.
In a statement, Topaz said that the contracts covered 14 offshore support vessels that BP Exploration (Caspian Sea) has been using at the Azeri-Chirag-Guneshli (ACG) and Shah Deniz fields, both of which lie offshore Azerbaijan. They provide for the BP affiliate to make use of the ships for five years, with the option to extend for two more one-year periods.
“The agreement extends currently running contracts for the 14 vessels until 2023, including all options,” the statement said. It noted that the deal covered emergency response and recovery vessels as well as large anchor-handlers and platform supply vessels.
“These contracts bring Topaz’s global revenue backlog to nearly US$1.4 billion and [demonstrate] the company’s competitiveness in the Caspian market,” it added. To date, it said, Topaz has supplied a total of 21 vessels for use in the Azeri offshore zone. The company has been active in the region for several decades.
Topaz did not reveal the value of the deal with BP Exploration (Caspian Sea), but Rene Kofod- Olsen, Topaz’s CEO, expressed satisfaction with the new contracts. “We are humbled by BP’s continued trust in our capabilities and look forward to repaying that confidence by consistent worldclass service,” he said. “Our ability to secure long term contracts with a reputed oil major such as BP reflects the value and quality of Topaz’s operations in the Caspian and globally.”
Kofod-Olsen also stated that the company was optimistic about expanding its operations in the Caspian Sea region. “Our exemplary operational and safety track record and our commitment to Azerbaijan allow us to build our position in the face of a challenging market,” he said. “The agreement provides a long-term platform from which to build further scale in the broader Caspian.”
Edited by Joseph Murphy
PetroChina establishes first gas pipeline joint venture
Petrochina, the country’s largest owner and operator of gas pipelines, has set up a joint venture with Chongqing Gas, ushering in China’s energy infrastructure ownership reform.
PetroChina will invest 178.5 million yuan (US$27.4 million) in the new 51:49 venture, while Chongqing Gas will stump up 171.5 million yuan (US$26.3 million). The joint venture, the first of its kind in China, will be responsible for building and operating pipelines in the southwestern city of Chongqing. It will also be tasked with opening up its network to third-party access.
PetroChina owns and operates about 77,000 km of onshore pipelines, 80% of the country’s total, most of which are gas pipelines.
Spinning off the state major’s pipeline assets from its core oil and gas exploration and development business comes under the company’s ongoing reforms.
In 2015, PetroChina decided to merge three gas divisions – Eastern Pipeline, Northwest United Pipeline and PetroChina United Pipelines – into a single special-purpose company. PetroChina will hold a controlling 72.26% stake in the new corporate vehicle, PetroChina Pipelines, with 27.74% held by New China Life, Taikang Life, Guolian Fund, China’s National Social Security Fund and Youngor Group.
Building pipelines in Chongqing is part of the local government’s strategy to increase the municipality’s gas production to 20 billion cubic metres by 2020. The government intends to spend up to 4.7 billion yuan (US$721.2 million) on constructing 11 shale gas pipelines in the city by 2020. The pipeline system will have a total length of 1,169 km with annual throughput capacity of 19.4 bcm.
The Ministry of Land and Resources (MLR) pegs Chongqing’s shale gas reserves at 2 trillion cubic metres.
Edited by Andrew Kemp
MCE wins riser modules contract
Australia’s Matrix Composites & Engineering (MCE) revealed last week that it had won a contract to supply drilling riser buoyancy modules for a rig under construction in Dalian, China’s northernmost warm-water port.
Under the contract, MCE is slated to deliver the modules to a shipyard for installation in a newbuild semi-submersible rig. The rig is now under construction at a shipyard in Dalian owned by a major original equipment manufacturer (OEM) based in China. It is due to be completed and delivered in the first half of 2017.
In its statement, the company did not identify the OEM or name the end-user of the rig. It did say, though, that the deal was worth around US$4.4 million.
Meanwhile, the Australian company’s CEO, Aaron Begley, touted MCE’s success in striking an agreement with a new customer. “I am delighted we have been able to secure this contract to supply a new customer, which is also Matrix’s third major order ultimately destined for a Chinese shipyard,” he said. “Our ability to win new clients and continue growing market share in the depressed oil price environment demonstrates our reputation as the clear leader for drilling riser buoyancy products.”
Begley’s remark highlights one of the difficulties facing the Chinese shipbuilding industry. When oil prices were still high, both state-owned and private shipyards began turning out rigs on a speculative basis, without first signing sales and purchase contracts. They did so on the assumption that prices would remain high enough to support demand for drilling equipment.
After oil prices began collapsing in mid-2014, however, interest in newbuilds among potential buyers diminished. As a result, a number of shipyards now have a surplus and have had to resort to cutting prices to attract customers.
Edited by Andrew Kemp
Shanxi targets shale gas opportunities
Northern China’s Shanxi Province, the country’s top coal producer, wants to push ahead with shale gas exploration as it comes under pressure to curb pollution levels.
Shanxi Coal Geological Bureau, in partnership with two local energy firms, has recently wrapped up a study of the area begun in 2013, an official at the provincial land and resources department told Xinhua Finance Agency last week.
It concluded that the province housed an estimated 4.44 trillion cubic metres of shale gas. If accurate, this would equate to 14% of China’s overall technically recoverable reserves of 31.5 bcm, as per the US Energy Information Administration’s (EIA) most recent estimate.
The survey showed that the Ordos and Qinshui Basins, the former already a major production centre for conventional gas and coal-bed methane (CBM), were also rich in shale deposits. Further research will be used to identify sites for commercial exploration, the official said.
Shanxi, which accounts for more than a fourth of China’s total coal supply, is looking at ways it can diversify its economy in the face of low commodity prices.
Many of its mines have become lossmaking, prompting the central government to order the province to slash production. Yields fell to 944 million tonnes in 2015 from 976 million tonnes in 2014.
As part of its clamp-down on pollution levels, Beijing is also trying to wean the country off coal and encourage the use of cleaner fuels, especially gas.
Despite having significant shale gas reserves, China’s progress in developing these resources has been slow, as a result of factors such as water shortages, geological complexities and a poorly equipped service industry.
In December 2015, Bloomberg reported that China would miss its output target of 6.5 bcm for 2015 by more than 1 bcm. Beijing currently forecasts shale gas production to hit 30 bcm per year, after halving an earlier estimate.
Edited by Anna Kachkova,
CNPC to spin off oilfield services division
China National Petroleum Corp. (CNPC) could shed part of its oilfield services arm as part of the company’s efforts to shore up its balance sheet and boost efficiency.
At the IHS CERAWeek conference in Houston, Bloomberg quoted CNPC chairman Wang Yilin as saying that his company was mulling an initial public offering (IPO) for its service segment. The timing and size of the offering was not specified, however.
As part of major economic reforms, Beijing is trying to loosen the grip of its oil giants on the country’s energy sector by ordering them to sell off assets.
In December 2015, CNPC subsidiary PetroChina unloaded a 50% stake in the Trans-Asia Gas Pipeline (TAGP) network in a US$2.4 billion move to bolster year-end profits. In 2014, rival Sinopec agreed to shed part of its sales-and-marketing unit.
The government is reportedly looking to strip both companies of their domestic pipeline networks.
CNPC is the only one of China’s big Three Oil firms to still retain full control over its oilfield services business. China National Offshore Oil Corp. (CNOOC) floated shares in China Oilfield Services Ltd (COSL) in 2002 while Sinopec Oilfield Service was sold off in 2014. China’s efforts to allow the market to play a greater role in the industry have had mixed results. The sale of 30% of Sinopec’s retail business in 2014 raised 107 billion yuan (US$16.4 billion). But many investors who took part in the IPO were government-backed funds.
Just before it was sold off, Sinopec Oilfield Services became entangled in Beijing’s anti-corruption probe, which led to its general manager, Xue Wandong, being detained.
In the end, Sinopec decided to sell the company to its Hong Kong-listed polyester maker, Sinopec Yizheng Chemical Fibre. This ensured the latter was not at risk of being delisted under exchange regulations after posting several annual losses.
Instead of a private investor, the stake in TAGP was passed to another state-run entity, China Reform Holdings (CRH), which Beijing established five years ago to facilitate the restructuring and consolidation of state-owned enterprises.
Attracting investor interest in CNPC’s oilfield services division could be a tall order. The sector has been hardest hit by the collapse in oil prices, as producers have responded by curbing drilling plans.The unit posted 110 billion yuan (US$16.8 billion) in revenues for 2014, according to Bloomberg. This compares with 94 billion yuan (US$14.3 billion) and 33 billion yuan (US$5.04 billion) in sales made by Sinopec Oilfield Service sand COSL respectively.
Edited by Andrew Kemp
Harkand to support start-up work for Maersk Oil
Harkand has been awarded a multi-million pound contract with Maersk Oil North Sea UK Ltd to deliver subsea support services to the operator including a commissioning support campaign for the Flyndre development located in the south-eastern part of the Central Graben Basin in the North Sea.
The Aberdeen office of the global inspection, repair and maintenance (IRM) company will oversee the mobilisation of its sister dive support vessels the Harkand Atlantis and Harkand Da Vinci. The Flyndre campaign will see personnel carrying out choke valve replacement work as well as delivering umbilical tie-in operations.
Exmar drops Caribbean FLNG plans
EXMAR has dropped its plans to send its Caribbean FLNG vessel, which is under construction in China, to Colombia, as market conditions mean the project is no longer economic.
In March 2012, Exmar and Pacific Exploration and Production (PEP) agreed to a 15-year deal to deploy the floating LNG (FLNG) vessel to Colombia. The two parties have agreed to a settlement whereby PEP will make payments to Exmar in monthly instalments until June 2017.
Exmar intends to redeploy the vessel to other markets, particularly to companies working “in West Africa and the Middle East”, according to the company’s CFO, Miguel de Potter.
De Potter told LNG World Shipping that Caribbean FLNG was “96 to 97 percent completed and will be commissioned one month from now”. Interest is now focused on Equatorial Guinea and Iran. The vessel has a liquefaction capacity of approximately 500,000 tonnes per year of LNG.
By virtue of the settlement agreement, as of March 3, 2016, any and all obligations in connection with the tolling agreement have been terminated.
The cancellation of the project appears to have been driven by PEP’s overall financial difficulties. Suffering in a weak market, PEP had made multiple announcements throughout the end of 2015 and into 2016 that it was “actively working” with its noteholders, lenders, and legal and financial advisors to restructure and extend repayments.
The FLNG market has also deteriorated. Caribbean LNG is just one of a number of projects that have fallen through in recent months as a result of the commodity price downturn. In February, Malaysia’s Petronas announced it would defer the delivery of its planned PFLNG 2 unit as part of a US$12 billion-plus budget cut.
Oslo-based Hoegh LNG Holdings also announced in February that it was putting its FLNG business on hold, allocating its resources and capital to its floating storage and regasification unit (FSRU) work, owing to the oversupplied LNG market.
Edited by Ryan Stevenson
Shell targets 2017 for FID on Philippines FSRU
Shell Philippines is finalising the technical aspects of its front-end engineering and design (FEED) study on the construction of a planned LNG terminal in the country. A final investment decision (FID) may be taken in 2017.
Shell Philippines Exploration’ managing director, Sebastian Quinones, said Batangas Bay, on the main island of Luzon, near Manila, could be the site of a floating storage regasification unit (FSRU). The official said the company needed to iron out details of the FEED before reaching an FID.
Quinones said investors and company shareholders would only approve the project if there was a “good and viable plus-minus 10 percent estimate” on the total project cost. “Probably, this would be hundreds and hundreds of millions again,” he said. “I don’t think [the final decision] will be this year. It could be next year.”
The Philippine Star said supply from the Malampaya deepwater gas-to-power project was projected to run out by 2024, building an LNG import terminal would help overcome any shortfall. Quinones said that once the FID was issued, it would take less than three years to install the FSRU terminal.
The Malampaya field supplies three gas-fired power plants on Luzon, the country’s most populous island, providing 40-50% of the island’s power generation needs.
“Energy projects like this take a long time. Remember, Malampaya took a decade ... that’s why we are already preparing for LNG as a fuel source to replace Malampaya,” Quinones said. “Hopefully, we can find something in between but now it’s too late to be able to develop something that can replace Malampaya. So, to bridge the gap would require LNG imports,” he added.
The Philippines’ first LNG regasification facility – the US$800 million Energy World terminal – is being completed in Quezon Province, on Luzon. It is scheduled to come on stream later this year or next year, which is at least two years behind schedule.
Edited by Andrew Kemp
Fraunhofer-IOSB tests AUV at PLOCAN test site
In March the Fraunhofer Institute of Optronics, System Technologies and Image Exploitation (IOSB) in Germany tested the DeDaVe, a new autonomous underwater vehicle (AUV), at the PLOCAN Test Site.
The prototype AUV, built with German technology, is able to dive and operate completely autonomously down to 6,000 metres depth. It is also capable of carrying a diverse payload of sensors and measurement instruments suitable for tackling various types of mission in the fields of oceanography, hydrography, geophysics, and search and location, among other important applications.
A multidisciplinary team of technicians came from Germany to carry out the work at PLOCAN's land-based facilities and in the PLOCAN Test Site off the coast of Telde.
The main objective of the trials was to validate the features and capabilities of the new device in deep water, in preparation for its commercialisation in the near future. Fraunhofer-IOSB is a world-renowned centre for the research and development of innovative concepts, methods and systems for industry, small and medium-sized businesses, and public-sector clients.
IWCF launches first free training for basic well control awareness
The International Well Control Forum has launched a global online training course which will be free to everyone in the industry to increase knowledge around what can cause a well blow-out and potential oil spill incident.
The interactive e-learning has been developed in response to the International Association of Oil & Gas Producers (IOGP) recommendations following the Macondo well blow-out which stated an introductory level 1 awareness training should be introduced. IWCF is the first organisation to achieve this and is offering the course free of charge through its website, supporting the organisation’s aim to increase competency and change behaviour in this safety-critical operation.
IWCF already offers the higher levels, 2, 3 and 4, which are targeted specifically at those involved with well and drilling operations, but plans for the new level 1 training to be accessible by everyone with an interest in the industry.
David Price, CEO of IWCF said: “It is important to us, particularly in the current climate within the industry, to give something back and by making this training readily available we believe that it will help to increase understanding of how well control events can occur and their consequences and prevention.
“The training is open to everyone, it is specifically aimed at those in the industry with a secondary involvement in well operations but students considering a career in oil and gas or anyone else with an interest in the industry will also find it insightful. Ultimately, we want to see an increase in well competency which will improve offshore safety.”
BGS scientists find new technique to lower fracking risk
BRITISH Geological Survey (BGS) scientists last week unveiled cutting-edge research that could mitigate the risk of earthquakes and borehole damage caused by hydraulic fracturing. This process of drilling down into the earth to recover gas and oil from shale rock may have the support of industry, but it has become a highly controversial subject in the UK.
The fracking-generated tremors near Blackpool in 2011 intensified the controversy about this drilling process. Because of these tremors, the UK government commissioned an expert panel from the Royal Society and Royal Academy of Engineering to study the safety of fracking in the UK.
BGS was selected to examine the stress data for the UK, after the panel recommended that a review be carried out. After it completely overhauled the existing data for the UK, BGS suggested that borehole imaging tools be used to log new boreholes drilled for shale gas. This process would help increase understanding of in-situ stress.
Mapping of the UK in-situ stress orientation was difficult to do more than 20 years ago because the data and state-of-the-art technology were limited at the time. Over the period, the coal and oil industries started gathering borehole imaging data that scanned the entire inner circumference of the borehole. This method led to the identification of zones of the borehole wall that are widened by in-situ stress (borehole breakouts).
The new data permit clearer images of breakouts. This in turn allows for interpretation of much smaller features, which enable breakouts to be identified in many more wells under UK stress conditions, the study suggested.
Examining data from more than 90 of these boreholes from the coal and oil industries, the BGS team identified features in 37 of these that run from Peak District to the Scottish border. The scientists compared the new data with the 1990s data, decreasing the uncertainty of borehole breakouts.
This new research can support assessments of in-situ stress orientation, which will give regulators
examining well safety access to the best data to make properly informed decisions about borehole integrity, the BGS said.
Commenting on the results of the study, BGS Director of Science and Technology Mike Stephenson said: “This research is crucial to the regulators and the oil and gas industry, as it is an easily applicable technique that can highlight parts of boreholes that may contain evidence of stress that is already present in rocks before fracking.”