Friday, 15 December 2017

UKCS operating costs decrease by 14% in 2016, falling for second consecutive year

UKCS operating costs decrease by 14% in 2016, falling for second consecutive year

Operating costs in the UK Continental Shelf dropped by 14% in 2016 with operators securing approximately £1.1 billion reductions in operating expenditure.

The “Analysis of UKCS Operating Costs in 2016” inaugural report, published today by the Oil and Gas Authority, shows that UKCS total operating costs fell for the second consecutive year in 2016, with more than half of UK operators achieving substantial cost reductions in 2016.
Lower costs are expected to be sustained for the next five years, supported by the efforts of those active in the UKCS to maximise economic recovery of its oil and gas resources.
The findings of the report include:

The average Unit Operating Cost fell in 2016, for the second consecutive year, to £12 per barrel of oil equivalent. The pace of cost reduction has slowed down, as Unit Operating Cost fell by 18% in 2016 compared with a 22% annual reduction in 2015. UOC in 2016 was over a third lower than the peak seen in 2014.

Excluding COP and start-up fields, total OPEX for continuing fields is lower and expected to decrease from 2017 onwards. There was high variation in costs between operators in the UKCS, with the highest UOC over 12 times more than the lowest UOC.

There was a strong positive relationship between production efficiency and UOC. The top quartile operators had an average PE of 84%. OPEX reduction in the UKCS was dominated by four operators who realised 60% of the total reduction in 2016. Total OPEX for the UKCS was £7.2 billion in 2016 compared with £8.3 billion the previous year.

The range of operators achieving reductions in operating cost is diverse – the top performing operators include new entrants, national oil companies, oil majors and independents.

Andy Samuel, Chief Executive of the OGA, said: “This report shows the significant progress industry has made towards consolidating the operational cost base in the UKCS. The reduction in Unit Operating Costs, driven by a combination of lower costs, higher efficiencies and higher production volumes, is a positive story for the UKCS through what has been a difficult operating environment in recent years.

“This analysis allows the OGA to identify cost-efficient assets and operators and provide benchmarking metrics which benefit our asset stewardship engagements and help drive further improvements in efficiencies. It is important that operators continue to collaborate, and share lessons learned to sustain cost efficiencies for the future while continuing to maintain high standards of health, safety and environmental management. This will enable the industry to withstand future oil and gas price fluctuations and be more profitable in periods of stability and growth.”

The report includes new information on UOC by field and geographical area, showing how costs are distributed at a micro level. The benchmarking data provided will aid peer group comparison and overall help validate the cost attractiveness of the UKCS.

Det Norske Veritas assumes full ownership of DNV GL

Det Norske Veritas assumes full ownership of DNV GL 

Stiftelsen Det Norske Veritas and Mayfair announce the sale of Mayfair’s 36.5% shares in DNV GL Group AS to DNV Holding AS. The agreement regarding the leading quality assurance and risk management company DNV GL was signed on 8th December 2017.

In 2012, Stiftelsen Det Norske Veritas and Mayfair agreed to build a global quality assurance and risk management leader well positioned to succeed in a rapidly transforming market: Germanischer Lloyd was merged with Det Norske Veritas to create DNV GL. Since the merger, the joint company has successfully adapted its organisation and realised significant synergies. It also strengthened its position in research and innovation and moved forward with its digital transformation.

“We are proud to have been part of building a leading quality assurance and risk management company over the past eleven years. Since we invested in Germanischer Lloyd in 2006, the company has expanded its position, and through the merger with Det Norske Veritas became a world market leader in its industries. The integration is now complete. We thank the Foundation for the collaboration, and we wish DNV GL and its employees continued success,” says Günter Herz of Mayfair.

The Foundation sees assuming full ownership of DNV GL as the best investment to fulfil its purpose of safeguarding life, property and the environment and to realise its strategy. The agreement between the two parties enables the Foundation to make this investment now and to provide continued support to DNV GL going forward.

“The merger between DNV and GL has created significant value, and we are thrilled about the opportunity to invest in DNV GL’s long-term success. 100% of the cash generated will remain within the Group to support further development and positioning of DNV GL globally. We thank Mayfair for its contributions to DNV GL over the past years,” says Leif-Arne Langøy, Chairman of the Board of Directors of Stiftelsen Det Norske Veritas. Leif-Arne Langøy is also Chairman of the Board of Directors of DNV GL.

Group President and CEO of DNV GL Remi Eriksen says that this is a new chapter in DNV GL’s history. “Moving forward with one strong owner with a long-term view and a fully aligned purpose will be good for DNV GL’s customers and employees.”

The DNV GL strategy, ‘Leading towards a digital, agile and efficient future’ remains unchanged. There will also be no changes to the management, organisation, name or branding. DNV GL’s headquarters for the Maritime business area will remain in Hamburg.

£7.5 billion Subsea industry supports 45,000 jobs, despite oil and gas downturn

£7.5 billion Subsea industry supports 45,000 jobs, despite oil  and gas downturn

Subsea UK’s latest business activity review reveals that the industry is generating annual revenues of £7.5 billion, compared to £8.9 billion in 2014.

The body which represents the country’s subsea industry also revealed that, despite the downturn in oil and gas, the subsea sector still supports around 45,000 jobs in the UK. This compares to around 53,000 three years ago.

Exports account for over half of annual revenues, while sales in offshore wind have risen from £770 million in 2014 to £1.3billion today. Sales in renewables are also forecast to increase with around a quarter of large companies anticipating more than 20% growth in this sector.

Underwater technology, systems, engineering and manufacturing have been helping recover more hydrocarbons from the North Sea since the eighties. This expertise honed in the UK has led to the creation of one of the UK’s largest industry sectors which are now involved in defence, oceanology and now offshore wind.

Subsea UK, whose 300 members make up the bulk of the country’s subsea supply chain, conducts regular reviews of the sector. The body’s chief executive, Neil Gordon, said: “It’s clear that, at the time of our last review, the industry was still riding the crest of a wave with revenues of almost £9 billion. The oil price crash and subsequent, prolonged downturn globally which led to the deferral or cancellation of major subsea projects, particularly in deep-water, has had a material impact on revenues and cost around 8,000 jobs.

“However, the subsea sector has appeared to have weathered the storm by increasing exports and diversifying, particularly into offshore wind, where the skills and technology are eminently transferable.”

The largest export markets for the tier 1 subsea companies are Scandinavia, West Africa and the Gulf of Mexico. For SMEs, this picture changes with South East Asia being the primary export market, followed by the Gulf of Mexico and the Middle-east, Scandinavia and West Africa.

Respondents expect Southeast and Central Asia to become more important export markets in the future, along with the Caspian and the Middle-east.

Around 80% of large companies are expecting to grow exports in the next three years, with a third expecting export sales to increase by between 10% and 20% and a fifth by over 20%
Meanwhile, 65% of SMEs believe they will increase exports, with the majority anticipating growth of between 10% and 20% and over a fifth anticipating more than 20% growth in international sales.

Mr Gordon believes that, with global expenditure estimates for subsea vessel operations and hardware over the next five years around $141 billion, the UK can still claim to be a world-leader with around a third of that annualised, global oil and gas market share. Similar figures for the offshore renewables markets globally are not available.

He added: “Since the eighties, Britain has pioneered subsea technology and expertise and become recognised as the global leader in subsea. I’m confident we can still claim to lead the way around the world, but we still need greater recognition of subsea as one of the UK’s best-performing industry sectors to help attract investment and talent and to work collaboratively with the government on diversification, internationalisation, innovation and skills.”

In 2013/14, Subsea UK estimated there were around 800 companies operating in subsea across the country from the north-east of Scotland to the south-east of England. Around 20% of those have gone into liquidation, merged, been acquired or retreated from subsea operations.

Subsea UK’s membership, which was the survey base for this business activity review, makes up around 90% of monetary value of the whole subsea sector.

Subsea UK represents the entire supply chain from small, niche technology companies to the tier 1 contractors such as Subsea 7 and Technip, to the multi-national exploration and production companies.

Thursday, 14 December 2017

SNC-Lavalin and Saudi Aramco sign MoU supporting in-country opportunities

SNC-Lavalin and Saudi Aramco sign MoU supporting in-country opportunities

SNC-Lavalin and Saudi Aramco signed a Memorandum of Understanding signalling SNC-Lavalin’s continued commitment to creating and accelerating opportunities for local workforces in Saudi Arabia. 

The MoU supports Saudi Aramco’s In-Kingdom Total Value Add program, which applies to Saudi Aramco suppliers and drives the localisation of oilfield services and equipment value chain, to strengthen and diversify the Saudi economy; transfer technologies, skill and knowledge through training and development; and create thousands of new jobs for the growing Saudi population.

Neil Bruce, President and CEO of SNC-Lavalin, was present for the signing and said: “SNC-Lavalin has been operating in Saudi Arabia for over 40 years, with a clear commitment to developing local talent and creating opportunities for a local supply chain. In recent years, our presence has grown rapidly, in large part due to our ongoing Saudization efforts and on ground presence.” 

“I am proud to sign the agreement, which reflects our long-term commitment to the region and our valued and trusted relationship with Saudi Aramco, and gives a working platform to accelerate our ongoing efforts to meet and exceed the objectives set within the IKTVA initiative.”

Christian Brown, President of Oil and Gas in SNC-Lavalin added: “Our work for Saudi Aramco is of great importance to us; we have close to 10,000 team members working in the country and putting in place such a framework around IKTVA means we can continue to grow and execute additional scopes on behalf of Saudi Aramco. Our presence, scale and experience in the region mean we are well placed to implement this, and we see strong demand for similar initiatives supporting economies and social development in our active bidding.”

Open Ocean and VORTEX team up to offer a complete online solution for offshore wind development

Open Ocean and VORTEX team up to offer a complete online solution for offshore wind development

Open Ocean, a pioneer in Marine Data Intelligence, launched in 2015 Metocean Analytics, the first online offer for metocean studies on-demand. Today, Open Ocean teams up with Spanish wind expert VORTEX to make Metocean Analytics the most complete online solution for site analysis during offshore project development.

VORTEX is an independent private company which has been providing wind data and analysis to the wind energy sector since 2005. Based on its team of wind and site engineers, atmospheric physicists and computer experts, VORTEX has built a solid international reputation for providing high-quality wind information for any location in the world. VORTEX has designed relevant solution for each phase of a wind project development.

Today, VORTEX wants to reach a wider range of users by teaming up with Open Ocean and offering its services through the Metocean Analytics solution.

Metocean Analytics is already participating in the digitalisation of the offshore energy sector by democratising the access to high-quality data and rigorous statistical analysis. Metocean Analytics simplifies and accelerates the analysis process for offshore development sites providing average metocean conditions, as well as extreme value analysis and operating weather windows.

Open Ocean keeps pushing further this necessary digitalisation process of the sector by offering data from all the best possible sources and complementary services through collaborations with expert partners.

Metocean Analytics is upgraded by including the SERIES and FARM solutions from VORTEX. You can obtain even more accurate site wind analysis through Metocean Analytics with the expert solutions from VORTEX. Offshore wind developers will get the best of both worlds from the combination of high resolution, high-quality wind data with the most advanced online offshore conditions analytics tool available on the market.

VORTEX and Open Ocean, two successful European SMEs, join forces to make offshore wind development easier, simpler and faster than ever.

 “We are very proud of this new partnership launched with VORTEX. Our goal is to bring the best offshore data analytics to all the actors of the offshore energy sector. With VORTEX solutions made available through Metocean Analytics, we add very valuable additional data for analysis directly accessible online. This will accelerate the site analysis process for offshore wind developers. We are keen on continuously providing new solutions to help the offshore renewable energy development” explains Renaud Laborbe, Executive Chairman of Open Ocean.

Trelleborg supplies suite of solutions to world's first floating LNG ship-to-shore system

Trelleborg supplies suite of solutions to world's first floating LNG ship-to-shore system

Trelleborg, the world leader in engineered polymer solutions, has hailed the recent successful test of the Universal Transfer System (UTS) conducted with Connect LNG and Gas Natural Fenosa, as tangible evidence of the new applications that its suite of products for jetty-less LNG transfer can unlock in this challenging field.

The UTS transferred LNG from the Skangas-chartered LNG carrier Coral Energy to the onshore terminal at the Norwegian port of Herøya on 7th October and is now in full commercial operation. A ‘plug and play’ solution, the UTS requires no modifications to the LNG carrier – instead, the platform manoeuvres offshore to meet a vessel, removing the need for costly and environmentally intensive dedicated small/medium-scale LNG vessel harbour and jetty structures.

The system consists of Trelleborg’s Cryoline LNG hoses, attached to a floating platform, which incorporates Trelleborg’s ship-shore link technology and a selection of its marine fender systems.

Vincent Lagarrigue, Director of Trelleborg’s oil and marine operation, commented: “The UTS shows that LNG infrastructure doesn’t need to be bound by the same thinking that underpins transfer solutions for fossil-based energy. Instead, it demonstrates how new ideas are creating the foundations for safe, efficient and convenient infrastructure that can keep pace with the rapid evolution of the LNG market, both as a power source and marine fuel.”

Magnus Eikens, Chief Commercial Officer of Connect LNG, added: “Trelleborg’s expertise in fluid handling and LNG transfer has made it an invaluable partner in this project. The Cryoline LNG hose is an integral part of this solution, thanks to its durability, flexibility, and safety features. What’s more, its ship-shore link technology and marine fender expertise are vital in supporting UTS LNG transfer operations.”

Richard Hepworth, President of Trelleborg’s marine systems operation, said “The UTS is an important forward-thinking development. Our Universal Safety Link (USL) and the Sea Guard and Super Cone fenders are used in many LNG applications already. Integrating them into such an innovative solution as this will help ensure the safe, efficient transfer of LNG into markets and locations that would have previously been considered uneconomic. We are proud to be part of a project that promotes the expansion of the LNG value chain.”

José Miguel Moreno, Director at Gas Natural Fenosa, commented: “The innovation demonstrated by Trelleborg and Connect LNG has delivered a game-changing solution for the LNG industry. We now have a market-ready system that opens a world of possibilities in the LNG small and medium scale business thanks to this collaboration.”

Wednesday, 13 December 2017

Spirit Energy launched following completion of Centrica and Bayerngas Norge exploration and production joint venture

Spirit Energy launched following completion of Centrica and Bayerngas Norge exploration and production joint venture

Spirit Energy, the exploration and production joint venture which combines Centrica plc’s exploration and production business with Bayerngas Norge AS, has begun trading as an independent oil and gas operator.  Completion of the transaction – which was announced on 17th July 2017 – follows receipt of all the required regulatory approvals and Spirit Energy now becomes a leading independent European exploration and production company.

Centrica plc owns 69% of Spirit Energy, with Bayerngas Norge’s former shareholders, led by Stadtwerke München Group (SWM), owning 31%.

This year’s production from the combined portfolios is expected to be around 50 million barrels of oil equivalent (mmboe) from 27 producing fields, and the total for the 2016 2P reserves and 2C resources were 625 mmboe. The company employs more than 700 people in the UK, Norway, Netherlands and Denmark.

The formation of Spirit Energy creates a strong and sustainable European exploration and production business, combining Centrica’s cash-generative and relatively near-term production profile with Bayerngas Norge’s more recently on-stream producing assets and development portfolio. The new company will be a robust, self-financing entity, and will invest in the range £400-£600 million per annum to deliver sustainable medium-term production of 45-55 mmboe. The transaction is expected to generate £100-£150 million net present value of synergies and the joint venture will have the opportunity to strengthen through further consolidation and joint ventures.

For Centrica, the creation of Spirit Energy completes the first phase of its planned portfolio transformation, as it continues to pursue delivery of longer-term returns and growth with a greater focus on its customer-facing businesses within clear strategic frameworks for both Consumer and Business divisions.  The establishment of Spirit Energy also gives its shareholders greater strategic optionality including the potential to participate in further industry consolidation.

Spirit Energy’s focus in 2018 will be to maximise efficiency from its producing assets, as well as progressing several key projects including the developments of Maria and Oda, appraisal drilling at the Fogelberg discovery and drilling several exploration prospects. Spirit Energy will also partner with Wintershall in submitting a plan for development and operation for the Skarfjell development.

Iain Conn, Group Chief Executive of Centrica plc, said: “I’m delighted that the Spirit Energy joint venture has completed, creating a more focused and sustainable European exploration and production business which will contribute to the resilience of Centrica while limiting the Group’s exploration and production participation. With the creation of Spirit Energy, we have now completed the first phase of our portfolio transformation as we reallocate resources towards our customer-facing businesses, leaving Centrica well-positioned to deliver longer-term returns and growth.

“As one of the largest independent exploration and production companies in North-West Europe, Spirit Energy will have the possibility to participate in further consolidation and joint ventures, and creates further optionality for Centrica’s shareholders.”

Florian Bieberbach, Chief Executive of Stadtwerke München Group, said: “Combining our exploration and production business units will enable us to run our joint business more effectively and cost efficiently in the future. Future investments and risks will be spread broader in the more diversified and balanced portfolio. SWM Group is looking forward to the future cooperation with Centrica in the joint company Spirit Energy.”

Chris Cox, Chief Executive of Spirit Energy, said: “Teams across both Centrica’s exploration and production business and Bayerngas Norge have been working hard over the last few months to combine the businesses and today that hard work is reflected in the launch of Spirit Energy.

“Now that both businesses have been brought together, these teams and complementary portfolios set us up to be a strong and sustainable exploration and production business, built for the long-term and committed to Europe.”

Chris Cox will be joined on the Spirit Energy management team by Andrew le Poidevin as Chief Financial Officer and Gerry Harrison as Chief of Staff. Spirit Energy’s board will be made up of Chris Cox, plus four appointees from Centrica and two from Stadtwerke München. It will be chaired by Centrica’s Group Executive Director Mark Hanafin.