Frontier Energy Summer 2019 by Frontier Energy

OIL, GAS & SHIPPING IN THE ARCTIC AND ICE-AFFECTED REGIONS www.frontierenergy.info SUMMER 2019

GREENLAND Who owns the Arctic?

RUSSIA Full steam ahead for Arctic LNG 2

ARCTIC COMMUNICATIONS Challenges for offshore vessels

NORWAY Sputnik soars for Equinor

ATLANTIC CANADA Oil spill response

ICEBREAKERS

ALASKA Oil licensing in the ANWR

High demand for new vessels + SAFETY • SHIPPING • TECHNOLOGY • COMMS • LNG • BROADBAND

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CONTENTS

11 10

06 Summer 2019 27/08/2019 11:48 Page 1

IN THIS ISSUE

OIL, GAS & SHIPPING IN THE ARCTIC AND ICE-AFFECTED REGIONS www.frontierenergy.info SUMMER 2019

GREENLAND Who owns the Arctic?

RUSSIA Full steam ahead for Arctic LNG 2

ARCTIC COMMUNICATIONS Challenges for offshore vessels

ICEBREAKERS

NORWAY ALASKA Oil licensing in the ANWR

High demand for new vessels + SAFETY • SHIPPING • TECHNOLOGY • COMMS • LNG • BROADBAND

T EN GS EV TIN LIS

Features

Regulars

WHO OWNS THE ARCTIC? Greenland is not for sale: that was the message that greeted US

04 NEWS New bid round for eastern Canada; Wärtsilä to support Sovcomﬂot ﬂeet; Arctic LNG 2 contracts awarded; Rosatom secures VTB funds help; Northern Sea Route transit record

President Donald Trump after he mooted the idea of buying the island. Yet the story underlines a deepening interest in the Arctic region generally, as its undoubted economic and strategic appeal sharpens territorial claims

Sputnik soars for Equinor

ATLANTIC CANADA Oil spill response

FE 06

FE 08

NORWAY Apart from the recent Sputnik discovery announced by Equinor in August, drillers have been left scratching their heads for the most part in the Barents Sea in the wake of a series of dry wells. Yet Norway remains keen to test the area further with more blocks up for grabs

FE On the cover The Audax under way. © Red Box Energy Services

12 ARCTIC BROADBAND US tech giant Northrup Grumman is to deliver space-based broadband satellites to the north polar region for Space Norway, with Elon Musk’s SpaceX to provide lift-off capabilities via the Falcon 9 rocket FE 14

SATELLITE COMMUNICATIONS How satellite network and service providers are getting to grips with the challenges faced by the offshore and maritime industries in the extreme Arctic environment. By Dan Rooney, EMEA Director Maritime Line of Business, Iridium

FE 16

ATLANTIC CANADA Canada’s frontier Atlantic region holds great potential for drillers, especially with the release of new blocks for investors this year, but there are still of lessons to be learned in the wake of the White Rose oil spill and new concerns over the Hibernia ﬁeld

FE 18

RUSSIA With the equity line-up for the Arctic LNG 2 mega project now seemingly complete, and with billion-dollar contracts being awarded to key engineering partners, all eyes turn to Novatek ahead of a ﬁnal investment decision this year

FE 22

ALASKA A proposed lease sale in Alaska’s Arctic National Wildlife Refuge has stoked plenty

28 EVENTS Frontier Energy’s comprehensive listing of essential trade events and conferences for the Arctic oil and gas industry and shipping sector

of controversy but ofﬁcials seem in determined mood to proceed with opening up the state for more oil investment FE 26

ICEBREAKERS The great icebreaker race gathers momentum: As economic interests in the Arctic region continue to grow, and as the icy waters of the region become less icy and more navigable, there is an unprecedented appetite for new icebreaker vessels

www.frontierenergy.info SUMMER 2019 1

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EDITOR’S LETTER

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“The US’ acquisition of Alaska from Russia in 1867 now seems a shrewd bit of business – how Moscow would dearly love to get its hands back on that piece of real estate...”

www.frontierenergy.info Editor Martin Clark editor@frontierenergy.info Canadian Correspondent Andrew Safer Publisher Stephen Habermel publisher@frontierenergy.info Design & Layout Nick Blaxill © 2019 All material strictly copyright, all rights to editorial content are reserved. Reproduction without permission from the publisher is prohibited. The views expressed in Frontier Energy do not always represent those of the publishers. Every care is taken in compiling the contents, but the publishers assume no responsibility for any damage, loss. The publisher, Renaissance Media, assumes no responsibility, or liability for unsolicited material, nor responsibility for the content of any advertisement, particularly infringements of copyrights, trademarks, intellectual property rights and patents, nor liability for misrepresentations, false or misleading statements and illustrations. These are the sole responsibility of the advertiser. Printed in the UK. ISSN 2047-3702 Published by Renaissance Media Ltd, c/o Maynard Heady LLP, Matrix House, 12-16 Lionel Road, Canvey Island, Essex SS8 9DE. Registered in England & Wales. Company number 5850675.

FRAM* Deal-making in the Arctic

espite the frontier nature of working in the Arctic and all the complexities and threats that brings – extreme cold, harsh weather environments, remoteness, higher costs – one thing that holds true is that there is unprecedented interest in

the region. Mega projects are taking shape in Russia’s far north, while Norway is actively testing its frontier Barents Sea territory with the drill bit. In Canada and Alaska too, the energy industry is keenly monitoring new opportunities and openings, alongside shifting political policy, environmental science and a generally heightened public awareness in the polar regions. Of course, it is not just the oil and gas industry that has been alerted to this opportunity. Other areas that are showing strong interest in the emerging Arctic region include mining, tourism and shipping, as melting ice opens up navigation to once-impassable areas. Little wonder then that this has started to have an influence on the geopolitics of the region, with the main Arctic players keen to assert their claims to the area. Canada became the latest Arctic state to make a submission to the United Nations to secure its territory in the frozen north, recently. Then there is President Donald Trump’s attempt to negotiate a deal with Denmark for control of Greenland. For now, at least, it seems that there is no deal to be done – Trump even cancelled a state visit to Copenhagen in the wake of the rebuff. But the very idea clearly highlights how the Arctic is becoming front of stage, not only economically and environmentally, but politically as well. The US’ acquisition of Alaska from Russia in 1867 now seems a shrewd bit of business – how Moscow would dearly love to get its hands back on that piece of real estate. And with a deal-making president like Trump in the White House, it seems any US proposals will stay on the table, or at least close by, should Denmark or Greenland ever wish to reconsider. The island, a semi-autonomous territory of Denmark, is thought to be home to large amounts of oil and gas (though much of this remains unproven) as well as vast quantities of rare earth minerals. Again, it is this potential that is coveted, in addition to the clear strategic benefits of gaining access to a giant new territory in the far north, at a time when Russia is clearly raising its own Arctic profile and opening up the Northern Sea Route. Inside this issue, we aim to draw attention to some of the potential and possibilities within this emerging Arctic landscape – from oil and gas, through to shipping, mining and even floating nuclear power stations, Russia’s latest enterprise – as well as documenting the very real complexities and challenges of opening up this tough new region, and the changing political realities. To repeat: notwithstanding all of the challenges, complexities and uncertainties, there has never been a greater interest in the Arctic, among all sides and across all industries. How corporations, groups and even nations choose to pursue this opportunity is the next big unanswered question. Fram is not only the Norwegian word for ‘Forward’, it is also the name of the one of the first ice-strengthened and most famous polar exploration vessels of the late 1800s and early twentieth century. It was captained by Norwegian explorer, Fridtjof Nansen, a Norwegian explorer, scientist, diplomat, humanitarian and Nobel Peace Prize laureate. Sharing his polar travel experiences with fellow adventurers and scientists, his technology innovations in equipment and clothing influenced a generation of subsequent Arctic and Antarctic expeditions. The word encapsulates what we aim to bring you with the magazine – a forward looking guide to the future of oil, gas and shipping activities in the Arctic and other ice-affected regions while keeping environmental protection and safety at the heart of operations.

www.frontierenergy.info SUMMER 2019 3

NEWS

Rosatom secures VTB funds help Nuclear submarine builder Rosatom has unveiled a partnership with VTB, one of Russia’s leading banks, to help ﬁnance its work in the Arctic. It covers assistance on key programmes for boosting navigation and increasing freight trafﬁc on the Northern Sea Route (NSR) and the “provision of a broad range of highquality banking services to Arctic projects”. The agreement increases the range of funding options available to the company, noted Rosatom’s deputy director general and director

of the NSR directorate, Vyacheslav Ruksha. “This year, for the ﬁrst time, the contract for building two nuclear icebreakers of Project 22220 under the mixed ﬁnancing scheme will be signed. A part of the amount will be allocated from the federal budget and the rest of it will be Rosatom’s own funds and borrowed resources from the banks. “The cooperation with VTB opens extensive prospects for the development of the Northern Sea Route and Arctic territories.”

IN NUMBERS

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146

vessels in the Sovcomflot fleet

65m barrels of potential oil resources in Equinor’s Sputnik discovery

220,000 bpd production from the Hibernia platform

New bid round opens for eastern Canada The Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) has opened up new bid areas in the south-eastern Newfoundland and Jeanne d’Arc regions. Deadline for submissions is November 6, 2019. In a statement, C-NLOPB said the sole criterion for winning bids will be the total exploration spend, with a minimum of $10 million in work commitments. There are a total of nine areas up for grabs in the south-eastern Newfoundland region (NL19-CFB01), covering 2,270,472 hectares, plus a further four areas, a total of 464,877 hectares, in the Jeanne d’Arc region (NL19-CFB02).

4 SUMMER 2019 www.frontierenergy.info

The new bid round will be a keen test of appetite for a region with proven oil and gas potential but one that is under increased scrutiny in the wake of first the White Rose spill, and, more recently, at the Hibernia field. With White Rose now resuming full production, ExxonMobil confirmed in August that Hibernia output is shut down at the 222,000 barrel per day (bpd) field after a temporary power cut led to oil and water leaking into the ocean. Exxon estimated around 14 barrels of oil leaked, but it marked the second spill in a month from the platform, just days after Hibernia resumed production following a mid-July leak. The platform has been producing oil since 1997 and sits 315 km east of St John’s, Newfoundland and Labrador.

6.6m

$7.6 billion TechnipFMC contract for Arctic LNG 2 project

tons per annum capacity of each LNG train at Arctic LNG 2

16 days journey time from Yamal LNG port of Sabetta to the destination port of Tianjin in China via the Northern Sea Route

2021 Russia to commence chair of Arctic Council for two-year period

$250m cost of new Canadian High Arctic Research Station in Cambridge Bay, Nunavut.

Sources: Equinor, Sovcomflot, Novatek, Canadian government, TechnipFMC

NEWS

Novatek sets Northern Sea Route transit record Russian energy giant Novatak is breaking records shipping its liqueﬁed natural gas (LNG) across the Northern Sea Route (NSR). It announced at the end of July that the Arc7 ice-class LNG tanker Vladimir Rusanov completed the NSR passage eastwards to deliver a cargo from the Yamal LNG port of Sabetta to the port of Tianjin in China. It said the vessel transited the ice-covered part of the route in only six days, setting a new record for independent passage via the NSR without ice-breaking support and with cargo on board. The net voyage time from Sabetta to the destination port was completed

in a record 16 days, it added — less than half the time required to transport a cargo of LNG along the traditional westbound route via the Suez Canal and Strait of Malacca. “For the second year in a row, our Arc7 ice-class LNG tankers were once again the first ships to open the summer navigation period via the Northern Sea Route,” said Lev Feodosyev, first deputy chairman of the Novatek management board. “These achievements were made possible due to the accumulated ice navigation experience and the outstanding ice performance characteristics of the LNG tanker fleet designed specifically for our Yamal LNG project.”

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Contracts are being dished out to build Russia’s Arctic LNG 2 project ahead of a ﬁnal investment decision this year. TechnipFMC was awarded a $7.6 billion engineering, procurement and construction (EPC) by project leader Novatek in July Arctic LNG 2 consist of three liqueﬁed natural gas (LNG) trains, each with a capacity of 6.6 Mtpa, to be installed on three gravitybased structure (GBS) platforms. The LNG trains and associated topsides will be manufactured in Asian and Russian yards. “We are leveraging our successful track record on the Yamal LNG project and notably the modular fabrication scheme,” said Nello Uccelletti, president onshore/offshore at TechnipFMC.

The Arctic LNG 2 project groups Russia’s Novatkek (60%) with partners Total (10%), CNPC (10%), CNOOC (10%) and the Japan Arctic LNG consortium (10%), following conﬁrmation of the equity line up this summer. Saipem also announced in August that it had reached an agreement with Technip to participate in the project with the design and construction of the three LNG trains. It is already engaged in the design and build of the GBS. Its share of the project is estimated to be worth approximately €2.2 billion. The new LNG trains are to be built in the Tazovsky district in the autonomous administrative region of Yamal – Nenets, in the western part of the Gydan peninsula.

Wärtsilä to support Sovcomflot fleet Wärtsilä has been recruited by Sovcomflot, Russia’s largest shipping company, to increase the safety and efficiency of its fleet of Arctic shuttle tankers. The Finnish tech firm will provide its ‘fleet operations’ solution, developed out of a collaboration between Sovcomflot and Transas, a Wärtsilä company. It provides an integrated infrastructure that combines bridge systems, cloud data management, data services, decision support tools, and access to real-time information. “It enables smart situational

awareness, automated voyage planning and optimisation, digital (paper-less) navigation, and remote technical support — all of which add considerable value to fleet operations,” said Vladimir Ponomarev of Wärtsilä Marine. The Sovcomflot shuttle tankers operate year-round in Russian Arctic waters, with a fleet operations centre in St Petersburg. The project will include the upgrade of the navigation systems on board the company’s vessels operating in Arctic waters to ensure real-time ship-to-shore data exchange.

www.frontierenergy.info SUMMER 2019 5

Sovcomflot

Russia’s Arctic LNG 2 contracts awarded

Boosting ship safety in the Arctic

GREENLAND

WHO OWNS THE ARCTIC? ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Greenland is not for sale: that was the message that greeted US President Donald Trump after he mooted the idea of buying the island. Yet the story underlines a deepening interest in the Arctic region generally, as its undoubted economic and strategic appeal sharpens any territorial claims

6 SUMMER 2019 www.frontierenergy.info

he media scoffed with incredulity when it was suggested in August that US President Donald Trump had asked whether Greenland was for sale. The vast, icy island territory in the Arctic – which is now attracting a smattering of interest from frontier oil explorers – is currently a semi-autonomous territory of Denmark. TV media showed locals laughing at the idea, while the Danish PM apparently dismissed the notion as “absurd”. Again, the anti-Trump media went into overdrive, claiming that this real estate ‘deal of a lifetime’ revealed much about the US president’s world view and tycoon mindset. But is it really such a strange idea? A land mass a quarter the size of the US, Greenland has been something of an unassuming partner as interest in the Arctic region has soared in recent times.

While there has been little evident in the way of ﬁrm hydrocarbons in the ground to report thus far, the virgin territory’s sheer size holds immense wonder not just for oil drillers, but for many other industries too. Greenland is rich in mineral deposits and is thought to possess some of the largest deposits of rare-earth metals. That includes the likes of neodymium, praseodymium, dysprosium and terbium, along with uranium and the byproducts of zinc. Trump’s multibillion-dollar takeover plan would effectively lock in these assets, at a time when China – which is itself showing keen interest in the Arctic – is hungry for dominance of the world’s industrial metals. The Greenland idea also makes sense in other sectors keen to unlock potential beneﬁts from a fast-changing Arctic landscape, such as shipping, with access via the northern polar

GREENLAND

President Trump is keen on Greenland

Greenland holds immense minerals potential

regions opening up as the ice melts. Similarly, this would likewise provide a US counter to block Russia’s rising interest in the Arctic. And, of course, there is a famous precedent when, in 1867, then President Andrew Johnson purchased Alaska from Russia. How President Vladimir Putin would dearly love to reclaim that strategic piece of territory now. Indeed, this territorial deal-making played a role in the very creation of the US in its early formation. Thomas Jefferson secured his own place in the presidential hall of fame after landing Louisiana from the French in 1803.

Economic activity Greenland has, in fact, been coveted before by US officials, with reported attempts to purchase the territory shortly after World War Two and again in the Cold War era. Its economic potential was reflected in a social media post by Greenland’s Ministry of Foreign Affairs, widely seen as a rebuff to Trump’s advances. “Greenland is rich in valuable resources such as minerals, the purest water and ice, fish

The area falls under the jurisdiction of one stocks, seafood, renewable energy and is a or other of the eight Arctic coastal states: the new frontier for adventure tourism,” the US, Canada, Norway, Russia, Denmark (via Ministry said in a tweet. Greenland), Iceland, Sweden and Finland. In terms of present day activity, however, it However, Arctic states continue to compete remains more a place of long-term potential for strategic influence with Russia, Denmark rather than actual yield right now. and most recently, Canada, pushing to stake On the mining side, Australia’s Greenland their claim on the seabed, including the Minerals has been operating there since 2007, geographic North Pole. putting together its Kvanefjeld project, which has the potential to become the most significant Western world producer of rare Canada’s partial submission earths. On May 23, Canada made its latest partial Oil explorers, meanwhile, continue the submission to the United Nations (UN) to search for hydrocarbons, though it has not recognise an extended continental shelf been plain sailing. beyond 200 nautical miles in the Arctic Last year, Chevron withdrew from its Ocean. The submission was made to the UN exploration acreage off north east Greenland after a multi-year seismic programme. Commission on the Limits of the Continental Other majors are still Shelf (CLCS) under thought to be keen, Article 76 of the UN though activity levels Convention on the There is certainly heightened remain low. Law of the Sea interest in the Arctic region, Smaller, frontier (UNCLOS). companies have been It noted the which has triggered various more engaged, the likes “innovative use of territorial claims and of Greenland Gas & Oil, technologies” as being and there is nonetheless critical to enabling ownership plenty of interest, despite data collection in such the low returns thus far. a harsh environment Last year, island officials stated that China and that it had regularly consulted both the National Petroleum Corp (CNPC) and China US, Denmark and Russia on its intentions. But the Arctic states are not the only actors National Offshore Oil Corp (CNOOC) had in this increasingly significant landscape. expressed their interest in bidding for onshore oil and gas blocks to be offered in 2021. Others, such as China, have sought to step So far, the oil search has been focused up their interest in the region in recent times, offshore but the next blocks to be tendered with the country previously describing itself as will be on the Disko Island and Nuussuaq a “near-Arctic state”. Peninsula area of West Greenland, Reuters Chinese and Japanese investment in reported last October, citing Greenland’s Russia’s Arctic LNG 2 project underscore the energy minister. wider level of interest. The UK, too, has More details of this programme are expressed a deepening interest in the region, expected to become available during 2020. as it has in the Antarctic too. For the indigenous peoples that call these While any US deal for Greenland looks unlikely – at least right now – there is remote areas home, the concepts of ownership certainly heightened interest in the Arctic and nationality might seem somewhat strange, region, which has triggered various territorial but there are no signs of any let up in the and ownership claims. quest for control in the Arctic. FE www.frontierenergy.info SUMMER 2019 7

NORWAY

MORE BARENTS SEA BLOCKS

up for grabs in APA 2019 ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

For the most part, drillers have been left scratching their heads in the Barents Sea this year in the wake of a series of dry wells, but Norway remains keen to test its frontier region further with more blocks available to investors in the new APA 2019 round

2019 Barents Sea wells have disappointed

Deadline The deadline for applications for the new blocks expired on August 27, with the goal of awarding new production licences at the start of 2020. It compares with just 14 Barents Sea blocks on offer in the APA 2018 round. The Norwegian Ministry of Petroleum and Energy says the expansion of the APA area is important to ensure effective exploration of larger parts of the NCS, including the Barents Sea. “The expansion will give... companies access to new opportunities that can enable value creation, employment and technology development,” it noted on May 29. The strong push into the Barents Sea reﬂects the government’s long-term desire to 8 SUMMER 2019 www.frontierenergy.info

open up this part of the country’s offshore territory to investors. The frontier area still represents just a fraction of overall activity compared with more mature areas. Of Norway’s 84 producing ﬁelds as of June 30, 2019, just two were in the Barents Sea, according to the NPD, compared with 64 in the North Sea and 18 in the Norwegian Sea. And of the 21 development projects in progress, just one is in the Barents Sea, compared with 14 in the North Sea and six in the Norwegian Sea. Whether the low impact 2019 drilling will dampen investor appetite for the new blocks remains to be seen. At the start of the year, analysts identiﬁed a number of potential high-impact wells in the Barents Sea, including Lundin Petroleum’s

Setter-Pointer well, which ultimately disappointed. Oil shows were encountered at various intervals in the Pointer prospect, in PL767 in the southern Barents Sea, but the well was classiﬁed as dry, Lundin reported back in February.

Dry wells Further to the east, Equinor was targeting an estimated 764 million barrels of oil equivalent (boe) with its Gjokasen well, which also turned out dry. More dry wells followed: in April, with the Gjøkåsen Deep prospect in PL857 also in the southeastern Barents Sea, and then in June with the Korpfjell Deep prospect in PL859. Would-be investors may, however, take more heart from ongoing projects that will

Harald Pettersen/Statoil/Equinor

ith the exception of the Sputnik discovery in August, exploration in Norway’s Barents Sea has been subdued this year – despite an increase in activity elsewhere in the country, notably in the North Sea and the Norwegian Sea. Prior to the Sputnik find (announced on August 20), the Norwegian Petroleum Directorate (NPD) reported on July 13: “None of the wells in the Barents Sea Southeast have been a success as of yet [in 2019], but there have also been several wells in mature areas that have not delivered.” That has not deterred officials from opening up more acreage in the area though and there are hopes for better things to come as we enter the tail-end of 2019 and move into 2020 – especially in the wake of Sputnik. This year’s licensing round in mature areas on the Norwegian continental shelf (NCS) – Awards in Predefined Areas (APA) 2019 – sees 48 Barents Sea blocks up for grabs, in addition to five in the North Sea and 37 in the Norwegian Sea.

NORWAY

The iconic Goliat FPSO

evelopment options for the project, which will Awards in Predefined Areas 2019

The industry will be watching these developments keenly as it did the roll out of Eni’s Goliat project, 85 km northwest of Hammerfest, in PL 229, in an ice-free area of the Barents Sea. The ﬁrst oil ﬁeld to start production in the area, back in 2016, it faced a number of teething issues in the early stages.

Lofoten Islands

Construction of the other two big pieces of the FPSO is also under way, with the hull being built in Singapore, and the turret in Dubai. These will eventually arrive at Stord in 2020 for assembly and completion before the vessel is moved to its permanent home in the Barents Sea. The overall development concept consists of 30 subsea wells drilled from 10 subsea templates and two satellites tied back to the ship-shaped FPSO. First production is currently targeted for late 2022. Another project, Wisting, is also taking shape with Equinor set to take over the operating role from OMV during the development phase. Upon production start-up, the operatorship will then revert to OMV (Norge) AS. The pair are currently drawing up plans to

NPD

FPSO construction

tap into recoverable reserves estimated at around 440 million barrels of oil. A decision on the type of FPSO could be taken in 2020, executives have suggested, with production expected to start in 2026.

One area that could be off limits to investors though is the Lofoten Islands, after the largest party in parliament withdrew its support for exploratory drilling. The move by the opposition Labour Party creates a large parliamentary majority against oil and gas exploration in the sensitive offshore area; the islands are considered a natural wonder. Estimates suggest there could be between 1 billion to 3 billion barrels of oil beneath the seabed off the Lofoten archipelago, which has been kept off limits to drillers for years through various political deals. The move reﬂects lower public support for the oil industry, amid rising concern over climate change and heightened support for renewable energy. The news was not well received by the oil and gas industry, however. “The whole industry is surprised and disappointed,” Karl Eirik Schjott-Pedersen, head of the Norwegian Oil and Gas Association told Bloomberg. FE www.frontierenergy.info SUMMER 2019 9

Var Energi

draw on known reserves from the area. Work on Equinor’s Johan Castberg project is now well under way. Situated approximately 100 km north of the Snøhvitfield in the Barents Sea, the project’s resource base consists of three oil discoveries – Skrugard, Havis and Drivis – all located in PL 532. First steel cutting took place for the topside of the Johan Castberg floating production storage and offloading (FPSO) vessel at Kværner’s yard at Stord at the end of last year.

NORWAY

SPUTNIK SOARS for Equinor /

The Sputnik discovery in August breaks what had been a disappointing year of drilling for Norwegian explorers in the Barents Sea

quinor and partners OMV and Petoro have announced a small oil discovery in the Sputnik exploration well in the Barents Sea. Recoverable resources are preliminarily estimated at 20-65 million barrels of oil. The Sputnik well was drilled in licence PL855, approximately 30 km north east of the Wisting discovery, an Equinor statement read on August 20. It said the well encountered a 15 m oil column in a Triassic sandstone reservoir. Fluid samples contained light oil and water. “We are encouraged by this result as it conﬁrms the presence of oil north of the Wisting discovery, where Equinor has acquired a strong acreage position,” said Nick Ashton, Equinor’s senior vice president for exploration in Norway and the UK. “The geology in the Barents Sea is complex, and more work lies ahead to determine commerciality. But this discovery shows that persistence and our ability to learn from previous well results does pay off.”

of commerciality. “Despite being small and remote – it lies more than 300 km from shore in the northern Hoop area in the Norwegian sector of the Barents Sea – Sputnik has a high chance of commerciality,” said Jamie Thompson, an analyst in Wood Mackenzie’s North Sea upstream team.

Other activity

10 SUMMER 2019 www.frontierenergy.info

Nick Ashton, Equinor’s senior vice president for exploration in Norway and the UK

the Equinor operated Lanterna well in PL796 in the Norwegian Sea. Equinor is operator and holds 55% of the PL855 licence. Partners are OMV (25%) and Petoro (20%). Commenting on the Sputnik discovery, analysts were upbeat about the ﬁnd’s chances

“The aptly named ﬁeld could be a satellite of the pre-FID 440 million-barrel Wisting development, which is just 30 km from Sputnik. We expect Wisting to reach FID in 2022, with ﬁrst oil in 2026. If it progresses to plan, Sputnik could start up towards the end of the decade when Wisting comes off plateau.” He also said Equinor and its partners will be encouraged by proving further oil in an area where they hold strong acreage positions. “The potential commerciality of Sputnik provides a much-needed boost to Barents exploration and highlights the importance of developing new infrastructure in this emerging basin,” added Thompson. Equinor’s Mist, near Johan Castberg, is its only other exploration well expected to spud in the Barents in 2019, he added, but highpotential wells are planned in the Hoop and southeast in 2020. FE

Equinor

Forecasts

Ole Jørgen Bratland/Equinor

In 2017, Equinor’s Gemini Nord well resulted in a very small, uncommercial oil discovery in a reservoir channel system within the PL855 licence. In 2018, a larger channel complex was targeted in the neighbouring PL615 licence with the Intrepid Eagle well. This well proved a 200 m gas column, but no oil. The Sputnik well, which is the second well in PL855, has proven oil in a large channel system. “Detailed ﬂuid analysis combined with geological and geophysical mapping will be carried out to fully understand the commercial potential of the Sputnik discovery,” added Ashton. “If conﬁrmed that the structure comprises volumes that can be recovered in a commercially viable way, the partnership will assess possible development solutions.” The Sputnik well (7324/6-1) was drilled to a vertical depth of 1569 m below the seabed by semi-submersible drilling rig West Hercules, which has now moved on to drill

NORWAY

generally decreasing, while other new chemicals that are not regulated are increasing.

Gas flaring

Gas ﬂaring is on the agenda

Norway heads Arctic

CLEAN-UP GROUP ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

The Arctic Council working group is aiming to share best practice on associated gas flaring and other pollutants that could damage the region’s environment

orway has taken over the chairmanship of the Arctic Contaminant Action Programme (ACAP), a working group of the Arctic Council that could have implications for the energy industry. The group’s focus is on how to reduce Persistent Organic Pollutants (POPs), mercury, other chemical threats, waste and short-lived climate polluters to the Arctic and to give a greater voice to indigenous and local people on these matters. Among other work, it initiates pilot projects and studies aimed at monitoring contaminants and pollutants in the sensitive Arctic region. Flaring of associated gas is one key area where ACAP has a strong focus through its various pilot projects, and through the sharing of best practices and knowledge. In Norway, ﬂaring has been prohibited for many years, but in Russia 80% of black carbon emissions stems from ﬂaring.

The Norwegian government highlighted the signiﬁcance of the working group in a May 7 statement. In it, ofﬁcials pointed out that the Intergovernmental Panel on Climate Change (IPCC) special report (2018) on global warming of 1.5 degrees had revealed how urgent it now is to curb climate change. “Local emissions of soot particles and other short-lived climate polluters from petroleum activity, shipping and industries are contributing actively to warming and rapid melting in the Arctic,” the statement read. “ACAP aims to create awareness of such effects through pilot projects and effects on environment and health of local people. The idea is that experiences of successful pilot projects may be scaled up by national authorities through the sharing of experiences and best practices.” It noted that recent research shows that deposits of chemicals in the Arctic that are regulated in international conventions are

It added that research indicates that 40% of the black carbon in the Arctic comes from associated gas flaring. As well as being a huge waste of resources, this could instead be used for energy production or to increase production efficiency. A major project is ongoing to reduce methane emissions from flaring in the petroleum industry, by capture and re-use of methane gas. ACAP is supporting efforts to reduce black carbon from flaring in cooperation with Russian petroleum companies, and encouraging the sharing of best practices and knowledge. This project will also provide advice for future investments in the sector that could further help to avoid emissions of black carbon and methane. “The goal is to capture and sell the methane gas,” the statement added, describing it as a “win-win solution” reducing emissions, cutting costs and waste for the private sector and contributing to the slow down of warming in the Arctic. A first phase of the project has been implemented in the oil and gas sector, with other pilot projects carried out in the transportation sector, mining industry and a new initiative coming up in the shipping sector.

Pilot projects Some of ACAP’s other important pilot projects include: Mercury pollution

A new pilot project on mercury pollution and related risks is to be launched this year, to be led by Norway. The aim is to develop an action plan to reduce emissions in some Arctic countries. The project has been developed by the Norwegian Institute for Water Research. Environment monitoring

A Climate Local Environmental Network has been established among Arctic states and will be expanded this year in the Nordic countries. More than 1,000 observers and 600 municipalities are engaged in the network, reporting on climate change effects at a local level. Young people, students and local people are engaged with reporting done via a smartphone app. Sami communities

Sami communities at the Kola Peninsula in Murmansk Oblast work together with local authorities to reduce hazardous waste and other waste that may cause damage to human beings and ecosystems. A project to clean up and develop management systems was launched last summer. FE www.frontierenergy.info SUMMER 2019 11

ARCTIC BROADBAND

Arctic satellite broadband

Elon Musk’s Space X to provide lift-off capacity for Norway’s Arctic broadband

SET FOR TAKE OFF //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

US tech giants are to deliver space-based broadband satellites to north polar region for Space Norway

illionaire space entrepreneur Elon Musk is to play a role in boosting communications coverage in the Arctic. The tycoon’s SpaceX company will provide the launch capacity for a new Arctic programme by Space Norway. Space Norway is to cooperate with the satellite operator Inmarsat and the Norwegian Ministry of Defence to offer mobile broadband coverage to both civilian and military users in the region. Two satellites to be built by Northrop Grumman will be launched by SpaceX in 2022, with a new ground station also to be established in the north of Norway. “This will be a milestone for people in the Arctic who have very limited or no broadband access in the region” said Jostein Rønneberg, Space Norway’s chief executive. “We are building a robust communications capability in an area strategically important to Norway and our partners. “This will be vital for surveillance, ﬁshery control and rescue operations in the vast sea area that is under Norwegian control, and will signiﬁcantly improve our ability to operate in the High North.”

Programme management Space Norway is a limited liability company owned by the Norwegian government. It has established a new subsidiary, Space Norway HEOSAT AS, to manage the programme and operate the two satellites together with Kongsberg Satellites Services (KSAT) in Tromsø. KSAT is an entity established by the Norwegian Space Centre, Space Norway and the Kongsberg Group in 2001. 12 SUMMER 2019 www.frontierenergy.info

The programme is fully ﬁnanced with customer agreements already in place for the service life of the satellites. Space Norway also owns the ﬁbre optic cable between Svalbard and mainland Norway, a key element of the country’s existing Arctic infrastructure. Both satellites will be launched in late 2022 on a SpaceX Falcon 9 rocket into a Highly Elliptical Orbit (HEO), which will provide full coverage from 65 degrees North, which in practical terms is the area north of the Arctic Circle. Each of the two satellites will carry multiple payloads, and the system is scheduled to be operational for at least 15 years with users able to switch between current geostationary satellites and the HEO satellites. Each satellite will have a mass of 2,000 kg and provide 6 kW of power through its sun arrays.

Kjell-Ove Skare, the programme director, said customer agreements have been closed with Inmarsat and with the Norwegian and US militaries after a “multi-year dedicated effort”. He added: “This is an exciting collaborative effort which ensures a cost-effective solution for all parties. Now we are eager to start the real work of building the satellites and the ground stations. “We look forward to providing the world’s ﬁrst and only mobile broadband service in the Arctic region, something which has long been an important objective for the Norwegian authorities.”

Northrop Grumman Northrop Grumman conﬁrmed in July that it would design, manufacture and integrate the two satellites, in addition to providing critical ground infrastructure for the Arctic

ARCTIC BROADBAND

Satellite Broadband Mission (ASBM) initiative. “This contract award marks our first mission with Space Norway and we appreciate the confidence it has in our capabilities to deliver high quality communication satellites,” said Frank DeMauro, sector vice president and general manager, space systems, Northrop Grumman. “By using our flight proven GeoStar platform coupled with our end-to-end payload integration capabilities, we are eager to demonstrate our ability to provide innovative solutions that regularly exceed our customers’ mission needs.”

Northrop Grumman is to deliver spacebased broadband satellites to the north polar region for Space Norway

Multiple hosted payloads

Northrop Grumman

The ASBM satellites will carry multiple hosted payloads including an X-Band payload for the Norwegian Ministry of Defence and a Ka-Band payload for Inmarsat. Northrop Grumman announced last year that it will also provide two Extremely High Frequency eXtended Data Rate (EHF XDR) payloads for the Enhanced Polar SystemRecapitalisation (EPS-R) to the US Air Force for integration on the spacecraft. The systems are designed to improve secure and continuous communications in the north polar region. FE

www.frontierenergy.info SUMMER 2019 13

SATELLITE COMMUNICATIONS

ARCTIC COMMUNICATIONS challenges for offshore vessels How satellite network and service providers are getting to grips with the challenges faced by the offshore and maritime industries in the extreme Arctic environment. By Dan Rooney (pictured), EMEA Director Maritime Line of Business, Iridium

he changing sea conditions within the polar regions allow for greater exploration and extraction of energy resources, with the United States Geological Service (USGS) estimating that 90 million barrels of oil, 17 trillion cubic feet of natural gas and 44 million barrels of liqueﬁed natural gas exists in the Arctic region. An incredible 87% of this estimated yield exists offshore. As might be expected, polar energy extraction then presents unique technical challenges, not least due to the extreme weather and temperatures that may be experienced. The successful and safe extraction of energy resources relies heavily upon communications, even more-so when factoring in the need for coordination between rigs and platforms and vessels, or aircraft transporting personnel, supplies or extracted resources.

Polar complications Communications are the backbone of modern business, terrestrial and offshore, yet based on geography, the choices are often limited and expensive. This holds true even more-so for the polar regions where something as simple as an antenna becomes a more complicated piece of equipment. For example, external communications antennas must be equipped with heating elements, keeping the functional parts of the antenna warm and reducing the risk of damage during operation in low temperatures. Typically, most satellite communications equipment can operate in temperatures down to -25C without additional protection. Temperatures of -40 Celsius are common, and sometimes fall below -55C. If polar operation is possible for a vessel, equipping the satellite antennas with heating elements is a necessity. The dynamics and dangers associated with operating a vessel in polar waters are signiﬁcantly different compared with lower latitudes. The master, crew and operational 14 SUMMER 2019 www.frontierenergy.info

staff on-board should be both highly trained and experienced for operation within Arctic areas and actively minimise any potential environmental impacts. Accurate ice and weather reports must be regularly received to facilitate the safe operation of the vessel. Further, the Global Maritime Distress and Safety System (GMDSS) mandates that vessels operating in the sea-area A4, speciﬁcally beyond the Inmarsat coverage area, must be equipped with Medium Frequency/High Frequency (MF/HF) radio equipment. Unfortunately, at higher latitudes the transmission and reception range of MF/HF is adversely affected due to decreased ionospheric activity. If a polar vessel must send a distress alert via MF/HF, it may not be received by a Maritime Rescue Coordination Centre (MRCC) or other vessels. Fortunately, a change is coming to the GMDSS, and in 2020 Iridium will release its truly global distress alerting system, allowing alerts to be generated in the sea-area A4 and received by an MRCC. The Iridium GMDSS system combines distress alerting, maritime safety information (MSI) and distress voice into a single terminal. The combined effect is that if a distress alert is sent from a vessel equipped with Iridium GMDSS, the receiving MRCC can call the vessel back and determine the nature of the emergency and respond accordingly. The Safety of Life at

Sea (SOLAS) Convention mandates that MF/HF must still be ﬁtted to vessels operating within the A4 region, although this may change as soon as 2024. Operations within polar areas are further hampered by a lack of VSAT connectivity. The nature of geo-stationary satellite networks ensure that coverage is typically focused over highly populated areas, directly the opposite of Arctic energy ﬁelds. The maritime industry is installing VSAT at an ever-increasing rate, with an estimated 75,000 terminals to be installed by 2028 (NSR Report May 2019).

Understanding the options The increase in VSAT demand has also seen an increase in capacity available that has resulted in the price per megabyte dropping year over year, with equipment pricing following suit, albeit at a lower rate. However, when it comes to the Arctic, there are just a small amount of VSAT satellites providing coverage, for example the Gazprom Yamal 402 satellite covering the Barents Sea area, but this can be costly to utilise. For a geo-stationary satellite network operator, it does not make business sense to deliver coverage in polar regions. And in some regions of the Arctic, terrestrial 4G/LTE services may be available, but these will be clustered around towns and cities, for example Longyearbyen or Barentsburg. However, for the vast majority of polar regions 4G/LTE cannot be considered for connectivity. There are two major factors in the selection of a satellite network for the polar regions: frequency and equipment – assuming coverage is known. Frequency determines the

The Lars Thrane LT-3100S will be the ﬁrst truly global GMDSS terminal

Iridium

SATELLITE COMMUNICATIONS

Certus terminals and antennas are delivered by the world-renowned manufacturers, Cobham and Thales. The new Iridium Certus antennas are solid-state and lightweight, allowing for simple installation even by crew members. Voice conversations are signiﬁcantly improved too, with cellular quality calling between ship and shore callers. Light weight and solid-state, the Thales VesseLINK antenna can easily be retroﬁtted onto an existing pedestal

lower total cost of ownership over their lifespan. An interesting new development for the satellite communications industry that may further impact the polar regions is the planned rise of new Low Earth Orbit (LEO) satellite constellations, some of which are planning to provide global connectivity from pole to pole by utilising crosslinked satellites, in the same manner as Iridium. However, timing for ﬁnancing, manufacturing, launch and service introduction for most of these proposed networks, that will use Ku or Ka-band frequency, remains unknown.

Consistent connectivity For polar operation, a cross-linked polar orbiting LEO constellation delivers consistent connectivity due to its nature. For example, Iridium’s LEO network has delivered polar connectivity for over 20 years and is used by more than a million subscribers globally for voice and data connectivity up to 352 Kbps. Over the past two years, the original Iridium constellation was upgraded with state-of-theart new satellites. In January 2019, the Iridium Certus L-band broadband service was launched, with the fastest L-Band data speeds available in polar regions at 352 Kbps and soon globally with a ﬁrmware update later this year to speeds of 704 Kbps*. Iridium

If we consider the increasing dependence that the offshore industry has towards an ‘always-available and high bandwidth’ model, how do those dynamics change when you remove almost all but voice connectivity in the polar areas? This further exacerbates the need for satellite communications. Without it, shortrange VHF and MF/HF radio services are available and not much else. Weather charts would be received by HF NAVTEX services, but still lack the high-resolution to safely navigate in ice-strewn waters. Overall, without satcom, a ship’s business operations are adversely impacted and the ability to receive trade orders or obtain provisions from agents is removed. Obtaining important safety information such as weather and ice charts becomes difficult. Crew members are not able to keep in touch with friends and family via social media, having a knock-on effect upon their feeling of isolation and subsequently their mental health. Having no connectivity can be hard to explain to a crew-member and even harder for a millennial to comprehend. As a result, bandwidth expectations must be defined for all personnel, with appropriate changes made to the operating procedures of a vessel sailing in polar waters. A service provider with the experience of polar operation can assist and as the only satellite company with complete polar coverage, Iridium’s Service Provider network has significant experience in enabling efficient connectivity and reducing the risk of ‘billshock’ via smart boxes. Its intelligent devices automatically switch the active connection between VSAT and Iridium based upon availability. The smart boxes sit in between the Iridium network and on-board LAN, rejecting unwanted or unnecessary data and compressing permitted data before transmission. These steps ensure that each byte that passes from ship to shore via satellite is desired and optimised. The need for reliable polar connectivity has never been more important, as increased exploratory, resource extraction and shipping activity continue. Therefore, an offshore operator should entrust it to a satellite network and service providers with the experience of Arctic operations. FE *704 kbps download speeds www.frontierenergy.info SUMMER 2019 15

Iridium

available bandwidth and resilience to weatherbased interference. The higher the frequency, most commonly Ka or Ku-band today (VSAT), the greater amount of bandwidth, but the more susceptible it is to signal interruption from bad weather. Serving as either a primary service or companion to VSAT, are L-band frequency systems. L-band has unique properties, that while unable to provide the same commoditysize bandwidth as Ka or Ku-band, offer a more specialised, weather-resilient option that makes it uniquely suited to provide critical communications and safety-of-life services – arguably the most important forms of communications in the Arctic. And, based on the data needs of a vessel, it may only require an L-band terminal. On the equipment front, there are two predominant forms of satellite antennas within maritime – stabilised and solid state. The vast majority of VSAT antennas are stabilised across three axes, continuously adjusting itself to maintain line of sight with the satellite. These antennas must be proven within the heavy seas of the polar environment, as a repair could be delayed and costly. Unlike stabilised antennas, solid state antennas have no moving parts, reducing the risk of an outage due to equipment failure, and offer a

Preparing for a new reality in polar shipping

ATLANTIC CANADA

MOVING ON after the White Rose spill ///////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Canada’s frontier Atlantic region holds great potential for drillers but there are still lessons to be learned in the wake of the White Rose oil spill and new concerns over the Hibernia field

anada’s Husky Energy is looking to move on after the White Rose spill offshore Newfoundland and Labrador with the resumption of full production. Following an extensive investigation, ﬂow line repairs, integrity testing and approval of the CanadaNewfoundland and Labrador Offshore Petroleum Board (C-NLOPB), it said in August that it will resume output from the remaining two drill centres shut in following the November 2018 oil spill. The restart of the North Amethyst and South White Rose Extension drill centres follows the safe resumption of operations from three other White Rose drill centres in the ﬁrst half of 2019. “We regret the spill last year,” said Husky chief executive Rob Peabody. “As a result of our investigation, we have enhanced our startup procedures, strengthened equipment and added more barriers to prevent failures. The lessons learned have also been shared broadly through the industry to try to prevent 16 SUMMER 2019 www.frontierenergy.info

similar incidents in the future.” Following the startup, Husky said it expects White Rose production to ramp up to approximately 20,000 barrels per day (bpd) (Husky working interest).”

Spill source Husky’s investigation into the November 2018 spill found the source was a failed flowline connector near the South White Rose Extension drill centre, which parted during startup operations. A replacement flowline connector with a higher load capacity was installed at the South White Rose Extension drill centre in July 2019. Flowline connectors are designed to release under specified tension in the event of iceberg activity. Other production flowlines with similar connectors have also been enhanced to withstand a higher load capacity. Husky also said that it has identified and implemented several process safety initiatives in the wake of the spill and added additional oversight around critical activities and the

process of restarting production. While the news from White Rose is more positive there are fresh concerns, this time at Hibernia, following reports of a July discharge that resulted in production closure. Production operations remain shut down on the Hibernia platform and will not resume without the approval of the C-NLOPB and the certifying authority, it was reported on August 21. The platform is located approximately 315 km east-southeast of St John’s, Newfoundland. Canada’s C-NLOPB industry regulator has already launched its formal investigation into the latest incident at Hibernia. Three vessels are currently on the site undertaking spill response efforts, it said, with additional resources in the air and a fourth vessel en route. A tracker buoy has been deployed and wildlife monitoring efforts are under way, with no reports of affected wildlife at this point. “The nature and frequency of these incidents in our offshore area are obviously concerning,” said Scott Tessier, chief executive of the C-NLOPB. “The C-NLOPB is focusing its efforts on driving enhanced operator performance with respect to the prevention of spills and improvements in compliance. Decisions on enforcement actions in these matters will follow the completion of our investigations under the Atlantic Accord Implementation Acts.”

Suncor Energy

The Hibernia platform

ATLANTIC CANADA

Other projects With Hibernia output halted, the resumption of full production at White Rose will give the industry some lift and will no doubt have a significant impact on Husky’s total output from the Atlantic Canada region. It said in its second quarterly statement in late July that overall average net production in the Atlantic region was approximately 12,200 bpd, which included two new infill production wells that were brought on stream in May. Elsewhere, the company is moving forward with its other projects after learning important lessons. That includes momentum on the West White Rose Project. “Construction work on the concrete gravity structure and related topsides is progressing, with the overall project more than 40% complete as it advances towards first oil around the end of 2022,” it stated in its second quarter results. But the Tiger’s Eye exploration well (in which Husky has a 40% interest) did not encounter commercial hydrocarbons and was subsequently written off. Suncor Energy – a partner on some of Husky’s projects – also reported ongoing development work at the West White Rose project in its own set of quarterly results. Drilling activity at Hebron is likewise ongoing and production continues to ramp up, it added. “Other E&P activity in the second quarter included development drilling at Hibernia, White Rose, Buzzard and Terra Nova, and development work on Fenja and the West White Rose Project.” During the early months of 2019, Suncor also sanctioned the Terra Nova asset life extension, a project that is expected to extend the life of Terra Nova by approximately a decade. The company said this project is planned for execution in 2020. FE

Oil spill research stepped up

New science research funding has been announced to counter the oil spill threat posed by an increase in activity in Canada’s Arctic area

The Canadian government is stepping up its activities in oil spill research. It announced in August support for various research projects on oil spill response measures and coastal environmental baseline monitoring at the University of Manitoba, under the country’s C$1.5 billion Oceans Protection Plan. The latest awards see C$6.4 million for scientiﬁc research at the university on the impact of potential oil spills, plus a further C$360,000 in funding for two marine environmental data collection projects in Frobisher Bay, Iqaluit. The funds will enable the University of Manitoba to investigate a wide range of techniques and technologies to assist in oil spill response across Canada. The work will involve both the experimental testing of alternative response options and chemical analysis to determine the effectiveness of various oil spill response techniques. It will also look at natural biodegradation of oil in Arctic marine environments. The results will add to the growing knowledge of oil spill response measures at home and abroad, while ensuring responders are well informed and well prepared when making evidence-based decisions related to oil spills, a Canadian government statement read. “The Canadian Arctic is experiencing extraordinary changes,” said Dr Gary Stern of the Centre for Earth Observation Science, Clayton H Riddell Faculty of Environment, Earth and Resources, University of Manitoba. “Reduced sea ice cover and ice-free summers have led to a tripling in vessel trafﬁc since 1990. With this increasing activity, comes a greater risk of accidental spills of fuel and

other transportation-related contaminants.” He added: “One of the challenges in the event of an accidental spill will be to distinguish between natural background and contaminating hydrocarbons caused by the spill. This MPRI [Multi-Partner Research Initiative] project will help build a database containing detailed hydrocarbon contaminant proﬁles and chemical concentrations in sediment, water and benthic invertebrates along the vulnerable shipping transportation corridor in the Kivalliq region of northwestern Hudson Bay. This information will be invaluable in developing oil spill mitigation strategies, assessing the success of remediation strategies and helping establish responsibility for the spill.”

Collaboration aim The C$45.5 million MPRI, announced in December 2017, aims to improve collaboration among oil response experts around the world, advancing oil spill research in Canada, and help minimise the environmental impacts of oil spills. Dr Feiyue Wang, Canada Research Chair in Arctic Environmental Chemistry and Programme Area Lead for the Multi-Partner Research Initiative, University of Manitoba, called the new wave of funding “timely”, with the university’s new Churchill Marine Observatory soon to be operational. The new site will be equipped to facilitate studies to address technological, scientiﬁc and economic issues pertaining to Arctic marine transportation, oil and gas exploration and development throughout the Arctic, Dr Wang noted.

The Terra Nova FPSO

Suncor Energy

The Hibernia ﬁeld is owned by a consortium that groups ExxonMobil, Chevron, Suncor Energy, Canada Hibernia Holding Corporation, Murphy Oil and Equinor Canada Ltd.

www.frontierenergy.info SUMMER 2019 17

RUSSIA

FULL STEAM AHEAD for Arctic LNG 2... almost ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

With the equity line-up on Arctic LNG 2 now seemingly complete, all eyes turn to Novatek ahead of a final investment decision this year

ussia’s liquefied natural gas (LNG) plans for the Arctic are reaching a critical juncture. The past few months have given us greater clarity on who will make up the final-look Arctic LNG 2 team, with a final investment decision (FID) now anticipated by the end of 2019. On July 1, the mega project moved a step closer to that point with the entry of Japanese companies Mitsui and government-linked Japan Oil, Gas and Metals National Corporation (JOGMEC) into the shareholding mix. It could well complete the final team that will steer Arctic LNG as it moves toward FID. Earlier this year, Total of France finalised its entry in the project with a 10% stake, while a Chinese duo, CNPC and CNOOC Limited, also each took 10%. If main project sponsor Novatek decides to lower its stake to under 60%, then Total will have an option to buy another 5% in the project. “With this announcement, the shareholding structure could be final. The next big step will be FID,” commented Nikolai Novikov, senior research analyst, Russia Upstream, at analyst Wood Mackenzie. A few months ago, Novatek was also in talks with Saudi Arabian oil giant Saudi Aramco about participation in the venture, though this now seems to have cooled. Leonid Mikhelson, Novatek’s chairman, now seems satisfied that the final project structure is in place, paving the way for FID. “The target level of Novatek’s participation has been reached, allowing us to make the final investment decision and optimally use the company’s cash flow to finance our new projects,” he said on July 22.

A harsh working environment awaits on Arctic LNG 2

Mitsui and JOGMEC’s purchase of the 10% stake via a joint venture was announced in the presence of Russian President Vladimir Putin and Japanese Prime Minister Shinzo Abe at a G20 meeting in Osaka. President Putin said Japanese investments in 18 SUMMER 2019 www.frontierenergy.info

Total

Japanese interest

RUSSIA

Yamal LNG facilities

Japan’s strategic interests Japan has long been one of the world’s top buyers of imported LNG and could well view Russia’s emerging Arctic gas industry with great strategic interest. “Energy security considerations, the investment attractiveness of Arctic LNG 2 and improving Russo-Japanese relations have proved deciding factors in getting both Japanese state and private enterprise on board,” added Novikov. The Arctic LNG 2 ambitions are simply huge in scale. The proposed LNG plant in the Russian Arctic consists of three trains, each with a capacity of 6.6 million tonnes per annum (mmtpa). Front-end engineering and design was completed last year, conﬁrming preliminary cost estimates of between US$20 billion and US$21 billion. Novatek is believed to be targeting FID imminently, with start-up of the ﬁrst train scheduled for between 2022 and 2023. Among the global LNG projects anticipated to reach FID during 2019, the Arctic LNG

project has the largest greenﬁeld capital investment – rising to as much as $25.75 billion, according to Rystad Energy – followed by Qatargas LNG with $17.5 billion. While Qatargas is raising its production capacity and drawing on greater volumes of reserves, these are extensions to existing plants. Moreover, Arctic LNG – despite its location in the far north – boasts some competitive pricing. Rystad Energy estimates that the breakeven price of $6 per Mcf for Arctic LNG 2 is roughly midway among all of the global LNG projects ready for sanction this year. Here, Qatargas comes out as the most competitive ($5.3 per Mcf), but the Novatek mega project still ranks well against other rivals, notably Driftwood in the USA ($8 per Mcf) and the Papua New Guinea LNG Extension ($7.3 per Mcf). Indeed, 2019 could be a bumper year for LNG investment globally, Rystad Energy says with Africa, of all places, taking the lead in a year that could shatter previous industry spending records. Rystad Energy forecasts that LNG greenﬁeld investment in 2019 will reach nearly $103 billion, the biggest investment year for the burgeoning industry to date.

Yamal LNG milestone On August 16, Yamal LNG announced that it had shipped its 20 millionth ton of LNG since the commencement of the project. The new Arc7 ice-class tanker Vladimir Voronin loaded the 273rd cargo as the project reached its 20 million ton milestone since the start-up of Train 1 in December 2017. The Vladimir Voronin is the 12th Arc7 ice-class

The Arctic LNG 2 project envisages constructing three LNG trains, using gravitybased structure (GBS) platforms and builds on the success of the previous Yamal LNG scheme. The new LNG project is based on the hydrocarbon resources of the Utrenneye field. As of December 31, 2018, the field’s 2P reserves under PRMS totalled 1,138 billion cu m (bcm) of natural gas and 57 million tons of liquids. Under the Russian classification, reserves totalled 1,978 bcm of natural gas and 105 million tons of liquids.

Third gas export project While we await FID on Arctic LNG 2, a third gas export project is already being mooted in the wake of the 2018 North Obskoye discovery by Novatek in the shallow waters of the Ob Bay in northern Russia. The newly discovered field is located close to the South Tambeiskoye field, the source for the Yamal LNG project, and contains estimated recoverable reserves of 11.3 trillion cu ft of gas (320 bcm). Advance work on Arctic LNG 2 has already sparked a rush for contracts among engineering firms keen to participate, including the likes of big hitters TechnipFMC, Saipem and Siemens. FE

tanker built speciﬁcally for the Yamal LNG project. There are three liquefaction trains currently in operation at Yamal LNG with cumulative nameplate production capacity of 16.5 million tons per annum. Trains 2 and 3 commenced production in July 2018 and November 2018, respectively. Project shareholders include Novatek (50.1%), Total (20%), CNPC (20%) and the Silk Road Fund (9.9%).

www.frontierenergy.info SUMMER 2019 19

Total

the project would total almost US$3 billion. Mitsui will have a 25% share of the stake, and JOGMEC 75%. Although there are no concrete plans at the moment, Mitsubishi is also rumoured to be interested in joining the newly created joint venture. “Mitsui will undoubtedly be responsible for marketing of the 1.98 mmtpa of equity LNG from the 10% stake,” commented Nicholas Browne, director, Asia Paciﬁc Gas & LNG research at Wood Mackenzie. “Mitsui will look to sell some of the volumes within Japan. However, it may also look to trade and sell Arctic 2 volumes into the Atlantic basin. The strong backing of JOGMEC highlights that this is seen as a strategic investment by the Japanese government.”

RUSSIA

challenging greenﬁeld projects, from the Arctic offshore to East Siberia, to hard-torecover reserves in West Siberia,” said Michael Moynihan, director of Wood Mackenzie’s Russia upstream team. “For example, Tazovskoye and North Samburgskoye have most of their reserves in the Achimov formation which requires advanced drilling technology. But the company is stretched and needs ﬁnancial and technological support from partners to develop the assets.”

DEALS SIGNED in St Petersburg ///////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Oil and gas deals took centre stage at one of Russia’s big annual business gatherings this summer

nergy stole the limelight at this year’s St Petersburg International Economic Forum (SPIEF), with a number of high-profile deals signed at the event: • Gazpromneft and Shell created the Meretoyakhaneftegaz joint venture, covering five blocks in West Siberia. The blocks comprise the two green fields, Tazovskoye and North Samburgskoye, the contingent West Yubileynoye field and the small Meretoyakhinskoye brownfield. • Gazpromneft, Shell and Repsol signed a memorandum of understanding (MoU) for the development of two remote blocks on the Gydan Peninsula. • OMV amended its agreement with Gazprom for the acquisition of a 24.98% stake in Achimov 4 and 5. The deal now incorporates a consideration of

Arctic outcomes SPIEF also provided a showcase for Russia’s Arctic energy potential. Igor Sechin, head of Rosneft, presented plans for the establishment of an oil cluster around new and existing ﬁelds, which will result in much greater output over the coming years. He said new technological solutions will be applied in the development of the cluster, including directional drilling technology. The forum also saw an agreement signed between the First Ore-Mining Company (part

20 SUMMER 2019 www.frontierenergy.info

€905 million (US$1.1 billion). • OMV and Gazprom also signed an MoU covering co-operation in the liqueﬁed natural gas (LNG) sector, including the construction of small-scale production capacity.

Chinese agreement These deals were in addition to Chinese state-owned companies CNPC and CNOOC signing sales and purchase agreements, which see them each take 10% stakes in Arctic LNG 2, at the forum on June 7. Not long after, it was the turn of Japanese investors to confirm an interest in the Arctic mega project. This high level of activity reflects strong appetite for Russia’s upstream sector by European and Asian firms, despite any other challenges faced in the wake of sanctions. “Gazpromneft’s portfolio includes many

of Rosatom’s mining division) and Outotec, a Finnish supplier of advanced technology and services aimed at sustainable subsoil resource management. The pair plan to work together to develop the Pavlovsk polymetal ﬁeld on the Novaya Zemlya archipelago. Another notable outcome was the signing of a quadripartite agreement to establish a new company called Arctic Sea Transport. It groups four organisations across energy, shipping and investment: Novatek, Sovcomﬂot, the Silk Road Fund, and COSCO Shipping, one of the largest container operators in the world. The intent is to build a

Strong technical capability He added: “This is why Shell’s entry to the Meretoyakhaneftegaz joint venture is so signiﬁcant. The major brings strong ﬁnancial and technical capability to the venture. Shell has a long history of co-operation with Gazpromneft at the Salym Petroleum Development joint venture and with Gazprom, Gazpromneft’s parent company, at Sakhalin-2 LNG. The agreement also offers Shell the opportunity to expand its presence in a country with a massive low-cost resource.” Christian Boermel, a senior research analyst in the Russia upstream team, added that Gazpromneft’s new ventures with Shell and Repsol are a “colourful basket” of various assets, providing many opportunities for cooperation. “For Shell, it is a further opportunity to cement their relationship with Gazpromneft. For Repsol, it is about expanding its foothold in Russia in partnership with Gazpromneft. Repsol and Gazpromneft are already linked up at the Ourinskoye discovery on the western edge of the West Siberian basin. The new joint venture now takes them north to under-explored territory.” He added: “It was expected that OMV would progress its deal with Gazprom. Pending since 2015, the swap deal for Norwegian assets fell through in 2018 and both companies are keen to have this wrapped up before start-up in 2020. The LNG announcement is interesting as it moves beyond a gas production and pipeline export relationship.” FE

fleet of Arctic icebreaking tankers providing safe year-round transport of LNG as part of Novatek’s current and future projects (the Russian company will hold a 75% controlling stake). The agreement will play a role in helping to ensure reliable and uninterrupted transport of LNG in the Arctic. Another agreement saw the establishment of an international consortium to build a new highspeed optical cable on the Arctic ocean floor. It brings together two companies, Megafon and Cinia Oy – a Finnish infrastructure operator – to work together to bring Europe and Asia closer in telecommunications and the digital field.

Gazpromneft

Foreign investors were keen to sign Russian deals

RUSSIA

FLOATING NUCLEAR

power plants

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Russia’s floating nuclear power station at the Arctic port city of Pevek – dubbed ‘Chernobyl on ice’ by environmentalists – is gearing up for first electricity production by the end of this year

The Akademik Lomonosov

According to Rosatom, the FNPP should replace the generating capacities of the Chaun-Bilibino Energy Hub, which includes the Chaun thermal power plant (TPP) in Pevek and the Bilibino nuclear power plant (NPP) in the city of Bilibino. In February, Rosatom began decommissioning work at the plant’s ﬁrst reactor. Russia’s state nuclear corporation said in a statement that the FNPP in Pevek will create conditions to expedite the socio-economic development of Chaun Municipality and the mineral-rich Chukotka region as a whole. “Besides, [the] FNPP will become one of [the] key infrastructure elements under the programme of development of the Northern Sea Route.” If the venture is successful, it will represent another milestone in Moscow’s efforts to tame the melting Northern Sea Route and open up a direct trade route between Europe and Asia. While Moscow believes the ﬂoating nuclear power project will provide clean and reliable energy to the remote Chukotka region for the next decade, not all are convinced. Rosatom insists that the station is “virtually unsinkable” and is even built to withstand collisions with icebergs, the whole idea has

Economic impact The ship, built by Baltijskiy Zavod JSC, took a decade to complete and carries two KLT-40S nuclear reactors, similar to those used on Russia’s nuclear icebreaker fleet. Longer than two football fields, it also contains more extravagant features, like a gym, a pool and a non-alcoholic bar. With first electricity now anticipated for December 2019, it is coming up to the next critical juncture in the pioneering project. It is expected to have a major economic impact on the area it serves.

The start of towing operations

got environmentalists worried. Greenpeace, which has labelled the project “Chernobyl on ice”, says the Akademik Lomonosov is a catastrophe waiting to happen. “Remember the last time a ship was called ‘unsinkable’? Nothing is invincible. The problem is that this nuclear titanic has been constructed without any independent experts checking it. In Chernobyl, there was a similar lack of oversight,” Greenpeace commented in a statement. It also comes at a time when interest in the threat of nuclear accidents has been revived by the popular TV series Chernobyl on HBO, dramatising the 1986 nuclear disaster.

Rocket explosion Moreover, in August, five Russian nuclear engineers were killed in a rocket engine explosion on an offshore platform in the Arctic, Rosatom reported. The explosion was followed by a 40-minute radiation spike in Severodvinsk, a city 40 km east of the Nyonoksa test range by the White Sea. The Bellona Foundation, which covers environmental issues in the Arctic region, has also expressed its concerns over the FNPP programme. Last October, it became the first international environmental group to inspect the Akademik Lomonosov at its moorings at Atomflot, Russia’s Murmansk-based nuclear icebreaker port. It said in August that the thought of a nuclear power plant as vulnerable to tsunamis and foul weather as is the ocean-based Akademik Lomonosov strikes an anxious chord. “The possibility of the plant dislodging from its port during a catastrophe cannot be ruled out. The prospect of an active nuclear reactor heaved ashore and away from its cooling source is too troubling to ignore.” FE www.frontierenergy.info SUMMER 2019 21

Rosatom

ussia’s plans to build floating nuclear power stations to supply energy to remote Arctic regions and commercial installations took a big leap forward recently. At the end of June, Rosenergoatom JSC – part of Rosatom’s power division – obtained a licence to operate the floating nuclear power plant (FNPP), the Akademik Lomonosov, for a period of 10 years through to 2029. The licence was issued by the Federal Environmental, Industrial and Nuclear Supervision Service (Rostechnadzor). The vessel is now floating across the Arctic and destined for eastern Siberia for final testing and commissioning work. “Getting the FNPP operating licence is a result of the complex longstanding work to develop a unique nuclear facility,” said Andey Petrov, general director of Rosenergoatom JSC. The ship is to make its way to the Arctic seaport of Pevek followed by tests and commissioning of the floating nuclear cogeneration plant “late in 2019”. Before the end of the year, it is planned to complete the FNPP’s onshore and hydraulic structures in Pevek, as well as infrastructure to provide for the transmission of electricity to the power grids of Chukotenergo and heat for the city’s supply lines. The ship’s reactors, No.1 and No.2, were successfully brought up to 100% capacity in March 31 with tests that confirmed the operational stability of all main and auxiliary equipment on board, as well as the automatic process control systems.

ALASKA

Alaska is keen to ﬁnd more oil

Alaska oil licensing: OPEN FOR BUSINESS ///////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

A proposed lease sale in Alaska’s Arctic National Wildlife Refuge has stoked plenty of controversy but officials seem in determined mood to proceed with opening up the state for more oil investment

S officials seem as determined as ever to open up oil leases this year in Alaska’s Arctic National Wildlife Refuge (ANWR) despite stiff environmental opposition. The ANWR covers some 19 million acres of Alaska’s North Slope, overlying an estimated 16 billion barrels of recoverable crude oil reserves, according to federal officials. The US Interior Department confirmed its intentions earlier this summer with plans to sell oil leases in the ecologically sensitive coastal plain area of the region. “That lease sale will happen in 2019,” Joe Balash, the assistant interior secretary for lands and minerals management, told an oil industry conference in Anchorage at the end of May. His comments stoked ire among 22 SUMMER 2019 www.frontierenergy.info

environmental campaigners amid a decadeslong battle with the energy industry over the Beaufort Sea coast of the wildlife refuge, home to caribou, polar bear and other Arctic wildlife east of Alaska’s North Slope oil ﬁelds. The refuge had been off-limits to oil and gas drilling until the end of 2017, when Congress passed a tax overhaul that included a mandate for oil leasing there. This called on the Interior Department to conduct a lease sale within four years. The aim would be to offer at least 400,000 acres for development within the coastal plains of the ANWR.

Oil lease sale The Bureau of Land Management (BLM), a part of the Interior Department, has been preparing for the lease sale, issuing a draft

environmental impact statement last year. On June 20, it issued an update calling for nominations and comments on available tracts to be considered for its 2019 oil and gas lease sale across the 22.1 million acre National Petroleum Reserve in Alaska (NPR-A). “This is one of several actions we are taking to further expand energy development in Alaska,” said Chad Padgett, BLM Alaska State Director.

Integrated Activity Plan “The BLM in Alaska is also working on a new Integrated Activity Plan for the NPR-A to maximise tracts offered in the next lease sale as well as developing an Oil and Gas Leasing Programme for the Coastal Plain of the Arctic National Wildlife Refuge, as directed by the 2017 Tax Act.” There are 879 tracts on approximately 10.2 million acres available for nomination and comment. Currently, there are 215 authorised oil and gas leases, totalling 1,558,396 acres in the NPR-A. One of the reasons behind the proposed opening of new areas for leasing is the general decline in production in the state over recent years.

ALASKA

Sheltering Alaska’s diverse wildlife

New investment for US Coast Guard

Polar Security Cutter contract awarded

US builder VT Halter Marine Inc lands $746 million deal for new US Coast Guard Polar Security Cutter The US Coast Guard has awarded VT Halter Marine Inc, of Pascagoula, Mississippi, a $746 million contract for the design and construction of its new lead Polar Security Cutter (PSC). The contract also includes options for the construction of two additional vessels, which, together would push up the total contract

value to around $1.9 billion. PSCs support a wide range of Coast Guard missions including search and rescue, maritime law enforcement, environmental response, and national defence missions. “Against the backdrop of great power competition, the Polar Security Cutter is key to our nation’s presence in the polar regions,”

US Coast Guard

The Alaska Department of Revenue has said that it expects North Slope oil production for the ﬁnancial year 2019 to reach 511,500 barrels per day (bpd), then rising to 529,500 bpd in 2020. But the forecast is full of ups and downs, with a decline to 469,100 bpd forecast in 2024, before a recovery to 500,600 bpd by 2028. Nonetheless, the historical picture shows that, years earlier, the state was producing closer to 2 million bpd collectively, a major contributor to overall US oil production. Whatever transpires on the ANWR, there is certainty on a number of other oil and gas tracts now open to the industry. Alaska’s Department of Natural Resources is offering three Special Alaska Lease Sale Areas this Fall – Harrison Bay, Storms and Gwydyr Bay – that were opened in 2018 but failed to sell. FE

said Admiral Karl L Schultz, Commandant of the Coast Guard. “With the strong support of both the Trump Administration and the United States Congress, this contract award marks an important step towards building the nation’s full complement of six polar icebreakers to meet the unique mission demands that have emerged from increased commerce, tourism, research, and international activities in the Arctic and Antarctic.” Construction on the ﬁrst PSC is planned to begin in 2021 with delivery planned for 2024; the contract includes ﬁnancial incentives for earlier delivery.

www.frontierenergy.info SUMMER 2019 23

ALASKA

ConocoPhillips ON THE MARCH ///////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

ConocoPhillips is progressing its Alaskan portfolio nicely: ongoing work on the 100,000 barrels per day Willow project and the recent acquisition of the Nuna discovery add to momentum from last year’s Greater Mooses Tooth start-up

onocoPhillips is moving at speed on its Alaska operations, a place where it has been active for over 50 years. The Houston-based player in June announced that it had entered into an agreement with Caelus Natural Resources Alaska, LLC to acquire 100% of the Nuna discovery. The Nuna site is located just east of the Colville River and approximately five miles southwest of the Oooguruk field. It was announced as a discovery back in 2012. The purchase includes 11 tracts covering 21,000 acres in total. Over the next several years, the company plans to appraise Nuna with the goal of moving toward a final investment decision (FID), although there is no clear date when this will be. “This transaction represents an attractive addition to our expanding North Slope position and will allow ConocoPhillips to cost-effectively develop Nuna utilising Kuparuk River Unit infrastructure,” said Joe Marushack, president of ConocoPhillips

Alaska. “We believe this acquisition could lead to more oil production, more revenue for the state and more jobs for Alaskans.” The company is making headway elsewhere on its Willow project, a large oil ﬁnd that was announced in 2017, in the Bear Tooth Unit in the north east portion of the National Petroleum Reserve-Alaska (NPR-A). The original Willow discovery wells, Tinmiaq 2 and 6, were drilled on federal leases in early 2016.

Resource estimates After a successful 2018 exploration and appraisal season in the Greater Willow Area, resource estimates range from 400 million to 750 million barrels of oil equivalent (boe). ConocoPhillips has proposed a new standalone production facility to develop the resource and is currently working toward a FID, possibly as early as next year or 2021, with ﬁrst oil around 2024-2025. It is estimated that the ﬁeld will produce in excess of 100,000 barrels of oil per day (bpd). Appraisal drilling this year is expected to

Cook Inlet geophysical survey

Hilcorp Alaska is to conduct the first geophysical survey in the Cook Inlet since July 2005 The Bureau of Ocean Energy Management (BOEM) has approved a permit from Hilcorp Alaska LLC to conduct a new geophysical survey in the federal waters of Cook Inlet, off the coast of Southcentral Alaska. The area to be surveyed is in the lower Cook Inlet, west of Kachemak Bay. It will be the ﬁrst geophysical survey in the Cook Inlet since a July 2005 survey conducted by Veritas DGC. Hilcorp said that it expects to begin the survey in late summer or early fall; the company will then have 60 days to complete the survey.

24 SUMMER 2019 www.frontierenergy.info

Hilcorp acquired 14 Outer Continental Shelf (OCS) blocks from Lease Sale 244 in mid-2017. The new survey area comprises 42 OCS blocks, including eight of Hilcorp’s 14 leased blocks, covering approximately 969 sq km. Data acquired from the survey will be used to identify potential offshore oil and gas resources. The survey will involve one seismic acquisition vessel plus two support vessels. Monitoring of marine mammals will be conducted simultaneously by observers deployed on the ships.

help the company zero in on specifics, including development plans and work timelines. The company has 100% interest in approximately 1.2 million acres of exploration and development lands in the area, including the Willow discovery itself. Towards the end of 2018, ConocoPhillips announced first oil production from the Greater Mooses Tooth #1 (GMT1) drill site in the NPR-A. This is a satellite development of the Alpine field and is connected by road to drill site CD5. Peak gross production is estimated at 25,000 to 30,000 bpd. Oil from GMT1 – the first drill site on federal leases within the NPR-A – is processed through Alpine’s existing facilities. FE

ALASKA

Great expectations ///////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Aussie junior XCD Energy is looking to make its name on Alaska’s North Slope Alaska may be home to all of the industry’s big boys — the likes of ExxonMobil, BP, ConocoPhillips dominate in this frozen northern wilderness — but it can also be a place for ambitious juniors to cut their teeth. Australia’s XCD Energy holds a 100% working interest in almost 150,000 acres in the highly prospective Alaskan North Slope, close to existing exploration and appraisal activities – including Conoco’s 100,000 barrels per day (bpd) Willow project. The freshly rebranded ASX-listed company – formerly Entek Energy — is pursuing the Nanushuk and Torok oil plays and has high expectations in what is an already-proven exploration hot spot. In July, it completed a 2D seismic reprocessing exercise to boost data quality across some of its assets. That meant the reprocessing of approximately 600 km of seismic originally acquired by the US Geological Survey (USGS) in the 1970s and 1980s.

Significant improvement The reprocessed lines cover both the Entek leases and the Conoco-operated Willow field to the north. XCD noted in a statement on July 18 that the new data set showed a “significant improvement” in quality. The reprocessed data will now be included in a more detailed study — known as the Integrated Nanushuk Technical Regional Overview (or INTRO Project) — incorporating sequence stratigraphy, basin modelling, geochemistry, petrophysics and core scanning technology to give a more comprehensive understanding of the Nanushuk play. This work is expected to be completed in late September. “The results of the reprocessed dataset represent a big step forward in being able to better interpret the numerous leads in our lease area,” said XCD Energy’s managing director, Dougal Ferguson. “The INTRO Project will deliver our expert technical group with an improved dataset and geological understanding to allow the company to confidently move forward with the planned 3D seismic acquisition in Q1 2020.”

www.frontierenergy.info SUMMER 2019 25

ICEBREAKERS

Heavy icebreakers Louis S St-Laurent and Terry Fox

The great icebreaker race GATHERS MOMENTUM As economic interests in the Arctic region continue grow, and as the icy waters of the region become less icy and more navigable, there is an unprecedented appetite for new icebreaker vessels

n a move that underscores the growing level of economic interest in the Arctic, investment in new icebreakers looks to be on the rise. The government of Canada recently announced plans to overhaul its fleet with the construction of new icebreakers for the Canadian Coast Guard. As part of the state’s National Shipbuilding Strategy (NSS), a total of six new icebreakers will be built for the Coast Guard. The new vessels will be fundamental to year-round safe and efficient movement of ships and goods in Canadian waters. The NSS is Canada’s long-term plan to renew the fleets of the Royal Canadian Navy and the Canadian Coast Guard. An official government statement in August 26 SUMMER 2019 www.frontierenergy.info

said the newbuild programme would support the “critical services” of the Coast Guard to protect mariners and the marine environment, and to ensure the safe and efﬁcient movement of ships in support of the nation’s economy. “With continued growth in commercial shipping and with climate change already affecting our communities, demands on the coast guard continue to grow,” the statement read. In May, Prime Minister Justin Trudeau announced that the country would be spending C$15.7 billion to renew its wider ﬂeet for the navy and coast guard. This would include up to 16 multipurpose vessels to be built at Seaspan’s Vancouver Shipyards and two new Arctic and offshore patrol ships to be built at Irving Shipbuilding Inc.

Jonathan Wilkinson, Minister of Fisheries, Oceans and the Canadian Coast Guard, highlighted the signiﬁcance of the investment. “The Canadian Coast Guard saves lives at sea, maintains safe shipping, enables an otherwise ice-choked economy, protects the marine environment and supports Canadian sovereign presence in the Arctic,” he said. “Demands on the coast guard will only grow as the impacts of climate change become more frequent and intense. By adding the new programme icebreakers to renew the ﬂeet, we are ensuring the women and men of the Canadian Coast Guard have the equipment they need to deliver icebreaking services in the Arctic, on the St Lawrence waterway and on Canada’s East Coast.”

Economic interests The new icebreakers will replace the coast guard’s heavy and medium icebreakers which operate in Atlantic Canada and the St Lawrence waterways during the winter and in the Arctic during the summer. In Atlantic Canada, the icebreakers help ensure year-long ferry services, escort ships through ice-covered waters, and clear ice from

CGG

ICEBREAKERS

Rosatom fleet In Russia, the Rosatom ﬂeet continues to expand with the launch of the nuclearpowered Arctic icebreaker Ural in May. In a statement, the company said the launch completes another step towards ensuring year round navigability of the Northern Sea Route (NSR).

The 173 m long vessel is equipped with two highly efﬁcient and compact RITM-200 nuclear reactors on board, capable of generating up to 350MW combined, allowing the ship to break through ice as thick as three metres. The Ural forms part of Rosatom’s socalled 22220 project, which also includes the new Arktik and Sibir icebreakers.

Aker Arctic activity

Dual-draught design A unique feature of the vessels is the dualdraught design. Ballast tanks inside the hull can be adjusted easily to alter the ship’s draught depending on whether the vessel needs to navigate Arctic seas or shallow river estuaries. With this smart design solution, Rosatom says it is essentially getting two types of icebreakers for the price of one, representing a potential cost saving of hundreds of millions of dollars. “The Ural, together with its sister [vessels], are central to our strategic project of opening the NSR to all-year activity,” said Alexey Likhachev, Rosatom’s director general. “Our goal for 2024 is for more than 80 million tonnes of shipments to pass through the NSR. We also plan to add two more project 22220 ships to our nuclear icebreaker ﬂeet by 2027. The contract for construction of these icebreakers is expected to be signed by the end of this August.” The Russian government has given Rosatom the lead in the development of the NSR maritime infrastructure, which includes large amounts of state funding. The total amount of funding for the NSR development project is RUB734.9 billion ($11.3 billion) for six years. Up to a third of that, RUB274 billion ($4.2 billion), will be provided from the government budget. The remaining two-thirds, over RUB460 billion ($7.1 billion), will be funded by investors including Rosatom, plus energy giants Rosneft and Novatek, among others, interested in transporting cargo along the Arctic sea route. FE The ceremonial launch of the Ural

Rosatom

harbours and wharfs, which is essential for Canada’s commercial fisheries. In the Arctic, they will provide icebreaking support to ships with vulnerable cargoes, such as dangerous goods and perishable products, and support vessels transporting cargo that is a vital part of the northern communities’ sealift and re-supply. Significantly, the new icebreakers will be built at a third strategic shipyard (in addition to Seaspan’s Vancouver Shipyards and Irving Shipbuilding Inc) to be selected through a competitive process under the NSS. In August 2018, the Canadian government awarded Chantier Davie a C$610 million contract for the purchase of three icebreakers. This contract included conversion of the first vessel for the Canadian Coast Guard. The three new icebreakers will assist with icebreaking operations while the existing fleet undergoes vessel life extension, repair and planned maintenance periods. All three are to be equipped with a removable towing notch, which allows for safe and secure closed-coupled towing of other vessels. The notch is located at the rear of the vessel, allowing it to break ice and tow at the same time. The icebreakers are the first in the new-look federal fleet to have this unique towing capability. One of the trio, the CCGS Captain Molly Kool – named after Captain Myrtle ‘Molly’ Kool, a pioneer in Canada’s maritime history – is taller than a seven-storey building and can operate continuously for up to 25 days, breaking up to 1 m of ice at a speed of 3 knots.

Finnish private company Aker Arctic is enjoying the benefits of an upsurge in demand for ice-class vessels, including icebreakers and other ships. It posted an update recently on its multiple Arctic icebreaking ship projects: l The new Chinese icebreaking polar research vessel, Xue Long 2, was delivered to the Polar Research Institute of China (PRIC) on the 15th China Maritime National Day on 11 July 2019. Aker Arctic was awarded the design contract for the first-ever Chinese-built icebreaker in 2012 and developed the state-of-the-art Aker ARC 128 design to meet both today’s and tomorrow’s research needs. Later this year, Xue Long 2 will join China’s 36th Antarctic expedition to carry out scientific research and resupply the country’s four research stations on the continent. l At Vyborg Shipyard in Russia, the construction of the port icebreaker Ob is approaching its final stages with sea trials and delivery scheduled for the coming autumn. The vessel, based on the Aker ARC 124 design, incorporates advanced features from general design to individual technical solutions, giving this relatively small icebreaker exceptional operational capability in the difficult ice conditions in the Arctic LNG terminal of Sabetta. l The construction of the world’s first Polar Class 2 expedition cruise ship for Ponant is also progressing at Vard Tulcea shipyard in Romania. Named after the French polar scientist JeanBaptiste-Étienne-Auguste Charcot (1867–1936), Le Commandant Charcot is the first luxury cruise ship designed to sail independently all the way to the Geographic North Pole. In June, Ponant officially opened sales for the vessel’s summer 2021 Arctic itineraries. l The Arctic condensate tanker Boris Sokolov has now been transporting gas condensate from Sabetta to various ports in Europe for more than half a year. Last spring, Aker Arctic’s expedition team carried out full-scale ice trials on the vessel based on its Aker ARC 212 design. In order to evaluate the performance of the vessel, the fully laden Boris Sokolov deviated from its regular route and headed towards the Siberian coast to seek ice conditions that were closer to the tanker’s maximum independent icebreaking capability. The analysis of the results is currently ongoing.

www.frontierenergy.info SUMMER 2019 27

EVENTS, CONFERENCES & EXHIBITIONS /////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Arctic Shipping Forum North America October 29-31, 2019 Montreal, Canada Exploring the latest in operations, design and technology for shipping in the Arctic. Taking place this October, the Arctic Shipping Forum North America will offer a two-day showcase dedicated to the latest regulatory and technological developments for the Arctic region. Focused primarily on developments in the North American region, this event will also include area spotlights on China and Russia, as well as the USA and Canada. A must-attend event for all businesses with an interest in the Arctic and active in these markets. https://maritime.knect365.com/arctic-shipping-northamerica/ /////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

15th Arctic Shipping Summit December 4-5, 2019 Hamburg, Germany Bringing together stakeholders from all parts of the Arctic shipping sector to discuss their involvement in the ever-changing Northern Shipping Route. This two-day conference will welcome companies and organisations such as national coastguards, senior government ofﬁcials, shipping companies, LNG projects, lawyers, P&I Clubs, Arctic researchers and lecturers and many more. The summit will allow for an interactive and open conference in order to facilitate as much networking and discussion as possible, and to explore key advancements in policy and regulation, as well as updates to the Polar Code. https://www.wplgroup.com/aci/event/arctic-shippingsummit-europe/ /////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

20th Annual Arctic Oil & Gas Symposium March 18-19, 2020 Calgary, Canada A major milestone for this successful annual gathering. Building on a legacy of 20 years, this event brings together political leaders and senior decision-makers from government and northern communities, as well as executives from the resource industry for candid discussions on the future of oil and gas development in Canada’s far north. Taking place at Calgary’s Hotel Arts and put together by The Canadian Institute, it is the perfect opportunity to learn about all the key developments in the rapidly evolving Arctic oil and gas industry. https://www.canadianinstitute.com/20th-annual-arctic-oilgas-symposium/

TO ADVERTISE your event in the magazine, website or eNewsletter, please contact publisher@frontierenregy.info

28 SUMMER 2019 www.frontierenergy.info

Arctic Futures 2050 September 4-6, 2019 Washington DC, USA Arctic Futures 2050 — convened by the Study of Environmental Arctic Change (SEARCH) — is an international conference designed to enhance collaboration between all groups with an interest in the Arctic region. A gathering of scientists, indigenous peoples, and policymakers jointly exploring the knowledge needed to inform decisions concerning the Arctic in the coming decades. Current sponsors include the National Science Foundation’s Arctic Sciences Section, the Gordon and Betty Moore Foundation, the Bureau of Ocean Energy Management, and the American Geophysical Union. https://www.searcharcticscience.org /arctic-2050/conference-2019 Sakhalin Oil & Gas 2019 September 24-26, 2019 Sakhalin, Russia The leading event for the oil and gas sector in the Russian Far East takes place at the Stolitsa Business Centre. The conference will bring together 600-plus participants to discuss current and future projects in the Sakhalin area, and the latest industry dynamics. Find out about all the latest projects, take part in influential debates with top government officials and representatives of both national and international oil companies, and gain access to top decision-makers. Includes evening networking receptions, one-to-one meetings, roundtable discussions, and access to an exclusive networking app. http://www.sakhalin-oil-gas.com Arctic Frontiers 2020 January 26-30, 2020 Tromso, Norway Arctic Frontiers started out in 2006 assembling the first global scientific conference on economic, societal and environmental sustainable growth in the far north. In January

2020, it will arrange the 14th conference under the theme ‘Power of Knowledge’. The conference has a pan-Arctic perspective and builds new partnerships across nations, generations and ethnic groups. Arctic Frontiers provides a forum for dialogue and communication between science, government and industry across the Arctic. https://www.arcticfrontiers.com/ event/arctic-frontiers-2020-powerof-knowledge/ OTC 2020 May 4-7, 2020 Houston, USA Now over 50 years old, OTC’s ﬂagship conference is held annually at NRG Park (formerly Reliant Park) in Houston, Texas. OTC is where energy professionals meet to exchange ideas and opinions to advance scientiﬁc and technical knowledge for offshore resources and environmental matters. The franchise has expanded technically and globally since its inception with the Arctic Technology Conference, OTC Brasil, and OTC Asia. The largest industry event of its kind, featuring approximately 2,000 exhibitors and attendees. www.otcnet.org Ocean Arctic Energy June 14-19, 2020 Shanghai, China The 30th International Ocean and Polar Engineering Conference takes place in Shanghai, China. One of the world’s largest technical conferences of its kind, the event is being organised by the technical committee of the International Society of Offshore and Polar Engineers (ISOPE) with 30-plus cooperating bodies. Its objective is to provide a timely international forum for researchers and engineers. Topics under the microscope will include offshore engineering, Arctic science, advanced ship technology and highperformance materials. www.isope.org