Frontier Energy, Spring 2020 by Frontier Energy

OIL, GAS & SHIPPING IN THE ARCTIC AND ICE-AFFECTED REGIONS www.frontierenergy.info SPRING 2020

COVID-19 Post-pandemic outlook

RUSSIA Unwavering commitment to Arctic energy

NORWAY Johan Castberg gathers momentum

OIL SPILL TECHNOLOGY Clean Arctic project

ICEBREAKERS Next-generation vessels

ICE NAVIGATION Reading the oceans

ATLANTIC CANADA A challenging environment + LOGISTICS + SHIPPING + LNG + TOURISM + ALASKA

T N E GS V E TIN S LI

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CONTENTS

08 Spring 2020

IN THIS ISSUE

OIL, GAS & SHIPPING IN THE ARCTIC AND ICE-AFFECTED REGIONS www.frontierenergy.info SPRING 2020

COVID-19 Post-pandemic outlook

Features

Regulars

FE 06

CORONAVIRUS The full impact of the pandemic on the oil industry may take time to play out but a toxic mix of low prices, weak demand and stiﬂed economic activity suggests that, at the very least, projects may be rolled back, especially in higher-cost production areas

FE 08

RUSSIA In determined mood: Moscow’s unwavering commitment to the development of its

04 NEWS Var Energi plans 4D seismic at Goliat ﬁeld; US Coast Guard to extend service life of Polar Star; Rosgeologia shoots Antarctic seismic survey; China’s ice ships team up; Norway to limit Barents Sea exploration boundary; Goldboro LNG investment decision delayed; Gazprom conﬁrms its drilling plans are on track

RUSSIA Unwavering commitment to Arctic energy

NORWAY Johan Castberg gathers momentum

OIL SPILL TECHNOLOGY Clean Arctic project

ICEBREAKERS Next-generation vessels

ICE NAVIGATION Reading the oceans

ATLANTIC CANADA A challenging environment + LOGISTICS + SHIPPING + LNG + TOURISM + ALASKA

Arctic energy sector remains intact despite price wars and pandemics, as key companies press on with their projects

T EN GS EV TIN LIS

FE On the cover

FE 10

NORWAY Unsettled outlook in the Barents Sea: Norwegian operators are battling against tough market conditions, scaling back spending in response to lower oil prices, subdued demand and the global health pandemic

FE 12

JOHAN CASTBERG Work gathers momentum: Equinor is still on track to complete the Arctic region’s biggest current oilﬁeld development, the mighty Johan Castberg project in the Barents Sea

FE 14

ICEBREAKERS Leaders of the ice pack: Rosatom subsidiary FSUE Atomﬂot is to expand its

The deck of an icecovered vessel at sea in Antarctica (Shutterstock)

icebreaker ﬂeet with giant new ‘Leader’ vessel, to be equipped with two RITM-400 nuclear reactors, able to smash through ice more than 4 metres thick FE 16

LOGISTICS Ships for all seasons: Two Red Box PC3 Module Carriers, the AUDAX and PUGNAX, have been instrumental in the development of the Arctic’s LNG sector, but their story is only just beginning

FE 18

REMOTE WORK TECHNOLOGY Data driven: The energy industry adapts to working from home as technology becomes the main oil and gas services segment to thrive in the Covid-19 era

FE 19 ICE NAVIGATION Reading the oceans: How the US Naval Research Laboratory and its

innovations are playing a role in helping vessels to safely navigate their way through challenging polar ice conditions FE 20

OIL SPILL TECHNOLOGY Clean Arctic project: Scientists at oil company Rosneft and the Russian Arctic National Park have discovered micro organisms that are able to clean oil pollution from soil

FE 22

ALASKA In an industry facing up to zero dollar pricing, US oil ﬁrms are racing to shore up their defences, slashing costs and production in a bid to protect their businesses for when a new normality returns

FE 24

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

ATLANTIC CANADA Production continues off Canada’s emerging Atlantic region, but delays to drilling and big budget cuts will no doubt dampen the outlook for the year ahead

FE 26 ARCTIC TOURISM New luxury cruise liners set to enter polar tourism market: Despite the

gloomy conditions, more vessels are being built to ferry tourists around the Arctic using state-ofthe-art technology to ensure safe travel

www.frontierenergy.info SPRING 2020 1

RED BOX ENERGY SERVICES RED BOX ENERGY SERVICES is the leading provider of module transportation services for Major LNG Liquefaction Projects. The RED BOX Team has transported a majority of the modules installed at GORGON LNG, ICHTHYS LNG and YAMAL LNG and has worked closely with worldâ&#x20AC;&#x2122;s Leading Energy Majors & EPC Companies. The Polar Class (PC3) Heavy Transport Sister Ships, AUDAX and PUGNAX are the only module carriers in the world today that can safely navigate unescorted, yearround above the Arctic Circle. They have been designed and constructed to safely transport module cargoes weighing as much as 20,000 tonnes. The Vessels have an ice-free deck area capable of receiving both side and stern loadout and discharge of modules as long as 80 meters with a beam of 45 meters.

Red Box Energy Services Hofplein 20, 14th Floor 3032 AC Rotterdam The Netherlands T +31 10 2680200 E info@redboxgroup.com W www.redboxgroup.com

EDITOR’S LETTER

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“A new global ﬂeet of icebreakers, tankers and cruise ships, planned or under construction, illustrates how the Arctic region remains of interest despite pandemics and tough market realities.”

www.frontierenergy.info Editor Martin Clark editor@frontierenergy.info Canadian Correspondent Andrew Safer Publisher Stephen Habermel publisher@frontierenergy.info Design & Layout Nick Blaxill © 2020 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* Batten down the hatches

hese are unprecedented times. If operating in the Arctic was not testing enough, the global Coronavirus pandemic has brought with it a whole raft of additional challenges, from social distancing measures through to an increased emphasis on remote working practices. Deals are being signed remotely, even nuclear inspections carried out by experts many miles from actual installations. It is a testament to all those working in the energy sector that production continues more or less unchanged amidst all the upheaval. Then there is the huge economic fall-out arising from the health crisis. A number of big Arctic economies, such as the USA and Russia, are facing heavy bills linked to the pandemic, which are expected to trigger a deep recession for the rest of the year at least. Highly volatile oil prices have also unsettled the industry, while global demand has been slashed as whole nations have been shut down. This toxic mix has resulted in oil companies worldwide reducing spending plans, which will impact exploration and development activity in the coming year. It is a sobering environment but one that applies to all industry players and, indeed, most industry sectors the world over, with aviation especially hard hit. The International Monetary Fund predicts a recession akin to the Great Depression 100 years earlier. In the oil industry, production is now being pruned back in response to the supply glut, which has already had a firming effect on pricing. Given the difficult backdrop, however, it may be some time before the market evens out to return to a new kind of normal. It is all the more remarkable then, how the men and women of the Arctic’s energy sector continue with their responsibilities undeterred. In Norway, that means pressing ahead with the giant Johan Castberg development in the Barents Sea, one of the country’s flagship oil projects. The gas sector has shown less volatility, and Russia has maintained its determination to proceed with key drilling and development plans as it grows its strategic interests in Arctic energy and shipping. The message is that the Arctic remains open for business, even in the face of such adversity. A new global fleet of icebreakers, tankers and cruiseships, planned or under construction, illustrates how the region remains of interest despite pandemics and tough market realities. One research report suggested recently that the Arctic may contain up to a quarter of the world’s untapped hydrocarbon reserves, representing a $35 trillion opportunity. That value may have taken a knock in the first of half of 2020 with the collapse of oil prices, but the point remains the same. It is hard to predict what the post-pandemic world might look like, and what the ramifications might be for the oil and gas industry. But if the world’s population continues to rise, and demand for energy climbs after this brief hiatus, then the Arctic region will remain a place of great interest for oil and gas, shipping and mining companies, among others. For now, as any good skipper will know, it is a case of weathering the storm.

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 SPRING 2020 3

NEWS

IN NUMBERS

///////////////////////////////////////////////////////////////////////////////////////////////////////

2022

Var Energi plans 4D seismic at Goliat oilfield Var Energi AS has teamed up with PGS Geophysical AS for 4D seismic acquisition at Goliat, the world’s most northerly oilfield. 4D seismic is a method of reservoir monitoring by acquiring seismic surveys at different times over the same field. The purpose is to map and assess reservoir changes over time. A baseline survey over the field was acquired in 2009; the intention is to collect the first repeat survey this summer, after four years of production.

“Comparing the differences between both surveys will give important information about fluid movement in the reservoir, which will help future drilling campaigns and enhanced field management,” said Rune Oldervoll, Var Energi’s VP Operations. “Use of the 4D technology contributes to responsible resource management and is part of our strategy to better assess and exploit the potential in proximity to the producing fields.”

40%

– number of Barents Sea licences awarded in Norway’s APA 2019

– fall in CO2 emissions with Var Energi’s new LNGpowered shuttle tankers

US Coast Guard to extend service life of ‘Polar Star’ The US Coast Guard (USCG) released a request for proposal earlier this year to extend the service life of the Coast Guard Cutter Polar Star. The 399 ft cutter, commissioned in 1976, is the USCG’s only active heavy icebreaker. The USCG said it wanted to prolong the active service of the vessel until its second Polar Security Cutter (PSC) is operational. Delivery of the next PSC is planned for 2024. The future contract for the Polar Star spans work over a

USCG Polar Star

USCG

Norway’s Goliat oilﬁeld

Vår Energi

– first oil expected from Johan Castberg project

ﬁve-year phased production schedule from 2021 through to 2025. “When the cutter is eventually decommissioned, its duties will be assumed by the planned PSCs,” a USCG statement read on February 3.

/////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Rosgeologia shoots Antarctic seismic survey

China’s ice ships team up

Russian state-owned geophysical company Rosgeologia (RosGeo) shot more than 4,000 km of new seismic data in the Antarctic earlier this year to assess its oil potential. It is reported to be the ﬁrst seismic work in the area by Russia since the late 1990s. RosGeo said the seismic work covered the Riiser-Larsen Sea, off the coast of Queen Maud Land. Previous work has indicated the

potential for billions of barrels of oil and gas deposits. But while the move may not trigger any imminent development, it could undermine the fragile politics that have protected the area for decades, according to an article by S&P Global Platts, citing one expert from the Antarctic and Southern Ocean Coalition, which represents the global environmental community at the Antarctic Treaty.

China’s ﬁrst domestically built icebreaker, Xue Long 2, delivered in 2019, is working alongside sister ship Xue Long (Snow Dragon) for the ﬁrst time on the country’s 36th Antarctic expedition. The vessel includes deck handling equipment from maritime cargo and handling experts MacGregor, with three offshore cranes, research equipment deck handling systems, oceanographic winches, deck machinery and hatch covers.

Xue Long 2 was designed by Aker Arctic Technology in Finland and the Marine Design and Research Institute of China, with construction at the China State Shipbuilding Corporation’s Jiangnan Shipyard in Shanghai. It was delivered to the Polar Research Institute of China (PRIC) in July last year. A Polar Class 3 vessel, measuring 122.5 m long, the vessel is the world’s ﬁrst icebreaker capable of cutting through ice whilst moving forward or backwards.

Norway to limit Barents Sea exploration boundary Norway looks set to extend its no-go zone for exploration in the country’s Arctic waters, though it will not affect areas for which licences have already been granted to oil companies. The government proposed an extension in April

4 SPRING 2020 www.frontierenergy.info

of the so-called ice edge boundary to the constantly changing southern fringe of the permanent ice sheet. Anything north of that line is considered offlimits for oil drilling.

However, the new line remains sufﬁciently far north that it does not affect existing exploration licences. “It is a good compromise,” said energy minister Tina Bru.

NEWS

450

$1 trillion

– number of wells to be drilled this year by ERIELL Russia

– expected drop in E&P spending during 2020

10 mtpa

8,000 tons

– planned capacity of Goldboro LNG plant, Nova Scotia

– weight of the Johan Casterg turret mooring system

2023

9.4 million barrels

12%

– first cargo from Arctic LNG 2 project

– Canada-Newfoundland and Labrador Offshore Area oil production in March

– fall in oil consumption in Q2 2020

Sources: Var Energi, Equinor, Drydocks World, Rystad Energy, Novatek, ERIELL Russia, Wood Mackenzie, Norwegian Petroleum Directorate (NPD), Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB), Pieridae Energy

Goldboro LNG investment decision delayed Canada’s Pieridae Energy has pushed back plans for a final investment decision (FID) on its Goldboro LNG export plant in Nova Scotia this year because of the Coronvirus pandemic, though it remains committed to the project. It now expects to make an FID by June 30, 2021. “Work continues on multiple fronts with our Goldboro LNG facility, primarily with KBR to finalise a fixed price contract to design and build the facility,” said its chief executive Alfred Sorensen in midApril. “Market conditions and the global fallout from Covid-19 have impacted our ability to make a final

investment decision this fall, but we are conﬁdent it will happen once conditions improve and we can better analyse the landscape.” Pierdae Energy hopes ultimately to build a 10 million tonnes per annum (mmtpa) liquefaction plant on Canada’s east coast with an initial start of 2023, though that may now be in doubt. On May 5, it announced that it had negotiated an extension with one of its customers, Uniper Global Commodities of Germany, which has a 20-year agreement to take LNG from Goldboro Train 1, some 4.8 mmtpa. Expected commercial deliveries of gas to Uniper will now

start between August 31, 2025, and February 28, 2026, subject to a positive FID. Sorensen added in a May 5 update that the company remains fully behind its project. “Over the last several weeks we have seen projects in Australia, Africa and the Gulf Coast either cancelled or

delayed indeﬁnitely due to the challenging energy market. We believe this is an opportunity for Canada to enter into this industry at a time when others are exiting. Our Goldboro LNG Project is fundamentally sound and, with fewer competing projects, now is the time to proceed.”

Advancing oil spill response science and technology through …

Gazprom confirms its drilling plans are on track Russian gas giant Gazprom confirmed 2020 drilling plans in mid-April for the Yamal Peninsula. The company said it plans to bring 52 new gas wells on stream at the Bovanenkovskoye field this year. At the Kharasaveyskoye field, it is beginning to weld pipes for gas collection headers and the connecting gas pipeline stretching to Bovanenkovskoye, a statement read. “This year, it is also planned to start production drilling and the construction of a CGTU and a booster compressor station at Kharasaveyskoye.”

Elsewhere, the Sakhalin— Khabarovsk–Vladivostok gas pipeline is undergoing an expansion, with 66 km of about 390 km of its linear part already built at the section between Komsomolsk-on-Amur and Khabarovsk. Production drilling is also in full swing at the Kovyktinskoye field in the Irkutsk region. Seven rigs are currently in operation, rising to 18 next year, it added. Gazprom reported a fall in 2019 net profit to RUB1.2 trillion ($16.3 billion) from RUB1.46 trillion in 2018 as revenues declined.

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www.frontierenergy.info SPRING 2020 5

CORONAVIRUS

Oil prices collapsed in H1 2020

RESILIENCE THE WATCHWORD as industry ponders post-virus future /////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

The full impact of the Coronavirus pandemic on the oil industry may take a long time to play out but a toxic mix of low prices, weak demand and stifled economic activity suggests that, at the very least, projects may be rolled back, especially in higher-cost production areas

n ordinary times, an oil price crash would make headline news. But these are not ordinary times. Despite the collapse of prices and the oil market in recent months, it is the almost unknowable effects of the Coronavirus pandemic that have kept the world’s media spellbound for nearly all of 2020. And for good reason: the pandemic has taken many thousands of lives and wreaked havoc on the world’s economy. Seeing where the industry goes from here – and how that might affect developments in the Arctic – is a bit like gazing into a crystal ball. So what do we know for sure? Perhaps most significantly oil prices have been decimated in past months, not only due to stifled demand arising from the pandemic and the strangling of key economies, but also because of the production war that has seen Saudi Arabia and Russia flood the market. At 6 SPRING 2020 www.frontierenergy.info

a time of reduced demand, the supply glut means prices have bombed. In the US, that even meant zero dollar barrels, prompting large-scale shut-ins and immense pressure for the country’s shale industry. Budget cuts have become the norm, as industry players shore up their defences for the future, ﬁrstly to survive, and then later to emerge in the postpandemic world.

Host of questions For the Arctic region, where production costs are not among the cheapest, it raises a host of questions about the future. The whole scenario has left experts and analysts scratching their heads. One way to see through the haze is to look at the industry’s expected total annual revenues for 2020, which have plummeted. A Rystad Energy analysis shows that global exploration and

production (E&P) revenues are now forecast to fall by about $1 trillion in 2020, a drop of 40% to $1.47 trillion from last year’s $2.47 trillion. By any measure that is a devastating blow, with multiple repercussions and ripple effects likely across the industry. This will slash cash ﬂow for the E&P sector, which reduces money available for investments, and also signiﬁcantly cuts government tax revenue. “It will be challenging for petro-states such as Russia and many Middle Eastern countries to sustain their budgets,” said Rystad Energy’s upstream analyst Olga Savenkova.

Russia resilient Russia perhaps is better placed to move forward with its Arctic energy plans than rival countries in the West. That said, it is still in the process of reducing output and tackling the virus. Its energy minister, Alexander Novak, said in late April that foreign-operated as well as domestic oil projects in the country will reduce output, pro-rata, as part of a global pact to cut crude production, Interfax news agency reported. Novak said Russian companies will cut their production by 19% from February levels as part of the global deal to reduce oil output. Nonetheless, there is plenty of activity on

CORONAVIRUS

the ground that gives reason for optimism. Novatek, the driving force behind Russia’s Arctic LNG projects, seems intent on pushing ahead with its expansion plans despite the challenges faced. On April 28, it announced that its Arctic LNG 1 subsidiary had registered licence number SLH 16637 NR for geological survey, exploration and production at the Bukharinskiy subsoil licence area on the Gydan Peninsula. The licence area, partially located in the shallow waters of the Ob and Taz bays in the Yamal-Nenets Autonomous Region, is earmarked as a potential resource base for nearby LNG production. It is held for a period up to 2050, reflecting long-term thinking. The company said it intends to begin full-scale geological and geophysical activities and commence drilling of a first well in the upcoming 2020/2021 exploration season. The Bukharinskiy licence area has estimated hydrocarbon resources of 1,190 billion cu m of natural gas and 74 million tons of liquids, or 8.4 billion barrels of oil equivalent, according to the Russian resource classification system. Oilfield services group ERIELL also highlighted strong activity in Russia as the main support for its 2020 outlook, as well as a primary focus on gas, rather than oil. In total, it expects to drill 450 wells during the course of the year, citing “intensive growth and new contracts” in Russia and Uzbekistan in a March 31 update. “We have a heavy involvement now in the gas sector... which experiences a bit less volatility than the oil sector,” noted Vitaly Dokunikhin, chief executive of ERIELL Russia. Last year, it signed an additional contract with Arctic LNG 2 for the drilling of 59 wells at the Utrennee field, involving three Arctic drilling rigs. The first Uralmash rig is already at the well site and is installing now, with a second one to be mobilised by summer 2020. It also announced continued cooperation with

What the CEOs said... “Equinor is in a strong financial position to handle market volatility and uncertainty. Our strategy remains firm, and we are now taking actions to further strengthen our resilience in this situation with the spread of the Coronavirus and low commodity prices.” Eldar Sætre, president and CEO, Equinor ASA (March 20, 2020) “While Covid-19 has had a significant impact on the global economy, we are confident that trade, transportation and manufacturing will recover. ExxonMobil continues to invest in the projects that will position us to support economic recovery and capture value for our shareholders.” Darren Woods, chairman and CEO, ExxonMobil (April 7, 2020)

Arcticgas, a joint venture between Novatek and Gazprom Neft, one of the company’s longest ongoing projects (over 10 years), with more than 180 wells drilled to date. It said new work is now under way at the Urengoyskoye and Yaro-Yakhinskoye oil and gas condensate ﬁelds on the Achimov and Valanginian deposits.

Supply chains After the tumultuous time of recent months, it is natural to expect an uneven path back to any kind of normality. Even with a determination to keep on track with 2020 plans, disruptions along the supply chain, and an unprecedented hit to the global economy, which is expected to suffer its worst blow since the 1930s, will hinder recovery. For oil and gas operators, problems with the supply chain may get a lot more real as infection rates increase, or in the wake of a second wave. That includes the impact on specialist technical knowledge

The world after Covid-19 The Covid-19 pandemic has hit the world economy harder than any event since World War 2. As governments around the world have shuttered businesses and restricted freedom of movement, demand for energy has plunged. Oil consumption in Q2 2020 is down more than 12%, according to Wood Mackenzie. In a new report, it highlights what to expect once the worst of the pandemic is over. “The ultimate impact of the pandemic is still uncertain and will depend heavily on whether an effective vaccine can be developed,” it states. “Political decisions, including the US elections in November, will also shape the consequences for energy.”

However, some clear trends are already emerging. Governments are intervening more actively to control businesses and the public; international trade and travel are being restricted; and the use of new technologies to adapt to life under lockdown is surging. It ponders the future under various scenarios, from full recovery through to the impact of a widespread rejection of globalisation, as well as the consequences of states using stimulus measures to accelerate the transition to alternative fuels. “The scenarios suggest a lasting impact on energy demand, which could persist for decades,” it notes. “Oil demand in particular

“The combination of Covid-19 and the oil market downturn has been difﬁcult on industry and on stakeholders everywhere. As we manage through this unprecedented event, ConocoPhillips’ priorities are to protect the health and safety of our stakeholders, help mitigate the spread of Covid-19 and safely execute our business plans.” Ryan Lance, chairman and CEO, ConocoPhillips (April 16, 2020) “We have taken immediate action to preserve our balance sheet and core business in this commodity price environment. Our focus remains on health and safety, and on increasing Husky’s resilience.” Rob Peabody, CEO, Husky Energy (April 20, 2020)

and skills in the North American and European supplier networks residing in epicentre regions such as in Houston, or manufacturing hubs such as Milan, as well as the big fabrication yards of Asia. And yet, most aspects of the industry – oil prices aside – have proved remarkably resilient already, a trait that the energy sector generally has nurtured over many years given the inherent volatility of the business. Oil companies have faced adversity before and they will probably do so again. The current crisis is expected to drive other trends, such as the shift to remote operations and the use of technology where possible (you can read more about this on page 18). It is hard to understate the impact that Covid-19 has had on the world economy and its people, but the oil industry is robust enough to come through it. When that will be, and how it will look on the other side of the pandemic, is another question. FE

is at risk, potentially taking years to regain its levels before the pandemic, and growing only slowly thereafter.” Despite the oil industry being ultra risk averse following the plunge in prices, it must “prepare for the changing world that lies ahead and map out a strategic direction to thrive postcrisis”. For others, there could be opportunity. The report states that if the global response supports a more rapid transition to the green economy, metals and mining companies may see the downturn as an opportunity. Power companies will likewise continue to shift away from coal and towards renewables, though the pace of change will depend on the policy environment. At this stage, there are still more questions than answers.

www.frontierenergy.info SPRING 2020 7

RUSSIA

Russia remains in DETERMINED MOOD Moscow’s unwavering commitment to the development of its Arctic energy sector remains intact despite price wars and pandemics, as key companies press on with projects

f ever there were a test of Russia’s hardiness and strength of character, it was surely in the early months of 2020. Not only in the oil supply stand-off with rival Saudi Arabia, but in grappling with the multitentacled effects of the Coronavirus pandemic. It will be no surprise that true Russian grit found a way through the many challenges, albeit with a few adjustments. Remember, the Arctic remains a key strategic growth pole for Moscow, amid ageing production from established fields in other parts of the country. The government is keen to keep this momentum going any way it can. In March, it introduced additional tax breaks for new liquefied natural gas (LNG) projects in the Arctic region, focused on those intended to come on stream from 2022, the text of a law signed by President Vladimir Putin showed. Leading LNG player Novatek is currently rolling out its giant Arctic LNG 2 project, the second major gas export venture in the area after Yamal LNG. The zero-rate extraction tax on natural gas will primarily benefit the independent gas producer, though the law also included taxation support for the Vankor group of oilfields being developed by Rosneft. Together, these illustrate continued state support for the Arctic region. 8 SPRING 2020 www.frontierenergy.info

Building out the LNG sector

Novatek, meanwhile, insists that its mega project is still on track regardless of recent international turmoil, both on the markets and in the health sector. Indeed, one of its construction sites supporting the project in the northern Murmansk region was struck by a ﬂurry of Coronavirus cases among workers, according to reports. Russia’s Interfax said the country’s emergency ministry had set up a temporary hospital to treat infected patients near the site, with healthy workers carrying on on-site. Arctic LNG was ﬁnally sanctioned in September 2019 after years in the planning and is expected to come on stream around

2023 with a full production capacity of 19.9 million tons per year (mt/y). According to some reports, Novatek insists it is even “slightly ahead of schedule” for opening the project by the end of 2022, despite the Coronavirus situation. High North News reported that satellite images reveal the beginnings of a “sprawling industrial complex on the Gydan peninsula”. The new project sits just across Ob Bay from the existing Yamal LNG plant, which launched in 2017. A second and third train Arctic LNG 2 expansion are mooted for 2024 and 2026 respectively, though timings could shift in light of recent events. The Russian gas producer owns a 60% stake in the new venture, partnered by French oil giant Total, China’s CNOOC and CNPC, and Japan’s Mitsui-Jogmec consortium Japan Arctic LNG. A third LNG project, known as Ob LNG, is also on the cards, with an investment decision originally anticipated this year, although this seems almost certain to be rolled back for now.

Underlying potential Russia’s Arctic ambitions are certainly supported by the area’s underlying resource potential. Novatek said on March 16 that it had reached a new milestone of 1 trillion cu m in cumulative natural gas production since commencing its gasfield development programme. It began producing at its EastTarkosalinskoye field with the launch of the first gas treatment unit in 1998. Subsequently, it started developing deeper gas condensatebearing layers that required the application of

Total

RUSSIA

Moscow remains committed to the Arctic

state-of-the-art technologies, including drilling large diameter, long horizontal wells with multi-stage fracturing. Today, Novatek is one of the largest natural gas producers globally, its chairman, Leonid Mikhelson, noted. “We have built a natural gas platform both domestically and now internationally with our Yamal LNG project that is one of the most cost competitive in the industry.” The Yamal LNG scheme also groups Novatek with Total. Mikhelson cited a “high-quality, long-life resource base, combined with a lowcost operating model” as its key competitive advantages. Despite the plethora of challenges facing operators at the moment, there is a long history here of overcoming adversity. More recently, that may mean the establishment of emergency ﬁeld hospitals to treat sick workers, but the long list of achievements also includes breaking open a whole new shipping route. To unlock access to the vast gas resources of Russia’s far north, the Yamal LNG project inaugurated a new LNG shipping route, the Northern Sea Route (NSR), that enables vessels to reach Asia in 15 days via the Bering Strait, compared with 30 days using the conventional route through the Suez Canal. The journey can be made between May and November, when the ice is thin enough to navigate. This feat is only possible thanks to a new breed of versatile LNG carriers that feature ice-breaking technology. There have been some adjustments to operations as well in light of the various challenges thrown up in the current climate.

Gazprom Neft

True grit: Russian workers

Novatek, which had moved all transhipment operations to domestic waters, has again resumed ofﬂoading some of its LNG cargo at a reloading point in Norway. During April, the tanker Vladimir Vize, carrying 170,000 tons of LNG from the Yamal LNG plant, was met by another vessel, Yamal Spirit, which had sailed up from Rotterdam, at Honningsvåg, a small Norwegian town on the Barents Sea coast. Insiders expect more exchanges to follow, though in the longer term, Novatek hopes to develop a new terminal in Vidyaevo to be able to handle as much as 20 million tons each year. The company has secured permission to develop the site, which it hopes could be operational by 2023.

International investors While Russia’s big oil and gas players push on, international investors are taking a somewhat more cautious line. Total, the country’s big LNG partner, has announced a raft of cost-cutting measures in light of the sharp decrease in oil prices, though these do not seem to directly impact its Russia operations. Others have shown caution in the region, with Shell opting not to complete a deal on an Arctic oil joint venture, Meretoyakha Neftegaz, that it was expected to enter with Gazprom Neft, citing a “challenging external environment”. Total resources at the Meretoyakha Neftegaz ﬁelds are valued by Gazprom Neft at over 8 billion barrels of oil.

In response, the Russian company said that it would go it alone on the venture. “Gazprom Neft will continue developing those licence blocks previously intended to form part of the joint venture [the Meretoyakhinskoye field, the Tazovsky and Severo-Sambrugsky blocks, and two Zapadno-Yubileiny blocks in the Yamal Nenets Autonomous District] independently, in accordance with the previously approved work plan,” it said in an April 13 statement. “On which basis, development of and commercial production at the Tazovsky field is expected to start by end 2020.” The decision by Shell does not impact its commitment to developing its other business in Russia, though, including cooperation with Gazprom Neft, on current and potential new opportunities, the statement added. For example, a deal had been closed at the end of March on expanding activities in developing the Salym group of fields in the Khanty-Mansi Autonomous Okrug, through Salym Petroleum Development (SPD), a Gazprom Neft-Shell joint venture. “Pursuant to a decision by both parties the SPD asset portfolio was expanded to include Gazprom Neft’s licence to rights for geological prospecting, exploration and production of traditional hydrocarbon reserves at the Salymsky-2 block in Khanty Mansiysk Autonomous Okrug,” Gazprom Neft said. FE

Yamal LNG milestone Yamal LNG announced at the end of February that it had shipped 30 million tons of LNG since the start of the project in December 2017. The Arc7 ice-class tanker Nikolay Yevgenov loaded its 411th cargo to mark the 30 million tons milestone on February 26, the Yamal LNG joint venture said in a statement. In 2019, the ﬁrst full year of operation of all three of its liquefaction trains, the project produced 18.4 million tons of LNG, exceeding the plant’s design capacity by 11% or 1.9 million tons. The project groups Novatek (50.1%) with Total (20%), CNPC (20%) and the Silk Road Fund (9.9%).

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NORWAY

UNSETTLED OUTLOOK for Barents Sea exploration ///////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Norwegian operators are battling against tough market conditions, scaling back exploration and development spending in response to lower oil prices, subdued demand and the global health pandemic

Leiv Eriksson rig in the Barents Sea

Directorate (NPD) announced that it had made 69 awards under its annual Awards in Predeﬁned Areas (APA) 2019, which included 13 production licences in the Barents Sea (see map). Major winners included established Barents Sea players such as Equinor, Var Energi, Aker BP, Lundin, OMV, Petoro and DNO. “The new licences are located in promising areas of the NCS [Norwegian Continental

Shelf), and are of strategic signiﬁcance to us,” said Var Energi chief executive, Kristin F Kragseth. It means Norway awarded more than twothirds of the total 90 blocks offered in the 2019 round. But, just a month or so later, there was a twist, with the APA 2020 round not including any Barents Sea acreage out of the 36 new offshore exploration blocks up for grabs.

Further delays

Var Energi secures LNG shuttle tankers

Problems elsewhere could further fuel delays as a result of the Coronavirus outbreak. AkerBP was lining up a ﬂurry of wells testing its Barents Sea acreage this year but is in the process of revising its plans in the wake of the abrupt start to 2020 that has decimated businesses, economies and lives across the globe. That includes postponing the drilling of Russian border wildcat Stangnestind. The company, which is 30% owned by oil giant BP, has reduced overall exploration spending by 20% this year, “with further signiﬁcant reductions planned for 2021-22”, it said in a March 23 statement. Prior to the dizzyingly destructive past few months, 2020 had opened with lots of promise for the Arctic region, not only in terms of planned wells and development. On February 14, the Norwegian Petroleum

As part of its commitment to greener shipping in Norway, Var Energi – the operator of the Goliat ﬁeld, the world’s most northerly oilﬁeld – is moving to LNG-powered shuttle tankers. The company in February secured access to two new LNG-powered tankers for crude oil shuttling in the North Sea and in the Barents Sea. The contracts are long-term time-charter contracts negotiated by Eni Trading & Shipping S.p.A and Knutsen NYK Offshore Tankers AS (KNOT). The new tankers will be available for use in 2022. Each vessel is able to cut CO2 (carbon dioxide) emissions by 40% compared with conventional oil-fuelled shuttle tankers, Var Energi said in a February 10 statement.

10 SPRING 2020 www.frontierenergy.info

“The agreement secures stable shuttle arrangements as well as a signiﬁcant cut in emissions,” said Ove M Helle, Var Energi’s vice president for safety and sustainability. “With two brand new LNG-powered vessels, we are one step closer to more sustainable and environmentally-friendly operations.” The company already uses an LNGpowered offshore supply vessel for its Goliat operations in the Barents Sea. The switch to LNG-fuelled tankers is a continuation of a longer-term commitment to minimise the company’s environmental footprint. Var Energi is the second largest operator on the NCS, owned by Italian energy giant Eni (69.6%) and Norway-based private equity investor HitecVision (30.4%).

Lundin Petroleum

hat may have been a decisive year for exploration in Norway’s Arctic oil and gas sector now looks set to be an eerily quiet one, with much of the planned drilling and ﬁeld development work in 2020 either delayed or postponed. Norwegian state operator Equinor is trimming costs and staff numbers in response to the oil price rout and the economic slowdown prompted by the global health pandemic, a move that will no doubt have repercussions across the nation’s energy industry. It has cut its 2020 capital expenditure by about 20%, from $10-11 billion to around $8.5 billion, while exploration spend is down from $1.4 billion to $1 billion. And yet it is not all doom and gloom. Equinor’s ﬂagship Johan Castberg development remains on track despite the upheaval and uncertainty (read more about this on page 12).

NORWAY

Barents Sea awards in predefined areas (APA) 2019

Offered acreage

It marks the ﬁrst time in a decade that Norway has not included any new acreage in the Arctic Barents Sea. While no new blocks were proposed in the Barents Sea, energy ministry ofﬁcials told Reuters that Norway would consider including some in the 25th frontier areas licensing round scheduled for later in the year. Frontier, or ‘numbered’, rounds focus on areas with greater geological uncertainty, but also with greater potential for larger discoveries.

Alta downgrade Perhaps the signs of what was really to come in 2020 were there to see at the start of the year after Lundin Petroleum unveiled

some disappointing news from its Barents Sea blocks on January 13. The company cut resource estimates at its Alta ﬁeld and said that it no longer viewed the combined Alta and Gohta discoveries being built as a standalone development. The company last November said Alta and Gohta could hold between 115 million and 390 million barrels of oil equivalent (boe) in gross resources. It did not disclose its new estimates for Alta, but stated that these had been “adjusted downwards” based on evaluation of the high speciﬁcation 3D seismic survey (Topseis) acquired over the area, combined with the extensive data and analysis from the well drilled for the extended well test

conducted in 2018. “A standalone development of the Alta and nearby Gohta discoveries is no longer considered to be commercial, and a subsea tieback development to either Johan Castberg or another future host development in the area is considered the most viable option,” the company noted in an update. However, it added that it would be drilling several large prospects in the Loppa High area this year, “which if successful could change the dynamic of commercial options for this area”, though it is unclear how timings might shift in light of recent events. Lundin landed three additional blocks in the southern Barents Sea from the APA 2019 round. FE www.frontierenergy.info SPRING 2020 11

JOHAN CASTBERG

Johan Castberg FPSO

JOHAN CASTBERG:

work gathers momentum

Work is still on track to complete the Arctic region’s biggest current oilfield development, Equinor’s mighty Johan Castberg project

ork to develop the giant Johan Castberg project continues at pace, despite current challenges facing operator Equinor and its small army of contractors around the globe. The company recently revealed new images from Hammerfest showing the ofﬂoading of subsea equipment at the Polarbase Arctic port. The project remains on track to deliver ﬁrst oil in 2022.

Turret mooring system Illustrating the global nature of the project, Drydocks World Dubai reported at the end of April that it had successfully completed construction of the turret mooring system (TMS) for the project on behalf of its client SBM Offshore. “We are delighted to have completed this milestone for the Johan Castberg project,” said Michael Sandberg, SBM Offshore senior project manager. The TMS will be integrated with the Johan Castberg ﬂoating production, storage and ofﬂoading (FPSO) vessel in Singapore, before its eventual deployment in the Barents Sea. “At Drydocks World we have the expertise and facilities to deliver high-quality offshore technology, and we are proud to successfully deliver this project with 4.98 million injuryfree man-hours,” said Captain Rado Antolovic, chief executive of Drydocks World Dubai. “Despite the current challenges 12 SPRING 2020 www.frontierenergy.info

posed by the Covid-19 pandemic, we have put every necessary measure in place to ensure our yard has the capabilities to keep production on-track, while keeping our employees safe, ultimately allowing us to deliver on our project commitments.” The 8,000 tons TMS is an integral piece of the Johan Castberg jigsaw. It will enable the FPSO to passively weathervane around the anchor legs, while simultaneously transferring ﬂuids, power and communications signals between the vessel and the subsea equipment. The FPSO will be permanently moored in 372 m water depth by means of three bundles of ﬁve mooring lines.

SAL Heavy Lift vessel Hammerfest

Ofﬂoading of subsea structures

Drydocks World completed the TMS in four modules, and was responsible for the production engineering, procurement, construction and testing of system components. The ﬁrst two modules, the bogie support structure and the lower turret, were completed in 2019 and delivered to the Singapore yard in 2019/2020. The manifold and gantry modules were safely loaded onto the transportation vessel in mid-April, with delivery to the Singapore yard imminent.

Business as usual The company that delivered the latest batch of subsea equipment for the Johan Castberg project at Hammerfest, SAL Heavy Lift, also conﬁrmed that its ﬂeet was

Equinor

performing normally despite the pandemic. “All our vessels remain fully operational and our office staff are all on the job, either in office or at home, but all dedicated to keep vessels, business and – first and foremost – your cargo moving,” it noted in a March 27 statement. Separately, Equinor has also awarded a new long-term contract for various testing work on the Johan Castberg FPSO to IKM Testing, with activity expected to commence later this year through to 2021. The Johan Castberg field is situated approximately 100 km north of the Snøhvitfield in the Barents Sea, and about 150 km from Goliat, the world’s most northerly oilfield. The project’s resource base consists of three oil discoveries, Skrugard, Havis and Drivis, located in PL 532, with total proven reserves estimated at between 400 and 650 million barrels of oil. The development has already been through a series of cost adjustments to achieve profitability after the fall in oil prices in 2014-15. Equinor had to change the design concept and develop new solutions in order to be able to proceed with the project. Compared with the original solution, costs have been more or less halved from approximately $10 billion down to $5 billion. FE

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Equinor

JOHAN CASTBERG

ICEBREAKERS

LEADERS of the ice pack Rosatom subsidiary FSUE Atomflot is to expand its icebreaker fleet with the giant new Leader vessel, which is to be equipped with two RITM-400 nuclear reactors able to smash through ice more than 4 metres thick

ussia continues to expand its nuclear icebreaker fleet, signing key agreements even in the era of lockdowns and social distancing. And this time it is going big, with plans for the first of a new generation of vast and mighty nuclearpowered ice ships. On April 23, Rosatom subsidiary FSUE Atomflot and shipbuilder Zvezda LLC remotely signed a contract on the construction of a new nuclear icebreaker to be named Leader. The agreement was signed by FSUE Atomflot’s general director, Mustafa Kashka, and Zvezda LLC’s general director, Sergey Tseluyko, even though the two parties were located many miles apart, in Murmansk and Vladivostok. Zvezda will be the sole contractor for the Rosatom-commissioned project. Its shipbuilding complex is based in the city of Bolshoi Kamen, in Russia’s Primorsky Territory, and is overseen by oil giant Rosneft. The new vessel, which is expected to be commissioned in 2027, will be equipped with twin RITM-400 nuclear reactors developed by a Rosatom subsidiary, JSC Afrikantov OKBM. “Today, an important step has been taken in the history of [Russia’s] nuclear icebreaker fleet,” said Kashka. “Leader will be equipped with two state-of-the-art RITM-400 nuclear reactors developed by Rosatom specialists, giving the vessel a total capacity of 120 MW (megawatts), which will allow it to overcome ice more than 4 m thick.” The 209 m long vessel will have a 14 SPRING 2020 www.frontierenergy.info

maximum speed of 22 knots in clear water and a navigation channel width of 50 m. As well as its two reactors, Leader will host a steam turbine unit equipped with four turbogenerators, each with a power capacity of 37 MW and an electric propulsion system equipped with four propeller motors, each with a power capacity of 30 MW. Rosatomﬂot currently operates the world’s only nuclear icebreaker ﬂeet. Kashka further underlined how the new vessel would play a role in keeping Russia’s strategic Northern Sea Route (NSR) open for shipping all year round. “The commissioning of this nuclear icebreaker will allow us to guarantee safe and regular operations in the eastern region of the Arctic Ocean, year-round navigation in the waters of the Northern Sea

Route, and new possibilities for carving out high-latitude commercial routes.” The latest announcement by Rosatom underscores Russia’s long-term commitment to expanding its icebreaker fleet, which has grown significantly in recent years. This has seen Russian firms push the limits of icebreaker technology.

Advanced icebreaker Last year, FSUE Atomﬂot took delivery of what was hailed as the ‘world’s most advanced icebreaker’. The new ship, named Ob, was built at Vyborg Shipyard and is designed to operate in Arctic winter conditions as low as -50ºC, and provide safe and comfortable working conditions for the crew all through the polar night. The Ob will be based at the Sabetta liqueﬁed natural gas (LNG) terminal and provide assistance for LNG tankers transporting gas year-round from the Yamal Peninsula. The new Leader project takes things to a different scale in terms of size and raw power. Furthermore, there are additional ships of the same class in the planning that could enter Ceremonial launch of the Ural

Rosatom

ICEBREAKERS

icebreakers, nine of which will be powered by nuclear reactors. The development of this nuclear ice ﬂeet has not been without its problems, however, amid reports of delays to another tranches of vessels.

As well as its two reactors, Leader will host a steam turbine unit equipped with four turbo-generators, each with a power capacity of 37 MW

service after 2027 if the Leader proves its mettle. Rosatomﬂot, a subsidiary of Rosatom, already operates four nuclear icebreakers. The new generation icebreaker, Leader, will have about twice the power capacity of those built currently, and highlights a scaling-up of Russia’s ambitions for the frozen north. The investment in this beefed-up icebreaker ﬂeet makes sense in the context of Moscow’s strategy for the NSR. President Vladimir Putin has said that Arctic shipping routes along Russia’s northern coast could rival the Suez Canal as a short-cut trade route between

Europe and Asia; the NSR trims 4,000 nautical miles off the southern alternative via the Suez Canal. Russian government plans envisage exporting 80 million tonnes of cargoes per year by 2024 to Europe and Asia through the northern route; that is up from around 20 million tonnes in 2018. Customers in Asia are also the primary buyers for Russia’s growing LNG exports, which are produced in the far north. By 2035, Putin has said that Russia’s Arctic ﬂeet will operate at least 13 heavy duty

Rosatom

LK-60Ya icebreaker line A separate trio of ships are currently being built – the last of which, the Ural, was ﬂoated out from a dockyard in St Petersburg last year – that when completed will be the largest and most powerful icebreakers in the world, at least until the Leader arrives in service. Designed to be crewed by 75 people, the Ural and its sisterships, Arktika (Arctic) and Sibir (Siberia), will be able to slice through ice up to around 3 m thick. The Arktika – the lead vessel in the socalled LK-60Ya icebreaker line – commenced sea trials in St Petersburg at the end of last year, with the Ural due to be handed over to Rosatom in 2022. While construction on the vessel began back in 2013, the ship is yet to be put in service despite an initial completion date of late 2017. According to various media reports, there have been a number of problems linked to domestically sourced components and even damages to the vessel during initial sea trials. It remains unclear when the ﬁrst of the new high-powered vessels will be placed into full commercial service. FE You can see what the ‘Leader’ will look like in action on Roastom’s YouTube channel. Visit: www.youtube.com/watch?v=5NDoF1LJg80

Floating nuclear power plant delivers first power

The Akademik Lomonosov the opening of the Northern Sea Route. “In the future, the electric power produced by the FNHPP will facilitate the growth of the gold, copper and other natural resources mining companies in Chukotka. Additionally, the FNHPP will be one of the key elements in

the infrastructure of the Northern Sea Route.” Russian companies are developing projects for the route in areas including liquefied natural gas (LNG), gas condensate, oil, coal and precious metals.

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Rosatom

Russia’s first floating nuclear heat and power plant (FNHPP) has delivered its first electric power into the isolated grid network of the Chauny-Bilibino hub, in the Chukotka Autonomous Region. A project by the Rosenergoatom joint stock company, a part of Rosatom, the development is significant in that it potentially opens up a new source of power for remote mining or industrial developments in the Arctic region. The FNHPP — the Akademik Lomonosov — delivered its first 10 million kilowatt hours (kWh) of electricity into the network in January, after its connection to the grid shortly before the turn of the year. The floating power plant is intended to fully cover the growing demand for electricity in Chukotka, supporting energy requirements for both the city of Pevek and the whole region in general. Rosenergoatom’s Vitaliy Trutnev highlighted the potential for the new floating technology, not only in driving remote mining and industrial projects, but also in supporting

LOGISTICS

Ships for all

SEASONS //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Two Red Box PC3 module carriers, AUDAX and PUGNAX, have been instrumental in the development of the Arctic’s LNG sector, but their story is only just beginning. By Edward Teach

16 SPRING 2020 www.frontierenergy.info

Breaking the ice: the AUDAX

Chris Muilwijk, chief commercial ofﬁcer at Red Box, was well aware that the future of Red Box would require winning additional time charter contracts once the work on Yamal LNG was completed. According to Muilwijk: “The Red Box strategy was based on our focus on long-term multi-voyage projects. The timeframe for pre-qualiﬁcation,

Red Box Energy Services

the Arctic Circle.” he Red Box PC3 module carriers According to Adkins, the concept design AUDAX and PUGNAX have been needed to combine the features of maximum safely navigating through the Northern Sea Route (NSR) for almost five deck space to accommodate both longitudinal years since they were delivered to Red Box and transverse load-outs as well as deck and Energy Services in early 2016. Their frame strength to accommodate two modules credentials in the Arctic were validated over a up to 10,000 tonnes each. Finally, the ballast series of voyages both East and Westbound in water system would need to be sufficient to the coldest and darkest conditions in accommodate extreme tidal changes during December through March. loading and discharge operations. The 32 megawatts (MW) of power “We confronted a 10 m tidal range for the Ichthys LNG project on the Darwin Peninsula generated on board were more than sufficient in Australia when we were working together to answer the challenges of navigating through 2 m of ice, even without nuclear at Fairstar Heavy Transport and were using icebreaker support from Rosatomflot. The semi-submersible vessels as module carriers. It Red Box team successfully delivered over was clear to us that the next generation of 60% of the modules module carriers for for the three-train future long-term They were designed to operate Yamal liquefied multi-voyage natural gas (LNG) projects would need all over the globe and have been liquefaction project the same ballast contracted to work on a variety in Sabetta, Russia. system as a semiof energy infrastructure projects However, the role submersible and our these two ships have design team made played above the sure that this was Arctic Circle is only half the story. They were, incorporated into the final design for class approval,” said Adkins. in fact, designed to operate all over the globe and have been contracted to work on a variety of energy infrastructure projects in the Time challenge next two years before sailing back into the “Our biggest challenge was time,” he cold for the Arctic LNG2 project in 2021. added. The multi-voyage time charter contracts Red Box was awarded by Yamgaz for Yamal LNG were conditional on Red Box Concept and design delivering the AUDAX and PUGNAX within Philip Adkins, chief executive at Red Box, 22 months of contract award. The liquidated shared some of the original thinking that damages were $125,000 per day per ship. was considered by the Red Box design team According to Adkins “there was a widely held in the concept stage back in 2014. “Of view in the industry that Red Box would fail course, we wanted a design that would meet to meet these deadlines. The Red Box team, the classification requirements of both PC3 and ARC7, but we were also well aware of contrary to the ‘common wisdom’ of our the commercial value in having sister vessels competitors, delivered both vessels on time that would be able to compete successfully and on budget and both ships went for a much broader range of long-term immediately on to four-year time charter multi-voyage projects, not only those above contracts with Yamgaz.”

LOGISTICS

Pipeline lifeline: the AUDAX at work

invitations-to-bid in the last three years. Red Box has been awarded a total of eight new contracts for three different energy infrastructure projects totalling almost $80million. While under these contracts, AUDAX and PUGNAX will sail through the Suez and Panama Canals and around the Cape of Good Hope before they return to the Arctic in 2021.”

Heavy load: PUGNAX at sea

commercial bids, engineering reviews, contract award and the delivery of the contract scope can be anywhere from two to ﬁve years. In the middle of the Yamal LNG project, we were already working on prequaliﬁcation packages for new energy infrastructure projects two years into the future. I was very happy to have contributed

some of the key performance criteria into our original vessel design because we believed there would be signiﬁcant opportunities for Red Box to win contracts for long-term multivoyage projects, not only in the Arctic but in warmer climates as well. The AUDAX and PUGNAX have been universally accepted in all of the pre-qualiﬁcation stages of

Rinse van Lievenoogen, chief technical officer at Red Box, was responsible for the final design as well as overseeing the construction of the ships at the CSSC Shipyard in Guangzhou, China. “As a naval architect, this was the opportunity of a lifetime,” he said. “We had the possibility of designing a ship that would combine the strength, power and reliability required by class to navigate through the Northern Sea Route, as well as the need to ensure the vessels could operate safely in any other conditions and were capable of performing the full range of loading and offloading techniques such as roll-on/roll-off, lift-on/lift-off, jack-down and float-over required by our clients in the energy industry.” He added: “We have indeed designed and built ‘ships for all seasons’.” FE www.frontierenergy.info SPRING 2020 17

Red Box Energy Services

Opportunity of a lifetime

REMOTE WORK TECHNOLOGY

DATA DRIVEN: energy industry adapts to working from home /////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Equinor/Ole Jørgen Bratland

Remote work technology: The one oil and gas services segment that Covid-19 has benefited

lready technology-dependent, the oil and gas industry looks set to see a shift to even more remote work operations in the light of the Covid-19 outbreak. Potentially, this could yield benefits in the advancement of the Arctic energy sector where the extreme climate is one of the great hazards for human operatives. There are no hard numbers yet to illustrate the extent to which the Covid-19 pandemic has affected the oil and gas industry’s digitisation. However, recent analysis of service companies’ earnings calls reveals a clear growth in cost-saving remote work technologies. Given the limited options of low-hanging cost savings in the current downturn, operators and suppliers are looking towards digital technologies to realise cost efficiencies, the analysis by Rystad Energy shows. For operators whose cash balances are not under short-term strain, the low oil-price environment is an ideal testing ground for new technologies as the opportunity costs of implementing these are lower. “Despite being positive news for suppliers offering digital technologies, spending by operators may have been accelerated as a result of Covid-19 instead of actual business needs,” said Daniel Holmedal, energy service analyst. “Growth seems to have mostly centred around remote work, while technologies focusing on optimisation of drilling and production seem to have hit some speed bumps.” Recent earnings calls have given a taste of how digital technologies have fared during the start of the downturn. Despite recent market events that have forced operators and suppliers to turn their focus towards cash conservation, development on this digital revolution still seems to be relatively robust. In fact, both Schlumberger and Halliburton noted in their earnings calls for the first quarter of 2020 that the current downturn could accelerate the adoption of digital technologies. This is especially true for technologies that enable remote operations, which remains an area where great cost 18 SPRING 2020 www.frontierenergy.info

The energy industry has seen an upsurge in home working

efﬁciencies could be realised with more efﬁcient operations. Covid-19 has already accelerated remote operations due to the movement restrictions imposed in many countries to limit the outbreak. Schlumberger recently deployed its DELFI platform for Woodside so that the operators’ asset team and geoscientists could have full access to their data while working from home.

Remote drilling operations Schlumberger, in its first quarter earnings call, underlined intentions of doubling down its digital strategy in the years ahead, with over 60% of the OFS provider’s drilling operations in March being conducted remotely. At a more general level, Covid-19 has also paved the path for key decisionmakers to get more first-hand experience with digital tools. This could eventually increase their willingness to fully buy-in on the digital revolution in other parts of their companies. Halliburton, similarly, noted during its firstquarter earnings call that demand for cloud infrastructure services saw an uptick in April

Powerful remote technology has long been a feature of the industry

2020. In late February, Halliburton helped Pertamina deploy a large portion of its processes and applications to the iEnergy cloud, which has allowed for well data to be structured and analysed to improve drilling performance, increase production and allow for better data-driven decisions along the well life-cycle. National Oilwell Varco (NOV), one of the largest suppliers within the drilling tools and services segment, also reported updates on its digital technologies in the latest earnings call. Using its TrackerVision augmented reality technology, which streams real-time audio and video, NOV is able to provide instructions on rig repairs remotely. Despite the growth in remote work digital solutions, not all is well for suppliers of digital technology, warned Holmedal. “Our activity forecast for 2020 indicates that spending on new technologies in the well services market will come under signiﬁcant pressure. We expect the number of wells drilled globally this year to drop by 21% from 2019, ending up at around 56,000 wells, with 2,200 of the wells being drilled offshore.” FE

Skype nuclear inspection It is not just the oil industry scaling up its remote working practices. Russian nuclear giant Rosatom said in April that its remote inspection tools had been used for the ﬁrst time for a foreign vendor. It said a scheduled inspection of the RAOS Project, the supplier of the Hanhikivi-1 nuclear power plant, was done by Finnish regulator STUK in Skype-conference mode. The three-day remote inspection was conducted due to the quarantine and travel restriction measures in Finland and Russia. More than 30 RAOS Project specialists from engineering, conﬁguration, requirements management, quality management, licensing and project management departments were directly involved in the inspection. A further inspection is planned for later this year.

ICE NAVIGATION

Reading the OCEANS

The US Naval Research Laboratory (NRL) is a scientific and engineering group dedicated to research that drives innovative advances for the Navy and Marine Corps from the seafloor to space. It recently played a key role in helping a vessel safely navigate its way through difficult Antarctic ice

US Naval Research Laboratorydeveloped Ocean Prediction System recently helped an ice-bound Antarctic science vessel back to open waters. The NRL’s Global Ocean Forecast System (GOFS) provided valuable environmental information that allowed the research icebreaking ship to navigate out of the iceladen waters and steer a course to safety. The US Antarctic Programme ship, Nathaniel B. Palmer, tasked with extended scientiﬁc missions in the Antarctic, could not manoeuvre around huge, stiff ice blocks while attempting to reach open waters when traversing around Pine Island Bay in West Antarctica.

Forecasting system The NRL-developed forecasting system assimilates ocean and ice observations from a number of sources and provides sea ice concentration, thickness and drift, as well as areas of converging or diverging ice. Convergence happens when sea ice blocks ﬂow together and become more compact. Divergence happens when sea ice breaks apart.

John-Martin Souza, captain of the Nathaniel B. Palmer, credits GOFS’ sevenday forecast for helping the crew safely negotiate the moving sea ice that constantly floats apart, then back together at different speeds and locations. “With the right imagery and extra support products GOFS provided, I was able to find a way out in only one day, after the previous four days of trying,” said Souza. “Everyone on our ship is grateful for the up-to-date information about the ice conditions.” The ocean forecast system, first released in 2013, evolved to incorporate a growing number of data inputs and a more refined understanding of ocean and ice physics. The Fleet Numerical Meteorology and Oceanography Centre and the National Ice Centre deploy GOFS and other tools to enable the Navy and coalition forces to safely navigate the ocean and ice environment. Maintaining the most up-to-date knowledge and cutting-edge technology are goals the laboratory always strives to meet in its prediction systems, said Joe Metzger, an oceanographer at NRL.

“NRL continuously improves this forecasting capability through new research and development and extensive product validation,” Metzger said. “The Navy wants and needs a real-time and accurate forecast.” NRL scientists have also been at work in the Arctic, developing ice-tethered acoustic buoys to monitor the acoustic and oceanographic environment in the region. The buoys provide critical oceanographic data to improve prediction capabilities of ocean and climate models. These buoys are testing Arctic researchers’ sound propagation theories and will continue to guide and validate theoretical studies in the Beaufort Sea through to March 2021. The NRL-built Billboard Array is an acoustics instrument equipped with 64 receiver elements, which differentiates and ampliﬁes sounds from different directions to help better understand seasonal oceanographic and sea ice conditions. “Our job, in real time, does the tomography in the ocean with buoys,” said Altan Turgut, research physicist with NRL. “Every four hours they assimilate data into the ocean models.” Ocean acoustic tomography is a technique that uses sound waves to image sections of ocean temperature and current.

Practical alternative The buoys are a practical alternative to more traditional acoustic and oceanographic measurement techniques, because they provide real-time monitoring and operational capability. Additionally, they enable under-ice acoustic communication and navigation capability for mobile platforms such as ocean gliders and underwater autonomous vehicles. Researchers have also developed a ﬁrst mathematical model to simulate and predict sound propagation under the ice called the Arctic Parabolic Equation. “This model accurately simulates the interaction of sound waves with the sea ice, which has been a challenging numerical problem,” said Michael Collins, NRL mathematician who developed the Arctic Parabolic Equation. Scientiﬁc evidence indicates the character of the Arctic sea ice continues to change. The current sea ice composition is thinner, younger and declined at a rate of 13% in the summer and 3% in the winter, per decade. “Interaction between the ocean and atmosphere is increasing and becoming similar to those at lower latitudes with more open ocean and fragile thin ice conditions,” Turgut said. “Therefore, acoustic measurements of new ice composition and near-surface hydrography would be essential for accurate ocean and climate model predictions in the Arctic.” FE www.frontierenergy.info SPRING 2020 19

Kristin Cobb, National Science Foundation

The research vessel Nathaniel B. Palmer

OIL SPILL TECHNOLOGY

POLLUTION

under the microscope //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Scientists at oil company Rosneft and the Russian Arctic National Park have discovered micro organisms that are able to clean oil pollution from soil

anaging risks and controlling pollution are integral to the successful operation of the oil and gas industry worldwide. In the pristine Arctic environment, that becomes even more important. Like all other strands of the oil and gas chain, technology is playing a key role in helping industry players navigate these critical challenges. Rosneft Oil Company is working alongside scientists, biologists and others to ﬁnd clever new solutions to potential pollution problems in Russia’s far northern regions. It started the Clean Arctic joint project last year, working alongside the Russian Arctic National Park. The initiative aims to rehabilitate the ecosystem of the northernmost territories of Russia: the wildlife sanctuary archipelago of Franz Josef Land, which has been part of a specially protected nature reserve since 1994.

Biologists ﬁghting pollution in the lab

And there have been some important breakthroughs too. The Russian oil giant and its partners recently announced the discovery of bacteria that can be used as a basis for the development of an innovative agent for cleaning soils from petroleum-based products. Scientists uncovered the promising microorganisms during the acquisition of samples of polluted soil on the Alexandra Land island, where fuel storage depots were situated until 2015. In a series of tests, conducted in the laboratories of RAS Federal Research Centre of Biotechnology, a unique feature of the bacteria was discovered – that they are able to decompose petroleum-based products at low temperatures (2-6°C). “These microorganisms may be used to create bio-agents for complex cleaning of soils in the Arctic from petroleumbased products,” a Rosneft statement read on April 15. Potentially, the scientists’ discovery could 20 SPRING 2020 www.frontierenergy.info

Oil drilling continues in Russia’s Arctic

Rosneft

Important breakthroughs

allow the industry to solve one of the main environmental problems facing Arctic territories as the oil and gas industry expands. Dmitry Krjukov, head of the Clean Arctic complex scientific project, commented: “Since the process of soil self-cleaning takes a long time, biotechnological methods of soil recultivation, which we are currently studying in the Franz Josef Land archipelago, get an exceptionally important role.” The latest findings build on earlier research by Russia’s biggest oil company to tackle pollutants in the Arctic region. Previously, Rosneft, together with a partner company, Innopraktika, developed an agent for the utilisation of oil pollutants on water at low and below-freezing temperatures that, it says, “has no equals anywhere in the world”. Work is ongoing under the Clean Arctic project to further understand how these new discoveries and technologies can be applied to the field for use where needed. FE

The Clean Arctic project The Clean Arctic project, involving Rosneft, forms a part of Moscow’s plans to clean up the nation’s Arctic territories, initially with a focus on the Franz Josef Land archipelago.The early goal, from 2012 to 2017, was to assess the scope of pollution on the wildlife sanctuary archipelago’s territory caused by human economic activity and development during the Soviet era. The Clean Artic project became the next logical extension for remediation of this accumulated environmental damage on the islands of Franz Josef Land archipelago and in Novaya Zemlya, within the borders of the national park.

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ALASKA

Ultra-low prices expose ALASKA’S OIL DEPENDENCY //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Western North Slope operations

After facing up to zero dollar pricing, US oil firms are racing to shore up their defences, slashing costs and production in a bid to protect their businesses for when a new normality returns

t has been an almost unimaginably difficult time for America’s oil industry. That has been played out in Alaska to the extreme, as the toxic mix of a global health pandemic and an unprecedented oil price crash have wreaked havoc on projects, companies and livelihoods all round. Key initiatives have stalled, with officials pausing an environmental review for the Kenai liquefied natural gas (LNG) project, while sweeping budget cuts will slash planned drilling activity in the field, jeopardising jobs and entire balance sheets at suppliers, contractors and other industry service providers. One of the state’s biggest investors and its top oil producer, ConocoPhillips, has called a halt to drilling on the North Slope for the time being in response to the current business downturn, as well as slashing billions of dollars from its 2020 capital budget, which is down by about a third. “These reductions are sourced from across our global portfolio, primarily focused on

Lower 48, Alaska and Canada areas where we have the highest levels of ﬂexibility,” it said in an April 16 update. The company ended its winter exploration programme in the state early as it seeks to adjust to the new oil price environment. As if these challenges were not enough, Alaska has also had to contend with other issues, not least the crippling blow arising from the state’s dependency on oil, tourism and one or two other sectors. The state’s oil-

wealth fund, the largest source of revenue for state operations, is reeling as a result of the crisis. In addition, there was also a small oil spill at the Trans-Alaska Pipeline System’s (TAPS) Valdez Marine Terminal to contend with. A sump overﬂow spilled oil into the water at the terminal but the volume spilled did not prevent tankers from loading at the site. A local ofﬁcial said in mid-April that clean-up work could nonetheless take weeks to

How quickly things can change. It was only March 31 when Oil Search, an independent listed on the Australian Stock Exchange, announced the successful completion of its latest Alaskan well tests. The company was testing the Nanushuk reservoirs encountered in the Mitquq 1 ST1 and the Stirrup 1 wells. It said the flow tests included a clean-up, flow period and a pressure build-up prior to the final flow test to assess well deliverability. Oil Search’s managing director, Keiran Wulff, hailed the group’s 2019/20 Alaskan exploration programme as a big success, with “excellent flow rates achieved in the two well tests”.

22 SPRING 2020 www.frontierenergy.info

The company also discovered high quality oil in a deeper reservoir at Mitquq which was not tested. “We now have a strong understanding of the geology and potential productivity of the proliﬁc Nanushuk play that underlies our portfolio of leases on the North Slope, which could add substantial resource and value to the Pikka Unit Development,” added Wulff. While any ﬁnal investment decision has been pushed back, it does give the company more time for further studies, with a focus on reducing the break-even of the project. “While further appraisal will be required, these new discoveries may represent low cost

tie-back options to the proposed Pikka Unit Development and have the potential to create substantial long-term value for Oil Search.” Amid all the challenges of the current climate, it is also a boost for Alaska’s North Slope, with Wulff highlighting his company’s commitment to the area. “Given the proximity of our acreage to existing infrastructure and the proven prospectivity of the Nanushuk play, we remain very excited about the opportunities for Oil Search in Alaska and are well prepared to deliver the world class Pikka Unit Development when market conditions improve.”

ConocoPhillips

Oil Search hails double well test success

ALASKA

Tanker loading at Valdez

Better days ExxonMobil, the largest US oil company, also said on April 7 that it was cutting its capital expenditure by about 30% for 2020. It means capital investments for the year are now expected to tally about $23 billion, down from the previously announced $33 billion, but still a formidable sum of money nonetheless. Its chairman and chief executive officer, Darren Woods, one of the most powerful figures in the industry, was also confident that things would bounce back. “The long-term fundamentals that underpin the company’s business plans have not changed – population and energy demand will grow, and the economy will rebound.” The largest share of Exxon’s capital spending reduction will be in the Permian Basin, a large onshore basin in western Texas and southeastern New Mexico. But the current crisis has caught nearly everyone by surprise. At the turn of the year, before the US had been impacted by the pandemic and prior to the oil price rout, things were looking up for Alaska’s energy sector. ConocoPhillips had announced its biggest

North Slope winter exploration season in decades. It and other oil companies were welcoming Trump administration plans to open federal lands, including the Arctic National Wildlife Refuge (ANWR), to development. The North Slope of Alaska is a proliﬁc oil and gas producing region with over 17 billion barrels produced since the 1960s, though current output is way down on decades earlier. Alaska produces around 500,000 barrels per day (bpd), down from 2 million bpd approximately 30 years ago. Its breakeven cost for oil is about $39 a barrel. Experts believe there is more to come, however. Onshore and near-shore discoveries have proven reserves in structural and stratigraphic traps in numerous formations ranging in age from the Mississippian Endicott Group to the Oligocene Franklin Bluffs Member.

Data coverage This general uplift prompted geoscience specialist TGS to extend its coverage of the northerly state, purchasing four additional 3D seismic surveys in the North Slope region. The newly acquired seismic programmes provide modern high-resolution imaging which encompass 1,606 sq km; a further 632 sq km was due to be acquired during 2020.

“The addition of this data in Alaska is an exciting step for TGS and reinforces our commitment to assisting renewed exploration efforts in the region,” said Kristian Johansen, TGS chief executive.“I am very pleased to see the growth of our onshore portfolio into a historically productive region with tremendous potential for signiﬁcant new hydrocarbon discoveries. Our unique combination of seismic and well data products delivers valuable insights into the North Slope for the best sub-surface understanding available.”

Well data library The surveys, which advance TGS’ effort to expand into active frontier basins, are further complemented by TGS’ well data library that will assist explorers to further evaluate new reservoir targets and rejuvenate historic discoveries. It said new project acquisition, Kuukpik 3D Phase 2, is all fully supported by industry funding. Indeed, recent discoveries in the Cretaceous topsets of the Nanushuk formation have revitalised exploration efforts in the Western North Slope and provided analogues for additional similar stratigraphic discoveries in the Eastern North Slope. Industry players will no doubt be hoping to get to grips with these and other prospects as soon as possible. FE www.frontierenergy.info SPRING 2020 23

ConocoPhillips

complete, especially given exceptional operational circumstances posed by the Coronavirus outbreak.

ATLANTIC CANADA

ExxonMobil’s Hibernia platform

Drillers wait to test Canada’s //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Production continues off Canada’s emerging Atlantic region, but delays to drilling and big budget cuts will no doubt dampen the outlook for the year ahead

t has been a challenging period for all operators and explorers working off Canada’s promising Atlantic coastline, though not everything has changed. A raft of safety and security measures aside – designed to support the national fight against Covid-19 – production activities continue much as before. The Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) outlined on April 9 key measures taken by firms and at installations to keep workers safe, but also made it clear that production is more or less on track despite the unusual circumstances. It said: “Production continues from the Hibernia and Hebron platforms as well as the SeaRose FPSO” (floating production, storage and offloading vessel). At the Terra Nova FPSO, production remains suspended while maintenance activities continue on safety and environmentally critical elements of the facility, the regulator added. Preliminary data indicates oil production 24 SPRING 2020 www.frontierenergy.info

from the Canada-Newfoundland and Labrador Offshore Area was approximately 9.4 million barrels in March, it noted. Drilling continues too from Hibernia, Hebron and the West Aquarius mobile offshore drilling unit (MODU). On April 7, the industry regulator issued an Operations Authorisation to Norwegian operator Equinor for the Transocean Barents MODU to work in the Flemish Pass.

Brutal economics It has arrived at location to undertake plugging and abandonment operations prior to drilling an exploratory well, with the rig under contract till about July this year. “Even as the industry we regulate grapples with low oil prices, offshore production and exploration are continuing here, as they are worldwide,” said C-NLOPB chief executive Scott Tessier in a message on the body’s website. “These are key activities that provide critical revenues and help to sustain the

economy of our province and our country when so many are struggling.” And yet Canada’s energy sector, too, has also felt the chill from the double whammy of the oil price crash and the health pandemic. While drilling and production are continuing, there is little doubt that spending plans are being cut massively in the face of such brutal economics, a move that will clearly impact upstream activities at some point. Indeed, Equinor and its Canadian partner Husky Energy have decided to postpone the Bay du Nord project off Canada due to the fall in oil prices. The company had previously expected the project, which has estimated reserves of 300 million barrels, to start production in 2025. It is centred around the Bay du Nord and Baccalieu ﬁelds, in the Flemish Pass Basin, discovered in 2013 and 2016 respectively. “Equinor and partner Husky Energy have decided to defer the Bay du Nord development project offshore Canada to make the project more robust for low commodity prices,” Equinor’s spokesman Morten Eek told Reuters in an interview by email. “Equinor will now take the time to further improve the project business case and assess the duration of this deferral,” he added. Chinese explorer CNOOC International has

Suncor Energy

TRUE POTENTIAL

ATLANTIC CANADA

its plans for the Atlantic region, announcing that major construction activities related to the West White Rose Project have been suspended due to Covid-19. Production at the main White Rose field continues, it added, with enhanced workforce control measures designed to ensure safe operations on the SeaRose FPSO. Husky has a 72.5% working interest in the White Rose field and a 68.8% working interest in the satellite extensions, including West White Rose. It also gave an update on the Terra Nova oil field, where it has a 13% working interest. “The planned dry dock for the Terra Nova FPSO vessel is being reviewed by the operator and alternative options are being considered to complete maintenance work and asset-life extension activities,” it noted. Canada’s Suncor Energy, another key player off the Atlantic coast, has similarly modified its spending and production plans for 2020 in light of recent events.

Offshore licensing

also pulled its Pelles wildcat in the Flemish Pass off Newfoundland, saying it cannot safely execute exploration because of the health crisis. The drilling ship Stena IceMax is under contract to CNOOC to carry out its Flemish Pass exploration campaign, but had been undergoing works at a yard in Spain, one of the countries worst affected by the outbreak. “We have concluded that given that we are in the early stages of our exploration programme, we cannot safely execute offshore in Atlantic Canada in the near term due to the Covid-19 pandemic,” the company told broadcaster CBC in a statement. Siobhan Coady, Newfoundland and Labrador Natural Resources Minister, said it was not feasible to sail the ship across the Atlantic in the current climate but hoped that things would return to normal as early as possible after the pandemic. CNOOC insists that its three-well

campaign is just facing a delay and that it remains committed to the area. Husky Energy, meanwhile, said on April 20 that it will cut its 2020 capital spending by half, down to $1.7 billion and potentially shutting in some production, most likely heavy oil from onshore Canada. “As the market rebalances supply with demand over a very short period in North America, negative cash margins before operating costs are occurring,” it said in a statement. “Reducing production minimises our negative cash margin exposure.”

Capital spending cuts Reducing and deferring discretionary capital spending is a trend being mirrored throughout the industry as oil and gas companies seek to shore up their ﬁnancial defences. Husky Energy also provided an update on

Licensing activity may have taken a backseat with all that has been going on, but the C-NLOPB’s original intention was to offer more acreage in the Newfoundland and Labrador offshore area at some point this year. The regulator said in April that it was still in consultations over this with various stakeholders. Yet much of the groundwork for this has been done already. Seismic specialists TGS and PGS released on March 31 the ﬁnal 3D data results for an area offshore Newfoundland and Labrador, ahead of the C-NLOPB announcement of parcels and the forthcoming licensing round. The datasets cover approximately 12,500 sq km in the eastern part of the Orphan Basin. “The uplift in image quality provided by these datasets will enable E&P companies to fully evaluate this acreage ahead of the scheduled licensing round,” TGS said in a statement. The ﬁnal full integrity data delineates key Cretaceous and Jurassic source rock intervals, with potential producing reservoirs from Lower Cretaceous to Lower Tertiary. TGS and PGS have been acquiring 2D and 3D multi-client seismic in Newfoundland and Labrador since 2011. Their data outlines play fairways across offshore eastern Canada, including Labrador Sea, Orphan Basin, Flemish Pass Basin, Jeanne d’Arc Basins and the basins in Grand Banks. On April 9, C-NLOPB said announcements regarding the next steps in its scheduled land tenure processes will be made “in the next few weeks, in consultation with governments”. Like many other things in the present climate, much will depend on safety and what happens next with the global Coronavirus pandemic. FE www.frontierenergy.info SPRING 2020 25

ARCTIC TOURISM

New Amundsen Expeditions cruise vessels will operate in polar and tropical conditions

NEW LUXURY CRUISE LINERS

set to enter polar tourism market Despite the gloomy market conditions, more vessels are being built to ferry tourists around the Arctic using state-ofthe-art technology to ensure safe travel

challenging market for global tourism it may be, but that has not stopped the pioneering spirit of shipbuilders keen to take on the rigours of the Arctic’s icy waters. Amundsen Expeditions is looking to roll out a ﬂeet of state-of-the-art vessels that will serve primarily Chinese tourists looking to voyage into the far north and experience the wonder of the Arctic. It has commissioned Finnish technology group Wärtsilä to develop a customised design for up to six new expedition cruise vessels capable of carrying 200 passengers.

Operational reliability The design order with Wärtsilä was signed in the third quarter of 2019. “The ships are designed to operate efﬁciently in both tropical and polar waters,” said Markku Miinala, general manager, ship design sales, Wärtsilä Marine. “Because of the harsh environment and often remote location of the cruise destinations, special attention has been given to ensuring the ships’ operational reliability.” The Wärtsilä team has already worked in close cooperation with Amundsen Expeditions – which will own and operate the ships – to develop a concept model. 26 SPRING 2020 www.frontierenergy.info

The vessels are designed to be fitted with a complete package of Wärtsilä solutions, including 32 of its engines, selective catalytic reduction (SCR) systems for the abatement of nitrogen oxide (NOx) emissions, electric propulsion, the Wärtsilä Nacos Platinum bridge system for navigation and communication, as well as other automation solutions. The eventual supply package is likely to be supported by a 10-year maintenance agreement, which will ensure the safety, reliability and efficiency of the vessels, while providing cost assurances for budgeting purposes. Wärtsilä has long been a leading supplier to the cruise industry, and is making a name for itself in vessels for the demanding polar environment, an emerging trend in the search for new high-end tourism experiences. Maikel Arts, general manager, cruise business, Wärtsilä Marine, said the new ship’s design emphasises the company’s strength and experience in the industry. “Our one-stopshop capability, which allows the ship design to be combined with a complete package of onboard solutions, enables a truly integrated design. This results in the various onboard systems working seamlessly in harmony to provide the optimal level of reliability and efficiency, while keeping cost and time

considerations under control.” Captain Rajko Zupan of Amundsen Expeditions, who has been actively involved in the ship’s design since the inception of the project, said the new batch of cruiseships are highly complex and require advanced design expertise. “The cruiseships will feature all outside guest cabins, presidential suites, winter gardens and the latest environmental equipment,” he said.

Endurance launched It is not the only new vessel that will be touring the polar regions soon. The National Geographic Endurance was delivered from Ulstein Verft in March 2020 and was meant to be on its maiden voyage to the Arctic in April, although this has now been pushed back. It is part of a series of vessels commissioned by Lindblad Expeditions Holdings, a global provider of cruises and adventure travel. Last September, Norwegian shipbuilder and ship designer Ulstein Group also celebrated the keel laying of Lindblad’s second polar new build at the CRIST shipyard in Gdynia, Poland, with the new vessel named National Geographic Resolution. Scheduled for delivery in the final quarter of 2021, it is the sister ship to the National Geographic Endurance. The 126-guest Polar Class 5 National Geographic Resolution will also feature Ulstein’s signature X-Bow, a distinctive bow that provides fuel efficiency while significantly improving guest comfort in rough seas, plus a very high ice class to access

Wärtsilä

ARCTIC TOURISM

Lindblad Expeditions/Ulstein

How the National Geographic Resolution will look

Venture in December 2018. The two new ships, National Geographic Endurance and National Geographic Resolute, will accommodate 126 passengers in 69 guest cabins and suites, designed to connect guests to their environment, dubbed as “the ultimate platform for exploration”. Off-ship exploring is also being encouraged with an innovative Zodiac loading system to allow passengers to get ashore quickly and safely, ensuring quick access to every destination. Additional tools for exploration include a remotely operated vehicle, hydrophones, a video microscope and underwater video cameras, among others.

Launch of the Ocean Victory

deep into polar regions. The ship’s expanded fuel and water tanks provide for extended operations in remote areas, while the zerospeed stabilisers will ensure stability, whether at zero speed or full steam ahead. The vessels will use the cleanest marine fuels available and will be among the ﬁrst vessels in the industry to use engines that

exceed the world’s most stringent emissions control standards without requiring the use of hazardous chemical exhaust after-treatment. The two new vessels built by Ulstein will expand Lindblad’s National Geographic polar ﬂeet to four ships, following the earlier launches of newbuilds National Geographic Quest in July 2017 and National Geographic

Facing up to challenging times Arctic cruise adventures have been growing in popularity in recent years, but the Coronavirus pandemic has cast a long shadow over the expedition industry At the start of the year, Viking announced the expansion of its cruise routes and expedition voyages, with plans to begin sailing in 2022 with its ﬁrst vessel, Viking Octantis, embarking on voyages to Antarctica and North America’s Great Lakes. A second expedition vessel, Viking Polaris, will debut later that same year, sailing to Antarctica and the Arctic. The company started taking public bookings for all expedition voyages on January 15. As well as tourists, the expeditions will carry scientists who will undertake ﬁeldwork on board and join voyages to share their expertise with guests. Launching in 2022, the new Polar Class 6 all-purpose vessels, which will each be able to take 378 guests, are currently under construction and will be delivered in Norway

by Fincantieri’s VARD. But just two months after opening bookings, and with the impact of the Coronavirus pandemic being felt across the globe, the company had temporarily suspended its cruise operations. A lot has happened in the early months of this year, which means much can happen between now and the time of its ﬁrst planned polar voyages. Viking chairman Torstein Hagen reiterated in mid-March that its Arctic and Antarctic cruises would still commence in early 2022. Others are affected too, with Quark Expeditions opening bookings in January for its polar vessel, Ultramarine, for an inaugural Arctic season in 2021 with voyages to Spitsbergen, Greenland and Canada. One of the early pioneers of Arctic tourism

SunStoneShips

Antarctica bound Another polar expedition vessel, Ocean Victory – ship number three in the SunStone Ships’ INFINITY series – was launched in March this year at the CMHI Haimen yard, also featuring the innovative Ulstein X-Bow technology. Although being one of the sister vessels to Greg Mortimer, the first vessel in the series, Ocean Victory differs in a number of ways, reflecting the flexibility of the design series. The 104.4 m long vessel has capacity for 200 passengers in 93 suites, 68 with balconies, nine with French balconies and 16 with panoramic windows. An infinity pool has also been installed, while the bridge wings have been replaced by two observation platforms. When completed, the new vessel has been chartered out to Albatros Travel for Antarctica journeys in the winter season and to American Queen Steamboat for Alaska cruises in the summer. FE

expeditions, it also unveiled its first sustainability report in February. Historical analysis shows that Quark Expeditions has decreased emissions from its fleet by 28% since 2010. In March, Hurtigruten also opened bookings for its new Alaska voyages, and like all others, will be monitoring closely how the situation surrounding the pandemic evolves as well as its impact on tourism generally, and also the cruise industry specifically. One of its vessels, Roald Amundsen, in February travelled the furthest south of any company ship in the expedition cruise line’s 127 years of business. After crossing the Antarctic Circle, the ship continued south to reach the ice edge at 70º south. Roald Amundsen is the world’s first hybrid electricpowered expedition cruiseship, equipped with large battery packs to reduce emissions, as well as a specially designed ice-strengthened hull, which allows it to operate in areas other ships cannot reach. Its sister ship, Fridtjof Nansen, which will also run on a hybrid electric-powered propulsion system, was due to embark on its maiden voyage this spring. www.frontierenergy.info SPRING 2020 27

EVENTS, CONFERENCES & EXHIBITIONS

Frontier Energy’s comprehensive listing of essential trade events and conferences for the Arctic oil and gas industry and shipping sector. Please note that all dates may be subject to change as a result of the Coronavirus pandemic.

16th Arctic Shipping Summit September 23-23, 2020 Helsinki, Finland Where the who’s who of Arctic shipping meet, September is the new date for the 16th Arctic Shipping Forum, to be held at the Paasitorni Congress Centre, Helsinki, Finland. The world’s longest-standing and most influential event focusing on Arctic shipping operations, new technology and ship design for ice-going vessels, this is a key forum for all stakeholders (shipping firms, coastguards, governments, lawyers, financiers and insurers). Included this year will be a focus on how Covid-19 has affected Arctic shipping and cruise operations during 2020 and what the implications might be going forward. The event will also explore other key areas including policy and regulation, as well as updates on the Polar Code. https://informaconnect.com/arctic-shipping-forum/ /////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Ocean Arctic Energy October 12-16, 2020 Shanghai, China The 30th International Ocean and Polar Engineering Conference takes place in Shanghai, China, after being pushed back from earlier in the year. 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 high-performance materials, among others. https://www.isope.org /////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Arctic Shipping Forum North America October 27-29, 2020 Montreal, Canada An industry event that will focus on North America’s emerging Arctic shipping industry, this October gathering will take place at Hotel Omni Mont-Royal in Montreal, Canada. It is the largest event for Arctic shipping professionals in North America dedicated to regulatory, strategic, operational and technological developments for the Arctic region, with key insight into how to effectively navigate through ice-covered waters off Canada and Alaska. Hear from commercial operators on the challenges and realities of Arctic shipping, analyse the detail of ice charting, forecasting and route planning and learn more about key environmental issues. https://informaconnect.com/arctic-shipping-north-america/ /////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

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

28 SPRING 2020 www.frontierenergy.info

Global Arctic Shipping July 8-9, 2020 Virtual event A two-day summit hailed as the world’s largest virtual maritime event. Global Arctic Shipping will be an opportunity to discover online the latest technologies and trends for this emerging maritime region, while also promoting sustainable development. The online event will bring together well-known experts and specialists from across the world, including governmental transport associations, shipping companies and leading service providers, to explore opportunities, technologies and challenges relevant to the Arctic region. https://www.arcticshippingsummit.com 11th Maritime Salvage & Casualty Response September 2020 London, UK ACI’s 11th Maritime Salvage & Casualty Response Conference will once again bring together senior executives and experts from salvage companies, technology providers, P&I clubs, law firms and global regulators to discuss the latest challenges and developments making an impact on the industry. The 2019 event took place in London and brought together industry professionals from organisations including Tsavliris Salvage Group, Resolve Marine and Five Ocean Salvage. This year, there will be an in-depth look into two themes: preventive actions to reduce fires on containerships and specifically on offshore oil and gas decommissioning. Final dates and venue to be confirmed. https://www.wplgroup.com/aci/even t/maritime-salvage-casualtyresponse/ Decarbonisation in Shipping: Europe 2020 October 7-8, 2020 Hamburg, Germany ACI’s Decarbonisation in Shipping: Europe 2020 will be taking place in Hamburg, Germany, this October

(venue to be confirmed), the first European edition of this event. The two-day forum will bring together key stakeholders from the maritime and energy industry, regulatory and policy officers, consultants, solution and technology providers. The conference will provide an in-depth look into the transition towards decarbonisation through presentations, roundtables, panel discussions and interactive sessions, as shipping steers a course to a more sustainable and cleaner future. https://www.wplgroup.com/aci/even t/decarbonisation-shipping-europe/ Arctic Frontiers 2021 February 1-4, 2021 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 February 2021, it will reconvene to continue this important dialogue. 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 OTC May 3-6, 2021 Houston, USA The world’s biggest offshore technology conference has been postponed for 2020 but will be back again next May. OTC is a regular fixture in the calendar for all oil and gas industry players, from big energy corporations through to small consultants and niche service providers. The annual event is focused on exchanging technical knowledge relevant to the development of offshore energy resources, in North America and around the globe, and includes vital information on the emerging Arctic oil and gas sector. http://www.otcnet.org

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