Offshore Aberdeen September 2015

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BUNDED TANKS PROVIDE A SOLUTION TO THE REQUIREMENT FOR OFFSHORE BUNDED AREAS INDUSTRIAL CHEMICALS, INCLUDING acids are commonly used offshore in a variety of operations. These chemicals are hazardous to the environment and need to be stored, transported and used under very strict controls. In the UK, the HSE requires that they are held in a bunded area , in case there is a catastrophic failure of the tank and the toxic chemicals damage the surrounding environment.

Offshore, the need to protect workers and the platform from the potential hazard, could potentially cause an issue for the project, as a specified bunded area would be difficult to maintain.

Bunded tanks are a solution to the issue.

The tanks are held within a frame that can contain the contents should there be a failure of the tank. They meet the HSE regulations and provide an ergonomic solution, ensuring that space offshore is maximised.

Ferguson’s new bunded T11 chemical tanks are made of 316 stainless steel with a

4-bar working pressure, they have a payload of 5900 kg and a maximum gross weight of 8500 kg.

Judith Verner, Development Manager Fluid Solutions said: “These form a new addition to the company’s offshore fleet of specialist tanks and the new bunded tanks will provide our customers with a solution for storing their chemicals in a non bunded area. The tanks have a secondary containment system that meets UK regulations as to the storage of industrial chemicals. The new T11 bunded tanks have a 110% fill capacity.”

Ferguson has a Chemical Solutions team available to offer customers advice on how best to manage their transportation and storage of chemicals along with tank cleaning and disposal of excess chemicals after their offshore operations.

The bunded tanks join a fleet of chemical tanks, ISO tanks, cryogenic tanks for liquid nitrogen and acid tanks in a range of sizes.

FERGUSON SUPPLIES 200,000th DNV-CERTIFIED OFFSHORE CONTAINER FERGUSON, A LEADING supplier of offshore DNV 2.7-1 / EN12079 certified containers, tanks, freezers, accommodation and workspace modules is pleased to announce that its latest workspace module is the 200,000th offshore container to be certified by DNV GL. DNV GL will present the prestigious

quality marque at Offshore Europe. Remi Eriksen, CEO of DNV GL, will join Richard Smith, Ferguson CEO on the Ferguson stand to make the award.

The 200 000th DNV 2.7-1 unit has been designed and built by Ferguson as an offshore office module. In addition it has been designed and certified to DNV 2.7-2

for use on offshore platforms worldwide.

The A60 4.8m module is fitted with an air conditioning system controlled by individual thermostat, PLC (programmable logic controller) fire and gas detection and category II lighting. This office module is part of the Ferguson fleet of workspace modules that can be configured as a meeting room, laboratory, wireline support cabin, ROV control cabin, workshop, MWD (measurement while drilling) and LWD

(logging while drilling) cabin, test cabin or tea shack. Accommodation modules that can be configured as an en-suite bedroom, mess, galley, freezer/dry store, recreation room, gymnasium, medic suite, laundry or locker are also available.

Dr Julian Poyner, Ferguson Engineering Director said: “DNV GL is an internationally recognised brand. We have applied DNV GL’s standards DNV 2.7-1, DNV 2.7-2 and DNV 2.7-3 to our fleet. Our adherence to these

highly regarded standards illustrate our absolute commitment to quality and safety.”

Richard Smith, Ferguson CEO added: “We continue to invest in robust and quality products to meet the needs of the offshore energy sector, whilst remaining committed to providing our customers with value for money. The fact that our equipment is accredited to DNV GL standards provides the client with the reassurance they require.”

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NEWS PUBLISHER

Shawn Coles shawn.coles@offshoreaberdeen.com 07919 884650

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Jeremy Bowden editor@offshoreaberdeen.com 07766 035 613

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TRANSPORTING HAZARDOUS CHEMICALS OFFSHORE INDUSTRIAL CHEMICALS ARE used regularly by offshore energy sector in exploration, production, cementing, well abandonment and decommissioning.

They are essential to many processes, and the logistics can be a time consuming component.

The national and international regulations regarding the filling, holding, storage, transportation and disposal of said chemicals are a challenge. Additionally there may be specific local regulations regarding the movement of chemicals, with separate licences required at each turn, whether being purchased, stored, filled, transported, or used and disposed of, on and offshore.

One of the main areas for using chemicals, is in well stimulation process . In carbonate formulations, hydrochloric acid is flushed into the well under pressure to dissolve

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Published in Aberdeenshire and neighbouring counties and printed by Archant Print, division of Archant Community Media Limited (Co Reg No. 19300). Registered Office: Prospect House, Rouen Road, Norwich NR1 1RE Views expressed by contributors are not necessarily those of the publishers. While all reasonable care is taken when accepting advertisements, Offshore Aberdeen accepts no responsibility for those appearing.

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small blockages and increase the rock’s permeability to facilitate hydrocarbon flow. For sandstone and shale deposits, hydrofluoric acid would be used instead.

The acid is rendered benign by the process, but needs to be removed after use. It does however, take a significant amount of chemical, which results in a significant amount of residual fluid that will need to be disposed off appropriately.

Methanol is commonly used in dehydrating and de-icing wells. This flammable chemical has to be transported in such a way as to protect the chemical, to prevent its evaporation, people and environment.

In decommissioning, wells are plugged and residual fluid recovered. It is imperative that the recovered fluids, which may be hazardous materials, are tightly managed with regards to their removal from the platform, subsequent storage and transportation in a way that ensures the safety of the workforce and environment.

Ferguson, a global specialist in supplying DNV 2.7-1 offshore containers for transportation and storage has a full range of DNV 2.7-1 chemical and acid tanks in the offshore fleet. The fleet includes acid tanks, helifuel tanks, chemical tanks, cryogenic tanks and bunded tanks.

However chemicals are transported, stored and used, it is essential that they are handled with the care they require. The legislation is prescriptive and because of this, it is always useful to find a supplier who can help with your needs and can help with the licences required.

FERGUSON MIDDLE EAST NEW DUAL HVAC KEEPS OFFSHORE GULF WORKERS COOL AND PRODUCTIVE FERGUSON HAS INTRODUCED an innovative new dual HVAC system to their engineering workspace modules.

The new system has been design engineered to protect offshore workers from the punishing temperatures in the Arabian Gulf. Temperatures can reach the upper 40 oC ( forty degree celsius) or higher during the summer months and high temperatures make for an uncomfortable work environment. Offshore crews need an air-conditioning system that offers a more comfortable and cooler workspace.

In addition to improvements to temperature management, the introduction of a two speed fan improved HVAC unit efficiency by 30%, during normal operation, and reduced purge time. When an A60 module becomes de-pressurised, it has to be purged prior to anyone re-entering the module. Purging a module can sometimes take up to an hour, during which time the pressurised module cannot be used. The new HVAC unit has meant a 25% reduction to the purge time.

Dr. Julian Poyner, Engineering Director,

Ferguson: “All offshore modules are pressurised and this means that they have cool air pumped through them at a constant rate whenever they are powered up. When you are dealing with a very warm ambient temperature the HVAC has to work a lot harder. Offshore, this can mean that the HVAC unit is under stress for days at a time, with the obvious risk to reliability.”

Poyner continued: “We are delighted that we have been able to design a solution to meet the needs of our Gulf clients and can offer a solution that successfully addresses the challenge of working in modules in such high temperatures.”

Each HVAC unit is more powerful than standard units and is operational at up to 50°C ( fifty degrees Celsius). The new HVAC unit has been designed to operate over a greater range of temperatures from -20°C to +50°C. Testing over this temperature range was carried out at the Motor Industry Research Institute (MIRA) in Nuneaton, with tests running constantly over a five day period.

FERGUSON OFFERS OFFSHORE WORKSPACE MODULES TO DNV 2.7-2 STANDARD FERGUSON IS DELIGHTED to announce that its workspace modules are now also manufactured and certified to DNV 2.7-2, in addition to DNV 2.7-1.

With this, the company is continuing its commitment to delivering quality products, manufactured to the highest international

TWI AND LLOYD’S REGISTER ENERGY TO TEAM UP ON 3D PRINTING PROJECT FOR OFFSHORE SECTOR TWI AND LLOYD’S Register Energy are to embark on a joint industry project to develop 3D printing techniques for the offshore oil and gas sector, entitled ‘Certification of laser powder additive manufactured components for industrial adoption in the energy and offshore sectors’. The 18 month project is expected to attract considerable interest from companies worldwide wanting to collaborate and gain early adoption of ‘approved’ additive manufacturing – or 3D printing - practices for their products. We have arranged to talk to the partners about their venture, and an in-depth article will be included in our next issue.

standards and requirements, for the offshore oil and gas industry. The latest workspace modules are certified to DNV 2.7-2, a collection of requirements relating to temporary offshore equipment, addressing key safety aspects relating to the unit itself and its impact on the offshore installation upon which it is used.

Dr. Julian Poyner, Group Engineering Director explained the difference between DNV 2.7-1 and DNV 2.7-2 standards: “DNV 2.7-2 is part of a suite of quality marques that provide a set of requirements for temporary offshore equipment modules. While DNV 2.7-1 provides a standard for structural requirements related to transportation and lifting phases, DNV 2.7-2 incorporates structural aspects relating to in-service operations. Its main focus however is on electrical requirements, based on internationally recognised IEC standards, and safety related aspects (driven by International Maritime Organisation Statutory requirements, e.g. SOLAS and MODU code) to maintain a safe working environment on offshore installations or vessels.”

“Certification by DNV GL in accordance with this standard provides a document which may be presented to users of the module

confirming its technical standard and safety related performance. This would include anything from accommodation modules to workspace modules or ancillary modules e.g.

Laundry, Medic, Galley modules,” he said.

There are several additions to Ferguson’s new workspace module design, primarily the ability to maintain fire and gas detection for

a period of 24 hours in the event that main power to the module is lost. There is also increased operating temperature range of the equipment which enables the modules to perform in more demanding environments and an increased operating range for HVAC systems which offers a more comfortable environment for the module operators.

offshoreaberdeen.com | September 2015 | Offshore Aberdeen

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NEWS UK LIQUIDS PRODUCTION UP FOR FIRST TIME IN 15 YEARS UK CONTINENTAL SHELF oil and gas production rose in first half of 2015, suggesting a recovery in efficiency, according to Oil & Gas UK. Deirdre Michie, Oil & Gas UK’s CEO, welcomed to news: “Provisional data for the first six months of 2015 show liquids production to be up around 3% and net gas production to be up around 2.5% this year, compared to the first six months of last year. It’s still early days, but initial indications suggest that production could increase this year for the first time in fifteen years.”

“Production in the second quarter of the year looks particularly encouraging and early figures suggest that May saw the most oil and gas produced on the UKCS since March 2012.”

Golden Eagle boosts UK production

“We will be able to discuss annual estimates with more certainty by the end of the summer maintenance season, as figures for July and August are historically the most uncertain.”

As well as improved production at existing assets, output received a boost from the Golden Eagle field, which came online in November 2014.

Deirdre Michie added: “Clearly the oil price – which has more than halved since this time last year – continues to really challenge the industry. However, this positive news can indeed be attributed to the effort and investment that industry has put into improving the integrity and performance of UKCS assets – something we’ll look to explore in further detail in our Economic Report 2015.

COMMENT As we approach the annual SPE Offshore Exhibition in Aberdeen, the oil price looks shakier than ever. With demand in China lower than expected and record production around the world, supply is outpacing demand by up to 2.5 million b/d. Still more big projects are due to come on-stream over the next few months, and demand is under question as stock markets around the world adjust in line with bad news from China and other major developing countries. Most experts are now predicting a lengthy period of low prices, with some uncertainty over where any support might lie as Brent prices struggle to stay over $45/bl.

In response, job cut announcements are mounting up, with Shell and Centrica among those breaking the bad news over the last month. Others such as Wood Group are steadily reducing numbers, and all companies are busy cutting costs, with strike action threatened as a result from the BALPA pilots union – all of which can be read about in our news section on pages 2 - 16. Unfortunately the sort of response seen by UK farmers to low milk prices won’t work for those in the oil business when crude falls. There is little public sympathy, so doing things cheaper and smarter is the only way through this.

With oil and gas stocks under siege we start a new regular slot dubbed ‘barometer’, where we look at how equity at 15 key North Sea companies perform from month to month, along with Brent crude. To accompany it this month we have articles on second quarter results of the biggest European oil companies (page 27), and another on those companies taking advantage of the downturn and expanding in the North Sea, which can be seen on page 37. A third company-focused article looks – with the help of data from India’s 1Derrick - at how merger & acquisition activity in the sector took off globally in the second quarter, as stock prices fell and buyers snapped up potential bargains, led by Shell’s takeover of BG. Whatever happens to price, technology can always be relied on to be on the side of developers, and innovative ideas, techniques and products are continuing to chip away at costs and expand potential options. In two technicallyfocused articles, we look at how advances in technology are changing maintenance options, in Robotics bring increased safety and lower costs, on page 22; along with how ideas on different ways of approaching decommissioning (informed by a KPMG study) may also get costs down and improve recovery,

in More evolved approach to decommissioning could create opportunities; cut costs, on page 18.

In response to the changing environment, new alliances are taking shape. In the field of management consultancy, for example, Accenture snapped up Schlumberger Business Consulting in August, whilst in engineering consultancy GE and Mcdermott have teamed up to form a joint group named io. We asked io’s CEO, Dan Jackson, a range of questions about his new expert group, and the replies can be found on page 20.

With crude in the doldrums, some offshore players may be looking to renewables to provide alternative options for business. However, concern is growing over the policy of the new Conservative government towards offshore wind, following its withdrawal of subsidies for onshore wind and solar. We reflect findings from Globaldata, indicating the UK’s dominant position in offshore wind worldwide, and ask if the UK can maintain that position with less government support, in UK offshore wind sector world leader; calls for clarity over government policy, on page 24.

Following on from this we discuss the UK’s leading position on tidal energy and its growing potential, with the help of a report from Frost & Sullivan, in UK powers ahead with development of tidal energy solutions, on page 25.

Faced with shrinking budgets, we also review – with help from work with McKinsey & Co’s Energy Insight Group - how operators might best spend what they have, and come out firmly on the side on well intervention. Doing more with the wells you’ve got is the most effective way of spending a limited budget, and more can be read on the topic in Well intervention proves best option in tough times on page 26.

Finally we have an interesting interview on the page 38 with Ryan Stewart, Chief Commercial Officer at floating accommodation specialists Prosafe, who speaks frankly about the tough environment currently being experienced by all firms that provide equipment to the offshore sector.

We hope you enjoy our seventh issue, which we hope many of you will read at the SPE Offshore conference and exhibition in Aberdeen. Three out of the four of us involved with Offshore Aberdeen will be there, and it would be good to meet as many of our readers as possible at what should be a great event, despite the downside of low prices. Who knows – by then OPEC might have changed policy, something that might begin to be in all its members’ interests before long.

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NEWS Elliot Kinch, Schools and Careers Guidance Committee co-chair, Society of Petroleum Engineers (SPE) Aberdeen Section

Schools – at the heart of the matter Despite these challenging times for the industry, it is critical that oil and gas companies continue to invest in the industry’s future generations in order to ‘pass on the baton’.

During the last 50 years of North Sea exploration and production, many of those who are currently working in the industry have been mentored, supported and advised by senior colleagues throughout their careers. One of SPE’s main missions and responsibilities worldwide is to capture the knowledge of the industry and share it with the schools, universities, teachers and professors.

The SPE Aberdeen School Careers Guidance Committee (SCG) proactively engages with primary and secondary school pupils from the Aberdeen and Aberdeenshire areas, working directly with teachers through a number of ongoing science, technology, engineering and maths (STEM) related activities. In the last two years alone, we have invested over £45,000 into the schools in our geographical remit.

There is a number of programmes the committee runs and supports both financially and in kind, among them Maths in the Pipeline, an event full of mathematical workshops and challenges for school pupils based on the application of mathematics in the oil and gas industry. The committee also runs a series of CV and career workshops in a number of schools across Aberdeenshire.

One of the biggest events we are involved in is TechFest Science Festival, the Aberdeen and North-East of Scotland’s annual festival of STEM subjects, which the committee has supported for almost ten years. By championing the promotion of STEM activities and adopting a fun and hands on learning experience, the festival effectively engages, challenges and inspires children.

The committee also supports teachers involved in STEM subjects, through Energy4Me, a programme designed to educate teachers about the industry, and encourage them to spark interest in their pupils. We also carry out continuous professional development sessions for

teachers, to ensure they know how best to engage and motivate their pupils.

The SCG Committee also provides technical experts to take part in these programmes, all of whom volunteer their time to ensure that the next generation is supported as much as they have been in their early career.

That is why this year’s Offshore Europe theme of ‘Inspiring the Next Generation’ is particularly fitting. It is hugely encouraging that the importance of encouraging young people to join the industry is taking centre stage.

Offshore Europe provides the perfect opportunity for young people to take some time out to see what opportunities are available in the industry. They can then assess where they are in their education, what skills and interests they have and what part of the industry they would like to fit in to. The oil and gas industry is unique, in that it offers a whole range of careers spanning from engineering and technical roles through to communications, HR, finance, health and safety and more.

One initiative designed to address the career options available is Inside Industry, a career guidance website for secondary schools and colleges which is sponsored by SPE Aberdeen. This website helps pupils identify different career options, demonstrates different entry routes into that career and connects them with other young people currently working in the industry.

It is important that pupils are not only aware of the comprehensive university courses on offer, but also the college courses and apprenticeship schemes available. There are many doors into the industry if you look hard enough.

For the senior professionals working in the industry, I would strongly encourage them to get involved in a membership organisation by attending events, workshops and/or conferences, to help pass information from one generation to the next. You might just be the person who inspires a young individual enough to become the next CEO or managing director of a major oil and gas operator or service company.

DRILLSHIP DAY RATES KEEP FALLING RIG DAY RATES keep falling with a new benchmark low set by a deal in the US. Diamond Offshore announced a contract agreement for the Black Rhino with operator Murphy for a 7 month extension in the Gulf of Mexico at a new low day rate of just $220,000, compared to a market peak of around $650,000 per day a couple of years ago. Day rates have fallen sharply since oil prices began falling last year, as operators have cut back on projects and rig-owners have been left with surplus vessels on their hands.

Ultra deep water rigs like the Black Rhino haven't earned day rates consistently below $250,000 per day since the 2004-2006.

Since then many new rigs have joined the workforce, with others still under construction at shipyards. With drillship availability increasing and demand continuing to fall, day rates could fall below operating cost break-even levels, placing owners in a tough position.

CENTRICA TO CUT 6,000 JOBS CENTRICA HAS ANNOUNCED plans to cut 6000 jobs, or 16 % of the company’s total workforce. The majority will be in the UK, with 3,000 cuts to be carried out by the end of 2017. The cuts come despite a doubling of profits at Centrica’s British Gas division. The company's total workforce now numbers about 37,500.

New management recently gained

control at Centrica, and radical change had been expected. Its new leader, Iain Conn, who joined from BP earlier this year said he would cut back on North Sea E&P and power generation when he joined.

The company has pledged to save £750m annually in costs until 2020, and intends to dispose of up to £1bn of oil and wind assets – in sharp

contrast to its fellow ‘big six’ utility, SSE, which snapped up a 20% stake in Total’s Langgan Tormore project last month to secure long term gas supply.

The new strategy is based on results of a strategic review, which concluded Centrica should focus on the British Gas side of the business and scale back its activities in upstream operations.

offshoreaberdeen.com | September 2015 | Offshore Aberdeen

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NEWS

WOOD GROUP JOB CUTS REACH 5,000 WOOD GROUP HAS cut about 5,000 staff since last December, as it seeks to readjust to the lower oil price environment. The group announced in February that it would be cutting jobs to cut costs. About 1,000 jobs have gone in the UK, 3,000 in the US and 1,000 in the Middle East. The Aberdeen-based group employed some 40,000 workers at the beginning of the year.

"Group headcount is down 13% from the position in December and 17% from June 2014," Wood Group said in a statement.

The oil service company’s first half net profit fell 17% to $116.8 million compared with the first half of 2014. Total revenue was down almost 20% at $3.1 billion. The cuts are expected to save $80 million annually. Despite the lower profits, the group increased dividends by 10%, “in line with intention to increase the dividend per share by a double digit percentage from 2015 onwards”.

Bob Keiller, chief executive, said: “Conditions in oil and gas markets remain very challenging. Performance in the first half demonstrates our commitment to cost discipline and the resilience and flexibility of Wood Group’s through cycle model. Our outlook for 2015 overall remains unchanged and we anticipate that full year performance will be in line with analyst consensus. With little prospect of short term improvement in market conditions, we will focus on remaining competitive and protecting our capability, working with clients to reduce their overall costs, increase efficiency and safely improve performance.”

Wood Group CEO Bob Keiller

WE HEAR THAT UP TO 95% OF ALL INCIDENTS ARE CAUSED BY HUMAN ERROR. DOES THIS MEAN THAT HUMAN ERROR ALWAYS LEADS TO SOMEONE GETTING HURT? The short answer to this question is “No!” Not every incident causes someone to get hurt, often the outcome is a ‘near miss’.

The relationship between these outcomes was captured in the 1930s

by Herbert Heinrich who stated that in a workplace, for every major injury, there are 29 accidents that cause minor injuries and 300 accidents that cause no injuries. This became known as Heinrichs law which suggested a relationship between near misses, minor injuries and major injuries because they shared common root causes. Organisations need only reduce one to affect the other.

More recent data shows that although this approach does reduce minor injuries it does not have a directly proportionate effect on major injuries and certainly does not take into account major incidents where there are often multiple injuries.

DOES HUMAN ERROR STILL PLAY A PART?

SHELL TO CUT 6500 JOBS SHELL SAID IT was reducing its headcount by 6500 staff and contractors, as the fall in oil and gas prices squeezes its global E&P operations. The cuts include some in the North Sea. The job losses are part of Shell's $4 billion program to reduce operating costs. Shell currently employs about 94,000 people.

Capex will also be cut - by about $7 billion to $30 billion, the company said.

Shell CEO Ben van Beurden said: "We have to be resilient in a world where oil prices remain low for some time, whilst keeping an eye on recovery. We're taking a prudent approach, pulling on powerful financial levers to manage through this downturn, always making sure we have the capacity to pay attractive dividends for shareholders."

Shell also said it had sold $20 billion worth of asset in 2014 and 2015, and it anticipated $30 billion in sales between

EVERY MONTH THE EDITOR, JEREMY BOWDEN ASKS FQM A FACT FINDING QUESTION...

2016 and 2018.

"Today's oil price downturn could last for several years, and Shell's planning assumptions reflect today's market realities," the company said. "The company has to be resilient in today's oil price environment, even though we see the potential for a return to a $70-$90 oil price band in the medium term," he said.

“We have to be resilient in a world where oil prices remain low for some time, whilst keeping an eye on recovery.”

Human Error possibly plays a bigger role than we have ever previously understood but not just in terms of injury and harm.

Error inducing factors in the workshop which may lead to an injury and can be seen as ‘Active Failure’. Similar error inducing factors in the Engineers office or the latest board room meeting on cost reduction may lead to a different kind of incident, elsewhere and much later on, and can be called ‘Latent Failure’.

The biggest ongoing financial impact on any organisation however, especially in the current climate, may be these same error inducing factors but which lead to duplication, rework, rewrite, modification, wasted time, effort and materials most of which remain a hidden cost. These are crippling losses which happen every day!

Not all error leads to harm…but all error leads to loss!

w fqmltd.com e info@fqmltd.com t 01224 628 260

Offshore Aberdeen | September 2015 | offshoreaberdeen.com

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NEWS

BP ANNOUNCES FURTHER $1BN INVESTMENT IN NORTH SEA BP IS TO spend $1 billion to increase output from the Eastern Trough Area Project (ETAP) in the central North Sea, which would secure the future of the field until 2030 and beyond, BP said.

"These are challenging times for the industry and we are having to make hard choices," BP said. "Nonetheless, we remain committed to improving the competitiveness of the North Sea and to maximizing economic recovery from our fields."

ETAP is an integrated development of nine different fields, of which six are operated by BP and the other three by Royal Dutch Shell. Production, which started in 1998, is at around 120,000 b/d.

Oil & Gas UK’s chief executive Deirdre Michie welcomed the investment: “Oil & Gas UK is pleased to welcome BP’s announcement... According to figures from the Department for Energy, the country’s primary demand for oil and gas, critical for our transport and heating and powering our homes, is set to remain unchanged until 2030 at least. It is encouraging to see the continuing investment BP is making in its North Sea assets and projects to deliver a secure indigenous supply of energy for the country.”

BP’s Aberdeen HQ

QUAD 204 SUBSEA STRUCTURES NEAR COMPLETION BABCOCK HAS COMPLETED 73 subsea structures for BP’s Quad 204 offshore redevelopment project, 130km west of Shetland. So far 65 of 73 structures have been delivered, including all of the 2015 program requirements.

Among the structures, two highly engineered manifolds, the largest and most complex constructions within the project,

were manufactured, painted and outfitted at Babcock’s Rosyth facility on the Forth.

With a combined weight of 326 tonnes, the manifolds are key parts of the 2015 installation program at Quad 204.

The subsea structures were transported to Lerwick by freighter and then transferred to a dedicated heavy lift vessel for installation at the Schiehallion and Loyal oil

and gas fields, helping to extend production at the North Sea site until 2035.

Babcock installed pipe spools and pressure tested the structures at Rosyth, before handing them over to BP and its subcontractors to carry out Controls Fit Out (CFO) and Site Integration Testing (SIT). Two Control Distribution Assemblies (CDA’s) were also provided and shipped to the fields.

The Babcock project team managed to complete more than 800,000 working hours with no lost time due to accidents on the program.

Charles Forrester Project Manager, Energy and Marine Services from Babcock said: “We are pleased to have delivered this hugely significant part of BP’s Quad 204 offshore redevelopment project. The

Manifolds are major pieces of highly complex engineering and it is testament to the skill, ingenuity and hard work of our workforce that the structures are now on their way to play their part in accessing remaining hydrocarbon reserves in the Schiehallion and Loyal fields. We were also thrilled, to be recognised for our safety performance on this program.”

offshoreaberdeen.com | September 2015 | Offshore Aberdeen

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NEWS Aasgard subsea compressor trains; photo courtesy of Statoil

DEPLOYMENT OF ASGARD SUBSURFACE COMPRESSOR DELAYED STATOIL SAID THAT its plans to install a subsea compressor to develop the Asgard field in the Norwegian Sea had been delayed. The company hoped the subsea compressor will boost recovery rates and speed up production. The work had been expected to begin during the first half of 2015, but it is now reported to be in the third quarter of the year, before the end of September.

“This is completely new technology that’s being put into operation for the first time,” Statoil spokesman Morten Eek said. “We are comfortable that it is taking longer time than first expected.” Eek said Statoil would “use the time we need” in order to ensure that the installation work was “carried out in the best possible manner.”

The Asgard field is located on the Halten Bank in the Norwegian Sea, about 200 km off the coast of central Norway. It is one of Norway’s largest existing developments.

Around 52 wells have been drilled through 16 seabed templates at the field, which comprises of a number of separate discoveries. The first of these, Midgard, was made by Saga Petroleum in 1981.

“This is completely new technology that’s being put into operation for the first time,”

Statoil needs the new technology to offset pressure declines in the reservoirs following many years of production. The company hopes subsea gas compressor will raise the total recovery from the Mikkel and Midgard discoveries by around 282 million boe.

Karen Seath is Decom North Sea’s chief executive. With over 20 years’ experience in the scientific and commercial business development sectors, she has specialised in risk management and regulatory affairs, managing relationships with official bodies across the globe.

A masters-qualified Marine Biologist, Karen combined her areas of expertise, becoming business development manager at St Andrews University’s SOI Group, where her passion for decommissioning took hold. A familiar name in the sector, Karen realised a long held ambition to become further involved in decommissioning, through her initial appointment as general manager of Decom North Sea in 2014, before moving into her current role.

“Around the world, after stopping production, all offshore installations have to be removed, reused or disposed, depending on the regulation of the area in which they were operating. This phenomenon is called decommissioning.”

NOW, I ADMIT that this quote isn’t particularly recent and I would hope that decommissioning is no longer classed as a “phenomenon”. However, the quote does serve to remind us of the sheer scale of decommissioning and the unknown factors that - to a certain extent – persist.

Just think; there are over 600 offshore oil and gas installations in the North Sea, the vast majority of which are in UK waters.

These include sub-sea equipment fixed to the ocean floor as well as platforms ranging from the smaller structures in the Southern North Sea (similar in size to Big Ben) to the enormous concrete or steel structures as big as the Eiffel Tower and much heavier in the Northern North Sea. There are decades of work to be gained from decommissioning – and right now, that’s a really important message for our oil and gas service sector. Yet those opportunities will slip away from the UK sector, and decommissioning has the potential to become a financial burden

on the UK tax payer, unless we are all fully appraised of – and understand – where, when and what those opportunities are. Without that information, we can’t develop the solutions for safe, efficient decommissioning, and we certainly can’t undertake the significant operational and financial planning required when it comes to projects of such magnitude.

Decom North Sea is the decommissioning industry’s only independent members’ organisation focused on all aspects of the decommissioning value chain. Our primary objective is to provide our members with meaningful and up-to-date market information and data covering key aspects of the decommissioning market.

We want to keep the supply chain in the decommissioning loop at all times, and we’re here to help mitigate uncertainty over the future of decommissioning, by providing members with exclusive and relevant market intelligence. There are, of course, many variables when it comes to predicting the exact date of decommissioning for each structure but we know from member feedback that this data provides invaluable knowledge about past, current, and future activity that provides the wherewithal to take an involvement with decommissioning on to

the next stage.

Current project contract information appraises our members of the associated business opportunities, whilst market projections help them understand the scale of activity and spend, where it will take place and the predicted proportion of spend attributed to each structure component.

For example, we’re helping our members plan their future activity by highlighting the areas of the North Sea predicted to be most profitable in the immediate, mid- and longterm. We focus in and report on the aspects of decommissioning that we know are of prime importance to our members and the sector as a whole. The perfect illustration of this is the information we have gathered regarding the North Sea ports and disposal yards that are active in, or have an interest in, decommissioning. There’s no doubt that this type of information will help operators and the supply chain understand the onshore options and port support for their planned decommissioning.

This is a small snapshot of the market intelligence our members can access, but the outcome of sharing such information can only result in enhanced collaboration and the development of efficient decommissioning solutions. In other words, the lifeblood of Decom North Sea.

Offshore Decommissioning Conference 17 - 19 November 2015 Fairmont Hotel, St Andrews

Full details, including sponsorship, accommodation, and delegate bookings will be available shortly.

FOR FURTHER INFORMATION Please contact Jennifer Dunbar jdunbar@decomnorthsea.com or Clare Rees crees@oilandgasuk.co.uk

Offshore Aberdeen | September 2015 | offshoreaberdeen.com

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NEWS

TCO EXPANDS WORKFORCE ABERDEEN-BASED WELL completion specialist, TCO, has confirmed a continuation of strong sales results, and plans to expand its Aberdeen workforce

by a third as a result.

Within the past six months, the company has employed eight new personnel for its UK base, namely three engineers, a

production scheduler, QHSE manager, administrative assistant and trainee produce, assembly and test technician as well as a new MD, Paul Betteridge.

Two further employees are expected to join the UK team this year, bringing the local headcount to 26 and accounting for 20% of the company’s personnel.

Earlier this year, TCO moved into its new, purpose built 1,000 square metre office and production facility in Altens.

The new facility contains multiple pieces of state of the art equipment including two high pressure test systems for multi-line function testing and a heating chamber for thermal pressure testing.

Commenting on TCO’s 2015 performance so far, Mr Betteridge, said: “Given the current climate within the energy sector, we are exceptionally pleased to be able to maintain and grow the business. There is no doubt

that this is down to the sound products and services we give our clients and we are keen to continue to expand our workforce, recruiting likeminded individuals to help us continue to prosper… 2015’s turnover is predicted to match that of last year and we see real potential for international growth into 2016 and beyond.”

TCO currently employs 130 people across its bases in Aberdeen, Norway, North and South America, Australia, Russia, Africa and the Middle East. The company specialises in completion barrier plugs, chemical injection systems, multi-cycle valves and Annulus Pressure Relief Systems, as well as the provision of tubing-conveyed perforating (TCP) equipment and services.

Paul Betteridge, TCO MD since March

Inspiring the next generation of underwater specialists

David Liddle, business development executive at the Society of Underwater Technology (SUT)

“Aligned with Offshore Europe’s theme of ‘How to Inspire the Next Generation’, the SUT is hosting two deepwater technical sessions at the event which will provide a platform for leading organisations to demonstrate innovations that are pushing boundaries at new depths.

Our first session, ‘New Technologies for Efficiency and Effectiveness’ will offer insights into innovations that help to reduce costs and improve reliability for developing and exploring oil and gas reserves. The second session, ‘Subsea Challenges for Enabling Deep Water Production’ will cover innovations addressing key challenges from integrity and flexible riser fatigue to subsea processing and chemical injection.

As the industry delves into deep sea frontiers, new underwater technologies are required that can support safe exploration and production at extreme depths. The variety of new developments being presented during these two sessions highlights just how much progress is being made and the ambitions of the industry to push boundaries and open up access to new reserves.

There is still a significant future for oil

and gas production and discovering new scientific approaches and technologies will play a major role in tapping into the harder to reach reserves. Although we are currently in a tough operating climate, we must continue to support and attract talented young people into our industry.

The Aberdeen branch of the SUT has a group dedicated to encouraging and supporting new entrants into the sector.

SUT+ is run by and for developing engineers, helping to broaden knowledge about the subsea industry and provide networking opportunities.

The SUT+ offers opportunities to get out of the day job and gain exposure to something new, be it a visit to another company within the industry to highlight their capabilities and demonstrate new equipment, or to sit down with and learn from industry professionals.

An expansive professional network is key for all industry professionals to developing in their role and career, and can also help when seeking employment. The SUT+ facilitates this by bringing together people from various sectors of the industry in a relaxed, less formal environment.

With the current competitiveness

of the job market, the small differentiators between prospective candidates are coming to the fore.

SUT+ events allows individuals seeking work to polish up their CV and investigate other sides to the industry they might want to get involved in, helping to improve their employability.

As a Society, we also support the next generation through our international educational grants as we want to encourage the different thinking that will enable advances.

I would encourage young people to get involved with special interest groups such as those offered by the SUT, which can open up a world of possibilities in underwater engineering or come and sit in on our deepwater sessions at Offshore Europe and find out about cutting-edge technologies that are helping industry go deeper than ever before.”

SUT will be available at Offshore Europe on stand 6D19. For more details on the sessions, visit: www. sut.org/event/deep-water-zone-suttechnical-session-1-offshore-europe/

SCC WARNS OIL PRICE SLUMP THREAT TO SCOTTISH ECONOMY MAJOR WEAKNESS IN the oil and gas services sector could hit the broader economy in Scotland, the Scottish Chambers of Commerce warned. The SCC said it was concerned about the potential knock-on impact on the Scottish economy as low oil prices leaves many oil and gas companies struggling.

“Long-term low oil prices represent a challenge not only for the oil and gas sector and the northeast of Scotland, but for every business in Scotland that makes up the supply chain of firms in the industry,” said the SCC. Commenting on the weakness in oil and gas services identified by the survey, Scottish Chambers head of policy and research Garry Clark said: “Most of the negative effects are probably confined to that sector just now.

Clearly, the longer the low oil prices go on, the higher the chances of the rest of the economy catching a slight cold.”

Mr Clark cited the weak performance of

companies in the oil and gas supply chain throughout Scotland as the reason why the survey found that more firms in the broader financial and business services sector experienced a fall in profits and cash-flow than achieved a rise in the second quarter.

SCC CEO Liz Cameron said the survey pointed overall to a Scottish economy that was “establishing a pattern of reliable growth, even if it is slower than we would like”.

Liz Cameron, Scottish Chamber of Commerce CEO

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Offshore Aberdeen | September 2015 | offshoreaberdeen.com

10 |

NEWS

ATLANTIC PETROLEUM SELLS ASSETS, CONSIDERS OPTIONS FAROES-BASED ATLANTIC Petroleum could be up for sale after its board authorised a strategic review. The cashstrapped company announced on August 3 that it would explore a “broad” range of strategic options in an attempt to “unlock” the value of its assets.

Atlantic’s cash position worsened significantly over the last year, and it is unable to finance its commitments for next year, which include development at the Orlando oil project in the UK North Sea, expected on stream during 2016’s fourth quarter.

Possibilities for Atlantic include a sale or merger in its entirety; a sale, joint venture or partnership for Atlantic’s activities in the UK, Norway or both, or continuing the existing strategy as an independent company.

Atlantic Petroleum UK has already completed the sale of its 10% stake in

P1724 (UK Block 43/13b, which contains the Pegasus West Gas Discovery), P1727 (UK Blocks 43/17b and 43/18b) and P2128 (Block 43/12) to Third Energy for £16.5 million, of which £7.5 million was paid on completion.

Remaining payments are conditional on production from Pegasus West and further development in the blocks.

“Atlantic’s cash position worsened significantly over the last year, and it is unable to finance its commitments for next year,” The Pegasus West well (43/13b-7) was drilled and tested at a combined rate of 91

mcf per day in late 2014. Both wells are in P1724, close to the producing Cavendish Field. The licences are operated by Centrica, which holds 55% equity.

On May 28, Atlantic also sold 10% of its stake in newly awarded PL 802 on the Norwegian Continental Shelf whilst also exiting PL 602, which includes the Roald Rygg prospect, to Statoil.

In March, Atlantic said that two of its key UK assets, Chestnut (15%) and Blackbird (9.39%), had produced less than was expected. Overall, the firm said production fell to 1,178 boe/d in the first quarter, down from 1,993 boe/d last year.

Iona Energy-operated Orlando, in which Atlantic holds a 25% stake, is located in Block 3/3b within the UK P1606 seaward production licence. Orlando was expected to provide Atlantic with 3.8 million boe in reserves, and an initial production of 2,600 boe/d.

Faroe Islands, home to Atlantic Petroleum

LUNDIN FINDS MORE OIL OFFSHORE NORWAY LUNDIN NORWAY HAS completed the drilling and logging of appraisal well 16/1-23 S on the Edvard Grieg field in the Norwegian North Sea. The well encountered a 66m gross oil column in pebbly sandstone with medium to good reservoir quality. Extensive data acquisition and sampling is currently ongoing with the initial data results appearing very promising with regard to additional inplace volumes.

The integration of these positive well

New online system shapes future of well control training Five years on from Macondo and the incident is still shaping how well control training is approached.

Following the tragedy, the International Association of Oil and Gas Producers (IOGP) made its recommendations calling for a sharper focus on the technical content of well control training.

These recommendations have brought positive changes to well control training, with new standards being introduced to improve knowledge and competency. Another priority issue was addressing the human factors including the competence and behaviours of the workforce. Unless people involved in well operations feel empowered to act, the new standards will never have the desired effect.

IWCF has taken a number of steps to address the technical shortfall including reviewing and updating the syllabus, setting up technical taskforces to shape exam content and introducing new levels of courses. As the only independent body focused on global well control training and accreditation; we had already introduced audits for training providers, but post Macondo took the step to increase the frequency and make them more robust.

As the recommendations from IOGP are implemented and technology

advances drive other changes through the industry we have launched a new online system, FORUM. Stage one of the roll out is the implementation of the admin system which will allow accredited centres to log in and schedule courses and exams.

Candidates can then be allocated places, if they have registered and created their FORUM profile.

Giving candidates an online profile makes the registration process easier and also enables them – as well as employers and potential employers - to verify their qualifications as all new certificates and wallet cards include a QR code which can be scanned to check with the online system.

The most significant change will be delivered in stage two when we introduce online exams to the system.

Following industry feedback, we will still offer paper exams to give candidates the flexibility to choose the format they are most comfortable with using. We will also make an option for USB exams available; this is designed for test centres in areas without access to a reliable internet connection.

This is a positive step for well control training, changing the way centres operate by enhancing the systems and training management helps ensure that it is delivered in a robust and consistent manner.

Antony Quin is the General Manager of the International Well Control Forum (IWCF), a not for profit membership organisation established in 1992.

IWCF is the only independent body focused on well control training and accreditation who administer well control training, assessment and certification programmes for personnel employed in the well operations sector of the oil and gas industry.

Antony coordinates global operations from the IWCF Head Office in Montrose and is responsible for the successful delivery and implementation of new initiatives including FORUM, the new online administration system. He has broad experience across multiple sectors, successfully leading large scale organisational, technical and commercial change programmes and is passionate about delivering further success for IWCF in line with their vision and mission.

getrichquickporky5.0.jpg Caption: Lundin strikes oil twice after several disappointing wells.

results will be used to optimise the drainage strategy and to determine the best possible location for production wells in this area. This is the tenth exploration/ appraisal well in PL338 of which seven have been drilled on the Edvard Grieg field. The licence was awarded on 17 December 2004 (APA 2004). Lundin Norway is the operator of PL338 with 50% working interest, alongside partners OMV Norge AS with 20%, Statoil with 15% and Wintershall Norge also with 15%.

offshoreaberdeen.com | September 2015 | Offshore Aberdeen

| 11

NEWS

LIME SNAPS UP NORWEGIAN ACREAGE

IONA TO RESTRUCTURE IN ORDER TO ENABLE DEVELOPMENT OF ORLANDO

IONA ENERGY IS to carry out a Can Iona save Orlando? restructuring that should allow it to develop its Orlando field, despite its 25% partner, Atlantic’s problems.

“This restructuring follows an extensive Micro Hydraulic Components Oil Tool Ad_THE LEEDERS AD 12/12/2014 09:28 Page 1 review of alternatives,” said chief executive Tom Reynolds, “which clearly demonstrated that other options were significantly less favourable for the company and its stakeholders and would have likely resulted in a liquidation and/or insolvency of the company and significant destruction of any remaining shareholder interest.”

“We are focused on finalising and implementing the transaction proposal to support the development of the Orlando project and to create a sustainable longterm future for the company,” he said.

Currently, Iona holds stakes in four oil projects – Orlando, Huntington, Kells, and West Wick, along with the Trent & Tyne and natural gas development. But falling oil prices and a limit on exports from Huntingdon earlier this year had placed the firm in jeopardy.

MALAYSIA’S HIBISCUS PETROLEUM said that its part-owned subsidiary, Lime Petroleum, had agreed to acquire EnQuest’s 50% stake in both the PL760 and PL760B licences. The operator at both licences is Total, which also holds 50%. The licenses are some 25km west of the Norne oil/gas field in the Norwegian Sea in water depth of 370m.

The adjacent Marulk gas field is producing from similar Cretaceous reservoirs as are being targeted in PL760 and PL760B. The deepwater Aasta Hansteen gas/condensate field development to the north includes the Polarled gas pipeline, which will pass close to PL760, providing it with transportation options.

Drilling at the licence could take place in 2016 or 2017, with a drill decision expected in February 2016. Lime is a jointly-controlled entity in which Hibiscus Petroleum owns a 35% stake. Hibiscus has also bought assets in the UK North Sea in the last month.

Hibiscus blossoms in European waters

Micro Hydraulic Components

“We are focused on finalising and implementing the transaction proposal to support the development of the Orlando project and to create a sustainable long-term future for the company,” Previously, Iona had said that Orlando was on track for first production in the fourth quarter of 2016, with a peak estimated at 11,000 b/d. The company is operator with a 75% share, while the remainder is held by Atlantic Petroleum.

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Offshore Aberdeen | September 2015 | offshoreaberdeen.com

12 |

NEWS

UK ANNUAL DECOM COSTS TO DOUBLE TO £2 BILLION BY 2018 ACCORDING TO THE newly released North Sea Decommissioning Strategy Report 2015, the total projected decommissioning spend will rise by between £41.3 billion and £46 billion by 2040, based on 2014 valuations. A further £3 billion of decommissioning expenditure is forecast for projects that are yet to be developed in the UKCS. Hence, the overall total could reach £49 billion, increasing to £58.2 billion by 2050.

The report provides insight on strategic planning, risk management approaches and effective scheduling and costing practices for the UK North Sea, one of the world’s biggest markets for future decommissioning operations. The study also provides detailed case studies of North Sea decommissioning projects such as Maersk’s Leadon Field, Marathon Oil’s Brae Area, Premier Oil’s Shelley Field and Shell’s Brent Field.

While UKCS decommissioning expenditure is estimated at £1 billion in 2014, amounting to 4% of the total expenditure on the UKCS during the year, the report expects this figure to double to £2 billion by 2018.

Over the last few months, new draft decommissioning programs have been published, such as Shell’s Brent Delta topside removal, Centrica’s Stamford subsea development, Perenco’s Thames, Arthur and Gawain developments and Tullow’s Horne, Wren, Orwell and Wissey developments.

Twenty Cease of Productions (COPs) are expected in 2015, with an annual rise estimated to close to 40 by 2021. But increased activity could put high pressure on the supply chain and lead to upward pressure on prices. Hence, it is essential to devise effective strategies to assess and reduce costs.

According to the report, well plugging and abandonment (P&A) is the largest item

of expenditure within decommissioning, as well as the area where most cost savings can be achieved.

The report estimates an £25.8 billion well P&A spend from 2014 to 2050, which includes £18 billion (60%) on platform wells and £9 billion (40%) on subsea wells. In the UK North Sea, the majority of wells are platform wells, representing 73%, while subsea wells make up 27%.

Organizing well P&A campaigns in advance and collaboratively is, according to the report, the most efficient way of saving costs and can bring 10-40% P&A savings per unit.

Effective cost reduction strategies should be based on proper planning and engineering, in order to gauge the extent of the decommissioning scope and the relevant cost. Decommissioning costs have often soared, with remarkable financial repercussions. In order to avoid this, it is of the utmost importance for decommissioning to be included in late life strategy, implemented 5-10 years before COP. One of the main costs is keeping facilities running and maintained after production has ceased in order to support decommissioning activity. To minimize costs, it is essential to get platforms isolated and to a hydrocarbon-safe state.

Cost increases often take place during the front end phases, since financial provision estimates do not fully address the project’s scope, according to the report. Effective cost reduction strategies should include integrated end of life planning and asset value plans, as well as optimization of a project portfolio by finding a good balance between schedules and costing.

While technology improvements have contributed to cost optimization and performance improvement, new technologies have not yet provided “step change improvements in performance”.

Harkand starts Leadon decommissioning for Maersk Oil

LUNDIN MAKES ANOTHER STRIKE LUNDIN PETROLEUM SAID that the drilling of exploration well 16/4-9 S on the Luno II North prospect has resulted in an oil discovery.

The well is located in a separate sub-basin northwest of the Luno II discovery in PL359 in the central North Sea sector of the Norwegian Continental Shelf. The well encountered a gross oil column of 23m in reasonable quality Jurassic/Triassic conglomeratic sandstones.

The pressure data indicates that the petroleum system in the Luno II North discovery is different to that seen in the Luno II discovery. Extensive data

acquisition and sampling was carried out in the reservoir including conventional coring and fluid sampling. One production test was performed in the oil zone, producing at a rate of 1,000 b/d through a 32/64” choke.

The Luno II North discovery, representing the southern part of the prospect, is estimated to contain 12 to 26 million boe. Lundin Norway is the operator of PL359 with a 50% working interest. The partners are OMV (Norge) with 20%, Statoil Petroleum with 15% and Wintershall Norge also with 15% working interest.

offshoreaberdeen.com | September 2015 | Offshore Aberdeen

| 13

NEWS

HIBISCUS AND PING SNAP UP NORTH SEA STAKES Hibiscus’ managing director Ken Pereira.

MALAYSIA’S HIBISCUS PETROLEUM and Ping Petroleum have agreed a deal for each to acquire 50% of Royal Dutch Shell and ExxonMobil’s stakes in the Anasuria Cluster of oil and gas fields in the UK central North Sea. The £67.7 million agreement will see the two companies obtain a 100% stake in the Teal, Teal South and Guillemot A fields, and 38.65% in the Cook field, along with control of the Anasuria FPSO unit. The sale is now subject to regulatory approval and consent from third parties, and will be backdated to January 1, 2015 on completion.

DRY WELL FOR E.ON E.ON, OPERATOR OF Norwegian production licence 650, has completed drilling wildcat well 6507/3-11 S, located about 12 km east of the Skarv field in the Norwegian Sea, without finding any oil or gas. The well is the first exploration well in production licence 650, which was awarded in APA 2011.

Water depth at the site is 350m. The well will be permanently plugged and abandoned. Well 6507/3-11 S was drilled by the Borgland Dolphin drilling facility, which will now proceed to production licence 248 in the North Sea to drill wildcat well 35/1118 where Wintershall Norge is the operator.

01189 733 337 Troll’s tongue overlooking Fjord extending from the Norwegian Sea

Commenting on the news, Ping and Hibiscus said the contract “reflected the support provided by the UK government to encourage smaller independents to invest and revive the North Sea Basin”.

“This acquisition will complete our company's strategy of acquiring a balanced portfolio, which includes exploration, development and producing assets within five years of listing our company,” added Hibiscus’ managing director Ken Pereira. “We will be able to cut our teeth as an operator in conjunction with Ping

in one of the world's foremost oil and gas production basins.”

In March last year Shell, which operates its North Sea assets in a joint venture with ExxonMobil, said that it intended to sell stakes in its Anasuria FPSO, and the Nelson and Sean platforms.

In a statement, a Shell spokeswoman said that the deal fitted in with its “strategy to deliver strong shareholder value across our assets… The Anasuria cluster has entered a phase where it offers greater value to other companies than it does for Shell.”

Offshore Aberdeen | September 2015 | offshoreaberdeen.com

14 |

NEWS

UK GOVERNMENT AWARDS MORE SHALE LICENCES A LARGE NUMBER of licences to explore for shale oil and gas have been issued for acreage across England. They cover 1000 square miles, and include parts of Yorkshire, Lancashire, Lincolnshire, Leicestershire, Nottinghamshire and Derbyshire, which are believed to be some of the most promising areas for shale gas.

The Government also launched a

consultation on plans to award another 132 licences, covering about 5,000 square miles of England. Most of these are also in the North or the East Midlands but some are in the South, including areas in Dorset, Somerset, Wiltshire, Sussex, Surrey and the Isle of Wight, thought to contain oil. In all the acreage would double the onshore area open to oil and gas drilling.

Norwegian wildcat

The news comes hot on the heels of central government plans to make decisions on fracking applications if the local planning process takes too long.

The sector certainly represents an attractive diversification opportunity for many involved in the North Sea oil and gas sector, although the Scottish government remains opposed to fracking north of the border.

Coming to a field near you?

WILDCAT LICENCE FOR STATOIL AND EXXONMOBIL THE NORWEGIAN PETROLEUM Directorate has granted Statoil Petroleum a wildcat drilling permit for well 16/7-11, to be drilled from the Songa Trym drilling facility, in production licence 072 B. Statoil is the operator with a 50% ownership interest. The other licensee is

ExxonMobil, also with 50%. The area in this licence consists of parts of block 16/7.

The well will be drilled east of the Sleipner Ost field in the central sector of the North Sea. Production licence 072 B was awarded on September 24, 2001. This is the second exploration well to be drilled in the licence.

Break the mould, let us innovate your communications and produce results for you Richard Cairney MD LFI

offshoreaberdeen.com | September 2015 | Offshore Aberdeen

| 15

NEWS

JOHAN SVERDRUP SUBSEA TEMPLATE IN PLACE

“We have awarded several main contracts and utility packages worth more than NOK40bn ($4.8bn) so far…

We have also started building the first platform jacket at Kværner Verdal. So far, the Johan Sverdrup development is on track.”

“We have completed and installed the first piece of one of the largest industrial projects in Europe. We still have a long journey ahead in the Johan Sverdrup development, but we are very pleased that we have completed this installation without serious incidents and according to plan. This is a good start in line with the required quality and precision standards for successful implementation of the development,” said head of the Johan Sverdrup field development Kjetel Digre.

Pre-drilling is planned to be carried out from March 2016 by Deepsea Atlantic drilling rig through the pre-drilling template, while the drilling platform is scheduled to be installed in 2018.

"We have awarded several main contracts and utility packages worth more than NOK40bn ($4.8bn) so far… We have also started building the first platform jacket at Kværner Verdal. So far, the Johan Sverdrup development is on track."

The Johan Sverdrup field production is scheduled to commence in late-2019.

In addition to Statoil, the Johan Sverdrup partnership comprises Lundin Norway, Petoro, Det norske oljeselskap and Maersk Oil. The partnership has recommended Statoil as the operator of all field phases.

The pre-drilling template is 32 metres long and 10 metres high.

Statoil

HEEREMA MARINE CONTRACTORS has designed and installed the 280t pre-drilling template on the Statoil-operated Johan Sverdrup field off the coast of Stavanger in the Norwegian North Sea. Installed using Thialf crane vessel, the 32m-long, 10m-high pre-drilling template features eight well slots that will allow for pre-drilling of production wells before platform installation to help operates utilize the production capacity as much as possible once the field enters service.

Project1_Layout 1 13/08/2015 09:52 Page 1

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Offshore Aberdeen | September 2015 | offshoreaberdeen.com

16 |

NEWS

BALPA MEMBERS SUPPORTIVE OF STRIKE ACTION BALPA, THE PILOTS union, said its members were willing to strike over job losses in the North Sea sector, and unless management substantially changed their position it would hold an official strike ballot in September.

BALPA General Secretary Jim McAuslan said: "We are not being unreasonable.

We know the downturn in the North Sea is going to hit jobs, but the way the companies are going about it is causing massive frustration, borne out by the very high turnout and strong 'yes' vote in this ballot conducted over just four days. In the event management do not substantially shift their position, Balpa's National Executive Council will be meeting early next month to consider a move to a formal strike vote, something we are still hoping to avoid."

Commenting on BALPA members’ support for strike action, Deirdre Michie, Oil & Gas UK’s CEO, said: “In light of the damage to competitiveness driven by rising costs and exacerbated by the falling oil price, companies on the UK Continental Shelf have been working hard to improve

efficiency and reduce expenditure.

Regretfully, this transformation is not without difficult decisions having to be made, but this focused approach and concerted action is beginning to yield results which will help to restore the attractiveness of the basin.

“However, there is still a long way to go.

The lower and volatile oil price demands the sector becomes more efficient if we are to weather the downturn, and emerge in competitive shape, capable of again offering an attractive investment proposition. Safe operations must not be compromised at any stage of the process.

“As we work through these challenging times, it is important that any changes are implemented as constructively as possible to minimise the impact on those affected.

“We urge all stakeholders in this great UK industry - companies, unions and employees alike – to reject conflict and work together to avoid industrial action which would only serve to further undermine the sector’s future in terms of jobs, investment, innovation and energy security for the long-term.”

ACCENTURE ACQUIRES SCHLUMBERGER BUSINESS CONSULTING AC C EN T URE HAS AC QUIRED Schlumberger Business Consulting (SBC), the management consulting arm of Schlumberger, for an undisclosed amount.

Over 250 consultants operating from nine offices worldwide will be integrated into Accenture’s Strategy business unit.

Schlumberger Business Consulting (SBC) is a global player in the energy and utilities sector, and has a strong presence in the upstream oil and gas industry.

The company provides consulting services in strategy, operations, people & transformation, capital projects and mergers & acquisitions. Founded in 2004, Schlumberger Business Consulting has grown to become a team of over 250 consultants operating from nine offices worldwide, with the North Sea covered from Paris and London.

“Schlumberger Business Consulting (SBC) is a global player in the energy and utilities sector, in has a strong presence in the upstream oil and gas industry. “

With the acquisition of Schlumberger Business Consulting, Accenture significantly bolsters its capabilities in the rapidly changing energy landscape.

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Offshore Aberdeen | September 2015 | offshoreaberdeen.com

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MORE EVOLVED APPROACH TO DECOMMISSIONING COULD CREATE OPPORTUNITIES; CUT COSTS

O

ver recent years estimates of the cost of decommissioning oil and gas assets in the North Sea have risen steadily to over £50 billion, in line with costs generally, while the backlog of late life assets on the market has grown. Now, as decommissioning gets underway in earnest and all costs come under pressure from low oil prices, service companies, consultants and operators are coming up with plenty of ideas and innovative options that could cut those cost estimates, accelerate late-life asset sales, create niche opportunities and

help maximise economic recovery.

To encourage these efforts, the recently elected Conservative UK government has tasked the new UK regulator, the Oil and Gas Authority, with the objective of lowering decommissioning costs, which qualify for full tax relief. This comes on top of its Wood Report objectives, including greater collaboration and maximising economic recovery.

According to a recent report from KPMG (Decommissioning Strategy: A New Imperative for E&P Firms), many E&P players have above all failed to

recognise that late-life management and decommissioning decision making is fundamentally strategic – involving complex decisions and trade-offs about asset portfolios, value realisation, business models, and relationships with partners and suppliers – as is the case with exploration or development projects. The industry has traditionally treated decommissioning as a technical and cost challenge, said KPMG, with much of the discussion to date revolving around supplier capacity, tax relief, safety and environmental issues.

Companies must make real strategic

choices about how quickly to move assets into decommissioning, and in what order; how much effort to invest in building internal capabilities and expertise for decommissioning, and how much to rely on outside providers; or whether to opt to sell late-life assets, even in the face of a difficult transactions environment. Such sales would make greater specialisation possible, cutting costs and improving end of life production, so a new class of operators and suppliers should be encouraged to run late-life assets and manage the full decommissioning process,

according to KPMG. “As assets enter decommissioning, we also see enormous potential for the creation of new, decommissioning service models.

Developing these models will accelerate learning and efficiency and allow a much more integrated approach across multiple assets. There is enormous scope for increased collaboration among operators, going beyond information sharing, to develop new models, for example in standards related to plugging and abandonment of wells, arrangements for joint campaigns on related assets, and potentially even the

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FOCUS By selling the assets operators inexperienced in decommissioning avoid the risks of using internal capabilities and traditional contracts with suppliers and service companies. Industry-wide experience in the practical realities of decommissioning execution is limited, and most operators will face a steep and troublesome learning curve, with costly mistakes along the way. This form of outsourcing would also minimise disruptions to operators’ organisations, allowing them to focus on development and operation of value-adding assets. Such techniques and approaches could then be applied elsewhere, giving early starters operating in the North Sea a springboard into a growing global market.

Decommissioning Insight Historic UK North Sea Decommissioning Forecasts

2000 Forecast Expenditure (£ Million)

creation of new entities to allow common buying of services and execution of end-toend programmes,” said Fergus Woodward, Energy Partner with KPMG. Taking a fully collaborative approach with rival producers could alone save between 30% and 40% of plugging & abandonment costs, according to Jim Christie, Global Decommissioning Manager at Marathon Oil – which has struggled to sell its latelife North Sea assets (principally Brae). By offering decommissioning contractors a guaranteed pipeline of work, operators can help reduce the risk of equipment downtime, which minimises the average contract rate required, encourages suppliers to invest in new technology, and in equipment that has a limited market, such as light well intervention vessels.

While oilfield operators tend to avoid collaborating in upstream exploration and development in order to have as much control over their schedules as possible, with decommissioning the focus is more on quality and cost, rather than deadlines. The advantages of sharing a decommissioning campaign include economies of scale, knowledge sharing and increases in expertise. Contractors such as Helix Well Operations have already brought together operators in joint subsea P&A campaigns.

Increased Uncertainty in Forecasts

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SWEETER TERMS

However, potential buyers are becoming choosier and field economics have often worsened, requiring operators to sweeten terms to ensure a sale. According to KPMG, this could involve reducing the risk of acquiring late life assets by selling them without decommissioning obligations. This could break the logjam currently in the market and get more late-life assets into the hands of specialist owners, which could operate them more cheaply and effectively for longer (as well

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as supervising decommissioning), supporting the goal of maximising economic recovery as well as cutting costs.

“The Wood Review and the new Oil & Gas Authority (OGA) recognise the real threat that a poorly coordinated and badly

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executed approach to decommissioning poses to maximising economic recovery in the UKCS, if companies operating mutually dependent infrastructure decommission earlier than they might…

Getting these things right will require a

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more focused approach by each company and a broader, more active level of cooperation among E&P firms, service companies, the OGA, and HM Treasury.

The potential prize is there, but time is of the essence,” said Mr Woodward.

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Offshore Aberdeen | September 2015 | offshoreaberdeen.com

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GE & MCDERMOTT ESTABLISH NEW PARTNERSHIP CONSULTANCY

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ajor service companies, GE and McDermott, have teamed up to establish a specialist offshore engineering consultancy, io.

The companies say the new set up aims to introduce a systems approach step change in the development of offshore projects.

Offshore Aberdeen asked io’s CEO, Dan Jackson, a range of questions, and here are the replies:

Q

How did the io JV come together? io oil and gas consulting is born out of the shared vision of GE Oil & Gas and McDermott who believe there is a better way forward for the offshore industry. Though io operates fully independently from both companies, io headquarters in The Shard, London

it is able to draw on their enormous industry strength, contracting expertise and resources to overhaul the operatorcontractor relationship.

Q

Where is your focus business-wise and why?

Business wise, our approach to project planning is truly holistic and encompasses all aspects of subsurface, subsea and facilities. We are the first and only consultancy to offer full-field provision for offshore projects with all the technical competencies covered. We are pioneering a systems engineering approach that is particularly applicable to complex projects where conventional development techniques are rendered unsuitable by a project’s intricacies and uncertainties.

This approach to systems thinking allows operators to make conscious decisions around contracting strategy.

Our value lies in offering consultancy, scalable project management and technical services to advise clients how best to execute projects. We are in a unique position that allows us to solve complex problems for clients with an independent, free-thinking perspective, providing a single point of contact.

Q

Any recommendations for changes in fiscal regimes/regulation in the North Sea? - What could the UK do to make it more attractive to develop reserves out there?

The Chancellor’s tax cuts for oil and gas companies in the last Budget were

welcomed by the industry, and we look forward to seeing more initiatives like this to encourage exploration and production.

There are 450,000 people dependent on the oil and gas industry in the North

Sea and an estimated 24 billion barrels of oil left1. Our view is that the market is open to finding better ways to develop oil fields, and to putting new systems in place in order to maximise recovery. As

“The role of standardisation in driving down costs is widely recognised throughout the industry, and our new service is part of that simplification process.“

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FOCUS GE-McDermott form io oil gas consulting

“Big Data and Analytics are bringing exciting new opportunities to and must form a core part of projects moving forward.”

new technologies are proven and accepted, the available reserves increase significantly along with new finds.

Q

Will the slide in oil prices halt the more ambitious offshore projects, or are there some that remain profitable even at $60-70/bl?

The low oil price has had a dramatic impact on offshore projects. Major deepwater and LNG projects can cost tens of billions of dollars. This is a far cry from the 1990s when megaprojects cost several hundred million dollars, oil was just under $20 / barrel and industry benchmarks were completely different.

Today, in spite of the industry being far more technically capable, clients say they cannot make projects commercially viable at $60 / barrel. Overspends are rife with a staggering two out of three offshore projects running significantly over budget or behind schedule.2

Q

How can operators best cut development and operating costs in the UK offshore, and reverse the rising cost trend of recent years?

There is a noticeable shift in the mindset of the offshore sector, as ongoing news of numerous job cuts and project cancellations demonstrates. This is

where io has the opportunity to make a real difference and highlight the advantages and efficiencies offered by a holistic systems approach. Contracting relationships are currently fragmented which is holding the sector back, and has made active permanent changes to the presanction project phase difficult to achieve.

Currently, there is an opportunity for a step-change through the application of a systems approach for offshore developments, which is needed to deal with the significant challenges of increasingly complex deepwater projects.

We seek to redesign the contractoroperator relationship and bring contractor

knowledge in as early as possible in the planning process. By starting with the end in mind, we can help operators set a clear roadmap for a project and work on details along the way.

By managing the intricacies of each part of the project, io reduces cost and schedule risk and delivers much-needed certainty. This helps operators with their overall investment decisions, enabling projects to run through successfully. The role of standardisation in driving down costs is widely recognised throughout the industry, and our new service is part of that simplification process.

behaviours, structures, processes and relationships within and between the operating and contracting communities and there can be no doubt that this restricts creativity and innovation.

However, Big Data and Analytics are bringing exciting new opportunities to and must form a core part of projects moving forward. This is true not only for technical work (e.g. sophisticated reservoir monitoring to de-risk drilling and maximise ROI) but also in terms of the business model which has the possibility to involve cloud based management tools and remote working practices.

What are the most promising innovations/new products you are seeing in the North Sea currently?

The industry is the product of past beliefs,

1. UKCS Maximising Recovery Review: Final Report 2. EY East Coast Offshore, February 2013

Q

Delivering Project Excellence for our Clients around the world

The right people, assets and technology

A leading engineering, procurement, construction and installation company focused on executing complex offshore oil and gas projects worldwide.

Learn more about McDermott www.mcdermott.com businessdevelopment@mcdermott.com © 2015 McDermott International, Inc. All rights reserved

Offshore Aberdeen | September 2015 | offshoreaberdeen.com

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ROBOTICS KEY TO MAINTENANCE ON FUTURE OIL AND GAS INSTALLATIONS

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dvances in automated maintenance and inspection have been coming in leaps and bounds as remote operation and vastly expanded computing power is increasingly applied to the offshore oil and gas sector. Investment is driven not only by the productivity and efficiency gains that can be achieved, but also by a reduction in the need for workers to operate in dangerous areas, which can avoid injuries and enable companies to improve their HSE performance.

Robotic maintenance and inspection includes remote subsea operations and systems for topside use, ranging from tailor-made solutions to commercially available inspection systems. Offshore rig-based robotic inspection typically involves remote controlled crawlers that

use magnetic wheels. These are able to climb the walls and even the roof of assets.

The majority of these robotic systems use inspection technologies including camera systems, sensors for thickness gauging, and magnetic or electromagnetic systems.

Examples of robotic systems that can be used for asset inspection include the OTIS, developed by A.Hak, and the MagneBike and FAST, developed by Alstom Inspection Robotics. Remote monitoring robotic systems include the Sensabot, developed by Carnegie Mellon University and supported

by Shell. Drones are also increasingly used to inspect hard-to-access areas.

Among the most important recent innovations in the sector is the Fraunhofer inspection robot, developed at Germany’s Fraunhofer Academy, which can be taught inspection tasks using a manual operator

control device. Once instructed the robot can autonomously execute the inspection tasks. This enables operators to adapt operations to each unique environment and speed up the maintenance process, while reducing costs. It remains unable, however, to independently deal with an unexpected situation, so operators can also monitor and adjust activity remotely as inspections and maintenance operations are carried out.

To find its way around the robot uses a laser scanner to identify specifically shaped objects such as pipes and poles, as well as stripes of reflective tape applied to the environment. A six-axis light-weight arm installed on the robot carries a camera to perform visual inspections. The robot platform has various application-specific sensors, such as a stereo microphone as well

“With a typical production platform featuring between 10,000 and 25,000 bolted joints, even the smallest leak can result in the closure of the site and in a worst case scenario lead to fire, natural disaster or even loss of life. Therefore ensuring the integrity of every joint is critical.”

as gas and fire sensors. Wireless LAN and Bluetooth are deployed to enable the robot to communicate with the central control PC and with a mobile operator control device.

The robot can navigate safely in offshore environments, which enables it to autonomously record sensor data at key locations or continuously monitor sensor data along a predetermined path, supervised in real time. For non-routine tasks the user can drive the robot around the oil and gas platform in order to get close to objects that need to be inspected or manipulated. Once the user has identified an object, the robot can then automatically perform planned tasks such as executing movements, positioning its camera in front of a gauge or turning a hand wheel.

Robotic manipulation systems are based on an articulated design where there are multiple joints that can move the robot within a given workspace. A number of different types of manipulation based systems are used - the snake arm robot for example, by OC Robotics, is a slender hyper-redundant manipulator, with a high degree of freedom which allows highly flexible positioning of its tools.

TAILORED SOLUTIONS

The snake arm robot from OC Robotics

Elsewhere development of more targeted automated maintenance devices is also underway. One such device that focuses on the single task of bolt maintenance, has recently been acclaimed as the world’s first “independent bolted joint integrity calculation engine”. The product, known as Asset 55, has been developed in northeast England by bolted joint specialist and technical director, Robert Noble.

Validated by two global independent authorities on bolted joint integrity, Asset 55 is the first independent calculator of its kind and was developed to increase safety by eliminating the risk of leaks and lengthening the life cycle of joints.

Mr Noble said it is the first product to provide independent assurance of bolted

joint integrity, by considering the stress, materials and service conditions of every joint, to assess and evaluate both long and short-term integrity issues. On this basis he claims that the product and software upon which it is based is set to revolutionise integrity assurance.

“Over the past 15 years the importance of how bolted joints are managed and maintained has increased rapidly, with the UK leading the way in oil and gas safety,” said Mr Noble. “With a typical production platform featuring between 10,000 and 25,000 bolted joints, even the smallest leak can result in the closure of the site and in a worst case scenario lead to fire, natural disaster or even loss of life. Therefore ensuring the integrity of every joint is critical.”

Mr Noble highlighted the importance of the software behind the product, which is reflected by the inclusion of leading technical experts in the Asset 55 senior management team. To ensure its capability the system is regularly updated with the latest standards wherever it is in the world, and if it works offline it is updated with an overnight online check to verify calculations. “Asset 55 companies across the world are able to benefit from a truly independent solution that is continuously being updated and verified online to utilise the latest industry standards and materials.

This ensures all calculations and advice is based on today’s best practice.”

Such automated maintenance devices work alongside extensive remote monitoring of more substantial rig components. Some monitoring systems, such as Automated Rig Technologies’ RPDAS (Remote Predictive Diagnostic Analysis System), can predict top drive hydraulic failures weeks in advance. The system enables a worn out hydraulic motor to be removed from service before a failure occurs, rebuilt and put back into service.

This allows companies to maximize uptime and help coordinate logistics. Once a motor fails it ends up as scrap, adding to

offshoreaberdeen.com | September 2015 | Offshore Aberdeen

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FOCUS ROV Hercules

the savings that can be made by avoiding such events.

SUBSEA FLEXIBILITY

Automated maintenance is particularly affective beneath the waves, where operating environments are either inaccessible or particularly dangerous for humans. Recent developments include an underwater vehicle that can switch between remotely operated vehicle (ROV) and autonomous underwater vehicle (AUV) operations. The system has been developed by the Woods Hole Oceanographic Institution (WHOI), based on technology originally developed for ocean research and military use. This could aid the oil and gas industry by enabling a wider range of robotic interventions and maintenance for subsea infrastructure on the ocean floor.

Based in Cape Cod, New England, WHOI is eager to partner with the oil and gas industry to insert this technology into oil and gas operations. The technology behind the product brings together acoustic and optical wireless communication systems, thus enabling a new class of undersea vehicles to fill the void between current AUV and ROV technology. The advances were based on breakthroughs in autonomy and opto-acoustic “wireless” underwater operations and micro-tether technology, developed for use in WHOI’s hybrid ROV (HROV) Nereus and other vehicles.

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Offshore Aberdeen | September 2015 | offshoreaberdeen.com

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UK OFFSHORE WIND SECTOR WORLD LEADER; CALLS FOR CLARITY OVER GOVERNMENT POLICY

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he UK is expected to remain the leading offshore wind power market globally by 2025, despite growing concerns over the new Conservative government’s backing for renewables. Installed capacity is expected to increase from 4.5 GW in 2014 to 23.2 GW by then, representing an impressive annual growth rate of 30.5%, according to researchers Globaldata.

The UK accounted for a dominant 51.3% share of global offshore capacity in 2014, with Denmark and Germany following, with respective shares of 14.5% and 11.9%.

By 2025 the UK’s share is expected to decrease to 30.6%, as major countries such Can UK maintain dominant position in offshore wind, and what about local content?

as the US and China begin to develop their offshore wind resources.

Up until that point UK expansion is expected to continue based on projects already approved, but beyond 2025 uncertainty is growing following removal of UK onshore wind and solar subsidies, and the UK environment minister, Amber Rudd’s, calls for a reduction in offshore wind sector costs. Industry leaders have urged the minister to provide more clarity on longterm offshore wind power support to improve project investment, as developers need a clear signal when planning future projects.

ScottishPower Renewables chief executive Keith Anderson said: “We need the government

to be clear in its intentions and lay out how future projects will be funded so the industry can look forward through the next decade….

Developers are bidding for contracts in the Contracts for Difference auctions at the end of the year… The industry has shown how it is prepared to bring the costs down. The government needs to acknowledge the will in the industry and tell it how Round 3 will be funded.” ScottishPower said that its East Anglia One offshore windfarm would be the most cost-effective ever delivered.

Mr Nagatham, GlobalData’s Analyst covering Power, said: “The UK government is aiming to achieve 18 GW of offshore wind capacity installations by 2020, based on

the roadmap laid out by the Department of Energy & Climate Change (DECC). To incentivize project development, it is looking to reduce the generation cost by 30% to £100 ($152.2) per megawatt hour.”

“Despite the higher costs of offshore wind compared to onshore, the government continues to support the former with contracts for difference, with the aim of achieving lower generation costs in the long term and the 18 GW installation target.”

The UK’s installed offshore wind power capacity increased from 0.4 GW in 2007 to 4.5 GW in 2014 – an annual growth rate of 22.3% - driven primarily by strong policy support and aggressive targets. The UK

possesses by far the largest offshore wind resources in Europe, but to date all 1450 turbines and 4350 blades in the UK’s 4.5GW of offshore wind were made and shipped to the UK from Danish and German factories.

James Gray, director of the East of England Energy Zone, said: “We need an early indication from government of a long term policy which will encourage investors attracting more inward investment, supporting our supply chain and creating the local jobs we need here. Until that happens, manufacturers for wind farms will continue to choose to invest in other countries, like Germany, whose offshore wind market is growing rapidly.”

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UK POWERS AHEAD WITH DEVELOPMENT OF TIDAL ENERGY SOLUTIONS T

he growing emphasis on renewable and carbon neutral energy generation has pushed tidal energy into the spotlight.

Tidal energy is more reliable than wave energy but has a few operational plants with across the globe. New, experimental concepts such as dynamic tidal power, which enable production even in low-tide regions, and combinations with wind turbines, possess the potential to disrupt existing technologies and make tidal power a key energy resource.

A new report from Frost & Sullivan (Tidal Energy: Current Status and Future Outlook), finds that the United Kingdom is the frontrunner in the development of newer tidal energy solutions buoyed by an ideal tidal pattern and a supportive regulatory

scenario. Canada, China and South Korea are also showing steady progress. The US is one of the top innovators.

“The success of smaller demonstration plants will propel the immediate adoption of tidal stream and tidal barrage technologies,” says Technical Insights Research Analyst Lekshmy Ravi. “The deployment of hybrid energy systems consisting of a combination of tidal and offshore wind energy seems probable in the long term.”

Although the basic technology of tidal energy is similar to that of wind turbines, the harsh conditions in the ocean multiply the issues faced during operation. Hence, parameters such as material strength, performance, maintenance and lifespan of tidal converters are aspects that research and development efforts must address.

Low capacity factor and high costs are further drawbacks.

The setting up of R&D centres and funding institutions dedicated to the cause of tidal energy generation will be crucial to speed up advancements. For example, the Fundy Ocean Research Centre for Energy (FORCE) is a main driver for the progress of in-stream tidal energy in Canada.

“Stakeholders must build a coordinated, multi-disciplinary strategy for tidal power to continue creating ripples in the renewable energy sector,” urges Ravi. “A concerted approach by regulatory agencies, technology developers, funding bodies and infrastructure firms will open the floodgates of development and give rise to tidal energy solutions with significant industrial and societal value.”

“The deployment of hybrid energy systems consisting of a combination of tidal and offshore wind energy seems probable in the long term.”

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WELL INTERVENTION PROVES BEST OPTION IN TOUGH TIMES

U

ntil recently high oil prices meant there had been little pressure to keep a lid on operating costs.

Now that prices have fallen the issue is coming sharply into focus, with many operators seeking to protect squeezed cash flow by cutting costs whilst maintaining production.

According to research from consultants McKinsey & Co, well intervention is a better approach to lowering operating expenditure per barrel in mature areas than drilling new wells. Its analysis shows that those companies adopting an “active” interventionist approach are seeing unit lifting costs about 5% below those with an “average” one, indicating that it offers good value for money, with active operators more than recouping their additional costs.

Intervention is also usually cheaper, quicker, and less risky than drilling a new well.

Active intervention achieves a higher return per barrel by enhancing the overall volume of recoverable liquids (volume protection) by an average of 5% compared to average operators, while production Mono-hull well intervention vessel Skandi Constructor

is boosted by 10% on average. The costs involved are relatively low – in fact, the cost per barrel added from intervention is roughly 5-10 times lower than the existing average unit lifting cost, making it well worth the effort even for small incremental volumes.

Incremental production can be calculated by subtracting the production rate trend before intervention, from that afterwards.

When results from 2012 and 2013 were compared, those companies that actively intervened extracted over 5% extra on average, with the top quartile over 10% and some as high as 40%, according to McKinsey.

Given the evidence of intervention’s costeffectiveness, the current low activity levels in the sector suggests the industry could be missing a trick. Operators have been reluctant to adopt an active intervention programme for a variety of reasons, including a “Green field mind-set”, where many operators of a mixed portfolio of green and mature fields struggle to get the balance right. Consequently, many companies, particularly the majors, are

seeking to address this by divesting mature assets. In response, specialist independent mature-field operators are gaining ground, acquiring such assets, and developing them with a focus on cost and active intervention.

McKinseys also believes there is a tendency toward a short term focus in many companies, obliging asset managers to deprioritize well integrity and production optimization tasks, in favour of maintaining current production levels. While that may prove a priority in the short run, it can lead to an erosion of asset integrity, as well as missed cost saving opportunities. There is also an ingrained belief that drilling new wells brings higher value, although the findings tend to disprove that.

Adoption of new techniques is also constrained because many mature field operations have no single point of responsibility to minimise cost and maximise long term recovery, and there may not be an interdisciplinary team responsible.

Combined with limited management time, and little data or guidance to make better choices, this leaves operators tending to do

what they have always done.

A failure to focus on production costs has left many operators today without much practice in well intervention and performance monitoring. That unfamiliarity combined with a traditional preference for new wells, creates uncertainty over what may be a relatively untried option. This added risk is made worse by uncertainty over the benefit of intervention. Asset teams often lack the information to be certain that intervention will bring higher value than drilling, and decision makers can also be deterred because there is no potential for a big upside win with steady low-cost, low-level intervention.

Above all a lack of measurement and comparison of the results of intervention, means operators are left to guess at how successful they have been. Only a few operators benchmark rigorously, and without benchmarking there is no point of reference for performance and practices.

It is important to assess the incremental recovery, and compare it to the costs of

intervention in each case, so the most efficient approaches can be adopted and fine-tuned. Most successful companies get better with time at both refining their intervention techniques and monitoring their success. This leaves them better placed to reduce operating expenditure, and maintain cost effective production from maturing fields.

When resources are limited, as is the case in the current low price environment, it is important that production enhancement efforts are directed in the most costefficient way. In the case of intervention, it represents lower up-front costs than new wells, reduces average operating costs, and adds significantly to daily production and overall recovery volumes. Many operators do not value intervention sufficiently, tending to opt for new wells instead. And when intervention is undertaken, it is often carried out in a sub-optimal way and not measured to assess performance. The best operators actively seek ways to do more intervention with more impact by putting the right enablers in place.

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M&A ACTIVITY RISES IN SECOND QUARTER

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pstream mergers and acquisition (M&A) activity in the first half the total in 2015 stood at $113 billion, more than half of 2014 ($186 billion), according to data providers 1Derrick. The figure is only 20% short of full year 2013 ($145 billion) total, indicating a sharp increase in activity from the low of $5 billion in Q1-2015, largely due to the $82 billion takeover of BG by Shell.

1Derrick suggests this is because companies took time to develop strategies in the aftermath of the crash in oil prices, and were keen to avoid action until the full impact on asset values had taken place. In Q2-2015, the deal value picked up to $108 billion, but excluding the $82 billion Shell-BG deal, the aggregate quarterly value was $26 billion - comparable to the deal flow observed in the wake of the last oil price slump during Q4-2008 to Q3-2009, when the quarterly deal value average was also $26 billion.

The activity has been driven by corporate M&A, which rose to 89% of the total in H1-2015, highest since 2008; Corporate M&A deal value totaled $100 billion across 38 deals. “In light of market uncertainties corporate M&A is on the rise – in 2015, so far, $100 billion worth of corporate M&A has been announced in the upstream segment. The market is expecting more Corporate M&A on the back of suppressed stock prices,” said Mangesh Hirve, Managing Director, 1Derrick.

The top 3 Corporate M&A deals in the first half of the year were all announced in Q2-2015: Shell ($82 billion, BG, Multiple countries); ALFA and Harbour ($6 billion, Pacific Rubiales, Colombia); Noble ($4

Shell’s $82 billion acquisition of rival BG

billion, Rosetta, US). Asset deals totalled $13 billion across 132 deals in first half 2015, compared to a total of $117 billion across 607 deals in 2014.

Market liquidity remains strong with packages on the market increased marginally to 152 at the end of Q2-2015 compared to 146 at the end of Q1-2015.

“Packages on the market increased marginally last quarter. There was a reduction at first as Capio and New Star were acquired, Noreco and RusPetro were financially restructured, and Argent suspended its strategic alternatives. But then significant packages were announced, including by Conoco and Eni,” he said.

There were 22 corporate deals in play, including KNOC, Shell and CNOOC looking to sell stakes in Harvest, Woodside and Bridas. In Q2-2015, Corporate packages reduced as Capio and New Star were acquired, Noreco and RusPetro were financially restructured while Argent suspended its strategic alternatives.

Conoco has assets worth about $8 billion on the market, including assets in the North Sea. Value of assets on the market in Q22015 at $117 billion up marginally from $114 billion in Q1-2015, although many of these were in the US. First half 2015 oil field services (OFS) deal value was low compared to historic averages at $7 billion from 34 deals; OFS deal value in 2014 was $71 billion from 167 deals. Average annual OFS deal value between 2011 and 2014 is $41 billion. Q22015 OFS deal value at $5 billion from 19 deals and includes Petrobras’ $3 billion sale of oil platforms to Standard Chartered.

M&A recovery is geographically broad based; driven by corporate deals

H1-2015 M&A Review

Top 20 deals in H1-2015

Deal Value ($ mn)

Deal Heading $81,849 Shell offers to acquire BG $5,542 ALFA and Harbour Energy offer to acquire Pacific Rubiales $3,847 Noble Energy acquires Rosetta Resources $2,671 Cenovus divests Heritage Royalty $2,100 Apache divests Australia assets to Quadrant Energy $1,747 ENOC offers to acquire remaining 46.1% stake in Dragon Oil

$1,568 Vedanta acquires remaining 40.12% stake in Cairn India $1,249 Crescent Point Energy acquires Legacy $750 BP acquires 20% stake in Taas-Yuryakh Neftegaz from Rosneft $700 Anadarko sells certain Wyoming assets to KKR and FDL

Q2

United States

Q2

Canada

Q2

Australia

Q2

Turkmenistan

Q2

India

Q2

Canada

Q2

Russia

Q2 Q1 Q2

$570 Vanguard acquires Eagle Rock Energy

United States

Q2

$539 Vanguard acquires LRR Energy

United States

Q2

Canada

Q1

$438 Diamondback acquires additional Midland basin assets

United States

Q2

$407 Gulfport Energy acquires Utica acreage from AEP

United States

Q2

$395 Energen sells San Juan basin gas assets

United States

Q1

Canada

Q2

$324 SM Energy divests Mid-Continent assets

United States

Q2

$324 Midwestern to acquire Mart Resources

Nigeria

Q1

$353 TORC acquires Saskatchewan and Manitoba assets from Surge

Oil Oil + Gas Gas Corporate M&A deals in bold

16 of the top 20 deals in H1-2015 were announced in Q2-2015 6 of the 8 Mega deals are corporate transactions, all announced in Q2-2015 Wide geographic spread in Mega deals

List of M&A in Q2, source 1Derrick.

Q2

Colombia

Norway

$460 Whitecap Resources acquires Beaumont Energy

Source: 1Derrick Global M&A Database

Period

United States

$602 Wintershall sells Norway North Sea assets to Sequa

• • •

Country United Kingdom

6

Offshore Aberdeen | September 2015 | offshoreaberdeen.com

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INFORMED

EXCEED AND FORMER SENIOR MEMBERS OF ADTI JOIN FORCES ABERDEEN-BASED WELL management provider, Exceed, said in early August that it had teamed up with eight former members of senior staff from Applied Drilling Technology International (ADTI).

This venture brings Exceed’s total number of staff to 30 people, with a further 20 contractors working on projects both locally in the North Sea, as well as internationally on projects in Canada, West Africa and South East Asia. All of the new positions will be based at Exceed’s existing headquarters in Aberdeen.

ADTI ceased trading in May 2015, following a decision to close the business made by the company’s private equity owner, Sun European Partners. Resulting in the loss of 90 jobs, it also lead to the decision by eight senior members from across the ADTI business to actively look at ways to continue to operate. Following discussions with Exceed, a new venture was formed with the intention of continuing to serve former ADTI clients and the wider North Sea market.

Al Brockie, Head of Wells Management at Exceed, said: “There is a strong strategic fit between ADTI and Exceed, with both companies offering a range of wells management services in different markets.

“Traditionally, ADTI has had a strong presence in the North Sea whereas the majority of Exceed’s projects have been delivered internationally. This partnership not only bolsters our global credentials and renews our focus on the North Sea, but also allows Exceed to evolve internal systems and processes which will result in significant benefits for clients.

“The move also sends an important message to the industry in a time when

thousands of jobs are at risk across all sectors and many talented professionals are being made redundant purely as a result of cost saving measures.

Companies which are still in a position

to continue expansion plans should be making the most of this opportunity.

The events following the closure of ADTI have been a prime example of how collaboration within the industry can

secure jobs and livelihoods.”

The new venture significantly expands Exceed’s service offering to include well abandonment, production technology and petroleum engineering, and will

allow the company to drive operations into several new markets. Depending on future contracts, there may also be the potential to take on further ex-members of ADTI staff.

(L-R) Calum MacDonald (Well Engineering & Operations Director), John Anderson (Commercial Director Wells), Al Brockie (Head of Well Management) & Ian Mills (Managing Director)

AQUATERRA ENERGY OUTLINES NEW APPROACH TO EARLY-STAGE DRILLING IT’S A KEY phase of any drilling campaign, but early-stage drilling operations have rarely been acknowledged as a distinct specialism with a single-source solution.

But now a services provider Aquaterra Energy has introduced the concept of ‘initiation engineering’, designed to inject new efficiency into drilling program execution and reduce costs, by deploying expertise to address all the challenges typically encountered in setting out the first phase of the well.

"It's about treating this phase of operations as a specialist area of focus, rather than as a bundle of services," said Aquaterra Energy Director George Morrison. “In many respects it’s applying the same principles as the completions phase, where many businesses already offer integrated packages.”

“Initiation engineering is in effect the other ‘bookend’ in the drilling process.

We’ve introduced the same all-in-one concept in this key area, bringing all the required services and products into a single market proposition. Operators can optimise their chances of well success with

expert, all-encompassing support at this critical time.”

The benefits of applying an initiation engineering package can include resolving ongoing riser issues; correcting potentially costly wellhead specifications; managing the conductor tendering process; addressing well proximity challenges and eliminating interface issues.

Speaking of his experience with a recent project, George added: “The combination of our direct service provision and project management support meant we helped our client secure the most economic and best technical solution," added George.

“It was a great example of the concept in action; of the value of introducing a hub of initiation knowledge to the team rather than pulling together a piecemeal solution from multiple vendors. By embedding an initiation expert in the drilling team from an early stage, operators can ensure they’re using the right services and products in the most cost-efficient way.”

“This is something new for our industry; a fresh way of thinking in an economic climate where everyone is looking to work smarter.”

offshoreaberdeen.com | September 2015 | Offshore Aberdeen

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INFORMED

TELEDYNE BOWTECH SENDS VISION SYSTEM DOWN UNDER ABERDEEN’S BOWTECH - NOW known as Teledyne Bowtech following its takeover

by US-based Teledyne Technologies in February - recently provided a subsea vision system to Curtin University and the Western Australian museum. Its first job has been to survey the shipwrecks of Australian warship HMAS Sydney II and the German raider HSK Kormoran in the Indian Ocean 200 km west of Shark Bay, Western Australia. It shows the reach of Aberdeen’s offshore sector, and resulted in some interesting photos.

An array of 10 LED-V-20K lamps, emitting up to 20,000 lumens each, were used on each of two ROVs to illuminate the wreckage which was filmed using a Surveyor-HD-Pro camera and a 3D-HD camera system all supplied by Teledyne Bowtech as part of a suite of equipment used on the project.

The Surveyor-HD-Pro is state-of-the-art High Definition camera with full 1080p 50/60. It has a water corrected fused quartz hemisphere window and Titanium housing rated to 6,000m depth.

The 3D-HD is a high definition stereoscopic camera, also rated to 6,000m operating depth. 3D imaging is invaluable for ROV manipulation tasks; the perception of depth enables the operator to carry out

difficult and time-consuming operations faster and more safely. In all operations subsea, and especially important to marine archaeology, 3D provides a tremendous spatial awareness that is not achieved through normal 2D vision.

Dr Andrew Woods, Research Engineer at the Centre for Marine Science & Technology at Curtin University reported “The lights performed really well providing some rich colours and wonderful lighting effects. The Surveyor-HD-Pro camera operated flawlessly. We’ve captured some amazing footage”. He hailed the expedition “a raging success” due in part to good weather, reliable equipment and very careful planning. “All of our goals were met, including many of our stretch goals.

There have been comments that we’ve set a new benchmark in maritime archaeology – which is what we set out to do”.

The research team now has the task of reviewing the 50TB of data, around 700,000 still images and some 300 hours of HD video collected during the week long survey. The intention is that the images of both shipwrecks will be used to create multiplatform museum exhibitions to capture the unique heritage value of these ships for future generations and to honour the lives lost in what is still Australia’s greatest naval tragedy.

Image of hole in Sydney’s bridge.

AGEING GAS FIELDS COULD BE COSTING NORTH SEA OPERATORS £700 MILLION RESEARCH FROM NEL, a flow measurement specialist, claims that the North Sea oil and gas sector could be misreporting over £700million per year of gas flow, due to its reliance on the American AGA-8 standard to measure gas composition of North Sea fields.

The AGA-8 (American Gas Association) method forms an integral part of the global oil and gas industry’s measurement infrastructure, and is the basis for all fluid property calculations related to natural gas supply. However, NEL is now increasingly seeing significant mis-measurement of gas production with more North Sea fields falling outside the pipeline quality gas specifications, required to obtain the 0.1% uncertainty of the AGA-8 method.

By using established alternative methods and calculation models, NEL has identified measurement errors of several percent, which is ten times the uncertainty that would be identified using the AGA-8 method. If this was to affect the bulk of the maturing North Sea fields, it could amount to a financial exposure of over £700 million per year. This poses a major problem for the maturing oil and gas sector worldwide, creating serious financial exposure, both for allocation measurement between operators using shared pipelines and for fiscal taxation reporting.

Lynn Hunter, Group Manager at NEL, said: “This is something that could affect the oil and gas industry worldwide, as mis-measurement is due to both the compositional changes from ageing fields,

and complex fields exhibiting non-ideal gas compositions. Falling outside the scope of the AGA-8 standard could therefore be costing the oil & gas industry millions of pounds every year, which is why NEL has been addressing its limitations by using alternative calculation methods to give operators more confidence in their production figures.”

NEL claims to be a global centre of excellence for flow measurement and fluid flow systems and is the custodian of the UK’s National Flow Measurement Standards. It has a strong track record in the development, design and application of new technologies. NEL is part of the TÜV SÜD Group, an international service organisation with almost 20,000 employees in more than 800 locations worldwide.

Bacton terminal, where much of the gas from the southern North Sea came ashore.

St Fergus terminal, which receives most of the gas from the northern North Sea.

Offshore Aberdeen | September 2015 | offshoreaberdeen.com

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INFORMED

ICOTA CALLS FOR ENTRIES FOR INNOVATION AWARD

OPERATORS AND SERVICE companies that take an innovative approach to developing new technology for the oil & gas industry are being invited to showcase their work by entering the Intervention & Coiled Tubing Association (ICoTA) European Chapter’s Innovation Award 2015. The winner will be announced during the SPE ICoTA European Well Intervention Seminar in Aberdeen on November 11th and 12th.

The award, presented annually by the leading industry body, recognises companies that have pushed forward the boundaries of well intervention and coiled tubing technology through technical innovation. Previous winners have included Oilenco, Interwell, Schlumberger, BP and BJ Services, Baker Hughes, Statoil, Talisman and Halliburton.

Scott Mitchell, Chair of the European Chapter of ICoTA said: “There is no doubt our industry is facing tough challenges and it has never been more important

to identify ways to help us work more efficiently and more effectively. Many companies operating in this region have developed world-leading technologies which have brought real benefits to the industry and this award raises awareness of their work and acknowledges some of their achievements.”

The award supports ICoTA’s mission to enhance communication, gather technical expertise and promote safety, training competency and industry accepted practices. Entries will be judged by the committee of the ICoTA European Chapter who will select the winner from a shortlist of finalists. The judges will be looking at how new technology or existing technology used in an innovative way is applied, its value to the industry and the benefits which it brings to customers. These benefits can range from improved safety to minimised environmental impact to reduced risk and increased recovery.

Last year’s winner, Oilenco (Warren Ackroyd) receiving the award from ICoTA Chair 2014, Kelly Murray.

PERMASENSE OPENS ABERDEEN OFFICE

PERMASENSE’S HAS OPENED a new office in Aberdeen. Leading the operation is 15-year industry veteran, Iain Fullerton, who has been appointed as upstream business manager.

Peter Collins, CEO at Permasense, said: “Aberdeen remains a strategic hub for many of the world’s leading operators, so it makes sense for Permasense to have a dedicated presence in this key location. Our committed sales team will work closely with operators, delivering cost-effective solutions to maximise throughput, while minimising the costs and safety risks associated with manual inspection methods.”

The company recently introduced a product for the real-time monitoring of corrosion and erosion at upstream assets, aimed at operators looking for innovative solutions that improve project economics.

“The challenging industry environment is encouraging operators to look for innovative solutions that have a genuine impact on project economics and offer quick return on investment,” said Mr Collins. “Permasense systems are renowned for increasing operating efficiency and enhancing production at oil and gas assets, with a payback time of weeks. The quality and frequency of the data delivered offers operators real-time insight into the impact of production operations – including flowrates, sand and acid levels – on equipment integrity.”

Iain Fullerton, added: “As crude remains around $60 per barrel, the pressure to reduce operating costs has never been greater. The North Sea in particular, is looking for new ways to optimise operations while managing operational risk. Working alongside a team with a proven track record in addressing operator challenges is a fantastic opportunity.”

Permasense’s new office is located at 72 Carden Place, Aberdeen, and specialises in the field of continuous integrity monitoring for the oil and gas production and processing industries.

Iain Fullerton, Upstream Business Manager, Permasense, heading up new Aberdeen office

offshoreaberdeen.com | September 2015 | Offshore Aberdeen

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INFORMED CHAPMAN FREEBORN TARGETS ABERDEEN ENERGY MARKET FOR ON BOARD COURIER EXPANSION CHAPMAN FREEBORN AIR chartering is expanding its global on board courier (OBC) business with the launch of a new Aberdeenbased hand-carry team dedicated to serving the North Sea energy market.

The company – which also works with freight forwarders and multinational corporations providing aircraft charter services worldwide – has made the move in response to growing demand for timecritical shipments.

Jamie Evans, Chapman Freeborn’s sales manager for energy related services, said: “With existing cargo charter clients regularly asking us for on board courier services it was a logical step to permanently base an OBC team in Aberdeen. It means we can now provide the full range of services – whether the client is looking to move a 1kg component by courier or a 100-ton piece of drilling equipment by charter.”

Chapman Freeborn’s OBC service provides door-to-door transportation solutions to connect businesses to markets worldwide - with dedicated hand-carry couriers accompanying shipments every step of the way. The company manages all of the details for the urgent shipment, from flight bookings to entry requirements and customs regulations worldwide.

Alex Berry, global sales and marketing director and Jamie Evans, sales manager for energy related services.

JEE ANNOUNCES NEW STRUCTURE AND INTERNAL PROMOTIONS ABERDEEN’S JEE LTD, a subsea engineering and training company, has announced a restructuring and a number of key internal promotions to strengthen its capabilities and champion the delivery of projects.

The new structure, headed up by head of engineering, Jonathan McGregor, underpins Jee’s core services, including design, integrity management, pigging and late life. The company has also appointed a head of project management to increase business efficiency.

If you’d like to meet some of the team, Jee’s new Head of Integrity Management Grant Adam, and Head of Pigging Paul Otway will lead training workshops at the Aberdeen Exhibition and Conference Centre (AECC) from the 8 – 11 September, focussing specifically on pipeline spans and flexibles.

Commenting on the appointments, Mr McGregor said: “As Jee grows, we need to adapt the company structure to support future business needs, ensuring we are capitalising on future opportunities.”

“The new structure and appointment of heads of service areas will not only support these opportunities but is vital in ensuring we are responding to our clients’ needs effectively and efficiently. I’m delighted to be heading up this new, highly skilled and ambitious team.”

As mentioned, Grant Adam is now Head of Integrity Management. Prior to joining Jee in 2013, Mr Adams held a number of engineering and integrity management positions in the energy sector, including Principal Pipeline Engineer at Oceaneering. Mr Adam

also presents Jee’s ‘Advanced integrity management of deepwater pipelines and risers’ course focusing on route cause analysis and risk mitigation.

Paul Otway is taking on the role as Head of Pigging. Mr Otway has extensive experience in subsea pipeline design and integrity projects for global operators, particularly in-line inspection campaigns and offshore management. With niche skills in defining technical pigging campaigns, pig selection and design, Mr Otway was announced as the winner in the young emerging talent category at the 2013 Subsea UK awards for his work.

John French is stepping up to Head of Design, expanding his responsibilities from his previous role as Principal Engineer. As Head of Design, Mr French will oversee all design projects from the feasibility stage to detailed design. He is also focused on developing innovative low-cost solutions.

Graham Wilson is moving to the role of Head of Late Life from his previous position as Head of the Pipeline Discipline team.

Mr Wilson is an experienced chartered Mechanical Engineer who has worked in the oil and gas industry since joining Jee as a Graduate Engineer in October 2004. As Head of Late Life, Mr Wilson is responsible for lifetime extension and decommissioning projects.

In addition, Joe Gransden, has been promoted to Head of Project Management.

Mr Gransden is an experienced Lead Engineer who has worked on a variety of oil and gas projects since he joined Jee in 2008. Mr Gransden’s remit is to focus on further service efficiency.

Jee Ltd Head of Engineering, Jonathan McGregor

Offshore Aberdeen | September 2015 | offshoreaberdeen.com

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INFORMED PETROTECHNICS LAUNCHES NEW ABERDEEN COMPETENCY AND TRAINING CENTRE PETROTECHNICS HAS OPENED a new state-of-the-art competency and training centre in Aberdeen. Located at the company’s Aberdeen headquarters, the new facility will address changing demands for operations excellence training in hazardous industries, including oil and gas, chemical and rail.

To date, over 70,000 people have been through Petrotechnics’ training programmes, with more than 4,000 delegates enrolled in the last year alone. The new centre will offer increased capacity to meet growing demand for a range of courses, including those focusing Petrotechnics’ leading software platform, Proscient.

“Petrotechnics has been delivering training for over 25 years and during that time we have experienced a significant shift in industry demands from simple control of work to integrated operational risk and operations management best practices.

Our investment in this new facility is part of our ongoing commitment to maintaining quality competence practices and addressing complex training needs across hazardous industries,” said Iain Mackay, Executive VP, Petrotechnics.

Petrotechnics’ team of 26 veteran trainers and coaches have a combined industry experience of 460 years. They have supported over 48 major projects with courses delivered in 24 countries on every continent.

“Hazardous industries have long understood the value of having a competent, trained workforce, and its contribution to productivity and safety,” said John Broomfield, Training Operations Manager.

“However, the means of achieving and maintaining a competent workforce have changed, and we have seen a steady evolution in industry training requirements, leading us to enhance our facilities and courses to meet this demand.”

OIL & GAS UK ISSUES NEW GUIDANCE ON PLANNED MAINTENANCE SHUTDOWNS OIL & GAS UK has launched new guidelines to minimise the frequency and duration of planned maintenance shutdowns and to improve the reliability and safety of installations on the UKCS. Managing shutdowns better is one of the main ways that operators can improve efficiency and help the UK become an attractive destination once again for oil and gas investors, Oil & Gas UK said. The new guidelines are part of a wider drive aimed at improving efficiency within the UK energy industry.

The ‘Guidance for the Efficient Execution of Planned Maintenance Shutdowns (PMSDs)’ comprises good practice for all types of planned shutdowns including corrective, breakdown maintenance, inspection activities, engineering and construction work, ranging from new tie-ins to modifications. It provides companies with guidance on topics including minimising the frequency and duration of shutdowns, good planning and delivery and ensuring

that the industry identifies the resources required well in advance.

“...a recovery in production efficiency, along with an improvement in production performance, is emerging.”

Production efficiency, a measure of how much oil and gas an offshore installation actually produces compared to its maximum production potential, suffered a dramatic fall from 80 per cent in 2004 to 60 per cent in 2012, which directly translated into a significant production decline. Since 2013, the Production Efficiency Task Force

has been working across the industry and efficiency has increased to 65 per cent, with further improvement in sight.

Oil & Gas UK’s operations director, Oonagh Werngren, said: “Better management of summer shutdowns, when major maintenance and construction to bring new production on-stream are undertaken, is seen as one of the principal ways of improving production efficiency.

Companies have been addressing this and a recovery in production efficiency, along with an improvement in production performance, is emerging. This guidance document will help cement and build on that progress.”

“The UK oil and gas industry is working to address its high cost base and improve efficiency so that competitiveness can be restored allowing it to become an attractive destination for investors again.

In publishing good practice guidance, Oil & Gas UK is helping to raise the bar in efficient operations.”

Better maintenance planning could help improve North Sea production.

offshoreaberdeen.com | September 2015 | Offshore Aberdeen

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INFORMED OIL & GAS UK AND OGA TARGET MAXIMUM ECONOMIC RECOVERY WITH NEW ‘PIONEER’ AWARD OIL & GAS UK has launched a new ‘pioneers’ category for the sector’s ninth annual awards, aimed at recognising those companies whose cooperative approach and positive behaviours have helped to maximise the economic recovery of oil and gas from the UKCS, as outlined in the Wood Report objectives. Sponsored by Shell, the awards will take place at Aberdeen’s Exhibition and Conference Centre on Thursday 5th November.

Oil & Gas UK’s chief executive, Deirdre Michie, commented: “I’m delighted to announce this award, which recognises the importance of addressing our current challenges. This latest addition to our Awards line-up reflects one of the key challenges facing industry today. Industry as a whole is putting a great deal of effort into improving its performance – and I look forward to hearing just some of those examples of excellence on the night.”

The Oil & Gas Authority will convene a panel of four judges, chaired by its CEO Andy Samuel, to decide on the winner. The judges will be looking for nominations from companies of all sizes that are currently

active on the UKCS and have demonstrated strong leadership in pioneering successful new ways of working in the region.

Andy Samuel commented: “We are seeing a real commitment from operators and service companies to find new, more efficient ways of working that can be sustained over the long term and help create a positive future for the industry.”

“The [new Maximise Economic Recovery] MER Award will recognise those companies whose co-operative approach and positive behaviours have helped to maximise the economic recovery of oil and gas from the UKCS. “We’re looking for operators and service companies – large and small – who have demonstrated strong leadership in pioneering successful new ways of working that can be shared and adopted across the industry.”

This follows on from a move last year to change the structure of its awards categories, with the two company awards: the Oil & Gas UK Award for Investment in People and the Oil & Gas UK Award for Business Innovation; split into two categories for large and smaller companies.

Oil & Gas UK’s chief executive, Deirdre Michie,

TRELLEBORG WINS CONTRACT FOR SAFETY COATING SOLUTIONS AT SVERDRUP OILFIELD TRELLEBORG’S OFFSHORE OPERATION has secured a contract to supply its thermal insulation, corrosion and passive fire protection (PFP) solutions for use on the new Johan Sverdrup oil field in the North Sea, off Norway.

Contracted by Kvaerner, Trelleborg’s offshore operation in Norway will supply its Vikotherm R2 thermal insulation coating to be applied to 12 risers. In addition, the company will provide corrosion coating for 195 riser guides, 40 caisson guides and 15 J-tube guides.

By working with Trelleborg, Kvaerner has reduced the number of its suppliers for insulation, corrosion and fire protection requirements, which is expected to save the contractor significant time and money throughout the life of the project.

Production will begin at Trelleborg’s facility in Krokstadelva in September and will continue until May 2016.

After the Pipe Alpha disaster in 1989, Trelleborg worked with Hydro and Saga Petroleum, now Norsk Hydro, to develop a new type of fire protection in rubber, for use on risers in splash zones. Since then, Trelleborg’s Firestop™ technology has developed further, growing the portfolio of fire protection solutions for the oil and gas market.

Better maintenance planning could help improve North Sea production.

Offshore Aberdeen | September 2015 | offshoreaberdeen.com

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INFORMED

3SUN GROUP LAUNCHES ASSET INTEGRITY SERVICE. 3SUN GROUP is to launch a complete asset integrity service for the offshore oil, gas and renewables sectors, based on what it claims to be tried and tested in-house capabilities.

The service is designed to ensure assets are up to scratch and likely to stay that way.

Commenting on the importance of asset integrity, Graham Hacon, CEO, said: “Safe operation of ageing assets is one of the biggest challenges facing the energy industry, particularly in the North Sea, and even more so in the current climate when identifying streamlined and cost effective solutions is key.

A well-managed asset integrity programme can play a major role in extending the life cycle of fundamental assets.”

Mr Hacon added: “Assets can deteriorate in many ways through corrosion, structural fatigue, impact damage and general wear and tear. Integrity management means working with operators to ensure assets are effectively maintained to be safe, reliable and efficient across their life cycle.”

3sun has a facility in Gourdon, Aberdeenshire, specialising in the

construction and maintenance of subsea controls systems. Since its inception in 2007, 3sun Group has grown rapidly to now employ over 350 people across six divisions.

“Assets can deteriorate in many ways through corrosion, structural fatigue, impact damage and general wear and tear.”

In the first quarter of this year it acquired AID Industrial, a specialist PPE provider and expert in Industrial Rope Access, Work at Height and Global Wind Organisation safety courses. This followed major contract wins, a Top 20 position on The Sunday Times HSBC International Track 200 league table and a £10 million investment from the Business Growth Fund last year.

A technician working at height on a wind turbine

HYDROPHOBIC COATINGS FIFTEEN TIMES SMOOTHER THAN POLISHED STAINLESS STEEL IN PUMPING EQUIPMENT, it is possible to reduce power consumption and improve the hydraulic properties by changing the pump surface finish. Coating technology can help in decreasing losses, increasing the pump’s performance and reducing operational costs. The smoother the pump walls, the more fluid turbulence will be reduced, thus reducing the energy required for the pump to move the fluid through the hydraulic passage.

Pump manufacturers can create smoother surfaces by polishing of the selected metal, such as stainless steel; however, this method is extremely time consuming and expensive. Alternatively, a smooth surface finish can also be obtained by applying an erosioncorrosion resistant efficiency coating on the pump’s volute and impeller.

These polymeric coatings are specifically designed to improve efficiency on fluid handling systems and protect metals against the effects of erosion-corrosion.

The coating’s unique combination of properties such as self-levelling application, hydrophobicity and hydraulic smoothness makes them ideal candidates for lining the hydraulic passages of pumps. These coatings possess a low electronic affinity towards water molecules and result in a smooth glossy finish once applied onto a metallic surface. This allows the water or other aqueous solutions to easily slide on the surface of the coating.

Belzona 1341 (Supermetaglide), a high performance coating designed to improve efficiency of pumps, pipes, valves and other fluid handling equipment while protecting them from the effects of erosion-corrosion, was measured as fifteen times smoother than polished stainless steel.

offshoreaberdeen.com | September 2015 | Offshore Aberdeen

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INFORMED NORTHERNMOST NORWEGIAN NORTH SEA SURVEYED BY DOLPHIN THE NORTHERNMOST REGION of the Norwegian North Sea has been surveyed

by Dolphin Geophysical, using 3-D SHarp Broadband seismic, covering both open and newly awarded acreage.

The Polar Duchess utilised 12 streamers with 75m separation and 6,750m offsets to acquire this large multi-client survey during July and August 2015. Dolphin’s staff are now working hard to get the data to clients before October.

3-D broadband coverage is needed in the area to map and evaluate the potential existence of interesting stratigraphic features such as Cretaceous and younger Cenezoic submarine fan deposits. The survey lies adjacent to the shallow 2005 Peon gas discovery and will cover three minor discoveries and six wells in total, including discovery wells 35/3-2, 6204/10-1 and 6204/11-1.

OIL & GAS UK PROVIDES FUNDING FOR MAINTENANCE OF MEMORIAL GARDEN THE ABERDEEN MEMORIAL garden set up to commemorate the 167 men who died in the Piper Alpha tragedy – the world’s worst ever offshore disaster in terms of lives lost - received maintenance funds from industry body, Oil & Gas UK in mid-August.

Oil & Gas UK gave the Pound for Piper Memorial Trust just over £185,000 – which is the remainder of funds raised by industry to help support refurbishment and upkeep of the garden at Hazlehead Park.

Deirdre Michie, chief executive of Oil & Gas UK, said: “We were delighted funds raised by our members for the Pound for Piper Memorial Trust contributed towards the initial restoration of the North Sea Memorial Rose Garden, which included planting and pruning, cleaning of the

monument and painting the surrounding benches. They also funded the garden interpretation board designed by local artist Nicola Cruickshank that has only recently been installed.

Carol Banks, from the Pound for Piper Memorial Trust, said: “The North Sea Memorial Rose Garden is a place of reflection and remembrance for the families and friends of those who lost their lives in what was the world’s worst offshore oil and gas disaster, and we very much welcome this latest industry support.”

Lucy Norval, also from Pound for Piper, added: “The money will help the Pound for Piper Trust and ground staff at Hazlehead Park keep the garden looking its best for years to come.”

Lord Provost of Aberdeen George Adam, said: "The memorial garden and statue is a very special place for the people of Aberdeen and the wider oil and gas industry, particularly for those whose lives have been affected by this tragedy.

“It is a place where people can go for quiet contemplation and reflection so it is essential that it is attractive, well looked after and maintained.

“Council staff work hard on its upkeep but the additional support from the oil and gas community, both on and offshore, has been a tremendous boost. We are extremely grateful for their generosity and hope we can continue to work together so the memory of the victims of the Piper Alpha tragedy lives on."

John Dick, Regional Business Leader, North Sea Region.

VIKING SEATECH ANNOUNCES CHANGE OF LEADERSHIP AND LAUNCHES REORGANISED BUSINESS DIVISION ABERDEEN-BASED SPECIALISt marine services provider Viking SeaTech has announced that Chris Forde, Regional Business Leader, Asia Pacific, will become the new Global Business Leader-President from September 1st 2015.

The move comes as Jan de Koning, Global Business Leader-President announces his retirement after 20 years with Viking SeaTech’s parent company Actuant Corporation in several international roles. Viking SeaTech has also combined its UK and Norway operations to form a new North Sea Region business division, which will be headed by John Dick, current Business Leader, UK and Africa.

Chris joined Viking SeaTech in September 2011. For the past four years he has led the Asia Pacific region where he has been instrumental in more than doubling business and making it one of Viking SeaTech’s most successful divisions.

Chris has more than 15 years’ experience in the international oil and gas industry, including 11 years with major oilfield

services firm Schlumberger.

John has been with Viking SeaTech since 2012. Most recently he has guided the transformation and development of the Viking SeaTech UK business.

Chris said: “We have embraced change to become a more effective organisation, reflecting the constant price pressure we see in our markets and with our clients.

We have optimised the business to align with the present economic and market conditions.”

Ahead of becoming Regional Business Leader, North Sea Region, John added: “I am looking forward to Viking SeaTech’s future based on our marine specialisms and strength of market knowledge. We have built an agile business with people who have the experience to support customers to maximum effect in key locations. The North Sea Region team has expertise in all marine and mooring disciplines as well as the project management skills our customers expect. There is scope to expand our market share in the region.”

Offshore Aberdeen | September 2015 | offshoreaberdeen.com

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BAROMETER Brent crude

(US Dollar)

Crude prices have confirmed their bearish medium term trend over the last month, dropping to just over $45/bl as Offshore Aberdeen went to press. An unexpected US stock build in the middle of the week sent crude sliding from support levels that had been seen at around $48/bl. The news supported indications that US shale oil production is failing to respond significantly enough to low prices, adding to the strong bearish fundamentals from around the world.

On the demand side this above all relates to a weakening Chinese economy, something the world has not seen to this extent since China began its rapid growth in the early 1980s. China appears to have hit the point at which it requires structural change to its economy, which casts uncertainty over its crude demand for some time to come. Other members of the major developing economy BRICS group are faring even worse, and European demand also remains weak.

On the supply side, fundamentals are even more bearish, with OPEC members producing at record

levels, and new supply continuing to come onto the market – fresh exports from Iraq and Iran will be added to next year by the long delayed start of the giant Kashagan field in Kazakhstan.

All this will add to pressure on the Saudis over upcoming months to change their focus on market share, and to use OPEC quotas once again to support prices, or risk losing control of the market completely.

Their current strategy appears to be running away with itself, leaving those poorer OPEC members dependent on oil revenues – particularly Venezuela – in desperate straits, as well as threatening the survival of some operations in the most expensive non-OPEC producing areas, notably the UK North Sea. If ever there were a time for OPEC action it is now – controlling supply was, after all, the purpose for which the group was set up in the first place, and there’s little point in it continuing otherwise. But even if there was a willingness to limit supply, the stand-off between Saudi/GCC and Iran/Iraq may prevent any agreement.

Indexes FTSE 100

FTSE 250

FTSE All Share FTSE Eurotop 100

Pound Sterling

Pound Sterling

Euro

Euro

Last close

6,403.45

Last close

17,398.55

Last close

3,492.64

Last close

3,004.71

30 day moving avg.

6,658.42

30 day moving avg.

17,608.26

30 day moving avg.

3,630.67

30 day moving avg.

3,129.57

90 day moving avg.

6,805.04

90 day moving avg.

17,745.11

90 day moving avg.

3,699.16

90 day moving avg.

3,137.61

7103.98

18263.46

3492.64

3309.06

6072.68

15233.90

3451.95

2535.87

Baker Hughes Inc Last close 30 day moving avg.

90 day moving avg.

52wk high 52wk low

BG Group Plc

Last close 30 day moving avg.

90 day moving avg.

52wk high 52wk low

Bilfinger SE

Last close 30 day moving avg.

90 day moving avg.

52wk high 52wk low

BP Plc

Last close 30 day moving avg.

90 day moving avg.

52wk high 52wk low

$54.09 $58.07 $62.60 $70.51 $47.51

£10.46 £10.74 £11.14 £14.20 £7.81

€37.00 €37.25 €39.43 €59.80 €31.65

£3.68 £3.99 £4.34 £4.99 £3.64

Cameron International Corp Last close 30 day moving avg.

90 day moving avg.

52wk high 52wk low

Chevron Corp

Last close 30 day moving avg.

90 day moving avg.

52wk high 52wk low

ConocoPhilips

Last close 30 day moving avg.

90 day moving avg.

52wk high 52wk low

EnQuest Plc

Last close 30 day moving avg.

90 day moving avg.

52wk high 52wk low

$47.41 $49.92 $51.64 $74.89 $39.52

$80.91 $89.40 $98.91 $129.53 $80.67

$47.68 $52.99 $60.65 $81.47 $47.05

£0.31 £0.37 £0.46 £1.23 £0.22

Halliburton Co

Last close 30 day moving avg.

90 day moving avg.

52wk high 52wk low

Royal Dutch Shell Plc Last close 30 day moving avg.

90 day moving avg.

52wk high 52wk low

Statoil ASA ADR

Last close 30 day moving avg.

90 day moving avg.

52wk high 52wk low

Transocean Ltd

Last close 30 day moving avg.

90 day moving avg.

52wk high 52wk low

$39.30 $41.31 $44.25 $70.50 $37.21

£17.29 £18.16 £19.06 £24.76 £17.26

$15.18 $16.63 $18.35 $29.48 $15.00

$13.65 $13.86 $16.66 $39.69 $12.08

Weatherford International Plc Last close 30 day moving avg.

90 day moving avg.

52wk high 52wk low

Wood Group (John) Plc Last close 30 day moving avg.

90 day moving avg.

52wk high 52wk low

$9.09 $10.66 $12.70 $23.98 $9.02

£5.61 £6.03 £6.62 £8.06 £5.18

This is a paid for information service. For further details on a particular fund, readers should contact their fund manager. Data as shown is for information purposes only.

No other is made by Morningstar or this publication.

offshoreaberdeen.com | September 2015 | Offshore Aberdeen

| 37

BAROMETER

COMPANIES ON THE UP IN THE NORTH SEA WHILE LOW OIL prices are causing many companies to cut back on spending and tighten their belts, others are seeing the associated falling costs and lower asset prices as an opportunity to expand.

Among these are well capitalised European companies such as Denmark’s Maersk Oil and Hungary’s MOL, which have both picked up assets and announced expansion plans over recent months, as well as companies like Malaysia’s Hibiscus Petroleum, seeking to develop mature field experience with an eye on improving the technique back home as fields mature there too.

Alongside this group are low cost specialists such as Enegi Oil and OranjeNassau Energie. These companies have seen their potential market increase, helped by a fall in asset values, although the capital is not always there to take full advantage. A third group are the technical specialists, often looking at unconventional operations, such as Cluff Natural Resources.

MOL snapped up a range of Norwegian assets last month, and Maersk recently said that it wants to become a top five producer in the North Sea region on the back of major projects such as Culzean and Johan Sverdrup. The company is currently the ninth largest producer, and said it wants to achieve the top five place within ten years “through a combination of its existing portfolio, major capital investment and more efficient operations, which can add

significant production”.

Maersk’s CEO, Jakob Thomasen, said “We have the capital to invest at a point in the cycle where better value is on the table than at any time in almost a decade,” he said. “Many other oil companies are scaling back because of the current market, but that does not mean the assets are not viable, and the right opportunities can offer great rewards.” Last month, Maersk’s board approved its $5 billion uHPHT (ultra highpressure, high temperature) Culzean field, a project that it said was made commercial by the government’s introduction of the new Cluster Field Allowance.

Low cost specialists have been picking up assets, including Oranje-Nassau Energie (ONE), which focuses on developing mature, end of life assets. It recently acquired Shell and Exxon’s 25% stakes in the Sean field. Earlier in the year, Enegi Oil said the downturn in North Sea activity related to the fall in oil price was an opportunity for it to expand its marginal field initiative in the region, using cost saving and mostly unmanned technology.

On the unconventional side, Cluff said its partnership with Halliburton was performing well, with significant progress in the development of both companies’ Southern North Sea gas and Underground Coal Gasification assets in the UK. Halliburton is providing technical and geological assistance in the development of Cluff’s Southern North Sea assets and

its’ Kincardine UCG Project in the Firth of Forth, Scotland. Cluff’s UCG portfolio of nine licences provides exposure to five different coal basins in Scotland, England and Wales.

Cluff also has five promote licences covering a total of eleven blocks in an emerging gas

province of the Southern North Sea. Generally, companies are seeking to prioritize projects that extend asset lifespans and efficiencies. So even though large-scale capital projects are slowing down, the number of smaller, brownfield

projects is increasing dramatically. Even for the companies feeling the squeeze from low oil prices the most, these smaller, more targeted investments have significant return in a relatively short period of time (see article on page 26).

Maersk container ship

MIXED RESULTS FOR BIG NORTH SEA PLAYERS RESULTS FOR EUROPEAN oil majors this year have inevitably been hit by the collapse in oil prices, but cost cutting, strong production growth and downstream earnings have enabled some – notably Total – to pull through relatively unscathed, for the time being at any rate.

Among results for the second quarter, the worst was from BP, which was hit by a $10.8 billion charge relating to the Deepwater Horizon disaster five years ago, pushing the company to a $6.3 billion loss for the period. Underlying profits stood at $1.3 billion, weighed down by $600 million in costs relating to the company’s operations in Libya because of write-offs and additional charges.

Despite this, BP’s CEO Bob Dudley said the company could now put the Horizon disaster behind it, and focus on the development of the company. This will involve $1.5 billion in restructuring during 2015, well ahead of its initial estimate of $1 billion.

Royal Dutch Shell reported a 37% drop in second quarter profits compared to a year earlier to $3.4 billion. In response, Shell plans to shed 6,500 jobs (see news story) and sell off $20 billion in assets over the coming year, while trimming spending further. Shell earned $1 billion in 2Q15 from its upstream operations, versus $4.7 billion

last year- down 35%. Its average revenues from a barrel of oil were 48% lower for the quarter than a year earlier. Revenue from natural gas operations declined by 31%.

“We have to be resilient in a world where oil prices remain low for some time, whilst keeping an eye on recovery,” said CEO Ben van Beurden, who also underlined the company’s intention to maintain dividends.

Total showed the strongest performance in terms of profits, posting just a 2% reduction to $3.1 billion on the back of strong productivity gains and high downstream margins. Overall, the company saw production climb to 2.30 million boe/d, up from 2.05 million boe/d in 2Q 2014.

Norway’s Statoil also recorded strong results for the quarter with net profit of 10.1 billion kroner ($1.24 billion), down from 12 billion kroner ($1.45 billion) a year earlier, again because of cost-cutting measures.

But concerns have been raised over the sharp reduction in capital expenditure, which has resulted in delays to a number of offshore projects.

BG posted a 60% drop in profits to $429 million for the second quarter, despite oil and gas production climbing to record levels. Earnings fell to $994 million, down from $2.36 billion a year

Deepwater Horizon disaster

“We have to be resilient in a world where oil prices remain low for some time, whilst keeping an eye on recovery,”

earlier. The company said that output for the period stood at 703,000 boe/d, a 19% increase on the second three months of 2014 and the first time this figure had breached 700,000 boe/d. Much of this was driven by the company’s operations in Australia and Brazil, which saw output more than double to 80,000 boe/d and 143,000 boe/d respectively. BG and Shell recently received regulatory approval in the US and Brazil for their merger.

profits-down-26464679.jpg

Offshore Aberdeen | September 2015 | offshoreaberdeen.com

38 |

INTERVIEW at ETAP, Regalia at Solan and the Safe Bristolia at Everest. Prosafe’s core markets are the North Sea, the Gulf of Mexico and Brazil, although over the years the Prosafe fleet has operated globally from Australia to the Gulf of Mexico. As a niche provider, Prosafe strongly believes that the North Sea will continue to offer opportunities, particularly with the prospect of significant decommissioning programmes due to commence in the coming years.

Q

Q

Are there any examples of work you have been involved in of interest - perhaps where lessons have been learned or new ground covered that you can share?

Prosafe are currently in the process of temporarily converting the Safe Scandinavia into a tender support vessel (TSV), which will assist with mud-pumping activities at the Statoil Oseberg East field offshore Norway, with a firm period of three years and four additional one-year options. This is a large undertaking for any vessel owner although the Safe Scandinavia has all the right properties to allow for the complex array of equipment to be installed.

Q

The oil price fall has seen drilling rig rates fall sharply over recent months, has the same taken place in the accommodation vessel market?

We all have our part to play to ensure a sustainable industry. The drilling sector has been the hardest hit due to the relative simplicity of ceasing exploration activities – this has an immediate effect on the bottom line.

Accommodation vessels are further down the life cycle of a field, typically employed at hook-up and commissioning through maintenance and thereafter decommissioning.

Prosafe has adopted a principle whereby we must move with overall market forces although satisfying our long term strategical decisions. Inevitably day rates will be impacted also for Prosafe, however the company is well placed to react, relying on a robust contract portfolio and years of operating experience.

Q

Has the oil price fall changed your investment/ business development plans?

Prosafe has maintained the investment programme that was developed in line with the approved medium/ long term strategy. Prosafe takes a long term outlook on the market and see the current industry climate as an opportunity to showcase our new vessels, and use operational experience to lower cost base. Prosafe is progressing well with the completion and delivery of the remaining three new build vessels, and as can be demonstrated by recent contract awards, demand is still there.

Q

Where do you see the most value for Prosafe on the UKCS currently?

UKCS operators are continually carrying out maintenance programmes in the North Sea. Due to the number of aging assets, structural integrity and fabric maintenance is paramount to their longevity and ultimate economic viability. Prosafe offer a cost-effective solution when such activities are considered and ensure that offshore productivity will be the highest possible. If larger, high capital expenditure projects are to be shelved, the maintenance of existing facilities will be in sharp focus.

Q

What presence do you have in Aberdeen and what makes it a good base? Any plans to change your set-up here?

In Aberdeen, Prosafe has an operational office in Altens which is used to supplement the daily technical management of the Prosafe fleet of vessels. In addition, a warehouse in Dyce offers logistical support to the fleet. Given its oil and gas heritage, Aberdeen has resources to support Prosafe both technically and operationally through supply chain requirements.

We, as an industry, are facing very challenging times ahead and must adapt to the commercial reality. As such Prosafe are extremely active in its efforts in creating efficiencies resulting in cost saving, without compromising on quality of service. With offices in Norway, Singapore, Jersey, UK, Brazil and Cyprus, Prosafe truly has a global footprint.

Q

Any recommendations for the UK’s new Oil & Gas Authority or government policy?

As with all contractors providing services to Operators within the UKCS, Prosafe require the government to support the industry. The stimulus introduced within the 2015 UK budget certainly were a welcomed change to the regime although it is clear that the oil price being experienced will impact operator’s budgets to a greater extent than predicted some months ago. Oil and Gas UK will continue to voice opinions of the industry to lobby the government, although concerning industry performance in 2014 should be a further red flag. Oil priced averaged at $99 per barrel in 2014 – 2015 reality is half that.

Q

What is your accommodation vessel presence currently in the UK offshore? Where else are you active worldwide?

Prosafe currently has three of its twelve vessels operating on UK contracts with the Safe Caledonia

QUICK CROSSWORD ACROSS 8 Horizontal structure housing oil rig, etc. (8) 9 10 11 12 14 16 18 20 21

Mistakes (6) Vehicle running on rails (5) Military town with resident body of troops (8) ‘The ------- City’; nickname for Aberdeen (7) Happenings; occurrences (6) Snake’s tooth (4) Furious; enraged (5) Bed or vein of rock viable for mining (4) Requesting; posing question (6)

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No.1 for Specialist Industrial Materials Procurement and Services. (9) Across: 8 platform 9 errors 10 train 11 garrison 12 Granite 14 events 16 fang 18 livid 20 seam 21 asking 23 spiders 25 crude oil 28 lifts 29 cranes 30 white hot Down: 1 plate glass 2 strata 3 downhill 4 smog 5 George 6 cruisers 7 trio 13 Elvis 15 transistor 17 grinding 19 drill bit 22 grouse 24 Eiffel 26 rare 27 laws

This month’s interview is with Ryan Stewart, Chief Commercial Officer at Prosafe.

How do you aim to improve your product offering over upcoming years?

In the past few years, Prosafe has invested in building four new high-specification units, strengthening our fleet and setting a new industry standard. The new vessels are the most sophisticated and efficient harsh environment accommodation vessels available on the market, two of which will meet stringent NORSOK specifications allowing them to operate offshore Norway. Prosafe are also focused on continually investing in the existing fleet by upgrading systems such as the DP technology and refurbishing the welfare and recreation areas.

It is important to gather feedback from clients to see what their priorities are for the accommodation vessel and then use this information to guide our fleet improvement plan.

Q

What are the most promising innovations/ new products you are seeing in the North Sea generally at the moment?

Given the commercial landscape the industry is facing, it is inevitable that going forward innovation will be key to the North Sea oil and gas future. As a company, Prosafe embrace product development and attempt to incorporate into the fleet. Areas such as communications and IT infrastructure are fundamental to the projects clients are conducting – far more than say 10 years ago. There was a time when a good film selection was of utmost importance, now it is internet connection.

Connecting Environments Globally

group

Accommodation & Workspace Modules A range of DNV 2.7-1 accommodation, ancillary and workspace modules including galley/mess, offices, laboratories, test cabins, wireline support cabins, ROV cabins and workshops

Offshore Containers

Refrigeration Modules

A full range of offshore containers, mud skips, tanks and baskets designed and manufactured in accordance with DNV 2.7-1 standards

IceBlue Refrigeration Offshore, part of the Ferguson Group, are specialists in providing offshore refrigeration and freezer solutions for offshore storage and transportation

Ocean Princess Scotland UK

Ferguson Group Ltd G/0204/15

Ferguson House, Midmill Business Park, Kintore, Aberdeenshire, AB51 0QG Tel: +44 (0) 1467 626500 Contact: marketing@ferguson-group.com www.ferguson-group.com