Oil, Gas and Shipping Magazine

ISSUE 74 www.ogsmag.com

Hess Corporation

A Community Of Innovators

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www.ogsmag.com ISSUE 74 www.ogsmag.com

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Cover Story Page 6 :

Hess Corp

Contents

“A Community of Innovators”

Hess Corporation A Community Of Innovators

Page 18 Redline Communications- How a networked

intelligent oilfield improves the bottom line Page 27 Oceaneering to acquire C&C Technologies Page 30 News in Brief Page 30 No scandal this time as Teapot Dome oilfield

sells for $45.2 million Page 33 Technip awarded two subsea contracts in Gulf of Mexico Page 33 North Sea needs investment Page 35 ConnocoPhillips starts production from Eldfisk II Page 35 Felixstowe handles world’s largest container ship Page 36 Shedding light on troubled waters Page 44 Keystone cops attention in Washington Page 48 Oil and gas mergers resilient despite downturn Page 52 BP- A British Success Story ADVERTISERS

Page 2 Seal For Life Industries Page 5 Tank World Expo Page 17 Redline Communications Page 22 Booth Industries Page 26 Technip Page 28 KIOGE 2015 Page 28 IT Vizion Page 29 Van Oord Page 31 Mercy Ships Page 32 Telenor Satelite Broadcasting Page 34 The Heavylift Group Page 40 TerraMar Networks Page 41 GN Rope Fittings Page 42 Air Greenland Page 43 AKD Engineering Page 46 BLH Safety Solutions Page 50 VersaDev Page 51 Danbor Page 62 SafeTMade Page 63 FMC Technologies Page 64 Shepherd Offshore

Contact Information:

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A Community Of Innovators

Founded by Leon Hess is 1933, The Hess Corporation (formerly Amerada Hess) is an American integrated oil company headquartered in New York City. The company explores, produces, transports, and refines crude oil and natural gas. Vertically completing the logistical chain, about 1,360 Hess branded filling stations market gasoline to consumers in 16 states along the East Coast of the United States.

Refined petroleum products, as well as natural gas and electricity, are marketed to customers throughout the East Coast of the United States. By blending an entrepreneurial spirit with an understanding of markets it serves, the company has grown steadily to become a major force in the international petroleum industry. The company’s refineries, among the industry’s most sophisticated and efficient, produce quality fuel oils, gasoline and other petroleum products.

To move crude oil and refined products, Hess operates a large fleet of tankers and other specialized vessels. It has extensive storage capacity, the largest on the East Coast of the United States, made up of strategically placed terminals distributing Hess products to customers from Boston to Houston and beyond, to both industry and consumers.

Hess retail outlets provide both gasoline and convenience store items through the most modern and clean facilities.

Hess Corporation

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Hess Corporation has exploration and production operations in the United States, United Kingdom, Norway, Denmark, Russia, Equatorial Guinea, Algeria, Libya, Gabon, Egypt, Ghana, the Joint Development Area of Malaysia and Thailand, Indonesia, Thailand, Azerbaijan, Australia, Brazil, and St. Lucia. Hess is also active in the financial markets, through the Hess Energy Trading Company (HETCO), its trading arm.

changed its name to Hess Corporation. By 2010 Hess had established a leading position in shale oil and gas exploration and production with two acquisitions that boosted the company’s acreage in North Dakota’s Bakken formation. It followed this with a strategic acreage position in Ohio’s Utica Shale through acquisition and joint venture agreements.

Hess History

The Tubular Bells discovery was made in October 2003.

The egg-shaped, deep Miocene discovery is located in blocks of Mississippi Canyon. The discovery well, located in a water depth of about 1,310m, was drilled to a total depth of around 9,488m by Transocean’s Deepwater Horizon semi-submersible offshore oil drilling rig. The exploratory well struck about 58m of net oil pay. An appraisal well was drilled in 2006.

It encountered hydrocarbons about eight kilometres from the first well.

In order to further determine the Tubular Bells discovery, Diamond Offshore’s Ocean Confidence semisubmersible rig was chartered to drill two sidetrack wells. The first sidetrack was drilled during the first quarter of 2007. The second well was spudded in the last quarter of that year and was completed during the first quarter of 2008.

Leon Hess founded his company in 1933 to supply oil around his hometown in New Jersey, USA. He acquired the company’s first oil terminal site in 1938, followed after the war years by its first oil tanker in 1948, then a refinery and its first gas station by 1960. By 1967 the company had expanded its range of operations outside the United States. It subsequently merged with Amerada Petroleum Corporation, to become Amerada Hess. By May the following year the company drilled its first successful wildcat well in Prudhoe Bay in Alaska’s North Slope. Expansion of its global exploration and production profile continued into the 1970s, adding significant positions in the Gulf of Mexico and the North Sea. In 2001 Amerada Hess purchased Triton Energy Limited, and with it a world-class growth opportunity in Equatorial Guinea and a longterm, long reserve-to-production life asset in the Malaysia/Thailand joint development area. Following on the heels of the Triton purchase, energy prices fell and global economies weakened. Amerada Hess struggled through the following years, but then posted steadily increasing profits from 2003 through 2006, when the company posted US$1.920 billion in net income. In May 2006, Amerada Hess Corporation

Tubular Bells Project

Tubular Bells oil and gas field is estimated to contain recoverable reserves of more than 120 million barrels of oil equivalent. Once operational, the field is expected to produce 40,000 - 45,000 barrels of oil equivalent each day during peak production.

In October 2011, Hess announced its field development plan (FDP) for the Tubular Bells project located in the Mississippi Canyon area. The development scheme initially

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called for setting up three subsea production wells and a couple of water injection wells. These were produced from two drill centres tied back to Gulfstar, a sparbased floating production system (FPS) owned by Oklahoma-based Williams Partners. The two drill centres are connected by two production pipelines, which, in turn are connected to the FPS. The twin pipelines are attached to the platform’s hull by employing a steel catenary riser (SCR) method. The first drill centre initially supports two production wells and a water injection well. The second drill centre is set up for one production well and one water injection well.

Both the centres are operated via an umbilical and controls distribution system. The FPS is the first facility of its kind to be manufactured entirely in the US. The production platform is designed to process 60,000 barrels of oil a day and 200 million standard cubic feet of natural gas each day. The facility supplies seawater injection services as well.

Now the Tubular Bells deepwater project has started crude oil and natural gas production. The field is located 135 miles (217 kilometers) southeast of New Orleans, in approximately 4,300 feet (1,310 meters) of water in the Mississippi Canyon area. Tubular Bells is expected to deliver total production of approximately 50,000 barrels of oil- equivalent per day producing from three wells. The Tubular Bells floating production facility is a classic spar hull with traditional three-level topsides.

Stampede Oil and Gas Project Hess Corporation’s Stampede oil and gas project involves the development of the Pony and Knotty Head deepwater fields located in the Gulf of Mexico.

The fields are located at a water depth of approximately 3,500ft and 115 miles south of Fourchon, Louisiana. The front-end engineering and design (FEED) for the project started in the second quarter of 2013 and the final investment decision (FID) was made in October 2014. The project is expected to require an investment of $6bn, and initial production from the deepwater fields is expected in 2018. Hess holds 25% working interest in the project and will operate the field, while Union Oil Company of California, a subsidiary of Chevron, Statoil and Nexen Petroleum Offshore own 25% interest each in the project. The Knotty Head and Pony fields were discovered in 2005 and 2006 respectively. The two fields were earlier conceived to be developed as separate projects by their respective operators, but Hess, the 100% owner of the Pony field, executed a joint operating agreement with Nexen Petroleum and its partners in the Knotty Head field in 2012.

Following this, the two projects were merged and named Stampede, and Hess was appointed as the operator. Oil and gas reserves at Stampede are located within the Miocene reservoirs at a depth of approximately 30,000ft. The two fields are estimated to hold combined recoverable reserves of up to 350 million barrels of oil equivalent (mboe).

The Knotty Head field was discovered in December 2005 by drilling the Knotty Head No. 1 discovery well. Drilled to a total depth of 34,189ft using the TransOcean Discoverer Spirit drillship, the well encountered approximately 600ft of net pay oil sand. It is the deepest well drilled in the Gulf of Mexico. The drilling of a sidetrack well 4,500ft to the south of the original wellbore was

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Bakken Shale completed in March 2006. The well was drilled to a total depth of 32,986ft and encountered 400ft of net oil pay. Pony field was discovered in July 2006 by drilling the Pony No.1 well to a total depth of 32,448ft. The well encountered 475ft of oil saturated sandstone. Drilling of the Pony No. 1 sidetrack well approximately 2,700ft north-east of the discovery well was completed in December 2006. The well was drilled to a depth of 30,634ft and encountered 280ft of oil saturated sandstones.

The drilling of the Pony No. 2 appraisal well, located 1.5 miles north-west of the discovery well, was completed in March 2008. The well was drilled to a total depth of 32,900ft and encountered oil within the targeted sands. In June 2008, Hess completed the drilling of the Pony No. 2 sidetrack well, located approximately 7,400ft north-west of the discovery well. Drilled to a total depth of 33,362ft, the well discovered oil.

The Stampede project involves the development of six subsea production wells and four water injection wells from two subsea drill centres. Two rigs are expected to perform the drilling works and the first rig is expected to commence operations in late 2015.

The wells will be tied back to a newly built tension leg platform (TLP). The TLP will be designed for a production capacity of 80,000 barrels per day (bpd) of oil, 60,000bpd of water and 120 million standard cubic feet per day (mmscfd) of gas, and will have topsides weighing approximately 11,500t. Hess Corporation has publicised its intention to proceed with the development of the Stampede project despite the current oil price slump.

Hess is driving value through strategic investments in long lived, good margin areas such as the Bakken formation in North Dakota, the premier shale oil play in the United States, and the Utica Shale in Ohio, an emerging shale energy play. The rapid growth of shale production is fundamentally transforming the economics of energy development and helping to reduce fuel costs for consumers.

The challenge for Hess and its partners is to produce abundant resources responsibly, prudently and economically. The corporation is meeting that challenge by making a substantial commitment to responsible shale energy development and production while continuously working to improve its operating performance. Hess is one of the most efficient operators in the Bakken, and has reduced drilling and completion costs by more than 40 percent since the beginning of 2012. To unlock shale oil and gas resources that are often found one to two miles below the earth’s surface, Hess employs industry proven horizontal drilling techniques that make it possible for the company to efficiently access more crude oil and natural gas from fewer well sites. Hess also uses hydraulic fracturing, where water is pumped at extremely high pressure, a technique deployed in about 1 million U.S. wells since 1949.

Further Opportunities Hess Corporation has focused its resources strategically, defining and prioritising the basins and types of assets it will pursue. Key basins today include West Africa, where Hess has made significant discoveries at the Deepwater Tano/ Cape Three Points license offshore Ghana, as well as the Gulf of Mexico, Asia Pacific and the

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Kurdistan region of northern Iraq.

In 2011, in partnership with Petroceltic International PLC, Hess Corporation signed productionsharing contracts (PSCs) with the Kurdistan Regional Government of Iraq for its Dinarta and Shakrok exploration blocks. It is currently completing seismic acquisition in these two blocks in preparation for the drilling of two wells in these blocks.

Hess announced in February 2013 that it has completed drilling of its seventh consecutive successful exploratory well on the Deepwater Tano/Cape Three Points block offshore Ghana. The company now plans to submit appraisal plans for the various discoveries to the Ghanaian Government for approval. In parallel, Hess has begun pre-development studies on the block.

Hess operates the North Malay Basin - Integrated Gas Development project, located on the offshore Peninsular Malaysia, under a production-sharing contract with PETRONAS. Under an early production system, its Kamelia field started production in October 2013.

As members of the Marine Well Containment Company, the Helix Well Control Group and the Clean Gulf Cooperative, Hess Corporation has rapid access to well capping/containment and spill response resources in the Gulf of Mexico.

Hess has produced oil and gas at the South Arne field in the Danish North Sea since 1999. Now it is investing $1 billion to extend the productive life of the field and optimize production from the tight chalk reservoir.

About 110 miles off the Louisiana coast in the Gulf of Mexico, Hess optimised production at its longrunning Conger asset. By working cross-functionally and employing new tools and analytics production was increased at Conger by 26 percent in three months in 2012. It is an illustration of Hess’ systematic approach to production that aims to get the most out of what it has safely, reliably and cost effectively.

Key To Success For the second consecutive year, Hess Corporation has been recognized among the 2015 Global 100 Most Sustainable Corporations by the Toronto-based media and investment research firm Corporate Knights. Hess is ranked 65th overall, moving up 23 places from last year among the world’s most sustainable corporations. The company is the only U.S. oil and gas producer named to the list. The Global 100 ranking is structured to reward the transparent disclosure of sustainability data and the actual performance of individual companies. According to the 2015 report, published in the latest issue of Corporate Knights magazine, companies go through an intense screening and those that emerge constitute the Global 100 Shortlist. Corporations making the shortlist are then scored on the key performance indicators for their industry. The top overall performers from each sector are named to the final Global 100, subject to the number of slots reserved for each sector.

Hess Corporation is building a global position in shale oil and gas, while maximizing production of existing, high impact assets. It produced about 396,000 barrels of oil equivalent per day in 2012 from assets in countries including the U.S., Norway, Denmark, Algeria,

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Libya, Equatorial Guinea and Malaysia. Hess relies on lean production techniques to maximize the success of its shale oil and gas operations in places like North Dakota’s Bakken formation, and is using what it learns there in assets like Ohio’s Utica Shale. In 2010 Hess launched Production Excellence, which helps to get the most out of each of its assets by improving environmental health and safety, integrity, reliability, production optimization and cost management.

With ongoing exploration ventures in the Gulf of Mexico, Europe, Africa and offshore Australia, Hess is poised to deliver long-term profitable growth through a strong exploration portfolio. Its exploration strategy is to be a focused basin master in areas such as West Africa, Asia Pacific and the Gulf of Mexico and to continue to look for overlooked and emerging basins to fill its inventory for the future. Hess Corporation’s goal is to focus on fewer geographic areas, manage risk through strategic partnering and continuously strengthen its organizational capabilities.

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Redline Communications

Redline Communications How a networked intelligent oilfield improves the bottom line

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In the digital oilfield, a high-speed, multipurpose, wide-area communications network is the foundation for increased productivity, and improved efficiency and safety. These benefits apply across the entire upstream operation from drilling to production and, for some, have resulted in an increase of five per cent or more output and a cost saving equal to 10 drilling days per drilling unit per year.

Smart drilling at the rig increases productivity Real-time seismic drilling or “smart drilling” involves creating 3-D seismic maps that indicate where to drill, and automation that optimizes drill speed and steering. The increasingly rich data collected from drilling site sensors makes this possible by allowing correlations across the entire suite of hydrocarbon information: surface survey maps, drill-bit sensors, flow rates, pressures, temperatures, chemical analyses, and more.

Intelligent automated drilling operations are more efficient at higher speeds than ever before, as they deliver higher rates of penetration and reduce down time. They can also predict dry holes much sooner, thus reducing costs and saving time.

To realize the benefits of smart drilling, there must be a high-capacity always-on network to allow data to move to and from sensors at the drill site. Fiber optic networks deliver exceptionally high capacity, but are rarely economical or flexible enough to use at drill sites. While satellite communications have been the default network for oil rig communications, the increasing need for more capacity and more real-time affordable communications is driving the demand for powerful terrestrial wireless networks.

Redline Communications networks provide this powerful, versatile, real-time, portable and cost-effective alternative. Operators who have incorporated smart drilling over wide areas using Redline networks have decreased their drilling time by up to 10 days per drill per year, which translates into significant cost savings.

Drill site networks increase worker efficiency and safety One of the most important additional benefits of a multi-purpose network at a drill site is the ability for teams to collaborate and problem-solve regardless of their locations.

Voice communications and video cameras on the drill site, the delivery of drill data to remote experts in real time, and universal access to business systems and documents are significant advantages: they help experts see better data; make better decisions faster and allow them to work on multiple drills from a central location.

The amount of voice, data and video generated at drilling sites is growing exponentially, driving the requirement for more powerful networks. There is no indication that the amount of data will decrease and, in fact, more applications become apparent as networks are deployed.

Remote monitoring of well sites provides ongoing status updates on production to personnel and to systems not on location, bringing visibility and allowing operators to “see” when there is a problem and then schedule a person to attend to it in order to minimize down time. Managing by exception, or only sending people to the site when there is a real and identified problem, will minimize the number of trips, reduce operating costs, increase efficiency, and improve worker safety.

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When monitoring becomes advanced process control and automation, the richness of well site data available to operators increases, and operators gain the ability to remotely and in real-time change an increasing number of production parameters. Going beyond monitoring to control optimizes the rate of production by tuning various parameters remotely. This can increase production levels without additional costs.

The gains associated with automation depend on a robust, reliable, powerful and real-time network. Traditional slow-speed SCADA networks cannot accommodate the transition to increased data and the need for real-time control. High-speed wireless networks such as Redline’s enable this advanced automation and control.

Drilling and production networks increase worker productivity and safety Despite the increasing level of automation in the oilfield, there will always be a need for on-site personnel. The same network that enables automation and control can also be leveraged to improve field worker productivity and safety.

With a network in place, field personnel can access the information or people required to be productive, often removing non-productive travel time to a network location. The collaborative work environment enabled by the networked oilfield also gives field crew up-to-date work instructions from the office, and real-time report progress, resulting in faster response and more efficient operations. Network-enabled field workers can also take pictures or videos of a situation, and deliver them to remotely located experts for real-time virtual collaboration and problem-solving.

With less time driving and ubiquitous access to information, experts and education can help minimize or prevent accidents that can be costly in terms of lost time, potential liability and impact on safety record.

Lastly, and equally important is the fact that workers can stay connected with friends and family while they work remotely – increasing job satisfaction and reducing costly employee turnover.

The bottom line The positive impacts of using technology effectively in the oilfield are easily measured, quantitatively in terms of increased production and improved efficiency, and qualitatively in terms of improved worker safety and well-being. Most of these benefits from technology rely on the availability of a powerful, versatile and reliable network infrastructure.

Major operators across the globe depend on Redline Communications to power their digital oilfields, as only Redline can deliver a wireless network solution powerful and flexible enough to power today’s digital oilfield, supported by a team of HSE-certified experts experienced in wireless and oil and gas operations. Multi-purpose and built for the most challenging locations and mission-critical applications, Redline networks are designed and delivered as an end-to-end operating network, specifically tuned to the unique requirements of each oil and gas customer – networks that are powerful, reliable and secure with a measurable return on investment.

Redline has delivered the most advanced and fully functional networks to some of the world’s largest oilfields, and to major and super-major oil industry operators. Rugged and reliable enough to operate without fail in the cold of Alaska, in the heat of the Middle East and in the rain of South America, Redline’s multi-purpose wireless networks have become the gold standard for wide-area industrial field communications in the oil and gas industry by enabling digital oilfields and offshore assets across the globe.

For more information about wirelessly enabling your digital oilfield, please visit www. rdlcom.co

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Monthly News & Features

MONTHLY NEWS

27

Oceaneering to acquire C & C Technologies

Oceaneering International, Inc. has entered into a definitive agreement to acquire C & C Technologies, Inc., a privately-held global provider of survey services, for approximately $230 million in cash.

Headquartered in Lafayette, Louisiana, C&C is a leading provider of ocean-bottom mapping services in deep water, marine construction surveys for both surface and subsea assets, and satellite-based positioning services for drilling rigs and seismic and construction vessels.

C&C also provides land and near-shore survey services along the US Gulf Coast and in Mexico, and performs shallow water conventional geophysical surveys in the US Gulf of Mexico.

“We believe this transaction is a

unique opportunity to strategically expand our service line capabilities and underwater service offerings,” said M. Kevin McEvoy, Oceaneering’s president and chief executive officer.

“Benefits we anticipate,” he continued, “include increased use of our remotely operated vehicles and vessels to support survey services; enhancement of our ability to secure subsea asset integrity work on pipelines, including x-ray and ultrasonic inspections, which could pull through additional demand for tooling and pipeline repair systems; and increased demand for our video and data solutions service.

“We are looking forward to the contributions that the more than

550 C&C personnel will make to our operations and growth. In addition, we expect to achieve cost savings and revenue synergies as we integrate C&C’s operations and bring its services to new markets by leveraging our extensive international footprint.”

Thomas Chance, co-founder and president of C&C, has agreed to remain with the company for at least a year to assist in assimilating C&C’s business into Oceaneering and facilitate a smooth transition.

Oceaneering expects to issue 2014 year-end earnings on 11 February, 2015 and will update its overall 2015 outlook at that time. The transaction is expected to be completed in early April 2015, subject to customary closing conditions.

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NEWS IN BRIEF Petrobras’ refineries in Brazil set a new annual oil processing record in 2014. The average volume processed was 2.1 million barrels of oil per day, an increase of 34,000 bpd (1.7%) over the previous record, set in 2013.

No scandal this time as Teapot Dome oilfield sells for $45.2 million

* * * Gazpromneft Sakhalin has been awarded subsoil-use rights to two licence blocks in the Russian Arctic—the Severo-Zapadniy block located on the Pechora Sea shelf, and the Heysovskiy block, located on the continental shelf of the Barents Sea. The company has begun geological and geophysical analysis of currently available information in order to construct a geological model of the region. * * * Sino-Global Shipping America Ltd has agreed to purchase a small oil/chemical tanker from Hong Kong corporation Rong Yao International Shipping Ltd. The Rong Zhou, built in 2010 by Zhejiang Chenglu Shipbuilding Co of Zhoushan City, China, will cost RMB 65 million (approximately US $10.5 million).

Sino-Global Shipping America is headquartered in New York with offices in China, Australia, Canada and Hong Kong. * * * Based in Piraeus, Greece, NewLead Holdings Ltd has expanded its fleet to ten vessels with the recent addition of five bitumen tankers.

The Captain Nikolas I, the Nepheli and the Sofia were acquired for approximately $21.0 million.

The Ioli and the Katerina L, were added to the fleet via separate bareboat/leasing agreements.

The historic Teapot Dome Oilfield, the subject of a political bribery scandal in the 1920s, has been sold by the US government through the Department of Energy for $45.2 million.

Officially known as Naval Petroleum Reserve Number 3 (NPR-3), the oilfield 35 miles north of Casper, Wyoming has been acquired by Alleghany Capital Corporation subsidiary Stranded Oil Resources Corporation (SORC), an exploration and production company focused on conventional and enhanced oil recovery.

“We are pleased to add NPR-3 to our portfolio, as the purchase is aligned with SORC’s core strategy of acquiring and redeveloping mature oil fields,” commented Mark See, president and chief executive officer of SORC.

“By targeting properties with known characteristics, we reduce the uncertainty and risk generally associated with oil exploration.

NPR-3 was used for a variety of research and development projects while under the ownership of the US government and the quantity and quality of the data on the field is impressive. We are excited about the opportunity to develop the field under commercial operations.”

David Van Geyzel, president and chief executive officer of ACC, said: “Purchasing mature oil fields that fit its acquisition criteria is a key component of SORC’s growth strategy during both industry up-cycles and industry down-cycles. We look forward to supporting SORC as it pursues the development of this unique, longterm asset.”

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MONTHLY NEWS

33

Technip awarded two subsea contracts in the Gulf of Mexico

Stone Energy Corporation has awarded Technip a flexible pipe supply contract and an installation contract for the Amethyst field in the Gulf of Mexico.

The first contract includes the detailed engineering, procurement, fabrication, assembly and testing of a 5-inch production static riser

(almost 9 kilometers long) as well as all associated hardware.

The second award covers the installation of the pipe as a tieback to the Pompano fixed platform, in approximately 395 meters of water depth.

Technip’s operating center in Houston, Texas will manage the

project which is scheduled to be completed during the second half of 2015.

The flexible pipe will be manufactured at the Group’s Asiaflex Products plant in Tanjung Langsat, Malaysia. It will be installed using the Deep Blue, Technip’s deepwater pipelay vessel.

North Sea needs investment

A report from leading business advisory firm Deloitte is urging industry and government to continue investment in the United Kingdom Continental Shelf (UKCS) after a period of change and price volatility in 2014.

Deloitte’s Petroleum Services Group’s latest North West Europe Review, which details drilling, licensing, and deal activity across the region for the whole of 2014, found that 40 wells were drilled offshore UK throughout the year,

down on the 50 wells reported in 2013 but largely consistent with expectations given recent trends and market conditions.

Following broad acceptance by government and industry of the recommendations made in Sir Ian Wood’s UKCS Maximising Recovery Review, subsequent changes have included adjustments to the North Sea’s tax regime and the establishment of a new industry regulator, the Oil and Gas Authority (OGA).

MONTHLY NEWS

35

ConocoPhillips starts production from Eldfisk II

ConocoPhillips has commenced oil production from the Eldfisk II project in the Norwegian North Sea. The company plans to drill 40 new production and water injection wells as part of the project. The first of four predrilled wells is currently online, and the other three are expected to follow later this month.

Two hundred miles offshore

Stavanger, the Greater Ekofisk area includes the producing Ekofisk, Eldfisk, Embla, and Tor fields.

Crude oil is taken via pipeline to Teesside in England, and natural gas flows via pipeline to Emden, Germany.

“Eldfisk II joins Ekofisk South as the second major project startup in Norway since late 2013,” said Matt Fox, ConocoPhillips executive vice-president, exploration and

production. “These projects will increase ultimate resource recovery and extend the field life of this premier legacy asset for years to come.”

Eldfisk II, along with Ekofisk South and other projects offshore Norway, are predicted to add 60,000 boe/d to the company’s production volumes by 2017.

ConocoPhillips has a 35.1% interest in the Greater Ekofisk area.

Felixstowe handles world’s largest container ship

The world’s largest container ship arrived in the UK for the first time at the Port of Felixstowe on 7 January.

Over 400m in length, the CSCL Globe carried around 19,000 standard containers.

The largest ship handled at the port previously was the Maersk Triple-E, carrying about 18,000 containers on board. The CSCL Globe will hold the record for only a short time, however. The MSC Oscar, carrying

over 100 more containers despite being four metres shorter, is due to arrive in the spring.

Felixstowe’s deep-water berths 8 and 9 were opened in 2011 at a cost of £300 million; without them ships of this size would not have been able to use Felixstowe.

The Hong Kong-registered CSCL Globe was built by China Shipping Container Lines and South Korea’s Hyundai Heavy Industries.

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Shedding light on troubled oil

On the surface, the current slump in the price of oil looks like a typical case of supply exceeding demand, but Martin Ashcroft smells a power struggle brewing in the murky depths.

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In normal times, a rise or a fall in the price of oil does not raise eyebrows, let alone blood pressure, but something feels different this time.

Yes, there is a combination of oversupply in the global economy and a slowdown in economic growth in Europe and China, but the source of the extra supply is the new kid on the block—US shale operations.

The price of oil peaked at nearly $150 a barrel in mid2008, but has been in decline ever since. Prices have fallen by around 60 percent since June 2014. That’s a dramatic fall over a six month period, and hardly anybody expected them to be as low as they are now.

In a climate used to prices in excess of $100 a barrel, Brent crude fell below $86 a barrel in October last year after Goldman Sachs cut its oil price forecasts for 2015.

Some analysts were obviously beginning to understand what was happening, but even the most forward of thinkers did not anticipate prices below $50 a barrel in January 2015.

Most observers expected OPEC to jump in and adjust production to prop up the price. At the time of writing, they haven’t done that yet, despite three or four months of speculation. Why are they digging their heels in, you might ask? It does seem as if there’s an element of brinkmanship going on.

It might be as well to remind ourselves here about the membership of OPEC (the Organization of the Petroleum Exporting Countries) which currently comprises twelve countries: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.

Some of these countries have little in common with others, apart from being exporters of oil, and herein lies a quandary for OPEC itself. The economies of Saudi Arabia, Kuwait, Qatar and the UAE, for instance, are a great deal more robust than those of Algeria, Iran and Venezuela.

Another thing to remember is that there are other influential oil producing countries that are not members of OPEC—the United States, Russia and Canada for instance, not to mention Norway and the European Union.

We used to think that the price of oil was something entirely within the remit of OPEC, but it doesn’t look quite as simple as that in 2015. OPEC has not made a significant intervention for six years, but some analysts were still expecting it to step in as recently as last November, when the organisation met in Vienna to discuss its strategy.

In the lead-up to that conference, JP Morgan was warning that in “extreme circumstances” Brent could fall as low as $65 a barrel. “We believe that OPEC will fail to agree to sufficient output cuts at its 27 November meeting and this will put further downward

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pressure on the oil price,” their report said.

OPEC agreed to maintain output at 30 million barrels per day as had been originally agreed in December 2011, so JP Morgan was correct in its prediction, but as the price of oil continued to fall, expectations began to rise that it would step in eventually—if for no other reason than ‘that’s what OPEC does’.

This is where hindsight highlights the difference between analysis and speculation, and shows how even the best connected and highest regarded commentators have no real idea what’s going to happen until it happens.

Pivotal shift Back in October last year, Reuters was reporting that the global oil market appeared to be on the verge of a “pivotal shift from an era of scarcity to one of abundance” and suggested that 2015 might be the year when US shale production “finally tips

“We used to think the price of oil was something entirely within the remit of OPEC, but it doesn’t look quite as simple as that in 2015.” the world into surplus.” It appears they were right, so you can see why OPEC might be worried.

Oil production in the United States has increased by over 70 percent since 2008, and US oil imports from OPEC have reduced by fifty per cent over the same period. That is a threat to the influence of OPEC in the world marketplace and the organisation cannot afford to ignore it. OPEC cannot afford to cut production to stimulate a price rise, because the shortfall would be made up in the US and other parts of the world and OPEC countries would simply lose market share without affecting prices.

Some OPEC members, such as Iran, Iraq and Venezuela are pushing for output cuts, but the richer members are willing to tough it out in the hope that a sustained period of low prices will force the shale producers out of the marketplace for a while, if not out of business for good.

“We are not interested in the short fixes because we know they will not last,” said United Arab Emirates

ConocoPhillips’ EagleFord shale drilling rig, Texas

Shedding light on troubled oil

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oil minister Suhail bin Mohammed al-Mazroui in November. ”OPEC should not in my view be the only one who is fixing this problem – OPEC did not make the oversupply. The oversupply came from the evolution of the unconventional oil production...

I think everyone needs to play a role in balancing the market, not OPEC unilaterally.”

Political implications While the Gulf producers are undoubtedly determined to win back market share from high cost frackers, there are political implications, too, which should not be ignored. Russia’s economy depends hugely on oil and low prices are crippling it. On the one hand, the Saudis are critical of Russia’ position on Syria, and on the other, Iran, despite being a member of OPEC, is by no means the Saudis’ favourite neighbour. They know what they’re doing all right. Low prices will hurt at home, for sure, but they’ll hurt others a lot more.

Stock markets around the world have continued falling as the price of US oil dipped below the symbolic threshold of $50 a barrel in early January. Brent crude bottomed at $48.8 per barrel on 12 January, its lowest price since May 2009.

Major operators in the North Sea have been shedding jobs and tightening their belts. Chevron and Shell made significant cuts last summer, and more recently ConocoPhillips, Shell and Total have followed suit. No major announcements from the frackers yet, however.

In its end of year report in December, with oil prices hovering in the upper $60s, Bank of America made the seemingly outrageous assertion that OPEC was “effectively irrelevant” and that oil prices would hit $50 a barrel in 2015. One of those predictions has already come true, but OPEC is still singing the same tune.

“We cannot continue to be protecting a certain price,” was the message once again in mid-January from UAE Energy Minister Suhail al-Mazroui at the Gulf Intelligence UAE Energy Forum in Abu Dhabi. “We have seen the oversupply, coming primarily from shale oil, and that needed to be corrected.”

Many small and mid-sized shale exploration and production companies have large cash deficits, and a long period of low prices will hit them hard. OPEC hopes it hits them hard enough to force them to close down projects, but when the going gets tough, you know what these kind of people do. By trying to force them out of business, OPEC might just be providing the right kind of climate for them to develop efficiencies more quickly than they might otherwise have done. If the shale producers succeed in bringing down their production costs, where can OPEC go next?

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Keystone cops attention in Washington The debate about the Keystone XL pipeline is heating up in Washington DC. As the 114th US Congress gets underway in January, the controversial and long delayed Keystone XL pipeline is jumping to the head of the legislative queue, after being “in the pipeline” itself for six years.

In case you’ve forgotten, this is a proposal by TransCanada Corp. to build an 1,179-mile crude oil pipeline from Hardisty, Alberta to Steele City, Nebraska, completing a route to carry oil from the Canadian tar sands to the Gulf Coast refineries.

Speaking on NBC-TV’s Meet the Press on Sunday 4 January, Republican Senator John Barrasso of Wyoming said that a bill to approve Keystone XL would be the first legislation to land on President Obama’s desk this New Year. Obama should sign it, he added, because the pipeline would mean 42,000 new jobs.

Apart from re-election, nothing makes a politician happier than the opportunity to declare a role in the creation of jobs. Underlining his point, Barrasso said that Obama’s decision would be “a bellwether on whether he supports jobs and the US economy, or extremists who oppose the project.”

Barrasso is not the only politician to jump on the jobs bandwagon in support of this project, but his use of that 42,000 figure is a highly creative interpretation of a State Department estimate of the economic impact of the project.

Any construction project is by nature temporary. The construction phase creates direct and indirect jobs for perhaps two or three years, but when the project is complete, construction jobs move on. The State Department actually said the project would “support” 42,000 direct, indirect and induced jobs, 99 percent of which would disappear after the two years it would take to construct the pipeline. Only 35 full-time jobs would remain after that.

Congressman and fellow Republican Kevin Cramer of North Dakota (an incoming member of the Energy and Commerce Committee), avoided boasting of an exact jobs figure, but was equally enthusiastic in his support of the pipeline. “By passing this bill in the House and Senate with bipartisan votes,” he said, “we can help provide the political muscle the president needs to finally approve this piece of critical transportation infrastructure, which will contribute thousands of jobs to the national economy and further our push toward national energy security.”

Bipartisan votes? Can he be serious?

Most observers seem to think that this issue divides along traditional party lines, despite the “new jobs” prophecy, which naturally appeals to everyone. But Democrat Senator Amy Klobuchar of Minnesota, who also appeared on the NBC program, admitted that she thought the project had merit but that the decision should not be made by Congress. “I think the president needs to make a decision,” she said. “A lot of us are frustrated that it has taken this long.”

The bill being debated now is identical to the bill proposed towards the end of last year by then-Energy and Natural Resources

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Committee Chairman Mary L. Landrieu (Dem-La) which fell one vote short of adoption on 19 November 2014.

“The bigger issue here, though, is that this has become symbolic on both sides,” she said. “We’re now the No. 1 producer of oil in the world. We’ve surpassed Saudi Arabia. [Gasoline] prices are down to something like two bucks a gallon in a lot of places. We’re starting to move on climate change. And I think what I want to look for is the things where there’s common ground.”

President Obama has the power to approve the Keystone XL pipeline because it crosses an international border, but he has already said that he will not make a decision on a cross-border permit until the Nebraska Supreme Court resolves a legal challenge to the project’s revised route across the state.

The Court has now finally ruled on the route, moving the debate over the TransCanada Corp project ultimately to Washington, where now in control of Congress are seeking to force its final approval.

Within hours of the Nebraska decision, the Republican dominated House of Representatives passed a bill 266 to 153, with 28 Democrats in support of the project, underlining the claim of bipartisan support. The Senate will debate a Keystone bill next week, but White House officials have said that President Obama will veto the legislation come what may. Obama has criticised the pipeline, saying it would not help US consumers because the petroleum would eventually be shipped abroad.

Charles Schumer, a Democratic Senator from New York, said on TV recently that his party would introduce amendments to the bill that would require all the steel in the pipeline to be sourced from the US and prohibit exports of oil shipped through the line.

Republicans would likely vote these measures down, albeit at the risk of a presidential veto.

Mark Trahant, a professor at the University of Alaska Anchorage, believes the project will never come to fruition, pointing out the growing strength of the climate change lobby: “building an 800,000 barrel-per-day pipeline of the world’s dirtiest oil will mean more tar sands dug up and burned, and more carbon pollution.”

Oil from the Canadian tar sands is more carbon intensive than other types of oil, and harder than conventional oil to clean up when it spills. His decision about Keystone XL will be seen as a telling sign of Obama’s attitude towards global warming and carbon emissions.

He has already said he could not endorse a project that meaningfully worsens climate change, so the issue could become one of the more contentious of his second term.

The price of oil is always a factor in decisions about project development, too, so the current low price could affect investment in oil sands projects. “The first thing that large oil companies cut during oil price declines is capital projects,” points out Trahant. “It’s much easier to wait until the price climbs again and the math works in the company’s favour.”

A presidential veto would not necessarily be fatal to the Keystone XL bill, as a Congress with bipartisan support is capable of negotiating such obstacles, but with global demand for oil slowing as too much is being produced, it would be no surprise to see a project like Keystone XL delayed again.

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Oil and gas mergers resilient despite downturn

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2014 was a notable year for oil and gas transactions despite the number of deals falling 20% from 2,367 in 2013 to 1,885 last year, according to Ernst & Young’s Global oil and gas transactions review 2014.

Despite the decline in volume, total global oil and gas deal value increased by 69% in 2014 to US$443 billion.

A similar story unfolded in each oil and gas segment. Deal value increased in upstream by 21%, downstream by 88%, midstream by 115% and oilfield services by an overwhelming 242%. Meanwhile, deal volume fell for each segment, except downstream.

After more than three years of relatively strong and fairly stable oil prices, weakening market fundamentals in the second half of 2014 finally outweighed geopolitical uncertainty, causing oil prices to decline by more than 50% and transaction activity to slow by year-end. EY believes commodity price uncertainty will continue to influence transaction decisions in 2015 as companies seek financial resilience.

“A number of transaction trends were evident in 2014, including bigger deals, less acquisition spend by national oil companies, continued interest in US unconventional assets and expansion of private equity interest,” said Andy Brogan, EY’s global oil & gas transaction advisory

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services leader. “Looking ahead, we expect to see some disruption from recent oil price volatility but for strength to return to the oil and gas M&A market as the year goes on and companies grapple with increased cost and margin pressures.”

Oilfield services Despite a decline in deal volume year-over-year, oilfield services deal value increased by an overwhelming 242% to US$72 billion in 2014 as a result of several large transactions — including the megadeal announced by Halliburton in November 2014.

Excluding the Halliburton/Baker Hughes transaction, deal value remains at an impressive 62% increase over 2013.

“Over the next year, we expect the transaction trend of consolidation to continue in the OFS segment as companies try to capitalize on scale, improve operational efficiency and cost bases that have been hit hard by inflation and commodity price uncertainty,” said Brogan.

Outlook for 2015 “Oil and gas companies around the world are grappling with how to generate returns and improve costs in the current environment of falling oil prices,” said Brogan.

“The price of oil may dip further in the absence of short-term changes to the global oil balance, but we expect the market to strengthen and transaction activity to increase by the latter half of 2015.

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BP

A British Success Story BP is one of the world’s leading international oil and gas companies, active in more than 80 countries and with a payroll of 83,900. BP provides its customers with fuel for transportation, energy for heat and light, lubricants to keep engines moving, and the petrochemicals products used to make everyday items as diverse as paints, clothes and packaging. All this started from BP’s difficult beginnings as the Anglo-Persian Oil Company and the first oil discovery in Persia, back in 1908.

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A British Success Story A Long History William D’Arcy gambled his considerable fortune on oil, and now he was on the verge of losing it all.

It seemed that the geologists and experts who had wagged their heads encouragingly at him since 1901 had all been wrong about the oil beneath the sands of Persia. Having never set foot in Persia himself, Mr D’Arcy didn’t even have adventure travel stories to show for his investment.

What he had was letters and telegrams from his explorer, George Reynolds, urging patience. Now Mr Reynolds would be on the receiving end of an insistent telegraph: drill to 1,600 feet and give up. But giving up was not part of George Reynolds’s character, even if he might admit that this particular search had often seemed doomed. It had taken 10 days just to get to Shardin, eight months to start drilling and six years of toiling to find nothing of any consequence.

Torrential rains had washed away four months of work on a link road to Masjid-i-Suleiman, where two weeks ago a drill bit had fallen off in one of two last-chance wells and taken more than a week to fish out.

Then George Reynolds got the break he had been waiting for. On 26 May 1908, the drill reached 1,180 feet and a fountain of oil spewed out into the sky.

From remote Persia, telegrams were slow. Mr D’Arcy got the good news five days later.

“If this is true, all our troubles are over,” he beamed, adding, “I am telling no one about it until I have the news confirmed.”

Within a year, the Anglo-Persian Oil Company, which would one day become BP, was in business. The press talked up the vastness of the new company’s potential to the point that on the day Anglo-Persian stock opened for trading in London and Glasgow people stood five deep in front of the cashiers at a Scottish bank, desperate to get in on the action. And William D’Arcy, who had nearly lost everything, was richer than he had ever been in his life.

To find oil in Persia, George Reynolds and his caravan of explorers had lived through seven years of harsh heat, gastric illnesses and disappointments. The next seven years would be no less difficult for the AngloPersian Oil Company, which would one day become BP. The construction of the Abadan refinery, which would one day become the worlds largest, took many years, hampered by logistical problems and illness.

By 1914 the Anglo-Persian project was nearly bankrupt for the second time in its short history. The company had plenty of oil but no one to sell it to. Cars were still too expensive to count as a mass market for fuel, and more established companies in Europe and the New World had the market in industrial oils cornered. Besides that, refining couldn’t remove the Persian oil’s strong, sulphurous stench. It couldn’t be sold as kerosene for home heating, one of the main consumer uses for oil at the time.

Enter Winston Churchill, who had taken a new role in British politics as First Lord of the Admiralty. Britons were proud of their navy, and oil-powered vessels were the latest innovation. But while AngloPersian executives had courted the Royal Navy for years as a prospective customer for its oil, the old guard at Whitehall had been hesitant to endorse coal’s upstart rival. Churchill was a believer. He thought Britain needed a dedicated oil supply, and he argued the case in Parliament, urging his colleagues to “look out upon the wide expanse of the oil regions of the world!”

Only the British-owned Anglo-Persian Oil Company, he said, could protect British interests. The resolution passed resoundingly, and the UK government became a major shareholder in the company. Churchill had ended AngloPersian’s cash crisis, and no one had long to quietly ponder the long-term implications of a company entwining its financial interests with a political entity.

Two weeks later, an assassin killed the Archduke Franz Ferdinand in Sarajevo. Six weeks after that, Germany attacked France.

The Great War had begun. By its end, war without oil would be unimaginable.

No longer the novelty ‘horseless carriages’ of old, cars flooded onto the streets of Europe and the United States in the 1920s and ‘30s. BP gasoline pumps appeared around Britain, often flying little Union Jacks as a patriotic flourish. There were 69 pumps in 1921, over 6,000 by 1925. On roadsides in mainland Europe the letters ‘BP’ became a familiar sight too, as AngloPersian, which produced BP gasoline, entered these markets with gusto. Persia changed its name to Iran in 1935, and to stay modern the company followed suit.

But the good times wouldn’t last much longer.

Everything changed in the autumn of 1939, when Britain entered World War II. Suddenly gasoline was a rationed commodity, and BP, Shell and the other brands on sale in the UK were consolidated together into a generic fuel labelled ‘Pool’.

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Nationality trumped commercial viability, and BP’s growth on the continent abruptly stopped. Winston Churchill once again called on Anglo-Iranian to support a war effort, and this time to give it everything they had. Ordinary employees lent their expertise to some curious and innovative schemes. They burned petrol at British airstrips to clear fog for take-offs and landings and helped engineer the giant, spooled gasoline pipeline that trailed Allied ships on their way to Normandy.

Like many companies, Anglo-Iranian, which would later become BP, lost a lot in World War II. But like many companies, it also gained the resolve it needed to keep moving forward. As Europe rebuilt so did Anglo-Iranian, investing in refineries in France, Germany and Italy plus new marketing efforts in Switzerland, Greece, Scandinavia and the Netherlands.

BP gasoline went on sale for the first time in New Zealand. But this fragile new stability would soon be shattered by political crises in the oil-rich Middle East, with tremors that would shake the ‘Iranian’ right out of Anglo-Iranian’s company name.

Oil exploration in the Middle East had transformed the region, bringing new wealth and political influence. Nationalists throughout the Middle East angrily questioned Western companies’ right to profit from Middle Eastern resources.

With Britain’s imperial hold on the region rapidly unravelling, Anti-British sentiment escalated especially. Among the nationalists, Iran’s prime minister spoke vehemently against Anglo-Iranian’s presence in Iran. In 1951 he convinced the Iranian Parliament to nationalize oil operations within the country’s borders.

The refinery was shut.

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Three months later, all political debate exhausted, the last of Anglo-Iranian’s expatriate employees boarded a cruise ship and were gone. An impasse followed.

Governments around the world boycotted Iranian oil. Within 18 months, the Iranian economy was in ruins. Mobs in the streets demanded the prime minister’s resignation. When the parties returned to the table, they hashed out a new arrangement allowing a consortium of companies, including Standard Oil of Indiana (Amoco) and others, to run the oil operations in Iran. Anglo-Iranian’s stake was 40%. In 1954, the board changed the company’s name to The British Petroleum Company.

As a company that had once staked its entire strategy on Middle Eastern oil, BP found that its world had now been fully turned inside out. Fortunately BP had recently discovered major

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A British Success Story oil fields in other parts of the world, including Prudhoe Bay in Alaska and the Forties field off the coast of Scotland. Now the company had to figure out how to get that remote oil to the sites where it could be stored, shipped or refined into gasoline.

And that would test the company’s engineering prowess as well as its environmental commitment.

The Forties field was 160 kilometres from the nearest shore, with over 100 metres of water flowing over it. BP’s engineers had to design production platforms with legs tall enough to perch above the North Sea’s notoriously rough waters and robust enough to stay standing even through harsh winters. The pipeline to a terminal at Firth of Forth would be the largest deepwater pipeline ever constructed. It needed the built-in security and agility to survive intense currents and corrosion.

At 1,200 kilometres long, the TransAlaska pipeline system was the largest civil engineering project ever attempted in North America, and one of the most carefully watched.

BP and Atlantic Richfield compiled extensive reports examining every potential environmental risk. The final designs for the pipeline included long aboveground stretches so that the warm oil passing through wouldn’t melt the permafrost. Raised areas at caribou crossings ensured that migration habits wouldn’t be disturbed.

When the oil started to flow from Alaska, no BP refineries or stations in the United States were there to take it.

Instead a 25% stake in Standard Oil of Ohio (Sohio) ensured that Sohio facilities were standing by to bring the first Alaskan gasoline to market. BP’s stake in Sohio grew over the years, and in 1987 BP bought the company outright, incorporating it into a new national business, BP America.

That same year the British government sold the last of the shares it held in BP. Fully privatized and in a period of intense self-scrutiny, BP

accelerated its sell-off of businesses – minerals, nutrition – that weren’t core to what the company had always done well: find, refine, transport and sell fuel.

In the late 1990s, with stiff competition in the energy industry setting off a string of prominent mergers, BP and Amoco joined to form BP Amoco. Then ARCO, BP’s old rival on the North Slope of Alaska, joined the portfolio. Later, Castrol’s motor oils and Aral’s distinctive European operation would also join the group.

As a century drew to a close and a whole new millennium approached, people around the world turned their thoughts to the future. BP was looking forward, too. The 20th century had drawn much of its immense energy from oil, and all signs were that the same would be true of the 21st. With major, long-term projects in Russia, the Gulf of Mexico, North America, Azerbaijan, Indonesia and elsewhere, BP had a lot of oil and gas in the proverbial pipeline. Furthermore, technology, including discoveries from BP’s own research facilities, was opening up new frontiers in the search for fossil fuels. As the millennium turned, BP people threw themselves into finding new forms of low-carbon energy while reducing BP’s own contributions to carbon in the atmosphere.

BP got involved in a Clean Cities campaign in Europe, launched an emissions trading scheme and expanded its solar power business, which now also included Amoco’s solar assets. In 2000, after a period in which the group grew to include Amoco and ARCO and Castrol (with Aral soon to follow) BP unveiled a new, unified global brand. Its identifier was a green, yellow and white sunburst, symbolizing energy in all its dynamic forms.

Under this new banner BP took bigger and bigger steps towards addressing climate change. It installed solar panels at its service stations, brought solar power to remote villages in the Philippines, helped bring hydrogen-fuelled buses to London and introduced new, cleaner types of motor fuel. It created a unit, BP Alternative Energy, devoted to making from all the various types of low-carbon energy – solar, wind, natural gas, biofuels – a viable, largescale and profitable business.

Mindful also of the more immediate demands of the world economy, BP people watched as the presidents of Azerbaijan, Georgia and Turkey inaugurated the BakuTbilisi-Ceyhan pipeline, which would transport one million barrels of oil a day from the Caspian. Projects in Angola, Russia and the Gulf of Mexico also came on stream.

From that first, uncertain search for oil in Persia, BP had grown to become a global energy company, providing large quantities of oil while also making strides along a promising path towards oil’s alternatives. Some might say BP had become (and perhaps always had been) an organization that embodied energy in all its many forms.

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Today, BP continues to explore new fields and to break new boundaries. It focuses heavily on both upstream and downstream operations.

Upstream The Upstream segment is responsible for activities in oil and natural gas exploration, field development and production, and midstream transportation, storage and processing. BP also markets and trades natural gas, including liquefied natural gas, power and natural gas liquids.

BP uses sophisticated technologies and tried-and-true techniques to find oil and gas under the earth’s surface. More recently, scientific techniques and new technologies have greatly improved the odds. Before putting drill to soil or seabed,

BP uses topographical maps, aerial photography, sound waves, 3D projections and other tools to form an educated guess about the size, shape and consistency of the oil or natural gas that lies underneath.

When all the experts have been consulted, the risks have been assessed, the environmental studies have been carried out and the data has been compiled into workable maps of the exploration site, the drilling crew can get started. Before any drilling begins on land BP may need to build access roads, construct a temporary power station or install wells for the water supply. In fragile habitats or very remote places helicopters or barges may be the only responsible way to get equipment and supplies into place. Drilling for oil in the winds, currents and choppy waters of the open seas is even more challenging. The most difficult part is getting a drilling rig to stay in position despite the currents and waves. Jack-up rigs, semi-submersibles or

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drill ships will be used, dependent on the location.

After establishing that there are large quantities of oil or gas (or both) at a drilling location, this site is known as a field. The next step is to plan and build a production facility, taking environmental, social and logistical factors into account.

Out at sea, BP builds oil or gas platforms that are strong and steady enough to cope with the amounts of oil and gas to be extracted, the depth of the water and the harshness of the climate or underwater environment. Over the decades-long lifespan of most production facilities, chances are new technologies will help BP reach deeper and deeper into reservoirs, helping to extract more of the resources within them.

BP transports crude oil in two main ways: pipelines and shipping.

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A British Success Story The choice depends on each project’s logistics, economics and location, as well as environmental considerations.

Meanwhile, arranging to get large amounts of oil, gas and energy products to all the places where they are needed is a steady and demanding job in itself.

Oil or gas in a pipeline is kept in motion by a system of pump stations built along it. Workers walk the length of the pipeline regularly to check for any signs of potential leaks or other complications. Inside the pipes, devices known as pigs flow through, helping clean and inspect each section of pipe. The Baku-Tibilisi-Ceyhan, or BTC, pipeline was one of BP’s most ambitious pipeline projects in recent years. It spans 1,760 kilometres of rugged terrain, with 1,500 river crossings along the way. After more than six years of planning and construction, including consultations with governments, environmental groups and the communities along its route, it began transporting oil from Azerbaijan to Turkey in 2006.

BP’s shipping division provides the logistics to move BP’s oil and gas cargoes to market as well as marine assurance on everything that floats in the BP group. The BP shipping fleet includes tankers specifically designed to transport crude oil, refined products or liquid natural gas. It was formed in 1915 to carry products for the Anglo-Persian Oil Company. BP Shipping operates an international fleet of crude oil tankers, product tankers and LNG carriers, transporting these energy products all over the world. Ships are crewed by around 1,250 seafarers, supported by close to 400 on shore staff and lead the industry in terms of health and safety performance.

The delivery of upstream activities is optimized and integrated with support from global functions with specialist areas of expertise: reservoir development, technology, finance, procurement and supply chain, human resources and information technology.

Technologies such as seismic imaging, enhanced oil recovery and real-time data support BP’s upstream strategy by

helping to gain new access, increasing recovery and reserves and improving

Clair Ridge Project Clair Ridge is a £4.5billion investment in the second phase of development on the Clair field, which lies 75km to the west of the Shetland Islands.

The project will comprise two new bridge-linked platforms, as well as new pipeline infrastructure to connect to processing facilities on Shetland. The next major milestone is the installation of the topsides, scheduled in 2015, with production expected to commence in late 2016.

The Clair reservoir was discovered in 1977. In the 1980s ten appraisal wells were drilled. This activity demonstrated that the structure extended to an area of some 400 square kilometres (150 sq mi) with static oil-in-place, although it failed to confirm the presence of economically recoverable reserves. Two further wells were drilled in 1991, two in 1992 and one in 1995. In 1996 there was a breakthrough in the drilling and extended well testing (EWT) of one well. The EWT was followed by the side-tracking of an offset well into the pressure sink created by the EWT. The 1996 well test results set the scope for the 1997 drilling programme and triggered interest in a first phase of development.

Two further wells were drilled in 1997 to appraise the ‘Graben’ and ‘3A’ segments to reduce uncertainty in these areas adjacent to the core area. In May 1997 it was agreed by the Clair partners to jointly develop the field. BP was appointed as the operator and programme coordinator. A development plan was approved in 2001, representing an investment of £650m by BP and its partners, ConocoPhillips, Chevron and Shell, in the project. The production facilities were installed in 2004. The first stage of the development was inaugurated on 23 February 2005.

platform. The installation of the DP and QU steel jackets weighing 22,300t and 9,000t respectively was completed in August 2013, while the topsides are expected to be installed in 2015. Initial drilling works for the project include the pre-drilling of seven wells using an eight-slot subsea template with the help of a semi-submersible drilling rig. The remaining wells, on the other hand, will be drilled by the DP platform for over 12 years.

The project primarily involves the installation of two bridge-linked platforms at a water depth of approximately 140m, the drilling of 36 wells (26 producing wells and 10 water injectors), and a tie-in to the existing Clair Phase 1 export pipeline system. The platforms will include a drilling and production (DP) platform and a 9,000t quarters and utilities (QU)

The produced oil will be exported to the Sullom Voe Terminal (SVT) via a new 6.5km long and 22in diameter pipeline connected to the existing Clair Phase 1 oil export pipeline, whereas the produced gas will be exported to the SVT via a new 14km long and six inches diameter pipeline connected to the west of the Shetland pipeline system.

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Clair Ridge is the first sanctioned largescale offshore enhanced oil recovery (EOR) scheme using reduced salinity water injection (LoSal® EOR) to extract a higher proportion of oil over the life of the field. To reduce the environmental impact of the project, the platforms will be powered using dual-fuel power generators, incorporating waste heat recovery technology. Vapour recovery will also be used to capture and recycle low-pressure gas for use as fuel or for exporting to shore.

In August this year BP and its co-venturers confirmed the safe installation of the Clair Ridge platform jackets, a major milestone in the Clair Ridge project.

Trevor Garlick, Regional President for BP’s North Sea business said: “Less than two

years ago we announced our decision to invest in the giant Clair Ridge project.

The safe installation of the two jackets in to the sea bed is a fantastic achievement by the project team, and is a very visible sign of our commitment to maintaining a successful long term business in the UK.” The Clair Ridge development will have the capability to produce an estimated 640 million barrels of oil over a 40-year period, with peak production expected to be up to 120,000 barrels of oil per day.

The project is headquartered in London, where over 750 people are currently employed. Approximately half of the Clair Ridge investment is occurring in the UK, with over 80 British companies providing engineering design and support services, hook up and installation services, manpower and a wide range of engineered equipment.

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Other Projects: Petrochemical Plants BP announced this month that it plans to invest over $200 million to upgrade its purified terephthalic acid (PTA) plants at Cooper River, South Carolina and Geel, Belgium. The investments will position these assets amongst the most efficient PTA manufacturing facilities in the world.

“This allows us to apply our latest proprietary technology and process know-how to existing assets, significantly improving their cost competitiveness and reducing their environmental footprint,” said Luis Sierra, President BP Aromatics - Americas, Europe and Middle East. “It enables Cooper River and Geel to remain the leading PTA manufacturing complexes in the Americas and Europe respectively.”

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A British Success Story By applying the latest PTA technology to these world-scale production facilities, BP expects to greatly improve feedstock and energy efficiency thus reducing both variable and fixed cost and greenhouse gas emissions. PTA is the raw material used to make polyester, which is found in a wide range of consumer goods ranging from fabrics to food and beverage containers. The BP Cooper River site is the largest PTA producer in the Americas and BP Geel is the largest in Europe. Cooper River’s PTA1 unit, one of two units at the facility, is expected to be upgraded by mid 2016. The project expects to create around 200 construction jobs at its peak and indirectly support many more jobs in the region. When the project is completed, the reduction in annual greenhouse gas reductions should equate to eliminating the electricity and heating emissions of about 2,000 typical U.S. households.

The Geel upgrade is expected to create around 100 construction jobs at its peak and will also indirectly benefit other businesses in the area.

Geel’s PTA3 unit is expected to be upgraded by the end of 2015 with PTA2 following in 2016. The annual greenhouse gas reductions should equate to eliminating the electricity and heating emissions of 1,500 typical Belgium households.

Investing in Egypt BP Egypt has been awarded two new exploration blocks as a result of the 2013 EGAS bid round. BP and its partners have committed to invest a total of $240 million in the blocks over different phases. Block 3 – North El Mataria is BP’s first entry into the Onshore Nile Delta. The block is located in the northeastern part of the Nile Delta cone, approximately 57km to the west of Port Said city. BP will operate the block with 50% equity and Dana Gas of Abu Dhabi will hold the remaining 50% working interest.

Block 8 - Karawan Offshore is located in the Mediterranean Sea, in the northeastern part of Egypt’s economic waters. The block lies at approximately 220km to the NE and 170km to the NW of Alexandria and Port Said cities

respectively. BP will have 50% equity and the block will be operated by ENI, which holds the remaining 50%. The programme will include 3D seismic and three exploration wells in each of the onshore and offshore blocks in phases over 6-8 years.

Hesham Mekawi, BP North Africa Regional President, commented, “BP is proud of the successful partnership it has had with Egypt for 50 years. We look forward to continuing to play a key role in the development of Egypt’s energy sector and maximising the use of our existing resources. BP’s expertise and latest technologies will be deployed for mutual benefit in these new blocks, which it believes have gas-bearing characteristics.

Exploring the two blocks will require substantial investments to unlock their potential, and will be done as part of our commitment to meeting Egypt’s energy needs. We also look forward to working with our Abu Dhabi partners at Dana Gas.” BP has a long and successful track record in Egypt stretching back 50 years with investments exceeding $25 billion, making BP one of the largest foreign investors in the country. In Egypt, BP’s business is primarily in oil and gas exploration and production.

Downstream The Downstream segment is the product and service-led arm of BP, focused on fuels, lubricants and petrochemicals.

BP has significant operations in Europe, North America and Asia, and also manufactures and markets its products across Australasia, southern Africa and Central and South America. The segment comprises three businesses: Fuels, Lubricants and Petrochemicals. BP aims to operate all of these businesses as safe and reliable value chains and participates in multiple stages of each value chain, in the belief that it can deliver greater returns from integration than from owning a collection of discrete assets.

These value chains, combined with BP’s advantaged manufacturing operations, supply and trading capability and expertise in technology, allow it to pursue longterm competitive returns and sustainable growth. This strategy is about winning sustainably in the markets where BP chooses to participate: to outperform

the best competitor in a region and do it safely; investing to strengthen established positions while maintaining overall capital employed, and still seeking to shift the mix of participation and capital employed from established to growing markets. BP does this while operating within a stable financial framework to deliver attractive returns and growth in earnings and cash flow. The delivery of these activities is optimized and integrated with support from global functions with specialist areas of expertise: technology, finance, procurement and supply chain, human resources, global business services and information technology.

It has been quite a journey from those first tentative steps more than 150 years ago.

In 2014 and beyond, BP’s businesses are organized to deliver the energy products and services people around the world need right now.

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