Oil, Gas and Shipping Magazine

ISSUE 88 www.ogsmag.com

On the cover

Maersk Group: Performance & values

From shipping to logistics to oil and gas, the diversity of the Maersk Group has been a source of strength and success for more than a century.

In this issue WSS: One-stop bunkering

Ship operators who rely on a myriad of companies for their global bunkering needs are wasting time, money and energy, Page 35

OPEC: Crude oil output Oil production from the Organization of the Petroleum Exporting Countries (OPEC) rose by 40,000 barrels per day in March. Page 43

News & Features Page 28

HARD WORKING ENGINEERS We have turned things around before.

No matter what the oil price is: The world needs energy.

It is at times like these new technology and new processes see the light of day. Together we have turned things around before – by innovating, reducing costs, and working in a smarter way. We are all adjusting once again, to make sure we can succeed in the new market reality.

And we know we can do what it takes.

Now is the time to get together and prepare for the future. ONS 2016 provides you with the latest insights, the new technology – and future business opportunities.

This is the place to be. Welcome to the leading energy meeting place.

www.ons.no New conference feature: Build your competence at our new Technical Sessions!

The Editor

OPEC in a pickle

Editor

The

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ast month’s meeting of oil ministers in Doha, Qatar, did not reach a deal on oil production. Most reports of the meeting led with words like ‘failure’ and ‘collapse’. The Economist called it ‘the debacle in Doha’. CBC News called them ‘fumbled talks’ while the BBC (bless them) said the meeting had ‘run into difficulties’.

The Doha meeting had been hyped up to the hills, but it was always more about politics than the economics of global oil supply. Its objectives did not include a cut in oil production, merely an agreement to keep the lid on, but this was the first meeting of its kind for over a decade to involve non-OPEC members—a political statement in itself. Russia would have loved some brownie points for brokering a deal between Iran and Saudi Arabia, but for this to have happened at Doha would have required an unprecedented and humiliating U-turn from at least one of the arch-rivals. Iran made its own political statement by staying at home.

Martin Ashcroft

There was a time, not too long ago, when OPEC (meaning Saudi Arabia) jumped on price fluctuations through strategic use of its spare capacity. The US shale revolution changed that.

OPEC cannot control global prices or production like it used to, which is why it has been concentrating on market share.

But while OPEC has been banking on a predicted decline in US shale oil production, will this be enough to justify the sacrifices made by its members? What will happen when the price of oil starts to rise again?

In her presentation to the US Senate Energy and Natural Resources Committee at the end of April, Suzanne Minter, manager, oil and gas consulting for Platts Analytics, offered a fascinating analysis of the global oil market in which she argued that as a result of their own spare capacity and other unique factors, US producers may be in the best position to lead the eventual oil recovery. A summary of her analysis can be found in this month’s magazine. Interesting stuff!

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Contents Page 6

Maersk Group: Performance & Values

3

The Editor: OPEC in a pickle

39

LNG shipping rates / China oil demand

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Maersk Group: Performance and values

41

Maersk Oil data contract / Dry bulk freight

28

ExxonMobil: Julia oil field Statoil: DNV GL contract

43

OPEC crude oil output

29

News in Brief: BHP Billiton / d’Amico Group

46

Interview: Bob Sanguinetti, Captain, Port of Gibraltar

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Shipping prices HTL 20th anniversary

50

Platts presents oil outlook to US Senate committee

33

DG JACK introduced at OTC Houston

54

Language, lives and international law

35

WSS: One-stop approach to bunkering

56

Expander System: The solution to pivot wear

37

Gorgon LNG project / SPE Offshore Europe

60

Statoil: Embracing challenges

ADVERTISERS Page: 2 ONS 2016 15 D&R Valves bv 26 Technip 27 IMI Sensors 32 Biardo Survival Suits bv 34 IT Vizion/ Kippertool 36 Telenor satellite broadcasting 38 TerraMar Networks 40 Spectrex Inc. 42 Wintershall 44 Shepherd Offshore 45 OMS 52 Kenz Cranes 53 Aggreko 58 Expander System 64 Turner & Townsend 72 Nov.com/gastight 74 MIAG Fahrzeugbau GmbH 75 EverSea 76 Ebara International

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News & Features Editor:

Martin Ashcroft martin@ogsmag.com

Page 28

News and Features

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Page 46

Interview: Bob Sanguinetti

The magazine is printed in A4 format on 250gsm gloss laminated cover and 170gsm matt internal pages. The magazine is both a printed hard copy magazine and distributed electronically. Currently our global readership is just over 105,000.

The magazine is also a media partner and supporter of some of the world’s largest exhibitions and conferences.

Oil, Gas and Shipping Magazine 2016

Page 60

Statoil: Embracing challenges

Oil, Gas and Shipping Magazine is published by Worldwide Business Media Limited, London, EC1V 2NX United Kingdom.

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maersk group Performance and values From shipping to logistics to oil and gas, the diversity of the Maersk Group has been a source of strength and success for more than a century

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ounded in Svendborg, Denmark in 1904, Maersk Group is now a global conglomerate operating in the shipping and energy industries. Maersk Group has a leading role to play in the arena of sustainable business development. Its shipping companies provide comprehensive coverage of the world’s need for cargo, oil and gas transport, terminal services and on-land logistics. The energy-related business units include drilling and platform service companies, as well as one of the world’s leading independent oil and gas firms. The diversity of the group has been a source of strength and success for more than a century. Maersk operates in accordance with a set of official corporate values. They are the same principles that its founders Arnold Peter Møller and Mærsk Mc-Kinney Møller relied on as they guided their family business through a century of success – innovation, sustainability and a commitment to partnerships.

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• Maersk Group normally scheduled route from Bremerhaven in Germany to Pipava in India, delivering cargo to the usual ports along the way. But it does so with a difference. As a supplement to traditional bunker fuel, Maersk Line has tested using fuel derived from algae to power the ship’s electronics along the route. Looking ahead, biofuel derived from algea could one day be used to power vessels. For Maersk Line, biofuels are part of a broader strategy for reducing CO2 and SOx emissions and for diversifying fuel supply.

Sustainable ship recycling in India

Shipping is a huge part of Maersk’s operational portfolio and with more vessels to recycle in the future the current cost of ship recycling is not sustainable. The Maersk Group is working to use its leverage to create more responsible recycling options and has recently announced a commitment to help selected ship recycling yards in Alang, India to upgrade facilities and practices to comply with the company’s standards. Now an agreement has been reached for the landing of the first two vessels. The Maersk Wyoming and the Maersk Georgia, two Maersk Line container vessels, are expected in Alang late May 2016. The vessels will be recycled at the Shree Ram yard in Alang, which is certified to the standards of the Hong Kong Convention.

The market for ship recycling is dominated by practices unchanged for decades. Out of the total 768 ships recycled globally in 2015, 469 – representing 74% of the total gross tonnage scrapped - were sold to facilities on beaches in India,

“Two Maersk Line container vessels are on their way to India for recycling at the Shree Ram yard in Alang” Innovation

Maersk invests heavily in innovation at all levels of its organisation – whether designing the world’s largest and most eco-friendly container ships, developing sophisticated software to improve logistics in growth markets, or inventing technologies that enable reliable, safe drilling in the world’s harshest environments. Innovation is a highly focused discipline that aims to deliver better service, protect employees and the environment, create new business opportunities and ensure cost-effectiveness.

One example of innovation is Maersk Oil’s TriGen power generator that uses technology derived from the space industry.

About the size of a shipping container, TriGen burns gas with pure oxygen to produce clean power, pure water and “reservoir ready” carbon dioxide that is captured and transported to oil and gas fields for enhanced oil or gas recovery. Because the CO2 is captured, the power produced is emissions-free.

Another example of Maersk innovation is the Maersk Kalmar.

This 300-metre-long Maersk Line container ship sails its

Pakistan and Bangladesh with challenges to workers and the environment. “The Maersk Group’s policy is to only recycle ships responsibly,” says Annette Stube, head of sustainability in Maersk Group. “There has, however, been no change in practices in this area and today, responsible recycling is only feasible in a limited number of yards in China and Turkey.”

Currently, the estimated extra cost for Maersk Group of responsible recycling at existing yards is US$1-2 million for each vessel. Steady improvements of conditions have been witnessed in ship recycling yards in Alang in the last couple of years and today a total of four yards in Alang are certified to the standards of the International Maritime Organisation and Hong Kong Convention. Following several visits at upgraded beaching facilities in Alang in 2015, the Maersk Group concluded that responsible recycling can be accelerated in the area, if the engagement is made now.

“We want to play a role in ensuring that responsible recycling becomes a reality in Alang, India,” says Annette Stube. “To find sustainable solutions, we are working on building a

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• Maersk Group

“The acquisition of Barcelona-based Grup Maritim TCB added 11 terminals in Colombia, Brazil, Mexico, Guatemala, Turkey and Spain to APM Terminals’ portfolio”

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• Maersk Group broader coalition with other ship owners and have initiated engagement with a number of carefully selected yards in Alang.

This includes improving local waste facilities and hospitals and upgrading the housing conditions for the migrant workers in Alang.”

The Maersk Group is engaging in the development of sustainable ship recycling for the long term and will in the coming years work directly with selected certified yards in Alang to further upgrade their facilities and practices to comply with the company’s standards.

Areas of operation MAERSK LINE

With 25,000 employees Maersk Line can offer customers access to a global network of feeder vessels and onshore logistics services. One of the key goals at Maersk Line is to transform the customer experience in the container shipping industry.

Working closely with customers, Maersk Line has launched several major initiatives over the last few years, for example, the revolutionary Daily Maersk service. With 70 dedicated ships and port calls throughout the week, Daily Maersk provides unmatched flexibility and absolute reliability to customers in Asia and Northern Europe.

Reliability is a top priority for Maersk Line and the company is frequently ranked by independent third parties as the most reliable carrier among the world’s largest shipping lines. In addition, Maersk Line is also a leader in eco-efficiency, which is fast becoming a major differentiator in the container shipping industry. Being considerably more efficient than the industry average this enables customers to reduce the environmental footprint (including CO2) of their logistics solutions and supply chains.

DAMCO

“Maersk Line is frequently ranked by independent third parties as the most reliable carrier among the world’s largest shipping lines”

With offices in more than 90 countries, Damco is a global player that keeps things moving for more than 10,000 businesses worldwide. Damco creates value by simplifying complex supply chains, enabling businesses to cut their inventories, reduce their operating costs, and achieve shortterm savings that improve long-term competitiveness. In 2011 Damco completed more than 300 supply chain projects that identified over US$130 million in potential savings for its customers.

Damco offers market-leading capabilities in key origin markets, and is a leading operator in emerging markets such as China, South East Asia, India, Africa, the Middle East and Latin America. Damco’s greatest successes have always come from working closely with customers to understand their business and deliver the solutions they need. This probably explains why Damco’s key customer retention rate regularly exceeds 97%, one of the highest customer retention rates in the industry.

APM TERMINALS

This business unit is an independent operator with a global port, terminal and inland services network spanning five continents. Its assets include interests in 62 port facilities and over 150 inland service locations, providing a growing business presence in 63 countries. As the world’s leading port and terminal operating company, APM Terminals plays a critical role in facilitating world trade, which is a primary

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• Maersk Group

“Maersk Drilling operates the world’s largest and most advanced ultra harsh environment jack-up rigs in the North Sea at water depths up to 150 metres” 14

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Issue 108 Ref: PlastoIl Please confIRm 6 / 5 / 14

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driver of global economic growth. Over 90% of world trade is transported by ship, and total container volumes at the world’s ports surpassed 600 million TEUs in 2012.

With APM Terminals’ purchase of a majority stake in the leading Spanish container terminal operator, the Maersk Group executes on its strategy to invest in growth through the business cycle. The acquisition of Barcelona-based Grup Maritim TCB adds 11 terminals in Colombia, Brazil, Mexico, Guatemala, Turkey and Spain to APM Terminals’ portfolio.

“With its robust financial performance and balance sheet, the Group is in a strong position to make investments of this kind in volatile markets and pursue growth opportunities— both organically and by acquisition,” says Nils S. Andersen, Maersk Group CEO. With this deal the APM Terminals global terminal network grows from 63 to 74 terminals in 40 countries across five continents. The 11 acquired terminals add 4.3 million TEU in capacity and 3.5 million TEU in estimated annual container volumes to the APM Terminals’ portfolio. “The 16

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acquisition supports our growth plans and value proposition towards APM Terminals’ wide range of customers in Europe and Latin America,” says Andersen.

Latin America has been a strategic focus of the Maersk Group for some time and it has many investments in the region.

The most recent example is the joint-venture multi-purpose terminal in Cartegena, Colombia.

Winning new business in an increasingly competitive global market requires not only a successful strategy for portfolio management and investment, but also a commitment to innovation and sustainable business practices. APM Terminals is an industry leader in innovation, with major projects including the productivity-doubling FastNet crane system and its announced portfolio-wide conversion to electrified rubbertire gantry cranes (RTGs) from diesel power.

MAERSK OIL

With 3,200 employees, turning marginal and challenging fields into commercial successes has been the cornerstone of

• Maersk Group potential development of two further wells based on field performance.

The Flyndre well is expected to peak at around 10,000 barrels of oil per day (gross production), with Cawdor expected to peak at around 5,000 barrels per day (gross production) with production there beginning in 2017. Total recoverable resources are expected to be approximately 30 MMboe for the initial development phase, with further upside depending on performance and further development phases. Maersk Oil UK Limited’s investment in the field developments is expected to be approximately £300 million.

CULZEAN: The Culzean project has taken a significant step forward. Maersk Oil UK and its co-venturers JX Nippon Exploration and Production (UK) Limited and Britoil (BP) have chosen a new standalone facility to develop the discovery: a complex of bridge linked platforms comprising a 12 slot wellhead platform (WHP), a central processing facility and utilities/living quarters. The total investment for the project is expected to be in excess of £3bn (US$4.7bn).

The development plan of the gas field received approval from the UK Oil & Gas Authority in September 2015. The drilling rig for Culzean will be designed to operate in water depths of up to 400ft and drill at depths of up to 30,000ft. The project will implement a high-specification, harsh-environment (HSHE) self-elevating drilling rig, which will be based on the Friede & Goldman JU-2000E design but with certain improvements. The rig will possess a static hook loading capacity of two million

“The total investment in the Culzean project is expected to be in excess of £3 billion (US$4.7bn)” Maersk Oil’s business since the company was founded in 1962.

Maersk Oil developed groundbreaking technologies while working with tight chalk reservoirs in the Danish North Sea and enabled Denmark to become an oil and gas producing country. Later, the company deployed these technologies abroad and became an international player in the upstream business. Today, Maersk Oil produces some 625,000 barrels of oil equivalent per day, with production in Denmark, the UK, Qatar, Algeria, Brazil and Kazakhstan. Exploration activities are ongoing in Angola, Norway, Greenland, Kurdistan, the US Gulf of Mexico and in the producing countries.

FLYNDRE AND CAWDOR FIELDS: The Flyndre field was discovered in 1974 and straddles the UK/Norway median line. Cawdor was discovered in 2008. The fields will be codeveloped as a subsea tie-back to the Clyde platform operated

by Talisman Sinopec Energy UK Limited. Flyndre will be developed with a single production well. The Cawdor field will be developed initially with a single production well, with

pounds and a cantilever reach of 75ft. It will enable off-line pipe handling and feature 15,000 pounds per square inch (psi) blowout preventer systems and accommodation for up to 150 personnel. If successfully developed, the Culzean field could provide around 5% of the UK’s total gas consumption by 2020/21. First gas from the project is currently expected in 2019.

MAERSK OIL PARTNERSHIPS: Maersk Oil’s strong technical capabilities and pioneering mindset allow it to move very quickly from the point of discovery to first oil – making Maersk Oil a valuable partner for host countries. It has a proven track record of diligent project execution, completing large, complex projects on time and on budget. The development of the Al Shaheen field in Qatar is an example of this. Maersk Oil took over the abandoned field in 1992 and produced the first oil in 1994. In 2011, it finalised a US$6 billion development of the field – including the installation of 15 new platforms and 160 production and water injection wells.

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“The drilling rig for Culzean will be designed to operate in water depths of up to 400ft and drill at depths of up to 30,000ft” •

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MAERSK TANKERS

A vital part of the Maersk Group, Maersk Tankers owns and operates a large, modern fleet of crude oil, product, and gas tankers, all built and operated in accordance with the group’s high standards for quality and reliability. Tankers form a vital link in the global energy industry, as well as playing a key role in ensuring that the industry operates safely, efficiently and with a minimal environmental impact. Maersk Tankers has been transporting oil since 1928, and today has one of the largest and most diversified independent fleets in the world.

Maersk Tankers aims to be the industry leader by offering customers unmatched service, scale and flexibility. One example of its strength is the 2012 founding of the Nova Tankers VLCC pool, which is the market leader in this segment. Maersk Tanker’s three product tanker brands also enjoy a commanding market position. The LR2 Pool operates double-hull coated Aframaxes, primarily carrying naptha and gasoil from the Arabian Gulf to East Asia.

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Handytankers is one of the world’s largest pool managers of vessels between 25,000 and 51,000 dwt. Broström, acquired in 2009, is a leading tanker company specialising in vessels below 25,000 dwt. Finally, Maersk Tankers has a strong presence in the handy-size and VLGC gas segments under its own name.

MAERSK FPSOs

This unit develops, builds, owns and operates floating production, storage and offloading (FPSO) vessels that are tailor-made for oil and gas production in demanding environments. FPSOs are some of the world’s most complex vessels. They are designed to receive reservoir fluids from nearby platforms, separate the oil, gas and water, and process and store the oil or gas until it can be offloaded onto a tanker or transported through a pipeline.

FPSO’s are especially effective in remote and deepwater locations where other solutions are not technically feasible.

Maersk FPSOs is a contractor to some of the world’s leading energy companies. Its produc

• Maersk Group Brunei, Egypt, the Gulf of Mexico, Australia, the Caspian Sea and Venezuela – applying efficient, high-performance equipment to break new ground in the global energy business.

Maersk Drilling is a leader in the North Sea, where it operates the world’s largest and most advanced ultra harsh environment jack-up rigs at water depths up to 150 metres. These highly automated rigs provide safe working conditions for its crews and an unsurpassed drilling efficiency for its customers.

The fleet also includes three highly sophisticated deepwater development semi-submersibles that are capable of operating at depths up to 3,000 metres.

Maersk Drilling continues to lead the way in the technological advancements of ultra harsh environment drilling. With its XLE Rigs, it will deliver the most advanced jack-up drilling rigs in existence. All of them will be customized to handle demanding and complex well drilling operations in the North Sea. The four XL Enhanced harsh environment jack-up rigs are based on the design of the MÆRSK INNOVATOR and the MÆRSK INSPIRER, currently the world’s largest and most advanced jack-up drilling rigs.

Significant operations in other regions of the world include the Egyptian drilling company (EDC), a joint venture formed with the Egyptian General Petroleum Corporation. This venture owns and operates a fleet of more than 60 land rigs and five jack-up rigs in the Middle East.

Maersk Drilling relies heavily on advanced engineering. It has its own in-house engineering department that develops newbuildings and modifies existing rigs to deliver exactly what

“Maersk Drilling has its own in-house engineering department that develops newbuildings and modifies existing rigs” tion units ensure safe and reliable exploitation of offshore oil and gas fields, and meet the highest standards in some of the world’s most strictly regulated and harshest offshore environments.

The Maersk Peregrino is the newest FPSO in the fleet. This state-of-the-art vessel is the Maersk Group’s most expensive unit, and is able to produce up to 100,000 barrels of heavy oil per day from the Campos Basin off the coast of Rio de Janeiro.

Maersk FSPOs’ purpose-built Maersk Curlew and North Sea Producer vessels have operated off the coast of Aberdeen since the late 1990s, while the NKOSSA II LPG storage ship operates off the coast of DR Congo, and the Volve production module is mounted on the Maersk Inspirer, currently operating off the coast of Norway.

MAERSK DRILLING

With 3,300 employees, Maersk Drilling has been an expert in drilling since it started operating in 1972. Maersk Drilling is currently drilling in the North Sea, West Africa, Malaysia,

customers want. Maersk Drilling also applies its technical know-how to the critical work of improving sustainability.

It has adopted an ISO 14001-certified environmental management system, and is involved in a number of sustainability initiatives, including the optimisation of newbuilding designs to reduce its environmental footprint by 10 per cent.

MAERSK SUPPLY SERVICE

This business area supports the oil, gas and renewable energy industries around the world with a large fleet of modern, advanced vessels. Maersk Supply Service has the technology and know-how to meet almost any customer’s need. Its diverse and highly sophisticated fleet includes powerful anchor handlers, platform supply vessels and advanced subsea support vessels. This fleet is continuously renewed, whether through newbuilding projects, modifications to existing vessels or divestment of older tonnage.

Maersk Supply Service capabilities cover all areas of offshore

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supply services, from rig moving, installation work, anchor handling and pipeline ploughing to supply services, iceberg management, subsea support, offshore fire-fighting and pollution control. It can move and install virtually any kind of rig or offshore installation, and has particular expertise in deepwater operations. Maersk Supply Service operates worldwide and in all major offshore areas, from Brazil and East Coast Canada to Africa, Asia and Australia.

The operations performed involve difficult work with complex, heavy equipment in very harsh environments, making safety a critical issue. Maersk Supply Service works constantly to improve its safety performance through training, risk assessment and strictly enforced procedures.

SVITZER

Svitzer is the global market leader in towage and emergency response. Its towage arm provides harbour, terminal and ocean towage services, as well as pilotage, firefighting, pollution response and escort assistance. It provides crew training in advanced tug simulators that replicate real-life port situations.

Simulator training also prepares crews to navigate around terminals even before they are built.

Svitzer’s rescue and recovery specialists and fleet of tugs and emergency response and rescue ships are always on standby to respond to an incident, whether to refloat a grounded ship, save a vessel or installation from sinking, or take part in an oil recovery and clean-up operation.

The Maersk Group is diverse in every sense of the word— commercially, geographically and in terms of the people who work there. Ask any Maersk employee and they will tell you that the culture at Maersk is international and dynamic. The focus is always on long-term, sustainable performance, which is why all decisions are guided by shared ethical values. The secret of the company’s success can therefore be summed up in two words: performance and values.

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News and Features

EXXONMOBIL

Production starts at ExxonMobil’s Julia oil field

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roduction has started, under budget and ahead of schedule, at ExxonMobil’s Julia oil field in the Gulf of Mexico. The first production well is now online and a second well will start production in the coming weeks. The Maersk Viking drillship is currently drilling a third well, which is expected to come online in early 2017.

The Julia development is approximately 265 miles southwest of New Orleans in water depths of more than 7,000 feet.

The initial development phase uses subsea tie-backs to the Chevron-operated Jack/St. Malo production facility, reducing the need for additional infrastructure and enhancing capital efficiency.

“Successful deepwater developments like Julia, located more than 30,000 feet below the ocean’s surface, benefit from ExxonMobil’s disciplined project execution capabilities and commitment to developing quality resources using advanced

technology,” said Neil W. Duffin, president of ExxonMobil Development Company. “This initial production will provide ExxonMobil with insight into the potential future development of the reservoir.”

Discovered in 2007, the Julia field comprises five leases in the ultra-deepwater Walker Ridge area of the Gulf of Mexico.

ExxonMobil, the operator, and Statoil Gulf of Mexico LLC each hold a 50 percent interest in the field.

ExxonMobil is on track to start up 10 new upstream projects in 2016 and 2017, adding 450,000 oil-equivalent barrels per day of working-interest production capacity. The company is enhancing resource value through production optimization, technology application and cost management.

Over the past decade, ExxonMobil has drilled 187 deepwater wells worldwide in water ranging from 2,100 feet to 8,700 feet.

statoil awards new contracts

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tatoil has awarded contracts to DNV GL for verification

of all four topsides, the three bridges, three of four jackets, topside installation by the Allseas single lift vessel Pioneering Spirit and extended site assessment for the jack-up.

Johan Sverdrup is the

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largest ongoing project on the Norwegian Continental Shelf. Through third party verification the operator and the authorities can rest assured that operations, structures and systems meet the requirements set by legislation, the industry, authorities - and in some cases - voluntary

commitments made by commercial operators. For the structures at Johan Sverdrup, a risk based verification approach is chosen to assess compliance with NORSOK standards, VMO standards (developed by DNV GL) and Statoil’s own technical requirements.

• News & Features

news in brief MOL Group has announced a new hydrocarbon discovery in the Karak Block in Pakistan. The block is operated

by Mari Petroleum Company with 60% working interest while MOL Pakistan Oil & Gas Co. BV has 40%.

The Halini-Deep-1 discovery constitutes the third consequent discovery in the block following two previous successes (Halini-X-1 in 2011 and Kalabagh-1A in 2015). MOL Group is an integrated, international oil and gas company, headquartered in Budapest, Hungary.

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SAL has appointed Mischa Tchang as managing director for SAL Singapore.

Tchang has over 15 years’ experience in heavy lift shipping, having joined Jumbo Shipping in 2000. From 2008 until 2010 he worked for BigLift and returned to Jumbo in 2010. His responsibilities are to strengthen and expand the SAL Singapore office by maintaining and expanding key client relationships while also developing new business opportunities.

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Natural gas production in the lower 48 United States averaged 72.2 billion cubic feet per day (Bcf/d) in March, which is down just over 1 Bcf/d (nearly 2%) compared to the February average, according to Platts Analytics. Most major basins contributed to the decline in some way, but the two main culprits were the Northeast and Texas, where production drops in each were roughly 0.5 Bcf/d month on month.

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Damen Shipyards Group has opened

a new branch office in Houston, Texas to meet the increasing demand for its unique shipbuilding concepts and repair and conversion services. Damen North America will represent Damen’s newbuild and shiprepair & conversion businesses across the US and Canada.

“In this difficult economic climate, it is important to support the oil and gas market and we are thrilled to expand our business in North America,” said Arnout Damen, chief commercial officer.

BHP BILLITON to pump

millions into oil exploration

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HP Billiton announced in its third quarter operations report that it intends to boost its investment in petroleum exploration.

The company said it had increased spending plans on its exploration program by an extra $40 million to $640 million for the 2016 financial year “to fund additional access and testing of our future growth opportunities.”

With $390 million spent already in the first three quarters, the announcement represents an additional $250 million for exploration in the June quarter.

BHP’s petroleum exploration program is focused in the deepwater Gulf of Mexico, the Caribbean and the Beagle sub-basin off the coast of Western Australia. The company said it has encountered hydrocarbons in the Gulf of Mexico at its Shenzi North ST3 exploration well. Results are being analysed and a follow-up well in the Gulf is now planned for this quarter.

In March this year, BHP Billiton was also the high bidder on four blocks in the Central Gulf of Mexico Lease Sale 241, although the award of the blocks remains subject to regulatory approval.

But BHP says the key project that has been bought forward into this financial year is in the Caribbean off Trinidad & Tobago, where a second drill rig is being mobilised for an eight-well program in seriously deep water.

BHP’s total petroleum production for the nine months ended March 2016 was down by four per cent to 184.1 MMboe. Guidance for the 2016 financial year remains unchanged at 237 MMboe, however, “as the strong performance by our conventional business offset the reduction in onshore US activity and the divestment of our gas business in Pakistan.”

M

aritime transport company d’Amico Group has been named Green Shipowner of the Year 2016 at an award ceremony in Copenhagen during the Green Ship Technology Conference. d’Amico was recognized for its commitment in implementing a system to reduce the environmental impact of its fleet and constantly monitor its energy consumption performance.

“We are really proud of this award,” said chairman Paolo d’Amico. “Thanks to the introduction of innovative technologies on our ships and to the new eco-ships investment plan, we have been able to pass the energy efficiency international standards, building a best practice globally recognized in the world of shipping.”

On the new eco-ships, the Italian shipping group has introduced the latest generation of electronic engines which, combined with a revisited hull shape to maximize water flow, significantly increased propulsive energy compared to the older generation of shipping.

“Caring for the environment cannot be limited to the purchase of new ecovessels, however,” said Domenico Savio Taiano, HSQE director. “It has to necessarily involve management of the whole fleet. The constant monitoring of vessels is made possible thanks to highly advanced sensors on board, which allow tracking of consumption and performance in real time.”

•

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29

Have a news story or press release you would like to be considered for publication in the next Oil, Gas & Shipping Magazine?

Please contact Martin Ashcroft at martin@ogsmag.com

www.ogsmag.com

• News & Features

SHIPPING PRICES

become less dependent on cargo type

C

ontainership carriers are no longer pricing cargo according to type, says shipping analyst Xeneta. Simply filling their vessels is now the number one priority.

The Oslo-based benchmarking and market intelligence platform for containerised ocean freight argues that oversupply, better supply chain management and downwardly spiralling fuel costs have made the market so competitive over the last 18 months that ‘what’s in the box’ no longer plays a part in negotiations.

Data gathered by the firm illustrates that the market average price for transporting a 40-foot container from Shanghai to Rotterdam, on a short-term contract, has slumped dramatically since mid-2014. As of 19 April 2016, the market average price stood at $595 (a 78% drop compared to 1 July 2014) and at $321 for the market low (an 82% drop over the same period).

This, Xeneta CEO Patrik Berglund argues, has created a new market reality.

“Traditionally, cargo was rated by weight or measure, with the ratings based on the cargo type,” he says. “But now, as long as the box isn’t overweight or filled with hazardous material, that’s

HTL, a family run manufacturer

of controlled bolting, flange working and portable machine solutions, is celebrating 20 years in business.

In 1996, founder Ray Jones started the business in a single garage in Blyth, Northumberland, in the UK with two employees. HTL has enjoyed an incredible journey of growth over the past two decades and is now a recognised industry leader.

all been pushed to the side. The carriers just want a full box, period.”

The reason for this, of course, he says, is oversupply in a declining market. “Over the last 18 months, slowdowns in the Chinese and EU economies have cut Chinese imports by 19% and exports by 13%. When that’s married to the fact that 208 new ships were introduced to the market in 2015, boasting a capacity of 1.67 million TEUs, carriers have a major problem.”

The industry is in a state of flux, says Berglund. “Cosco and CSCL are looking to get their recent merger approved by EU and US regulators and, together with Evergreen, OOCL and CMA CGM, form a new east-west mega-alliance. Such a powerful grouping would challenge the market dominance of the Maersk and MSC 2M vessel-sharing agreement, and possibly drive the price war to new highs, or rather lows.

“In this environment there’s rumours of rock bottom prices, with mentions of boxes booked for Qingdao – Rotterdam for as low as $100. So, at present, ‘what’s in the box’ isn’t the question, it’s ‘can we have your business please’?”

Still a family run business, HTL now has eight global facilities and an extensive product and service portfolio. Distributing its product lines to over 40 countries it is considered the largest European independent privately owned supplier to the controlled bolting sector.

It all started by supplying a small range of hydraulic torque wrenches to the oil and gas industry, and has grown to offer a complete range of customer

first solutions to a variety of sectors including power generation, renewable energy, subsea & decommissioning, chemical, heavy engineering and the construction industry.

With tens of thousands of stock items readily available at HTL’s impressive 65,300 sq.ft Cramlington Corporate HQ, coupled with unrivalled bolting expertise, the once small supplier has one of the largest rental fleets in Europe.

•

OIL, GAS & SHIPPING MAGAZINE www.ogsmag.com

31

• News & Features

DG JACK

introduced at otc houston “The decision to partner up and produce the DG JACK range is based upon feedback from the offshore markets”

A

t this year’s OTC in Houston, Texas, the Damen Shipyards Group and GustoMSC announced a collaboration to produce self-propelled and non-selfpropelled jack-up platforms for the offshore industries – the DG JACK range.

The collaboration will be based on GustoMSC’s strong track record in the design of jack-ups and provision of jacking systems, combined with Damen’s extensive experience in shipbuilding and vessel optimisation, financing and worldwide aftersales services.

Damen chief commercial officer Arnout Damen explained: “The collaboration between Damen and GustoMSC represents a considered response to the needs of the entire offshore industry. It provides operators with a reliable, effective solution, combining GustoMSC’s expertise in design and engineering with Damen’s knowledge of construction, quality, outfitting, aftersales service and finance options.”

This arrangement provides the market with a total solution, drawing on the extensive experience of both companies, and on the wealth of knowledge within the Dutch maritime industry.

Working together in this way, GustoMSC and Damen will be able to offer total control over the entire process, covering everything from basic design, through construction, to aftersales care – anywhere in the world.

The decision to partner up and produce the DG JACK range is based upon feedback from the offshore markets. DG JACKs will operate across the offshore spectrum, in both renewable and non-renewable sectors.

Damen head of business development Peter Robert explained: “In the oil & gas markets, the demand for selfelevating service vessels such as the DG JACK range is driven largely by operation and maintenance (O&M) requirements.

Age significantly increases the amount of topside repair, maintenance and refurbishment the operator must undertake for the platform to remain serviceable and compliant. In such circumstances the DG JACK represents an extremely costeffective solution.

“At the same time, shallow water offshore fields remain a major source of production. With enhanced technology and recovery, combined with the relatively low cost of production compared to deep water locations, such sites will ensure a continuing demand for the DG JACK range, particularly at this time of low oil prices.”

Trends in the offshore wind industry are also favourable for the DG JACK range. Operational experience to date has shown that jack-up vessel intervention has been required at operational windfarms to correct failures in relation to main components, both for isolated defects and to introduce design improvements.

Consents granted to forthcoming projects indicate that a trend for scaling up is set to continue in the long term, and the fact that wind farms are placed farther offshore and in deeper water, means different capabilities are required than those seen in the current fleet of jack-ups operating in offshore wind. And, with the design life of offshore wind farms being between 20 and 25 years, routine operation and maintenance tasks are assured to ensure performance optimisation.

•

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• News & Features

WSS advocates one-stop shop approach to bunkering

S

hip operators who rely on a myriad of companies for their global bunkering needs are wasting time, money and energy, according to Wilhelmsen Ships Service (WSS). In an industry defined by tight margins and cost constraints, this approach is ultimately bad for business.

The Norway based maritime products and services provider is now offering global bunker service agreements, to provide peace of mind and uniform quality through a streamlined process with predictable pricing and no hidden extra fees.

WSS estimates that there are over 80,000 bunker-only port calls each year. Although these are relatively simple operational tasks, they come with a complex web of administrative and qualitative considerations, as highlighted by Daniel Wikstroem, business manager, Ships Agency, WSS. “Bunker-only calls can be a real headache for ship operators used to high quality, efficiency and performance driven day-to-day operations,” he says.

“Typical bunker calls include up to 40 lines of communication between an array of parties – including port agents, bunker brokers and bunker surveyors – up to two separate financial transactions, and an excessive

administrative workload checking disbursement accounts. Multiply this on a global level, on a port-by-port basis, and there is huge room for unpredictability and a massive manhour inefficiency. And it goes without saying that time is money.”

Wikstroem adds that every ‘mom and pop’ business, in every port, is different. “Shipping firms will rely on their bunker brokers, or procurement

in 2015, uses its global network to offer bunker service agreements with consistently high quality services minimising delay, while maximising value and operational performance.

A uniform global bunkering routine ensures that each call runs smoothly, with pre-arrival formalities and ISPS requirements completed 24 hours prior to arrival; bunker suppliers, surveyors, port authorities and pilots always given vessel ETA updates; service boats always ready for bunkering surveyors upon arrival and completion; and a strict following up of all bunkering progress.

Wikstroem says that by switching to the WSS bunkering solution, a typical client performing around 100 annual bunker calls would save over US$20,000 a year through reduced bank transactions and paperless DA handling alone.

“We want to provide the industry with a better alternative to current bunkering practices,” Wikstroem concludes. “One which is predictable, accountable and transparent, where quality and efficiency of service are paramount.

Ship operators across the world are focused on efficient operations and effective cost management – improving bunkering procedures should be absolutely central to that mind-set.”

“There’s an opaque area here where it’s very easy to lose time and money” departments, to select the right fuel supplier, but what information can they themselves access with regards to typical bunkering times? Reliability?

Punctuality? Ease of use? These factors make a real difference between a seamless bunkering process and a convoluted, lengthy and therefore costly one. There’s an opaque area here where it’s very easy to lose time and money.”

WSS, which took care of over 4000 bunker-only calls at over 150 ports •

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35

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• News & Features

FIRST LNG SHIPMENT

from australia’s gorgon project

C

hevron Corporation has made its first shipment of liquefied natural gas from the Gorgon Project on Barrow Island, off the northwest coast of Western Australia. The cargo is being delivered to one of Chevron’s foundation buyers, Chubu Electric Power, for delivery into Japan.

“Departure of the first cargo from the Gorgon Project is a key milestone in our commitment to be a reliable LNG provider for customers across the Asia-Pacific region,” said Mike Wirth, executive vice president, Chevron Midstream and Development.

One of the largest liquefied natural gas projects in the world, Gorgon includes a domestic natural gas plant, a carbon dioxide injection project, and an LNG export facility. Its three liquefaction units, also known as trains, have a combined capacity of 2.1 billion cubic feet per day (Bcf/d).

The first train was commissioned in March, with the second and third trains to follow at six- to nine-month intervals.

SPE Offshore Europe has

announced Catherine MacGregor, President Europe & Africa, Schlumberger, as its conference chair for SPE Offshore Europe 2017, to be held in Aberdeen from 5-8 September 2017. The SPE Offshore Europe Conference is the largest free-to-attend programme in the industry.

A new attraction for 2017 will be the

The Gorgon project took more than six years to develop, with the original estimated capital costs of US$37 billion in 2009 growing to $54 billion by 2013,

the additional LNG capacity currently under development is fully operational as planned by 2019, the country’s LNG export capacity would likely increase to the largest in the world, at 11.5 Bcf/d, equivalent to one-third of global LNG trade in 2014.

Three projects in eastern Australia— Queensland Curtis, Gladstone and Australia Pacific—have been fully or partially commissioned since 2014.

Queensland Curtis commissioned its two trains in 2014-15, Gladstone commissioned its first train in October 2015, and Australia Pacific sent its first cargo in January 2016. All three projects process coalbed methane into LNG and have a current combined capacity of 2.3 Bcf/d.

Gorgon LNG is the first of the four new projects off the northern coast of Western Australia to be partially commissioned. Three other projects in the northwest—Prelude, Wheatstone and Ichthys—are still under construction.

“Departure of the first cargo from the Gorgon Project is a key milestone” making it the world’s most expensive LNG project to date.

The Chevron-operated project is a joint venture between the Australian subsidiaries of Chevron (47.3 percent), ExxonMobil (25 percent), Shell (25 percent), Osaka Gas (1.25 percent), Tokyo Gas (1 percent) and Chubu Electric Power (0.417 percent).

Including the first train from Gorgon, Australia’s LNG export capacity currently stands at 6.2 Bcf/d, according to figures from the US Energy Information Administration. If Decommissioning Zone, which will include 40 of the leading technology and service suppliers and over 12 hours of presentations in the Decom Theatre.

“We are in a position where operators, service companies and other stakeholders need to find new ways of working together to build sustainable business models,” said Ms MacGregor.

“Now is the time for the industry to reinvent itself to be ready for growth,

having answered the cost and efficiency questions exposed during this downturn.

“We will share inspirational examples of innovations and technology developments, more cost effective processes and new business models.

The knowledge and technology being shared will shape the future of the industry for the next ten years.” http://www.offshore-europe.co.uk •

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• News & Features

LNG SHIPPING RATES to remain under pressure

L

NG shipowners will have to wait until 2018 for earnings to improve, when the majority of new US plants are expected to come online, according to the latest edition of the LNG Forecaster report published by global shipping consultancy Drewry.

The first quarter of 2016 was no better than the previous quarter for LNG shipowners as spot rates remained low at around $30,000pd. Two new liquefaction plants, Sabine Pass LNG in the US and Australia Pacific LNG, began operations in the first quarter of 2016, but freight rates for LNG carriers remain low despite the new liquefaction trains coming online.

The ramping up of Australian LNG exports will not bring any respite to LNG shipowners given the short-haul voyage distance between Oceania and Asian markets. Inflated fleet growth over the last few years has led to a

supply glut, which will keep the rates under pressure until 2017.

Moreover, the recent commencement of exports from Train 1 at the Sabine Pass LNG terminal in the US is not expected to increase LNG shipping

China’s apparent oil demand

showed that refinery throughput in March averaged 10.62 million b/d, a 0.6% decrease year over year, and a 0.2% contraction from the prior month.

China’s oil demand growth is expected to moderate significantly in 2016 as gross domestic product growth slows on the back of economic rebalancing.

contracted by 1.6% in March 2016 from a year earlier to 11.11 million barrels per day, according to an analysis of Chinese government data by S&P Global Platts. Data from China’s National Bureau of Statistics (NBS)

$4.00 and $5.00 per MMBtu. “Based on the above considerations, we believe that the majority of the cargo from Train 1 will land up in either Europe or Latin America, for two reasons,” said Shresth Sharma, Drewry’s lead LNG shipping analyst.

“First, demand from Far East Asian countries is weak, and second, in the current low-price environment it does not make much sense to import from the US. Thus, if this happens, tonnemile demand will be one-third of what it would be if exports went to Asia.

“All in all, the additional export volume is not expected to have any major effect on LNG shipping rates as this is being matched by vessel deliveries. Therefore, our outlook is that the market must wait till 2018 for more US plants to come online, as only large production capacity will consume inflated vessel supply.”

“Australian LNG exports will not bring any respite to LNG shipowners” demand, as the cost economics of importing LNG into Asia from the US are unfavourable. The landed cost of US LNG, without mark-up, at current Henry-Hub and bunker prices is around $6.00 per MMBtu, while the spot price in Asia is currently between

The Chinese economy expanded by 6.7% in the first quarter of this year, down from 6.8% in the fourth quarter of 2015, according to the government.

China’s apparent oil demand this year is forecasted to grow by less than two per cent.

•

OIL, GAS & SHIPPING MAGAZINE www.ogsmag.com

39

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• News & Features

MAERSK OIL awards 4 year software contract to datum360 M

aersk Oil has awarded a four year contract to British information management specialist Datum360, to implement its software as a service (SaaS) solutions for the Culzean development in the UK North Sea. The key component of the solution – PIM360 – will be at the centre of Culzean’s engineering data management.

Datum360 software has been used for the issuing, maintenance and creation of a tagging and numbering specification together with the matching of these to specific documents which will capture work completed on all the platforms and vessel.

As well as implementing Datum360’s DMaaS (data management as a service), Maersk has also used the company to advise its data control centre on processes and software and currently to train staff on engineering information systems.

Speaking about the contract win, Steve Wilson, CEO and co-founder of Datum360 said: “We are delighted to have been awarded this contract and to work with a progressive company that is very reactive to pressures faced in the oil and gas industry. As such, Maersk is really driving to increase its efficiencies and implement improvements to their engineering information management, which will play a significant role in reducing costs and saving the company time.

Dry bulk freight rates in 2016

will be, on average, lower than in 2015, as the medium-to-long term fundamentals for dry bulk shipping will remain challenging, according to the latest edition of the Dry Bulk Forecaster report published by global shipping consultancy Drewry.

The dry bulk sector has seen a period of recovery in recent months based on higher iron ore, coal and grain trade. The boom in iron ore trade

“It is estimated that up to 60% of an engineer’s time can be spent moving and organising data on major assets like offshore oil platforms and vessels. If the

“We pride ourselves on the speedy deployment of off the shelf SaaS solutions that can be operational within days and cost as much as ten times less than the fees that owner operators have previously had to budget for. In the current oil and gas climate we are acutely aware of the need to add value, build trust and ultimately do more for less, delivering efficiencies, experience and first class SaaS technology that delivers every time.”

Datum360 is based in the UK with offices around the world, including Kuala Lumpur and Houston. It works with four of the top-six super major international oil companies.

“Up to 60% of an engineer’s time can be spent moving and organising data systems they use are cobbled together, ineffective and or simply don’t interlink then this time is completely wasted. that has seen record exports out of Australia and Brazil is expected to be a short term phenomenon, however, as it has mainly been based on iron ore restocking due to low inventories.

Seasonal iron ore restocking activity in China will relax over the next few months as inventories increase.

A sharp increase in layups, order cancellations and high demolitions are currently playing a major role in correcting the massive tonnage supply

problem in the dry bulk market.

Demolition activity ramped up in the New Year, especially in the larger vessel segments, including 37 Capesize, 49 Panamax and four VLOC vessels - in total amounting to more than 12 million dwt tonnage in just a quarter.

This is double the volume compared to the previous quarter, which enabled overall vessel supply to contract (quarter-on-quarter) for the first time in 10 years.

•

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• News & Features

OPEC crude oil output increased in march

O

il production from the Organization of the Petroleum Exporting Countries (OPEC) rose by 40,000 barrels per day to 32.38 million b/d in March, driven by sanctions-free Iran, according to the latest survey of OPEC and oil industry officials by industry analyst Platts.

“Iran and Iraq remain the big swing factors, having driven OPEC output higher in March, while Saudi Arabia has been more neutral, keeping production steady since January,” said Eklavya Gupte, Platts senior editor.

The drop in March oil production volumes from United Arab Emirates (UAE), Libya, Nigeria and Venezuela was offset by a rise in output from Iran, which accounted for the single largest increase within OPEC, followed by smaller increases observed in Iraq and Angola.

Iran’s output in March climbed by 110,000 b/d from the previous month to 3.23 million b/d. Its production is up 340,000 b/d since December, as it seeks to regain its former share of the global oil market. The rise is less dramatic than the country’s leaders had predicted, but it is still a notable increase as former buyers return to the market.

an increase in the level of reinsurance coverage for shipments of Iranian crude oil. European banks are gradually showing more confidence in financing Iranian crude transactions. Iran has said it is targeting production of 4 million b/d in the new Iranian year, which started on 20 March.

In Iraq, oil output rose 30,000 b/d to 4.16 million b/d in March, largely on the back of a substantial rise in exports from the country’s southern terminals.

However, the increase in southernterminal oil exports was blunted somewhat by a decline in total volumes from the semi-autonomous Kurdistan Region, where vandalism and attacks continued to disrupt exports via the pipeline which transports crude from northern Iraq and Iraqi-Kurdistan to the Turkish Mediterranean port of Ceyhan.

Similarly, Angolan output in March was also up by 30,000 b/d to 1.80 million b/d, the highest production seen since December.

The largest fall in monthly output was posted by the UAE, where production slipped from 2.85 million b/d to 2.80 million b/d. The decline occurred on the back of ongoing partial planned field maintenance at the Murban field.

“Iran and Iraq have driven OPEC output higher in March, while Saudi Arabia has kept production steady since January”

The demand for Iranian crude has jumped, particularly from Indian and South Korean refiners. France’s Total, Spain’s Cepsa and Russia’s Lukoil have noticeably returned as customers, having emerged since the West lifted sanctions against Iran on 16 January.

Even more Iranian crude is expected to flow this month to Europe, buoyed by •

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43

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ob Sanguinetti assumed the role of CEO and Captain of the Port of Gibraltar in May 2014. Born and raised in Gibraltar, he studied at Oxford University and served in the Royal Navy for three decades, rising to the rank of Commodore. He commanded several Royal Navy warships and a multinational coalition task group before working at the Ministry of Defence in a number of strategic roles. Most recently he was head of intelligence at the UK’s National Operations Headquarters in North London.

46

•

OIL, GAS & SHIPPING MAGAZINE www.ogsmag.com

LNG is considered to be the ‘fuel of the future’.

Do you share this view?

Yes I do. While I do not consider it to be the only fuel of the future, evidence and trends out there suggest that it is a matter of when and not if LNG becomes a prime source of energy for propulsion and electricity generation in the shipping world.

LNG is already a proven and commercially viable solution, albeit currently only used in niche sectors.

In the shorter term, we will continue to see a combination of different solutions such as scrubbers and distillate fuels being used as more restrictions are introduced. But in the longer term, LNG is likely to be one of the few options that can comply with the increasingly restrictive national and international regulations on requirements for emissions of harmful pollutants, such as sulphur oxides, nitrogen oxides and carbon footprints.

At the Port of Gibraltar we are very excited at the prospect of developing the infrastructure for LNG bunkering in partnership with Shell over the coming months.

The cruise industry has been growing over the past 20 years. Do you foresee sustainable growth in the future?

There is certainly no sign of an imminent slowdown in this

• Interview sector. It is still considered to be a relatively ‘young’ industry and there are several reasons why one should be optimistic about the future.

The biggest opportunity appears to be in attracting newto-cruise customers. Secondly, larger and newer builds offer increasing capacity. There were seven new cruise ships in 2015 - another fifteen in 2016 and 2017 will see a substantial increase in passenger capacity. In addition, more local ports and destinations, and new onboard and ashore activities, together with growth in emerging markets such as Asia should see the passenger growth rate in the industry match or exceed the 7.2% annual average seen since 1990.

Here in Gibraltar, we seek to consolidate our position as a successful and popular cruise destination, where a cruise ship arrives into port within an hour of leaving the main shipping lanes, and the passengers can be enjoying the attractions or excursions within minutes of berthing.

Bunkering is a specialised sector with emphasis on safety standards. What advice could you give ports introducing bunkering to their shipping services?

Bunkering is an industry which has suffered from negative associations, particularly in light of the environmental impact of oil spills caused by vessel casualties losing their bunker fuels.

The fact that most of these issues are not directly related to or caused by bunker supply operations is something which is mostly overlooked when considering this. Any port looking to (or already undertaking) bunkering activities therefore has a strong incentive to have a bunkering regulatory regime which demonstrably shows the highest safety and environmental standards incorporated.

This will also assist in making the bunkering industry successful; in today’s world ship owners and operators will be loath to call at ports which are not associated with high standards.

How important is the environment in shipping?

As individuals, we all have an important role to play in striving for a cleaner environment. As an industry, we have a collective responsibility. This is made harder by shipping’s poor track record on environmental issues, so we must be seen to be exploring and seizing every opportunity to deliver cleaner, more efficient modes of transport.

While significant progress has been made in recent years there is still evidence of bad practice, such as vessels deliberately routed to avoid burning fuel in emission control areas (ECA), in turn maximising the time where they can burn cheaper fuel, containing higher amounts of sulphur.

Conversely, there is also plenty of evidence of responsible behaviour where cargo owners and shippers try to pick their vessels on the basis of sensible and accepted greenhouse gas emission performance criteria.

But, as a community, we need to be ambitious in our aspirations. Proactive action and industry wide agreements on voluntary targets are, in my view, a prudent way to avoid potentially unrealistic rules imposed by external regulators.

What more can be done by the shipbreaking countries in improving their reputation?

Shipbreaking is a global industry. The challenges facing the

wider shipping community regarding this activity therefore require a holistic approach if we are to see positive results. The shipbreaking countries need robust political and legislative action to protect workers’ rights and working conditions, whilst demanding and enforcing internationally acceptable shipbreaking practices.

Shipbreaking companies must make it mandatory for their workplaces to maintain minimum safety standards through a concerted campaign of awareness programmes and close supervision. This needs to be accompanied internationally by strict adherence to the likes of the Hong Kong convention and EU Ship Recycling Regulation by shipping companies, together with a commitment to place workers’ rights and the environment above profit, when choosing shipbreaking facilities.

What role does marketing play in promoting shipping, and how is this applied by the GPA? Marketing is a fundamental component of the strategy of anyone involved in the shipping industry. We operate in a hugely competitive environment against very tight margins and marketing one’s products or services is beneficial to both the supplier and the customer in identifying optimum solutions.

At the GPA we place marketing at the forefront of our business, following a three strand approach; advertising, attending and sponsoring high profile industry conferences and conventions, and, most importantly, direct engagement with ship owners and operators.

At the Port of Gibraltar we value our hard earned first class reputation as a centre of innovation and maritime excellence.

But we are by no means complacent – open dialogue with the shipping community allows us to better understand their needs, so that we may adapt and evolve in order to continue •

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providing the best possible service to ships calling at Gibraltar.

What key changes do you think the shipping industry will experience over the next few years?

The two key factors likely to drive transformation in the future are technology and the environment. No stones are being left unturned by the shipping industry in the drive to contribute towards a greener marine environment. We will continue to see advances in cleaner fuels, ballast water management, more efficient propellers and rudders, hull paints and waste heat recovery systems.

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In the longer term, in an age of aerial drones and driverless cars and trains, the most revolutionary, if not controversial, development could well be the emergence of unmanned and autonomous ships. While there are significant technological and socio political challenges to overcome, the benefits are clear and much of the technology already exists.

Your memorable maritime experience and favourite ship?

My (generic) memorable maritime experience is the thrill you experience as you pull into a port for the first time, be it on a

• Interview

small yacht or an aircraft carrier. Specifically, the excitement of steaming eastward through the Strait of Gibraltar during the morning watch, cup of coffee in hand, as you see the crouched lion silhouette of the Rock appear against the rising sun would be hard to beat!

As for favourite ship, it would have to be my two commands during my time in the Royal Navy – the Minehunter Berkeley and the frigate Grafton – a wonderful experience and privilege.

But I have to say that, as a proud Gibraltarian, I am extremely delighted to be back in my birthplace and contributing to the well-being and continued development of such a dynamic and vibrant port.

Paul González-Morgan Editor, Gibraltar Shipping Email: shippinggib@gmail.com Twitter: @ShippingGib Web: www.gibraltar-shipping.com

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oil outlook

PLATTS PRESENTS OIL OUTLOOK to us senate energy & natural resources commitee

Suzanne Minter, manager, oil and gas consulting for Platts Analytics, testified in April before the US Senate Energy and Natural Resources Committee in a hearing examining the challenges and opportunities for oil and gas development in different price environments.

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ummarising the events and conditions leading to the current situation, Minter drew attention to the “shale revolution” that has seen US natural gas production grow 25 per cent from an annual average of 58 Bcf/d (billion cubic feet per day) in 2010 to an annual average of 72 Bcf/d in 2015.

In 2012, she said, the technology that drove natural gas growth found its way into the oil space. Since January 2012 US oil production grew by 57% from 6.1 Mmb/d (million barrels per day) to reach a peak of 9.7 Mmb/d in April 2015.

“As I will reference during this testimony,” she said, “all energy production, be it natural gas, natural gas liquids or oil is entwined. For purposes of this testimony I will focus primarily on crude oil.”

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Turning her attention to prices, she pointed out that North American crude, generally benchmarked as West Texas Intermediate (WTI), fell 76% to reach a low of $26.05 in February 2016, after reaching a peak of $107.73 in June 2014.

“The first leg of this overall move lower was a precipitous drop in pricing from $107.73 to $42.03 that occurred from June 2014 to March 2015,” she said. “In a mere 250 days, prices fell 55 per cent. The rapidity and steepness of this price action caught many in the producing and investment community off guard and caused dramatic changes in producer behaviour and balance sheets.“

CAPEX

As a result of this price movement, she continued, producers

• Oil Outlook were forced to cut capital expenditure (CAPEX) plans dramatically, making average CAPEX cuts of 35% in 2015 as they reduced their drilling plans and slashed the rig fleet. As of April 2016, the US rig count stands at 443, an all-time recorded low, and down 80% from the all-time peak of 2,144 achieved in October 2014.

“The most amazing piece of this entire story though,” said Minter, “is that despite the annihilation of the rig count, US crude production has yet to show dramatic declines.” The US Energy Information Administration (EIA) estimates that US production peaked in April 2015 at 9.7 million barrels per day, and currently is estimated to be at 9.2 million b/d – a decline of a mere 500,000 b/d or five per cent. At the same time as they cut CAPEX, she said, producers were able to capture huge cost savings from the services sector and recognise impressive gains in technology.

She used the Eagle Ford Basin of Texas as an example (which accounts for 13% of US crude production). In October 2014, she said, the rig count in the Eagle Ford peaked at 209 rigs. At that time, the average initial production (IP) rate for a well in the Eagle Ford was 436 barrels of crude per day and the average time it took to drill a well was 15 days. If those 209 rigs had remained in the basin and continued to drill at the same rate, they would have ultimately produced 3.3 Mmb/d of crude in the Eagle Ford by 2020.

There are now only 49 rigs in the Eagle Ford, but those remaining are sitting on the best acreage, so the average IP rate has increased by 50% to 662 barrels of crude per day and average drill times have fallen by 25% to 11 days. At these rates, when recovery occurs, the Eagle Ford would only require 125 rigs to create the 3.3 Mmb/d by 2020 that had once required 209 rigs to produce.

DUC inventory

Platts analysis of rig data and company quarterly reports has revealed a significant shift in behaviour by US producers in the new, reduced CAPEX environment. It seems that not all wells being drilled are producing oil immediately.

“Producers with relatively healthy balance sheets are completing enough wells to hold production flat during 2016,” said Minter, “and are intentionally creating an inventory of drilled but uncompleted (DUC) wells that they will carry into 2017 in hopes of completing them in a higher price environment. This DUC inventory will have significant implications for production and the price recovery in the near to midterm.”

Platts Analytics estimates there are over 6,500 DUC wells in inventory as of December 2015, with approximately 2,500 in Texas alone. Assuming an average IP rate of only 500 barrels per day, if producers made the decision to complete all of those wells at one time, Texas alone could introduce 1.25 MMB/d of oil into the global market. This oil, with the potential to hit the market in a short period of time, is known as ‘spare capacity’.

Platts Analytics believes that in the current global energy producing community, the US has the greatest amount of spare capacity.

Producer motivation

The United States has an estimated 9,000 individual entities producing energy, and they all behave in their own best interest. As oil prices fall, producers keep producing as long as it makes economic sense to do so.

The independent US producer is unique in the global energy market because it is driven solely by individual profit. As a general rule, National Oil Companies produce for revenue, not

profit. The economic decisions that drive production in OPEC nations are therefore not the same as those of the independent US producer. The US producer has to purchase or lease the land it drills, while the NOC owns the land and often owns a refining complex that US companies must compete with in the global market place.

Aside from this difference, the revenues raised from energy fund the majority of these countries’ national economies.

Given that they are currently receiving only 25% of the revenues per barrel produced as they were as recently as June 2014, these countries need to create and sell more volumes at current low prices in order to keep their economies viable.

The recent surge in global energy supply has overwhelmed demand, but energy markets must balance eventually. Once that balance appears, natural demand growth will require additional production to be introduced back into the marketplace to meet demand.

In the near to mid-term, said Minter, the US producer will be the marginal supplier and price setter into the global market because the US holds the largest spare capacity.

“Despite the fact that energy production is an expensive undertaking, we currently estimate that the prices needed by the US producer to complete their DUC inventory may be much lower than our global competitors believe or would like it to be,” said Minter. “As previously mentioned, the DUC inventory is a result of wells that have been drilled, which results in ‘sunk’ costs of 40% of drilling costs. Therefore, a producer may decide to complete his well at lower prices than previously required or expected in order to recapture that ‘sunk’ cost and generate cash flows and revenue. While each producer may behave differently, it seems realistic that pricing in the mid $40-$50 per barrel range would bring incremental volumes back into the market place.”

Although there are many variables in the equation, Platts Analytics believes that due to spare capacity and the unique economic environment, the US producer may be best positioned to lead the recovery and bolster economic growth.

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LANGUAGE, LIVES & INTERNATIONAL LAW

While ship’s officers are required by law to understand a specified list of English phrases, lives continue to be lost at sea through non-compliance, says Stephen Murrell

I

nternational law obliges ship’s officers to be certified in maritime English. The International Maritime Organisation (IMO) made the regulations to save lives and avoid accidents at sea, but some national authorities bend the rules to allow officers who do not fulfil the IMO regulations to command ships. Other governments ignore (or don’t understand) the regulations and their vessels operate illegally.

IMO regulations on language learning, designed to save lives, are ignored. The accidents at sea continue.

Language is a serious maritime problem. Mistakes kill seamen and cause millions of dollars of damage. The IMO web site said that more than 100 people die every year because of problems with English communication. To help solve the problem IMO 54

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wrote the SMCP (Standard Marine Communication Phrases) and requires that certain categories of seamen must learn them.

The SMCP is a set of basic English phrases that equip seamen to communicate details of most maritime procedures and emergencies. The grammar is ingeniously simple. Speakers don’t even need to understand how to make the interrogative and the entire 103 pages can be memorized and used by people who don’t speak English. IMO published the SMCP then passed a series of laws requiring that all deck officers must learn them The SMCP was adopted by the 22nd Assembly in November 2001.

The SMCP was a necessary step to creating safer seas and if all seamen learn them, accidents will be reduced. However,

• Language & Law

most authorities ignore the spirit of the law and in some cases they ignore the law altogether. The result is that deaths and accidents continue at sea.

IMO law requires officers to be certified in the SMCP but the IMO does not specify what the certification should measure.

There are more than 197 authorities in the world and each decides how to measure ‘the ability to understand and use the SMCP’ in its own way. Different countries require their officers to understand different parts of the SMCP. If different ships are commanded by seamen who have learned different parts of the SMCP, this can lead to accidents, but there is no breach of IMO law as long as the flag state has certified the officer’s ability to use the SMCP.

Under the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1978, as revised 1995, the ability to understand and use the SMCP is required for the certification of officers in charge of a navigational watch on ships of 500 gross tonnage or more.

(Introduction to the Standard Marine Communication Phrases) Some nations ignore this requirement altogether. Most marine authorities with native English speaking crews ignore the regulations. This is the case in Australia, the UK and the USA. While it is true that the English required to pass their officer exams is of a higher level than that required to use the

SMCP, mariners from these countries never learn the actual SMCP terminology. This leads to situations where a poor English speaker can say and understand “Helicopter assistance required” but cannot understand the answer “Chopper coming”. This interchange was accredited to an Australian coastguard and a Chinese container transporter.

Some nations make more of an effort than others but without international agreement it is difficult to see how the world’s seamen will study the same parts of the English language or even the same language skills. The SMCP requires listening and speaking skills for radio communication, but in Italy cadets take a written exam in translating IMO documents into Italian!

The Italians have made more progress in standardising what will be measured to certify ‘the ability to understand and use the SMCP’. Messina Shipping commissioned a self-access DVD so their seamen could study the SMCP at sea, and introduced an in-house exam to certify the seamen’s language capability.

Finnaval has followed the same example. The Italian Ministry of Education has recognised the SMCP Proficiency Certificate, the world’s first officially recognised exam in the SMCP. Cambridge University Press published Safe Sailing CD-ROM SMCP training for seafarers, to teach seamen across the world.

The problem of inadequate English at sea is costing lives and money. (One of the causes quoted for the Costa Concordia disaster was language problems). Ships whose officers are not certified in the SMCP are breaking international law and it is possible to imagine a situation where an insurance company refuses to pay in the event of an accident, on the grounds that the crews are not certified in ‘the ability to understand and use the SMCP’. Obviously, some formal certification is required and until one is recognised, deaths at sea because of language problems will continue.

Stephen Murrell is a maritime English training expert and member of the SMCP Proficiency certificate who would be glad to exchange ideas and information about Maritime English teaching. smurrell@thetrainingcompany.org •

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Expander system The long term, cost-effective solution to pivot wear

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nybody who has owned or operated equipment will be aware of the problem of pivot wear. When a straight pin is installed in a pivot, no matter how close the initial tolerance is, there’s bound to be some movement between the pin and the lug ear hole. Over time, this movement causes wear, which commonly turns what was a round hole slightly oblong.

Eventually, this pivot wear will compromise the functionality and safety of the equipment, necessitating repair.

In the past, the only repair method available was welding and line boring to bring the hole in the pivot lug back to its original diameter and tolerance. The problem with welding and line boring, beyond the high cost and significant downtime, is that it’s only a temporary solution. The wear problem will repeat itself, meaning another weld and line bore will be required at some point. This is a pattern that will continue for the life of the machine.

“When you torque the fasteners, the tension washers push the expansion sleeves up the tapered part of the pin, thereby locking the system into the lug ears and eliminating the movement that causes pivot wear.

Problem solved – once and for all.”

The Expander® System is an alternative repair solution for pivot wear. It’s usually cheaper and faster than welding and line boring, but most importantly, it’s a permanent solution – not a stopgap measure. It’s a one-time repair that essentially lasts for

• Expander System

Compared to welding and line boring – the traditional method of dealing with pivot wear – Expander System is usually cheaper, faster and can be installed in the field, which minimizes downtime. More importantly, it’s also a permanent fix designed to last for the life of the machine.

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No More Line Boring

®

The Expander®System installs directly into worn pivots without the need for costly welding and line boring – even if holes are worn oval. Each assembly is designed to fit your specific machine make, model and position. The assembly pin-body is tapered at both ends, and when the fasteners are tightened, the tension washers force the expansion sleeves into the worn lug holes. The sleeves conform with the wear pattern to permanently eliminate the wear problem, so you get a perfect fit every time.

Stop endlessly replacing pins, and opt for a long-term solution that will expand your bottom line – The Expander®System.

See how it works

Contact Expander today to find the perfect-size pins for your oil, gas and drilling equipment.

www.ExpanderSystem.com The Global Leader in Pivot Engineering

Sweden: Expander System Sweden AB +46-(0)120-299 00

Germany: Expander Deutschland GmbH +49(0)611-97445707

USA: Expander Americas Inc. +1-888-935-3884

info@ExpanderSystem.com www.ExpanderSystem.com

• Expander System

Expander System eliminates pivot wear by locking in place a tapered pin through the use of slotted expansion sleeves.

the life of the machine.

“The standard expansion system consists of an assembly including a pin body that’s tapered at both ends, two slotted expansion sleeves, two tension washers and two fasteners,” explained company President Roger Svensson. “When you torque the fasteners, the tension washers push the expansion sleeves up the tapered part of the pin, thereby locking the system into the lug ears and eliminating the movement that causes pivot wear. Problem solved – once and for all.”

“To demonstrate our confidence in the product, we offer a 10-year, 10,000-hour warranty” Svensson founded Expander System in 1986. Soon after, the company was awarded the Nobel Prize for Innovation and Development. Expander System has been granted numerous

patents in the years since, as it continually works to improve the product.

“To demonstrate our confidence in the product, we offer a 10-year, 10,000-hour warranty on the locking mechanism of Expander System,” says Svensson. “But based on years of field testing and results from end users, we fully expect it to last much longer than 10,000 hours, even in the most abrasive environments.”

The Expander System is usually sold as an aftermarket part, but major machine manufacturers also use it as a factory “firstfit” OEM part for construction, mining, forestry and offshore oil and gas rig equipment. The products fit, or can be custommade to fit, every machine in the world – from the smallest to the largest, and any make, model or manufacturer.

For more information, a dealer locator or ordering instructions, visit www.ExpanderSystem.com •

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statoil Embracing challenges Statoil, the state oil company of Norway and the leading operator on the Norwegian continental shelf, is in a phase of international expansion, especially in subsea development, where the future is longer, deeper and colder •

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As a leading international energy company with operations in 33 countries, Statoil is well used to identifying and meeting the many challenges the oil and gas business presents. Building on more than 40 years of experience from oil and gas production on the Norwegian continental shelf, Statoil is committed to applying technology to create innovative business solutions.

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The company, headquartered in Stavanger, Norway and with approximately 23,000 employees worldwide, believes that competitive returns for its shareholders are best achieved through a values-based performance culture, stringent ethics and a code of conduct which promotes personal integrity.

Safe and efficient operations are Statoil’s first priority, and the company is renowned for its technical safety monitoring system and safe behaviour programme. Statoil also aims to meet the demand for energy, necessary for further economic and social development, while showing consideration for the environment and making an active effort to fight global climate change. It focuses on contributing to sustainable development via its core activities in each country in which it operates.

Statoil has grown alongside the emergence of the Norwegian oil and gas industry, dating back to the late 1960s. Today, the company is one of the world’s largest suppliers of oil and gas. In 1972, the Norwegian State Oil Company, Statoil, was formed, and two years later the Statfjord field was discovered in the North Sea. In 1979, the Statfjord field commenced production,

• Statoil development projects. Partner-operated fields represent a significant proportion of Statoil’s oil and gas portfolio. The portfolio ranges from development projects to mature fields.

The complexity of these requires detailed knowledge of the areas involved.

Johan Sverdrup

One of Statoil’s most ambitious and challenging projects is Johan Sverdrup, a gigantic field currently under long term development and with massive potential for both Statoil and for Norway. Johan Sverdrup is situated in mature acreage that has been thoroughly studied, and where the most central environmental aspects are that the development receives its power from land; that produced water will be purified and re-injected into the reservoir; and that cuttings drilled with oil-based liquid will either be brought ashore, or purified and discharged offshore.

“Statoil believes in a values-based performance culture, stringent ethics and a code of conduct which promotes personal integrity”

Start of the drilling operation of Johan Sverdrup field

and in 1981 Statoil was the first Norwegian company to be given operator responsibility for a field, at Gullfaks in the North Sea. Statoil merged with Norsk Hydro’s oil and gas division on 1 October 2007. The new company was given the temporary name of StatoilHydro, but changed its name back to Statoil on 1 November 2009. Norsk Hydro’s oil history stretches back to the late 1960s, when the company was a license holder in the giant Ekofisk discovery in the North Sea in 1969. Statoil has been one of the most important players in the Norwegian oil industry, and has contributed strongly to Norway’s development as a modern industrial nation. Today, Norway is one of the world’s most productive petroleum provinces and a test lab for technology development.

Statoil is the leading operator on the Norwegian continental shelf, and a company in an expansive phase internationally.

As the fields on the Norwegian continental shelf become increasingly mature, Statoil is actively seeking international opportunities to apply its expertise in offshore and deep water

Planning of Johan Sverdrup commenced in March 2012 and building and installation is due for completion in 2019.

Work in phase 1 is based on standard technology, though development will be demanding due to the size of the project. Even though the project is immense and somewhat daunting in terms of size at 200 square kilometres, Statoil’s previous experience of complex, major projects, as well as the company’s experience of smaller field developments with tough standardisation and industrialisation requirements, will prove to be most valuable here.

Statoil also has the support of its partners’ experience; and the goals set by the authorities for the NCS. Statoil and the industry possess extensive experience of seabed development solutions in this area. With ocean depths of 110 - 120 metres and good reservoir characteristics, development is therefore possible without having to resort to new, customised solutions – at least, not yet.

The first phase of the field centre includes a process platform, drilling platform, riser platform and accommodation platform.

The installations, which have steel jackets, are linked by bridges and stand in ocean depths of between 110 and 120 metres. The field centre will extend over approximately 700 metres. The accommodation quarters will contain 450 cabins.

At production start-up in the first phase of the development, planned for late 2019, total capacity will be between 315,000 and 380,000 barrels per day. Statoil expects to drill a total of 35 production and injection wells in connection with phase one.

A number of wells will be pre-drilled from 2016 to speed up production at start-up, which is planned for 2019.

Total first-phase investments will amount to NOK 117 billion (2015 value). These include a field centre and four platforms, wells, export solutions for oil and gas, plus power supply. The estimate also includes unforeseen costs and provisions for market adjustments. In addition, preparations will be made for increased oil recovery during the first phase.

The partners have chosen land-based power supply for the •

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Independent global consultants supporting our clients to improve their commercial performance and achieve better cost, quantity measurement and schedule predictability throughout the project lifecycle

“It’s all about adding value for our clients by reducing costs, regardless of whether it is through a small bespoke intervention or delivery of a major programme.” Chris Stops, Director, Turner & Townsend Energy

Depth of experience From Statoil’s first field, to the Sleipner platform, to projects today, we have been involved in more than 15 of Statoil’s major developments on the Norwegian continental shelf since 1980.

Our latest role is in support of the Johan Sverdrup field development, preparing major construction contracts packages.

For further details, a presentation or demonstration of how we can help your project achieve a more competitive and predictable outcome please contact Chris Stops. t: +44 (0) 7958 830308 e: chris.stops@turntown.co.uk www.turnerandtownsend.com

Driller at Johan Sverdrup field

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• Statoil

“Statoil is renowned for its technical safety monitoring system and safe behaviour programme”

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• Statoil Johan Sverdrup field in the first phase, which will reduce total climate gas emissions by 80% to 90%, when compared with a standard development procedure involving gas turbines on the NCS. In addition, energy efficient solutions are being given priority in order to reduce total energy consumption.

“Planning of Johan Sverdrup commenced in March 2012 and building and installation is due for completion in 2019” The oil and gas for export from Johan Sverdrup will be piped ashore. The oil will then be transported to the Mongstad terminal in Hordaland, while the gas will be transported via Statpipe to Kårstø in Rogaland – in a new 165-kilometre-long gas pipe – for processing and onward transport.

Once it becomes fully operational the Johan Sverdrup field may well turn out to be the most significant on the Norwegian continental shelf since the 1980s.

Subsea

Besides being a leading operator of innovative floating production platforms and production ships, Statoil has an enviable record in producing hydrocarbons via subsea (seabed) installations. Its goal is to maximize the production on the Norwegian continental shelf and lay the ground for further growth.

To achieve this, further technology development is being pursued along the lines of compact and environment-friendly solutions to improve recovery from the reservoirs, and allow long tie-backs to land and equipment for ultradeep water.

“Statoil aims to develop the elements required for a subsea factory by 2020” Once the equipment has been developed and installed, efficient intervention systems are essential for carrying out modifications and repairs – both in the well and on the seabed.

Dedicated high-capacity vessels for seabed intervention, modification and repair (IMR), light well intervention (LWI), and through-tubing rotary drilling (TTRD) have been developed to achieve fast response times. These in turn enable high levels of productivity and reservoir recovery.

Statoil is taking subsea longer, deeper and colder. Through innovative thinking and collaboration with partners and suppliers, Statoil aims to develop the elements required for a subsea factory by 2020—a process plant on the seabed making it possible to utilize remote-controlled transport of hydrocarbons at any offshore facility.

Future resources are further from land, at greater depths and in colder and harsher environments. The subsea factory will be vital to realise business opportunities for Statoil in these areas and help to realise its production goal of 2.5 million barrels of oil equivalent (boe) per day by 2020. Statoil believes that compact separation facilities on the seabed will be a key

to success in the Arctic or in deepwater areas like the Gulf of Mexico and Brazil.

Statoil’s offshore portfolio is well suited to the application of subsea production and processing. It operates 500 subsea wells and has a 25-year track record of subsea technology development, implementation and operation. It has already taken the first technological steps, making the world’s first complete subsea solution for separation and injection of water and sand from the Tordis wellstream, and has developed the first subsea facility for injection of raw seawater on Tyrihans.

Projects such as the oil-dominated multi-phase transport on Tyrihans and Snøhvit’s gas condensate transport are at the forefront in the development of multi-phase transport over long distances.

Shale

Shale resources have begun to transform the global energy outlook. Due to reserve additions from shales, global natural gas reserves are estimated by the International Energy Agency (IEA) to last around 250 years at present consumption levels.

According to the IEA, unconventional gas (shale gas, tight gas and coal bed methane) now makes up 60% of marketed production in the US and production estimates of tight oil in the US alone could exceed 1.4 million barrels per day by 2020.

For Statoil, shale and tight rock reservoirs are a key growth area that increases its long term reserve base. Statoil’s heritage as a pioneering company and its technological competence give it a strong foundation for its strategic ambitions in shale.

The development of shale and tight rock resources enables both local and global economic development, creating jobs and wealth at the local and national level, while also meeting growing world energy needs.

Statoil’s shale and tight gas and oil business began in the US through active partnerships in the Marcellus play along the eastern seaboard, the Eagle Ford play in south Texas, and its own operation of tight oil activities in North Dakota and Montana in the Bakken play. Shale and tight rock opportunities are in the early stages of development in many other parts of the world.

What about the alternatives? Statoil is leading the way in harnessing new energy sources, including carbon capture and storage, as well as wind energy. Carbon capture and storage (CCS) makes an important contribution toward reducing CO2 emissions, and Statoil is actively pursuing CCS in many areas.

It has stored CO2 on Sleipner Vest since 1996, and continues to be a champion for the development of CCS. New renewable energy is one of the most exciting growth areas in the energy market. Statoil is focusing on establishing a position in markets where the company has natural advantages, particularly within offshore renewable energy.

The world’s energy demands are such that oil and gas will be key energy sources for decades to come. At the same time, sustainability is becoming increasingly important. Statoil built its knowledge base on the development and production of oil and gas, and currently leads the world in energy efficiency and low CO2 emissions. The current focus is on continuing this position, combined with a gradual build-up in the field of renewable energy. But exactly how these competences should be used to serve the company best raises questions for the company to answer over the next few years.

Since Statoil was founded in 1972, the State has developed this premium asset. The stock exchange listing in 2001 and •

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“Shale and tight rock reservoirs are a key growth area that increases Statoil’s long term reserve base”

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the merger between Statoil and Hydro oil and gas in 2007 were important to create an international energy company.

The ability to handle risk, seize opportunities for growth and ensure future value creation are also linked to the company’s size. Safe and efficient operations, technology development, innovation and active exploration activity will remain the engines in Statoil’s development. But also in the future, structural adaptations may be instruments to develop global competitiveness.

In the next 40 years, Statoil will be moving into new and demanding territory. The answers to tomorrow’s challenges are not going to be easy, and will be shaped by the company’s capacity for adaptation, reflection and a continued willingness to discuss the alternatives and dilemmas it faces.

Strict requirements and high expectations for health, safety and the environment from the authorities and its stakeholders have given Statoil and the Norwegian oil industry a competitive advantage. The company sees no long-term conflict between the interests of its owners and society’s expectations. Statoil’s aim is to continue to deliver solid returns to its shareholders, while operating in a way that builds trust and understanding for what it does.

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Providing Oil & Gas solutions for tomorrow’s needs

EverSea provides integrated contract solutions to the following focus markets: • engineering, procurement, construction and installation of minimum facility platforms; • engineering, preparation, removal and disposal of decommissioned platforms; • offshore service and maintenance support for platforms facilities; • well intervention services and P&A of wells.

EverSea NV Part of GeoSea NV Haven 1025, Scheldedijk 30 . B-2070 Zwijndrecht, Belgium T +32 3 250 53 12 . F +32 3 250 55 41 info.eversea@deme-group.com . www.deme-group.com/eversea

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Member of the DEME-Group