ProjectsOGP Spring 2015 by Red Mist Media

Incorporating news from Projects Oil, Gas and Petrochemical database and Your Industry News - Spring Edition 2015

OFFSHORE VESSELS PAGE 10

OIL PRICE DECLINE PAGE 24

CHINA OIL DEMAND PAGE 25

PLUS:

Ferguson Group, 3M Oil and Gas, CMP Products, NOV Portable Power, J2, SMD, Osiris Projects, Seatronics and Ashtead Technology

PROJECTS FEATURED:

Julimar Gas Field Clair Ridge Field Vette Oil Field Offshore Area 1

EUROPE’S LEADING

8-11 SEPT 2015

TECHNICAL E&P EVENT

ABERDEEN, UK

SPE Offshore Europe CONFERENCE & EXHIBITION

HOW TO INSPIRE THE NEXT GENERATION PEOPLE • TECHNOLOGY • BUSINESS MEET 1,500 EXHIBITORS FACE-TO-FACE DEVELOP GLOBAL BUSINESS AT 34+ INTERNATIONAL PAVILIONS PARTICIPATE IN 10+ FREE KEYNOTE CONFERENCE SESSIONS ACCESS NEW TECHNOLOGIES ACROSS THE E&P VALUE CHAIN LEARN MORE IN THE DEDICATED DEEPWATER ZONE

“

Fantastic range of exhibitors with many very interesting stands. Overall great atmosphere and lots of networking opportunities! DIRECTOR, PWC

Organised by

PROJECTSOGP

CONTENTS

Welcome

page

CLIENT FEATURE Ferguson Group 3M Oil and Gas Osiris Projects

ProjectsOGP Magazine is proud once again to be a media partner with the Australasian Oil and Gas Exhibition. We have also partnered with Ocean Business for the first time, and have our magazine available to read at both shows.

04 06 08

NEWS IN DEPTH Offshore Vessels

In this edition, we are focusing on offshore projects in the UK, Oceania, Africa and Norway. Our key projects in focus are the Clair Ridge, Julimar, Offshore Area 1 and Vette Field. We also have some excellent news in depth reports on Offshore Vessels and the recent oil slump, along with an article on Chinaâ&#x20AC;&#x2122;s oil demand.

PROJECT PROFILES

Julimar 14 Clair Ridge 16 Vette 18 Offshore Area 1 20

EUROPE NEWS

REPORT

Oil Price Decline China Oil Demand

I would like to thank all of our clients for their continued support, with 3M Oil and Gas, Ferguson Group, CMP Products, NOV Portable Power, Ashtead Technology, SMD, Ashtead Technology and CRU Group all providing excellent features and advertisements.

24 25

CLIENT FEATURE CMP Products Ashtead Technology SMD

26 28 29

GLOBAL PROJECTS

ON THE MOVE

FINANCE NEWS

I would also like to thank all of our partners, and look forward to working with you all again in the near future.

Editor: John Morrison Editorial team: Ioannis Tzelepis, Louise Douglas & Chris Watt

FEATURES

Design and production: Louise Douglas

OFFSHORE VESSELS: AN INCREASE IN DEEPWATER PROJECTS PUTS PRESSURE ON THE OFFSHORE VESSELS INDUSTRY.

OIL PRICE DECLINE: A TOUGH YEAR FOR THE OIL INDUSTRY BUT WILL 2015 BE AS BLEAK OR BOOST RECOVERY?

Advertise: john.morrison@redmistmedia.com t: +44 (0) 1224 582902 ProjectsOGP Magazine published by: Red Mist Media Ltd INTERKAB House, Links Place Aberdeen, AB11 5DY, UK t: +44 (0)1224 582902 e: info@redmistmedia.com w: www.redmistmedia.com

REACHFURTHER

With our range of services and products including online marketing, advertising, brand awareness, industry news and business intelligence. to find out more: www.redmistmedia.com +44 (0) 1224 582902 info@redmistmedia.com

www.projectsogp.com - AOGEdition Edition2015 2014 www.projectsogp.com - Spring

CLIENT FEATURE

FERGUSON GROUP, OVER 30 YEARS PROVIDING ACCOMMODATION SOLUTIONS Ferguson Group celebrates great triumphs in building and assembling modular complexes for offshore workers

orking offshore often takes place in harsh environments, and it is important that workers are housed in high quality accommodation. There are particular guidance standards that set out the basic requirements for offshore living. The most obvious are sufficient bedding for each individual, adequate storage space, no overcrowding and reasonable privacy.

In addition, a fresh water making plant, sewage collection system and power distribution were required. Stairs and walkways to access the modules, and escape stairs were also fabricated in their Inverurie manufacturing plant. Ferguson’s field services team travelled offshore to carryout hook up, commissioning and client acceptance testing of the complete complex.

But these are only the most basic needs. There should be a medical facility to assess and treat injuries, laundry facilities and some kind of recreational area, usually a gym and TV lounge to help workers unwind.

Gary Wilson:“This was a complete accommodation solution for our client. In addition to the two story complex, we also supplied a power distribution module, reverse osmosis water making and sewage collection facilities. We channelled assistance from all divisions of our group to meet our delivery that was just six weeks from order placement.

There are logistic considerations too. Assembling any kind of shelter, be it a workspace or accommodation space, has to be done efficiently, in a limited space, with the utilities hooked up. Gary Wilson, Managing Director, UK Business Unit, Ferguson Group has extensive experience of working with modular products. He understands that the health and welfare of offshore workers is of paramount importance. Ferguson Group recently completed a 16 module 32 person accommodation complex to be located on the Helwin Beta Platform in the North Sea off the German coastline. Once assembled, it would be a two story block, containing galley, mess, recreation rooms, gymnasium, offices, meeting rooms and accommodation on the top floor.

“Early in the project we made the decision to ‘trial assemble’ the complex at our Kintore facility. This allowed us to speed up the assembly process offshore. This trial assembly generated much interest from our colleagues as they had never seen a completed accommodation complex before. Following our client inspection we ran a guided tour for staff to view before the complex was dismantled and sea-fastened ready for shipping.” The complex was dispatched with a crew of specialist field services technicians who hooked up the mains distribution, power, water, HVAC and sewage systems quickly and efficiently. Gary Willson:“This was a real team effort and a new way of working for us. We have over thirty years’ experience of building and assembling modular complexes, and it is a testament to our staff on our ability to complete this project in such a short timescale, given the added complexities of the additional ancillary items we also supplied as part of the overall project.” Ferguson Group is now busy managing other builds; both large and smaller.

Ferguson Group, accommodation complex

www.ferguson-group.com

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Connecting Environments Globally

AUSTRALIA

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

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

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

Pluto Platform, Australia

G/0175/15

Ferguson Group Australia Pty Ltd 16 Alacrity Place, Henderson WA 6166 Tel: +61 (0)8 6144 0100 Contact: info@ferguson-group.com.au www.ferguson-group.com

CLIENT FEATURE

3M PROTECT CABLE TRAYS AGAINST HYDROCARBON FIRE Design Considerations for Protection of Cable Trays against Hydrocarbon Fire

his year marks the 25th anniversary of the Piper Alpha disaster in which 167 men died. More recently, tragic incidents at oil and gas facilities in the US, Argentina, Venezuela and Japan have served as a timely reminder of the devastating human, financial and ecological impact of a fire. These events highlight the need for fire safety to be given prime consideration.

related property loss in the petroleum and petrochemical industries.” According to API 2218, “The principal value of fireproofing is realised during the early stages of a fire when efforts are primarily directed at shutting down units, isolating fuel flow to the fire, actuating fixed suppression equipment, and setting up cooling water streams.”

When a fire occurs at a refinery, offshore facility or petrochemical plant, the electrical systems which serve critical areas such as control rooms, process equipment, ventilation, sprinklers, alarms and other emergency systems must remain operational. In particular, cables which ensure the activation of emergency shut down valves (ESDVs) must be adequately protected in order to isolate the flow of fuel to the fire, preventing further escalation of fire and explosion.

A number of options are available to operators for providing hydrocarbon fire protection to cable trays including calcium silicate boards, intumescent and ablative coatings, ceramic fibre blankets and endothermic mats. Each of these materials has different properties which operators should evaluate in order to select the most appropriate system for the requirements of their specific application.

The fire protection of electrical raceways or cable trays that act as conduits for cables supporting these process critical functions is therefore of vital importance to operators. As well as mitigating against the financial implications that loss of property and disruption to ongoing production brings, a robust, well designed fire protection system can prevent catastrophic loss of life and devastating environmental impact. A good starting point when considering the specification of such systems is the American Petroleum Industry (API) 2218, Fireproofing Practices in Petroleum and Petrochemical Processing Plants, which offers guidance for, “selecting, applying, and maintaining fire proofing materials that are designed to limit the extent of fire-

Design Considerations When specifying fire protection systems for for cable tray applications, specifiers should consider a number of criteria, including: • • • • • •

Maintain circuit integrity under fire Ampacity derating System flexibility requirements System weatherability requirements Weight load capacity Total system installation cost

All fire-resistant systems should be tested in accordance with industry standards in order to ascertain how the system will perform when subjected to a high intensity hydrocarbon fire. API 2218 recommends UL1709 (or functional equivalent) as the primary standard for hydrocarbon fire testing. UL1709 reaches 1100°C (2000°F) within 5 minutes, and maintains that temperature for the duration of the test. API 2218 also recommends that critical wiring and control systems be protected for 15 to 30 minutes to UL1709 or equivalent testing If the control wiring is used to activate emergency systems during a fire. A reputable materials supplier will be able to supply appropriate documentation to validate such testing.

3M Interam EMat taping

Ampacity derating refers to the reduction of a cable’s ability to conduct electricity and can be tested through the use of IEEE 848 Standard Procedure for the Determination of the Ampacity Derating of FireProtected Cables. The higher level of insulation provided to a cable, the less current it can conduct without risk of damage from overheating. Therefore, if a cable is

www.projectsogp.com - Spring Edition 2015

CLIENT FEATURE derated by 40% it can only be used to conduct 60% of its ambient capacity. This can have major implications on design cost, footprint and overall system weight. System flexibility: The choice of fire protection system should reflect the existing maintenance regime and possible requirements for future cable alterations. A more fixed system will be difficult to re-enter for inspection and upgrade of cable trays. System weatherability: The location and level of exposure of a cable tray can vary greatly as can the weatherability performance of fire proofing materials. Systems exposed to high levels of liquid or vapour may require additional surface protection such as a top coat or surface cladding. UL 1709 testing include a standard set of exposures for weatherability and chemical tolerance as part of its normal testing protocol. Weight load capacity of cable trays will have an influence on the weight, and therefore type of fire proofing materials which can be applied. Total system installation cost should be evaluated based on the total material costs, labour and installation costs, expected life cycle and the associated maintenance and replacement costs. When upgrading existing facilities, disruption to ongoing operations as a result of system installation should also be a key consideration.

3M™ Interam™ Endothermic Mat 3M, the diversified technology company, has developed 3M Interam Endothermic Mat (or ‘E-Mat’) material that achieves hydrocarbon and jet fire protection for a range of applications. E-Mat is a flexible material that provides a uniform covering which, when exposed to high temperatures, releases chemically-bound water to cool the outer surfaces of the wrap material and significantly retard heat transfer. 3M has advanced fire protection technology that offers outstanding performance in many fire scenarios including large hydrocarbon pool fires in accordance with UL 1709 (ASTM E 1529). Using endothermic technology, E-Mat helps to prevent the transfer of heat from the exposed side to the protected items via a chemical reaction, which absorbs the heat energy. E-Mat’s flexible, space-saving construction allows ease of installation for protection to critical areas of all types including cable trays, conduit, equipment shrouds and other electrical systems for up to three hours in intense heat. The endothermic nature of the product also allows heat from normal operations to dissipate, reducing any ampacity derating of the cables. E-Mat can be used for both interior and exterior applications and is designed to endure harsh environments with virtually no maintenance. The product is also re-enterable and

can be removed and reinstalled for quality inspections or future refits. Because of its flexibility, engineers can use E-Mat to meet fire protection requirements in nearly any area and along virtually any wall, helping to reduce the need to make revisions to existing plans. This represents a significant cost-saving and timesaving benefit for both installers and designers.

Case Study – Midwest Refinery During the late 1990s at an oil refinery in the US Midwest, a pipe containing combustible material burst, resulting in a fire plume 15 feet above ground. The fire’s intense heat threatened to breech a nearby tank within the refinery that contained hundreds of gallons of hydrofluoric acid. Immediately recognising the seriousness of the situation, plant employees sought to move the acid to another tank away from the fire. A cable tray containing critical control circuitry required to send diverting signals to valves that had been exposed to the fire. This circuitry needed to stay operational to allow refinery employees to safely transfer the acid. Fortunately 3M E-Mat had been installed to protect the cable tray, helping to reduce the danger to employees and nearby residents. The emergency electrical circuitry protection enabled refinery personnel to drain the tank in 30 minutes using remote controls. After the tank was drained, the fire continued to burn for over three hours before finally being extinguished. The following day, the contractor that had installed the E-Mat inspected the cable trays and found they had suffered no damage as a result of the fire. Had the tank been ruptured and its contents released into the atmosphere, as well as injuries to refinery workers, potentially hundreds of residents in the surrounding community would have been at risk of harm. After material repairs, the refinery was able to return to its pre-fire operating capacity within four days following the fire.

Looking Forward 3M E-Mat has been used extensively around the world for over 30 years and is ideal for effective fire safety solutions for both offshore and onshore energy environments. As a major hazards industry, reducing the number of dangerous occurrences and improving safety standards should be key priorities. The continuous development and application of new technologies that can improve safety performance is therefore vital.

www.3moilandgas.co.uk

www.projectsogp.com - Spring Edition 2015

CLIENT FEATURE

INNOVATIVE NEW SURVEY PLATFORM d’ROP Seabed survey company Osiris Projects launches its innovative new survey platform d’ROP

eveloped by Osiris Projects, the dynamic Remotely Operated Survey Platform d’ROP has the potential to revolutionise survey productivity in shallow water tracking and inspection applications. In recent years there has been a significant increase in the requirements for cable depth of burial surveying in coastal areas, where compact ROVs struggle with the environmental conditions and work-class ROVs add significant expense. The idea behind the d’ROP is simple; to provide a compact, stable platform for remote survey in dynamic coastal environments. Osiris Projects MD Andy McLeay explains: “The system is effectively a compact high powered work class ROV platform with all the expensive, complicated bits that we don’t need for our survey tasks stripped off; no vertical thrusters, simplified ‘handsoff’ deployment and close to fully automated operation. What makes the d’ROP unique is the inherent simplicity of the system without any compromise in functionality”. Although this type of design is a new venture for Osiris Projects, the company benefits from the backing and expertise of parent company Bibby Line Group and sister company Bibby Offshore. Headquartered in Liverpool and employing over 6,000 people, the group has built on the strong reputation of the shipping company founded over 200 years ago. Osiris Projects was acquired by Bibby Marine in 2012 and has since doubled in size with further plans for expansion. Innovation has always played an important role in Osiris Projects which has almost 20 years’ experience in providing specialist seabed survey services to clients from a range of industries. The company has recently

launched its 5th custom-build vessel ‘Bibby Athena,’ the sister ship to the successful ‘Bibby Tethra’ launched in 2011. The d’ROP is designed initially for exclusive operation from Bibby Athena and it is anticipated that the pairing will create an unbeatable package. Deployed vertically through the vessel’s moonpool, the system relies upon the support vessel for forward propulsion, a bespoke heave-compensated umbilical winch and combined LARS for its vertical control with the on-board thrusters maintaining heading and fine adjustments to the lateral position. Maintaining a fixed heading and altitude in relation to a survey line, cable or pipeline, this provides exceptional control and stability when compared to traditional mid-size ROV systems. Providing 100% more thrust than an equivalent-sized ROV, the d’ROP’s ability to hold station allows operation at either a slow speed or stationary for depth of burial surveying. Osiris Projects benefits from a diverse client base and a history of serving internationally recognised oil and gas clients including Shell, Eni, Saipem, BHP Billiton and Perenco. With an equally impressive background in renewables, the company is well-placed to translate ideas across industries, with the d’ROP serving as just one example. The unique design combines proven principles from existing ROVs, ROTVs and methods from the modern day dredging industry with off-theshelf components to ensure maintenance simplicity. Whilst the system was designed primarily for precisiontracking of buried cables and pipelines the d’ROP can accept multiple sensors simultaneously, including multi-beam echo sounders, magnetometers and side scan sonars, opening up potential applications. Andy continues: “The beauty of this system is its assembly from proven components and has the flexibility to support virtually any survey sensor. It can be considered as an extension of the survey vessel as it allows us to deploy sensors where they are needed for maximum effectiveness as water depth increases or environmental conditions deteriorate.” Osiris Projects have a number of interesting developments to keep them busy in 2015, including an exciting announcement at the end of March that will see a strengthening in their relationship with Bibby.

Osiris Projects d’ROP image

www.osirisprojects.co.uk www.projectsogp.com - Spring Edition 2015

Introducing the d’ROP

A revolution in coastal ROV survey

Cable Tracking & Inspection - Pipeline Tracking & Inspection - Depth of Burial Survey - UXO Survey

d d

eveloped by Osiris Projects, the d’ROP system has the potential to revolutionise productivity in shallow water tracking and inspection applications. ’ROP is a dynamic Remotely Operated Survey Platform uniquely combining existing, proven technology to provide the performance of a work-class ROV at a fraction of the cost. For precision tracking and survey in challenging coastal environments, join the d’ROP revolution.

www.osirisprojects.co.uk | enquiries@osirisprojects.co.uk | +44(0)151 328 1120

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NEWS IN DEPTH

OFFSHORE VESSELS

Offshore Vessel

Future challenges and driving forces concerning the offshore vessels market By: Ioannis Tzelepis

n the last decade, the oil and gas industry has seen significant growth globally, stemming from high crude oil prices and enhancements in offshore drilling technology. The high profits derived during this era nurtured the offshore market and especially allowed companies to launch previously unviable deepwater projects. A by-product of this development was the thriving offshore vessel market, which except for a period of distress following the global financial crisis and Macondo Blow, saw a robust growth. The offshore support vessels or OSVs, widely used in the marine industry, became a vital component for the hydrocarbons sector, providing logistic services along with various other supporting activities including platform support, anchor handling, standby facility and rescue.

“

On top of that, the shale gas revolution, which has initially negatively impacted the offshore market, due to having started from onshore, gave a further boost to the vessels market with the launch of the latest offshore fracking technologies. In late 2013, fracking was reported to have resulted in a production increase of up to 230% from Eni’s Kitina field, offshore the Republic of Congo (Brazzaville), where the technique was employed to revive under-performing sandstone reservoirs.

Vessel supply expected to increase by 45% over the next three years

Additionally, major players begun focusing more on frontier licenses, which required fleet renewal and a concentration of funds heading towards deepwater stimulation vessels and light well intervention vessels for subsea fields, in order to reduce costs and ensure health and safety measures are met. According to Statoil, to maintain current production levels on the NCS toward 2020, it is vital to secure an efficient rig fleet adapted

to the assignments. Sustainable cost competitiveness, drilling efficiency, and sufficient rig capacity are key all factors.

”

Moreover, the customer oriented business strategy of the big players in the industry built solid foundations, as the development and construction was mostly based upon the individual needs and criteria of the client and the specific features of its offshore assets. An example is the pioneering new walk to work vessel, due to be delivered in 2015. This is a new type of offshore maintenance support vessel under construction at Royal Niestern Sander Shipyard by Wagenborg for Nederlandse Aardolie Maatschappij (NAM) and Shell UK. This innovative type of vessel has been developed in a way that allows it to be operated

www.projectsogp.com - Spring Edition 2015

NEWS IN DEPTH manned and unmanned in remote areas, performing frequent journeys to and from the platform, as many of NAM and Shell UK’s oil and gas platforms in the North Sea do not have a permanent crew or helicopter pad. In general, the market has seen major technological progress over the years, launching a new era of fleet renewals for many major players. On top of that, positive predictions regarding constant, increasing drilling activity instilled investors with further confidence, boosting a huge market growth, which led to the current situation of oversupply and the phenomenon of many vessels still remaining without signed contracts. Under these new market conditions the industry is expected to face some significant challenges and there are many influential factors that will determine the future. First of all, the key driving factor will be the increase in offshore exploration and production activities, as the demand for offshore vessels will rise, in order to cater for different types of support vessels. Specifically, constant growth in Asia-Pacific where the offshore support vessel market has been in huge demand, due to increased shallowwater exploration activity mainly focusing in Southeast Asia, which is a crucial region that could stimulate contractual activity. However, the regional deep and ultra-deepwater market will remain the aim for most companies, this is due to the higher needs for offshore support. Europe is the key region in these depths and the demand is driven primarily by trunk and control line installation, which is expected to drive a wave of activity in addition to significant demand for SURF installation. In Africa, a potential growth could be attributed to the aggressive exploitation of reserves across the deepwater regions of Nigeria and Angola, or the shallow water basins of Egypt and Libya. On the other hand, it is essential to see an increase in the day rate cost of the vessels like AHTS and PSV, as this will lead to an increase in market size of offshore vessels. For example, Anchor Handling, Towing and Supply Vessel (AHTS) is the major vessel type for the offshore support vessel market which will dominate the OSV market in the next few years and has been specifically designed for deepwater and frontier licenses, which were the driving force for the market. Furthermore, a rise in the offshore rig count also increases the market for offshore support vessels. With the day rates for the most advanced ultra-deepwater rigs peaking at US$650,000 in 2014 and now estimated at a range of US$375,000-US$500,000, the offshore rig actual market rate is gradually decreasing. As Transocean CFO Esa Ikäheimonen clearly stated,“It is going to be a very challenging market place for the next 12-18 months, as people will retire some of the older assets and typically deepwater and midwater assets will be going.”

Offshore Vessel in harbour industry is the efficient control of the fleet renewal programmes, as vessel supply is expected to increase by 45% over the next three years, as well as finding a balance between the high specification vessels needed for remote areas and the lower cost vessels deployed in shallow waters. In the last few years, the trend in newbuilds saw a shift towards high cost assets capable of operating in frontier environments, such as the Barents Sea, while higher demand still stem from shallow waters. This contradiction combined with the progress of the booming onshore shale developments have led to a waste of capital. In general, the global fleet of low specification vessels have always given a push to the market and even when faced with the challenge of low utilisation rates, showed a high utilization rate by being able to engage in other markets, such as civil marine works. The current market conditions have created a new framework under which the offshore vessels market needs to adjust. With Transocean’s stock down 25 percent in the past year and Seadrill also down 14 percent, the offshore drillers’ shares have been underperforming during 2014. Rig rates have seen a sharp fall-off, while oil companies reduce capital spending, in order to save capital for dividends. According to DNB Markets, AHTS rates are forecasted to remain flat during 2015, with an increase of 5% expected in 2016. The course of the offshore vessels industry will undoubtedly depend on further project delays, Russian sanctions that could influence the Kara Sea drilling campaign, low oil prices and falling drilling demand. All these factors will play a significant role in the establishment of high utilisation levels and the effort to support an increasing day rate environment.

Other factors that could dictate the stability of the

OTC Edition www.projectsogp.com Edition2014 2015 www.projectsogp.com -- Spring AOG

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PROFILE

PROJECT PROFILES highlighting major projects

JULIMAR PAGE 14

VETTE PAGE 18

CLAIR RIDGE PAGE 16

OFFSHORE AREA 1 PAGE 20

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PROFILE

JULIMAR Julimar Gas Field Project image by Apache Corporation

PROJECT PROFILE DETAILS The Julimar Gas Field, discovered by Apache and Kuwait Foreign Petroleum Exploration Co. (KUFPEC) in 2007, is located in the WA-356P exploration permit in the Carnarvon Basin offshore Western Australia. In 2009, Apache and KUFPEC joined with Chevron to develop the Wheatstone LNG hub. Apache and KUFPEC agreed to supply gas from the Julimar to become foundation equity partners in the Chevron-operated Wheatstone LNG project. The Julimar Development Project is expected to unlock in excess of 2.1 trillion cubic feet of sales gas from the Julimar and Brunello fields generating net sales to Apache of approximately 140 million cubic feet per day (MMcfd) of LNG (1.07 MMtpa), 22 MMcfd of sales gas into the domestic market and 3,250 barrels of condensate per day. In December 2014, Apache Corporation agreed to sell its 13-percent interest in the Wheatstone LNG Project along with accompanying upstream oil and gas reserves, including its 65-percent interest in the Julimar/Brunello offshore gas fields and the Balnaves oil development, to Woodside Petroleum Limited.

OPERATORS Woodside Energy is the recent Operator of the Julimar Project, after purchasing Apacheâ&#x20AC;&#x2122;s interest in December 2014. Woodside now holds 65% operational interest in the project. Kuwait Foreign Petroleum Exploration Company (Kufpec) holds the remaining 35% interest in the project.

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PROFILE

PROJECT UPDATES Julimar Project Development The Julimar Development Project is to consist of subsea gas production wells, which are drilled from three drill centres and two satellite locations. Each of the wells will be tied into a subsea manifold. The manifolds will be connected using intra-field flowlines and linked to the offshore Wheatstone platform by twin raw gas production lines. The Julimar Development Project is expected to unlock in excess of 2.1 trillion cubic feet of sales gas from the Julimar and Brunello fields generating net sales to Apache (Operator of the project) of approximately 140 million cubic feet per day (MMcfd) of LNG (1.07 MMtpa), 22 MMcfd of sales gas into the domestic market and 3,250 barrels of condensate per day. In December 2014, Apache Corporation sold its 13-percent interest in the Wheatstone LNG Project along with accompanying upstream oil and gas reserves, including its 65-percent interest in the Julimar/Brunello offshore gas fields and the Balnaves oil development, to Woodside Petroleum Limited. The purchase price of the binding transaction was US$2.75 billion. The transaction, which has an effective date of June 30, 2014, is expected to close in the first quarter of 2015 and is subject to necessary government and regulatory approvals and customary post-closing adjustments. Since the transaction announcement the company has recently contracted Ezra Holdings Limited’s Subsea Services division for subsea construction operations, valued in excess of US$105 million.

CONTRACTS EMAS AMC secures construction contract

subsea

Ezra Holdings Limited’s Subsea Services division, EMAS AMC, has secured a subsea construction in Australia valued in excess of US$105 million. The awarded scope of work includes project management, engineering, transportation and subsea installation of an electro-hydraulic steel tube umbilical, two heavy lift subsea manifolds, flying leads and jumpers as well as the procurement, fabrication, transportation and installation of diverless tiein spools for the Julimar Development Project offshore Australia. Project Management and Engineering is to commence immediately with offshore execution scheduled to start in 1Q2016, utilising the heavy lift and multi-lay deep water offshore construction vessel, the Lewek Constellation.

Atlas contracted for drilling services at Rosella E01 well Metgasco has selected Atlas Drilling Services, a Titan Energy Services Company, as its drilling contractor for the Rosella E01 well. Atlas was chosen from five drilling companies that participated in a tender process, on the basis of criteria that included cost, safety, rig capability and reliability.

A large amount of contractors have all been working at different stages on the Julimar Project. A variety of contracts have been awarded throughout the process of the development. Some of the major contractors include: J P Kenny, which was awarded the front end engineering and design contract for the project; GE Oil & Gas won a US$150 million contract to provide subsea equipment for the project. Allseas Construction Contractors won a Pipelines Transport and Installation contract from Apache and Subsea 7 won a Subsea Equipment Transport and Installation contract. Other contractors include; Atlas Drilling Services, Atwood Oceanics, Bredero Shaw, Bumi Armada, Oceaneering International Services, Technip and finally Ezra Holdings Limited’s Subsea Services division. The development is estimated to take 20 years to complete with first gas expected in 2016. All major tender packages for the Project have now been awarded and the procurement of all major equipment (subsea pipelines and manifolds) is well underway. The installation of the equipment and drilling of the development wells are expected to be completed in 2016.

Julimar Gas Field Project image by Apache Corporation

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PROFILE

CLAIR RIDGE Clair Ridge Oil Field image by Amec Foster Wheeler

PROJECT PROFILE DETAILS Clair Ridge Field is located 75 km west of the Shetland Islands in 150 m of water and extends over an area of 220 km². Clair Ridge is the second phase of development of the Clair field which, with an estimated eight billion barrels of oil in place, is the largest undeveloped hydrocarbon resource on the UKCS. Clair was discovered in 1977, but challenging reservoir characteristics and the technological limits of the time meant it was the mid-1990s before the field saw extensive drilling and 2001 before BP and partners approved a development plan. Targeting the 300 million barrels of recoverable reserves believed to be held in the Phase I area, BP and partners brought the field onstream in 2005 with the first fixed offshore facility to be installed in the west of Shetland area. Horizontal drilling and high-quality seismic imaging have both played an important role in BP’s ability to tap the reservoir’s complex geology. Clair Phase 1 had produced more than 100 million barrels by October 2014. Clair Ridge will see the world’s first deployment of BP’s enhanced oil recovery technology LoSal®, a water injection method that is expected to deliver an additional 40 million barrels of oil.

OPERATORS BP Exploration Operating Co holds a 27.6215% interest in Clair followed by; Britoil plc (BP) 0.98%, Conoco Phillips (U.K) 24.0029%, Chevron North Sea Limited 19.4225, Enterprise Oil 18.6831% and Shell Clair UK has a 9.2900% interest.

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PROFILE

PROJECT UPDATES Clair Ridge Project Development The Clair Ridge Field Phase 2 is an ongoing project which is currently being developed and designed for production to continue for as long as 2050. The project primarily involves the installation of two bridge-linked platforms at a water depth of approximately 140m, the drilling of 36 wells (26 producing wells and 10 water injectors), and a tie-in to the existing Clair Phase 1 export pipeline system. These platforms will include a drilling and production platform. BP chose to extend the Platform Drilling Services contract with Odfjell Drilling for a further 4 years in December 2014, by declaring two 2-year options. This brought the contract to a renewal date in December 2018. In addition, BP now has one remaining 2-year option. The installation of the DP and QU steel jackets weighing 22,300t and 9,000t respectively was completed in August 2013, while the topsides are expected to be installed later on in 2015. The value of the 4-year extension is estimated at US$165 million. Not long after this development the construction of the modular topsides at the Hyundai shipyard began to take longer than expected. Therefore, the start-up of BP’s US$6.8 billion twinplatform bridge-linked Clair Ridge project West of Shetland was unfortunately delayed. The Initial drilling works for the project include the pre-drilling of seven wells using an eight-slot subsea template with the help of a semi-submersible drilling rig. The remaining wells, on the other hand, will be drilled by the DP platform, over a 12 year period.

NEWS IN BRIEF CONTRACTS AGSL selected to provide platform software management BP has selected the Asset Guardian Solutions Ltd. proprietary software management platform Asset Guardian for the Clair Ridge project. BP will use the Asset Guardian toolset to improve the performance and security of the process control software that it will use throughout the Clair Ridge project, and to operate assets associated with the Clair Ridge field development when it is fully operational. West of the Shetland Islands offshore Scotland, the project will feature two bridge-linked platforms and new pipeline infrastructure to connect to processing facilities on Shetland. The development is the first sanctioned largescale offshore enhanced oil recovery scheme to use reduced salinity water injection (LoSal EOR) to extract a higher proportion of oil over the life of the field.

Amec Foster Wheeler to provide hook up and commissioning services Amec Foster Wheeler has been appointed by BP and its co-venturers, Shell, ConocoPhillips and Chevron, to deliver the hook up and commissioning services (HUC) for the two new Clair Ridge platforms. The work, which is scheduled to run through to March 2016, is valued at £68 million.

Recently BLOBA Glasgow Aluminium Company successfully installed an accommodation module to be used on the BP Clair Ridge project. The Bellshillbased Alphastrut decking has saved BP around 54 tonnes in weight following the completion the seven figure installation deal. Construction of the 3,500 tonne, six storey living quarter module was carried out at Hyundai Industries’ yard in Korea in December 2014. All oil produced at the field will be exported to the Sullom Voe Terminal via a new 6.5km long and 22in diametre pipeline connected to the existing Clair Phase 1 oil export pipeline, whereas the produced gas will be exported to the SVT via a new 14km long and six inches diametre pipeline connected to the west of the Shetland pipeline system.

Clair Ridge Oil Field image by Amec Foster Wheeler

www.projectsogp.com - Spring Edition 2015

PROFILE

VETTE OIL FIELD

Vette Oil Field image by Sevan Marine

PROJECT PROFILE

DETAILS

Vette (previously known as the Bream Oil Field) is located 50km northwest of the Yme field. The field was awarded to Premier and partners in the 2006 APA licensing round, having originally been discovered in the 1970s, however it was left un-developed. The discovery was successfully appraised during 2009. Production tests at the time of the discovery flowed at up to 1,000 barrels per day of 30 degree API oil. The Vette development concept is planned to be an FPSO with subsea production and water injection wells. This may be linked to four oil producers and two water injectors, with an export line transporting the hydrocarbons to the Yme field. An exploration well on the adjacent Herring prospect is planned during the development phase and, if successful, would contribute additional resources to the overall project. Premier currently estimates that the Vette and Mackerel fields contain around 50 mmboe of 2C resources.

OPERATORS Premier Oil Norge As is the Operator of the Vette Oil Field Project with 50% interest in the project, followed by KUFPEC with a 30% interest. Tullow Oil has the final 20% interest in the Vette Oil Field.

www.projectsogp.com - Spring Edition 2015

PROFILE

PROJECT UPDATES Vette Oil Project Development Premier Oil is focusing on a Sevan Marine-designed cylindrical floating production unit as the base case to develop its Vette Field (previously known as the Bream Field) off Norway. In January 2015 the Petroleum Safety Authority Norway (PSA) carried out an audit of Premier Oil and the Vette development. The licensee group has now completed the plan for development and operation (PDO) of the discovery. The proposed development solution consists of a subsea development with an FPSO (floating production, storage and offloading) unit. Water depth in the area is between 105 and 120 metres.

CONTRACTS Marine FEED contract won by Sevan Marine Premier Oil Norway has awarded Sevan Marine a FEED (Front End Engineering and Design) contract for the hull and marine systems of a Sevan type cylindrical FPSO for operation on the Premier Oil operated Vette field in the Norwegian Central North Sea. CEO of Sevan Marine, Carl Lieungh commented: “We are both proud and pleased to receive this FEED contract, demonstrating Premier Oil’s continued confidence in our technology.”

The PSA performed an audit of the development project at the premises of engineering company Aibel in Asker on 11th November 2014. The audit was the second in a planned series of audits of this project. The purpose of the audit was to follow up how PONAS was securing compliance with regulatory requirements for risk management during work on the PDO for the Vette development project. This part of the audit focused on selected topics in technical safety, process safety and electrical plant. During the audit, an observation was made concerning the robustness of the proposed solution for fire water, which the PSA considers may present a challenge in terms of satisfying regulatory requirements in this area. Another challenge facing the project is that of the current plummet in oil price. This plunge in price has forced many operators to tighten their belts, in regards to operational spending. Due to these current industry conditions, Premier Oil the Operator of the Vette Oil Field has decided to delay its final investment decision on the project until the third quarter of 2015. However, Premier has shown its commitment to the project, as it has already submitted the plan for the development and operation of the US$1.5 billion Vette project to the authorities. Although these plans have recently been submitted, final contract awards are set to be delayed until the end of 2015.

Vette Oil Field image by Premier Oil

www.projectsogp.com - Spring Edition 2015

PROFILE

OFFSHORE AREA 1 Offshore Area 1 image by Anadarko

PROJECT PROFILE DETAILS The Anadarko-operated Offshore Area 1 covers approximately 2.6 million acres in the deepwater Rovuma Basin. Anadarko and its partners have drilled more than 25 successful wells on the block. The Prosperidade complex holds an estimated 17 to 30+ Tcf of estimated recoverable resources. In May 2012, Anadarko announced the Golfinho discovery well, almost 20 miles northwest of Prosperidade, had encountered another major natural gas accumulation. This well was followed by the Atum discovery in June 2012. This new complex (Golfinho/Atum), which is separate and distinct from Prosperidade and contained entirely within the Offshore Area 1, is estimated to hold between 15 and 35 Tcf of recoverable natural gas resources. Additional discoveries in 2013, including Orca, increased the total estimated recoverable resource range from 35 to 65+ Tcf to a new range of 50 to 70+ Tcf in the Anadarkooperated Offshore Area 1.

OPERATORS Anadarko Petroleum is the Operator of Offshore Area 1 with a 26.5% interest in the project followed by; Mitsui E&P with 20% interest, Cove Energy holds 8.5% interest, BPRL Ventures Mozambique B.V 10% interest, Empresa Nacional de Hidrocarbonetos 15% interest, ONGC Videsh Limited (OVL) has a16% interest and Oil India Limited holds the remaining 4% interest in the project.

www.projectsogp.com - Spring Edition 2015

PROFILE

PROJECT UPDATES Offshore Area 1 Project Development Offshore Area 1 is located in the Rovuma basin in Mozambique. Since the discovery of the block the Operator has come across 25 successful wells, and rising. The first major discovery was that of the Golfinho Discovery in May 2012, closely followed by the Atum Discovery in June 2012. In 2013 Anadarko,the Operator of the project made significant progress in the advancement of the Offshore Area 1 Gas Development Project. Anadarko completed an environmental impact assessment along with a FEED contract for the offshore gathering infrastructure and bid invitations. In Febuary 2014 the company sold a 10% interest in the Rovuma Offshore Area 1 project for US$2.64 billion. As it stands today, Anadarko remains the operator of the project. Drilling operations at the project have been ongoing. The Orca #4 appraisal well was completed on the Orca discovery in Offshore Area 1, after encountering natural gas pay in two reservoirs in 2014. Analysis is currently under way to define future appraisal requirements and an optimum potential development scenario.

CONTRACTS Bethnic bags deepwater geotechnical contract Benthic has been awarded a contract by Anadarko for a deepwater geotechnical site investigation to collect seabed geotechnical data at the Golfinho Field off the coast of Mozambique. During the final phase of an extensive geotechnical investigation program on the Prosperidade Field off the coast of Mozambique, Benthic was notified by Anadarko that the program would be extended to include the site investigations on the Golfinho Field. Benthicâ&#x20AC;&#x2122;s PROD3 subsea drilling unit will perform the work from the Jaya Vigilant, in water depths ranging from 700m to 1200m. The Golfinho Field extends to the north of Prosperidade and has a similar rugged bathymetry with a series of steep canyon features.

In waiting for these results the company has begun drilling a second well called the Kifaru-1 exploration well. Wentworth has an 11.59 percent net interest in this well, which is being operated by Anadarko and drilled with the Helmerich & Payne rig #243. The Kifaru-1 well has a planned total depth of 4,050 metres True Vertical Depth Subsea, based on the current drilling program. With drilling activities underway at the project, there are also developments which concern the transportation of the liquid gas from the block. The Offshore Area 1 Block is currently awaiting a much anticipated decision in regards to the transportation of Liquid natural gas (LNG) from the block to Asian shores. The consortium plans to set up two LNG trains of five million tonnes each with a provision for expansion in the future. The consortium will have to enter into long-term contracts with buyers to raise funds to finance the project and help put up the first two trains. Production from the fields will begin in 2019. The LNG trains will initially require around US$18-20 billion, of which US$14 billion will be raised in loans. Bharat Petro Resources Limited will be investing up to Rs 10,000 crore as part of its share towards a 10 million tonne LNG terminal project in Mozambique. Recently the government of Mozambique gazetted its Decree Law, designed to help provide the appropriate framework for a stable business environment for investors, customers, financiers, and construction contractors. This is expected to benefit Anadarko as it advances its large-scale LNG project to harness gas from Offshore Area 1.

Offshore Area 1 image by Anadarko

www.projectsogp.com - Spring Edition 2015

EUROPE

NEWS IN BRIEF

PROJECT UPDATES Statoil awards Mariner drilling and well services contract to Schlumberger Oilfield UK Statoil has on behalf of the Mariner co-venturers awarded the contract for integrated drilling and well services on the Mariner field on the UK continental shelf (UKCS) to Schlumberger Oilfield UK Plc. From its Aberdeen base, Schlumberger will deliver all the main drilling and well services for Mariner, including drilling, completion, electrical submersible pumps (ESPs), cement and fluids. A total of 22 drilling and well services are included in the scope, including a logistics support responsibility that goes beyond the normal scope for similar Statoil contracts. The contract commenced in January 2015 and has duration of four years, plus options for several additional four-year periods. The main Mariner platform will have one drilling rig and one well intervention and completion unit. In addition, a new-build jack-up rig will be located next to the Mariner installation, working through well slots on the platform for the first four years. Over the field’s lifetime as many as 130 well targets are planned. Drilling is planned to start in 2016 with production start-up following in 2017.

Rosneft and Transneft sign Tariff Agreement Rosneft and Transneft have signed a long-term Tariff Agreement as part of their joint project to construct a pipeline offshoot from the East Siberia – Pacific Ocean (ESPO) trunk pipeline to the Komsomolsk Refinery. The offshoot design and construction will be financed by Transneft by means of the long-term tariff to be paid by Rosneft under the Agreement. The Agreement provides for the design and construction of a pipeline offshoot to the Komsomolsk Refinery with an annual capacity of up to 8 mln tons of oil. Rosneft will also supply up to 8 MTA into Transneft’s trunk pipeline system to be delivered to the Komsomolsk Refinery. Most of the crude for the Komsomolsk Refinery is currently being delivered by the railway service. The pipeline will provide steady and secure supplies of growing crude volumes to the refinery.

Lukoil orders Tendeka control equipment for Caspian Sea wells

Lukoil-Nizhnevolzhskneft has contracted Tendeka to supply autonomous inflow control devices for deployment in horizontal wells at the Yuri Korchagin oil field in the North Caspian Sea. ICDs create a more even production profile along the length of a horizontal wellbore to avoid early water or gas breakthrough caused by reservoir heterogeneity, fractures, or frictional pressure losses.

Dyna-Mac secures Catcher development FPSO modules construction contract

Dyna-Mac has secured a contract worth around US$71.2 million to build ten units of floating production, storage and offloading (FPSO) topsides modules and one flare tower unit for BW Offshore. The contract requires Dyna-Mac to prepare shop drawings and fabricate ten units of topsides modules for FPSO vessels, which will operate at Premier Oil’s Catcher oil fields in the UK North Sea. The FPSO topsides modules are expected to be delivered within the first quarter of 2016. The Catcher FPSO will have the capacity to process around 60,000 barrels of crude oil per day and store 650,000 barrels. First oil is expected mid-2017.

Fendercare Marine Diving Services provide support to offshore installation in Liverpool Bay

Fendercare Marine Diving Services has been contracted to provide significant diving services and equipment for an offshore installation in Liverpool Bay, UK. The Liverpool Bay Development comprises four oil and gas fields, together with significant offshore and onshore facilities used for extracting, transporting and processing these reserves. Fendercare Marine Diving Services mobilised the Diving Support Vessel “Seabed Worker”, complete with a full air diving & nitrox surface demand diving spread, two work class ROV’s, a complete pipeline hydrographic survey facility and the James Fisher Hydro-Digger (mass flow excavator) for survey and remedial works to the assets located offshore in Liverpool Bay. The work scopes are; undergoing hydrographic surveys and mooring integrity surveys.

www.projectsogp.com - Spring Edition 2015

EUROPE

PROJECT UPDATES Nexans to supply Direct Electrical Heating (DEH) technology Statoil, on behalf of Wintershall, has signed a contract with Nexans for the supply of Direct Electrical Heating (DEH) technology. The DEH riser will connect the Kristin and Maria fields in the Norwegian Sea with the Kristin platform, ensuring the constant flow through pipelines. The delivery, worth approximately US$9 million, will replace an existing DEH riser cable from the Kristin platform. The new riser cable will connect the Kristin platform with a subsea connection box, and will contain four cores to enable the operation of one DEH line to the Kristin field and one to the Maria field. Direct electrical heating (DEH) is a flow assurance method used on many pipelines. The method used is based on controlling the temperature on the pipeline by passing electric current (AC) through the steel wall of the pipeline, thus preventing hydrate and wax formation. At more than 300 metres depth, the water is just above zero degrees Celsius. In addition, Nexans has also been awarded a subcontract by FMC Technologies for a dynamic control umbilical system for the same project. Floating platforms like Kristin feature a riser system containing flexible production lines, water injection lines, gas injection/lift lines, umbilicals controlling the subsea templates and electrical cables for heating the pipelines.

Plexus Holdings receives purchase order from Det Norske Plexus Holdings has received a purchase order from Det Norske Oljeselskap to supply surface wellhead and mud-line equipment services for Geopilot#2, an oil and gas appraisal well on the Ivar Aasen development project, offshore Norway. Geopilot#2 will be the seventh Det Norske well to use Plexus’ POS-GRIP wellhead equipment since 2012. The value of the latest order is estimated at approximately US$1.41 million with revenues expected to commence in February 2015. Under the terms of the PO contract, Plexus will supply its 18-3/4 15,000 psi High pressure/ High Temperature (‘HP/HT’) adjustable surface wellhead and mudline system. The drilling of Geopilot#2 will directly follow the Geopilot#1 well, which will also be using Plexus’ POS-GRIP® based equipment. Both wells are planned be drilled using the recently built Maersk Interceptor rig.

NEWS IN BRIEF Confirmation letter recieved for works on Yamal LNG project

Jutal Offshore Oil Services through its associated company, Penglai Jutal Offshore Engineering, has received the confirmation letter for the works on Russia’s Yamal LNG project. According to the letter, the construction workload of the two option trains of modules of the Yamal LNG project has been confirmed by Yamgaz, the general contractor of the LNG project. Yamgaz is a consortium composed of Technip, JGC and Chiyoda. The total construction period of the Yamal LNG project is about 36 months. The part awarded to PJOE is package 3, involving total 140,000 tons of three trains of pipe rack modules (including two option trains) with the biggest module being 7,172 tons.

9,000km 2D survey in Ireland

Searcher Seismic will carry out a 9,000km Echidna Regional Broadband 2D seismic survey in Ireland. The survey will be undertaken in conjunction with project partner MAGE. It will be the first well-tie survey covering the Atlantic Margin offshore western Ireland.

SharpEye Triple IR Flame Detectors provided by Spectrex for Kashagan project

The Kashagan field, in Kasakhstan’s zone of the Caspian Sea, has invested in more than 2,000 SharpEye Triple IR Flame Detectors provided by Spectrex. The AGIP Kashagan field constitutes an extremely harsh environment. Despite this, the SharpEye Triple IR Flame Detectors continue to provide top detection with the highest accuracy, reliability and immunity to false alarm.

Technip awarded an important subsea contract by Statoil at the Gullfaks field in Norway

Technip signed a lumpsum contract with Statoil ASA for the Gullfaks Rimfaksdalen (GRD) Marine Operations Pipelay and Subsea Installation project. This project is an option to the Snøhvit CO2 Solution project awarded in 2013. The GRD project scope consists of a subsea tie-back to a new Wye piece on an existing pipeline close to the Gullfaks A platform. The GRD template will be located 190 kilometres Northwest of Bergen, Norway.

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SUBSEAREPORT FOCUS

THE OIL PRICE DECLINE, WHAT DOES THE FUTURE HOLD FOR 2015? Copious factors added to the dramatic decline in oil price in 2014 By: Chris Watt In the final quarter of 2014 the demand for oil from Europe and the US began to drop, mainly due to weakening economies and new regulations recently put in place by their respective governments. The result was devastating for the industry, with the price of Brent Crude oil dropping as low as US$48 per barrel. The deteriorating price was expected to steady by the end of 2014, and even rise come the beginning of 2015. However, early signs are failing to back up such a prediction. Since the financial crisis in 2008, where the price of a barrell of Brent Crude stood at around the US$26 mark, oil prices have boomed and were rarely seen below US$100 per barrel. This was a direct result of the growing demand for oil in countries such as China, as well as conflicts in key oil producing nations, particularly in the Middle East. Skip forward four years, we are now staring back at a 40% reduction in the price of oil, in a timespan of just 6 months, and are left wondering: Who is to blame and when will the price start to increase? In November 2014 at a meeting in Vienna, OPEC was expected to announce a curb in oil production, a move that would have aided the crippling oil price. Instead, OPEC revealed that they would continue to produce at the same rate, with the Saudi Arabian oil minister stating: “the oil market will stabilise itself eventually”.

The decision was heavily influenced by Saudi Arabia in spite of pleas from fellow OPEC members, such as Iran and Venezuela, to cut production in the hope that it would drive oil prices up once again. The most likely reason behind this move was the reluctance of Saudi Arabia to risk losing their market share to the USA’s growing shale oil industry. The US shale oil boom has transformed the country from the world’s biggest oil importers, into one of its biggest oil producers. Production has tripled in the last three years, with the USA now churning out more than nine million barrels a day, just half a million off the daily production of Saudi Arabia. This resolute stance from OPEC, however, is driving the USA to submission point, as the expensive fracking industry struggles to cope with the current oil market, requiring the barrel price to be at least US$69 in order to break even. Unlike Saudi Arabia, the USA does not have an abundance of oil cash reserves to call upon when times get tough, and may therefore be forced into cutting their own production rates. So what does this mean for the future price of oil? According to OPEC Secretary General Abdalla El-Badri the oil price has, “reached bottom” and will soon start to improve, possibly reaching US$200 per barrel in the not too distant future; his comments have since resulted in a mini price increase. A decrease in production from the USA may lead to a gradual increase in price, but the industry is in dire need of a more rapid growth, as oil companies make drastic cutbacks resulting in thousands of job losses. In 2008 Goldman Sachs predicted that the dwindling oil price would steady and rise to the US$200 mark. Just months later, the oil price crashed to around US$40, taking three years to fully recover. Let’s hope OPEC’s prediction has more substance for the greater good of our industry. The recent passing of Saudi Arabia’s King Abdullah, may pave way for a new policy on the matter from the oil rich kingdom. Unless the country does not oppose change on its current outlook, 2015 may prove to be one of the worst on record for the industry.

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REPORT

CHINA OIL DEMAND UP 5.3% IN DECEMBER FROM YEAR AGO Demand hit historic high of 10.63b/d; Overall demand in 2014 increased 3% By: Platts China’s apparent oil demand in December rose 5.3% year over year to 44.96 million metric tons (mt), or an average 10.63 million barrels per day (b/d) – hitting the highest absolute demand on record – according to a just-released Platts analysis of Chinese government data. China’s apparent oil demand in 2014 rose 3% from a year before to an average of 10.1 million b/d, which was higher than the 2% year-over-year growth seen in 2013. Total oil product imports in 2014 tumbled 24.2% from 2013 to 30 million mt, the lowest annual level since Platts started tracking Chinese oil demand data in 2005. Exports of oil product from the country increased 4.1% to 29.67 million mt. As a result, China remained a net importer of oil products, despite being a net exporter during the first 11 months of 2014. China’s apparent oil demand increased considerably through the year, rising to 10.34 million b/d in the fourth quarter, buoyed by a seasonal uptick in consumption as well as the government’s monetary easing measures. In comparison, apparent oil demand was recorded at 9.89 million b/d in the third quarter and 9.88 million b/d in the first half. “Oil demand growth this year is expected to be similar to that of 2014,” said Song Yen Ling, Platts’ senior writer for China. “China’s economic growth is likely to continue slowing, with many analysts predicting GDP expansion this year to average below 7.5%.” Crude throughput by refineries in December was up 6.3% year over year to 44.58 million mt, or a record high 10.54 million b/d, according to data released by the National Bureau of Statistics (NBS) mid-January.On a monthly basis, China’s oil product imports were 5.3% lower year over year to 3.2 million mt in December, while exports climbed 6.8% to 2.82 million mt, according to data released by the General Administration of Customs.

The pace of growth in December was the fastest since July 2011. Over the whole year, China’s gasoil apparent demand rose 1.8% from 2013 to 172.72 million mt, while the previous year’s demand had contracted for the first time by 0.9%.

Gasoline Meanwhile, apparent demand for gasoline in December rose 13.4% year over year to 9.55 million mt, with full-year demand increasing 12.5% to 105.25 million mt. Gasoline consumption growth in China continues to be sustained by new passenger car sales as a new middle-class of urban consumers becomes increasingly wealthier.

Fuel Oil Fuel oil witnessed a structural decline in demand as China’s independent teapot refiners have found ways to get access to more crude supplies. This reduced their appetite for imported fuel oil, which had traditionally been their primary feedstock. Fuel oil apparent demand in December jumped 30.5% year over year to 3.05 million mt, as low prices on the back of falling crude spurred buying. Imports of the fuel hit an 11-month high of 1.9 million mt in December. However, fuel oil apparent demand slumped 11% to 33.8 million mt over 2014, compared with the 2.2% contraction experienced in 2013. Month-to-month demand in China is generally viewed to be subjected to short-term anomalies which are of interest and important to note, but often fail to reveal the country’s underlying demand trends. Year-to-year comparisons are viewed by the marketplace to be more indicative of the country’s energy profile.

Gasoil Apparent demand for gasoil, the most widely consumed oil product in China, in December was 6.7% higher than a year ago at 15.42 million mt. Up to 70% of the fuel is used in the transport sector while the remainder is used by various sectors, including construction, farming and fishing, industrial heating and to power machinery.

www.Platts.com

www.projectsogp.com - Spring Edition 2015

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CLIENT FEATURE

ASHTEAD TECHNOLOGY Kicks-off 30th Anniversary Celebrations with Contract Win Ashtead Technology has secured a new contract with FUGRO to be a preferred supplier of subsea rental equipment and associated services to all its operating companies around the world. The award comes as the Aberdeen head-quartered business, which is the only global, independent provider of subsea electronic and survey equipment rental, sales and services, launches its 30th anniversary celebrations at Subsea Expo 2015, marking three decades of subsea technical excellence. In the new two year agreement, Ashtead Technology will rent subsea equipment, including underwater positioning, subsea inspection, ROV survey sensors and tooling, metocean, hydrographic and geophysical and camera and video equipment, to FUGRO companies world-wide. Tim Sheehan, Commercial Director of Ashtead Technology, said: “This is a strategically important contract win for us and we are totally focused on delivering real value and efficiencies to FUGRO by meeting all their requirements for subsea equipment across their global operations. We believe this contract award is a result of our service delivery to Fugro over the last two years coupled with major investment in our rental fleet which guarantees our customers can access the latest and most in-demand technology on the market.” Ashtead Technology, which made its biggest single annual investment of £10million in its fleet last year, is committed to further investment in the coming years. “FUGRO is a major account for us and we will be working hard to build on existing relationships with all its operating companies from Aberdeen to Bergen, Cairo to Abu Dhabi, Singapore to Perth Australia and from Rio to Houston,” added Mr Sheehan. Formed in 1985 as a subsea equipment rental company, Ashtead Technology has grown to become a market leader in providing integrated subsea technology solutions to customers around the globe. The company has marked three decades in business with a clear strategy for the future to further increase its range of services. Through the delivery of enhanced technical support services, increasing the capabilities of its teams across the business and investing in the latest technology to build the largest and most modern

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Allan Pirie Ashtead CEO and Tim Sheehan, Commercial Director rental fleet in the subsea sector, Ashtead Technology is well on-track to achieving its ambitions and is committed to further improving and growing its range of value-added services which now include the supply of offshore personnel, equipment sales, complete asset management, calibration, repair and maintenance, custom engineering, cable moulding and training through the recently launched Ashtead Academy. Mr Sheehan said: “With recent strong growth, significant investment in our rental fleet, a number of exclusive product sales agreements secured with world-leading manufacturers and a brand new, industry-first training academy, we have entered our 30th year in a robust position. Since the eighties, the subsea sector has evolved to become a recognised stand-alone industry that has been growing globally at a phenomenal rate. With the recent decline in oil price, 2015 is set to be a challenging year but innovation and technology will be key to driving efficiency and Ashtead is ideally placed to work hand-in-hand with our customers to explore and then deliver the best and most efficient solutions for their specific needs.” Ashtead Technology now employs 95 people in Aberdeen, London, Houston and Singapore with agents in Abu Dhabi, Perth (Australia) and Stavanger.

www.ashtead-technology.com

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CLIENT FEATURE

SMD SMD Announce New Shareholder Specialist Machine Developments (SMD) Ltd has recently announced that the company has signed a sale and purchase agreement with Zhuzhou CSR Times Electric Co. Ltd a subsidiary of CSR Corporation Limited of China, for the sale of the entire share capital of the SMD group. Andrew Hodgson, CEO of SMD, commented: “Becoming part of CSR will be a key step in SMD’s development as a business and we look forward to continuing to deliver to our markets in this new and exciting phase of our history”.

Jiang Yi, Tim Smallbone, William Wang, Andrew Caffyn & Andrew Hodgson the subsea sector. I believe CSR and SMD will work together to further develop the global subsea equipment market”. This completion of the deal is now subject to completion of the filing procedures with several Chinese regulatory authorities and we expect this process to take between two and four months.

Mr Jiang Yi, Deputy President of CSR Zhuzhou Institute added: “SMD has world class technology, a world class engineering team and an extensive track record in

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GLOBAL PROJECTS

GLOBAL PROJECTS Updates from around the world

NORTH AMERICA Project: Stampede Tension Leg Platform Project The Stampede Gas Project is a major deepwater subsea development focusing on the joint exploitation of the Pony and Knotty Head discoveries, located at water depth of 3,350 feet. The project involves a drilling program of six production and four water injection wells, will be tied-back to a constructed Tension Leg Platform in the Gulf of Mexico, with project design capacity around 80,000 barrels of crude oil per day and a cost expected to be approximately US$6 billion.

SOUTH AMERICA Project: Libra Oil Field Libra oil field is a large ultradeepwater oil prospect located in the Santos Basin, about 230 kilometres off the coast of Rio de Janeiro, Brazil. The Libra field is considered the largest pre-salt find in the basin, ahead of the Tupi oil field, making it the largest discovery since the Cantarell Field in 1976.

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AFRICA Project: TEN Cluster Development The Tweneboa-Enyenra-Ntomme (TEN) fields are located in the Deepwater Tano licence, covering an area of 800 sq km. The project is the first deepwater field to be developed in offshore Ghana and is expected to enter production phase by 2018, with estimations revealing that it could hold around 300 million barrels of oil.

GLOBAL PROJECTS

EUROPE Project: Eldfisk Field Eldfisk is one of the two biggest fields in the Greater Ekofisk Area and has been in production since 1979. The Eldfisk field produces from the Ekofisk, Tor and Hod Formations while oil and gas is transferred to the export pipelines through the Ekofisk Centre. Gas from the Ekofisk area is sent by pipeline to Emden, while the oil, which also contains NGL fractions, is routed by pipeline to Teesside.

ASIA Project: Malikai Deepwater Project Located 110 km offshore northwest Sabah, is the latest deepwater project in Malaysia and the first field in the country to employ a tension-leg platform (TLP). The project aims to produce gas from the Malikai field, which is situated on Block G offshore Sabah and was discovered in September 2004 at water depth of 1,854 feet. The TLP vessel will be located about 68 miles (110 kilometres) offshore of Sabah, in a water depth of 1,640 feet (500 metres). Shell is the operator of the project, with ConocoPhillips and Petronas holding the remaining interest. The project is scheduled for completion on the third quarter of 2015.

OCEANIA

MIDDLE EAST Project: Upper Zakum This field is located 84 km, North West of Abu Dhabi Islands, covering around 1,200 sq Kms of the Gulf marine areas. Zakum field is the second largest field in the Gulf and the fourth largest field in the World. The accommodation platform of Upper Zakum field has the capacity to accommodate 550 personnel, making it one of the largest offshore living structures in the world.

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Project: Browse LNG Project The Browse gas fields are estimated to hold approximately 40 Tcf of gas and 500m bbl of condensate reserves, consisting of three gas fields, about 425 km northwest off the coast of Broome, Western Australia. The fields are called Torosa, Brecknock and Calliance and the natural gas contained in them is planned to be converted to LNG primarily for export to international markets.

GLOBAL PROJECTS

GLOBAL NEWS OCEANIA

Wood Group Kenny secures contract with Woodside Wood Group Kenny has secured a contract with Woodside to provide the front end engineering design (FEED) of the flowline system, and associated procurement support, for the proposed Greater Western Flank Phase 2 (GWF-2) development for the North West Shelf Project, offshore Western Australia. The scope of work includes engineering and procurement support services for the 16\” GWF-2 corrosion resistant alloy rigid flowline system, flowline end termination structures, inline tee assembly structures, mid connection structure and subsea tie-in spools. The primary engineering focus of the GWF-2 flowline FEED is to develop the flowline system for the final investment decision planned for the second half of 2015. This contract follows the successful completion of the preliminary engineering for GWF-2 rigid flowline basis of design phase. The GWF-2 development represents the next phase of gas supply to the existing NWS Project infrastructure after the Persephone Project. GWF-2 will develop the hydrocarbon resources of the Keast, Dockrell, Sculptor, Rankin, Lady Nora and Pemberton fields.

Bowen Pipeline Project enters FEED stage Arrow Energy will move into the front-end engineering design phase for its proposed Bowen pipeline, another key milestone in its Bowen Gas Project. The pipeline is planned to supply gas from the Bowen Basin to liquefaction facilities at Gladstone. The FEED contract had been awarded to engineering services firm WorleyParsons, which would produce a preliminary design for the pipeline. Arrow Energy has signed DHL to provide logistics management to Arrow’s proposed coal seam gas developments in the Bowen Basin. In a first for the Australian resources sector, DHL has been engaged as a fourth-party logistics (4PL) contractor, meaning it will effectively function as an Arrow department. The contract, signed for 1+5 years, began in November 2014 and covers logistics services to the proposed Bowen Gas project and the Arrow Bowen pipeline. The bulk of the 4PL contract depends on the two proposed projects proceeding to construction.

NEWS IN BRIEF PGS begins a multi-client 3D subsea shoot

Seismic player Petroleum Geo-Services (PGS) has kicked off a multi-client 3D shoot in the Ceduna sub-basin, off the coast of South Australia. The survey, known as Springboard, will cover an area which was currently lacking any 3D seismic data. The offshore sub-basin had apparently become a “hot spot” for exploration activity following a recent gazettal round. Drilling over the frontier deep-water acreage is widely expected to start in 2016 or 2017, meaning the Springboard data will be in high demand as companies look to firm up leads and prospects within their acreage. PGS is carrying out the Springboard shoot using its Ramform Sovereign seismic vessel.

KBR signs on for Magnolia LNG

Australia’s Liquefied Natural Gas Limited has signed a technical services agreement with engineering giant KBR for its Magnolia LNG development in the US, with the latter also set to work with SK E&C on the engineering, procurement and construction contract.

Sulzer to provide pumps for Ichthys LNG Project Sulzer has been contracted as the pumps provider for the critical liquids removal system of the INPEX-operated Ichthys liquefied natural gas (LNG) project. The pumps will be installed on the offshore Central Processing Facility (CPF). Sulzer will deliver six large API 610 (ISO 13709) Barrel Casing Pump sets in 2015. The scope of supply of the pumps includes the six pump skids with electric motors and complex seal systems, which are being manufactured, packaged, and tested in the Sulzer state-of-the-art test facility in Bruchsal, Germany. The processing on the CPF will separate the gas from liquids. The Sulzer pumps will transport the liquids from the CPF to the FPSO (floating production storage and offloading unit), stationed about 3.5 km away.

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GLOBAL PROJECTS

EUROPE Dyna-Mac secures Catcher development FPSO modules construction contract Dyna-Mac has secured a contract worth around US$71.2 million to build ten units of floating production, storage and offloading (FPSO) topsides modules and one flare tower unit for BW Offshore. The contract requires DynaMac to prepare shop drawings and fabricate ten units of topsides modules for FPSO vessels, which will operate at Premier Oil’s Catcher oil fields in the UK North Sea. The FPSO topsides modules are expected to be delivered within the first quarter of 2016. The Catcher FPSO will have the capacity to process around 60,000 barrels of crude oil per day and store 650,000 barrels. First oil is expected mid-2017.

Nexans to supply umbilicals to Visund Statoil has contracted Nexans to supply umbilicals to the Visund oil and gas field in the Tampen area of the Norwegian North Sea. The umbilicals will comprise electrical and fiber-optic cables and hydraulic and chemical lines.

NEWS IN BRIEF Lukoil orders Tendeka control equipment for Caspian Sea wells

Lukoil-Nizhnevolzhskneft has contracted Tendeka to supply autonomous inflow control devices (AICDs) for deployment in horizontal wells at the Yuri Korchagin oil field in the North Caspian Sea. ICDs create a more even production profile along the length of a horizontal wellbore to avoid early water or gas breakthrough caused by reservoir heterogeneity, fractures, or frictional pressure losses.

Sapiem to construct Caspian Pipeline

Saipem has been awarded a US$1.8 billion contract to construct two 95 km pipelines at the giant Kashagan project in Kazakhstan’s Caspian Sea region.

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GLOBAL NEWS MIDDLE EAST

Masirah Oil Ltd commissioned a new 3D seismic survey in Block 50 Oman Rex International Holding Limited through Masirah Oil Ltd has commissioned a new 3D seismic survey in Block 50 Oman. The seismic survey will be undertaken by Dolphin Geophysical ASA with its vessel, Artemis Arctic. The seismic survey commenced in November 2014 and is scheduled to be completed within approximately 45 days following mobilization. Given that Block 50 Oman covers a large area of close to 6,563 square miles (17,000 square kilometres), information from the seismic survey will value-add to the extended well testing and multi-well campaign targeted to be carried out in the block in 2015 and 2016. Masirah holds 100 percent of the Block 50 Oman concession. In September, Masirah Oil was conferred the prestigious Offshore Discovery of the Year award for discovering hydrocarbons in its second offshore exploration well in Block 50 Oman in February 2014.

Wood Group Intetech completes acid gas reinjection project for MOL Group Wood Group Intetech has successfully completed a six-month project for MOL Group. The project saw WG Intetech develop a detailed design for an acid gas reinjection well on MOL Group’s Akri-Bijeel field in Iraq. The scope of the agreement included well design and comprehensive materials selection for all well components. Renowned for its expertise in materials selection, particularly in high concentration hydrogen sulphide environments, WG Intetech was awarded the contract by MOL Group following a competitive tender process. The MOL development was technically challenging, requiring WG Intetech to mobilise a team of experts across several disciplines to ensure the success of the project. Dr Liane Smith, Managing Director and Founder of WG Intetech, said: “Acid gas reinjection involves handling high pressure gas with a high concentration of hydrogen sulphide … This can lead to an increased safety risk if the correct materials are not selected at the design stage, and requires an intense focus on achieving well integrity. There are currently very few companies in the world that offer this level of experience.”

NEWS IN BRIEF SNC-Lavalin and Qatar Kentz win a four-year multi-million-dollar calloff contract

SNC-Lavalin and Qatar Kentz, a member of the SNC-Lavalin Group, has been awarded a fouryear multi-million-dollar call-off contract, with a possible two-year extension, by Qatar Shell for its Pearl Gas-To-Liquids (GTL) onshore and offshore facilities in Qatar. As EPCM and construction contractor for onshore and offshore Pearl GTL facilities, Kentz will manage the EPCM work for all services related to plant changes, as well as minor, base and medium projects. This will include project management, engineering and specialist studies, procurement and logistics, construction and commissioning management, and the execution of construction works.

Amarinth to deliver self-priming AP 610 super-duplex pumps

Amarinth to deliver self-priming AP 610 superduplex pumps to ADMA-OPCO for SARB3 project Amarinth has been awarded a contract to supply 16 API 610 super-duplex pumps, some of which will be self-priming, for use on the ADMA-OPCO SARB3 project. Following previous successful projects undertaken by Amarinth for ADMAOPCO, this new contract is to supply 16 API 610 super-duplex pumps in A-series and C-series configurations to be used for various duties including fire water supply and diesel transfer in the ADMA-OPCO Satah al-Razboot (SARB) offshore oil field.

Saudi Aramco let an engineering and construction contract to Saipem SPA

Saudi Aramco has let an engineering and construction contract in Saudi Arabia to Saipem SPA, a unit of Eni SPA. The transaction includes an EPC contract for expansion of onshore production centres at Khurais, Mazajili, and Abu Jifan fields. Construction of facilities will allow an additional 300,000 b/d to be processed from Khurais field, while the installation of satellite facilities will reinstate production of 200,000 b/d from Abu Jifan and Mazalij fields.

www.projectsogp.com - Spring Edition 2015

GLOBAL PROJECTS

AFRICA

NEWS IN BRIEF

FMC Technologies, Inc. has received an order from Eni Angola to supply subsea production systems FMC Technologies, Inc. has received an order from Eni Angola to supply subsea production systems for its deepwater Block 15/06 East Hub development. The order has an estimated value of US$393 million in revenue. Eni is the operator of Block 15/06, while Sonangol EP is the concessionaire. The other partners of the joint venture are Sonangol Pesquisa e Produção, SSI Fifteen Limited and Falcon Oil Holding Angola SA.

CAMAC Energy secures additional drilling rig for offshore Nigeria

CAMAC Energy terminates Northern Offshore drilling contract CAMAC has terminated its contract with Northern Offshore International Drilling Company Ltd. for the drillship Energy Searcher. The Company notified Northern on January 7, 2015 that it elected to terminate the contract with immediate effect for Northern’s repudiatory breach of contract and other material breaches of the drilling contract by Northern.

These breaches have caused significant damages and loss, including delay damages and wasted spread costs to the company. CAMAC is considering all legal options to enforce its rights under the contract.

CAMAC Energy Inc. has signed a contract with a subsidiary of Transocean Ltd. for the provision of the semi-submersible drilling unit called the Sedco Express, for drilling and completion activities offshore Nigeria.

The company’s Oyo Field drilling and completion operations are now being conducted by the Transocean Sedco Express semi-submersible drilling rig, which arrived on location in December 2014, and production is still expected to be online by the end of Q1 2015.

The contract allows for the drilling or completion of up to three wells, and CAMAC intends to use the rig to accelerate timing of the tie-in of production from the Oyo-7 and Oyo-8 development wells. With the ability to drill a third well, and an option to extend the contract, the Company is also considering using the rig to accelerate its 2015 exploration drilling program.

BMT to supply the riser integrity monitoring systems for the Egina project

The Sedco Express is an ultra deepwater, semisubmersible drilling rig built in 2000, and is already within close proximity of the Oyo Field in OML 120. The Company’s other rig, the drillship Energy Searcher, will continue the plugging and abandonment operations on the Oyo-5 and Oyo-6 wells.

Subsea equipment provided for operations at the Agbami field FMC Technologies, Inc. has received an order from Star Deep Water Petroleum Limited (a Chevron company), operator of the Agbami field, to provide subsea equipment for operations in the Agbami field, offshore Nigeria. The Agbami field is located 70 nautical miles (113 kilometres) off the coast of the central Niger Delta region, at a water depth of approximately 4,800 feet. The parties in the Agbami field include Famfa Oil Limited, Star Deep Water Petroleum Limited, Petroleo Brasileiro Nigeria Limited, Statoil Nigeria Limited, and Nigerian National Petroleum Corporation.

BMT Scientific Marine Services (BMT), a subsidiary of BMT Group Ltd, has been selected by Saipem to supply the riser integrity monitoring systems for the Total Egina development located 150km off the coast of Nigeria. Riser integrity monitoring systems measure bending moments and tensile forces in risers in order to provide end users with an understanding of the risers’ condition. Data from these systems are then used to verify riser design models, ultimately leading to long-term improvements in riser design. The Egina project will feature systems that incorporate BMT’s ROV-Serviceable Subsea Strain Sensor Assembly. This allows for continuous monitoring and data collection, preserving the absolute bending and tension measurement while a single sensor is removed and replaced. BMT provides innovative Integrated Marine Monitoring Systems (IMMS) for a wide range of floating offshore oil facilities including the associated subsea risers and mooring systems.

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GLOBAL PROJECTS

GLOBAL NEWS

NORTH AMERICA Technip wins two subsea contracts Technip has been awarded by Stone Energy Corporation both a flexible pipe supply contract and an installation contract for the Amethyst field, located on Mississippi Canyon 26, in the Gulf of Mexico. The first contract includes the detailed engineering, procurement, fabrication, assembly and testing of a 5-inch production static riser (almost 9 kilometres long) as well as all associated hardware. The second award covers the installation of the pipe as a tieback to the Pompano fixed platform, in approximately 395 metres of water depth. Technip’s operating center in Houston, Texas, USA, will manage the project which is scheduled to be completed during the second half of 2015. The Group will leverage its unique vertical position in the subsea business. The flexible pipe will be manufactured at the Group’s Asiaflex Products plant located in Tanjung Langsat, Malaysia. It will be installed using the Deep Blue, Technip’s deepwater pipelay vessel.

Subsea 7 S.A. contract for installation work in support of the Stampede project Subsea 7 S.A. has been awarded a contract by Hess Corporation for installation work in support of the Stampede Project in deepwater US Gulf of Mexico. The scope of work involves installation of flowlines, steel catenary risers, umbilicals, jumpers and associated subsea architecture which tie-back two drill centres to a tension leg platform hosting drill centres, water injection and gas lifts. Production will be via two 10inch flowlines from each drill centre. The main offshore installation phase is expected to commence in Q3 2016, concluding in Q1 2017. Craig Broussard, Vice President - Gulf of Mexico, said: “We are delighted to have been awarded this important project from Hess Corporation for installation work in support of the Stampede Project. Having worked with Hess before in the Gulf of Mexico on the Tubular Bells construction scope, as well as on flexible product installation for Hess’ Ceiba Field in Equatorial Guinea, we are pleased to be continuing our work with this important client.”

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NEWS IN BRIEF SK E&C USA wins EPC contract for Liquefied Natural Gas’ Magnolia LNG project

SK E&C USA has secured an engineering, procurement and construction contract for Liquefied Natural Gas’ Magnolia LNG (MLNG) project in Louisiana, US. The contract covers the initial four million tonnes per annum LNG installation, featuring two LNG trains. Each LNG train will have a design capacity of 2 mtpa, two 160,000m³ storage tanks, a jetty, a ship loading facility and associated infrastructure. The EPC contract, awarded by Liquefied Natural Gas’ subsidiary MLNG, also covers all required approvals and licences for the entirety of the 8 mtpa project. Plans also include two additional 2 mtpa trains, which will follow the initial installation.

McDermott lands Ayatsil-A Jacket Setup for Pemex

McDermott has been awarded a contract to install the offshore jacket, deck and piles for the Ayatsil-A drilling platform for PEMEX in the Bay of Campeche Ayatsil field. The value of the award is included in McDermott’s fourth quarter backlog. The Intermac 600 will launch the 8,400-ton jacket and the heavy-lift Derrick Barge 50 will complete the installation of the jacket, a 3,400-ton deck and other platform components in waters 400 feet deep. The total weight of the facility is approximately 15,800 tons.

Enbridge tapped for Gulf of Mexico pipeline

Enbridge is working with its upstream partners at Hess Corp. to oversee pipeline developments from a Gulf of Mexico oil field. Enbridge will build, own and operate a crude oil pipeline in the Gulf of Mexico to connect the planned Stampede development. The US$130 million project will start in the deepwater Stampede project and terminate 16 miles away with a connection to a third-party pipeline system. Hess Corp. launched development plans for its deepwater Stampede project in the Gulf of Mexico in late October 2014.

www.projectsogp.com - Spring Edition 2015

GLOBAL PROJECTS

SOUTH AMERICA Modec and Schahin Group wins FPSO charter contract from Petrobras Modec and its Brazilian partner Schahin Group have been awarded a contract for the overall operations of a Floating, Production, Storage, and Offloading (FPSO) vessel for the BM-C-36 block (Tartaruga Verde and Tartaruga Mestica fields) in the Campos Basin by Petroleo Brasileiro S.A. The FPSO will be deployed at Tartaruga Verde and Tartaruga Mestica fields in the BM-C-36 block in the Campos Basin in water depth of 2,509 feet (765 metres). Modec and Schahin Group are responsible for the engineering, procurement, construction, mobilization, installation and operation of the FPSO, including topsides processing equipment as well as hull and marine systems. SOFEC, Inc., a subsidiary of MODEC, will design and supply the spread mooring system. The FPSO will be capable of processing 150,000 barrels of crude oil per day, 176 million standard cubic feet of gas per day, 200,000 barrels of water injection per day and has storage capacity of Compass Print - OGP Advert_Layout 1 28/01/2015 12:10 Page 1 about 1,600,000 barrels of crude oil.

NEWS IN BRIEF Ezra wins US$110 million engineering and fabrication contract

Ezra Holdings Limited wholly owned subsidiary London Marine Consultants (LMC), Ezra’s Floating Production, Storage and Offloading (FPSO) Turret Design outfit has been awarded a contract by Sembcorp Marine’s subsidiary Jurong Shipyard of Singapore, to supply an external turret mooring system for the Libra field’s Extended Well Test FPSO vessel. The LMC scope of supply includes engineering, procurement and construction of the complete external turret. LMC will also design the mooring lines, analyse the risers and provide engineering support for integration of the turret and swivel stack onto the FPSO at Jurong Shipyard.

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GLOBAL NEWS

ASIA

Hilong Marine Engineering wins bid for the provision of offshore pipe-laying services Hilong Marine Engineering (Hong Kong) Limited has recently won a bid for the provision of offshore pipelaying service to CNOOC China Limited. The awarded contract is in relation to Phase II of Weizhou Project. A service contract was signed on November 14, 2014 with a total contract value of US$29.8 million. The provision of offshore pipe-laying service, as contemplated under the contract, will be performed by Hilong 106, a pipelaying vessel of the company. The “Hilong 106” was built by Shanghai Heavy Industries and purchased by Hilong in late December 2013. Equipped with an internationally advanced S-lay system and key equipment including pipe rolling transmission device, two tensioners with 100-ton constant tension, one 200-ton constant tension A/R winch, a fully-automatic welding station and fullyautomatic ultrasonic testing equipment. It also features a maritime heavy lifting crane with a 3000-ton lifting capacity, a 12-point grip mooring system and six 50ton davits. The service is expected to be completed by mid-July 2015.

McDermott wins Bukit Tua contract from PC Ketapang McDermott International, Inc. has been awarded a transportation, installation and pre-commissioning contract by PC Ketapang II Ltd, a subsidiary of Petronas, for the Bukit Tua Development Project in the Ketapang block of East Java, Indonesia. This new contract is for the transportation and installation of the BTJT-A jacket, its related topsides and subsea pipeline tie-in spools. Additionally, McDermott will undertake the pre-commissioning of the related export and infield pipelines. All offshore installation work will be carried out by the McDermott Derrick Barge 30 (“DB30”). The offshore campaign is expected to be completed by end of the first quarter of 2015.

NEWS IN BRIEF Greka awarded drilling gig

Greka Drilling has been awarded a US$45 million contract in China from existing client Green Dragon Gas. The contract will see Greka drill 30 wells for Green Dragon on the Shizhuang South Block in China’s Shanxi Province. Greka expects to start its latest contract with Green Dragon in 2015 and will utilise up to 10 existing GD75 rigs.

L&T to manage Vasai East expansion project

ONGC has contracted L&T Hydrocarbon Engineering for additional development services for the Vasai East project. L&T will be responsible for engineering, procurement, construction, and installation of two wellhead platforms, subsea pipelines, and modification of existing facilities on the Heera-PannaBassein block of Mumbai Offshore. ONGC is seeking to improve recovery from the Vasai East field where production started in 2008. The program should be completed by April 2016.

Orwell Offshore and FES International to supply of an external turret system for the FPSO

TH Heavy Engineering Berhad has contracted Orwell Offshore and FES International to supply of an external turret system for the FPSO Layang. Orwell will deliver the external turret and mooring system, with FES supplying the fluid transfer system, swivel stack, and mechanical components. The FPSO Layang, ex-Deep Producer 1, is contracted to JX Nippon Oil & Gas Exploration (Malaysia) and will operate at the Layang field in block SK10 offshore Sarawak, Malaysia. The turret’s externally bow mounted design will allow the vessel to operate in water depths up to 295 ft. Orwell’s design will ensure a permanent mooring and free weathervaning capability, and the flexibility for later re-deployment to other sites. Both parties should complete the contract, valued at US$40 million in total, by 4Q 2015. Production from the Layang field is expected to begin in summer 2015.

www.projectsogp.com Edition2014 2015 www.projectsogp.com- -Spring AOG Edition

NEWS IN DEPTH

NEWS IN BRIEF

www.projectsogp.com - AOG Edition 2014

ON THE MOVE

ON THE MOVE Highlighting new hires, appointments and movement within the industry

David Currie: Appointed as Chief Executive of JDR JDR is pleased to announce the appointment of David Currie as Chief Executive Officer and a member of the Board of Directors, effective 12 January 2015. David is an accomplished industry leader with nearly 30 years’ experience in the global offshore energy industry, most recently the UK Regional President for Aker Solutions. David will focus on developing JDR’s commercial opportunities, creating new opportunities for the company’s industryleading products and services; from subsea production umbilicals, IWOCS and power cables to aftermarket and installation services.

David Currie

Business Development Manager appointed as IMES targets further growth IMES has appointed a new Business Development Manager as the company targets further strategic growth. Ewan Giles, who is based at the company’s HQ in Aberdeen, is responsible for driving growth in the company’s traditional service Ewan Giles lines, while also promoting its UK-wide capability for developing innovations to solve industry issues.

InterAct appoints Val Lerma as Engineering Manager InterAct, an Acteon company, has appointed Val Lerma, P.E., as Engineering Manager. Lerma will be based in InterAct’s Ventura, California, office and has more than 30 years of experience working with major and independent oil and gas operators, both on and offshore.

Superior Tube and Fine Tubes appoint new Global Director Superior Tube and Fine Tubes, both part of the Watermill Group, are pleased to announce the appointment of Shion Hung to the position of Global Director of Customer Programmes and Business Intelligence.

2H Offshore appoints Madhu Hariharan as Director of London office 2H Offshore, an Acteon company, has appointed Madhu Hariharan as an additional Director in its London office. Hariharan’s considerable riser engineering experience further strengthens the Senior Management Team in the UK and will help develop 2H Offshore’s growing client base in Europe and the Middle East.

Shion Hung

Specialist addition to growing Maxoil Solutions team Madhu Hariharan

Hariharan holds a Master’s Degree in Ocean Engineering and has extensive understanding of deepwater steel catenary and lazy wave risers, drilling, completion and intervention risers and in-depth knowledge of integrity engineering and design, fabrication and installation verification.

Val Lerma

Global oil and gas consultancy Maxoil Solutions has made a key appointment to its team of specialists, with a focus on corrosion monitoring and mitigation. Simon Schapira is a chemistry consultant and a technical authority on corrosion with 25 years’ experience in oil and gas operations. Simon Schapira

www.projectsogp.com - Spring Edition 2015

ON THE MOVE OPT Appoints New President Ocean Power Technologies, Inc. announced that its Board of Directors has appointed George H. Kirby as President, Chief Executive Officer (CEO), and Director effective January 20, 2015. Mr. Kirby has more than 22 George H. Kirby years of experience in the global energy and infrastructure sector including the power and industrial facility sector. He was most recently Senior Vice President for the energy business unit at AECOM Technology Corporation.

“An offer I could not refuse”, Kristin Færøvik becomes new Lundin boss After 4.5 years at Stavanger yard Rosenberg, owned by multinational WorleyParsons, got President Kristin Færøvik a request she simply could not refuse. Kristin Færøvik will asKristin Færøvik sume the role of Managing Director of Lundin Norway in April 2015. Kristin has long and varied technical, operational and management experience in the Norwegian oil and gas industry.

Cisco specialist Arrowdawn appoints Technical Director

Atkins Director elected to the board of the Association for Project Management

Integrated IT networking and communications specialist Arrowdawn has appointed Richard Moir to the newlycreated role of Technical Director.

The Association for Project Management (APM) has announced that John McGlynn from Atkins has been elected to its board. John is a Director within the design, engineering and project management John McGlynn consultancy’s Defence business and as an elected trustee he will also act as both a Company Director and charity trustee for APM for a three year term.

Gordon Adie (left), Managing A former director at Director & Technical Director Cisco Scotland, Richard Richard Moir will be responsible for driving the Aberdeenbased company’s continued growth across the country through the delivery of effective IT and networking solutions to clients. He was previously Principal Consultant for Edinburgh-based FarrPoint.

Intertek appoints former HSE inspector to lead integrity service Intertek has appointed Andy Duncan as Integrity Lead Consultant for its Production and Integrity Assurance (P&IA) Division. Based at the firm’s Manchester office, Mr Duncan will be developing this new Andy Duncan role to lead the integrity service offerings within Intertek P&IA, which employs more than 100 scientific and technical personnel across six countries. Mr Duncan has more than 30 years’ experience in the international oil and gas industry. He joins Intertek from the Health and Safety Executive’s Energy Division-Offshore.

Inchcape selects key Vice Sales President Inchcape Shipping Services (ISS) the world-leading marine, cargo and supply chain solutions provider has announced another key hire to its African regional management team as the company Riaan Blom gears up for ambitious growth across the region in 2015. Joining ISS on 1st January, Riaan Blom takes up the position of Vice President Sales, Africa and will be based in Nairobi. With a career spanning over 20 years, Riaan brings to the role extensive ships’ agency experience with specialisms in project management, freight forwarding and large oil & gas contracts. His most recent appointment was as Regional Manager Oil & Energy, East Africa at DHL Global Forwarding, also based in Kenya.

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TECHNOLOGY

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FINANCE

FINANCE NEWS UK oil tax changes fail to significantly improve investment climate While positive measures have been taken to attract investment in the UK’s exploration and production (E&P) sector, low oil prices and the country’s high tax burden mean that more significant changes are required to make new developments commercially viable. During the annual Autumn Statement, UK Chancellor George Osborne announced a supplementary charge reduction, which will decrease the overall tax rate on the country’s E&P sector from 62% to 60%, effective from 1 January 2015. According to Will Scargill, Fiscal Analyst for GlobalData, this move will improve the sector’s profitability to some extent, but the simultaneous removal of the price-based trigger mechanism, which could have reduced the total tax rate by 12%, will not be considered a beneficial trade-off by E&P investors if the oil price does not rebound from its current levels. Scargill says: “The 2% supplementary charge reduction is unlikely to have a significant impact on investment decisions, as the resultant reduction in fiscal take is limited and the break-even oil price for a typical North Sea field is decreased by less than US$1 per barrel. However, even reducing the charge to 20% would not push the break-even price below US$70 per barrel, suggesting that if the oil price does not rebound in the medium to long term, more substantial changes will be required to allow companies to invest in new field developments.”

Total sells remaining stake in GTT to Temasek Total has entered into a definitive agreement for the acquisition by Temasek of Total’s entire remaining stake in GTT (Gaztransport & Technigaz), representing

10.4% of the company. In February 2014, during GTT’s initial public offering, Total reduced its shareholding from 30% to 10.4%. Following the two transactions, Total will have raised more than US$650 million from the sale of its entire stake in GTT.

Wood Group anticipates wholesome results for 2014 In Wood Group Engineering the anticipated reduction in 2014 EBITA will be less than the 15% indicated in December 2013. In Upstream, activity on offshore projects including Det Norske Ivar Aasen, Hess Stampede and Husky White Rose, together with onshore work in the US have lessened the impact of the slower pace of award of significant detailed engineering work. Wood Group Engineering continue to work on more early stage projects than in recent years and see this as a good indicator of future activity. In Subsea & Pipelines, there has been good activity overall including work with BP on Shah Deniz and Tullow in Ghana. Onshore US pipelines activity continues to be strong, driven by shale related infrastructure development. Downstream, process & industrial has benefitted from the impact of lower gas prices on refining and chemicals work. In December 2014, Wood Group were awarded a 5 year contract with an estimated value of around US$750 million with BP for the provision of services to upstream and midstream operations. The balance sheet remains strong and supports the continued investment in further acquisitions and organic growth.

Repsol reaches an agreement with Talisman Repsol has agreed with Talisman energy to acquire 100% of the shares of the Canadian company for US$8.3 billion plus assumed debt of US$4.7 billion. The transaction has been approved and recommended by the Board of Directors of the Canadian company. The deal will transform Repsol into one of the world’s largest privately-owned energy groups, with increased

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FINANCE presence in OECD countries, incorporating reserves and production in politically stable countries. Once the transaction is complete, North America’s weight in the resulting company will increase to almost 50% of capital employed in exploration. Latin America will represent 22%. The incorporation of Talisman will increase the output of the Repsol Group by 76% to 680,000 barrels of oil equivalent per day, and will boost reserves by 55% to 2,353 billion barrels of oil equivalent. The resulting group will be present in more than 50 countries with over 27,000 employees.

Noreco restructures financial outlook On 12 December 2014 the Company Noreco, requested a temporary suspension of the Company’s shares and bonds on the Oslo Stock Exchange pending discussions concerning amendments to the summons. The discussions concerning the summons were initiated by the Company, which after renewed considerations has concluded that it is necessary to also request a deferral of the interest payments that were due on the Company’s bonds on 9 December 2014. Given this and as payment of interest was an integral part thereof, the previous summons and negotiated waiver and deferral terms can no longer be met. “Noreco’s financial situation and outlook has continued to deteriorate due to the significant and continued drop in oil prices, increases in projected operating costs and accelerated retention of cash to cover future abandonment costs,” says Tommy Sundt, CEO of Noreco. It is the Board’s view that circumstances now dictate that a swift solution to its financial situation must be sought. The Board has therefore decided to put forward a restructuring proposal as attached to this release for discussion with its stakeholders.

Tethys Oil ends on a positive note, with its fourth quarter and end of year report Tethys ends 2014 with yet another strong reserve report. In 2014, it had an internal reserve replacement ratio of 193 per cent and its 2P reserves now stand at 17.8 million barrels of oil. Our oil production remained stable in the fourth quarter, and the company ends the year with a new record high monthly production in December of 8,438 barrels of oil per day. Projects remain robust even at an oil price of US$50 per barrel. In taking everything into consideration the present production volumes and everything else equal, generate an annual operating cash flow of US$

40-50 million even at an oil price of USD 50 per barrel. Following the oil price development, Tethys investment plans for the year are currently being revised. However, it is to be expected that a large part of the upcoming year’s operating cash flow to be reinvested in Blocks 3 and 4 onshore Oman.

Oil price collapse impacts LNG, will spur transaction activity After more than three years of US$100-110 per barrel oil, prices collapsed by nearly 50 percent in late 2014 as the market lost its “manager” after OPEC refused to cut production. Combined with modest oil demand growth since 2010, restored production in countries like Libya and Iraq and the huge increase of US light tight oil production, OPEC’s decision has contributed to a massive supply/demand imbalance and the resulting price drop. The sharp decline in prices has also impacted global gas markets, as oil-linked LNG has fallen to levels on par with hypothetical US LNG export prices. “Five years ago, the worry was ‘peak oil’ and whether or not we’d have enough oil supply, but now the concern is ‘peak demand’,” said Deborah Byers, the Oil & Gas Leader for Ernst & Young LLP in the US. “Unless there is an unexpected change in the supply/ demand balance, a substantial oil surplus — and hence low oil prices — could continue through the first half of 2015.”

Schlumberger to acquire Eurasia Drilling Company Schlumberger has made an agreement to acquire a minority equity interest in Eurasia Drilling Company (“EDC”). The agreement extends the successful long-term relationship enjoyed by the two companies within the strategic alliance signed in 2011, which has enabled deployment of a range of drilling and well engineering services to customers in the Russia land conventional drilling market. The principal shareholders of EDC will take the company private. Upon delisting of the company from the London Stock Exchange, Schlumberger, through one or more subsidiaries, will acquire a minority equity ownership interest of 45.65% in EDC, in exchange for consideration of US$22 per share. The total cost of acquiring this minority interest is approximately US$1.7 billion. This transaction is to close during the first quarter of 2015.

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FINANCE Shell’s Nigerian subsidiary agrees £55 million settlement with the Bodo community Shell’s Nigerian subsidiary, The Shell Petroleum Development Company of Nigeria Limited (SPDC), has agreed to a £55 million settlement agreement with the Bodo community in respect of the two highly regrettable operational spills in 2008. The £55 million settlement provides for an individual payment to each claimant who accepts the settlement agreement in compensation for losses arising from the spills, amounting to up to £35 million in total. The remaining £20 million payment will be made for the benefit of the Bodo community generally.

Premier delivered a strong performance in 2014 Operationally, Premier has delivered a strong performance in 2014, with production exceeding guidance, key milestones reached on a number of its development projects and non-core assets disposed of in a difficult asset market. Premier states that it will, “continue to invest in high quality projects only if they are robust at our conservative oil price assumptions and if their cost base reflects the current oil price environment.” In 2014, Premier achieved record production of 63.6 kboepd, up 9.3 per cent on 2013 and above the upper end of guidance. This strong performance was largely driven by success across the portfolio in improving uptime. UK production increased by 30.2 per cent to 19.4 kboepd, this was due to improved operating efficiency from the Premier operated B Block, flush production from Kyle and increased contributions from Huntington and Rochelle. However Huntington, their principal non-operated asset, continues to suffer from poor uptime due to operational issues and gas export restrictions imposed by the CATS pipeline operator BP. Moreover production in 2015 from existing producing assets, excluding new production from the Solan field, is expected to be around 55 kboepd, reflecting the impact of the sale of the high cost producing Scott area in the UK North Sea.

Multi million pound investment for OTEAC A multi-million pound investment into specialist fire and safety engineering products and services provider, OTEAC, has paved the way for major growth

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and global expansion. This will see the company expand its services in asset management and integrity, including performance verification, design, engineering, installation and commissioning of specialist fire and safety equipment as well as supply, inspection, servicing, testing and maintenance of equipment.

Lundin claims 2015 capital expenditure budget of US$1.45 billion Lundin Petroleum AB has released its 2015 development, appraisal and exploration budget which totals US$1.45 billion and represents a 31 percent decrease on forecast 2014 capital expenditure. The 2015 expenditure on development projects is budgeted at US$980 million which represents a 30 percent decrease on forecast 2014 development expenditure. The 2015 budgeted expenditure on exploration activity is US$320 million this is a 27 percent decrease on forecast 2014 exploration expenditure. The budgeted 2015 appraisal expenditure amounts to US$150 million which is a 48 percent decrease on the forecast 2014 appraisal expenditure.

Northern Oil and Gas, Inc. make agreement to increase equity stake On January 2, 2015, Northern entered into a letter agreement with Robert B. Rowling, Cresta Investments, LLC, Cresta Greenwood, LLC and TRT Holdings, Inc. The Agreement provides that, upon the terms and subject to the conditions set forth in the Agreement, a committee of disinterested directors of Northern’s board of directors approved, for purposes of Section 302A.673 of the Minnesota Business Corporations Act (the “MBCA”), the acquisition by TRT and their affiliates of additional shares of Northern’s common stock in excess of 10% of the issued and outstanding shares but less than 20% of Northern’s issued and outstanding shares of common stock.

Unique Maritime Group secures strategic investment Unique Maritime Group, one of the world’s leading integrated turnkey subsea and offshore solution providers announced a strategic investment from Blue Water Energy. UMG’s CEO, Harry Gandhi, comments “Blue Water Energy has understood our strategy and vision and we are confident that with their industry experience”.

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FINANCE Encana focuses 2015 capital program on four strategic growth assets Encana has a highly focused 2015 capital program of between US$2.7 billion and US$2.9 billion, with approximately 80 percent directed to four of its highest margin growth plays; the Montney, Duvernay, Eagle Ford and Permian. Encana expects to generate approximately 75 percent of its 2015 cash flow from oil and liquids production. The company estimates total liquids production will grow approximately 70 percent compared to 2014 to between 140,000 and 160,000 barrels per day and anticipates overall production of between 405,000 and 440,000 barrels of oil equivalent per day. Encana expects total cash flow between US$2.5 billion and US$2.7 billion, reflecting the impact of higher margin production and continued cost efficiencies, partially offset by anticipated lower commodity prices. “We enter 2015 focused on our long-term strategy, increasing liquids production, capturing new efficiencies throughout the business and protecting our balance sheet. Built into our 2015 plan is the flexibility to respond to the challenges and act on potential opportunities presented in this volatile price environment.”

Wärtsilä strengthens position in automation and electrical systems by acquiring L-3 Marine Systems International Wärtsilä Corporation is to acquire L-3 Marine Systems International from L-3 Communications Holdings Inc. L-3 Marine Systems International is a business sector within L-3’s Electronic Systems business segment primarily focused on the commercial ship industry.

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Inter Pipeline expands on oil sands transportation Inter Pipeline Ltd. announced a US$400 million capital expenditure program for 2015 with a primary focus on the expansion of its oil sands transportation and conventional oil gathering businesses. In 2015, organic growth projects are expected to account for approximately US$340 million of total capital expenditures. The remainder will be spent on sustaining capital requirements across Inter Pipeline’s business segments.

EnQuest feels oil pinch on capital expenditure With hedging in place for 2015, EnQuest has responded expeditiously to the low oil price environment. The 2015 total Group cash capital expenditure programme has been cut further and is anticipated to be in the region of US$600 million, with capital expenditure reductions from both new developments and existing fields. Operating cost per barrel is expected to be reduced by at least 10%, both as the result of cost savings and high margin barrels coming onstream. Control of the cost base has always been a focus for EnQuest and in this new macro environment, it is continuing to work with the supply chain and contractors to achieve additional cost savings. However, EnQuest expects EBITDA for 2014 to be in the range of US$530 million to US$580 million.

Halliburton purchases Baker Hughes for US$34.6 billion Halliburton Company and Baker Hughes Incorporated have made a definitive agreement under which Halliburton will acquire all the outstanding shares of Baker Hughes in a stock and cash transaction.

The transaction is valued at MEUR 285, subject to customary adjustments including an estimated reduction of MEUR 60 for L-3 MSI employee pensionrelated liabilities to be assumed by Wärtsilä Corporation.

The transaction is valued at US$78.62 per Baker Hughes share, representing an equity value of US$34.6 billion and enterprise value of US$38.0 billion, based on Halliburton’s closing price on November 12, 2014, the day prior to public confirmation by Baker Hughes that it was in talks with Halliburton regarding a transaction.

Financing for the deal will be from existing cash resources and credit facilities. The acquisition is subject to clearance from the regulatory authorities. The acquisition is expected to be closed during the second quarter of 2015. Wärtsilä foresees that the new unit will be able to capture new market opportunities and improve operational efficiency for its customers, thereby increasing both the sales and profitability of the business.

Upon the completion of the transaction, Baker Hughes stockholders will own approximately 36 percent of the combined company. The agreement has been unanimously approved by both companies’ Boards of Directors. The transaction combines two highly complementary suites of products and services into a comprehensive offering to oil and gas customers.

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3M Oil & Gas Solutions

Taking on the

Elements

> Protecting People and Their Environment > Extending the Life of Critical Assets > Improving Productivity