OSEA2018 Show Daily Day 1

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OFFICIAL SHOW DAILY PRODUCED BY UPSTREAM

Tuesday 27 November 2018

IN THIS ISSUE Digital innovation and investment in gas: Driving the oil and gas industry in Asia forward Page 9 Solutions to lead the future of maritime industry Page 10 Navigating the murky waters of Southeast Asia’s offshore market Page 11 Digital technologies to lead the oil and gas industry into the next era

Page 12

INSIDE Duo joins LTA list

Boskalis and Lamprell confirm agreement with Saudi Aramco.

Page 3

Chinese drill drive

CNOOC Ltd eyes push in South China Sea deep waters.

Page 4

SKK Migas search

Indonesian government looks for new head of upstream regulator.

Page 6

Ghasha partner

Wintershall joins Adnoc and Eni in drive to develop UAE sour gas project.

Page 7

PTSC takes lead in Al Shaheen race

PETROVIETNAM Technical Services Corporation has emerged as the front-runner in the race to secure a sizeable offshore contract from Qatar’s North Oil Company to provide facilities for the second development phase Page 2 of its Al Shaheen oilfield.

Photo: TOTAL

Dorado the star

Carnarvon and Quadrant hit major oil resource in Australia’s Bedout sub-basin. Pages 14&15 Get up to speed with the latest news from the world of oil and gas. Visit us at Stand BH2 - 10 or log on to www.upstreamonline.com

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Tuesday 27 November 2018

MIDDLE EAST

New contracts: the Al Shaheen field

Photo: TOTAL

PTSC leads Al Shaheen race Vietnamese contractor understood to be in pole position to provide facilities for Qatar field’s second phase NISHANT UGAL and RUSSELL SEARANCKE Singapore

PETROVIETNAM Technical Services Corporation (PTSC) has emerged as front-runner to secure a sizeable offshore contract from Qatar’s North Oil Company (NOC) to provide facilities for the second development phase of its Al Shaheen oilfield.

Multiple industry sources told Upstream that PTSC is “well placed” for the offshore contract, which is said to be worth between US$300 million and US$350 million.

“We are hearing that PTSC is expected to win the NOC contract, although there’s no clarity yet on whether NOC has placed the letter

of award,” a source close to the tender process said.

A second source also confirmed that PTSC is set to win the job and added that the Vietnamese contractor offered a very competitive price.

“The offshore contract was initially thought to be worth more than US$400 million,” said one source, but added that PTSC’s offer was thought to have come in below that level.

NOC, a joint venture between Qatar Petroleum and France’s Total, is carrying out further expansion of the Al Shaheen offshore field. PTSC is believed to

have pipped several international engineering, procurement and construction contractors that were competing for the job.

In addition to the Vietnamese player, other contractors understood to have submitted bids included US-based McDermott, Italy’s Saipem, Malaysia’s Sapura Energy and Singapore-based SembCorp Marine.

The workscope comprises three new wellhead decks and related offshore infrastructure, industry sources said.

The offshore package named as NWHP-01 envisages detailed engineering, procurement, construc-

tion, transportation, installation, pre-commissioning and commissioning of three new wellhead platform decks, three bridges and their integration to existing facilities.

The new platforms — DC, EG and FC — are likely to weigh more than 2100 tonnes each.

Total chief executive Patrick Pouyanne last year said that his company plans to spend more than $2 billion on development work at Al Shaheen over the next five years, adding that its priority would be to maintain output at current levels, believed to be close to 300,000 barrels per day. In addi-

South-East Asia yards turn focus to Middle East jobs

OFFSHORE yards in South-East Asia are increasingly looking to expand their operations in the Middle East after a period in which work closer to home has been hard to come by, writes Nishant Ugal.

Malaysia Marine & Heavy Engineering (MMHE), Sapura Energy, PetroVietnam Technical Services Corporation (PTSC) and Singapore-based SembCorp Marine are some of the leading regional players that have been actively bidding on major offshore projects in the Middle East and beyond.

One project watcher pointed out that

South East Asian yards would continue to focus on Qatar and Saudi Arabia in the short-to medium term as their key strategic markets in the Middle East.

Billions of dollars’ worth of offshore projects are likely to be offered by Qatar, Saudi Arabia and the United Arab Emirates during the next five years and several South East Asian players are pitching in for a higher stake in the region.

While Sapura and PTSC are understood to have either already won or be close to clinching key EPC contracts in Qatar, while

MMHE is poised to enter the Saudi Arabian offshore EPC market by joining state-owned Saudi Aramco’s long-term agreement contracting arrangements.

By one reckoning, more than $20 billion worth of offshore jobs are likely to be offered

by Saudi Aramco over the next five to seven years, providing work to a number of workhungry international contractors.

In addition to opportunities in the fabrication market, many South East Asian players are also understood to be scouting for offshore pipelay work in the Middle East.

tion to the topsides tender, NOC is thought earlier this year to have awarded Sapura a separate contract for Al Shaheen involving the jackets for the three new offshore platforms.

The workscope for the first batch awarded to Sapura includes jackets, each expected to weigh at least 1200 tonnes, while piles are expected to be around 1000 tonnes each, sources said.

Meanwhile, NOC is expected to soon embark on the second part of the Al Shaheen phase two development, with several fresh tenders likely to be floated next year.

One source suggested that during the next phase, two new wellhead platforms are likely to be tendered, followed by two additional units at a later stage.

Total in 2016 was awarded operatorship of Al Shaheen, Qatar’s largest oilfield, for a period of 25 years.

The field accounts for close to half of Qatar’s crude production.

Existing facilities include 33 platforms, 300 wells and several production hubs spread over nine separate locations.

Qatar Petroleum owns a 70% stake in NOC with Total holding the remaining 30%.

The official OSEA2018 show daily is published by Upstream, an NHST Media Group company, Christian Krohgs gate 16, PO Box 1182, Sentrum, N-0107 Oslo and printed by Markono Print Media Pte Ltd, Singapore.

This edition was printed on 26 November 2018. © All articles appearing in the Upstream OSEA2018 show daily are protected by copyright. Any unauthorised reproduction is strictly prohibited.

This newspaper is published by Upstream, which is solely responsible for its editorial content. The editorial content is not necessarily the opinion of the event organisers.

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Tuesday 27 November 2018

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MIDDLE EAST

Duo signs up to Aramco LTAs Boskalis and Lamprell join Saudi giant’s long term agreement arrangements for offshore work NISHANT UGAL Singapore

NETHERLANDS-BASED Boskalis and UK-based Lamprell have signed agreements with Saudi Aramco to join the oil company’s long term agreement (LTA) arrangements for offshore contractors.

Boskalis and Lamprell separately confirmed the development and said they have been selected as LTA contractors as consortium partners.

Four more new players are expected to be added to Aramco’s LTA arrangements.

In addition to the Boskalis-Lamprell pairing, Malaysia’s Sapura Energy, China’s Offshore Oil Engineering Company (COOEC) and a grouping of UK-based TechnipFMC and Malaysia Marine & Heavy Engineering are also expected to soon confirm their inclusion in the LTA programme.

Lamprell suggested that the overall LTA investments to be offered by Aramco could exceed US$3 billion per annum.

One industry source suggested that investments in the LTA arrangement could even be higher than the Lamprell estimate at more than US$4 billion per annum, for the next four to five years at least.

Lamprell added that the Saudi LTA arrangements will have an initial programme duration of six years with options for a further three-plus-three years’ extension.

Boskalis said that the selected LTA contractors will have the right to bid for Aramco tenders without further technical pre-qualification, considerably shortening the lead time through to award.

Lamprell will focus on the engineering, procurement and construction of offshore structures, such as topsides and jackets, while Boskalis will be responsible for the transportation and installation of these structures.

Aramco’s LTA arrangement covers engineering, procurement, construction, transportation and installation (EPCI) contracts to support all of the kingdom’s offshore expansion and maintenance programme.

Five existing contractors or consortia are currently part of Aramco’s LTA list and with four new members set to come on board it will climb to nine.

Aramco’s existing preferred LTA players include McDermott and Dynamic Industries of the US, Italy’s Saipem, a partnership of India’s Larsen & Toubro with Oslolisted Subsea 7 — which last year acquired Emas Chiyoda’s business in Saudi Arabia — and Abu Dhabi’s National Petroleum Construction Company (NPCC).

Aramco has finalised upstream projects worth more than US$6

billion during the past two years while another US$4 billion-worth of projects are currently at the tendering stage.

Aramco is progressing with several key tenders for the expansion of its Marjan and Berri oilfields.

The Saudi state-controlled giant is also thought to be preparing a huge offshore plan for the further development of its Zuluf field, which is likely to involve dozens of platforms and could be worth billions of dollars.

Signing up: Lamprell and Boskalis have joined Aramco’s list of LTA contractors Photo: AFP/SCANPIX

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Cosco cuts first steel for Karish FLOATER FABRICATION

Tuesday 27 November 2018

CHINA

CNOOC Ltd targets drill drive in South China Sea

Qiongdongnan and Pearl River Mouth basins in spotlight for exploration and development push

Chinese yard starts work on FPSO for Energean CHINESE yard Cosco Shipping Heavy Industry has started construction of the floating production, storage and offloading vessel that will be used

by Greek player Energean Oil & Gas for its Karish and Tanin gas fields development off Israel, writes Xu Yihe.

First steel was cut yesterday at Cosco’s Zhoushan facility, marking the start of a fabrication process that is expected to see the yard deliver the floater hull in just 12 months from now.

Energean earlier said that the project to develop 2.4 trillion cubic feet of natural gas from Karish and Tanin is on track for first output in the first quarter of 2021.

Cosco was awarded the hull construction job as a sub-contract from main FPSO contractor Sembcorp Marine (SembMarine) of Singapore.

Once the hull is completed in China it will be delivered to SembMarine, where the topsides will be installed under a contract that the Singaporean fabricator was awarded by Energean’s main project contractor TechnipFMC. Energean has said that sailaway from Singapore is seen in late 2020.

Once completed, the spreadmoored FPSO will be installed in 1700 metres of water off Israel.

The FPSO will be able to store 800,000 barrels of liquids and will have ultimate capability to handle up to 8 billion cubic metres of gas per annum, which equates to about 800 million cubic feet per day.

XU YIHE Singapore

In action: workers work on a drilling platform in the South China Sea Photo: REUTERS/SCANPIX

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CHINA’S CNOOC Ltd is aiming to boost exploration and development in the South China Sea, focusing on the Qiongdongnan and Pearl River Mouth basins.

The recent Yongle and Baodao ultra-deepwater discoveries in the Qiongdongnan basin will serve as a starting point for future development in that area, which could see new production come on stream by 2030.

CNOOC Ltd plans to establish a new gas production hub surrounding the two finds, which lie east of the Lingshui gas field and are each thought to have reserves potential of 100 billion cubic metres of gas.

Also in the Qiongdongnan basin, CNOOC Ltd has officially started development work on its 22 billion yuan (US$3.1 billion) deep-water Lingshui 17-2 field, with first gas scheduled in 2020 and output increasing to 3.5 billion cubic metres per annum at peak.

The company is also considering plans to develop deep-water gas deposits including Lingshui 18-1, 18-2 and 25-1 in the outlying area of Lingshui 17-2.

CNOOC Ltd already produces 6 million cubic metres per day of gas from shallow waters in the South China Sea and aims to boost output by another 9 MMcmd from the western area covering the Yinggehai and Qiongdongnan basins.

It is currently developing two projects in the the Pearl River Mouth basin — the Liuhua 29-1 gas field and Liuhua 16-2 oil complex.

The Liuhua complex lies in water depths ranging from 392 to 429 metres and, incorporating the Liuhua 16-2, Liuhua 20-2 and Liuhua 21-2 oilfields, will accommodate 26 subsea wells in an initial

development phase, with another nine sidetracks to be drilled in phase two.

The three fields are scheduled to start production from July 2020 to March 2021.

At the Liuhua 29-1 deep-water gas field, CNOOC Ltd and operator Husky Energy of Canada will install seven subsea wells at water depths between 520 and 1150 metres.

First gas at the field is expected at the end of 2020.

All the deep-water discoveries lie in water depths of more than 300 metres in the Pearl River Mouth and Qiongdongnan basins.

Based on latest surveys carried out by China’s upstream watchdog, the Ministry of Natural Resources, the deep-water areas of the two basins hold 3.05 billion tonnes (22.4 billion barrels) of oil in place and 6.1 trillion cubic metres of gas in place.

This is out of a total 35 billion tonnes of oil and gas in place, of which gas accounts for 83% in the South China Sea. Industry officials said that before China’s deep-water exploration and development can make significant progress, CNOOC Ltd will need to overcome technical and logistical challenges including the lack of onshore supply bases, technologies to drill high temperature/high pressure wells, complex geology and long lead times for oil and gas testing.

Other hurdles include the harsh sea environment, frequent typhoons, the need for complex subsea structures and power supply challenges.

South China Sea

Petro Matad eyes new well as Wild Horse fails to run MONGOLIA-FOCUSED explorer Petro Matad is plugging and abandoning the second of two large onshore exploration wells in the Baatsagaan basin, having not seen any indications of oil.

The Wild Horse-1 well, drilled in Petro Matad’s 100%-owned Block IV, reached a total depth of 1490 metres in a granitic basement.

In line with the pre-drill prognosis, the well drilled through interbedded sands and shales throughout a prospective section from 650 metres to total depth but no oil shows were observed.

Petro Matad chief executive

Mike Buck said: “The Wild Horse-1 result is clearly disappointing but this was too big a structure to leave undrilled. We will use the data gathered to re-evaluate the Baatsagaan basin and to look again at the prospectivity in the other basins in Block IV.” He added that Petro Matad is fully funded for its 2019 drilling programme, and is in the process of identifying priority targets.

Preparations for drilling in Block XX in the east of Mongolia are well advanced and will focus on near-field and appraisal targets.

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Tuesday 27 November 2018

Extra time for Adoon

PAPUA NEW GUINEA

Progress: PNG Treasurer Charles Abel

PNG passes budget in major boost for projects

Policy and legislative changes expected in year ahead RUSSELL SEARANCKE Singapore

PAPUA New Guinea’s parliament has passed the government’s 2019 budget, which puts an emphasis on the early works and construction phases of new petroleum and mining projects.

In his budget address, Treasurer Charles Abel said the government expects a number of large petroleum and mining projects to start in 2019.

“While production may be some way off, the early services and works will have a significant impact on the economy and buoy business confidence,” said Abel.

Between 2019 and 2023, the economy is expected to grow at an average annual compound rate of 5% bolstered by work on these projects, which will include Papua LNG, Pasca, Stanley and P’nyang, according to budget papers.

There are five producing oilfields and eight producing gas fields in the country and the sector has significantly contributed to the growth of the PNG economy. However, the “challenge for PNG is to maximise the benefits

for economic growth and ensure that this translates into tangible developments”, said the budget papers.

To this end, the government is aiming for certain policy and legislative changes “to better regulate the sector and ensure revenue gains are optimised over the life of the project, learning from the lessons of the PNG LNG project”.

The government next year will embark on a number of policy and legislative changes including amendments to the Mining Act 1992 and the Petroleum Act 1998.

There will be a policy that guides state participation in resource projects and third-party access in the oil and gas sector; a policy to guide the distribution and management of benefits to landowners and subnational governments; and the introduction of a policy on domestic market obligations for gas and petroleum products.

However, in 2019 the government’s total expenditure is reportedly going to be US$500 million more than revenue.

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Photo: PNG CHAMBER OF MINES & PETROLEUM

MALAYSIA’S Yinson Holdings has received a fresh interim extension for its Adoon floating production, storage and offloading vessel to continue operations at the Antan field off Nigeria.

Yinson last week confirmed that Sinopec subsidiary Addax Petroleum had extended its contract for the floater from 16 January to 16 April, adding that talks over a “substantive” extension were ongoing.

The FPSO contract was originally awarded in October 2006 for a firm eight-year period with options to renew for a further eight years.

The initial contract expired in October 2014 and was originally extended for another 12 months, until October 2015 and thereafter for another three years to 16 October 2018.

Addax last month again extended the contract.

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Velesto hit by low rig work

Tuesday 27 November 2018

INDONESIA

RIG MARKET Malaysian contractor optimistic about new jobs MALAYSIAN offshore drilling contractor Velesto Energy reported a net loss in the third quarter of 2018 due to lower rig utilisation but the outlook for new work is promising, writes Russell Searancke.

Velesto, formerly UMW Oil & Gas, said revenue in the threemonth period ended 30 September 2018 was 150.3 million ringgit (US$36.3 million), which was 16.7% less than the corresponding period last year, due mainly to lower drilling rig utilisation rates.

The company’s net loss for the quarter was 13.3 million ringgit compared to a net profit of 3 million ringgit in the same period of 2017.

All seven of Velesto’s jack-up rigs generated income but only two of them contributed a full-quarter revenue compared to four in the corresponding three months last year.

Currently six out of its jackups rigs are working with one just completing a contract.

Two more units expected to complete their contracts by the end of this year while the remainder of the fleet will continue into 2019.

“Based on the current outlook, an increased number of new drilling contracts are available starting from the second quarter of 2019,” said Velesto.

“The group is aggressively bidding and negotiating for new contracts to replace expiring ones. However, time charter rates are expected to remain challenging due to

Frac woe in Victoria THE Australian state of Victoria is set to permanently ban hydraulic fracturing after the Labor Party retained power in a landslide victory over the Liberal-National coalition.

With 71.43% of the vote counted on Monday, the Labor Party had claimed 52 seats, well above the 45 required to win power, while the coalition had only claimed 24 seats, three had been awarded to other parties and only nine still remained in doubt.

In the lead up to the election, Premier Daniel Andrews promised to ensure fracking was banned in Victoria by enshrining the current legislative ban on the practice into the state’s constitution, which will make it much more difficult to remove.

Labor also currently has a ban on conventional exploration in Victoria that is set to remain in place until at least 2020.

End of term: Amien Sunaryadi has retired as head of SKK Migas

Photo: EOIN O’CINNEIDE

SKK Migas in hunt for Amien successor Indonesian government still running rule over options for next head of upstream regulator AMANDA BATTERSBY Singapore

INDONESIA’S upstream regulator SKK Migas faces having to find a new leader after Amien Sunaryadi officially completed his term last week.

The nation’s president Joko Widodo is still considering candidates to replace Amien, who is understood to have stepped down on 20 November, two days past his intended departure date.

The rumour mill is swirling in Jakarta with suggested replacements including former Pertamina president director Dwi Soetjipto, and Djoko Siswanto, director general of oil and gas at the Ministry of Energy & Mineral Resources. Meanwhile, SKK Migas

officials have been quick to assure industry that the industry watchdog’s operations and regulatory oversight will not be compromised during the time before a new boss comes on board.

However, the stated stance comes as SKK Migas is evaluating Plans of Development for projects such as Chevron’s Indonesia Deepwater Development and will likely soon receive the revised PoD for the Inpex-operated Abadi liquefied natural gas project.

It is understood that Japanese operator Inpex has completed the pre-front end engineering and design study for the Abadi development scheme, which is now

being reviewed by SKK Migas.

Amien’s departure might have come after he completed his appointed four-year term. However, it also comes at a time when Indonesia is struggling to attract E&P investment.

As of early November, only 56% of this year’s targeted upstream investment had been realised and there has only been limited take-up of this year’s offered oil and gas acreage.

Neither SKK Migas nor the Ministry of Energy & Mineral Resources would be drawn on when a successor to Amien might be announced.

An SKK Migas spokesperson

refused to comment on whether the government was struggling to line up suitable candidates.

The day-to-day functions of the upstream regulator are currently being handled by the deputy chairman of SKK Migas, Sukandar, who goes by just one name as do many Indonesians.

Sukandar was also put in the frame by one source as a contender to succeed his former boss as head of the regulator.

SKK Migas

Show Daily

Tuesday 27 November 2018

MIDDLE EAST

Wintershall joins team for Ghasha sour gas push German player takes 10% stake alongside Adnoc and Eni in project to develop UAE concession ANAMARIA DEDULEASA London

GERMANY’S Wintershall has joined state player Abu Dhabi National Oil Company (Adnoc) and Italy’s Eni as a third partner in the Ghasha sour gas concession off the United Arab Emirates.

Under the deal, Wintershall will take on a 10% interest in the offshore development, which includes the Hail & Ghasha, Dalma and other offshore sour gas fields, including Nasr, Satah Al Razboot and Mubarraz.

Eni was awarded a 25% stake in the Ghasha concession earlier this month.

The move comes as Adnoc looks to bring in more partners, aiming to capitalise on the technological expertise of international oil companies and further de-risk the challenging ultra-sour gas projects in the area.

Adnoc chief executive Sultan al-Jaber said: “Development of the Ghasha concession area is a strategic priority for Adnoc.

“The gas, extracted from the concession area, at commercial rates, will make a significant contribution to fulfilling our commitment to ensuring a sustainable and economic gas supply and achieving our objective of gas self-sufficiency for the UAE. “Wintershall has extensive experience of appraising and developing ultra-sour gas resources in technically complex fields.

“It is a partnership in which each company will benefit from the experience of the other as, together, we optimise costs and ensure we extract the maximum value from all the available gas resources,” he added.

Wintershall chief executive Mario Mehren added: “The project also fits excellently with our strategy. We have been working since

KISWIRE_N2Hyrope_AD_146x181_161017.pdf 1 2016-10-17 오후 1:34:04

Strategy: Wintershall chief executive Mario Mehren

2010 on strengthening the Middle East region by investing here and developing it into another growth region for Wintershall. And we achieved that goal today by signing the contract.”

The 40-year concession is expected to produce more than 1.5 billion cubic feet per day of gas at peak and could help make Abu Dhabi a net exporter of gas by the middle of the next decade.

The Hail & Ghasha and Dalma sour gas projects will tap into the Arab basin, which is estimated to hold multiple trillions of cubic feet of recoverable gas, Adnoc said.

The project is also expected to produce 120,000 barrels per day of oil and condensate.

Meanwhile, in addition to developing the Ghasha concession area, Adnoc plans to increase production from its Shah field to 1.5 Bfd and also proceed to develop the sour gas fields at Bab and Bu Hasa.

Al-Jaber has previously said the company is ready to get started with work to increase its oil production capacity to 4 million barrels per day by 2020, and to 5 million bpd by 2030 to meet growing global demand.

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Viking in joint venture deal

SINGAPORE-LISTED Viking Offshore & Marine has entered into a joint venture agreement that will see it target opportunities in China.

Viking’s subsidiary Viking Airtech Pte Ltd (VAPL) has entered into the pact with an unnamed Chinese partner in connection with Viking Airtech Shanghai (VASH), a wholly-owned subsidiary of VAPL. Viking plans to use the partner’s local oil and gas expertise,

which spans 16 years, to secure orders for products and services in China.

Under the agreement, VAPL and the Chinese partner will commit and extend capital contributions by way of cash of up to 2 million yuan (US$288,000) in a 49:51 split.

The deal would see VAPL’s shareholding in VASH reduced to 49%, with the Chinese partner taking a 51% stake, following the completion of the first tranche of capital contributions to VASH.

Photo: WINTERSHALL

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DNO in offer for Faroe NORWAY’S DNO has launched a hostile takeover bid for London-listed Faroe Petroleum that values the UK independent at £607.9 million (US$780 million).

The Oslo-listed player is offering 152 pence for each Faroe share, which represents a 20.8% premium to Faroe’s closing price on 23 November, as it laid its cards firmly on the table after building up a “strategic” 28.22% stake in the company earlier this year.

DNO executive chairman Bijan Mossavar-Rahmani said: “We are pleased now to engage directly with the Faroe shareholders.”

He claimed that without a deal: “There is no assurance of Faroe achieving its full value potential in a volatile commodity and financial markets environment”.

Faroe’s shareholders have a 60-day period in which to take up the DNO offer after receiving bid documents, which are due to be issued in two to four weeks.

Faroe “strongly urged” its shareholders to take no immediate action, adding it “will meet together with its advisers to consider the offer” before making an announcement.

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Loss at Bumi Armada

Tuesday 27 November 2018

BLACK SEA

SOUTHEAST ASIA MALAYSIAN offshore and marine contractor Bumi Armada reported a net loss of 502.8 million ringgit (US$121 million) in the third quarter of 2018 due mainly to impairment charges on certain vessels.

Excluding the impairment charge of 563.5 million ringgit and net allowance for impairment losses of 14.5 million ringgit, the group posted a net profit of 75.2 million ringgit in the three-month period ended 30 September 2018.

The company recorded revenue of 588 million ringgit for the same quarter, a decrease of 66 million ringgit compared to the prior three months.

For its floating production business, Bumi said it has now completed final acceptance of the Armada Kraken floating production, storage and offloading vessel and is looking to continue to improve operations on its existing units.

In its offshore support vessel business, segment activity remains weak, and Bumi is in the process of implementing a revised plan for the segment.

“The group is currently focusing on optimising our cost structure and looking to strengthen our balance sheet via monetisation of under-utilised assets and generating sustainable cash flow,” said the company.

Court date delayed THE trial to hear the floating production, storage and offloading vessel dispute between Australia’s Woodside Petroleum and Malaysian contractor Bumi Armada has been delayed until February 2019.

The Supreme Court of Western Australia had previously listed the trial to begin on 15 October 2018, but Woodside successfully applied for an extension of time, according to Bumi.

The new date is 18 February 2019, and Bumi reiterated that there are “reasonable grounds to expect a favourable outcome” in respect of its claims against Woodside.

Woodside in March 2016 unexpectedly issued a notice of termination to Bumi for its FPSO working on the Balnaves oilfield off Western Australia.

The Armada Claire FPSO had been on contract since August 2014 under a four-year fixed charter with extension options.

Woodside said the termination was due to “performance-related issues”. Bumi disputes this, saying its contract was “wrongfully terminated”.

Bumi Armada is seeking damages of US$275 million.

Looking ahead: BSOG chief executive Mark Beacom

Photo: BSOG

BSOG hands out major contract for Midia field GSP Offshore to carry out EPCIC for offshore and onshore facilities, as well as development drilling at Romanian gas development ANAMARIA DEDULEASA Singapore

BLACK Sea Oil & Gas (BSOG) has awarded an engineering, procurement, construction, installation and commissioning contract for all offshore and onshore facilities, as well as the development drilling contract for the Midia gas development project off Romania to local player GSP Offshore.

Romanian independent BSOG, together with partners Petro Ventures Resources and Gas Plus International, said the award is contingent on a final investment decision being taken on the Black Sea development, which centres on the planned exploitation of the Ana and Doina gas discoveries.

The final investment decision was originally expected to be announced in the fourth quarter of this year but has been pushed back to early 2019 after Romania changed offshore regulations.

BSOG said it is evaluating the implications of the new regulations before making any decision. Meanwhile, the company

continues to award the contracts and agree supply deals with local and international players for future production.

The EPCIC contract covers the procurement, construction, installation and commissioning of the complete subsea gas production system for the Doina field, as well as the construction, installation and commissioning of a new unmanned production platform to be located on the Ana field. The platform will be built at GSP’s fabrication yard in Constanta.

In addition, the workscope includes the subsea pipeline system that will link the production platform to shore, the onshore pipeline and the new gas treatment plant that will be built in Vadu village.

A contract has also been concluded for the development drilling of five production wells.

This work will comprise one subsea well at the Doina field and

four platform wells at Ana, for which GSP will deploy the jack-up rig GSP Uranus, BSOG said.

Building the entire project infrastructure is estimated will take two years, according to the company.

The value of the contract has not been disclosed, but BSOG said that the total cost of the project will around US$400 million, with around 70% of this related to contracting activities.

Mark Beacom, chief executive of BSOG said: “In line with our objective to bring this project to FID we have recently announced the signing of our transportation agreement with Transgaz and a gas sales agreement with Engie.

“We are now very pleased to announce that we have concluded this EPCIC contract and development drilling contract with the largest Romanian offshore contractor for our pioneering Midia project that could provide 10% of Romania’s gas needs, utilise the

services of local contractors and subcontractors, deliver gas into the Romania market and deliver significant benefits to our local community as well as to the country.”

However, Beacom again warned that the company’s ability to take a final investment decision on Midia is tied to its ongoing evaluation of the country’s offshore law.

“Once all the remaining milestones have been reached, (a final investment decision) is subject to the vote of the partners and shareholders and critical to that vote will be how the new offshore law, particularly in relation to these new fiscal provisions, impacts the decision to proceed with the investment in the project,” he said.

BSOG

Organised by:

Tuesday 27 November 2018

Marina Bay Sands

osea-asia.com

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Digital Innovation and Investment in Gas: Driving the Oil & Gas Industry in Asia Forward

K

ey strategies for new near-term growth opportunities are being spotlighted at OSEA201 8 — with close to 1,000 exhibiting companies from over 40 countries and regions and 16 country group pavilions taking part this year.

The growing demand for gas in Asia and the need to embrace digitalisation and new innovations to move the oil and gas industry forward in this digital age will be discussed over the three days.

Asia’s Gas Outlook

The Thought Leaders Panel at the OSEA2018 Conference, comprising LNG leaders from BP, Pavilion Energy, as well as energy consultants Wood Mackenzie and legal advisors Ashurst spotlights the liquefied natural gas market in Asia, and the outlook on key growth areas and challenges in commercialisation, distribution and financing.

“South East Asia will be the single largest regional growth market for LNG over the next 10 years and as such will continue to be a focus area for the global industry. One of the key themes for 2019 is the new wave of investment in global LNG supply which is imminent, with new projects chasing the growing market opportunity from 202223 looking to take FID next year. These will offer new offtake and partnership opportunities for South East Asian buyers and NOCs,” says Chris Graham, Vice President — Energy Consulting, Wood Mackenzie, and moderator of the Thought Leaders Panel.

“While new LNG construction projects offer great opportunities for the engineering and service sector across South East Asia, reaching commercial close on new

Innovation

and

Opening Ceremony 9am, Level 3, Begonia Ballroom

Virtual Reality Welding Demonstration and Competition Show opening hours, Level 1, 1H3-06

Digital

With emerging technologies driving change in the operating landscapes of almost every sector, the digitalisation journey of the oil and gas industry to achieve increased productivity, better safety and overall enhanced financial and operational performance also features strongly at OSEA2018.

Speaking at the OSEA2018 Conference on how oil and gas companies can achieve digital transformation with Alibaba Cloud’s AI and Big Data platform, Yang Kan, Regional Manager of Data Intelligence Business, Alibaba Cloud says: “We are committed to leveraging our knowledge and experience to build a strong ecosystem for our partners in the oil and gas industry to help them create more effective business models for the digital era.”

The conference will also feature a session by Sanjay Bakshi, Head of Digital Transformation & Ventures, Shell, on building a digital strategy for maximum Return on Investment and how technologies and innovations in the Internet of Things,

Key events at a glance Keynote: The Future of Global Oil & Gas Supply and Demand Dynamics Thom Payne, Director, Westwood Global Energy Group 920am, Level 3, Begonia Ballroom

infrastructure will also require support from financiers and lenders, legal firms and eventually shipbuilders,” he adds.

Taking a step forward to invest in downstream facilities and solutions for the growing LNG ecosystem, Singaporebased turnkey service provider and EPC company SSB Cryogenic Services (SSB) and Global Petro Storage (GPS) Singapore, a global investment firm specialising in asset management in the energy industry, inked an Collaboration Agreement worth US$50 million to build and bring small-scale LNG supply chain solutions to Southeast Asia.

Embracing Strategies

#OSEA2018

automation and Artificial Intelligence can be leveraged to achieve cost and operational efficiencies for sustainable business. In addition, a panel discussion on cyber safety in oil and gas, discussing practical and actionable considerations to safeguard critical Information Technology and Operating Technology assets and a masterclass on building a roadmap for the digital oilfield will follow.

On Level 1, a VR welding competition in collaboration with AllAlloy and Lincoln Electric demonstrates how using smart immersive technology for hands-on training can facilitate and speed up competency in welding, to help fill skills gaps in the industry. Additionally, additive manufacturing and design optimisation for offshore and marine applications will be demonstrated by Nanyang Polytechnic at its booth.

Capitalising Benefits of Additive Manufacturing for Marine and Offshore by Nanyang Polytechnic 10.30am – 11.30am & 2.30pm – 3.30pm, Level 1, 1T2-02 Tech Garage 11am – 4.30pm, Basement 2, BT4-04 Sonardyne Seminar – Fusion 2: A New Chapter in Acoustic and Inertial Subsea Positioning 1pm – 6pm, Level 3, Angsana, 3E OSEA Industry Networking Night 6pm – 8pm, Level 4, Foyer

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Tuesday 27 November 2018

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El Coqui combination container roll-on/roll-off vessel, designed and built by VT Halter Marine for Crowley Maritime Corporation

Solutions to lead the future of maritime industry Chew Men Leong, Chief Marketing Officer, ST Engineering and Deputy President & President (Defence Business), Marine, shares solutions that will lead the future for the maritime industry

T

he future of the maritime industry is one exciting topic revolving around the endless possibilities which smart autonomous vessels and greener engineering solutions will bring.

ST Engineering has levelled up this discussion with the showcasing of several of its innovative solutions at OSEA2018.

This includes solutions for Smart Autonomous Vessels, cybersecurity, scrubber retrofit solution, as well as solutions for liquefied natural gas-powered vessels that will help ship operators meet stricter emission regulations in 2020.

Smart Autonomous Vessels Unmanned Surface Vessels (USVs) offer safe and reliable alternatives to address mundane repetitive operations and provide much needed relief to counter manpower crunch and simplify labour-intensive tasks. These translate to enhanced operational efficiency, safety, reliability and cost savings in the long term for both military and commercial uses.

With a track record in delivering USVs operating in dense commercial shipping waters, ST Engineering has the capability to design and integrate the three key autonomy systems of a USV namely HM&E (through NERVA SMS2), navigation and operation.

The in-house developed NERVA ship management and sensemaking system (SMS2) is a class-certified integrated alarm, monitoring and control system that provides ship operators with intelligent hull, mechanical and electrical (HM&E) management and control of the ship systems.

This can be done through real time, centralised control and monitoring of platform sensors and systems including intelligent health monitoring and predictive diagnostics on platform machineries.

The NERVA SMS2 manages the vessel’s engineering plant to optimise vehicle readiness based on mission and conditions.

The Group has also developed the navigation and operation autonomy systems.

The navigation autonomy system is capable of autonomous navigation with collision avoidance based on COLREGS, while the operation autonomy is in charge of remote/ autonomous control of payloads.

Autonomous Underwater Vehicle Solutions for Autonomous Underwater Vehicle (AUVs) will also be showcased.

The NEPTUNE AUV is used to conduct a myriad of subsea operations such as seabed mapping, underwater pipeline and cable inspections, debris field inspections as well as search and salvage.

It is equipped with a fully autonomous capability, supported by robust guidance, navigation and control algorithms that enable steady underwater navigation along planned routes during subsea operations.

It is also equipped with a sophisticated sonar, which can capture high resolution imagery and data of subsea objects.

Deepening Smart Connectivity for the Maritime sector Developed to suit various operational requirements of the Public Safety and Maritime

OSEA2018 Exhibitor Addendum

Booth

Company

Country

1J6-03

Six Tee Engineering Group Pte Ltd

Singapore

1K4-06

OSM International Services

Netherlands

NERVA ship management and sensemaking system (SMS2) is a class-certified integrated alarm, monitoring and control system that provides ship operators with intelligent HM&E management and control of the ship systems

sectors is the SuperneT™ Maritime Integrated Communications System (MICS), which integrates all communications needs on a single platform for both ship-to-shore and shore-to-shore maritime as well as offshore voice communications.

The IP-based SuperneT ™ enables seamless interoperability with disparate communications systems, optimising operational efficiency and situational awareness for vessels, port operators and maritime control centres.

Boosting Cybersecurity Protection for the Maritime Industry Cyber-attacks on critical information infrastructures (CII) including the maritime sector will be highly disruptive, leading to critical impact on essential services and even human lives.

To address these cyber vulnerabilities, ST Engineering has developed a comprehensive suite of capabilities that will help CII defend against sophisticated cyber-threats through its cutting-edge products such as the Black Computer, the DigiSAFE DiskCrypt M10 and the DigiSAFE Data Diode.

Stricter IMO Emission Regulations & Cleaner Alternatives As 2019 approaches, the market will continue to see ship operators race against time to ensure compliance to IMO’s stricter emission regulations. CoSCRUB™ was designed and developed by the Group’s Engineering Design Centre as an open loop wet scrubbing system that can be easily installed on all vessels.

Shipowners who are interested in innovative and cost-effective diesel engine exhaust abatement solutions that can meet impending MARPOL regulations will benefit immensely from this fully automated system.

With the impending IMO 2020 sulphur cap implementation and growing number of Emission Control Areas (ECAs), LNG has quickly become one of the most appealing marine fuel options.

The demand for LNG-powered vessels will continue to soar in the near future as regulations promoting a greener and more sustainable environment are implemented.

Having built the world’s first Combination Container Roll-on/Roll-off (ConRo) ships powered by LNG, ST Engineering will showcase some of these LNG-powered solutions, such as LNG bunkering vessel solutions and gas-powered near shore power plants.

The maritime industry will continue to adopt digital technology at a rapid pace, in part due to changing regulatory requirements and the need to address issues relating to limited manpower, enhanced productivity and efficiency. Shipbuilders, owners and operators alike need to be even more conscious of the risks involved as well as acknowledge the headwinds to come in the form of regulatory, ethical and legal concerns. As conversations continue, let us charge forward.

ST Engineering: Booths BE3-10, BK2-01, BL5-04

Tuesday 27 November 2018

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Navigating the murky waters of Southeast Asia’s offshore market OSEA conference speaker Thom Payne, Director, Westwood Global Energy Group, talks about the macro-economic environment currently shaping higher oil prices, the mid-long term outlook for regional E&P activity, and the timing of a more substantial market recovery WHAT is the current state of the oil and gas industry? Where is it heading?

The past month has been quite a rollercoaster for those trying to divine the answer to where the oil market is headed.

As recently as October, sentiment was as bullish as it had been since 2014 as Brent topped US$80 per barrel and E&P companies’ profitability and cash-flows started looking like pre-crash levels.

Since then the apparent U-turn of the US government on Iranian sanctions as well as the reinvigorated US shale industry has threatened to flood the market with excess crude, which has seen oil prices fall to under $60 per barrel.

Saudi Arabia has attempted to stop this freefall by reintroducing production cuts — so, in the near-term at least, all eyes will be on meetings between Saudi and Russian state officials at the G20 summit in Argentina next week as well as the OPEC meeting scheduled for 6 December.

Industry bulls will be hoping for a commitment from Arab OPEC states and Russia to cut production by at least 1 million barrels per day to counter Iranian export waivers.

However, whilst the US and Middle East land markets are generally quick to react to macro-economic winds, these events have not had a noticeable impact on the “long-cycle” offshore O&G industry.

Jack-up and deep-water floating rig counts remain in the doldrums with global utilisation currently at 62% and 54% respectively.

Despite this, improved industry sentiment combined with significant industry cost rationalisation has seen a notable uptick in new offshore project sanctioning. Over the past 12 months,

projects such as ONGC’s R-Cluster in India, Mubadala’s Pegaga in Malaysia and Cooper’s Sole field in Australia have all gotten the green light.

Any notable trends on your radar?

The region’s shift towards offshore gas production has been well documented, and this is set to continue with numerous world-class projects in the pipeline — think IDD and Abadi in Indonesia, Kasawari in Malaysia and Block B in Vietnam.

Geographically, the Rakhine basin in North Myanmar has been something of a bright spot with regards to new frontiers, and it has seen significant investment in both exploratory drilling and onshore infrastructure. However, as with many gas projects across Southeast Asia, the negotiation of complex commercial terms between governments and foreign E&P players may be a stumbling block to future activity.

Could market volatility present valuable opportunities for industry players?

It’s somewhat fashionable to look for opportunities in a crisis, but what the offshore market really needs is a period of stability. We have seen numerous “false dawns” over the past three to four years.

If oil prices are able to stabilise above $65 per barrel over the remainder of 2018, it may start to embolden the industry and trigger increased levels of the more “speculative” investment required to really “move the needle” and improve the fortunes of offshore contractors.

In addition, the offshore supply chain is not just reliant on E&P companies to stimulate demand but also the banking/ investment sector to provide/restructure debt to finance expansion. A steady,

Westwood Global Energy Group director Thom Payne Photo: WESTWOOD GLOBAL ENERGY GROUP

robust rate of growth is needed to thaw the frosty, negative mindset the financial community currently holds on offshore oil and gas.

E&P spending has been on the rise.

What’s your view on it?

At the back end of 2017, local E&P companies had generally budgeted for increased levels of capital spending in the region as recent cost efficiency measures improved operating cash flows. This sentiment has also been echoed by major service companies such as Schlumberger, which are expecting double digit revenue growth across international markets in 2019; with much of this coming from offshore and exploration-related activities.

However, despite more positive news flow we don’t expect a major improvement in local offshore activity in the near term as new project sanctioning (mainly long-cycle offshore developments) will take time to translate into tangible volumes of work for the

supply chain.

Furthermore, there is a sense of “having your cake and eating it” as new project sanctioning generates more work. However, it has been largely driven by supply chain efficiency and lower industry costs. This likely means that pricing for contractors in the drilling and offshore marine markets will remain suppressed for the next couple of years.

Most important takeaway for OSEA conference delegates?

A firm understanding of the macroeconomic environment currently shaping higher oil prices, as well as the mid to long-term outlook for regional E&P activity and the timing of a more substantial market recovery.

If delegates are able to leave the event armed with the above then they should have a solid foundation for navigating the murky waters of the Southeast Asian offshore market over the next few months.

Conference Highlights: Tuesday 27 November OSEA 2018 OPENING CEREMONY 9.00am

Welcome Address by UBM

9.05am

Opening Address by Guest of Honour

9.20am

Keynote: The Future of Global Oil & Gas Supply and Demand Dynamics

9.40am

GOH Tour of Exhibition

Morning Tea Break OSEA2018 CONFERENCE 10.30am

Country Insights on Market Outlook, Investment Opportunities and Latest Oil & Gas Developments: Norway and USA

11.00am

Thought Leaders Panel: LNG Market in Perspective – An Asia Outlook

11.45am

Building a Digital Strategy for Maximum ROI

Lunch Break

12.15pm 1.15pm

Panel Discussion: From Electrification to Digitalisation, Are We Doing Enough About Cyber Safety in Oil & Gas?

2.00pm

Digital Transformation (DX) through Co-Innovation

2.25pm

Digital Transformation with Alibaba Cloud’s AI and Big Data Platform

Afternoon Tea Break

2.45pm 3.00pm

Masterclass: Building a Roadmap for the Digital Oilfield: From Advanced Analytics to Predictive Maintenance

4.00pm

Masterclass: Smart Autonomous Vessel: Technology Roadmap, Opportunities and Challenges

5.00pm

End of Conference Day 1

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Tuesday 27 November 2018

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Lux Research Energy Transition analyst Harshit Sharma Photo: LUX RESEARCH

Digital technologies to lead the oil and gas industry into the next era The widespread deployment of emerging digital technologies will have a fundamental impact on operational and financial performance of E&P assets, according to OSEA conference speaker Harshit Sharma, Analyst on the Energy Transition team at Lux Research

T

he “Digital Oilfield” has been one of the most discussed topics in the oil and gas industry in the past few decades. Whether oil prices soar or crash, digital technologies are often touted for finding more oil, extracting it more efficiently and, most importantly, keeping producers financially in the black.

However, there are several emerging digital technologies that have yet to see widespread adoption, which could further enhance the operational and financial performance of the oil and gas industry.

As a matter of fact, in 2017 the World Economic Forum (WEF) in collaboration with BP projected that a full digital transformation of the oil and gas industry could create more than US$1 trillion in economic value for industry players.

However, digitalisation is not new. The oil and gas industry has led the adoption of several technologies, such as seismic data acquisition and data processing technologies, at a far greater rate than many other sectors.

With that, as the oil and gas internet of things (IoT) continues to expand, the range of technologies and vast amounts of data available at every single stage of the upstream process could be overwhelming — bringing both opportunities and challenges in innovation.

While there are several technologies,

Lux Research believes the following are the top four digital technologies that will have the greatest impact in the digital transformation of oil and gas.

with several existing companies pivoting towards the offshore industry for new opportunities.

• Downhole communication: Sensors form the cornerstone of any IoT system in the oilfield for data acquisition and communication. To date, the industry has innovated heavily in fibre optics and acoustic telemetry for downhole sensing.

However, despite the benefits these technologies offer, there are limitations, as these sensors are exposed to high pressure and high temperature during operations.

Moving forward, there are potential innovations in downhole sensing as developers look to deploy acoustic sensors that produce accurate fracture imaging and monitoring for shale operations.

• Artificial intelligence: Probably the most highly anticipated technology to date and one with the largest impact for digital solutions in oil and gas, primarily due to its applicability in almost every aspect of the value chain.

For example, Shell, one of the leaders in artificial intelligence adoption in the industry has made a series of strategic investments to build its own portfolio of AI providers.

While Shell and several of its peers — BP, Total and Chevron — are actively involved in AI, the rest of the industry has yet to catch up.

Moving forward, mid-sized oil and gas companies and downstream refiners will gradually adopt AI solutions as well.

• Edge computing: As with many industries, oil and gas has pretty much migrated to the cloud, such as Shell and Chevron with Microsoft Azure and Total with Google Cloud.

Yet, despite these notable relationships, challenges remain in remote environments, particularly for offshore projects where a lack of connectivity and high latency remain troublesome and unresolved.

As interest in offshore projects continues to grow, we expect a higher adoption of edge computing solutions

• Blockchain: Blockchain has garnered a significant amount of interest in every industry globally, but a truly tangible benefit and return on investment has yet to be discovered.

While blockchain has made headway in financial services, food supply chain management and even healthcare, the oil and gas industry still lags in adoption.

Despite the slow momentum, blockchain can be a significant disruptor for oil and gas in the years ahead.

Importantly, these technologies will not be deployed in a silo and will likely

require the development and deployment of complementary technologies and new business models. Irrespective of your position in the oil and gas value chain, two key takeaways emerge when thinking about a digital transformation strategy.

First, it remains critical to identify the business proposition and use the case for digital technologies first. While many have been swept up in the hype of digital transformation, more than 80% of time digital transformation projects fail due to a lack of clarity on the right application, the right data and how to measure success.

Identifying value creation is important before deploying any digital solution.

Second, identify your core expertise and evaluate the benefits of building your own digital platform versus bringing in outside technology — the classic “build or buy” dilemma. But as highlighted above, several oil and gas companies have found success using external collaborators, be they start-ups or major technology companies, and continue to look outward for innovation rather than focusing on developing technologies internally.

As the oil and gas industry continues to evolve and the rise of digital technologies permeates through its value chain, it will transform the operational and financial excellence of those who adopt technologies early and integrate them seamlessly into their physical, organisational and cultural infrastructure.

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Tuesday 27 November 2018

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EUROPE

BP celebrates Clair start-up UK supermajor starts production at challenging development in West of Shetland area ROB WATTS London

UK SUPERMAJOR BP has started production from its £4.5 billion (US$5.8 billion) Clair Ridge scheme, the second phase of development at the giant Clair field in the remote West of Shetland region.

BP, with partners Shell, Chevron and ConocoPhillips, expects to recover an estimated 640 million barrels of oil from the twin-platform development, with production expected to ramp up to a peak of 120,000 barrels per day of crude.

Bernard Looney, BP’s upstream chief executive, said: “The start-up of Clair Ridge is a culmination of decades of persistence. Clair was the first discovery we made in the West of Shetland area in 1977. But trying to access and produce its 7 billion barrels proved very difficult.

“We had to leverage our technology and ingenuity to successfully bring on the first phase of this development in 2005.

“And now more than 40 years after the original discovery, we have first oil from Clair Ridge, one of the largest recent investments in the UK. This is a major milestone for our upstream business and highlights BP’s continued commitment to the North Sea region.”

The development was originally expected on stream in 2016 but there were delays with the construction of topsides modules that were compounded by challenges with the hook-up and commissioning of the facilities, located in harsh waters 75 kilometres west of the Shetland Islands.

Ariel Flores, regional president for BP’s North Sea business, said: “Safely delivering first oil from Clair Ridge, in some of the harshest conditions in the UK continental shelf, is the result of years of planning and hard work by BP, our partners and supply chain colleagues.

“We are proud to have played our part in this pioneering project and are excited for the Clair region’s continued potential.”

The Clair Ridge start-up also follows that in May last year of Quad 204, the massive redevelopment of the Schiehallion and Loyal fields, another BP project located in the West of Shetland area.

BP said Clair Ridge is the first offshore deployment of proprietary enhanced oil recovery technology called LoSal, which is designed to increase recovery by using reduced salinity water in water injection.

BP reckons this will result in up to an additional 40 million barrels being recovered over the lifetime of

landmark: BP’s Clair Ridge facility in the UK West of Shetland area

the development. In addition to the platforms, the project also includes new pipeline infrastructure.

A 5.5-kilometre, 22-inch diameter oil export pipeline ties into the Clair phase one export pipeline, which takes oil to the Sullom Voe Terminal (SVT) on Shetland.

Meanwhile, a new 14.6-kilometre, six-inch gas export pipeline tying Clair Ridge into the West of Shetland Pipeline Systems (Wosps) will transport gas to the SVT. Clair Ridge also features an advanced drilling rig, which is set to be at work for more than a decade.

The infrastructure includes 36 well slots, two of which are being used for the tie-back of pre-drilled wells.

Andy Samuel, chief executive at the UK Oil & Gas Authority (OGA) said: “First oil from the newly built Clair Ridge platform is a major milestone for the UK continental shelf.

“The OGA continues to view the West of Shetland [area] as strategically important with substantial remaining potential.”

Deirdre Michie, chief executive of trade association Oil & Gas UK, said: “First oil at Clair Ridge represents a major milestone in BP’s developments West of Shetland, the frontier region which is likely to have the greatest potential to expand current UK production.

“This is another firm step towards maximising economic recovery from the basin,” she added.

BP operates Clair Ridge with a 28.6% interest alongside partners Shell on 28%, ConocoPhillips on 24% and Chevron on 19.4%.

BP in July agreed to buy a 16.5% interest from ConocoPhillips and,

once that deal completes, the UK operator will hold a 45.1% interest with ConocoPhillips retaining 7.5%.

The first phase of development at Clair began in 2005. It was the first offshore fixed facility to be installed in the West of Shetland

region. The Clair partners are evaluating a potential third phase of development of the field.

The eight Clair Ridge modules — 53,000 tonnes in all — plus the bridge connecting the platforms were installed in two campaigns

Photo: BP

in 2015 and 2016. BP said the commissioning project was the largest to have taken place in the North Sea in more than 20 years and involved more than 6000 people with 750 offshore at any given time.

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Tuesday 27 November 2018

AUSTRALIA

On target: the jack-up Ensco 107 drilled at Dorado for the field partners

Photo: CARNARVON PETROLEUM

Dorado the star in new play Partners Carnarvon and Quadrant hit major oil resource in addition to anticipated gas in Bedout sub-basin RUSSELL SEARANCKE Wellington

T

HE large Dorado oil discovery off Western Australia has confirmed a new offshore oil province in the country and created a buzz of anticipation around the discovered play and surrounding areas.

Australia was desperate to find a new oil province given domestic crude production is fading fast, but no-one expected the unfancied and rather neglected Bedout sub-basin to provide the solution.

Quadrant Energy and Carnarvon Petroleum spudded the Dorado-1 well in early June using the jack-up Ensco-107 and they expected to find half a trillion cubic feet of gas in the primary Caley sandstone, not oil.

Instead, they hit a very handsome oil column in the Caley as well as gas and condensate in other intervals.

The oil volume is 171 million barrels of oil on a gross best estimate contingent basis. The gas

volume is 552 billion cubic feet on the same basis, along with 16 million barrels of condensate for good measure.

The same joint venture partners had previously scratched the surface in 2014 and 2016 with the Phoenix South-1 and Phoenix South-2 wells that found modest volumes of oil but not in the Caley sandstone.

Spectacular success

The Phoenix and Phoenix South fields contain about 23 million barrels of oil on a gross best estimate contingent basis.

The spectacular and unexpected success of Dorado-1 is significant for the two companies with direct interests in the field — Quadrant and Carnarvon — and smaller players with surrounding acreage will hope to emulate that success.

Quadrant, which a few years ago acquired Apache Corporation’s

Australian subsidiary, had only just completed drilling Dorado-1 when it accepted a takeover offer from Australian independent Santos.

Santos’ share price gained 12% immediately, while Carnarvon’s shares have boomed about 123% over the past couple of months.

3D Oil, which has a nearby exploration permit in the Bedout, also saw its share price leap even though it has not even acquired seismic.

The Dorado co-owners, and that includes Santos, are thoroughly enlivened by the new find, and are keen to bring it on stream as soon as possible via an early oil production system.

Santos, which expects to imminently complete its acquisition of Quadrant, recently said Dorado will initially produce 50,000 barrels per day of oil, but emphasised this is a “low-end type estimate of what we expect the Dorado devel-

The Dorado result has unlocked a number of similar structures nearby and they’ll be receiving plenty of attention next year.

Carnarvon chief executive Adrian Cook

opment to look like in terms of production volumes”. Santos chief executive Kevin Gallagher says: “We might have taken a conservative view on this but we’ve not tested it yet.

“We want to go and drill the appraisal wells next year. We’ll test it, and if it is significantly bigger than we’re assuming here, then great.”

Drilling of the Dorado-2 and Dorado-3 appraisal wells and a development-spec 3D sweep are planned for next year followed by

a final investment decision in 2020. The area is in shallow water, which is jack-up drilling territory, and the development concept is a wellhead platform tied to a leased floating production, storage and offloading vessel.

The early thinking is that Dorado will be the hub, which can grow to accommodate the remaining oil, gas and condensate that have been discovered at Phoenix, Phoenix South and Roc, as well as future discoveries.

Carnarvon says the exploration

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Tuesday 27 November 2018

15

Discovery partners dominate new area

New find: Carnarvon Petroleum chief executive Adrian Cook

Photo: LUCAS DAWSON

off Western Oz “upside is staggering” in the four permits that it holds with Quadrant.

“The Dorado result has unlocked a number of similar structures nearby and they’ll be receiving plenty of attention next year,” says Carnarvon chief executive Adrian Cook.

“The Dorado structure was new on our prospects inventory some two years ago. This is another reminder that we expect to unlock more opportunities as we drill and build our knowledge over time.”

New play

Dorado opened up a new play type in multiple stacked, high-quality sandstone reservoirs that are set up and trapped by what is now known to be the shale-filled Dorado Canyon, says Carnarvon.

The nearby Apus Canyon is similar and numerous other prospects have been de-risked due to the success of Dorado. Three in par-

ticular — Roc South, Pavos and Apus — have tremendous resource potential.

Bill Ovenden, Santos’ vice president of exploration, says: “There’s no doubt in our minds that this is one of the most exciting things on anyone’s radar at the moment.

“It’s the biggest oil discovery, we think, in the last decade offshore Australia, and with the Quadrant acquisition we’ll be taking an 80% equity position in it.”

“The thing that’s got our exploration guys a little bit wound up about the Bedout basin and Dorado is the fact that not just Dorado but the other drilling has delineated an extensive kitchen with some of the best oil-prone source rocks we’ve seen anywhere on the North West Shelf,” adds Ovenden.

“It’s a real credit to the Quadrant exploration team to take it to this place, but there’s a lot more running room. “There are a lot

more prospects and leads linked to that hydrocarbon kitchen and we’re pretty excited about it.”

Quadrant has put up the majority of the exploration capital so far, but it was Carnarvon that spotted the opportunity a decade ago and bid successfully for four permits covering 20,000 square kilometres — the majority of the Bedout area.

Local energy consultant EnergyQuest says previous explorers had sidestepped the Bedout on the basis of a handful of unsuccessful wells aimed at shallower gas prospects.

Carnarvon and privately-owned partner Finder Exploration worked with new ideas, funded a 3D seismic acquisition and developed a farm-out package that attracted Apache and JX Nippon.

Finder and JX Nippon sold out in 2016 leaving Quadrant and Carnarvon to write the Dorado story.

THE success of the Dorado oil discovery off Western Australia has piqued the interest of the industry, but there is relatively little acreage available in that specific area, writes Russell Searancke.

The find’s co-owners Quadrant Energy and Carnarvon Petroleum have sewn up most of the Bedout sub-basin with their four permits covering 20,000 square kilometres.

The Bedout is a smallish subdivision of the surrounding Roebuck basin, which itself is part of the Northern Carnarvon basin.

The Offshore Exploration Section within the federal Department of Industry, Innovation and Science says the majority of the Bedout is covered by Quadrant’s and Carnarvon’s blocks WA-435-P, WA-436-P, WA-437-P and WA-438-P. The Dorado and Roc discoveries are located in WA-437-P while the Phoenix and Phoenix South finds are in WA-435-P. The Offshore Exploration Section says a small portion of the Bedout straddles the south-east corner of release area W18-4 that is currently up for grabs in Australia’s 2018 licensing round.

Another release area in the 2018 round, W18-5, is along the western boundary of W18-4.

Bids for both W18-4 and W18-5 are due on 21 March next year, and sources say there is keen interest in both areas but especially W184.

W18-4 and W18-5 reside in the Beagle sub-basin alongside the Bedout, and there are hints that the Beagle could host the Lower Triassic oil play discovered at Dorado.

The south-east corner of W18-4 provides the possibility of direct

analogues of the Dorado discovery.

W18-5 is close to numerous oilfields in the Dampier sub-basin including Mutineer-Exeter.

Geophysical company TGS recently bought from Polarcus the 22,000-square kilometre multi-client Capreolus 3D survey covering the Beagle and Bedout sub-basins.

Just a few weeks after signing the purchase agreement, Quadrant and Carnarvon made the Dorado discovery within that survey area.

“What we see now is that the industry, the whole international industry, is now looking at Australia again and trying to really understand what’s going on with that Dorado discovery, and we are very, very hopeful that our database will attract a lot of seismic sales over the next two years,” says TGS chief executive Kristian Johansen.

TGS, which is also reprocessing its Polly 3D seismic survey within the same Bedout-Beagle area, says its dataset provides E&P companies with modern contiguous 3D data linking Dorado to the release areas W18-4 and W18-5.

As for the Roebuck basin, the Offshore Exploration Section says only the southern region is covered by active exploration permits, with a majority of the northern part of the Roebuck where water depths are greater than 1000 metres remaining unlicensed.

One exploration permit in the Roebuck basin was made available in the 2017 licensing round.

This block, W17-4, located on the northern boundary of Quadrant-operated WA-435-P and WA-436-P, recently received one bid and that is currently being assessed.

Find boosts hope for neighbouring juniors QUADRANT Energy and Carnarvon Petroleum have sewn up most of the acreage around the Dorado oil discovery but there are active permits nearby held by junior companies looking for partners, writes Russell Searancke.

Quadrant and Carnarvon are partners in four permits — blocks WA-435-P, WA-436-P, WA-437-P and WA-438-P — that cover nearly all the Bedout sub-basin.

The Dorado and Roc discoveries are located in WA-437-P while the Phoenix and Phoenix South finds are in WA-435-P. Carnarvon also has a fifth permit in the Bedout, WA-521-P, which is along the northern border of WA-435-P. The company has a 100% interest in WA-521-P and is seeking a farm-in partner to pursue “significant oil prospects” including the Labyrinth play.

“Results from the Phoenix South-3 well in particular have enhanced the confidence of the Labyrinth play type,” says Carnarvon, which adds that its Ivory prospect on WA-521-P is estimated to contain 420 million barrels of mean recoverable oil.

Along the eastern border of the Quadrant-Carnarvon permits is Block WA-527-P, which is wholly-owned by junior 3D Oil. The company recently identified possible Dorado lookalike

structures based on open-file 2D seismic data.

3D Oil has begun reprocessing certain 2D seismic lines acquired on the western side of its acreage.

“It should be noted that significant additional geophysical interpretation is required before 3D Oil can fully confirm and delineate these features,” says the operator, which is seeking a partner to fund 3D seismic and accelerate exploration.

Two other permits considered to be along trend from the Quadrant-Carnarvon discoveries are in the Roebuck basin and owned by private company Pathfinder Energy.

Pathfinder has a 100% interest in blocks WA-487-P and WA-479-P that are located about 150 kilometres north-east of the Quadrant-Carnarvon area.

The company in March was seeking to farm out some interest to fund 3D seismic and drill an exploration well.

The main prospect is called Pina Colada, which sits in WA-479-P and has an estimated mean prospective oil resource of 180 million barrels.

Western Australia

16

Show Daily

Tuesday 27 November 2018

AUSTRALIA

Inpex ramps up Ichthys output Operator celebrates 20-year drive to develop technically challenging project off Western Australia JOSH LEWIS Perth

JAPANESE operator Inpex is ramping up production from its Ichthys liquefied natural gas project off north-west Australia after 20 years of work that led to the recent start-up of its first operated LNG project.

Inpex started production from the first liquefaction train at Ichthys in July this year, leading on to the first shipment of condensate on 1 October that in turn was followed by the first LNG shipment on 22 October.

“The project itself has been and remains one of the most technically demanding resource projects on the planet for many years,” Inpex director of operations Conor Walker told delegates at a Petroleum Club of WA dinner in Perth last week.

“While every year has been a busy time on Ichthys, these last few months have certainly been very exciting for the whole of Inpex family, whether in Tokyo or in Australia.”

It marked the culmination of a 20-year journey that began in 1998 when Inpex was first awarded the permit off Western Australia where it discovered the giant Ichthys gas condensate field two years later.

“What made the Ichthys project so special to me was that many thought it would never happen, [they asked] ‘who’s Inpex? They’ll never get it off the ground’,” Walker said.

“We were able to, through the drive and determination of our teams, to achieve something that the doubters thought wouldn’t happen. We delivered it, we are

producing and we are producing well.”

Being a first time operator, Inpex’s journey from discovery to production was not without its challenges.

The project suffered delays pushing back the original start-up, which had been expected in 2016, and the project’s costs increased from an initial estimate of US$34 billion to US$40 billion.

Another challenge, which Walker appeared to present as both a gift and a curse was that the maiden operator was working with “a blank canvas” as it embarked on its first major project.

“We had no legacy. All you long to do, go after it, create what you want to. You would be amazed at how a blank canvas can be a really hard thing to work with when not everyone has the same image in mind and there are so many painters with access to the brushes. Amazingly hard but very enjoyable and a great challenge.”

Everything had to be created from the ground up, including the systems, such as information and management systems, which needed to be put in place for the development and future operation of the facilities.

“In all this we had an interesting overlay on our efforts, we only had ourselves to blame if it didn’t turn out right at the end,” Walker said.

“There was no one before us to point at to blame for the positions we might find ourselves in, to blame for why things didn’t work.

I’m really pleased now to say we

Overview: Inpex director of operations Conor Walker

haven’t found the need to be upset with our handiwork as yet.”

Gas from the Ichthys field has already made its way to Inpex’s end user customers in Japan and On location: the Ichthys Venturer FPSO moored at the Ichthys field

Photo: INPEX

the project’s second liquefaction train commenced production on 10 November.

As of last week, Icthys had shipped four LNG cargoes, one liquid petroleum gas cargo and two condensate cargoes, with more vessels approaching both the onshore and offshore facilities to load more cargos.

The Ichthys field, which lies about 220 kilometres off Western Australia, is estimated to contain more than 12 trillion cubic feet of gas and 500 million barrels of condensate.

Output is gathered within the field’s central processing facility, which Inpex claims is the world’s largest semi-submersible platform, where liquids and gas are

Photo: ROVIS MEDIA

separated. The liquids are piped to the nearby Ichthys Venturer floating production, storage and offloading vessel and offloaded via shuttle carriers, while the gas is sent via a 890-kilometre subsea pipeline to onshore liquefaction facilities at Bladin Point, near Darwin in the Northern Territory.

The project is expected to reach peak production within the next two to three years that will include as much as 8.4 million tonnes per annum of LNG, 1.6 million tpa of LPG and up to 100,000 barrels per day of condensate.

Inpex, which operates the project with a 62.245% interest, is partnered by Total on 30% and several other players with smaller stakes.