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Kenzie plays decisive role in offshore platform tribunal

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Kenzie plays decisive role in offshore platform tribunal

Kenzie Group has played an integral role in the owning company of an offshore platform successfully defending itself against claims from an engineering, procurement and construction contractor in a tribunal that lasted 50 days.

After negotiations between the owning company and the EPC contractors failed, the case was heard by three arbitrators in Oslo, who ultimately awarded the contractor just 10 per cent of the value of the claims that were made.

The defence was supported by the dispute resolution services of Kenzie Group, whose team provided written evaluations extending to hundreds of pages to the tribunal.

Kenzie’s documentary evidence provided arbitrators with a clear explanation of the methodology used in order to value the claims and assess variations from the contract of work.

The evidence also included calculations, measurements, drawings, industry norms and rate calculations to support the evaluation, which found the variations to be substantially lower than the amounts claimed.

Kenzie also worked with a leading Oslo law firm to provide litigation support services and assist them in dealing with issues that arose during the hearing.

In the final award, the arbitrators commented favourably upon Kenzie’s witness testimony.

Joseph Bond, managing director of Kenzie Group, said: “We were instructed to value some of the EPC contractor’s claims and variations on behalf of our client, and to prepare the client’s counter claims.

“We provided a comprehensive, substantiated and logical report that formed a key part of our client’s defence, and we were pleased that the arbitrators agreed with our assessment.”

 

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China’s March To Biggest Oil Importer Hits US Shale Roadblock

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China’s March To Biggest Oil Importer Hits US Shale Roadblock

The world’s biggest oil importer. The title nobody wants.

For decades the U.S. held undisputed rights to the crown. Last year, China squeaked ahead for the first time amid growing demand and as rising U.S. shale production displaced overseas deliveries. The Middle Kingdom looked poised to become the center of the crude importing world.

Then $30 oil happened. U.S. drillers shut the most rigs in modern history, production began to fall and imports have rebounded. Chinese oil firms also shuttered output and kept demand growing. Now the two are neck and neck.

“I don’t think any country would want to boast about being the world’s largest importer of crude,” said John Driscoll, chief strategist at JTD Energy Services Pte in Singapore. “Who gets more nervous during OPEC meetings? Who’s more vulnerable to supply disruptions, geopolitics or resource nationalism?”

The one group with no reason for dismay is the Organization of Petroleum Exporting Countries, which needs buyers to soak up a supply glut that has cut prices in half from two years ago.

U.S. Imports

The U.S. imported 8.04 million barrels of oil a day in March, according to the Energy Information Administration, the most since August 2013 and about 330,000 more than China did in the same period. U.S. output has fallen 5.9 percent since peaking in April 2015, and drillers have idled 80 percent of the country’s oil rigs since October 2014.

The increase in U.S. imports comes after years of declines due to increased shale production. Meanwhile Chinese economic growth has boosted imports four-fold since the beginning of 2005, making the country the second-largest consumer in the world. China imported more oil than the U.S. in a month for the first time in April 2015 and again in February.

China’s crude production dropped by the most in 15 years in May as producers from PetroChina Co. to Cnooc Ltd. reduce drilling in unprofitable fields. Lower domestic output will increase the country’s dependence on imports from the Middle East and Russia, Gordon Kwan, head of Asia oil and gas research at Nomura Holdings Inc. in Hong Kong said in an e-mail. China also recently allowed smaller independent refineries, known as teapots, to begin importing oil directly, creating new buyers.

“I don’t see the U.S. overtaking China on a consistent basis,” said Amrita Sen, chief oil economist for Energy Aspects Ltd. in London. “Especially since China now has sustainably higher crude demand from teapot refineries.”

–With assistance from Sarah Chen. To contact the reporter on this story: Dan Murtaugh in Singapore at [email protected] To contact the editors responsible for this story: Ramsey Al-Rikabi at [email protected] Aaron Clark, Alpana Sarma

 

 

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Venezuela Says Oil At $50 Enough To Avoid PDVSA Default

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Venezuela Says Oil At $50 Enough To Avoid PDVSA Default

Crude prices around $50 a barrel are enough for Venezuela’s state oil producer to avoid a default on its debt, company president and national oil minister Eulogio Del Pino said Thursday in an interview.

“$50 is enough,” he said on Bloomberg Television from Russia at the St. Petersburg International Economic Forum. The company’s average production cost is around $12 a barrel, he said.

Petroleos de Venezuela SA will be able to make payments on its dollar bonds due later this year, Del Pino said. PDVSA, as the Caracas-based company is known, has interest and principal payments totaling $1.4 billion in October and $2.8 billion in November, according to data compiled by Bloomberg.

“We are working to pay that,” Del Pino said, noting that “we have been paying all of our debts” during what he called “the longest cycle of low prices that we have had.”

Crude’s rally from a 12-year low at the start of the year to near $50 a barrel is helping boost Venezuela’s ability to repay debt. Still, prices are well short of the $121.06 a barrel the South American country needs to balance its budget, according to RBC Capital Markets. Venezuela, which depends on oil for 95 percent of its export revenue, remains the country most at risk of failing to pay its debt in the world, according to credit-default swaps.

PDVSA’s $3 billion of 12.75 percent bonds due in 2022 have risen along with oil prices since hitting a record low on Feb. 11, the same day when crude futures in New York traded at their lowest since May 2003. They have since gained 12 cents to about 47 cents on the dollar on Thursday, with yields at about 34 percent.

To read about Venezuela default fears, click here.

The company will continue to use its refineries in the U.S., most of which are operated by its Citgo Petroleum Corp. subsidiary, to support its business, Del Pino said, when asked if the company had any plans to sell them in order to meet its debt payments. The reopening of a refinery in nearby Aruba will also be a “big plus” for the company, he said.

Service Companies

Del Pino said that PDVSA is working to with some of its “most important” service providers to change their contracts after companies including Halliburton Co. and Schlumberger Ltd. said they have curbed activity in the country because of unpaid invoices.

“We are changing the scheme of the contracts,” he said, describing a new scenario in which future oil production will be able to pay for investment needed for new drilling. He said it wasn’t a production sharing agreement and that “the control is going to be all the time in the hands of PDVSA.”

“We are changing the way of the relationship,” he said, without directly naming which service companies he was talking about. “They have been operating in the country for more than 100 years. They are not going to leave.”

The country has enough active rigs to sustain production in the Orinoco oil belt and hold off any further decline in output, he added.

A new military service company known as Camimpeg is not yet operating and will eventually focus on providing services to PDVSA and its joint-venture partners in remote, “frontier” areas near the border with Colombia, Del Pino said.

China Demand

The company is currently sending about 300,000 barrels a day to China, Del Pino said, confirming that there had been talks with the Asian country about renegotiating some of its debt.

“We are in that process to talk with our friends, the Chinese,” he said “We’re talking all the time. We’re monitoring the price, the conditions to bring the oil to China. That’s something that is all the time under discussion.”

Venezuela produces about 2.6 million barrels of crude a day, in addition to 150,000 barrels a day of condensate, Del Pino said. That’s more than the 2.3 million barrels a day that Bloomberg estimates show for the country in May. Some secondary production reports that state lower production levels for Venezuela don’t always include some heavier grades of crude, Del Pino said.

 

 

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Iran Oil Comeback That Startled Doubters Approaches Roadblock

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Iran Oil Comeback That Startled Doubters Approaches Roadblock

Iran easily beat expectations with its speed in boosting oil exports after the lifting of sanctions. Without an injection of cash and the easing of remaining trade barriers, the recovery may have run its course.

When restrictions on Iran’s oil exports were relieved in January following a nuclear pact with world powers, analysts from Goldman Sachs Group Inc. to Barclays Plc doubted it could return to previous levels this year. The Persian Gulf state defied the skeptics with a 25 percent surge in production and aims to reach an eight-year high of 4 million barrels a day by year-end.

“They have surprised most market participants with the speed they’ve been able to resume production,” said Antoine Halff, a senior fellow at the Center on Global Energy Policy at Columbia University in New York. “But to exceed pre-sanctions levels would require investment and technology and that’s a much longer-term proposition.”

Returning to world markets after more than three years of isolation, Iran is seeking more than $100 billion of investment from international partners to rehabilitate its oil industry and ultimately reclaim its position as OPEC’s second-biggest producer. Still, companies are still waiting for Iran to approve the contract model to be used in deals and for clarity on remaining U.S. sanctions before re-entering the country.

Iranian Wins

Since limits on crude sales were lifted, exports have doubled to about 2 million barrels a day, flowing again to previously prohibited markets in Europe, where Royal Dutch Shell Plc and Total SA resumed purchases. Production reached pre-sanctions levels of 3.6 million barrels a day in April and maintained that level in May, the Paris-based International Energy Agency estimates.

Iran’s own figures have output climbing to 3.8 million barrels a day in May, with plans to hit 4 million by the end of the year and ultimately reaching 4.8 million within five years, Oil Minister Bijan Namdar Zanganeh said June 3 in Vienna. With Total, Eni SpA and BP Plc having expressed interest in developing Iran’s resources, Zanganeh predicts the first deals with foreign companies will be signed within three months.

While oil analysts concede that Iran surpassed their initial forecasts, they aren’t convinced its greater ambitions will be realized soon. Qamaar Energy Chief Executive Officer Robin Mills and independent consultant Peter Wells, who both have experience working in Iran, say that sustaining a level of 3.6 million to 3.8 million a day is more realistic.

New Investment

Oil ministry officials didn’t immediately respond to requests for comment on whether output would plateau without the added spending.

Iran will need billions of dollars of investment and foreign technology to boost reservoir pressure to expand capacity at its aging, cash-starved wells, which were already suffering output declines before sanctions hit, the Paris-based agency estimates. Even with an influx of investment, returning to 4 million barrels a day won’t happen before 2021, the IEA predicts.

“They are doing everything they possibly can on their own while waiting to bring in foreign partners,” said  Bjornar Tonhaugen, an analyst with Rystad Energy AS in Oslo, an oil consultant that advises more than 600 clients. “The risk now is that it’s not sustainable.”

Iran can boost capacity by 300,000 barrels a day in the next several years from deposits in the West Karoun area near the Iraqi border, said Tushar Tarun Bansal, an energy analyst at consultants FGE in Singapore. Zanganeh, in an interview with Iranian magazine Seda Weekly published June 11, said the country can add 700,000 barrels a day from these fields over five years.

Model Contract

However, attracting foreign capital will be a struggle when a model contract for oilfield investment isn’t ready and as a range of U.S. sanctions remain in place, said FGE’s Bansal.

Even after dropping sanctions on Iran’s oil sales, the U.S. still prohibits transactions related to the Islamic Republic from being conducted in dollars, restrictions imposed because it accuses Iran of human rights abuses and sponsoring terrorism. Zanganeh acknowledged last week that the oil contract models need further revisions.

“The big question for the Iranians is: ‘Are they going to get all the investment they want?’” Daniel Yergin, vice chairman of consulting firm IHS Inc., said in a Bloomberg television interview. “Companies are going to be very cautious about making new commitments to Iran. No one wants to run afoul of U.S. sanction law. ”

Market Reaction

A series of output disruptions from Nigeria to Canada and Venezuela has meant that the extra Iranian oil has been easily absorbed by the market rather than depressing prices, said Mike Wittner, head of oil market research at Societe Generale SA in New York. Crude futures recovered to more than $50 a barrel last week, nearly double the 12-year low reached in January. With Iran’s comeback almost complete and global demand rising, traders are starting to wonder how much world markets will tighten in 2017, he said.

“By the end of this year Iran will be maxed out,” said Wittner. “Is it bullish? Yeah. When I look around the world and I need a bit more OPEC crude, I ask myself where it’s going to come from.”

 

 

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Applied Acoustics equipment to assist in project investigating the risks associated with storing carbon dioxide under the seabed

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Applied Acoustics equipment to assist in project investigating the risks associated with storing carbon dioxide under the seabed

Southampton researchers are playing a key role investigating the risks of leaks from carbon dioxide (CO2) storage reservoirs situated under the seabed.

Academics from the University of Southampton will work with colleagues at the University of Edinburgh and the National Oceanography Centre Southampton (NOCS) on a NERC-funded project to understand the risks involved in the storage of CO2 in depleted oil and gas reservoirs and saline aquifers in the North Sea.

Carbon Capture and Storage (CCS) is recognised as an important way of reducing the amount of CO2 added to the atmosphere, and oil and gas reservoirs and saline aquifers are the preferred storage location of most European nations. However, a key element in the safety of such storage is to fully understand the risks of any leakage.

University of Southampton lead scientist Professor Jonathan Bull, a professor in Geology and Geophysics, said: “The location and potential size of any possible CO2 leakage at the sea floor is critically dependent on the distribution and permeability of fluid pathways in the marine sediments overlying any proposed storage reservoir.”

The four-year project aims to develop better techniques to locate these sub-seafloor structures and determine the permeability of the pathways so that they can be better constrained and quantified. Amongst other equipment specified for the project, the Applied Acoustics’ DTS-500 deep-tow sparker will be used to survey the geology beneath the seabed to determine, in high resolution, the geophysical stratigraphy of the sedimentary basins.

 

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Ecofix: Corrosion damage repair

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Ecofix: Corrosion damage repair

Subsea Industries has just announced a new product for filling and building up a corroded and pitted steel surface to its original form prior to recoating with Ecoshield. Ecofix is as tough as the steel itself, machinable, and can be used to repair most pitting or corrosion damage on rudders, stabilizer fins, thrusters and other underwater gear.

Ecofix is used in combination with Ecoshield, the ultimate rudder protection coating. When a rudder or other piece of underwater ship gear has not been properly protected, the surface will become corroded. Cavitation damage can cause severe pitting. The steel needs to be restored to its original shape with a smooth surface prior to recoating. This is where Ecofix comes in. It is a superior, tested and proven filler. Because it uses the same basic resin as Ecoshield, the coating can be applied  just one hour after the filler. And because it is part of the Ecospeed/Ecoshield family, it is fully compatible with the coating.

Ecoshield gives permanent protection against cavitation damage for all running gear. The glassflake reinforced coating protects the rudder for the service life of the ship without need for recoating or major repair and comes with a ten-year guarantee.

With the launch of the new product, Subsea Industries offers a full package;  Ecofix restores the surface of the rudder or other underwater gear and Ecoshield will protect the area from ever suffering corrosion and cavitation damage again.

Contact one of our offices today and put a permanent end to worries about cavitation and corrosion damage to rudders and underwater gear.

 

 

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Norwegian Oil Unions Threaten Drilling Rig Strike

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Norwegian Oil Unions Threaten Drilling Rig Strike

Nearly 300 employees on oil and gas drilling rigs off Norway could go on strike unless a wage deal is agreed by June 22, the country’s state-appointed mediator said on Thursday.

Rowan Companies’ Viking and Gorilla rigs will be affected, one of the unions involved in the wage talks said. It was not clear if other rigs would be affected.

The mediator said that around 3,000 workers could join a long-term strike.

Labour disputes on drilling rigs typically halt oil and gas exploration and drilling of new production wells at existing fields, but do not affect current production at wells.

One of the unions, Safe, said 79 of its members working on Rowan Companies’ Viking and Gorilla rigs would go on strike if no agreement is reached.

Unions and the rig owners are due to meet to negotiate an annual wage deal on June 20 and have set a deadline to reach an agreement by midnight on June 21. They have not publicly disclosed the terms demanded.

The Viking rig currently does work for Swedish oil firm Lundin, while the Gorilla works for oil major ConocoPhillips, Rowan said recently.

In addition to the 79 Safe members, another 190 workers represented by the Industri Energi union and 14 members of DSO would be part of the first wave of a strike, the state mediator said.

A spokesman for ConocoPhillips said on Thursday that the Gorilla rig is currently engaged in the plugging of abandoned wells on its Ekofisk field in the North Sea, and that oil output would be unaffected by a strike.

Lundin and Rowan were not immediately available for comment.

 

 

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InterOcean Systems, Inc. joins Delmar Systems, Inc.

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InterOcean Systems, Inc. joins Delmar Systems, Inc.

The ownership of Delmar Systems, Inc., a worldwide supplier of offshore mooring and subsea services, announces an expansion of products and services with the acquisition of privately owned InterOcean Systems, Inc. InterOcean will be operated as an affiliated entity of Delmar.

Since 1946, InterOcean Systems is the leader in the design and manufacture of high quality oceanographic and environmental equipment and systems, including its proprietary Rig Anchor Release (RAR), acoustic technology and releases, METOC buoys, current meters, transponders, transducers, hydrophones, subsea winches, and other specialized equipment including its proprietary remote oil spill detection system – Slick Sleuth™.

“Delmar is committed to providing the offshore industry with quality products and services,” said Brady Como, Delmar’s Executive Vice President. “InterOcean’s products, services, and long-standing customer service will enhance Delmar’s product offering beyond the traditional oil and gas industry customer base. Their excellent reputation for quality and innovative products will be a great addition to Delmar. We welcome the dedicated professionals as InterOcean has a long standing reputation serving the specialized marine equipment industry on a global basis.

“The synergies between Delmar and InterOcean make this combination of strengths a key benefit to our mutual customers,” says Mike Pearlman, President and CEO of InterOcean. “Our dedicated professionals look forward to continuing the tradition of providing the very best service and quality that has led to our success the last 70 years in business.”

InterOcean Systems will continue to operate with its existing management from its San Diego, CA headquarters as an affiliate of Delmar Systems, Inc., offering the same products and services the company has been known for the last 70 years.

About Delmar Systems

Headquartered in Broussard, LA, Delmar Systems, Inc. has provided mooring and subsea installation services for over 48 years to every oil and gas region around the globe, with offices strategically located to serve the offshore industry in the world’s most challenging offshore environments.

 

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Oil Price Downturn Prompts Update of Rig Guide

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Oil Price Downturn Prompts Update of Rig Guide

With drilling activity down due to low oil prices, a number of offshore drilling rigs have been coldstacked as drilling contractors wait for prices to recover. At the same time, the process of laying up and deactivating increasingly complex drilling rigs poses a higher financial risk and ultimately, a safety risk.

Faced with clients needing clarification on its rig layup and reactivation guide, the American Bureau Shipping has updated this guide for the first time since its 1986 publication. The updated guide is available now for use, Forsyth said.

The clients – underwriters and investment bankers who own these assets – wanted greater clarification on ABS’ lifecycle notation, J. David Forsyth, chief surveyor – offshore for classification society ABS, told Rigzone.

For example, if a rig was just laid-up, it meant that the rig owner could do the lay-up procedures themselves and just inform ABS of the layup status. In the 1980s oil industry downturn, drilling contractors literally welded the doors shut on rigs and abandoned them by docks, Forsyth said. Reactivating these rigs involved more time and cost than typically involved in the process.

“Given that some of these new drillships are $500 to $600 million assets, these clients are very interested in maintaining them and not letting them waste away,” Forsyth commented.

In the case of jackups, if gears aren’t preserved, they can be ruined, and lead time to obtain replacement jackup parts is up to a year.

To fulfill this request, the updated guide has expanded the definitions of the life cycle status for rigs. These now include laid up, laid up warm-stacked and laid up cold-stacked, and enhanced laid-up warm stacked and enhanced laid-up cold stacked.

“A rig lay-up shouldn’t take longer than two weeks, if you have a good plan and know what you’re doing, Forsyth said.” In a lot of cases, a drilling contractor will put in dehumidification and shut down all the machinery on board and put preservative fluids in the machine to keep them from rusting while they’re not working. They dehumidify the tanks and internal spaces with dehumidifiers. They will have an onshore deck generator to run the dehumidifiers.

“They want these rigs ready to go back to work at a moment’s notice,” Forsyth explained. “If you walk away and don’t do anything to preserve the unit, it can take anywhere – depending how long it’s been in layoff – (from) one month to six months.”

While asset maintenance is the factor behind the guide update, in the long run, asset maintenance also is part of worker safety, Forsyth said.

Following the guide rules is required for classification by ABS. The society classifies 75 percent of the world’s drilling rigs, and 80 percent of the world’s jackups. This classification indicates that a rig conforms to ABS safety requirements. In the current downturn, rig owners are coldstacking more rigs than warmstacking rigs. Coldstacking rigs requires risk analysis that is determined by weather conditions, such as hurricane threats. In the past, drilling contractors didn’t lay up any rigs in a downturn; they just kept rigs in warmstacked, with crews on onboard to maintain rigs, Forsyth said.

The updated lay-up guide also addresses computerized systems, such as automated drilling systems, on board rigs. In 1986, rigs mostly had mechanical equipment, Forsyth said.

“Rigs are more complicated today than they were 30 years ago,” said Forsyth, adding that even new high-spec jackup rigs have more computerized systems that older jackups.

ABS started working on the layup guide late last year after seeing the initial bounce in oil prices, seeing the dip in oil prices as a wake-up call that a large number of rigs would be stacked. ABS also held an industry meeting to talk about the guide before they started updating it. Industry officials wanted more detail on the requirements for reactivating rigs, Forsyth said.

According to Rigzone’s rig database RigLogix, 51 of the world’s 526 jackup rigs are coldstacked; 157 rigs are ready or warmstacked. Of the 178 semi-submersible drilling rigs worldwide, 41 are cold-stacked and 39 are ready/warmstacked. Nineteen of the world’s 119 drillships are coldstacked, and 27 are ready/warmstacked.

 

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Saipem signs co-ownership & exclusive commercialization agreement for SPRINGS

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Saipem signs co-ownership & exclusive commercialization agreement for SPRINGS

A recently signed agreement will see Saipem lead the industrialization and commercialization of SPRINGS®, an innovative subsea water treatment technology designed for deep water application, developed in collaboration with major oil & gas company Total and water treatment specialist company Veolia.

SPRINGS® (Subsea PRocess and INjection Gear for Seawater) is a nanofiltration-based sulphate removal unit designed for subsea use in deep water environments. Saipem has entered into an agreement with partners Total and Veolia for the co-ownership and exclusive commercialization of the technology. A deepsea test was successfully completed last year to prove the validity of the process in a relevant environment offshore West Africa.

A cost effective alternative to conventional topsides water treatment and injection units, SPRINGS® moves the sulphate removal process subsea, thus enhancing the economics of oil recovery by:

• eliminating water injection sealines
,
• producing savings in terms of topsides weight and deck space, freeing up vital topside space for production equipment

• easing brownfield retrofits, especially on FPSOs

• making distant, deep injection wells economical.

Saipem’s Chief Executive Officer, Stefano Cao, commented: “The signing of the agreement is in line with Saipem’s commitment to develop innovative technologies and deploy its capabilities in the subsea environment with a view to reducing Clients’ overall costs and enabling new business opportunities.”

Saipem is one of the world leaders in drilling services, as well as in the engineering, procurement, construction and installation of pipelines and complex projects, onshore and offshore, in the oil & gas market. The company has distinctive competences in operations in harsh environments, remote areas and deepwater. Saipem provides a full range of services with “EPC” and “EPCI” contracts (on a “turn-key” basis) and has distinctive capabilities and unique assets with a high technological content.

 

 

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