Tuesday, April 9, 2013

Statoil Awards Emerson Automation Upgrade for Visund

Statoil has awarded Emerson Process Management, a business of Emerson (EMR), a $33 million contract to upgrade safety and automation systems on the Visund oil platform in the Norwegian North Sea.

Previously selected by Statoil as one of its preferred automation and safety suppliers, Emerson will provide integrated safety and automation systems to help the international energy company boost oil recovery and extend the life of the field while also reducing operating costs and minimizing safety and environmental risks. The Visund project includes a complex but seamless changeover from existing to new automation and safety systems (known as a hot cutover) to allow uninterrupted operation of the floating production, drilling, and living-quarters platform.

Emerson will design, configure, and install the new safety and automation systems, as well as provide ongoing support services to help ensure continued smooth operations. Aker Solutions of Bergen, Norway, will provide project-execution support to Emerson.

To help with space and weight limitations on the platform and to offer more design flexibility during the upgrade, Statoil will take advantage of Emerson's electronic marshaling with CHARMs technology. This technology reduces the complexity of connecting such systems to the hundreds or thousands of measurement and control instruments in typical process operations – a significant advantage because last-minute wiring changes with traditional marshaling can result in high costs and expensive delays.

Statoil will also benefit from Emerson's operator and maintenance interfaces that were designed with human-centered design principles to make it easier for workers to correctly and efficiently assess operational conditions and take appropriate action to ensure production uptime.

Based on Emerson's PlantWeb digital architecture, the integrated solution will include a DeltaV digital automation system to monitor and control platform operations, as well as a DeltaV SIS system to perform emergency shutdown functions and to control fire and gas detection systems. Emerson's AMS Suite predictive maintenance software will be used for instrument commissioning and configuration and to monitor field devices for potential problems that could affect operations.

"Emerson continues to develop its safety and automation business in the North Sea by providing the best technologies and by investing in support services and skilled personnel to help our customers make the most of their operations," said Steve Sonnenberg, president of Emerson Process Management. "We are delighted that Statoil has recognized the value our technologies and experience can bring to the Visund project."

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Gasoline Futures Slump as Northeast Supply Worries Ease

Gasoline futures prices tumbled 4.2% Wednesday to a one-month low, a hopeful sign for drivers, after data from the U.S. Energy Information Administration offered an improving outlook for domestic fuel supplies.

Government data released Wednesday showed that refineries are returning to their work of churning out fuel after a period of maintenance work, raising oil processing by 335,000 barrels a day last week. The increasing activity helped push gasoline stockpiles higher in the key Northeast region, where refinery shutdowns over the past year have raised concerns about shortages.

Hit by Hurricane Sandy, gasoline stocks in the Northeast had dropped to as much as 19.3% below year-earlier levels at the end of November, sending futures higher and raising prices at the pump. Now, they are bouncing back. Gasoline stocks in the region are at the highest level since last March and have gained 35% since mid-December.

Gasoline futures have fallen over 7% this week and the surge in retail prices over the past month is slowing, which has some analysts expecting lower prices for drivers. Retail U.S. gasoline prices averaged $3.786 a gallon Wednesday, according to AAA's daily Fuel Gauge Report, up just 0.4 cent from Tuesday. A month ago, gasoline averaged $3.349 a gallon.

"The product is now getting to the market," said Stephen Schork, head of energy-consultancy Schork Group. "Prices at the retail level should start to moderate."

March-delivery reformulated-blendstock for oxygenate blending, or RBOB, futures fell 12.51 cents to settle at $2.8565 a gallon on the New York Mercantile Exchange in the largest one-day percentage decline since December, 2011.

March-delivery gasoline meets the winter-grade fuel standard, while April gasoline must meet a cleaner-burning summer-grade standard. Gasoline futures for April delivery settled 2.9% lower Wednesday at $3.1063 a gallon.

Crude-oil futures finished with slight gains, settling 13 cents higher at $92.76 a barrel on the Nymex. ICE Brent crude futures settled 84 cents, or 0.8%, lower at $111.99 a barrel.

The EIA reported crude-oil stocks rose last week by 1.13 million barrels, less than an anticipated rise of 2.5 million barrels. And increasing refinery operations could signal rising demand for crude to turn into gasoline and other fuels. Still, stocks at 377.5 million barrels are the highest since last July and are the most on record for this time of year since EIA data began in 1982.

The sharp increase in gasoline futures over the past month also contributed to this week's steep decline, according to market watchers. Indications of strong regional supplies just ahead of Thursday's expiration of the March gasoline-futures contract helped spurred the dramatic skid.

"We're seeing more pullback after huge advances," said Kyle Cooper, managing partner at IAF Advisors in Houston.

March heating-oil futures settled 4.38 cents, or 1.4%, lower at $2.9879 a gallon.

Copyright (c) 2012 Dow Jones & Company, Inc.

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CNOOC Completes Nexen Buy; News Follows Sinopec-Chesapeake Deal

HONG KONG - News late Monday that China's state-run CNOOC Ltd. had completed its record-breaking purchase of Canada's Nexen Inc. came hot on the heels of another Chinese investment in the U.S. the same day, signaling that the appetite for North American shale projects in energy-hungry Asia remains strong.

CNOOC and Nexen said in separate statements they had completed the $15.1 billion acquisition following approvals from Canadian, U.K. and U.S., regulators, giving the third-largest Chinese oil and gas company by output control over huge shale-gas reserves in British Colombia and crude-oil deposits beneath the North Sea.

Hours before that, state-owned oil giant China Petrochemical Corp., or Sinopec Group, agreed to buy a 50% stake in Chesapeake Energy Corp.'s Mississippi Lime venture for $1.02 billion. In 2010 and 2011, CNOOC bought into Oklahoma City-based Chesapeake Energy's oil-rich shale fields in south Texas, as well as fields in Colorado and Wyoming.

The deals are a consequence of new technology that has unlocked huge amounts of gas and oil formerly trapped in shale-rock formations in North America, the funding needed to develop these, and moves by Canada to encourage foreign investment and find new customers for its future oil and gas output.

"CNOOC is delighted to acquire a leading international platform through the acquisition of Nexen," CNOOC Chairman Wang Yilin said in the CNOOC statement. "We strongly believe that this acquisition is a good strategic fit for us and will create long-term value for our shareholders."

Nexen said Kevin Reinhart would continue as the company's chief executive, while CNOOC CEO Li Fanrong will assume the chairmanship of Nexen's board. Nexen's shares will be delisted from the Toronto Stock Exchange in the coming days.

The Nexen acquisition, China's largest single overseas investment, is vital for CNOOC's long-term growth and important for its long-term energy security, as its oil and gas output growth has been slowing since 2011 due to maturing fields.

CNOOC is targeting oil and gas output growth at a compound annual rate of 6%-10% between 2011 and 2015.

Asian firms have completed $31 billion in outbound mergers and acquisitions in North America's oil, gas and mining sectors in the past year, according to data tracker Dealogic.

The Nexen-CNOOC deal follows the $5.2 billion purchase in December by Malaysian state-controlled energy giant Petroliam Nasional Bhd., also known as Petronas, of Canadian natural-gas producer Progress Energy Resources Corp.

Both CNOOC and Petronas are looking to export deep-chilled liquefied natural gas from Canada's west coast to Asian markets once approvals have been given and export facilities built.

Canadian Natural Resources Minister Joe Oliver on Monday signed a 25-year export licence for another project aiming to export to Asia: LNG Canada Development Inc., a consortium comprising Royal Dutch Shell, Korea Gas Corp., Mitsubishi Corp. and PetroChina International that is planning to build a terminal at Kitimat, British Columbia. That project still requires additional approvals.

"The Harper Government is aggressively working to open new markets for Canadian natural resources in the fastest-growing region of the world," Mr. Oliver said. Canada's natural gas exports currently go only to the U.S.

As part of its bid, CNOOC promised to keep Nexen's headquarters in Calgary, Alberta, and to transform those offices into the headquarters for CNOOC's North and Central American operations. Nexen confirmed those moves late Monday.

Copyright (c) 2012 Dow Jones & Company, Inc.

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Aker Closes Enovate Acquisition

Norwegian oilfield services company Aker Solutions announced Wednesday that it has closed a deal to buy a majority stake in Enovate Systems – a specialist in subsea well control equipment. Aker announced at the end of January that it had agreed to buy a controlling stake in the Aberdeen-based firm.

Enovate has developed a range of patented components and products for use in open water workover systems as well as in riser workover systems, rigless intervention systems and drilling safety systems.

Founded in 2002 and now employing 62 people, Ennovate had revenues of approximately $23.6 million in 2012 and an EBITDA profit of $7.8 million.

Aker intends to see Enovate continue to be developed as an independent supplier of well control equipment.

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Aker Wins Major Subsea Deal with Statoil

Norwegian oilfield services firm Aker Solutions reported Wednesday that it has been awarded a "major" frame agreement with Statoil to deliver subsea operation and services on the Norwegian continental shelf. The deal will see the expansion of Aker's Aagotnes facility on the west coast of Norway.

Aker said that it had booked some $1 billion of orders as a preliminary estimate of the work to be generated in the initial five-year period of the agreement, which has three additional three-year options for extension.

The subsea operations and services covered by the agreement include: subsea equipment, maintenance, upgrade and recertification of tools and installed equipment. The agreement includes workover activities and life extension of subsea wells.

"Aker Solutions has worked with Statoil for decades and we are very honoured by this major award. We are not only refurbishing subsea trees to guarantee an extended lifetime, but we are also upgrading to accommodate more functionality, enabling Statoil to increase production capacity from each well," said Alan Brunnen, head of Aker Solutions' subsea business division.

Aker Solutions' facility at Aagotnes, near Bergen on the west coast of Norway, will support the Statoil projects. As a result of the frame agreement, Aker expects to further develop its service base at the facility in 2013 and 2014 with new workshops, increased logistics capability and a new office block.

Aagotnes currently employs approximately 800 people.

The agreement will see Statoil immediately execute a subsea refurbishment project to be performed by Aker on the Troll field, located in the northern part of the North Sea approximately 40 miles west of Kollsnes in Norway.

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GulfMark Offshore Ends 4Q on a High Note

GulfMark Offshore Inc. ended last year on a high note and is poised to be a strong player in vessel market conditions in 2013.

The company closed 2012 with a consolidated revenue of $95 million and the net loss for the same period was $4.9 million, or $.19 per diluted share, according to its fourth quarter and full year 2012 operating results. For the 12 months that ended Dec. 31, 2012, consolidated revenue was $389.2 million and net income was $19.3 million, or $.72 per diluted share.

"We have emphasized the cyclicality of our business and our belief that 2012 was a year where we positioned GulfMark to take advantage of the strong upside that appears to be developing," said Bruce Streeter, president and CEO of GulfMark Offshore, in a released statement. "Since 2009, we have seen year-over-year improvement in the global market for our vessels, and we continue to see an improving and expanding marketplace as we look ahead."

Barclays Capital believes that the company will be a key player of the strengthening vessel market conditions in the U.S. Gulf of Mexico (GOM) and the recent demand increase in the North Sea which will help expand its earnings power into 2014.

"Recent operational disruptions in Southeast Asia are likely transitory, in our view, and we expect utilization levels in that region to improve towards 2H13," the advisors stated in an equity report. "Offshore rig demand remains high, newbuild deliveries will likely tighten vessel markets globally throughout 2013 and GLF's high-spec fleet should drive margin improvement."

The GOM is developing into a very strong market, with utilization levels near 100 percent for several of the weeks thus far this year, Streeter said. The North Sea continues to be a strong market and current indications point to a meaningful increase in drilling activity for the 2013 season, Streeter added.

For 2013, the company has 11 vessels under construction, eight of which will be delivered during the year, with another three vessels undergoing renovations.

"Operating costs, driven largely by mariner labor costs, continue to put pressure on profitability, but we are pushing costs through to operators as contracts roll over and anticipate that these cost pressures will wane as the current backlog of new vessels are delivered in 2013 and 2014," Streeter said.

With more than 10 years of journalism experience, Robin Dupre specializes in the offshore sector of the oil and gas industry. Email Robin at rdupre@rigzone.com.

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Subsea 7 Wins Talisman Pipeline Contract

Oilfield services firm Subsea 7 announced Wednesday that it has been awarded a contract to install pipeline bundles at Talisman Sinopec Energy UK's Montrose Area Redevelopment Project.

The contract, valued at $285 million, will see Subsea 7 deliver two three-mile pipeline bundles that will tie back the Cayley field to the new bridge-linked platform (BLP) at the Montrose facility. The contract scope also includes the procurement, fabrication and installation of an 11-mile production pipeline, water injection pipeline, gas lift pipeline and control umbilical to tie back the Shaw field to the BLP.

Subsea 7 said that engineering and project management will begin immediately from the firm's Aberdeen office with offshore operations starting in 2014.

Steph McNeill, Subsea 7's Vice President for UK and Canada, commented in a statement:

"This contract award continues our long-standing business relationship with Talisman. The complexity of this project further illustrates our bundle system’s unique ability to offer a highly cost-effective single product which neatly integrates all necessary pipelines and control lines."

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CEO Group Offers Recommendations for US Energy Policy

CEO Group Offers Recommendations for US Energy Policy

A group of U.S. chief executive officers (CEOs) are offering in a new report their recommendations on what a comprehensive U.S. energy policy framework should look like.

The CEOs of the Business Roundtable released a report Monday, "Taking Action on Energy", providing greater detail about the policies needed to make affordable, reliable energy a reality for U.S. consumers and businesses.

The new report is a follow up to the group's March 2012 "Taking Action for America" report. In the previous report, the Business Roundtable identified reliable, affordable energy as a critical strategy to revitalize economic growth and job creation.

"Taking Action on Energy" is an attempt to outline an energy policy framework that is both timely and durable. While many of the policy solutions in the report focus on major issues of the day, the group also attempts to place them within a broader system of national energy policy goals, principles and strategies.

"We believe that the framework outlined in this paper represents a balanced approach to enhancing economic growth and energy security while also reducing the environmental risks associated with criteria pollutants, greenhouse gases and other emissions," said David M. Cote, chairman and CEO of Honeywell International and chairman of the Business Roundtable's Energy and Environment Committee, in a statement.

To support this effort, the organization's Energy and Environment Committee is re-evaluating U.S. energy policy and forging a long-term framework that has the potential to simultaneously advance the nation's economic, security and environmental interests.

The group's initial assessment has found the United States' energy future to be exceptionally bright, Cote noted.

"The nation's energy outlook has improved substantially in recent years due to a confluence of factors that are fundamentally reshaping the U.S. energy landscape, including the development of technologies to unlock vast new domestic oil and natural gas resources and the application of innovative technologies to economically extract and deliver these resources to market," Cote commented. "In addition, the United States remains a global leader in the research, development and commercialization of energy efficiency, renewable energy, new nuclear and advanced coal technologies."

While the shale oil and gas revolution offers a textbook example of the private sector's ability to drive innovation and capitalize on new opportunities, Cote noted that the business community cannot lead the way along if the United States is to sustain its energy renaissance and restore its status as an energy superpower.

The Business Roundtable believes the United States should capitalize on these advantages and accelerate efforts to develop a portfolio of diverse, affordable and efficient options for meeting the nation's 21st century energy needs, Cote commented.

"Despite our optimism, we remain realistic about the difficulty of replacing our ad hoc energy policy with a more purposeful approach," Cote noted. "Making this change will require leaders to engage in an open and honest dialogue about our values and priorities as a nation, as well as the policy and regulatory approaches most likely to achieve them. This report is intended to contribute to that dialogue."

Boosting economic growth, enhancing energy security and promoting environmental stewardship are the three overarching goals the group has identified for a long-term national energy policy. To advance these goals, U.S. policies and regulations should be aligned with the principles of:

Fostering innovationEncouraging competition and energy resource diversityEmpower consumersEngage internationallyEnsure smarter regulationsFortify critical infrastructure

Noting that the United States will continue to rely heavily on traditional energy resources such as oil and gas to fuel future economic growth, the group recommended policies to enhance oil and natural gas production, including greater access to onshore and offshore federal lands, including promising areas such as the eastern Gulf, Atlantic and Pacific coasts and Alaska to ensure reliable oil, gas and coal in the coming decades.

The Business Roundtable also called for a streamlined permitting process to substantially lower the anticipated and unanticipated costs of investing in, producing, processing and transporting energy resources while continue to ensure public health, safety and environmental quality. The group also called on the executive branch to avoid regulations that duplicate or conflict with state regulations.

"Any proposal to promulgate new or expanded federal regulations should be weighed against the fact that the states traditionally have had the preeminent role in regulating oil and natural gas activity on non-federal lands," according to the report.

New federal regulation of oil and gas activities on federal lands should be developed in consultation with states and be consistent with state regulations.

Additionally, they called for the "expeditious approval" of infrastructure projects such as the Keystone XL pipeline and other privately funded infrastructure projects.

Regulations by the U.S. Environmental Protection Agency should be based on sound science, undergo thorough net cost-benefit analysis, and take into consideration the net cumulative impact of these regulations on energy costs, economic growth and job creation while protecting the environment and human health, the group noted in the report.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

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Court Testimony: BP Managers Under Cost-Cutting Pressure before Spill

Deepwater Horizon Gulf of Mexico Oil Spill

NEW ORLEANS - BP PLC's managers were under pressure to cut costs significantly in the years leading up to the Deepwater Horizon accident, according to testimony at the federal trial here over liability for the 2010 explosion and oil spill.

Kevin Lacy, BP's former head of drilling in the Gulf of Mexico, said in a videotaped deposition that he was told to cut hundreds of millions of dollars in costs in 2008 and 2009.

"I was never given a directive to cut corners or deliver something unsafe," Mr. Lacy said. "But there was tremendous pressure on costs."

The testimony came on the third day of the civil trial that will determine the degree of culpability that BP and other companies have for the accident, which killed 11 workers. They are being sued by the federal government, state, and local businesses that say they were hurt financially by the oil spill, which lasted for three months.

Mr. Lacy's testimony was preceded by excerpts from interviews lawyers for plaintiffs suing BP did with its former chief executive, Tony Hayward, who was asked repeatedly about speeches he had given on cost-cutting at the company. In many cases Mr. Hayward tried to point out a broader context for the statements and speeches.

On Monday, lawyers for the parties traded barbs over who was to blame for the explosion that unleashed the worst offshore oil spill in U.S. history. Tuesday was dominated by testimony from Robert Bea, a University of California Berkeley engineering professor who called the accident "a classic failure of management and leadership in BP" that came after many warnings to the company.

Lamar McKay, the head of BP's exploration and production business, repeatedly rebuffed attempts by a lawyer for the plaintiffs to place the entire blame for the accident on BP. Mr. McKay stressed that decision making and safety were shared responsibilities among all the companies working on the doomed rig.

The trial is scheduled to take up to three months, but could be cut short or temporarily stopped if the parties reach a settlement.

A second trial, scheduled for the fall, will determine how much oil leaked into the Gulf of Mexico.

Together, they will determine the size of fines firms face under the Clean Water Act, which could total as much as $17.6 billion.

BP, which hired Transocean Ltd. and Halliburton Co. to work on drilling its well, has said the fines would likely be under $5 billion.

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Shell Puts Alaska Drilling Plans on Hold

Shell Puts Alaska Drilling Plans on Hold

Royal Dutch Shell plc will temporarily halt its exploratory drilling activity offshore Alaska this year to ensure the readiness of its equipment and employees for future drilling.

Despite the pause in drilling activity, Shell officials said Wednesday they are committed to drilling in Alaska in the future, and the state remains an area with high potential for Shell over the long-term.

"Shell remains committed to building an Arctic exploration program that provides confidence to stakeholders and regulators, and meets the high standards the company applies to its operations around the world," said Marvin Odum, director of Upstream Americas for Shell, in a statement.

The company completed top hole drilling on two wells last year in the Beaufort and Chukchi seas, which Shell said marks the industry's return to offshore drilling in the Alaskan Arctic after over a decade.

However, Shell faced a number of challenges in its Alaska Arctic drilling program, including issues with the two drilling rigs it used for its Alaska program.

The Kulluk drilling rig was damaged after it ran aground New Year's Eve last year while being towed to Seattle for repairs. Last week, the U.S. Coast Guard lifted the order restricting the Kulluk from leaving Kiliuda Bay, Alaska, where it has been undergoing assessment for damage. The Kulluk and the second rig, the Noble Discoverer (mid-water drillship), will be towed to Asia for maintenance and repairs.

Assistant U.S. attorney Kevin Feldis confirmed to Rigzone that the U.S. Coast Guard has turned over material regarding 16 violations involving the Noble Discoverer drilling rig to federal prosecutors for further investigation.

Shell initially faced delays in receiving drilling permits while it waited for the oil spill containment Arctic Challenger to be certified. The company was granted permission to conduct preparatory activities for planned drilling programs in the Chukchi and Beaufort seas. The Arctic Challenger received its U.S. Coast Guard certification in October of last year.

The company revised its exploratory drilling plans from five wells to two wells due in part to time needed to repair the dome of the Arctic Challenger after it was damaged during a test. The short window of time Shell had to drill before sea ice encroached in the area also prompted Shell to alter its planned exploration program.

Shell re-entered Alaska in 2005, when it bid $44 million in that year's Beaufort Sea lease sale. The company then spent over six years navigating the regulatory approval process to drill in Alaska's Arctic, which Shell said holds significant oil and gas resource potential. According to Shell, the Chukchi Sea Shelf is estimated to hold up to 30 billion barrels of oil and natural gas reserves.

Environmental groups such as Greenpeace have been critical of Shell's Alaskan Arctic drilling plans. Greenpeace participated in launching a website that satirized Shell's offshore Alaska exploration efforts.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

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