ABERDEEN, UK – Production efficiency on fields in UK waters rose to 75% last year, according to the Oil and Gas Authority (OGA).
This represented 11 MMboe added production for 2018, or 30,000 boe/d higher than in 2017 (a 1% improvement).
Actual wellhead production was 3% up on 2017, with economic production potential rising by 1% due to the impact of new fields coming onstream, countering a natural decline of maturing fields.
Among the OGA’s other findings:
Overall production losses in 2018 were down by 6 MMboe to 196 MMboe (from 202 MMboe in 2017), due to reduced well and export losses.
Well losses across the UK shelf dropped by 21% in 2018.
Plant losses, however, rose by 14%.
Floating platforms had the biggest increase (5%) in overall production efficiency compared to the previous year; with some in the northern North Sea and west of Shetland up by 13%.
Loraine Pace, head of Performance, Planning and Reporting, said: “The steady improvement demonstrates industry is keeping up best practice, sustaining efficiency efforts, and driving new technologies…
“The OGA remains committed to working with all operators in their efforts to further increase PE to the target of 80%.”
Matt Nicol, chairman of the Production Efficiency Task Force (PETF), added: “We’ve just launched a new Brownfield Digitalization work group to concentrate on the adoption and deployment of technology to help deliver further disruptive PE enhancements.
“Industry is collaborating and delivering results, and we are encouraging more volunteers to join the PETF to continue this momentum and for every operator to get involved.”
Report: Oil prices rise over U.S. – Iran tensions after U.S. drone shot down
Oil price rose Friday over tensions between the U.S. and Iran, following reports on Thursday that Tehran had shot down a U.S. drone in what the U.S. said was international airspace. Tehran claims the drone violated Iran’s airspace.
File photo of a RQ-4 Global Hawk unmanned surveillance and reconnaissance aircraft. (U.S. Air Force photo)
The U.S. Central Command said that “a U.S. Navy Broad Area Maritime Surveillance (or BAMS-D) ISR aircraft was shot down by an Iranian surface-to-air missile system while operating in international airspace over the Strait of Hormuz at approximately 11:35 p.m. GMT on June 19, 2019.
“Iranian reports that the aircraft was over Iran are false. This was an unprovoked attack on a U.S. surveillance asset in international airspace,” it said on Thursday.
The drone incident follows last week’s attack on two oil tankers near Iran’s coast for which the U.S. has blamed Iran, and which Iran has denied.
The tankers were attacked near the Strait of Hormuz, through which a fifth of the globally consumed oil is shipped, and which the U.S. Energy Information Administration on Thursday labeled as the “world’s most important oil transit chokepoint.”
Reuters on Friday reported that Brent Crude had risen to over $65 a barrel over the tensions and potential conflict, with the news agency citing Iranian sources who claim that U.S. president Donald Trump had sent them a warning of an imminent U.S. attack on Iran. The news agency also cited a New York Times report in which it has been claimed that Trump had approved military strikes but then pulled back from launching them.
Following the reports of a U.S. drone being struck down, Trump tweeted: ”Iran made a very big mistake.”
However, Trump then on Friday in a series of Tweets confirmed the U.S. was “cocked and loaded to retaliate,” but he stopped the strike “10 minutes before” as he had been informed 150 people would die, which he felt was “not proportionate to shooting down an unmanned drone.”
Responding to claims that Iran had shot down the U.S. drone in international waters, Iran’s Foreign minister Javad Zarif said on Thursday via twitter: “At 00:14 US drone took off from UAE in stealth mode & violated Iranian airspace. It was targeted at 04:05 at the coordinates (25°59’43″N 57°02’25″E) near Kouh-e Mobarak. We’ve retrieved sections of the US military drone in OUR territorial waters where it was shot down.”
“The US wages #EconomicTerrorism on Iran, has conducted covert action against us & now encroaches on our territory. We don’t seek war, but will zealously defend our skies, land & waters. We’ll take this new aggression to #UN & show that the US is lying about international waters,” Zarif said.
By economic terrorism, Zarif means the U.S. Economic Sanctions which Trump reimposed on Iran after he had in May 2018 terminated the U.S. participation in the Iran nuclear agreement devised in 2015 to curb Iran’s nuclear weapons development capacity, labeling it “one of the worst and most one-sided transactions the United States has ever entered into,” much to a dismay of the international community, as Iran had stuck to its part of the agreement.
The sanctions on Iran’s oil sector, which kicked in November 2018, have targeted the Iranian crude oil sales, and also countries who buying Iranian oil with the aim reportedly to bring Iran’s production to zero, with Trump saying that anyone doing business in Iran “will NOT be doing business with the United States.”
Pressure on buyers
Credit rating agency Fitch late in May said that the pressure on buyers of Iranian oil had intensified and the country was likely to reduce exports.
“This is due to the US not renewing waivers to continue to purchase crude from Tehran for China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey. This is likely to reduce spare capacity elsewhere in the market and has already caused price volatility. It also increases the chances of oil prices rising in the short term.”
“We believe it is unlikely that Iran’s exports will fall to zero as some countries, notably China, continue to buy oil from it despite the removal of waivers. However, we assume export volumes could halve, compared to around 1 million barrels per day (MMbpd) at the beginning of the year, as Italy, Greece and Turkey have stopped buying Iranian crude,” Fitch said in a report on May 24.
U.S. Energy Information Administration estimates that 76% of the crude oil and condensate that moved through the Strait of Hormuz went to Asian markets in 2018.
“China, India, Japan, South Korea, and Singapore were the largest destinations for crude oil moving through the Strait of Hormuz to Asia, accounting for 65% of all Hormuz crude oil and condensate flows in 2018,” the EIA said on Thursday.
World’s most important oil transit chokepoint
As said earlier, the U.S. Energy Information Administration on Thursday released a report in which it said that the Strait of Hormuz was “the world’s most important oil transit chokepoint”
“The Strait of Hormuz, located between Oman and Iran, connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. The Strait of Hormuz is the world’s most important oil chokepoint because of the large volumes of oil that flow through the strait. In 2018, its daily oil flow averaged 21 million barrels per day (b/d), or the equivalent of about 21% of global petroleum liquids consumption,” U.S. EIA said, warning that the inability of oil to transit a major chokepoint, even temporarily, can lead to substantial supply delays and higher shipping costs, resulting in higher world energy prices.
The EIA said that while most chokepoints can be circumvented by using other routes that add significantly to transit time, “some chokepoints have no practical alternatives.”
“There are limited options to bypass the Strait of Hormuz. Only Saudi Arabia and the United Arab Emirates have pipelines that can ship crude oil outside the Persian Gulf and have the additional pipeline capacity to circumvent the Strait of Hormuz. At the end of 2018, the total available crude oil pipeline capacity from the two countries combined was estimated at 6.5 million b/d. In that year, 2.7 million b/d of crude oil moved through the pipelines, leaving about 3.8 million b/d of unused capacity that could have bypassed the strait,” EIA said.
Fitch sees Brent averaging $65 in 2019
In a report on Monday – so, before the drone incident – Fitch said that increased geopolitical tensions and economic uncertainty are likely to contribute to oil price volatility, but its year-average base-case expectations remained unchanged.
Fitch said in the report: “The toughened sanctions against Iran, production declines in Venezuela and the conflict in Libya contributed to Brent price recovery to around USD75/bbl by end-April from USD50/bbl at end-2018. However, the price fell to USD60/bbl in early June due to deteriorating expectations for global economic growth and increased trade war risks. We expect the global economy to decelerate from 3.2% in 2018 to 2.8% in 2019 and 2.7% in 2020.
Nevertheless, we expect OPEC+ to continue to manage supply to avoid large supply-demand imbalances. We believe that the OPEC+ deal will be extended until at least the end of this year, though its parameters could change. As a result, we expect the market to stay broadly in balance, and assume annual average prices will remain in line with our existing base-case assumptions. Year-to-date average prices (Brent: USD66/bbl) are consistent with our assumption of USD65/bbl for 2019.
Many large Middle Eastern producers (such as the UAE and Kuwait) should be able to balance their budgets comfortably under Fitch’s base case assumptions for 2019-2020, except Saudi Arabia, the “swing” producer. Saudi Arabia requires Brent to be priced above USD80/bbl, hence its decision to produce below its OPEC+ quota, putting upward pressure on crude prices.
In the longer term we assume average prices to moderate to USD57.5/bbl for Brent and USD55/bbl for WTI as OPEC+ policies may become less efficient over time. The differential between Brent and WTI will narrow as transportation constraints gradually ease. We expect US upstream companies to remain profitable at these price levels, assuming the current cost base and achieved efficiency gains. We expect production growth in the US to meet most of the additional global demand in the next few years as it does now. At the same time the responsiveness of US shale to current prices makes the scenario of oil prices falling consistently below USD50/bbl significantly less likely.”
There have been improvements over the past 18 months, according to Westwood’s Matt Adam, with 460 mobile offshore drilling units (MODUs) working globally last month, the highest level of activity since May 2016, when 466 rigs were in service.
Over the same period, supply has decreased due to 207 MODUs being withdrawn from the fleet, although 101 newbuilds have also been delivered.
Global use of the MODU fleet is now at 59%, 12 percentage points higher than the low point of February 2017, and day rates for new contract awards are rising, notably in niche markets such as the Norwegian North Sea.
The rig market as a whole appears to have emerged from one of its worst ever downturns and Adams expects demand to continue to increase as operators work through a backlog of delayed projects, while at the same time more aging, under-spec rigs are retired.
So, there is room for cautious optimism, although the offshore rig market seems unlikely to return to the heights of the previous up-cycle, Adams concluded.
06/17/2019
Historic leading day rates by rig type and date of award, Jan. 1, 2010- June 1, 2019. Line is Generated using GAM Smoothing.RigLogix / RigOutlook
The vessel is expected to be renamed Fulmar Explorer.
In June, SeaBird acquired the BOA Thalassa from the same company.
Both are designed for source and 2D operations and for electromagnetic seabed logging.
The BOA Thalassa is currently performing EM duty for EMGS until September 2019, with three six-month extension options. This vessel is expected to be renamed Petrel Explorer.
Applying GeoStreamer technology to the Trøndelag Platform is said to deliver better seismic velocity estimation, improved imaging of Jurassic targets, and information about Permian presalt potential.
PGS
Offshore staff
OSLO, Norway – PGS has started acquiring a 9,500-sq km (3,668-sq mi) 3D GeoStreamer survey over frontier acreage in the Norwegian Sea within the Trøndelag Platform and Helgeland basin.
The contractor is using a triple source to maximize data density. It expects to deliver final pre-stack depth migration (PSDM) results in July 2020, adding that the dataset could be used as a baseline survey for future 4D studies.
Applying GeoStreamer technology to the Trøndelag Platform should assist seismic velocity estimation and imaging of the Jurassic targets, PGS said, also providing new information on the presalt potential in the Permian.
Integrated Wavefield imaging of the GeoStreamer data should allow detailed prospect evaluation and exploration for new plays.
Twenty-seven blocks offered in latest Equatorial Guinea bid round
Jun 18th, 2019
Equatorial Guinea 2019 Oil & Gas Licensing Round
Perceptum Ltd.
Offshore staff
LONDON – Drilling looks set to pick up offshore Equatorial Guinea, with new companies likely to be awarded blocks later this year under the country’s 2019 Oil and Gas Licensing Round.
The government has made available 25 blocks for exploration and two for appraisal/development of existing discoveries under production-sharing contracts.
In the latter case, the Ministry of Mines and Hydrocarbons has extended the period of pre-qualification to tender until June 28, due to the high level of interest. But there is no requirement to pre-qualify for bidding for exploration blocks.
Deadline for all types of bids is Sept. 27, with awards due to follow on Nov. 27 at the Gas Exporting Countries Forum 5th Gas Summit in the capital Malabo.
Minister of Mines and Hydrocarbons Gabriel Mbaga Obiang Lima, speaking at yesterday’s Africa Oil & Power Investor Forum in London, said that so far there had been 15 visits to the EG Ronda 2019 data room, and that 14 companies had applied to pre-qualify for the appraisal/development blocks.
Certain other blocks on offer already have 2D and 3D coverage. In this case, the minister said, all the investor needs to do is reprocess the data then decide whether or not to drill.
After ratifying the newly awarded contracts at the end of the year, the Ministry will start preparations for a Deep and Ultra Deep Round in 2020.
Lima forecast increased drilling activity off Equatorial Guinea next year, with various new projects going forward.
Three of the main players all have active programs. ExxonMobil has been drilling five new wells to stabilize production from the Zafiro field.
Within a fortnight another rig should arrive to drill wells for Noble Energy targeting new resources, the minister added. “By the end of this summer we hope to announce positive results. The same rig will also drill for Kosmos Energy in the offshore Rio Muni basin.”
Earlier this year Noble Energy and its partners committed to develop gas from the offshore Alen field (previously reinjected to support liquids recovery), in response to the government’s call to turn Equatorial Guinea into a Gas Mega Hub for stranded offshore gas resources in this part of the Gulf of Guinea.
Alen’s gas will head through a new 70-km (43-mi), 24-in. subsea pipeline to the onshore LPG processing plant that receives production from Marathon’s offshore Alba field, and the EG LNG complex, both at Punta Europa on Bioko Island.
Lima said the government hoped the Gas Mega Hub project would lead to the development of world-class infrastructure. “Investors need to know that if they discover a gas field, they have a market.”
Other gas fields in Equatorial Guinea’s South Domain and offshore neighboring Cameroon could also be developed through Punto Europa, he suggested. “The only economic use for the gas is LNG – it’s too expensive to build a floating LNG facility in this area.”
06/18/2019
2019 Oil and Gas Licensing Round of Equatorial GuineaPerceptum Ltd.
Rystad: No room for OPEC+ to increase output for the rest of 2019
The OPEC+ countries will not be able to increase their collective oil production levels in the second half of 2019 without having a detrimental effect on oil prices, according to Norwegian oil and gas intelligence firm Rystad Energy.
Even though a production increase is off the cards without influencing prices, Rystad Energy said on Tuesday that the production cuts required by OPEC+ to support prices need not be as much as 1.5 mbpd.
According to the intelligence firm, that is contrary to what traditional supply-demand balances suggest, owing to a tight market for medium and heavy barrels and the fast-approaching shipping fuel changes known as IMO 2020, which are expected to cause an increase in crude demand.
Disappointing global demand and strong production growth in the U.S. are also weighing on OPEC+’s decision, which may be postponed to early July.
Ahead of the 6th OPEC Ministerial Meeting in Vienna, Austria, Rystad Energy’s chief oil market analyst Bjørnar Tonhaugen said: “We expect crude demand to accelerate thanks to the upcoming IMO 2020 regulations later this year, and OPEC will likely not have to cut production as much as the call on OPEC suggests.
“Having said that, there will not be room for the cartel to increase output for the rest of 2019 in our view.”
Rystad Energy’s supply-demand forecast suggests that the so-called call on OPEC production will decline by 1.5 million bpd to 29.0 million bpd from the second quarter to the fourth quarter of 2019.
OPEC+, which consists of OPEC countries plus Russia and several other supportive producers, account for nearly 49 million of the 84 million bpd of global crude and condensate production expected to be produced on average in 2019.
“We expect non-OPEC+ production to grow by 1.9 million bpd year-on-year in 2019, driven by the continued rise of the U.S. shale industry, whereas global demand is expected to grow only by between 1.1 million and 1.2 million bpd year-on-year.
“In other words, as non-OPEC+ adds more supply than global demand is increasing by, OPEC+ will still be pressured to manage production to balance the global market,” Tonhaugen added.
A forecast by Rystad Energy stated that U.S. oil production would grow by 1.6 million bpd y/y in 2019, with monthly production reaching 13.4 million bpd by December 2019. The brunt of the supply growth comes from the Permian Basin, the prolific shale play in Texas and New Mexico.
U.S – China tariff war
It is worth noting that Brent benchmark crude prices have shed more than 13 dollars per barrel since reaching a recent peak in May. Fear of a possible trade war between the U.S. and China over tariffs also dampen the outlook.
“However, the fears about the impact of recent tariffs on global oil demand growth are overblown,” Tonhaugen said.
“We believe the current oil price weakness is fueled more by expectations of faltering trade prospects and a worsening global economy, rather than by the direct effect of new and existing tariffs on oil demand.”
Rystad Energy’s analysis suggests that if the U.S. and China proceed with another round of tariff hikes, covering all their respective trade volumes, global oil demand growth could fall by 100,000 bpd in 2019 and 400,000 bpd in 2020.
This is the direct result of lower trade volumes for the U.S. and China, as well as for China’s main Asian trade partners such as Japan, South Korea, and the EU.
“The downside may be even greater if the global economy, especially the Chinese economy, continues to slow. With this in mind, we believe the market is currently bracing for a greater impact than what current tariffs will deliver,” Tonhaugen concluded.
Montara oil spill class action trial starts in Australian Court
Indonesian seaweed farmers whose livelihoods have allegedly been destroyed after the 2009 blowout and subsequent oil spill from PTTEP’s Montara platform in Australia are seeking more than A$200 million ($137 million) in damages in a class action lawsuit.
“The Montara oil spill of 2009 in Northern Australia that saw thousands of barrels of oil pour into the Timor Sea over 70 days and destroyed the livelihoods of 15,000 seaweed farmers as a result, will go to trial in a Federal Court class action beginning in Sydney today,” Maurice Blackburn Lawyers representing 15,000 Indonesian seaweed partners against PTTEP, said Monday.
The Montara incident happened on August 21, 2009, in the Timor Sea after an explosion hit the platform, followed by an uncontrollable oil spill into the sea, in Australian waters 690km west of Darwin and 250kms south-east of Rote Island, Nusa Tenggara Timur, Indonesia. The discharge of oil and gas was stopped on November 3, 2009.
The lead applicant in the class action is Daniel Sanda, a seaweed farmer from Rote Island, Indonesia, who alleges that his seaweed crops were destroyed by oil from the Montara Wellhead Platform reaching the coastal waters of his island. Sanda brings action on behalf of approximately 15,000 seaweed farmers whose crops were destroyed in similar circumstances.
According to Maurice Blackburn Lawyers, which will represent the plaintiffs during a 10-week trial, Nusa Tenggara Timur (NTT), one of 34 provinces on the Indonesian archipelago, has historically, been one of Indonesia’s poorest provinces.
“However, from around the year 2000, seaweed farming developed as a profitable alternative to traditional fishing and agriculture, promising to greatly improve the economy and quality of life in NTT. Seaweed was even termed ‘green gold’, such was the improvement in the standard of living as a result of its cultivation.
“In the years prior to the Montara oil spill, Indonesians in NTT who had previously been subsistence farmers found themselves able to send their children to university in Jakarta and Bali, construct homes, and buy expensive items such as cars and motorboats.
“In September and October 2009, seaweed farmers in NTT began to observe oil in and around their farms. Soon after, entire crops were destroyed, including the cuttings farmers would have used to plant the next harvest. Farmers persisted in their attempts to grow seaweed but many have still not reached the level of production that they enjoyed prior to the oil spill,” Maurice Blackburn Lawyers have said.
The principal lawyer from Maurice Blackburn, Ben Slade, said the PTTEP needs to be held accountable for the devastation that ensued.
“Our experts contend that approximately 6,000 barrels of oil per day contaminated the sea – that’s akin to pouring over 70 million liters of sludge into the ocean over the months that the environmental disaster dragged on for,” Slade said.
“We are now 10 years on from this environmental disaster and the oil company responsible and its wealthy Thai parent (PTTEP) continue to deny the devastating impact their oil spewing out uncontrollably for months on end had on Indonesian seaweed farmers.”
PTTEP on Friday issued the following statement regarding the class action: “PTTEP Australasia has no comment on the matter at this time as it is currently before the Australian courts.”
Indonesia alleged that the oil spill affected thousands of acres of mangrove, seagrass, coral reefs, and marine ecosystems in the province, and was seeking 27 trillion Indonesian rupiah – 2 billion U.S. dollars – in damages.
PTTEP at the time said: “PTTEP Australasia maintains its position, based on extensive independent scientific research overseen by the Australian government, that no oil from Montara reached the shores of Indonesia and that no long-term damage was done to the environment in the Timor Sea.”
To remind, in 2012, PTTEP was fined 510.000 Australian Dollars in the Northern Territory Magistrate’s Court over the Montara incident. At a sentencing hearing in Darwin in August 2012, PTTEP AA was convicted and fined for three occupational health and safety offences and one non-OHS offence.
The OHS offenses comprised failures by PTTEP AA to verify barriers in the well, which increased the risk of an uncontrolled hydrocarbon release, causing the wellhead platform to be unsafe and a risk to the health of any persons at or near the facility. The non-OHS offense comprised a failure by PTTEP AA to carry out operations in a proper and workmanlike manner and in accordance with good oilfield practice. PTTEP last year sold the Montara asset to Jadestone.
Axxis Geo Solutions (AGS), a Norwegian ocean bottom node seismic company, has completed a major field acquisition for ONGC of over 2,000 square kilometers in oilfields encompassing D1 and NH fields on the western continental shelf of India.
The campaign contract was awarded in August 2018 to AGS and its strategic partner.
Announcing the completion of the survey on Friday, AGS said that its part of this contract is valued at over $70 million. AGS has been responsible for the entire offshore acquisition operation, and the strategic partner has provided field quality control, data processing support, contract holding and client interface.
“This is a major milestone for AGS. We have completed a profitable Ocean Bottom Node (OBN) project on schedule and we have positioned the company for additional surveys in the region,” says Lee Parker, the CEO of AGS.
“We see a growing interest in ocean bottom seismic acquisition services and we experience increased demand from oil companies across the board. I am very excited about the prospects,” he adds.
The campaign used five seismic specific vessels, two dual source vessels and three ocean bottom node handling vessels.
Worldwide offshore rig count in May up by 43 rigs year-over-year
The worldwide offshore rig count in May 2019 dropped by 11 units sequentially but was up 43 rigs year-over-year, according to monthly rig count reports by Baker Hughes, a GE company (BHGE).
BHGE splits its rig counts into international and North America rig counts, which combined make the worldwide rig count.
Baker Hughes said on Friday that the international rig count for May 2019 was 1,126, up 64 from the 1,062 counted in April 2019, and up 159 from the 967 counted in May 2018. It is worth noting that the international rig count now includes active drilling rigs in the Ukraine.
The international offshore rig count for May 2019 was 240, down 11 from the 251 counted in April 2019, and up 42 from the 198 counted in May 2018.
Regionally, Asia Pacific had the highest number of offshore rigs in May totaling 90, down 9 from April 2019 and up 9 from 81 in May 2018.
The Middle East region held the second place in the number of offshore rigs during May totaling 54, down 2 rigs from April 2019 and up 6 from 48 counted in May 2018.
Next up was Europe with 44, then Latin America with 30, and finally Africa with 22 offshore rigs in May 2019.
In North America, the offshore rig count in May 2019 totaled 24, which was the same number from the month before and up 1 from 23 counted in May 2018.
The worldwide rig count for May 2019 was 2,182, up 42 from the 2,140 counted in April 2019, and up 86 from the 2,096 counted in May 2018.
The worldwide offshore rig count for May 2019 was 264, down 11 from 275 in April 2019 and up 43 from 221 in May 2018.
