OGV Energy - Issue 31 - April 2020 by OGV Energy

APR 2020

REGIONAL REVIEWS Europe, US & Middle East

FOSSIL FUELS News & industry updates

RENEWABLES Energy transition

GREEN ZONE Google deal cements Taiwan’s global future

INNOVATION Featuring Re-Gen Robotics

PROJECTS MAP

ALTERNATIVE ENERGIES

CONTRACTS

The path to decarbonisation?

NEWS EVENTS

PANDEMICS AND PRICE WARS

Instability and uncertainty for the energy sector?

PIPER ALPHA AND MACONDO

Similar disasters, different responses

REDUCE YOUR INSPECTION OPEX

Faster end-to-end inspections, reduced POB, safer processes and improved data management with the Inform Inspect™ system. Read on page 4

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CONTENTS

REGIONAL REVIEWS

8 Europe 10 Middle East 12 US

SPECIAL FEATURES

14 The future is now: How oil and gas companies can decarbonise 34 Piper Alpha and Macondo: similar disasters, different responses

RENEWABLES

18 ECOSSE IP launch new generator powered by slow-moving water 19 ASEAN countries reach for the sun

FOSSIL FUELS

21 UK North Sea Oil & Gas Review 24 Contract Awards 28 Rystad Analytics 31 UKCS Status Report

GREEN ZONE

32 Is nuclear energy misunderstood? 33 Google deal cements Taiwan’s global future

TECH & INNOVATION

36 Denmark’s downhill slope, proves it’s on the up 36 DeepStream Technologies to transform Premier Oil’s supply chain operators 37 Anti-Solar: turning solar energy inside out 38 Award winning Re-Gen Robotics the ‘Holy Grail’ in tank cleaning safety

EVERY MONTH

4 Cover Partner: Oceaneering 6 World Project Maps 40 On the Move 42 People in Energy 44 Community Partner 45 Events 46 Legal and Finance

SHELLEY MILNE EDITOR

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What would you do with an extra 10 hours a week? If you have a one hour each-way commute to work, that’s what you have just been gifted. Just imagine the books you could read, the languages you could learn, the instruments you could play – everything your working life gets in the way of. There is no question that we are swimming in turbulent waters. A serious market supply issue combined with a viral pandemic has shone bright lights in dark places, exposing the weaknesses and challenges which surround our complex social and professional cultures. But as with any weakness or challenge, it is also unearthing strength and opportunity. Technology is proving that remote working is a genuinely workable solution and every day I find myself impressed by the ingenuity of people who are embracing and re-inventing tools to adapt their offering to a digital market. The strength of our relationships may be tested by distance but also offers a chance to know and understand family, friends and colleagues in new ways. New habits take time to bed in, but the new ways of working, will inevitably change the shape of how we work in the future, when things return to “normal”. The proof of home-working options may open doors for those with mobility issues, young children, or elderly parents, all of whom previously struggled to take their place in the workforce. For the young workforce, this may be an opportunity to develop self-sufficiency, focus and motivation, and perhaps, more importantly, to learn in real-time the digitally-led world into which we appear to be moving. Who knows what offices will look like in a year, or ten years? Self-isolating is going to be hard. Doing business while self-isolating may be harder, but just remember, you are not alone in this.

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operator requirements for a more aggregated and integrated inspection management solution that builds consistency and accuracy for the future.

Digital tools that enable streamlined workflows One example that aims to reverse this trend is Oceaneering’s Inform Inspect™ platform, an NDT and inspection management solution designed to help manage the full inspection life cycle, and reduce waste and cost. The system was created by an in-house team, which initially looked to source a holistic NDT and inspection management paperless solution that would work globally. The team could not find one on the market that covered all the requirements that they knew, as inspectors themselves, were necessary to create a truly flexible, intuitive and integrated solution. The team categorised the four NDT methods: visual, ultrasonics, electromagnetics, and radiography. These were split into individual deployment techniques and over the span of six months were added into a system that aligns with regional and operational requirements. Inform Inspect applies a global standard for capturing data, providing consistent reporting and methodology.

Streamlining inspections with digital data management

This has developed into a configurable process that enables users to customise reports, manage access, add preferences, such as the prioritisation of inspection tasks and bespoke picklists, and also offers added rigor with options to approve, amend, or reject inspections from the office in real-time, using information provided onsite.

A new, innovative solution reduces end-to-end inspections by 30% and provides measurable OPEX savings... By Chris May, Asset Integrity Systems Director, Oceaneering

The system helps inspectors prepare for their shift in advance of being onsite, using quality predesigned work packs that are ready to view on the recommended tablet. The system also contains information that helps accurately pinpoint inspection locations, which reduces time onsite, providing an advantage to inspectors working in high-risk or remote areas. Results from Inform Inspect includes measurable safety improvements and an increase in productivity of 30% or more.

Digitalisation and improved data capture can positively impact asset performance and efficiency in several ways. It can provide accurate and fast results on the condition of production equipment through streamlined inspection and maintenance programmes, and helps assure safety and reduce risk for personnel.

Standardising inspections to reduce waste

The future of asset integrity

Until recently there has been little standardisation of non-destructive testing (NDT) applications. Execution of inspection routines can vary between individual inspectors, organisations, and by region. At Oceaneering, we’ve encountered one organisation applying over 20 different ways of recording ultrasonic inspection (UT). That one process alone, will ultimately result in more time deciphering and recording results, and could potentially lead to less accurate reporting.

Digital asset integrity systems, such as Inform Inspect, are changing the way in which integrity issues are identified and actioned. With a constant focus on reducing cost and cutting out waste, Oceaneering’s system provides an enhanced level of accuracy by providing usable data from site to the office almost immediately. A far cry from illegible, rain-damaged paper reports that can take weeks to get back to the reviewing Inspection Engineer, and even longer before any remedial action is implemented.

Finding efficiencies to save OPEX in asset integrity processes A typical oil and gas installation will have tens of thousands of inspection data points, generating a flood of information. However, indiscriminate collection of data does not automatically equal more efficiency. The process of converting this data into usable information, in order to enhance decisions and performance, is all too often found wanting. Existing digital inspection solutions often amount to well-presented, but basic, electronic spreadsheets. As more and more processes become digitalised and automated, these tools cannot keep up with

www.ogvenergy.co.uk I April 2020

There is no doubt that smarter, faster, digital applications can and will have a significant impact on predictive maintenance in the oil and gas industry. The trick is to ensure you use applications that do more than just simply collect data, and move to those which provide practical insight, better control, and deliver true value to the inspection management process. Find out how Oceaneering can reduce your asset integrity OPEX. Visit oceaneering.com/inform-inspect

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Journalists

Shelley Milne Tsvetana Paraskova Loren Steffy Katie Milne Aditya Saraswat Lilian Espinoza-Gala Sean McHardy

Ben Mckay Fara West

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WORLD PROJECTS

WORLD PROJECTS MAP

1 INDONESIA Inpex US$16bn Inpex Corporation in cooperation with the National Land Agency (BPN) are expected to start clearing the land that will be used to develop the Abadi LNG plant. The land clearing is expected to last for eight months. Once completed, Inpex will move ahead with the construction of LNG plant, which is scheduled to last for 58 months.

MARCH 2020

The EIC delivers high-value market intelligence through its online energy project database, and via a global network of staff to provide qualified regional insight. Along with practical assistance and facilitation services, the EIC’s access to information keeps members one step ahead of the competition in a demanding global marketplace. The EIC is the leading Trade Association providing dedicated services to help members understand, identify and pursue business opportunities globally. The EIC is renowned for excellence in the provision of services that unlock opportunities for its members, helping the supply chain to win business across the globe.

WORLD PROJECTS SPONSORED BY

GUYANA ExxonMobil US$2.5bn

AUSTRALIASantos US$500mn

USA - Maine Prime Technologies US$200mn

TAIWAN Copenhagen Infrastructure Partners US$550mn

ExxonMobil has submitted the environmental permit for the development of the Hammerhead discovery.

Santos and Carnarvon will move ahead with the project despite low oil prices, according to a recent announcement by Carnarvon.

This will make Hammerhead the fourth project in line for development at the Starbroek Block.

The two companies don’t see any obstacles preventing the project from advancing to the FEED stage nor do they foresee any element that would affect the FEED schedule.

It is understood that a new project partner will join the development, with further details expected to be released by May 2020. Discussions with turbine suppliers are underway and the developers are looking to now deploy a single 8-12MW turbine. Construction activities are scheduled to be carried out between 2021-2022.

The construction phase for the Changfang and Xidao projects has been launched after FID was reached. Developer CIP is highlighting the developments’ high levels of local content, with foundations, pin piles, onshore equipment, installation works and several wind turbine components sourced domestically.

www.ogvenergy.co.uk I April 2020

WORLD PROJECTS

6 4

6 UK IOG US$355mn Detailed design for Phase 1 of the Core project is understood to be well advanced, with fabrication activities now underway. This work is proceeding under a letter of limited commitment, which will be converted into a full contract upon field development plan (FDP) approval. FDP approval is slated for April 2020. Work to connect IOGâ&#x20AC;&#x2122;s fields to the Thames Pipeline is scheduled for 2H 2020. Competitive tendering is ongoing for a rig and offshore services for a five-well drilling programme. Drilling is expected to start early 2021.

FRANCE Iberdrola US$2.8bn

BELGIUM Parkwind US$28mn

UGANDA TOTAL US$2.2bn

Iberdrola has finalised an agreement for complete ownership of project company Ailes Marines. The acquisition has been approved by the French Ministry of the Economy.

Development of a renewable energy to hydrogen project in Belgium. The facility will be able to convert several megawatts of clean power into green hydrogen which can be transported and stored in existing natural gas infrastructure. EPC tendering for the project is underway with a final investment decision scheduled for Autumn 2020.

Uganda is reportedly close to an agreement with Total and its partners in the Lake Albert oil project. Talks aimed at concluding a dispute over capital gains tax and fiscal terms were slated to end by the end of March and will allow companies to conclude the farm-down deal and prepare for the final investment decision scheduled for April.

Subject to final approval, a final investment decision could be reached in April 2020.

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03 7

REGIONAL REVIEWS: EUROPE By Tsvetana Paraskova

European Energy Review Europe’s energy scene has seen some significant developments since the start of 2020. The European Union aims to enshrine a target for carbon neutrality by 2050 into law. Major European oil and gas firms have pledged to cut carbon emissions in response to growing investor and shareholder concern about climate change and insufficient climate action. Deal-making and exploration in the oil and gas sector continue along with project development and project launches in several alternative energy areas including; offshore wind, hydrogen, solar power and energy storage.

he European Commission proposed in early March a European Climate Law to enshrine the European Green Deal’s commitment for carbon neutrality by 2050 into legislation. Under proposed European Climate Law, the 2050 netzero carbon target would become legally binding collectively binding all EU institutions and member states to take the necessary measures at EU and national level to meet the net-zero target.

In recent weeks, while the European Union is working on a continent-wide net-zero goal, several major oil and gas firms have pledged to reduce their carbon footprint by lowering their emissions and the emissions from the energy products that they sell. On 6 February, Norway’s Equinor unveiled its climate roadmap through 2050, aiming to reduce the net carbon intensity, from initial production to final consumption, of energy produced by at least 50 by 2050. Two years ago, Equinor dropped the name Statoil to reflect its ambition to be associated with the wider energy sector. In an effort to be a part of the solution in the energy transition, Equinor will also look to grow its renewable energy capacity tenfold by 2026 and become a global offshore wind major. “We will produce less oil in a low carbon future, but value creation from oil and gas will still be high, and renewables give significant new opportunities to create attractive returns and growth,” Equinor’s president and CEO Eldar Sætre said.

www.ogvenergy.co.uk I April 2020

Galp now looks to develop a sustainable renewable power generation portfolio, allocating 10-15% of its investment to renewables to capture opportunities from new businesses that could be scaled up. Italy’s Eni joined the ranks of oil and gas firms pledging significant cuts in carbon emissions and intensity in its long-term strategic plan through 2050 unveiled on 28 February. Under the plan, Eni expects its oil production to peak in 2025 as the company will look to boost its gas production and materially increase its renewable energy portfolio. Eni aims to obtain by 2050 an -80% reduction in net scope 1, 2 and 3 emissions of the entire life-cycle of the energy products it sells, as well as a -55% reduction in emission intensity compared to 2018. The Italian major plans to have global renewables installed capacity of 3 GW by 2023 and 5 GW by 2025, and to raise that capacity to more than 55 GW by 2050. “We have designed a strategy that combines economic sustainability with environmental sustainability, and we have done so by defining an action plan based on technologies – existing or developed in-house - that we know how to implement. This will allow Eni to be a leader in the market supplying decarbonised energy products and actively contributing to the energy transition process,” Eni’s chief executive Claudio Descalzi said.

A week later, BP followed with another net-zero pledge from an oil major. The UK-based oil giant set on 12 February a new ambition to become a net-zero company by 2050 or sooner. The oil and gas supermajor will also look to cut the carbon intensity of products BP sells by 50% by 2050 or sooner and increase the proportion of investment into non-oil and gas businesses over time. BP will keep its commitment to reward investors as it transforms, chief executive Bernard Looney said. “We can only reimagine energy if we are financially strong, able to pay the dividend our owners depend on and to generate the cash to invest in new low and no-carbon businesses,” Looney said. Another week later, Portugal’s oil and gas firm Galp said it was embracing the energy transition, creating a new division dedicated to renewables and new business models. “Galp will launch new products and services and will transform its traditional businesses through technology, digitalisation and innovation,” the company said on its Capital Markets Day.

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Equinor and Shell signed an agreement on digital collaboration to jointly develop solutions and methods through the exchange of expertise in areas such as data science, artificial intelligence (AI), and 3D printing.

In plastics recycling, Eni’s chemicals company Versalis is launching HoopTM; a project aimed at developing new technology to chemically recycle plastic waste.

In alternative energy news, the European Commission unveiled on 10 March a new industrial strategy to help Europe’s industry lead the twin transitions towards climate neutrality and digital leadership. As part of the new initiatives, the Commission proposes the creation of a Clean Hydrogen Alliance to accelerate the decarbonisation of industry and maintain industrial leadership.

“Europe’s industry has everything it takes to lead the way and we will do everything we can to support it,” said Ursula von der Leyen, President of the European Commission. Shortly before the EC’s announcement, Europe’s largest green hydrogen project up to date was launched in Groningen, the Netherlands. A consortium of Gasunie, Groningen Seaports, and Shell Nederland launched in February the NortH2 green hydrogen project to produce green hydrogen using renewable electricity generated by a mega offshore wind farm. The project developers aim to build wind farms in the North Sea with capacity of 10 gigawatts around 2040, from which hydrogen will be produced. The project begins this year with a feasibility study and if successful, the consortium expects first green hydrogen production in 2027. “Together we will have to pioneer and innovate to bring together all the available knowledge and skills that are required. The energy transition calls for guts, boldness, and action,” said Marjan van Loon, President-Director of Shell Nederland.

France’s Total has announced several deals in renewables and battery production in recent months. These range from setting foot on Spain’s solar market with a pipeline of 2 GW worth of projects to launching a pilot plan to manufacture European batteries for electric vehicles together with PSA and Opel, installing and operating up to 20,000 new EV public charging points in the Netherlands. Total says it is building a portfolio of low-carbon businesses that could account for 15 to 20% of its sales by 2040. With more than 5 GW of solar projects announced since the beginning of this year, Total is well on track to reach its target to have 25 GW of installed power generation capacity from renewable sources by 2025.

While major companies continue to announce lowcarbon projects and targets, operators in the North Sea and the Norwegian Sea continue to drill for resources, aiming to raise production. Equinor and partner Neptune Energy have struck oil in the Sigrun East prospect in the North Sea, the Norwegian energy giant said in early March. Recoverable resources at Equinor’s first discovery on the Norwegian Continental Shelf this year are estimated at between 7 and 17 million barrels of oil equivalent.

Before this major project, another green hydrogen production project is set to begin operations at the port of Ostend in Belgium in 2025 though an exclusive partnership between the Port of Oostende, DEME Concessions, and PMV.

”The project serves as an example that even small fields can create value for the licensees and the Norwegian society,” says Arvid Østhus, the NPD’s assistant director for development and operations in the North Sea.

In wind power generation, Europe installed a total of 3.6 GW of new offshore wind capacity in 2019 – an annual record high, WindEurope said last month. Total new onshore and offshore wind installations in Europe reached 15.4 GW in 2019, bringing Europe’s wind energy capacity to 205 GW. Wind energy accounted for 15% of all electricity consumption in Europe in 2019, WindEurope said but noted that currently, Europe is not building enough new wind farms to deliver the EU’s goal that it should be half of Europe’s electricity by 2050. In an effort to boost grid compatibility of offshore wind turbines, the Fraunhofer Institute for Wind Energy Systems IWES in Germany is launching a mobile test facility; a grid simulator to verify current and future grid system services as well as electrical properties of a wind turbine. The project will allow the testing and optimisation of the grid compatibility of large wind turbines with an output of up to 20 MW.

Spirit Energy signed in March an agreement to sell two noncore assets in Denmark—stakes in the Hejre and Solsort discoveries—to INEOS.

In plastics recycling, Eni’s chemicals company Versalis is launching HoopTM; a project aimed at developing new technology to chemically recycle plastic waste.

The Norwegian Petroleum Directorate (NPD) gave the green light to operator Aker BP to start oil and gas production from the Skogul field in the North Sea, one of the smallest fields offshore Norway developed with a subsea template tied-in to the Alvheim FPSO via the Vilje field.

“The HoopTM project aims to create a theoretically endless plastic recycling process, producing new virgin polymers suitable for all applications and that are identical to polymers that come from fossil raw materials,” said Daniele Ferrari, chief executive at Versalis.

REGIONAL REVIEWS: MIDDLE EAST

By Aditya Saraswat, Senior Upstream Analyst at Rystad Energy

No middle ground in Middle East PRICE WAR TITLE HERE

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A month after powerhouses Saudi Arabia and Russia failed to reach an agreement over production cuts and the oil price has dwindled to less than $30 per barrel (bbl), with no signs of stopping. Unleashed, the middle eastern giants are rearing to gain market share by heavily discounting crude grades and putting their crude on wholesale. Amidst it all, the second quarter already looks terribly oversupplied as an oil market struck by the coronavirus shows little appetite.

PEC+ member countries are now aiming to utilize their maximum capacities to capture the majority of the oil market. Meanwhile, Saudi Arabia is preparing to deploy the equivalent of an atomic bomb upon the oil market in April, with plans to supply 12.3 million barrels per day (bpd) of crude to the market next month. For this ambitious target, the kingdom will have to rely on some draws from commercial storage, as Rystad Energy estimates their upstream crude production capacity – without any additional drilling – is limited to around 11.5 million bpd in the short term. In line with this, Saudi Arabia has hired 25 to 30 extra oil tankers by state tanker company Bahri and notified field supervisors to prepare fields for maximum output. Saudi Arabia’s all-time high crude production was previously achieved in November 2018 when it produced 11.1 million bpd. For now, we expect crude production to rise to 10.8 million bpd from 9.8 million bpd in Feb 20, and to increase further to 11.2 million bpd in May 20. However, we believe Saudi Arabia is able to meet, and possibly exceed, the 11.0 million bpd production target as soon as April. At 10.8 million bpd of upstream production, the stock draws at Saudi-controlled storage facilities would have to amount to 1.5 million bpd in April (45 million barrels).

www.ogvenergy.co.uk I April 2020

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REGIONAL REVIEWS: MIDDLE EAST

Core-OPEC members UAE and Kuwait, each with around 300,000 bpd of spare capacity, will contribute to the crude tsunami in April. Both countriesâ&#x20AC;&#x2122; NOCs aim to boost sales in April, with ADNOC announcing its intent to supply 4 million bpd to the market in April. We expect UAE production will increase by around 200,000 bpd to 3.20 million bpd in April from February levels of 3.04 million bpd, mostly driven by its flagship-grade Murban, produced onshore. We acknowledge that the UAE could manage to increase production even higher if it utilizes its entire spare capacity, but this would require drawing significant amounts of crude from storage if the country aims to supply 4 million bpd to the market. On the other hand, Rystad Energy forecasts crude production from Kuwait could reach 2.80 million bpd in April with less upside risk than for UAE, Russia and Saudi Arabia.

The last major country with ample available spare capacity to potentially bring to the market in April is Iraq. In the ongoing price war, Rystad Energy expects Iraq will begin to bring back production from state-operated fields, where 480,000 bpd was collectively cut under the recent OPEC+ cuts. Based on our analysis, Iraq will rampup production by 250,000 bpd to nearly 4.90 million bpd in April. If Iraq is able to find buyers for this additional crude, the total 480,000 bpd could be back online by June 20. The devil is, of course, still in the demand details. Global oil demand faces increasingly negative prospects as the macro picture weakens on quarantine measures across the world, most recently in France, Spain, and other European countries who have announced nearly total economic lockdown in March. As an increasing number of countries shutter economies to fight the coronavirus outbreak, at least 2 million bpd in April will contribute to the unprecedented supply glut, which Rystad Energy expects will grow in the short term. Indeed, the oil industry may experience one of the greatest shocks in history as coronavirus containment measures will add to the headache of producers fighting for market share. The next pressing question for the oil market is: Can the market actually absorb all the expected crude supply during 2Q 2020? Or, will the oil spot price have to collapse entirely, forcing production shut-ins due to real physical storage constraints? And which supply is most at risk from ever-decreasing oil prices? In Rystad Energyâ&#x20AC;&#x2122;s oil price and production outlook base case, we assume that the rampup in OPEC production will only last until June of this year, at which time we expect that a new production cut agreement will be made.

REGIONAL REVIEWS: US

By Loren Steffy

The U.S. energy industry squeezed between virus fears and OPEC price war

For the U.S. energy industry, the bleak start to 2020 turned increasingly dismal by mid-March. As coronavirus fears gutted global demand and a price war between Saudi Arabia and Russia flooded the market with production, the industry found itself facing the prospect of increased bankruptcies, anemic financial performance and widespread layoffs. As the price of West Texas Intermediate crude slid toward $30 a barrel in mid-March, the U.S. faced the prospect that it’s new role as a net crude exporter might be short-lived. For the past few months, America exported more oil than it imported, but the worst price rout in almost three decades prompted speculation the U.S. production would fall by a million barrels a day. That would reduce exports below import levels, according to an analysis by Bloomberg NEF. While producers struggled with the steep price declines, the coronavirus hit close to home. Organisers canceled CERAWeek in Houston, one of the country’s biggest oil and gas conferences, citing coronavirus concerns. The number of known coronavirus cases in the U.S. topped 3,600 by midMarch, and at least 66 people had died. CERAWeek typically draws more than 5,000 industry executives from more than 80 countries. Meanwhile, the far larger Offshore Technology Conference, which draws tens of thousands to the city each year, was postponed until late summer. The price war that erupted between OPEC and Russia dealt another blow to U.S. shale drillers, many of whom were already struggling to break even when crude was much higher. The financial fallout has begun to show up on the balance sheets of some of the biggest independent producers. Occidental Petroleum, just six months after its $37 billion acquisition of Anadarko Petroleum, slashed its quarterly dividend for the first time in 30 years. Oxy said it was reducing the payout to 11 cents from 79 cents, and it lowered its capital spending budget by one-third. Occidental is still working to reduce the $38 billion in debt it took on to buy Anadarko. The one winner in Oxy’s struggle may be billionaire investor Warren Buffett, who put up $10 billion in financing in exchange for preferred stock that pays him $800 million a year regardless of commodity prices or company earnings. Buffett’s holding is now worth almost as much as the entire company. Just days after Oxy’s announcement, another large independent, Marathon Oil, slashed its 2020 drilling budget by 20%, to $1.9 billion from $2.4 billion. The move came after Marathon’s 2019 profit fell by 56% from a year earlier.

www.ogvenergy.co.uk I April 2020

Many other companies, from producers to service providers, have focused on controlling spending and improving profit margins rather than boosting production at all costs, but now many industry observers wonder if the sudden embrace of fiscal discipline has come too late. It’s not just company budgets and share prices that have been battered. Yields on about $110 billion of energy company bonds slipped below a margin of 10% above Treasuries, a sign that the bonds are in distress and raising concerns that some companies may not be able to repay their debt.

The combination of low commodity prices and heavy debt is likely to trigger a wave of mergers, bankruptcies and lawsuits according to industry analysts and bankruptcy lawyers who specialize in oil and gas. “We already had a number of U.S. shale producers that were very challenged because they didn’t have great balance sheets and were struggling,” Pearce W. Hammond, managing director for midstream equity research at Simmons Energy, told HartEnergy.com. “This just accelerates this process. It likely means several companies will go bankrupt.” Some industry leaders are appealing to the Trump administration for help, such as low-interest loans, federal oil purchases to prop up prices, or even trade barriers or import quotas to help shield the domestic industry from the ravages of the global marketplace. But even many Republicans appeared reluctant to help an industry that’s producing at record levels. Critics wasted no time condemning the idea, and on social media derided the plan as a “shaleout.” Things are looking only slightly better on the natural gas side of the equation. Shares of companies such as Cabot Oil & Gas, Southwestern Energy and Range Resources climbed in early March on the speculation that plunging crude prices will force operators in the Permian Basin to curtail oil production. Because gas is still produced primarily as a byproduct of oil in the region, analysts predict that declining oil production will ease the natural gas glut that has pushed prices to a four-year low. The output from the Permian and other shale basins continues to rise, but at a slower pace.

However, with the coronavirus tamping down global demand, some international buyers are refusing U.S. shipments of liquefied natural gas, raising speculation that American gas exports, like oil, will slow.

President Trump, during a recent visit to India, tried to convince the Indian government to buy more LNG from U.S. producers, but it was a tough sell. Given the weak price environment, more global buyers are turning to the spot market, rather than locking themselves into long-term supply contracts. The reluctance to commit to long-term agreements comes as companies in the U.S. are bringing more than a dozen new LNG export facilities online. Just days after Trump’s visit, for example, federal regulators in the U.S. gave permission for a second dock at Freeport LNG’s export terminal in Brazoria County, Texas, south of Houston. The new permit will allow for increased tanker activity at the facility, which sent out its first shipment in December and which has plans to build a total of three production units with a combined output of 15 million metric tons a year. U.S. exporters like Freeport need long-term agreements in advance to secure the billions needed to fund the projects. Thanks to the fracking boom, the U.S. is about to become the world’s third-largest gas exporter, but a global oversupply of gas from Qatar, Russia and Australia has kept prices low and left U.S. exporters scrambling to secure buyers. The plunge in oil and natural gas prices hasn’t slowed the country’s ongoing shift away from coal-fired electricity plants. The U.S. Energy Information Administration reported that coal use plunged 13% last year, a decline that’s likely to be repeated in 2020. That’s the biggest in 65 years. Coal producers have struggled to compete with cheap natural gas and growing pressure over climate change. With Saudi Arabia indicating in mid-March that it would boost production, and Russia vowing to do the same, things aren’t likely to improve for U.S. producers any time soon. In Texas — which, as the biggest oil-producing state is the most sensitive to the boom-bust cycle — some industry participants are saying 2020 is starting to look like 1986, when the Saudis flooded the market with crude, sending the industry into a tailspin from which it didn’t recover for 15 years. While U.S. production continues to rise, at least for now, the country remains the biggest producer and consumer of oil. But after four decades of scarcity and reliance on foreign imports, America is finding that abundance and energy independence bring their own set of perils.

USA REVIEW sponsored by

SPECIAL FEATURE

By Chantal Beck, Sahar Rashidbeigi, Occo Roelofsen, and Eveline Speelman

The future is now: How oil and gas companies can decarbonise

As the pressure to act on climate change builds, the industry should consider a range of options.

f the world is to come anywhere near to meeting its climate-change goals, the oil and gas (O&G) industry will have to play a big part (Exhibit 1). The industry’s operations account for 9% of all human-made greenhousegas (GHG) emissions. In addition, it produces the fuels that create another 33% of global emissions (Exhibit 2). Several trends are focusing the minds of industry executives. One is that investors are pushing companies to disclose consistent, comparable, and reliable data. Activist shareholders, for example, are challenging US- and Europebased oil majors on their climate policies and emissionsreduction plans.1 Investors are also increasingly conscious of environmental issues. In the five markets examined by the Global Sustainable Investment Alliance— Australia and New Zealand, Canada, Europe, Japan, and the United States— sustainable investments reached assets of $30.7 trillion in early 2018, one-third of total investment. At September’s UN climate summit, an alliance of the world’s largest pension funds and insurers (representing $2.4 trillion in assets) committed itself to transition its portfolios to net-zero emissions by 2050.

Exhibit 1

Many sectors have to play a role if the world is to meet its climate-change goals.

Global emissions, by source and fuel type, 2015, %

Exhibit 2

Directly and indirectly, the oil and gas industry accounts for 42% of global emissions. Oil and gas (O&G) share of global emissions, 2015, %

Although there is still no global market, carbon taxes or trading systems cover 20% of worldwide emissions...

At the same time, renewable technologies have been getting cheaper. In the United States, the cost of solar—both photovoltaics (PV) and utility scale— has fallen more than 70% since 2011, and the cost of wind by almost two-thirds. By 2025, they could be competitive with natural gas–based power generation in many more regions.

Other forces are also coming into play. Although there is still no global market, carbon taxes or trading systems cover 20% of worldwide emissions, compared with 15% in 2017, according to the World Bank.3 Many European governments plan to implement binding GHG emissions targets and are drawing up national energy and climate plans.

Options for the oil and gas sector To play its part in mitigating climate change to the degree required, the oil and gas sector must reduce its emissions by at least 3.4 gigatons of carbon-dioxide equivalent (GtCO2e) a year by 2050, compared with “business as usual” (currently planned policies or technologies)—a 90% reduction in current emissions. Reaching this target would clearly be easier if the use of oil and gas declined. But even if demand doesn’t fall much, the sector can abate the majority of its emissions, at an average cost of less than $50 per ton of carbon- dioxide equivalent (tCO2e), by prioritising the most cost-effective interventions. Process changes and minor adjustments that help companies reduce their energy consumption will promote the least expensive abatement options.

www.ogvenergy.co.uk I April 2020

SPECIAL FEATURE

The specific initiatives a company chooses to reduce its emissions will depend on factors such as its geography, asset mix (offshore versus onshore, gas versus oil, upstream versus downstream), and local policies and practices (regulations, carbon pricing, the availability of renewables, and the central gridâ&#x20AC;&#x2122;s reliability and proximity). Already, many companies have adopted techniques that can substantially decarbonise operationsâ&#x20AC;&#x201D;for example, improved maintenance routines to reduce intermittent flaring and vaporrecovery units to reduce methane leaks (Exhibit 3). Cutting emissions is not necessarily expensive. An onshore

operator found that about 40% of the initiatives it identified had a positive net present value (NPV) at current prices and an additional 30% if it imposed an internal carbon price of $40/tCO2e on its operations. One option is to implement initiatives that offset emissions by tapping into natural carbon sinks, including oceans, plants, forests, and soil; these remove GHGs from the atmosphere and reduce their concentration in the air. Plants and trees sequester around 2.4 billion tons of CO2 a year.4 The Italian energy giant ENI has announced programs to plant 20 million acres (four times the size of Wales) of forest in Africa to serve as a carbon sink.

Exhibit 3

Current technologies can address most of the oil and gas industryâ&#x20AC;&#x2122;s emissions. Emissions by source, share, and possible solutions, %

Other companies are looking at how to fund these offset programs; Shell offers Dutch consumers the possibility of paying to offset emissions from retail fuel. The cost of carbon sinks is uncertain; estimates range from $6 to $120 per tCO2e in 2030, depending on the source and the sequestration target. Any company can invest in offsets. On the whole, however, upstream and downstream operators have different sets of options at their disposal.

Planning a decarbonisation strategy: Questions to ask Companies are at different stages of preparing their GHG-reduction plans: some are ready to act, others are just getting started. Here are questions companies should ask as they plan and execute strategies to reduce GHG emissions. Goals. What is the baseline for setting targets? What are the targets over the next three to five and five to ten years, as well as to 2050?

Initiatives. What is the most cost-effective way to decarbonise our different sources of emissions? What is the business case for each asset? How can our company manage the trade-offs between longer-term decarbonisation and shorter-term growth, revenue, and sustainability targets?

Stakeholder strategies. How can we get investors, employees, customers, and governments to support our decarbonisation agenda? What is the investment case? Are new sources of funds available? How can we differentiate our products? When should we collaborate or go it alone?

Management. What capabilities do we need centrally or in business units? What is the right organisational setup? How do we allocate capital for decarbonisation across the portfolio? How do we measure and track success?

Energy transition. How do we align our decarbonisation goals with the larger energy transition? What is the right timeline and payback period?

SPECIAL FEATURE We estimate that reducing fugitive emissions and flaring could contribute 1.5 GtCO2e in annual abatement by 2050, at a cost of less than $15/tCO2e.

Electrifying equipment.

What upstream operators can do. Upstream operations account for two-thirds of sector-specific emissions. Below, we discuss some ways in which oil and gas companies are taking action. The economics will vary greatly, depending on the option and local conditions. Changing power sources.

One oil and gas company is using on-site renewable-power generation to provide a costeffective alternative to diesel fuel. By replacing generators with a solar PV and battery setup, the company not only reduced emissions significantly but also broke even on its investment in five years. Connecting onshore or nearshore rigs and platforms to the central grid (as opposed to decentralised diesel generation) can also work well: for example, in its drive for electrification, Equinor recently connected its Johan Sverdrup field, which lies 140 kilometres offshore, to the grid. If upstream producers electrified most of their operations, that could add up to 720 tCO2e a year in abatement by 2050, at an estimated cost of $10/tCO2e, depending on local electricity costs.

Reducing fugitive emissions.

Companies can cut emissions of methane, a powerful GHG, by improving leak detection and repair (LDAR),installing vapor-recovery units (VRU), or applying the best available technology (such as double mechanical seals on pumps, dry gas seals on compressors, and carbon packing ring sets on valve stems).5 One company replaced the seals in pressure-safety valves, which had been found to be a frequent source of leaks, and then was able to monetise these streams of saved or captured gas.

www.ogvenergy.co.uk I April 2020

One company replaced gas boilers with electric steam-production systems, including high-pressure storage for nighttime steam supply, to support separation units. The project will pay for itself in less than ten years. In many circumstances, there is already a good business case, on purely financial grounds, for combining the use of solar and gas in place of conventional boilers.

Reducing nonroutine flaring through improved reliability.

One operator found that 70% of all flaring emissions came from nonroutine flaring, mainly as a result of poor reliability. It therefore focused on improving its operations—for example, by carrying out predictive maintenance and replacing equipment. These actions not only reduced emissions but also raised production. Best-in-class operators are making significant strides in reliability thanks to area-based maintenance and multiskilling. Predictive analytics can reduce the frequency of outages to compressors or other equipment.

Reducing routine flaring through improved additional gas processing and infrastructure. While some flaring may be unavoidable, the capacity constraints of infrastructure can lead to more than either companies or the public might want. In the Permian Basin, for example, a record 661 million cubic feet a day (mcf/d) were flared in the first quarter of 2019. Addressing this challenge requires additional gas-processing facilities, as well as gathering and transport infrastructure. The Gulf Coast Express natural-gas pipeline, which went operational in September, will help. An additional 16 billion cubic feet a day (bcf/d) of planned capacity increases on pipelines from the Permian to the Gulf Coast is now under discussion.

Increasing carbon capture, use, and storage (CCUS).

While this technology is projected to play only a minor role in the sector’s overall decarbonisation, O&G players can still significantly influence its adoption and development. There are 19 largescale CCUS facilities in commercial operation; four more are under construction and another 28 in development. There are also a number of demonstration and pilot projects. Together, plants under construction and in operation can capture and store about 40 MtCO2e a year. Total CCUS capacity could increase by as much as 200 times by 2050. In this market, the oil industry is well placed to lead because it already uses carbon captured via CCUS for use in enhanced oil recovery (EOR). That oil is also less emissions intensive than the conventionally extracted variety. A number of countries are looking to accelerate CCUS development. In 2018, for example, the US Congress passed a provision (45Q) increasing the tax credit that power plants and industries can take for either storing or using captured carbon. Congress is considering a bill, known as USE IT, to support the construction of CCUS facilities and CO2 pipelines and to finance research on direct-air capture. The business case for CCUS works only under specific economic conditions, such as tax relief or the imposition of a carbon price. Without some kind of regulatory framework, CCUS does not create value in and of itself. CCUS costs $20/tCO2e for selected processes in the oil and gas sector but as much as $100 to $200/tCO2e in other industries, such as cement. One undertaking to watch is the Clean Gas Project in northern England, where a consortium of six oil and gas companies is building what could be the first commercial natural-gas plant with full CCUS capacity.

Rebalancing portfolios.

Operators are starting to take a close look at their upstream portfolio choices. The highest-emitting reservoirs are nearly three times more emissions intensive than the lowest. For example, complex reservoirs— highly viscous, in deep or ultradeep water, compartmentalised, or high pressure and temperature—may be at a structural emissions disadvantage. They may therefore become increasingly unattractive to develop in the future.

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RENEWABLES

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RENEWABLES ZONE SPONSORED BY

Mike Wilson - EIP Chairman and Stuart Moir - EIP Project Engineer

The Mass of Water Turbine (MOWT), a new technology from Scottish company, Ecosse IP, is set to enhance opportunities for cost-effective energy generation which will apply to will apply to offshore energy, renewables, utilities, aquaculture, marine and defence sectors.

enerating energy from slow-moving water, the patent-pending MOWT is designed for use in rivers, estuaries and subsea current & tidal environments offering an energy solution with minimal environmental impact. Currently, MOWT measures 5m long x 1m high and weighs less than 1 tonne. The MOWT can be fitted with an integrated battery pack and built-in Ambient lifting technology with the option for additional modules to increase its size. In the future, Larger utility-scale MOWTs are planned as an alternative to tidal barrages, with the added benefit that its unique low-speed energy capture, it has no detrimental effects on fish and other subsea creatures. The MOWT is positioned using a small vessel such as a multi-cat, and the in-built Ambient lifting technology allows for simple installation and recovery. Power can be generated from the MOWT when floating on the surface, semisubmerged or on the river/seabed, with the current design generating between 5-10kW in 1m/s flow to power subsea assets. Large-scale MOWT’s will have a power output of several megawatts. There are many applications for MOWT including powering subsea assets, as an

www.ogvenergy.co.uk I April January-February 2020 2020

alternative to tidal barrages and supplying energy to communities by harnessing kinetic energy from slow-moving water for use in offshore energy, renewables, utilities, aquaculture, marine and defence sectors. Mike Wilson, Chief Technology Officer and Stuart Moir, Project Engineer are co-inventors and the driving force behind EIP’s latest product development. Mike highlighted “Delivering simple economic solutions to customer problems underpins everything that we are about at EIP. The team is constantly looking at how to do things differently – designing and engineering innovative solutions for current and future customers.”

Here at Xodus we have charged into 2020 with a true sense of determination and pride. I’m incredibly excited that most of our work utilises skills from across the business; from offshore wind supply chain experts to commercial analysists (and many more!). We know this works and that it adds value for clients. But we also know that this approach is fit for purpose in a world where the focus is on a broad energy mix and meets increasing demand. We are leading and guiding our Clients through the energy transition, and working together to deliver a responsible energy future.

Peter Tipler Renewables Director, Xodus Group

RENEWABLES the environment. Since April 2016, Myanmar as invested roughly K1.2 trillion to produce 700MW of additional electricity, with plans to produce another 1000MW by the middle of the year. The number of companies in Indonesia using solar energy has soared due to low costs of using solar energy, which reduce electricity costs by up to 20%, according to managing director of a rooftop panel leasing company PT Xurya Daya Indonesia, Eka Himawan. This increased use of solar energy supports the Indonesian Government’s efforts to achieve 23% renewable power production mix by 2025. Adding to this, Coal miners PT Sumber Energi Sukses Makmur will build a 10.5MW hybrid solar power station in South Sumtarai, Indonesia, to sell power to local palm oil plantation company PT Golden Blossom Sumatra. The plant will exclusively power the company as part of a 20-year deal. The construction of the plant is scheduled for July with the completion expected for March 2022. Singapore is implementing solar power with plans to have city waterworks powered by solar power by 2021. Two 1.5-megawatt peak (MWp) floating solar systems will be deployed at Bedok and Hower Seletar reservoirs, as well as a 60 MWp solar system at Tengeh reservoirs which, upon completion, will be the world’s largest solar system. The floating solar farm will reduce about 32-kilotonnes of carbon emissions and is due for completion in 2021.

ASEAN Countries reach for the Sun

hile member countries – Thailand, Myanmar, Indonesia, Vietnam and Malaysia - have all been making solar power a central component for their country’s electricity supply, they have all taken different approaches. Approved last year, Thailand has a power development in place which looks to reduce the dependence on fossil fuels and promote the use of renewable energy. The plan aims to make the most of solar power – mainly due to the decreased price of solar panels and Thailand’s abundant solar energy potential.

At the end of the year, Vietnam became the largest installed capacity of solar power in south-east Asia with 44% of the total capacity, according to figures from Wood Mackenzie. Vietnam originally had plans in place to build new coal plants, but since renewable energy has been made cheaper recently, they are becoming serious about solar power.

Despite some countries in the ASEAN making more of the solar power potential than others, it is unquestionably becoming more popular across the region.

In line with the Thai Government’s eco-friendly energy scheme for the power plan, a contract was recently signed to create the world’s largest hydro-floating solar hybrid project for the Electricity Generating Authority of Thailand (EGAT); a state-owned utility under the ministry of energy, responsible for electric power generation and transmission for the whole country. Thailand’s bordering country, Myanmar, is also building a 40-megawatt solar power plant with the Government in efforts to provide country-wide electricity cover by 2030. Deputy Minister of Electrical and Energy, U Khin Maung Win, has spoken about Myanmar’s need to increase energy sources that have little impact on

Countries in the Association of Southeast Asian Nations (ASEAN) made great strides in 2019 towards harnessing the region’s potential in solar energy, and it’s clear that trend is likely to continue throughout 2020 and beyond.

The Malaysian solar industry is on the rise with BayWa renewable energy gmbH announcing the commissioning of a 39-MWp solar park in the country which contains almost 120,000 panels. Malaysia already has established a solar manufacturing sector, however most of the solar equipment being used is exported. Despite some countries in the ASEAN making more of the solar power potential than others, it is unquestionably becoming more popular across the region. The rise of alternative energy aided by the lower cost of solar production, has resulted in many countries moving away from their previous reliance on fossil fuels such as coal and crude oil.

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FOSSIL FUELS

MARCH

UK North Sea Oil & Gas Review By Tsvetana Paraskova

This past month’s highlights in the UK energy sector include forecasts for oil and gas revenues from the North Sea, measures to reduce carbon emissions and help a sustainable energy transition, as well as various contract awards and project updates.

But more than anything, the keyword in the oil and gas industry, and any industry and service sector for that matter, all around the world these days is the coronavirus pandemic, which is weighing down on global oil demand and oil prices. Combined with the supply shock of promised additional supply from former allies Saudi Arabia and Russia at a time of severely depressed demand, oil prices tumbled in two weeks to levels unsustainable for many upstream operations, including those in the UK offshore sector. Industry body OGUK issued a stark warning on 19 March that the oil price crash and the halving of gas prices are driving “an increasingly fragile outlook for the UK’s offshore oil and gas sector.” OGUK now expects drilling levels to slump back the lows of 2016, down more than a third compared to earlier forecasts. Capital investment could drop by 20-30 percent this year, straining the sector’s FOSSIL FUELS supply chain, “with the pressures expected to significantly undermine the industry’s businesses, jobs, and contribution to the economy.”

Continues > Colour code #222a68

FOSSIL FUELS

In other news, the Office for Budget Responsibility halved its forecast for oil and gas revenues in the UK between fiscal years 2020-2021 and 2023-2024. In the Economic and fiscal outlook March 2020, the OBR said that it had revised down the UK oil and gas revenues, consisting of offshore corporation tax and petroleum revenue tax, by £900 million a year on average. Oil and gas revenues for 2019-2020 are now seen at £700 million.

the workforce and steps to ensure reducing emissions does not see high quality jobs leave the country. “This report shares our industry’s focus on delivering a fair, inclusive and sustainable transition to a low carbon future. These findings confirm the need for continued partnership working with governments, regulators and our people to ensure that we can continue to support the UK’s diverse energy needs, the communities we work in as well as wider society,” OGUK Chief Executive Deirdre Michie said, commenting on the report.

“This is more than explained by much lower oil and gas prices, with our forecast conditioned on prices that are respectively 12 and 34% lower in levels terms by 202324 than in our March 2019 forecast,” the OBR said in its report, which was updated as of 6 March, when oil prices slumped, but before the price crash of 9 March when oil plunged by 30% in one day. This suggests that even the lowered revenue estimates may be too optimistic.

Energy consultancy Wood Mackenzie said at the end of February that the UK North Sea will see the largest decommissioning bill of any country over the next decade. More than £17 billion is expected to be spent on UK decommissioning by 2029, twice that of any other country, according to Romana Adamcikova, Senior Research Analyst – North Sea Upstream at WoodMac. “With large hubs ceasing production and without new investment, we predict decommissioning spend will overtake capex in 2025,” Adamcikova said.

“Dollar oil prices on 6 March were 17.8% lower than the 10-day average to 11 February used in this forecast. Mechanically, that would lower our receipts forecast by £0.6 billion a year,” the OBR said. The UK government announced a £90-million package to tackle emissions from homes and heavy industry. The package includes £70-million funding for two of Europe’s first-ever large scale, low carbon hydrogen production plants, the first on the banks of the Mersey, the second planned for near Aberdeen. A third project will develop technology to harness offshore wind off the Grimsby coast to power electrolysis and produce hydrogen. The other £20 million in the package is earmarked for projects aimed at cutting household emissions and bills through nine UK-wide local “smart energy” projects. “This is an important part of our worldleading efforts in eliminating our contribution to climate change by 2050 while also growing our economy, creating up to 2 million green collar jobs across the country by 2030,” Kwasi Kwarteng, Minister for Business, Energy and Clean Growth, said.

Kwasi Kwarteng

Energy storage and demand side response (DSR) are crucial elements to ensuring the flexibility of the UK energy system while achieving the 2050 net zero ambition, Energy UK said in a report published in partnership with The Association for Decentralised Energy (ADE) and BEAMA, the UK trade association for manufacturers and providers of energy infrastructure technologies and systems. “We must continue to develop technologies and expertise to realise the potential benefits of a smart flexible energy system and the export opportunities for technologies, skills, and services,” the report says, urging the Government and Ofgem to work with stakeholders in the coming year “to address and remove the barriers to an efficient and transparent market in which providers of flexibility are rewarded and innovation is supported.” OGUK, the leading representative body for the UK’s offshore oil and gas sector, praised the interim report of Scottish Government-appointed Just Transition Commission for its call for greater engagement with

www.ogvenergy.co.uk I April 2020

“We must continue to develop technologies and expertise to realise the potential benefits of a smart flexible energy system and the export opportunities for technologies, skills, and services” Energy UK report in partnership with ADE and BEAMA

Industry majors BP, Eni, Equinor, Shell, and Total assumed leadership of the Net Zero Teesside project, with BP as operator. The project aims to be the UK’s first zero-carbon cluster, with the partners bringing global experience of carbon capture, utilisation and storage technology. The project will decarbonise local industry by building a transportation and storage system to gather industrial CO2, compress it, and store it safely in a reservoir under the North Sea. “With the right government support the project has an ambitious yet achievable potential start-up date of the mid2020s,” the partners said in a statement. In corporate contracts and news, Shell and Subsea 7 struck an agreement to speed up digital transformation in the subsea industry. As part of the deal, Subsea 7’s Life of Field business unit i-Tech 7 entered into a five-year collaborative technology agreement with Shell International Exploration & Production to accelerate subsea digitalization. “Digitalisation will support Shell to become a world-class investment case by improving our productivity, reliability and performance as well as reducing the costs of our assets,” said Christian George, Shell Vice President of Wells, Deep Water and Surface Engineering Technology. Solstad Offshore won a contact from Premier Oil for its PSV Normand Flipper for four wells firm plus options starting between May and June 2020. The contract is expected to last around 400 days supporting the jackup drilling rig Valaris JU123 at Premier Oil’s Tolmount field in the southern North Sea. Premier Oil has also awarded DOF a contract for four wells firm, plus two well options for the Skandi Caledonia vessel with operations expected to begin in Q2 with an estimated duration of around 100 days per well for both the firm and optional wells. Wintershall Noordzee, a joint venture of Wintershall Dea and Gazprom EP International, has successfully started gas production from its operated cross-border Sillimanite field on the UK and Dutch Continental Shelves, Wintershall Dea said on 20 February. Awilco Drilling announced in February that it had signed a letter of intent with Serica Energy to provide the WilPhoenix vessel for a one-well workover on the Rhum field, for a programme of between 45 and 70 days expected to begin between 1 September and 30 October 2020. The contract value is estimated at £5.9 million to £9.1 million. CNOOC Petroleum Europe Limited, a wholly-owned subsidiary of China’s CNOOC, has extended the contract with materials and logistics management company ASCO for another five

FOSSIL FUELS years. The contract, which has options for a further six years, is worth over £100 million and includes ASCO supporting all the operator’s North Sea assets. BP extended a contract with Vroon Offshore Services (VOS) Ltd for another three years. The contract extension is worth around £30 million and under the deal, VOS will continue its exclusive provision of four highperforming vessels to support BP’s North Sea and West of Shetland assets until 2023. Independent Oil and Gas plc said on 28 February that the option held by its partner CalEnergy Resources Limited to buy 50% of the Harvey and Redwell licences had expired, but discussions continued as to CalEnergy’s potential participation in the two licences.

Babcock’s offshore business has won a new five-year shared contract with three oil and gas operators for helicopter transport in the northern North Sea, the company said on 6 March. Babcock will initially operate over 100 helicopter flights each month from Sumburgh in Shetland, on behalf of CNR International, EnQuest, and TAQA, with flights expected to begin on 1 July 2020. Serica Energy said on 9 March that production resumed from the Bruce platform, after it had been halted at the end of January for engineering work to secure an unused caisson, which was found to be in a deteriorated condition. “We are delighted that we have been able to restart production considerably sooner than we had initially predicted,” said Mitch Flegg, Serica Energy’s CEO.

“This work will have no negative Aberdeen-based offshore Energy storage and impact on future production rates support vessel specialist demand side response or on the ultimate recovery of Sentinel Marine has (DSR) are crucial reserves from Bruce, Keith and won a £36 million Rhum,” Flegg added. elements to ensuring package of contract awards and extensions the flexibility of the UK RockRose Energy announced to operate its fleet of energy system while on 10 March that the first of two emergency response achieving the 2050 infill development wells at West and rescue vessels net-zero ambition Brae, in which RockRose has 40% (ERRVs) in the North and is operator, had successfully Sea. Sentinel Marine won completed and was delivering in line contracts with Chrysaor with expectations. to support decommissioning activities in the southern North Sea Tailwind Energy said on the same day it had and with Spirit Energy, which has chartered submitted the environmental statement for the Biscay Sentinel to support the Borr Ran development of the Evelyn field in the Central drilling rig in the Irish Sea. Sentinel Marine North Sea. The first phase of development will has also extended the contract for Mariner consist of a single well, subsea tie-back to the Sentinel, which is chartered to Equinor’s Triton FPSO, with first oil expected by the end of Mariner field, and for Forties Sentinel’s 2022, Tailwind said. contract with INEOS. Forties Sentinel is currently tasked in the firm’s Breagh gas field in the southern North Sea in support In career moves, Neptune Energy said that of routine operations and drilling, Sentinel Alexandra Thomas had joined the company as UK Marine said. Managing Director, based in Aberdeen. Thomas joins Neptune from Tullow Oil plc, where she most Premier Oil said on 5 March it expected the recently held the position of Head of Exploration, last cargo from the Huntington field to be Development and Commercial for Ghana. lifted in April 2020.

BRENT OIL PRICES OVER THE YEARS

YEAR AGO

- BRENT OIL PRICE 2019 - $71.23 For the first time in several months, U.S. energy firms increased the number of oil rigs operating. They added 15 oil rigs a week on April 5, which is the biggest development from the previous year (2018) bringing the total count to 83.

YEARS AGO

- BRENT OIL PRICE 2015 - $59.52 With the steady development of the market, Metso Corp, opened a new valve and field device service center in Queretaro, Mexico. Lewa GmbH had been certified by the German Technical Inspection Association for their implementation of the workplace safety and health protection management system. The UK established the Oil and Gas Authority regulator.

YEARS AGO

- BRENT OIL PRICE 2010 - $84.82 ProMinent, a German pump group, expanded the production plant in Giheung-gu, Yongin City, Gyeonggi-do by investing around €2.5 million. The biggest oil spillage disaster reseased 4.9 million barrels of oil in the Gulf of Mexico. Having a massive economic and environmental factor, the rig was burning for 36 hours before sinking.

FOSSIL FUELS

www.ogvenergy.co.uk I April 2020

Contract Awards

CONTRACT AWARDS Unity, Europe’s largest provider of well integrity technology, services and engineering solutions, has been awarded a three-year contract by Spirit Energy to maintain wellhead equipment across twelve platforms in the East Irish Sea, Southern North Sea and the Dutch sector of the North Sea.

Unity secures multi-million-pound contract with Spirit Energy for well integrity services

operations. We are thrilled to add this service agreement to our growing portfolio of offshore contracts, which now includes over half of all major North Sea operators.

These strong but lightweight products will be delivered to clients with significantly reduced cost and lead times.

As part of the work-scope Unity will deliver surface wellhead and Xmas tree maintenance services offshore, covering around one hundred wells, as well as providing onshore equipment testing, repair, refurbishment and storage from its base in Great Yarmouth. The contract, worth an annual seven figure sum, has two additional two-year extension options.

“We are well placed to deliver an allencompassing service to our clients through a workforce of highly experienced offshore technicians. Our team has exceptional knowledge of all OEM wellhead equipment which will add value throughout this project. Our own range of spare parts, rental assets, innovative technology and specialised engineered solutions also offer reassurance for rapid equipment availability and solving any integrity challenges which may arise.”

Mr Smart continued: “We believe that part of the reason we are a preferred supplier for many of our clients is not only the fast turnaround, competitive pricing and expertise within the company, but crucially, the additional value we can deliver through our own in-house product technology and engineering. We continue to invest in research and development to enhance this capability and are looking forward to introducing our additive manufactured components to the market later this year.”

Gary Smart, Unity CEO commented: “Having previously worked with Spirit Energy to provide well integrity and technology solutions, we have a strong understanding of the company’s

Unity is currently developing additive manufactured wellhead components at its base in Aberdeen, to complement its maintenance and spare parts offering.

Unity, part of the FrontRow Energy Technology Group, employs more than 120 skilled personnel across its bases in Aberdeen and Great Yarmouth, UK and Esbjerg, Denmark.

FOSSIL FUELS Babcock wins five-year offshore contract from Bristow Turkmenistan oil and gas, told Shetland News: “We are of course disappointed the new IAC contract has not been awarded to Bristow following many years of continued strong performance. We are currently working to understand any potential impacts as a result of this outcome and will work to provide support to our local employees who may be impacted.” Consolidating operations Notwithstanding winning this new major offshore contract, Babcock has downsized its presence in the oil and gas sector over recent years due to mounting competition and a dwindling number of contracts.

Babcock has won a five-year offshore transport contract from Integrated Aviation Consortium (IAC) to operate more than 100 helicopter flights per month between Shetland and the North Sea for three offshore oil firms. The contract will see Babcock operate the flights from Sumburgh, Shetland to offshore rigs on behalf of CNR International, EnQuest and TAQA. Babcock hopes to start the flights on 1 July 2020. Simon Meakins, Babcock’s offshore director, said: “We are delighted to welcome this new customer group to Babcock Offshore and look forward to working with them. We are committed to delivering the safe and efficient aviation support they require.”

The consortium also includes a fixed-wing contract to transport workers from Aberdeen International Airport to the Shetland Islands which was awarded to LoganAir. IAC is an almost 30-year-old partnership between oil and gas companies and aviation companies to conduct aviation logistics missions in the North Sea. Bristow held the IAC contract for the past decade, having first been awarded it in 2010 and then securing a renewal in 2015. The contract has now passed to Babcock.

Babcock wrote down £85m on the book values of its “predominantly oil and gas” aviation assets and leases in 2019, according to a trading update posted in February. And it is consolidating its oil and gas operations, having terminated offshore missions in the Congo and Ghana and currently downsizing its Aberdeen operations. Archie Bethel, CEO of Babcock International said in a recent earnings call that Babcock has “no intention to join the chase to the bottom” of the oil and gas transport market.

‘Potential impacts’

“It’s a difficult business to see long term what’s going to happen when there’s so much disruption going on,” said Bethel. “We are still seeing companies that have committed a sharp turn… in a price war with each other, which as I say, we don’t really want to join.”

Responding to losing the contract, Matt Rhodes, Bristow’s director of UK and

No one from Babcock was available to answer Helicopter Investor’s questions.

Tendeka receives Letter of Intent from Aker BP for major sand-face completion scope operator of the Valhall, Ula, Ivar Aasen, Alvheim and Skarv field hubs. Karianne Amundsen, Tendeka’s Scandinavia Area Manager said: “Our fully interchangeable, fieldadjustable, sand and inflow control solution is engineered for a wide range of applications and fits the different requirements Aker BP have across their assets.

Independent global completions service company Tendeka has received a Letter of Intent for a substantial multi-million-pound scope to supply sand-face completion equipment to Aker BP’s Norwegian assets. Over the next three years, the existing frame agreement will see Tendeka deliver its sand screens and FloSure Autonomous Inflow Control Devices (AICDs) to Aker BP’s fields on the Norwegian Continental Shelf (NCS). Measured in production, Aker BP is one of the largest independent oil companies in Europe and is the

www.ogvenergy.co.uk I April 2020

“Aker BP has been a great partner to collaborate with in the past and we look forward to working closely with the team over the coming years to enhance production across these key Norwegian fields.” Brad Baker, CEO at Tendeka, added: “We are proud to have been selected to carry out this work with Aker BP. Our fanatic focus on reservoir recovery and unique production enhancement technology coupled with our dedication to constantly improve, invest and innovate on these technologies are allowing our customers to see real benefits on their assets. “This specific technology is recognised for delivering marked production enhancement around the globe on key iconic fields and several recent significant industry awards reinforce our reputation as the world leader in inflow control technology and sand

management. We appreciate our strong working relationship with Aker BP and look forward to overdelivering on their needs.” Last year, Tendeka secured the sand and inflow control contract for Equinor’s Troll field on the Norwegian Continental Shelf. The four-year exclusive contract will see the company deliver and install up to 100,000 metres annually of sand screens and FloSure AICDs for sand-face completion. Tendeka’s completion products can be seamlessly combined to provide customers with solutions tailored to specific requirements, for both conventional and unconventional wells. The company’s focus on ensuring an evenly distributed flow profile and enhanced oil recovery has resulted in the creation of a specialised range of inflow control solutions. Tendeka has installed more than 7,000 passive ICDs and more than 42,000 AICDs around the world. The field-adjustable FloSure AICDs preferentially chokes unwanted produced fluids whilst promoting the production of oil from the entire length of the well, leading to greater recovery, lower water cuts and less gas production.

Contract Awards

Edge LNG expands in Marcellus with another project under its belt Initial operation is underway and is set to be ongoing until at least 2022.

Pennsylvania, USA, 29th Jan 2020; Edge Gathering Virtual Pipelines 2 LLC (“Edge LNG”) has been selected by a large producer to capture and liquefy gas from its stranded wells in Tioga County in the Marcellus basin. For the producer, this represents an opportunity to reap economic benefits on assets unreachable by pipeline.

The deal sees Edge LNG deploy its fully mobile, truck-delivered liquefied natural gas equipment clusters to the Marcellus site and each cluster includes two Cryobox liquefaction units. This unique process, created by Galileo Global Technologies and deployed exclusively by Edge LNG in North America, can be delivered to any site accessible by road. After set-up and safety checks, production can begin within hours, with minimal investment required of the site owner and without the need of pipeline infrastructure. Edge will purchase the LNG it extracts from the producer to deliver via its truck-based virtual pipeline to existing customers in the region. The company has also signed a deal to supply LNG to the City of Norwich, Connecticut which will be used to provide natural gas to homes and businesses.

Mark Casaday, CEO at Edge LNG, says: “The Marcellus is an important region for us, there is lots of potential here with a large number of stranded wells. So much gas goes unharnessed, purely because lack of access to a pipeline has meant there is no economic way to take it to market. We provide operators with an opportunity to profit from wells that would otherwise not be used and we make it into valuable fuel. It’s a win-win solution.” The announcement follows Edge LNG’s US launch <https://edgelng.com/new-way-to-capture-distribute-and-monetize-stranded-and-flared-gas/> and first deal earlier this year, which saw the company successfully monetize a source of previously stranded gas in the Marcellus field and deliver it as LNG to a New England utility. Edge LNG’s stakeholders include specialist international private equity firm Blue Water Energy and Galileo Global Technologies.

Technip wins FEED contract for Etinde gas field offshore Cameroon Africa-focused oil and gas explorer Bowleven has awarded a contract to Technip FMC to provide front-end engineering design (FEED) work. Technip will be the lead FEED contractor for the Etinde gas condensate field, off the coast of Cameroon. The first phase of the proposed development concept comprises an onshore gas processing, storage and export facility tied to an unmanned wellhead platform with associated gas pipeline infrastructure. Reservoir engineering and sub-surface development elements of the FEED programme will be carried out by field operator New Age. TechnipFMC were also awarded an integrated engineering, procurement, construction and

Iran awards $1.3 bil contract to develop 2 oil fields Tehran — Iran awarded a $1.3 billion contract to a domestic company for improved oil recovery at two onshore oil fields in the southwest part of the country, oil minister Bijan Zanganeh said. The contract was awarded by the National Iranian South Oil Co. to general contractor Mapna Group, with gross income from the project seen at $6 billion at an oil price of $50 a barrel, Zanganeh told reporters at a signing ceremony. The two fields in the southwest Khuzestan province Parsi and Paranj are currently producing 52,000 b/d of crude oil. The 10-year contract will raise the production to 85,000 b/d, with output over the 10 years at around 121 million barrels. “The contract core sum is $876 million and with its side costs the investment will reach $1.3 billion,” Zanganeh said. The contract was signed by Ahmad Mohammadi, managing director of the National Iranian South Oil Co., and Abbas Aliabadi, managing director of Mapna. The two fields hold around 12 billion barrels of

oil and development will include desalination and drilling of 29 new and submersible wells. Parsi, which pumped 450,000 b/d in the past, will be injected with 280 million cubic feet/day of gas, and Paranj with 24 million cf/d, Mohammadi said. The Mapna contract is the fifth modeled after the Iran Petroleum Contract, with the first being South Pars gas field phase 11, the second Aban and West Paydar, the third Sepehr and Jofeyr and the fourth, East Paydar, Dalpari and Cheshmeh Khosh, Zanganeh said. One of the differences between the Mapna contract and the model IPC is that the contractor will support the operation even though it won’t directly be present at the site, Zanganeh said. “Finance is an important issue for us... such projects even the smallest ones require $1 billion in two, three years. Some of the money should come from the capital market. We should now consider other sources than the

installation contract from BP Angola for the Platina field development, offshore Angola. The contract will cover the manufacture, delivery and installation of the subsea equipment including subsea trees, rigid pipelines, umbilicals and flexible jumpers. TechnipFMC said the contract was a significant one, meaning that the value is between USD75 million and USD250 million. “We are very pleased to have been selected by BP for this important deepwater development offshore Angola. We are committed to BP and to supporting the Angolan oil and gas industry. This iEPCI follows iFEED work and will utilize our local assets such as our service base in Luanda and our umbilical factory in Lobito,” said Arnuad Pieton, president of Subsea at TechnipFMC.

National Development Fund given the economic situation of the country,” he said. The National Development Fund is a vehicle for surplus oil income. The new contract “has become a little bit Khuzestani” which makes it a first for the National Iranian South Oil, Zanganeh said.

FOSSIL FUELS

Conducted by Craig Jamieson and Oddmund FĂ¸re @ Rystad Energy

Service Market Drivers Greenfield project sanctioning

Database version: Rystad Energy Databases March 2020

Sacntioning year (2016 - 2022)

Year (2016 - 2022)

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Offshore Rig Market Analysis

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FOSSIL FUELS

Conducted by Craig Jamieson and Oddmund FĂ¸re @ Rystad Energy

Offshore Rig Market Analysis Utilisation

Offshore Rig Market Analysis Contract backlog

www.ogvenergy.co.uk I April 2020

Rystad Analytics

Database version: Rystad Energy Databases March 2020

Decommissioning Projects

Current (Fields)

OPERATOR

P EXPLORATION (Don - Miller)

(Cheviot)

Decommissioning Projects (Fields)

UK HOLDINGS

BP EXPLORATION - Vorlich - ETAP ) DANA PETROLEUM E&P ONOCOPHILLIPS

ANA PETROLEUM E&P ENQUEST (Hudson)

PLC (Sullum Voe Terminal -Thistle - Magnus and SVT All Assets - Ninian to STV Pipeline - All UKCS)

NI UK LIMITED EQUINOR ASA (Big Dotty - Little Dotty - Dawn - Hewett)

(Utgard) NQUEST PLC (EnQuest Producer) FAIRFIELD

REMIER OIL PLC (Lancaster)

ENQUEST PLC (EnQuest Producer)

(Glamis - Huntington - Balmoral - Rita & OIL HunterAND - Caledonia) INDEPENDENT GAS

INEOS INDUSTRIES (Cavendish)

Blythe - Elgood)

INEOS INDUSTRIES OCKROSE ENERGY (Brae Bravo - East(Breagh) Brae)

NEPTUNE E&P (Minke - Juliet)

OYAL DUTCH SHELL ITHACA ENERGY INC. (Various - Brent - Atlantic and Cromarty - Curlew - Goldeneye)

PIRIT ENERGY

(Captain)

PERENCO OIL & GAS (Guinevere - TYNE - Pickerill)

(Ensign - South NEPTUNE Morecambe - Audrey E&P- Annabel - Ann & Alison Markham - York - Trees)

(Seagull)

PREMIER OIL PLC

AQA EUROPA B.V

PARKMEAD GROUP PLC (Eider - Tern - North Cormorant - Cormorant Alpha)

(Glamis - Huntington - Balmoral - Rita & Hunter - Caledonia)

WALDORF PRODUCTION (Perth) (Renee / Rubie)

PERENCO OIL & GAS Discovery&Projects (Leman Indefatigable - Wollaston)

P EXPLORATION PING PETROLEUM (Andrew - Murlach (Avalon) - Clair South)

LIMITED

OIL PLC (Catcher - Tolmount)

REPSOL SINOPEC RESOURCES

QUINOR ASA (Tain - -Montrose) (Peik - Bressay - Rosebank Frigg - Mariner East)

ROYAL DUTCH SHELL URRICANE ENERGY (Lincoln, Warwick) (Gannet D Pipeline Replacement

HARIS ENERGY LTD (Pilot)

Jackdaw - Penguin Area - Fram)

SERICA ENERGY (Columbus)

s and contact details, follow the link SICCAR POINT ENERGY m/project-pathﬁnder

(Suilven - Tornado - Cambo)

TAQA EUROPA B.V. (Harding North)

TOTAL UPSTREAM UK LIMITED (Edradour - Glenlivet) WHALSAY ENERGY (Bentley) WHALSAY ENERGY (Sillimanite)

REPSOL SINOPEC RESOURCES (Tartan - Buchan - Beatrice - Fulmar)

ROCKROSE ENERGY (Brae Bravo - East Brae)

ROYAL DUTCH SHELL (Various - Brent - Atlantic and Cromarty - Curlew - Goldeneye)

NOOC LIMITED PREMIER (Blackhorse)

NQUEST PLC (Eagle)

CONOCOPHILLIPS (Caister CM - Murdoch - CMS - MacCulloch)

ENI UK LIMITED (Big Dotty - Little Dotty - Dawn - Hewett)

ENERGY

EPSOL SINOPEC RESOURCES (Southwark (Tartan - Buchan - Beatrice - Fulmar)

CNR INTERNATIONAL (Ninian)

DNO NORTH SEA (Schooner)

HIBISCUS PETROLEUM (Marigold & Sunflower)

ERENCO OIL & GAS HURRICANE (Guinevere - TYNE - Pickerill)

BP EXPLORATION (Don - Miller)

DANA PETROLEUM E&P (Hudson)

ENERGY LIMITED INDUSTRIES (Darwin - Skye)

EPTUNE E&P (Minke - Juliet)

(Fields)

CNOOC LIMITED (Ettrick/Blackbird)

(Caister CM - Murdoch - CMS - MacCulloch) (Platypus)

NEOS (Cavendish)

OPERATOR

CENTRICA STORAGE HOLDINGS (Rough)

NR INTERNATIONAL (Alligin (Ninian)

NO NORTH SEA (Schooner)

Date Generated: 13-03-2020

Projects

OPERATOR

ENTRICA STORAGE HOLDINGS ALPHA PETROLEUM (Rough)

NOOC LIMITED (Ettrick/Blackbird)

UKCS Status Report

ATHFINDER - UKCS Status Report Date Generated: 13-03-2020 Date generated March 2020

Project - Arran -

SPIRIT ENERGY

(Ensign - South Morecambe - Audrey - Annabel - Ann & Alison Markham - York - Trees)

TAQA EUROPA B.V

(Eider - Tern - North Cormorant - Cormorant Alpha) WALDORF PRODUCTION (Renee / Rubie)

Discovery Projects BP EXPLORATION (Andrew - Murlach - Clair South) CNOOC LIMITED (Blackhorse) ENQUEST PLC (Eagle)

EQUINOR ASA (Peik - Bressay - Rosebank - Frigg - Mariner East) HURRICANE ENERGY (Lincoln, Warwick) PHARIS ENERGY LTD (Pilot)

For additional project summaries, locations and contact details, follow the link www.oilandgasvisionjobs.com/project-pathﬁnder

GREEN ZONE By Shelley Milne

Is nuclear energy

misunderstood? As the energy transition gains traction and decarbonisation efforts take centre stage, fossil fuels are not the only sector suffering from a public perception issue.

ublic Perceptions: Nuclear Power, a report released by the Institute of Mechanical Engineers (ImechE), has highlighted that limited public understanding of nuclear power could jeopardise the sector’s contribution towards achieving the UK’s ‘net-zero’ carbon targets.

In 2019, UK Prime Minister, Boris Johnston, called for a Nuclear Renaissance, but public understanding will be crucial to maximising political momentum, developed in recent months.

The most common concerns from respondents around Nuclear power were Nuclear waste and its disposal

The poll findings revealed that men are almost twice as likely to favour Nuclear power than women, with only 29% of women supporting it compared with 56% of men. It is also clear that age, as well as gender, is a factor in public perception. The survey, taken in December 2019, reveals that understanding increases among older people, who, at 61% are far more likely to recognise Nuclear as a low carbon electricity source in comparison to 47% among 35 to 44-year olds. However, this still falls short when compared to levels of public understanding around renewables. “The importance of rapidly decarbonising the UK’s power system has increased as concern about climate change intensifies,” said Dr Colin Brown, IMechE’s Chief Executive, adding:

“This poll shows the potential of low carbon electricity sources has not been effectively communicated, with Nuclear much less understood than renewables.”

www.ogvenergy.co.uk I April 2020

As decarbonisation efforts continue, there is real potential for Nuclear to work alongside Renewables to reduce the UK reliance on Fossil Fuels. However, the survey findings could prove to be a point of concern as the UK undertakes its transition to reach net-zero emissions by 2050.

The Advanced Modular Reactor Programme is poised to conduct Government-funded feasibility studies of designs by ‘vendors’ of small modular reactors (SMRs). However, the survey findings suggest that a widescale roll-out of SMRs would not be well received with 41% of respondents stating they would oppose construction of Nuclear power stations in their locality while only 27% would support them.

Overall, public support for Nuclear power paled when compared to support for renewables, peaking as just 42%, compared to 84% for renewables. Dr Jenifer Baxter, IMechE’s Head of Engineering, suggested that low support could relate to concerns relating to older Nuclear power stations, such as Sellafield and Dounreay.

“I think people conflate previous projects with new projects. We have reduced the amount of fuel we need, the amount of waste produced and it is safer – in fact, it is the safest form of power generation” The most common concerns from respondents around Nuclear power were Nuclear waste and its disposal (58%) and safety concerns including accidents (44%) while ‘reliability of energy supply’ (43%), ‘low carbon energy’ (37%), and ‘security of future energy supply’ (34%) were the most frequently cited benefits.

“Understanding has to improve, not just for members of the public but for planners and potential industry workers as well” said Dr Baxter, adding “We have to make sure that we support not just ourselves today, but future generations to live the lives they want to, and Nuclear power needs to be part of that.”

GREEN ZONE Google first started working in Taiwan in 2013 when they opened their first Asian data centres in Taiwan, it is now home to around 200 staff and, today, is one of the largest data centres in Asia. The company expects to open new offices in late 2020.

By Sean McHardy

In 2019, a commission under Taiwan’s Ministry of Economic Affairs approved investment by Google worth $851 million to expand data operations on the island. This allowed Google to go ahead with plans to build a second hyperscale facility in Tainan city. To offset the environmental costs of the data centres, Google, signed a deal to buy the output of the 10MW solar array where they will place the poles.

Previously, only utility companies could purchase renewable energy. Google had been pushing the Taiwanese government to alter their energy laws so they could buy renewable energy from the source, prompting a legislative change in 2017, which allowed non-utility companies to purchase renewable energy. Google has been interested in renewable energy for many years now; since 2010, Google has signed more than 30 solar and wind projects across America and Europe, making it the largest corporate purchaser of renewable energy and eight years ago the company announced plans to build a wind energy project in the Atlantic Ocean, running from New York to Virginia. The company has moved ahead with its first water-based renewable energy project in Tainan City, marking its entry into the Asian renewable energy market. The idea of building solar panels above water is something that has become more popular recently, especially in Asia due to population density and competition for land. Still, Google’s project may differ from many other water-based solar projects. Many of these projects involve the solar panels laying directly on the water, but Google is currently focusing on panels that would be hoisted above the fishing ponds. According to an experiment by the Fisheries Research Institute this design could result in better fishing yields as it provides the fish with optimum room and also provides shade, although they have not made a final decision on how they will layout the solar panels. Taiwan holds high hopes and expectations with solar power with the Taiwanese prime minister Su Tseng-chang announcing that the government expects around 3.7GW of new solar generation capacity in the next two years. This will be delivered under a two-year solar PV promotion plan which follows on from the 2017-2018 plan. The government expects benefits of $7.2 billion in investment and business opportunities from the twoyear solar promotional plan, said the prime minister.

This purchase is smaller than the power that will is expected to be used by Google’s data centre but will give the company a more realistic price for their electricity long-term and also reduce the carbon emissions in Taiwan.

Google Deal Cements Taiwan’s Global Future

Google has become the first to purchase under the 2017 Taiwan electricity act, which allows nonutility companies to buy renewable energy. Google purchased the outputs of a 10-Megawatt solar array in Taiwan where they will install poles with solar panels on top and placed over fishing ponds.

Google is clearly invested; seeing renewable energy as something that will be important to the company’s growth. At the tail end of 2019, Google’s chief executive, Sundar Pichai, unveiled ambitious plans for the biggest renewable energy deal in corporate history which would include 18 separate agreements to supply Google with electricity from both solar and wind projects from across the world. Speaking to The Guardian newspaper, Pichai said that the deal will “spur the construction of more than $2bn in new energy infrastructure” and will include millions of solar panels and hundreds of wind turbines across multiple continents, adding; “We’re not buying power from existing wind and solar farms, but instead are making longterm purchase commitments that result in the development of new projects.” The reasons for these investments are clear. Investments in renewable energy make “business sense” for them, said Mike Terrell, Head of Energy Market Development at Google. This is primarily down to the dramatic decrease in the amount it costs to generate solar power – dropping from several hundred dollars per megawatt an hour to just 25 dollars over the past decade. This deal underscores Taiwan’s developing role as an innovative economy and a new global renewables leader. Already a major player in solar panel production, the country has gained a reputation for creative thinking, diligent research and GREEN ZONE development-focused approach to developing Energy Industry SPONSORED BY solutions. The world’s secondlargest photovoltaic producer and the second-largest LED producer; Taiwan, once known as Garbage Island, now a growing economy and home to a thriving corporate market place with a high return on investments – and slowly, but surely, the world is catching on.

SPECIAL FEATURE

By Lillian Espinoza-Gala

Piper Alpha and Macondo: Similar Disasters, Different Responses

The Deepwater Horizon disaster and the Piper Alpha tragedy are separated by 22 years and the expanse of the Atlantic Ocean. Both are the worst offshore disasters for their respective countries, and both forever changed those nations’ regulatory regimes and the reputations of the companies involved.

lmost ten years after the Deepwater Horizon explosion on April 20, 2010, killed 11 men and injured 17 others, the offshore industry continues to grapple with the legacy of both disasters — even as it struggles to win back public trust.

www.ogvenergy.co.uk I April 2020

disaster, although each struck a sympathetic Both BP and Occidental Petroleum, the tone early on. BP’s Tony Hayward quickly set up operators of the Deepwater Horizon and a fund to pay businesses and others affected Piper Alpha, respectively, are far different by the 87-day spill that followed the disaster. companies today. BP, having gone through Then, he made an off-hand comment to a the crucible of the US legal system, is far TV reporter that he wanted his life back. That smaller. Much of the past decade was a single gaffe turned public sentiment against the financial fight for survival as it struggled to company and ultimately cost Hayward his job. pay legal settlements, battled a declining Armand Hammer, the iconic CEO of Oxy, made stock price, sold assets worldwide, and was a brief visit to Aberdeen and took responsibility, even rumoured to be a takeover target. Oxy, vowing to fund the cleanup and provide too, is much smaller and focused for injured employees and the primarily on drilling in the families of those who died. Then Permian Basin of West Texas. he went to tea with Margaret It’s currently fighting for Thatcher at 10 Downing survival amid declining oil The Piper Alpha Street. (Hammer was later prices, having paid $37 explosion on July 6, nominated for a Nobel billion to acquire rival 1988 — which killed 167, Peace Prize, losing to the Anadarko Petroleum Dalai Lama.) including two rescue last year, a deal many analysts now question. workers — remains It’s unlikely that a CEO the offshore industry’s would have tea with the BP was a British deadliest man-made prime minister in the wake of company operating the disaster. such a disaster today. Indeed, Deepwater Horizon in even BP’s far harsher treatment American waters, and Oxy by the US government (rather was an American company than brewing up a pot of Earl Grey, operating Piper Alpha in British President Barack Obama wanted to know waters. Both explosions erupted on calm “whose ass to kick”) might pale compared with moonlight nights just before 10 p.m. Both the backlash in the current geopolitical climate. company’s CEOs struggled to respond to the

SPECIAL FEATURE The Piper Alpha explosion on July 6, 1988 — which killed 167, including two rescue workers — remains the offshore industry’s deadliest man-made disaster. BP’s Macondo disaster in the Gulf of Mexico, the largest accidental oil spill in the industry’s history, spewed some 200 million gallons that stretched from Texas to Florida. Saddam Hussein’s torching of 800 wells as he retreated from Kuwait in 1991 spilt more oil, but it was a deliberate act of war. Even so, Wild Well Control’s Pat Campbell said cleaning up Kuwait was far easier than killing the Macondo well in 5,000 feet of water. A new oceanographic study published in February found Macondo oil still affecting marine life in the Gulf of Mexico. With each hurricane and tropical storm, Macondo tar balls and tar “logs”—some twenty feet long wash ashore in Louisiana and Mississippi.

These two disasters are linked by a series of failures — in government regulation, in best industry practice, in process safety system management and in listening to the concerns of the workforce. Rig-owner Transocean commissioned the Deepwater Horizon and, in 2001, sent it to the Gulf, where it drilled 50 wells for BP and quickly earned a reputation as “the best of the best.” Its crowning achievement was drilling the Tiber well to 35,000 feet in 2009, the deepest well ever drilled at the time. But nearly a decade of service began to take its toll. Soon after the Tiber project, it flunked a major audit. Parts and equipment that were no longer manufactured had been cannibalised from other rigs. The computerised drilling program was a Windows 98 program that kept freezing up and triggering the “blue screen of death.” The Macondo well wasn’t included in its drilling schedule, but BP engineers hoped to finish it by March 8. Another Transocean rig, the Marianas, had started drilling the well ,but was damaged in a hurricane in late 2009. Because the Deepwater Horizon was larger, BP assumed completing Macondo would be a short assignment.

One BP engineer even warned his team at the time that “Macondo is a different kettle of fish” from other wells the rig had drilled. Like Piper Alpha, those on the sharp end of the safety spear for Macondo struggled to keep up with equipment failures, a backlog of maintenance issues and unusual drilling complications from the high pressure and temperatures of Macondo’s complex formation. Like Piper Alpha some people involved had a gut instinct that Macondo “was an accident wait to happen.” Three of the Transocean rig crew asked their wives to remarry if they died at sea. Several people with BP and Transocean quit or asked for reassignment. When a major project falls behind schedule everyone can talk about safety but the underlying message that gets transmitted from the executive suite often is financial. It’s left to those on the front lines to translate those financial decisions into actions. Safety concerns often get drowned out. The Macondo well was

costing BP $1 million a day. Everyone from the service companies, the Transocean crew and BP company men did the calculations. They knew that every action they took or postponed was costing BP $600 a minute. And everyone on the rig knew that a well completed in less than 51 days without a recordable injury would mean an $11,000 bonus for galley hands, service personnel — everyone on the rig. The company men knew the clock for Macondo had started October 6 with the Marianas — there would be no bonuses. Many of the men on the drill crew were just hoping to literally finish this well and go home alive. Even in the UK, BP faced a backlash. As oil continued to gush from the ruptured well, the US imposed a drilling moratorium on all deepwater operations. The European Union proposed a similar measure in the North Sea. During a hearing in the House of Commons, Hayward was asked how he could be sure a Macondo-style disaster wouldn’t happen in British waters. His answer: the UK had better regulations. Those regulations stemmed from the inquiry into the Piper Alpha disaster by Lord William Cullen.

Now, as the industry once again confronts tightening budgets, weak oil prices, and the prospect of costcutting, the pressure on safety is mounting again. The US remains far behind other countries in its offshore regulations, but the lives of Macondo need not be lost needlessly. During the coming slowdown, the industry has a chance to revisit the disasters and study the mistakes that contributed to them. If we do that, then in some small way we can learn the lessons of the past and honour those who died aboard the Piper Alpha & Deepwater Horizon.

Lord Cullen’s report included 106 recommendations that overhauled the UK’s approach to safety. It led to a 1992 law requiring each operator to develop, with input from contractors and workers, safety processes for each installation. The “safety case” document had to be updated with every change to daily operations.

In the 1990s, the UK enacted additional regulations. By 1997, amid reports that offshore workers’ concerns were not being adequately addressed, trade and lobbying groups adopted policies designed to improve safety by 50%. In the US, the Deepwater Horizon disaster led to a host of new safety regulations, but with the election of Donald Trump in 2016, many have since been rolled back. The Wall Street Journal recently reported that Scott Angelle, the director of the Bureau of Safety and Environmental Enforcement — created after Macondo to oversee offshore drilling more closely — ordered changes in drilling rules that directly contradicted his agency’s own engineers. The move comes as the Trump administration hopes to open more coastal waters to offshore drilling. Meanwhile, an analysis by the Center for American Progress, a liberal think tank, found that the rate of offshore injuries rose by 21% in 2018 and 2019, compared to the previous twoyear period. A senior fellow at the centre called the findings “an unravelling of safety gains made after Deepwater Horizon.”

GUEST JOURNALIST Lillian Espinoza-Gala Lillian Espinoza-Gala, owner LEG Exploration Education, serves as a Membership Chair on SPE International Human Factors Technical Section Board. She served on steering committee to create two-day workshop on Offshore Process Safety and Worker Empowerment in 2018 and was a member of the Deepwater Horizon Study Group.

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INNOVATION ZONE

By Katie Milne

Denmark’s downhill slope, proves it’s on the up Copenhagen, allegedly the happiest city in the world has even more to smile about than usual. The infamously flat country now boasts an active winter-sports industry, thanks to some innovative thinking around the aesthetics and cultural opportunities presented by a city-based waste-to-energy plant.

he CopenHill ski slope, was first conceived by Danish Architects in 2011 as part of an initiative to promote recreation and sustainability. Ten years in the making, the CopenHill Ski slope was opened to the public in 2019, allowing avid winter sports enthusiasts to soar down a 450-metre slope, complete with views of the Danish Capital, Copenhagen, while 450,000 tonnes of waste is recycled below their feet. Denmark, a country with no hills or mountains, has long lost-out to its Nordic neighbours in terms of winter sports tourism, so, when the idea came about to build an artificial

s a global company, Premier Oil procurement processes significant levels of complex service and equipment agreements. These agreements involve input from across the business including technical, commercial, financial and legal specialists. The intensity of this process often generates large volumes of sensitive and detailed information with contractors and intermediaries within their supply chain. Historically, procurement teams have been heavily reliant on email to track and coordinate supply chain communications, accompanied by heavy PDF’s of contracts and data. The one-to-one nature of transactions undertaken in this way creates a significant compliance issue in terms of data management and corporate oversight.

DeepStream’s technology provides a fully integrated, tender-based portal which offers a full-service procurement solution, ensuring governance, compliance and auditability of documentation and communications across the supply base.

www.ogvenergy.co.uk I April 2020

ski slope merged with the concept of a waste-toenergy-plant, plans were set in motion to make it a reality. A 450m ski slope constructed on the roof of a large incinerator which burns waste to produce heat and electricity is not a simple feat to achieve. A first of its kind, the CopenHill Ski Slope is the perfect manifestation of aesthetic and cultural harmony between industry and environment. Costing around £490 million at point of build, the attraction now draws around 55,000 visitors per year to the city. Copenhagen has ambitious climate goals, aiming to become the first capital city to become carbon neutral by 2025. The creation of the Amager Bakke met the criteria for meeting these goals as the new plant would burn household waste instead of burning fossil fuels. Located in the capital city of Denmark, the Amager Bakke is said to have the cleanest incinerator in the world. The plant receives over 400 tonnes of waste for recycling every day from households

and business throughout Copenhagen. Scrubbing equipment removes the bulk of sulfur and nitrogen emissions and two huge furnaces burn 400,000 tonnes of waste at temperatures of around 1,000oC. A turbine and generator produce energy which is fed into grids. Any leftover energy from the steam is used to provide heating to over 72,000 homes. This is a system called district heating which is commonly used throughout Denmark. Prior to Amager Bakke, Copenhagen relied on a coal plant was located just outside the city. Built in 1971, far from any residential areas to minimise disruption, the plant became unsuitable as the city expanded around it, forcing the municipal corporation owners to replace the plant with one that was safer, greener and wouldn’t be an eyesore. Thus, the Amager Bakke was born. The plant is run by waste management firm, Amager Resource Centre (ARC) and owned by five local municipalities, while engineering firms Babcock and Wilcox Vollund built the main infrastructure for the plant.

DeepStream Technologies to transform Premiere Oil supply chain operations Global E&P Company, Premiere Oil is set to energise their procurement operations through adoption of digital technology developed by London-based Software development Company DeepStream Technologies Ltd. which aims to create an open and collaborative approach to holistic supply chain management. “It’s important that we have best-in-class processes and technology to ensure our operations continue to be robust and efficient.” Said Steven Petrie, Premier Oil UKBU Supply Chain Manager. “In our supply chain operations, we are focused on performance in terms of delivering value and assuring communication auditability and compliance: DeepStream is making a significant contribution to those objectives” he added. According their website, Deepstream Technologies strive to help businesses digitise their offering and facilitate commercial transactions in a secure, transparent and collaborative environment for compliant data exchange. By developing a highly user-friendly product with the latest software technology available to an underserved enterprise market, DeepStream has facilitated over US$600m of industrial tender-based transactions globally including in the UK, Norway, US, Mexico and West Africa. Jack Macfarlane, DeepStream Technologies Chief Executive Officer, commented:

“DeepStream is delighted to be working with Premier Oil in the UKCS, and we have been extremely impressed with their ambitions in leading the way towards a digital and transparent supply chain, sharing our vision in using technology to drive overall industry collaboration. We are not only facilitating a dramatically improved software experience for Premier Oil, but also enabling a secure and auditable tendering platform which removes the compliance risks associated with opaque email & attachment driven processes”. Deepstream’s innovative technology lends itself well to Premier Oil’s ambition to grow shareholder value by investing in high quality production and development opportunities whilst maintaining exposure to upside value from successful exploration within a strict capital discipline framework. This collaboration enables Premier to maintain the highest standards of corporate responsibility whilst providing DeepStream with a high-volume E&P client to further develop its digital offering to the industry.

INNOVATION ZONE

OGV Energy - Issue 31 - April 2020

Articles inside

OGV Energy - April Issue Global Review

OGV Energy -April Partners

OGV Energy - May Issue 2020 Global Review

Anti-Solar: Turning solar energy inside out

Google Deal Cements Taiwan’s Global Future

Is nuclear energy misunderstood?

Award winning Re-Gen Robotics, the "HOLY GRAIL" in tank cleaning safety

ECOSSE IP Launch New Generator Powered by Slow-Moving Water

Streamlining inspections with digital data management

Award Winning Community Trust and historic University extend partnership

The U.S. energy industry squeezed between virus fears and OPEC price war

Denmark’s downhill slope, proves it’s on the up

Middle East

Piper Alpha and Macondo