Offshore Aberdeen February 2015

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ODFJELL DRILLING’S giant Deepsea Ab-erdeen semi-submersible rig is continu-ing its voyage to Shetland from Daewoo’s South Korean shipyard, where it was built, and has recently rounded the Cape of Good Hope, with next stop Las Palmas in the Canary Islands.

Speaking to Offshore Aberdeen, Odfjell’s SVP Communications, Gisle Johanson, said the rig had stopped tem-porarily to perform acceptance tests in Cape Town. He acknowledged that there had been some slight delay to the original schedule due to minor problems related to an incident with its blowout preventer prior to handover from Daewoo, but that the rig would still begin operations be-fore the end of the first quarter – meeting its target of the second half of Q1.

Odfjell Drilling took delivery of Deep-sea Aberdeen in November from Dae-woo Shipbuilding & Marine Engineering (DSME) in Korea. Once it arrives, Deep-sea Aberdeen will start a seven-year con-tract with BP for use west of Shetland in the Schaihallion area. It will support BP drilling activities in the Quad 204 redevel-opment, with a total of 25 wells expected to be drilled over the contract duration.

Deepsea Aberdeen is the latest addi-tion to Odfjell Drilling’s fleet of harsh en-vironment and ultra deepwater drilling units. The semi-submersible is of same design and incorporates the excellent operational performance as Deepsea At-lantic and Deepsea Stavanger. “The rig is an important contribution to our fleet and operations and we are well prepared

to ensure a safe and efficient commence-ment of operations for BP West of Shet-land,” said CEO Simen Lieungh.

RIG TOTAL REACHES A HUNDREDThe new rig will bring the total number of rigs operating in the North Sea to around 100 vessels, made up of roughly the same proportion of jack-ups and semi-sub-mersibles. Other recent additions include the first new-build semi-submersible drilling rig incorporating Wood Group Mustang Norway’s GG5000 floating hull design, which has been delivered to COSL Drilling Europe and is designed to operate in water depths up to 1,500 metres and drill wells up to 7,600 metres.

The list also includes the Maersk Inter-ceptor jack-up rig, which will soon start its initial contract with Det norske in Norway, drilling a three-well programme in block 16/1. In 2015 another six new rigs are due to be added to the fleet; five semi-submersibles and one jack-up. However, the oil price slump has seen some operators suspending contracts, which has cut rig utilisation.

As of mid-December, some 41 rigs were active in the UK sector, with 11 on exploration and appraisal (10 drilling, one preparing to spud), and the remain-der either on development and produc-tion operations or mobilising between drilling locations. In addition, three are in port, with the JW McLean and Ocean Vanguard stacked and the GSF Arctic III idle but available, according to Hannon Westwood.

SHELL COULD RECONSIDER DEVELOP-ING NORWAY’S ORMEN LANGE GAS PROJECT IN 2016Oil and gas giant Royal Dutch Shell could restart work on offshore compression at its Ormen Lange gas field in Norway in the first quarter of 2016, after stopping the project in April. Shell called off work on the innovative subsea gas compression project after costs spiralled and studies showed the decision was not time criti-cal. Ormen Lange gas is supplied to the UK through the Langeled pipeline under the North Sea.

DECEMBER NORTH SEA OIL OUTPUT UP 11.5%North Sea oil production jumped 11.5 per-cent in December, compared to Novem-ber. Output from 12 of the main British and Norwegian crude streams averaged 2.028 million b/d in December, up from a revised 1.819 million bpd in Novem-ber. Brent, Forties, Oseberg and Ekofisk streams, which are the main constituents of dated Brent, will load 1.007 million b/d in December, up 19.9 percent on Novem-ber’s daily loadings.

HUNTINGTON PARTNERS FACE OUTPUT RESTRICTIONS UNTIL END-FEBRUARY Operator E.ON and its partners Premier Oil, Noreco and Iona Energy will continue to face production cutbacks due to output restrictions on the Huntington field until the end of February.

Noreco said: “Huntington production continues at restricted rates, with output around 1,500 b/d of oil to Noreco… The CATS (Central Area Transmission Sys-tem) restrictions are imposed as a con-sequence of an incident that occurred on the CATS Riser Platform during restart in the middle of December.”

RIG ACTIVITY REMAINS WEAKThere have been two new contracts for North Sea rigs agreed in recent weeks, but overall new contract activity remains light, according to KL Energy Publish-ing. The new awards include a three-year extension for the jack-up Ensco 92, with its existing client ConocoPhillips at a dayrate of about $150,000. The second deal involves Diamond Offshore’s Ocean Valiant, which has been hired by Premier Oil. Premier is bringing the rig from the Canary Islands, where it has been idle for several months, for a two-well program at a dayrate of $320,000.

DEEPSEA ABERDEEN RIG ROUNDS CAPE OF GOOD HOPE HEADING FOR SHETLAND

NEWSOffshore Aberdeen | February 2015 | offshoreaberdeen.com2 |

Lundin pLans new ZuLu weLLSWEDEN'S LUNDIN PETROLEUM said drilling of the exploration well on its Zulu prospect in the North Sea has started. The well – designated 26/10-1 and located on Norwegian production license 674BS – is located some 60 miles west of Stavanger and 18 miles northeast of the Johan Sver-drup discovery.

The main objective of the well is to test the reservoir properties and hy-drocarbon potential of Miocene-aged sandstone of the Utsira Formation in the Patch Bank Ridge. Lundin estimates that the Zulu prospect might contain up to 153 million barrels of oil. The planned total depth is 3,350 feet, and is expected to take about 25 days, with the well being drilled by the Island Innovator semi-sub rig.

Lundin is the operator of PL674BS and holds a 35 percent working interest in the license. Petrolia Norway and E.ON E&P Norge hold 35 percent and 30 per-cent respectively.

Lundin also announced on Tuesday that its senior vice president for de-velopment, Chris Bruijnzeels, will step down at the end of January following 12 years with the company. Bruinjnzeels is to become CEO at ShaMaran Petroleum Corporation.

SHELL AND SSE are moving forward with their plans to develop the world’s first full-scale gas carbon capture and storage (CCS) project, which would se-questrate 10 million tonnes of carbon dioxide emissions from the Peterhead Power Station over ten years, trans-porting it by pipeline 100km offshore to the depleted Goldeneye field offshore for long-term storage 2km beneath the North Sea. With renewables still reliant on fossil fuel back-up, the project is an important part of Scotland’s drive to be-come carbon emission free by 2030 - and if the wider UK is really serious about its emissions targets, the project could be-come the first of many.

In January Shell began the approval process for the offshore part of the proj-ect, and despite some delays, energy sec-retary, Ed Davey, said in January that the project was now “developing very well”, with investment decisions likely to be taken this year. “It’s taken a bit longer, I accept. I would have liked to have gone quicker. But we have to consider value for money for consumers… we have the funds for them if they go to the next stage already in the budget.”

Shell say it is very important to them that the proposed Peterhead CCS Project is developed with input from the local communities around Peterhead, and extensive public consultation through-out the development of the project is planned. A third round of consultations were carried out in January in advance of tendering, which is planned for this year. Detailed engineering is then sched-uled for 2016, followed by construction in 2017-2018, with commissioning and start-up targeted for 2019-2020.

The approval sought by Shell in Janu-ary involves an environmental impact as-sessment for the installation of a pipeline between Peterhead power station and the existing 100-km, 20-inch diameter Goldeneye to Fergus gas export line. The location of the most suitable tie-in point will determine the length of new pipeline, although the current preferred option is for a tie-in at 20 km. It will also involve the change-out of the existing Goldeneye subsea safety isolation valve and associ-ated infrastructure, modification of the existing platform topsides and recom-pletion of the existing Goldeneye wells for CO2 injection, as well as testing and

report also expects that, through CCS clus-tering, new jobs will be created in the CCS industry by 2030, as well as protecting ex-isting jobs in the region – which may help cushion the blow of a declining offshore oil and gas sector.

Shell is already participating in a num-ber of CCS projects worldwide including the largest CO2 capture demonstration facility in the world, the European CO2 Technology Centre Mongstad, Norway. In September 2012, Shell also announced plans to progress the Quest CCS Project in Canada and is a partner in Australia’s Gor-gon natural gas liquefaction project.

In January 2013, Cansolv Technologies Inc. (a subsidiary of Royal Dutch Shell), working in partnership with RWE npower, successfully captured the first tonne of CO2 at the Aberthaw Power Station in South Wales, the world’s first integrated sulphur dioxide (SO2)/CO2 capture plant. Cansolv Technologies Inc. is also provid-ing the CO2 capture technology for Sask-Power’s Boundary Dam project.

peterhead CCs projeCt opens up new frontier in north sea

commissioning of the facilities.The Peterhead CCS Project was chosen

in 2013 as one of two CCS demonstration projects to progress to the next stage of the Government’s CCS Commercialisation Competition funding. A technical FEED for the project was carried out in 2014. The proposed project will be a significant step forward in developing CCS technology and helping to decarbonise the UK’s power sec-tor. Adding CCS to a gas power plant can reduce CO2 emissions by more than 90%. In addition, CCS is the only way to collect the CO2 from heavy industry, such as ce-ment and other industrial facilities.

In November 2012, the joint Govern-ment and Industry CCS Cost Reduction Task Force reported that gas and coal power stations equipped with CCS have clear potential to be cost competitive with other forms of low-carbon power genera-tion. In this way, gas can play a long-term role in the low carbon electricity mix and address the intermittency challenges with renewable forms of energy. The Task Force

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‘ These cost cuts are going too far ’

NEWSoffshoreaberdeen.com | February 2015 | Offshore Aberdeen | 3

WELL, WE COULDN’T have picked a better moment to launch our first issue of Offshore Aberdeen, what with the oil price tanking to well below $50/bl. With less than half the money in the business that there was just six months ago, there is far less to go round for all those already involved in the sector, let alone anything left over for newcomers. Nevertheless, we are determined to squeeze in, by providing you with the most comprehensive round up and analysis of happenings in Aberdeen and the offshore North Sea energy sector.

The format is a little loose to start off with, but we hope to touch on the latest in exploration, licensing, appraisal and development, with in-depth features on particular aspects of the industry every month. We will keep an eye on the latest market trends, from crude itself to rigs and specialist equip-ment, and also provide a view on the expanding renewable energy, decom-missioning and carbon capture fields related to the North Sea. Every issue will come complete with the latest news updates and product developments.

The most pressing current issue facing Aberdeen is of course the weak oil price, and perhaps even more than that – when might the price recover? The uncertainty in our new smart, high tech and low carbon world, combined with changing geo-political and economic realities, makes predicting that more difficult than ever.

Unfortunately, against this background, much of the news and analysis covered in our first issue is inevitably bad, so we hope you will remember not to blame the messenger – we will make up for it next issue with a look at the latest exploration successes, and at the results of recent licensing awards in the UK and Norway. Despite the price woes there has been some good news around exploration success over recent weeks and even some new project go-aheads - see news section. It shouldn’t be forgotten that the North Sea saw record investment over recent years, and much of that is now coming on-stream and boosting output figures.

Nevertheless, the oil price falls have produced a chorus of voices express-ing concern at the future of the UK’s aging offshore oil and gas sector. A 45 percent increase in North Sea operating costs over the past three years, and the decline in easily accessible reserves makes it particularly vulnerable to the price falls. Sir Ian Wood, for example, said the sharp falls in crude meant the UK North Sea was in for tough times in 2015, with 15,000 jobs likely to be lost and possible falls in production of 10 percent.

In our first editorial features (see Focus section), I will look at the mount-ing efforts to tackle high costs in the region, the longer term outlook for prices and reflect on a likely boost to M&A activity. I will review the possible prospects for those who manage to stay the course, and what projects might be on the line in the meantime. In addition, we take a look at what the gov-ernment might do in the way of tax cuts and other support to cushion the blow, and what might now be in store for the recommendations made by Sir Ian Wood in his 2014 report, given the new price environment - as well as a detailed look at prospects for decommissioning in the North Sea. I hope you enjoy our first issue.

CoMMent

expLoration aCtiVity LiMps aLong into januaryHEADING INTO JANUARY, a total of 10 exploration and appraisal wells were active in UK waters, up three on the be-ginning of December, with nine of these appraisal, along with just one exploration well, according to Hannon Westwood. Six wells were drilling in the Central North Sea, with no change since last month,

whilst two are located in the Gas Basin along with one apiece in each of the West of Shetlands and Northern North Sea.

With three, possibly four, well starts in December the slight increase in activity that was seen in November has continued, bringing the total well starts in 2014 to 28. Of these 25 are classed as new spuds, this

therefore represents the year with the few-est spuds since exploration started in the sixties. Of these 25 spuds, 13 were explora-tion wells, five of which made discoveries. Hannon Westwood said that if the oil price drop is at all prolonged, a further reduction in drilling in 2015 may be expected as com-panies postpone planned activity.

totaL starts produCtion at west frankLinTOTAL HAS STARTED producing gas and condensate from the 85 million bar-rel West Franklin field in the North Sea. The field is located 240 km east of Aber-deen, and is expected to deliver 40,000 boe/d. Gas pumped from the field will be processed at the Elgin platform, be-fore transportation to Bacton on the east coast of England, through the SEAL pipeline. Condensate will use the FPS pipeline to Kinneil in Scotland.

The project involves drilling three wells and installing two new platforms that have been tied back to existing facilities. With reservoir pressures in excess of 1,000 bars and temperatures in excess of 200 degrees centigrade, the project has advanced the boundaries of existing High Pressure High Tempera-ture (HPHT) technical know-how in the industry.

Operator Total owns 46.2 percent of the West Franklin field, while Italy's ENI holds 21.9 percent and BG 14.1 percent. Other stakeholders include E.ON, Exx-

ConoCophiLLips begins produCtion at eLdfisk iiCONOCOPHILLIPS SAID it had started producing oil from the Eldfisk II proj-ect in the Norwegian North Sea. "Eldfisk II joins Ekofisk South as the second major project startup in Norway since late 2013," said Matt Fox, executive vice president of Exploration and Production. "These projects will increase ultimate re-source recovery and extend the field life of this premier legacy asset for years to

bp brings kinnouLL onstreaMBP STARTED PRODUCING oil from its Kinnoull field in the central North Sea at the end of December, bringing on stream a new field that feeds into BP's existing Andrew platform off the coast of Scot-land. Oil and gas produced at Andrew and Kinnoull is expected to peak at over 50,000 boe/d, and will be transported to the mainland through the Forties oil pipe-line and CATS gas pipeline, BP said.

The contribution from Kinnoull should help to offset some of the decline in For-ties production from the Nexen-operated

Buzzard field, which is currently produc-ing about 180,000 b/d, down from its previous maximum operating capacity of about 205,000 b/d.

onMobil, Chevron, Summit and Dyas.BG’s European E&P Managing Direc-

tor, Ernst den Hartigh said: “We are pleased to see first production from the West Franklin field which will help extend the life of this important North

come."Eldfisk II, along with Ekofisk South

and other projects offshore Norway, will add 60,000 boe/d to the company's production volumes by 2017. The Eldfisk II project includes plans to drill 40 new production and water injection wells. Production from the field will ramp up over the next three years as additional wells are brought online.

The Greater Ekofisk Area, located 300 km offshore Stavanger, is comprised of four producing fields: Ekofisk, Eldfisk, Embla and Tor. Crude from Greater Ekofisk's producing fields is exported by pipeline to Teesside, while gas flows by pipeline to Emden, Germany. Cono-coPhillips operates the Greater Ekofisk Area, with a stake of 35 percent, along-side Total, Eni, Statoil and Petoro.

Sea hub. By working closely with Total and other JV partners we have contrib-uted and extended our knowledge of High Pressure High Temperature gas developments which is key to our UK strategy.”


det norske starts produCing at bøyLa fieLd, offshore norwayDET NORSKE OLJESELSKAP said it had started production at the Bøyla field in the Alvheim area offshore Nor-way. Recoverable reserves from the field are estimated at 23 million boe, and the maximum production rate is expected to exceed 20 000 boe/d, although the plateau rate is expected to be below this. The field is being developed using a subsea installa-tion consisting of two horizontal produc-tion wells and one water injection well.

“Bøyla is the fourth producing field tied back to Alvheim FPSO, and the vol-umes added from this field are impor-tant in maintaining production from the Alvheim area at a high level”, said Karl Johnny Hersvik, CEO of Det norske.

NORTH SEA-FOCUSED Ithaca Energy said that its budget for capital expen-diture in 2015 will be almost 60 percent down on the figure for 2014. However, the firm is well positioned to weather the oil price storm, having hedged 6,300 b/d at an average price of $102/bl until June 30, 2016. Ithaca said that it anticipates its base production for 2015 to be around 12,000 boe/d, 95 percent of which will be oil, compared to 12,300 boe/d in 2014.

About two-thirds of its planned $150-million capital spending budget relates to the company’s Greater Stella Area assets. The timetable is currently unclear, but once it comes on line, Stella is expected to provide Ithaca with an ad-ditional 16,000 boe/d.

The balance will be spent on the completion and tie-in of the Ythan de-velopment well, the continuation of the onshore UK Wytch Farm well work-over program, asset maintenance activities and two Norwegian wells.

In December, Ithaca Energy ap-pointed Roy Buchan as its new CEO. Buchan has more than 30 years of oper-

ithaCa Cuts north sea expenditure 60%

Cairn CoMpLetes 40% staff reduCtion; MoVes ahead with north sea projeCtsIN JANUARY CAIRN Energy said that it had completed its group reorganization announced last summer, which involved a 40 percent reduction in staff. The reor-ganisation leaves the company cash rich and well positioned to ride the downturn in oil prices. Plans to develop its Catcher and Kraken developments in the UK North Sea remain on track, with the group reporting cash reserves of $869 million at the end of December.

The company’s CEO, Simon Thomson said: "Cairn is fully funded to deliver its exploration and appraisal program, along with the Kraken and Catcher develop-ments which are on track for first oil in 2017." Cairn expects 20,000 boe/d from the project, after it reduced its share in the Catcher development from 30 percent to 20 percent at the end of January.

In an operations update the company said it would begin manufacture in Singa-pore of the Catcher FPSO hull in the first half of this year, while fabrication of the main modules had already started. Devel-opment drilling is scheduled to start in the second half of 2015, following instal-lation of the first phase of subsea drilling templates.

Cairn remains involved in a program of non-operated exploration wells in the North Sea and it is undergoing a process to pre-qualify as an operator in Norway. The firm has also farmed into a 20 percent working interest in the PL420 license, which lies adjacent to the Skarfjell discov-ery on the Norwegian continental shelf.

Low priCes and write offs forCe job Cuts at tuLLowTULLOW OIL IS planning to announce job cuts by the end of the first quarter, ac-cording to recent press reports. Shares in the company have fallen by over 50 per-cent over the last year, and it had to write off a record $2.7 billion in 2014, as a result of the oil price drop combined with a se-ries of exploration failures.

The company said the oil price slump to $50 per barrel from $80 in September had wiped off $600 million in value across its assets, with another $1.2 billion of write downs due to unsuccessful exploration projects and ventures that are no longer commercially viable.

The company’s CEO, Aidan Heavey, said

The drilling operations on the second production well were suspended in late 2014 and the Transocean Winner semi-submersible rig will return to complete the well during the second quarter of 2015 with startup of this well expected by mid-year 2015. The project is located in block 24/9, license PL340, in the north-ern part of the North Sea.

Det norske is the operator for the Bøyla field and holds a 65 percent interest. Partners are Core Energy with 20 percent and Lundin with 15 percent. Lundin said the development was one of four proj-ects that will boost Lundin’s production to more than 75,000 boe/d by the end of 2015.

ational experience in the oil and gas in-dustry, having worked for Royal Dutch Shell, BG Group and Talisman Sinopec Energy UK. At BG he was group head of operations, while he served most re-cently as technical and production di-rector for Talisman Sinopec.

that Tullow had taken steps to strengthen the business, and would continue to do so during 2015, “to ensure the group [is] in a position to benefit when conditions im-prove.” More worrying for the North Sea, he said Tullow planned to divert capital away from exploration and towards its core production sites in West Africa, and cut the 2015 exploration expenditure budget again to $200 million, down from US$1 billion invested in the first half of 2014 alone.

Tullow Oil employs more than 2,000 people across 22 countries, and while it maintains several North Sea assets, over half its employees are in Africa.


bp Cuts north sea jobsSTAFF AT BP’S North Sea headquarters in Aberdeen are facing around 200 job cuts and 100 contractor layoffs, follow-ing a review of its North Sea operations. It is believed that most of the cuts are on-shore. The company expects a relatively small number of compulsory redundan-cies. BP currently employs 3,500 people in the North Sea, with a further 11,000 elsewhere in the UK.

Regional president for BP North Sea Trevor Garlick said: “We are commit-ted to the North Sea and see a long term future for our business here. However, given the well-documented challenges of operating in this maturing region and in toughening market conditions, we are taking specific steps to ensure our busi-

pa resourCes in danger of going underSTOCKHOLM-BASED PA Resources is at risk of liquidation after posting impair-ment charges of $258 million. The strug-gling Swedish offshore firm announced on January 20th that it would have to prepare a balance sheet for liquidation purposes after breaching the financial covenants of its bond loans.

“The loss arising from the impairment charge will most likely result in the com-pany’s shareholders’ equity being less than one half of the registered share

preMier announCes write downs, Cuts expenditure by 40%PREMIER OIL IS to cut development spending in 2015 by 40 percent, after an-nouncing a write off of $300 million. Devel-opment spending on new oil fields is being “subject to further review”, and the com-pany is already negotiating arrangements with several contractors.

Chief executive Tony Durrant said: “Pre-mier is in a strong position to weather a period of oil price weakness due to its long-

new oga Chief faCes Major ChaLLenges as he takes up aberdeen postANDY SAMUEL, THE chief executive of the Oil and Gas Authority (OGA), the UK offshore industry’s new regulator, took up his new position on 1st January, amid mounting news of job cuts in the face of declining prices.

The UK government has also placed Mr Samuel at the head of a review of the industry, as it plunges into a far lower priced environment than had been the case when earlier assessments of the sec-tor had been made. The review will report preliminary findings by the end of Febru-ary, identifying as a priority the “key risks to oil and gas production.”

The OGA will take over regulatory re-sponsibility from the Department of En-ergy & Climate Change (DECC), sometime after the next election. It will act as an arm’s length regulator independent of both government and the industry, in line with recommendations put forward by Sir Ian Wood in his February 2104 report on maxi-mizing oil and gas recovery on the UKCS.

capital. As a consequence, the company’s board of directors has resolved to prepare a balance sheet for liquidation purposes,” PA said in a statement.

Investors will decide on liquidation at the next general meeting on April 23 if, as expected, shareholder equity is under 50 percent of registered share capital. The news came after PA announced the ac-quisition of a second UK North Sea stake in First/Dyas-operated Block 21/24b on January 15th.

ness remains competitive and robust, and we are aligning with the wider industry. Whilst our primary focus will be on im-proving efficiencies and on simplifying the way we work, an inevitable outcome of this will be an impact on headcount and we expect a reduction of around 200 staff and 100 contractor roles.”

The company began a major restruc-turing in December in response to the fall oil prices, saying it needed to respond to “toughening market conditions”. BP has also announced a global pay freeze and redundancies at the Grangemouth pet-rochemical complex in Scotland, in its Azerbaijan operations and in Houston, with more expected elsewhere around the world over coming weeks.

term cash flow generation. Premier has also responded to the sharp fall in the oil price with a broad program of cost reductions and the postponement of discretionary spend.”

Last year, Premier Oil hit the upper end of its production target, reaching 63,600 b/d of oil. Production is expected to fall to 55,000 b/d in 2015, before being boosted by output from its North Sea Solan project later this year.

Mr Samuel moved to the OGA from his previous post of managing director of ex-ploration and production for BG Group in Europe, signing a three-year contract with the option of a three-year extension, subject to his performance. His overall objective remains to maximize oil and gas extraction.

det norske to deVeLop Viper-kobraDET NORSKE OLJESELSKAP is to de-velop the Viper-Kobra prospect, which consists of two separate discoveries with a potentially-connected reservoir, dis-covered in 1997 and 2009, respectively. Both discoveries lie on production li-cense 203, and will be tied back to the Al-vheim FPSO facility. The two reservoirs each contain about 4 million barrels, and some gas adding up to about 9 million boe. On completion in December 2016, the project will produce 7,500 b/d.

"The existing infrastructure in the area renders this project profitable. The key is to develop both discoveries with the same infrastructure, thus ensuring maximum utilization of the resources," Øyvind Bratsberg, senior vice president for Technology and Field Development at Det norske, said in a company state-ment. The development costs for Viper-Kobra are estimated at around $234 million, including the drilling of two wells, subsea installations, pipelines and hook-up.

“The existing infrastructure in the area renders this project profitable. The key is to develop both discoveries with the same infrastructure, thus ensuring max-

imum utilization of the resources”, said the SVP Technology and Field Develop-ment of Det norske, Øyvind Bratsberg.

“Even though this is probably one of the smallest discoveries on the Norwe-gian shelf being developed the profitabil-ity is good, and the project is important to us. The development has been ap-proved in Det norske, and the partners have given their consent”, he said.

The development comprises a new subsea installation with a pipeline tied into the Volund manifold. The four well slots are designated for one well from Viper and one from Kobra, in addition to two well slots intended for potential future wells in the area.

According to plan, the first contracts are now due to be awarded. The drilling of wells will likely commence during the spring of 2016. Installation of templates and hook-up is scheduled for September the same year, whereas start-up of pro-duction is planned for year-end 2016 or early 2017.

Ownership mirrors that of the Al-vheim licence; Det norske (operator) 65 percent, ConocoPhillips 20 percent and Lundin 15 percent.

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enegi oiL sees opportunities as priCe faLLsIN JANUARY ENEGI Oil said the down-turn in North Sea activity related to the fall in oil price, was an opportunity for it to expand its "marginal field initiative" in the region.

Enegi Chairman Alan Minty said: "A new regulator in the North Sea charged with encouraging asset development, a downturn in activity in the UKCS shown by a reduction in drilling commitments in the 28th Licensing Round, as well as a reduction in current drilling activity and even the reduction in oil price, show that the business model is appropriate and timely.”

"More fields are becoming marginal and marginal fields need to be developed to support the overall production rate in the UKCS and other jurisdictions. The

MaCquarie CapitaL piCks up stake in baLtiC 2 windfarMAUSTRALIA’S MACQUARIE CAPITAL has bought a minority stake in the 288 MW Baltic 2 offshore windfarm – located in the German offshore sector - from Ger-man utility EnBW.

EnBW sold 49.89 percent of the wind farm to Macquarie Capital for €720mn. The transaction is set to close this com-ing summer, subject to approval by anti-monopoly authorities. EnBW will retain a majority stake and will be responsible for the operation and maintenance of the complex.

The wind farm is due to start feeding power into the German grid next week if weather conditions allow, with 34 out of 88 turbines installed so far. Full commis-sioning is scheduled for the spring. The wind farm is expected to produce about 1.2 TWh per year, based on a load factor of around 48 percent.

EnBW has already sold minority stakes in its 48.3 MW Baltic 1 offshore wind farm, which it started producing power in 2011. A consortium of 19 municipal utilities, or stadtwerke, mostly from the southern German state of Baden-Wurttemberg,

holds 49.9pc in Baltic 1.The utility is also developing the

450MW Hohe See wind farm and recently bought the 316MW Albatros offshore project from Austrian construction group Strabag.

solutions that we offer provide a way to develop those marginal fields through the overall reduction in [capital spending], and the adoption of the resultant operat-ing and engineering philosophies provide a significant reduction on [operational expenditure]."

Enegi is working with its partners ABTechnology and Wood Group PSN to develop a Self-Installing Floating Tower (SIFT) development solution for the North Sea's Fyne field. It said that the work so far on the Fyne development "has considerably advanced" the engineering of the SIFT solution, providing a deeper understanding of its potential applica-tions on the UKCS and beyond. Fyne has estimated reserves of just under 10 mil-lion barrels of heavy crude.

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AS DECOM NORTH Sea enters its 6th year of operations, it’s encouraging to see how the decommissioning sector has evolved over the past few years, with contracts being awarded and activity ramping up. However it is clear to most of us that we are now entering a period of market turbulence. At the time of writing, the oil price is now below $50 per barrel, with the ongoing price slide triggering a range of activities which we can only see this continuing in the com-ing months.

How will this impact decommission-ing? At the moment, it’s difficult to an-swer that question, as organisations across the oil and gas sector will manage the current situation in their own way; we know some operators are bringing forward decommissioning plans, while some will delay and others are continu-ing with their long term plans.

Key issues are the speed at which the price has dropped, the likely duration of the lowest prices for some years, the timing and duration of the bounce-back and the overall impact this all has on the UK Continental Shelf. If this price issue is about curtailing investment in shale until the market has rebalanced, prices must remain low for some time and a new equilibrium in oil markets might be

some way off. As we approach the end of the finan-

cial year for many operators, we can undoubtedly expect to see reviews of capital expenditure and staffing levels, with warning signs flashing over the future of a sustainable UK oil and gas industry.

So where does decommissioning fit into this context? Yes, in this uncertain environment there are undoubted chal-lenges across the oil and gas industry, but one thing is clear - decommissioning is a long term business and projected ac-tivity will remain. The drivers for decom-missioning are still in place, liabilities remain and project plans are increasing in number.

Those of us dedicated to decommis-sioning are focused upon helping and supporting the industry in driving ef-ficiency – a focus which has particular resonance right now. Innovative, nimble businesses that have an absolute focus on their customers and their markets can achieve much and Decom North Sea exists to both drive and facilitate col-laborative activities, focusing on shared challenges, and enhancing decom knowledge transfer, development and cost efficiencies in these testing circum-stances.

Nigel Jenkins is Chief Executive of Decom North Sea, responsible for leading the representative body for the decommissioning industry. Previously a director with Decom North Sea from 2011 – 2013, he took up his current position in July 2014. Previous roles include board leadership positions with AMEC and AECOM, and most recently as board director with KDC Contractors – specialists in decommissioning. He is passionate about industry’s collective responsibility to efficiently manage and deliver end-of-asset life solutions.

faroe sees opportunities in downturnABERDEEN-HEADQUARTERED FAROE Petroleum is looking to buy more produc-ing assets in the North Sea while asset val-ues remain depressed due to low oil prices. “Faroe is well placed to consider capitalising on potentially attractive asset opportunities which may become available in the period

sheLL and exxon seLL sean stakes to oneSHELL AND EXXON have sold their 25 percent stakes in the Sean field to Dutch company Oranje-Nassau Energie (ONE) for an undisclosed sum. Shell said: “Sean has entered a phase where it offers greater value to other companies than it does for Shell… The deal shows that Shell is delivering its strategy to focus on areas where the company can add value in the UK Continental Shelf.”

ahead,” said Faroe’s CEO, Graham Stewart.“Despite the challenges of a low oil price,

Faroe remains robust due to its strong, largely unleveraged balance sheet, profit-able cash flow from a balanced production portfolio and modest capital commit-ments.”

STATOIL HAS STARTED up the Valemon gas and condensate field in the North Sea. Total recoverable reserves are estimated to be 192 million boe. Valemon is a high temperature, high pressure field, and will cost NOK 22.6 billion ($3.0 billion) to bring to full production. Shareholders in the field include Statoil with 54 percent, Petoro, Centrica and Royal Dutch Shell.

CAIRN ENERGY REPORTED that it has completed the farm out of a 10 percent stake in the Catcher development in the UK North Sea to Dyas UK, in exchange for the funding of exploration and develop-ment costs up to $182 million. As a result of the transaction Cairn has reduced its forward capital expenditure to the end of 2017 by $380 million.

Cairn farMs-out CatCher aCreage to dyas uk

statoiL begins produCing at VaLeMon

2014, planning is now underway for our 2015 annual event. This event will bring together 250+ decommissioning professionals from all tiers of the industry, providing the operators and supply chain with an excellent opportunity to engage with one another. The event will showcase the innovation,

within the sector and consider how this

faced with the current market challenges.

SPONSORSHIP AND EXHIBITION OPPORTUNITIES

AVAILABLE

FOR FURTHER DETAILSPlease contact Izzie [email protected] 914044www.decomnorthsea.com

Save the DateWednesday 27th May 2015Aberdeen Exhibition and Conference Centre, Aberdeen

Decom North Sea (DNS) is playing a vital role within the UKCS decommissioning market in the context of maximising eco-nomic recovery (of oil and gas) for the UK and is the only organisation solely focused on this strategically important sector.

Established in 2010 in response to the needs of industry, DNS bring people, ideas and developments together to improve decommissioning solutions and project execution efficiency. DNS drives collabora-tion for meaningful business benefits for our 250 members drawn from operators, major contractors, service specialists and

technology developers.Following from the success of Decom

Offshore 2014, our 2015 annual event will bring together 250+ decommissioning professionals from all sectors of the in-dustry, bringing operators and the supply chain together.

The event will showcase the innovation, collaboration and entrepreneurial flair required within the sector and consider how this contributes to decommissioning efficiency and cost effectiveness at a time when the industry is faced with enormous economic and operational pressures.

2014, planning is now underway for our 2015 annual event. This event will bring together 250+ decommissioning professionals from all tiers of the industry, providing the operators and supply chain with an excellent opportunity to engage with one another. The event will showcase the innovation,

within the sector and consider how this

faced with the current market challenges.

SPONSORSHIP AND EXHIBITION OPPORTUNITIES

AVAILABLE

FOR FURTHER DETAILSPlease contact Izzie [email protected] 914044www.decomnorthsea.com

Save the DateWednesday 27th May 2015Aberdeen Exhibition and Conference Centre, Aberdeen

FOR FURTHER DETAILS, please visit www.decomnorthsea.com or contact Izzie Bryce on [email protected] or 01224 914044.

FOCUSOffshore Aberdeen | February 2015 | offshoreaberdeen.com8 |

Cost Challenges: Cut your Cloth. a s the oil price falls compa-

nies are looking for ways to cut costs, with most ac-knowledging that tax cuts alone – if they come - will

not be enough. Already the cutbacks are mounting, both globally and lo-cally. In terms of job cuts in Aberdeen, over recent weeks BP has already said it would cut 200 onshore staff plus 100 contractors, and slash wages by up to 15 percent. ConocoPhillips an-nounced a cut of 230 staff from its UK operation, taking its number of UK employees down to 1400. Schlum-berger has announced that it intends to cut 100 jobs in the North Sea.

This comes on top of 250 job losses announced by Shell last year and the axing of 200 Aberdeen jobs by Chev-ron - which also told employment agencies that it would reduce rates this year “to better align with indus-try benchmarks and manage cost pressures”. Lundin and Ithaca have announced cuts in the last month, and Wood Group has announced pay cuts for 1,300 contractors. The first corporate casualty looks a lot closer as Sweden’s PA Resources, which has several assets in the North Sea, filed for liquidation in January. (See news section). Smaller companies, which are common in the North Sea, tend to have less capital to fall back on as in-come from oil sales falls, so are most vulnerable.

"The oil price fall has shone a light onto the very high costs and tax struc-tures of North Sea operations," said Canaccord analyst Thomas Martin. He said factors such as cost increases and late or underperforming proj-ects were among the issues that had "dogged" the sector over recent years. This was echoed by business consul-tancy Deloitte which said: "To sustain its future, the North Sea's stakehold-ers will need to adapt to a lower oil price environment and reduce costs in order to get through this period of transition."

Industry association Oil and Gas UK and Ernst & Young are predicting that 35,000 jobs could be lost over the next five years out of a total of almost half a million, and that was some time ago when prices were still above $65/bl. Robin Allan, a director at Premier Oil and chairman of the independent

oil explorers association Brindex, claimed it was now “almost impos-sible to make money” in the North Sea with prices at or below $60/bl.

Low cost specialists, such as ONE, Petoro and Faroe, however, see the situation as an opportunity for their business models, and are looking to expand by snapping up underval-ued assets. This could signal a more general move towards a greater effi-ciency-focused business approach to development in the North Sea, taking advantage of much of the new tech-nology coming on-stream aimed at lowering operating and development costs.

Other companies such as Talisman Sinopec (soon to be Repsol-Sinopec) are tackling the cost issue by splitting into two units, with one focussing only on late-life asset management. The other unit will focus on maximiz-ing production and extending field life in the North Sea. Earlier the com-pany warned of potential increases to the cost of decommissioning. “Our industry is operating in a mature environment, against a backdrop of, seemingly, ever increasing operating costs, asset integrity and mainte-nance issues as well as a declining oil price,” said the JV.

On a more positive note, Sir Ian Wood suggested the industry might be in better shape by the time the oil price recovers because of efficiency initiatives currently underway, along with potential improvements in the fiscal and regulatory environment – referring to hoped-for reductions in taxation and improved incentives (see page 12, Share the pain).

More generally, discussions in Davos last month between leaders of some of the world’s largest oil com-panies including BP, Total, Statoil, Mexico’s Pemex, China’s Sinopec and Saudi Arabia’s Aramco, reportedly fo-cused on the relationships with both oilfield services companies and engi-neering firms, in order to crack down on excessive cost over-runs common in the industry. Strategies being con-sidered are a shared database of best and worst service companies listed by region, a series of common standards for equipment such as valves and pipes, or moving engineering work back in-house.

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staying the Courset hose best positioned to with-

stand weak prices could emerge as major winners when the cycle does even-tually turn, with some pre-

dicting a sharp rebound when it does come. It is likely to be the case that the longer the slump the sharper the re-bound is likely to be - if a large amount of supply capacity goes, resurgent de-mand could push the price higher than ever.

In late January the boss of oil giant BP, Bob Dudley, said that oil prices could remain low for up to three years, which would lead to job losses and fall-ing investment in the North Sea oil in-dustry and elsewhere, curbing supply and eventually forcing the price back up. How high is difficult to predict, but Italian oil group Eni, for example, said the next spike could be around $200 a barrel.

To many companies such predic-tions of jam tomorrow will be a major incentive to keep going, through

on the linea ccording to Wood Mack-

enzie, over 70 percent of reserves with project de-velopment pending in the UKCS and Western Europe

have a break-even price over $60 per barrel. This amounts to 32 potential European oil field developments con-taining 4.9 billion boe - representing in-vestment of more than $87 billion that is now on the line. High operating costs and falling production at existing fields, means many of them are also unprofit-able with crude below $60/bl. In 2013 operating expenditure rose to a record level of £8.9 billion, despite a fall in pro-duction of 38 percent between 2010 and 2013. Estimates for 2014 operating costs are up a further 8 percent at £9.6 billion, according to Lloyds Register Energy.

"I think Scotland is going to be under some stress because of these low oil prices," said BP’s Dudley in January. BP has two large projects in the North Sea, including the Clair field, repre-senting investment of £8bn over ten years. "Their economics are challenged

the hard times, and be there for the bounce back - if predictions of $200/bl oil are correct then it will be worth it even if it takes three years. It may be that investors too, will have this at the back of their minds, which could keep capital within the sector – particularly for exploration, which doesn’t pay off for many years anyway, by which time prices may reach these predicted heights.

However, many appear to disagree with this sentiment, and it may not be borne out in reality as news of bud-get cuts mounts. BP’s Mr Dudley said: "Companies like us, at BP, we're going to need to rebase the company based on no guarantees at all that the price will come back up," he said. "We have got to plan on this [price] being down, and we don't know exactly what level, but certainly a year, I think probably two and maybe three years."

Longer term, Wood Mackenzie emphasized that deep-seated geopo-litical, economic and technological

trends may point to a new era of weak hydrocarbon demand growth. “Such a scenario represents a high-impact tail risk for energy companies in the years to come”, said Wood Mackenzie.

Well they might, as this time round, Saudi Arabia – which has the world’s lowest production costs - appears to be championing cheap oil, by aiming for market share and failing to restrain output. In the face of claims that much of the world’s crude must be kept in the ground to avoid catastrophic climate warming, Saudi strategy ap-pears to have switched to ensure that those unexcavated reserves are the expensive ones, including much of what remains in the North Sea: “Do we produce at higher cost or lower costs? Let’s produce the lower cost oil first and then produce the higher cost”, said OPEC Secretary General Abdullah al-Badri in January.

While this might be beneficial for the offshore wind industry it is not for the UKCS’s oil and gas sector.

now with these new prices… But we're in the North Sea for the long term. We have a large workforce in Scotland. There will be activities that we needed to pare back anyway."

Major operators are now attempting to cut costs globally and this is likely to impact on further North Sea projects. Shell, for example, announced a $15 billion cut to expenditure at the end of January, involving the cancellation or deferment of projects between now and 2017 equivalent to 14 percent per year from 2014 capital investment of $35 billion. “We are taking a prudent approach here and we must be careful not to over-react to the recent fall in oil prices,” Shell CEO, Ben van Beurden said.

Exploration – an easy area to cut - had already slumped to the lowest level since the 1970s, with just 15 wells drilled on the UKCS last year, com-pared to 44 in 2008. Some North Sea operators have already announced exploration cuts for 2015, including Atlantic Petroleum, which has slashed its exploration budget by three quar-

ters to save cash to fund its operating fields.

In the first half of 2014, drilling rates dropped to their lowest level in ten years. Only ten wells were spudded in the second quarter of the year, ten fewer than a year ago. Several projects have already been put on hold or de-ferred, such as Rosebank and Bressay, and poor exploration success has re-sulted in fewer discoveries, and there-fore fewer new projects. This threatens a more permanent decline, with major implications for jobs and businesses in Aberdeen.

Nevertheless, while production has fallen steadily since 2000, this year, following record levels of investment, the long term production decline is ex-pected to be temporarily arrested with production increasing to 1.46 million boe/d in 2018, from the current level of 1.43 million boe in 2014. But after 2018, the decline is forecast to return with production dipping below 1 mil-lion boe/d by 2023, less than a quarter of the 1999 peak, according to Wood Mackenzie.

Key theMes to WatCh in 2015oil MarKets: Struggling to find balance in 2015 - The strength of oil demand growth in 2015 is a major concern, and a weaker than expected economic outlook could exacerbate the current market im-balance. If a non-OPEC supply re-sponse is not enough to rebalance the market then attention will fall on the Middle East, and OPEC’s next meeting, during the summer months. Oil market rebalancing in 2015 is likely to deliver price volatil-ity and a period of uncertainty.

CorPorate: A true buyers’ market could emerge in 2015 - Corporate valuations are now heavily dis-counted. Companies are weighing up options and distressed sales could precipitate the emergence of a buy-ers’ market in 2015. Those with the financial strength to withstand weak prices will be well positioned for the next cycle.

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Dan

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Wood Mackenzie

FOCUSoffshoreaberdeen.com | February 2015 | Offshore Aberdeen | 11

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Bearish outlooK Could Bring out Buyersin a December report, Edinburgh-

based consultants, Wood Mack-enzie, painted a bleak picture as far as the near-term outlook for oil prices is concerned: “Oil market

concerns will be inescapable in 2015. With no sign that OPEC is reconsid-ering its decision to leave production targets unchanged, the impetus falls on non-OPEC producers to limit sup-ply growth and bring the market back into balance.” Weaker than expected global economic growth – especially in Europe and a maturing China - could put even more pressure on prices. Oil companies will be forced to adapt, and a buyers’ market could emerge for oil and gas assets in 2015.

However, if there is to be any uptick in acquisition activity it hasn’t started yet, with global business in the fourth quarter of 2014 down sharply on a year earlier and mostly gas focused.

Repsol’s purchase of Talisman was the only major deal – including interests in 46 North Sea fields; eleven offshore operatorships and an oil terminal at Flotta, Orkney. (With a divestment program planned before the compa-ny’s takeover, the future of these proj-ects is unclear.)

Many observers expect acquisi-tion activity to rise sharply in 2015 as companies feel the pinch. In a report released in December, Pricewater-houseCoopers (PwC) predicted that 2015 would see several high-profile moves, while oil prices continue to remain depressed. Possible targets in-clude BP and Tullow – both of which have been weakened by problems un-associated with the price crash.

The price fall is likely to hit smaller companies, of which there are many in the North Sea – hardest, especially those without strong financial back-

ing. This could trigger a bout of con-solidation, which could help with the collaboration agenda championed by the Wood report in early 2014. How-ever, many assets have been on the market for some time and continuing high operating costs, combined with uncertainty over decommissioning costs, could continue to deter buyers.

For example, BG Group’s planned sale of its largest operations in the North Sea has stalled, with buyers put off by depleting oil resources and high costs. The UK’s third-largest energy producer is attempting to sell its Ar-mada, Everest, and Lomond fields but has so far been unable to reach a deal with potential buyers, and expecta-tions of as much as $2 billion, reported only six months ago, are now likely to be much lower. Others, including Mar-athon Oil, are seeking buyers for their operations. C

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share the Pain P art of the answer to the

North Sea’s challenges is undoubtedly tax cuts. UK chancellor George Osborne has signalled that further

tax cuts for North Sea firms could be included in the 2015 Budget in light of ongoing weak oil prices. According to some reports, the supplementary charge may be removed altogether.

“I don’t want to pre-empt the Bud-get but I can see that may well in-volve further reducing the burden of tax on investment in the North Sea,” Osborne said, adding that the govern-ment was considering ways to protect investment in the region and simplify the tax regime.

“We have a record amount of in-vestment in the North Sea,” he added. “A lot of these investments take a long term view but there’s no doubt

deCoMMissioning liKely to aCCelerate in faCe of PriCe falls recent government fore-

casts predict decommis-sioning expenditure in the UK North Sea could top £40 billion over the next 25

years, with about 470,000 tonnes of material requiring removal. Nearer term, £10.4 billion is expected to be spent by 2020, with an average rate of spend estimated at £1.5 billion per year over the next ten years.

The forecast is a tripling of current annual spending, which the Depart-ment of Energy and Climate Change (DECC) put at £470 million in 2013. Only 7 percent of installations have been decommissioned to date, and the huge sums involved represent a major opportunity for specialist firms, such as InterMoor and Wood Group, as well as a headache for li-cence holders and a weight on asset values. That weight has grown over the years as decommissioning cost estimates have risen.

The obligation to decommission

the dramatic fall in the oil price has raised questions about future invest-ment in the North Sea”.

In addition the UK government is to fast-track a consultation on a new tax incentive related to proposals in last autumn’s financial statement, de-signed to simplify the current system of field allowances. This could cut the tax rate on new projects to between 45-50 percent from 60 percent now, based on cost, rather than field char-acteristics.

Malcolm Webb, CEO of industry as-sociation, Oil & Gas UK, welcomed the move but noted headline tax rates were most important: “We are encouraged to note that work on the Investment Allowance announced in the Autumn Statement is progress-ing… However, a reduction in the headline rate of tax is also essential

to really improve the international competitiveness of the UK Continen-tal Shelf.”

The Tories inclination is always to use the markets, so the reduction of taxes would seem a natural move for them to make this spring, if at all pos-sible. With tax revenue falling in any case the hit to the exchequer will be less severe than if prices remained high. At this critical stage in the his-tory of UK offshore oil and gas devel-opment it is important that bold steps are taken now to ensure strong activ-ity continues into the future.

Talks between UK Energy Secretary Ed Davey and various representatives from the UK’s oil and gas industry were held on January 14, with Scot-tish Secretary Alistair Carmichael, in-dicating he was behind further cuts. As the justification for the hike in the

supplementary tax rate from 20 per-cent to 32 percent in 2011’s budget was a doubling of the oil price, the fact that it has now halved would sug-gest a reversal should be expected, ex-tending the 2 percent cut announced in last year’s autumn statement.

OGUK chief executive, Malcolm Webb said last year that profitability on the UKCS was already insufficient to maintain the uncompetitive high tax rates of 62 to 81 per cent paid by production companies. “The Trea-sury’s promise in last year’s Autumn Statement of a simplified tax allow-ance to encourage new investment must be delivered by Budget 2015 if it is to have any impact, he said. “With the continued falling and potentially sustained low oil price, this is no lon-ger enough”.

“Last year total UKCS expenditure

exceeded post-tax revenues; this year it is heading in the same direction. This is not a sustainable situation,” he added. “Without swift action, capi-tal investment is set to halve by 2017.”

OGUK is calling for:• Immediate removal of the increase

in supplementary charge introduced in 2011

• Introduction of a single, uniform capital investment allowance to em-brace all capital expenditure includ-ing exploration and infrastructure

• Tax incentives to make exploration on the UKCS more attractive, both by improving the potential returns, and by encouraging new entrants

• Removal of the timing restrictions for the Ring Fence Expenditure Sup-plement; and

• The reduction to zero, over time, of the rate of Petroleum Revenue Tax.

UKCS installations is enshrined in the 1998 Petroleum Act. DECC said well plugging and abandonment remained the biggest category of expenditure at 44 percent of total forecasts. Along with over 5,000 wells, there are eight installations with large concrete substructures, 31 with large steel jackets of over 10,000 tonnes, 214 other steel jack-ets, 278 subsea production systems, 21 floating production systems and 3,300 pipelines stretching around 25,000 km.

Of the £10.4 billion to be spent by 2020, 44 percent is anticipated to be in the Northern North Sea, 32 percent in the Central North Sea and 24 per-cent in the Southern North and Irish Seas. DECC, which is shortly to del-egate its North Sea supervisory role to a new, more proactive government body – the Oil and Gas Authority (OGA), which is already in the pro-cess of being established in Aberdeen – has outlined decommissioning

principles, including a presumption in favour of re-use, recycling or final disposal on land.

In October it also announced tax relief for decommissioning opera-tions, which it hopes will remove the uncertainty that had been de-terring investment in older fields. Under DECC rules all topsides must be removed, along with all steel in-stallations installed after 1999, steel jackets below 10,000 tonnes, and all floating and subsea structures or installations, while a minimum clearance of 55m is required for any partially removed structure which does not project.

Alternative solutions are possible for fixed concrete structures, and for footings of jackets over 10,000 tonnes installed before 1999. Pipelines are assessed separately, although with their lower profile they are not a risk to shipping, and with growing envi-ronmental evidence that abandoned infrastructure can act as a habitat for

marine life, they are of less concern.In addition to anticipated regula-

tory changes emanating from the Wood Report, a wide range of factors can change a field’s decommission-ing date and costs, including long-term trends in oil and gas prices, and above all technical innovations that are able to increase recovery rates or cut costs. “Ageing assets are a real driver of technology innovation,” said Tim Walsh, SVP for Asset Integ-rity Services at Lloyd’s Register En-ergy, in a recent report on upstream technology.

This means that while the forecasts are accurate given the current situa-tion, the outcome is likely to change in the coming years, as it has over the last 20. The production profile of the North Sea has been extended repeatedly beyond earlier forecasts, and could continue to be pushed out – despite lower prices, provided the right technology is available.

The Lloyd’s report also included a

survey, in which respondents con-cluded that technologies designed to “extend the life of current assets, or improve uptime and efficiency” were being prioritised. In the near term, automation and enhanced oil recovery (EOR) are expected to have the greatest impact, according to the survey, while the effect of some other technologies may not be felt for some time. Subsea robotics, for example, is unlikely to be properly developed until the mid-2020s, but once proven could have a major effect on

North Sea recovery economics. “Robotics, which we have yet to see the start of in our industry, will be a big game-changer,” Shell’s CTO, Ger-ald Schotman, said in the report.

However, if oil prices stay low operators may bring forward de-commissioning plans, or abandon in-cremental or marginal development projects which would otherwise have extended the life of existing infra-structure.

FOCUSoffshoreaberdeen.com | February 2015 | Offshore Aberdeen | 13

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Wood adviCes ir Ian Wood, author of the

2014 Wood Report, said he hoped the politicians would think carefully about how to actually get the oil industry

into better shape. He said firm action was needed immediately. If nothing is done and the current situation con-tinues for the next nine months to a year, he believes that 10 per cent of the 375,000 UK oil jobs could be at risk.

“The most important thing right now is creating a bit of stability,” Wood said. He admitted that with oil being sold in the region of $45-$50 a

barrel, tax breaks would have little impact in the short term, because at the current price companies were not making enough money to pay the sup-plementary tax on profits.

Despite this, he said, the UK gov-ernment should cut the supplemen-tary levy by at least 10 percent before Chancellor George Osborne’s March budget. The tax break should be ac-companied by a pledge that the reduc-tion would continue into the future, giving oil companies an incentive to ride out the rough times. He sug-gests that the 50 percent petroleum

What noW for the Wood rePort?THE FUTURE DIRECTION of the North Sea oil and gas sector had been laid down in a government sponsored report containing series of proposals in February 2014 by Sir Ian Wood, aimed at “maximising economic recovery of oil and gas for the UK”. Wood said “game-chang-ing” solutions were still required to do this effectively.

To this end clauses have been in-serted into the Infrastructure Bill currently before the UK Parliament to legislate for this key objective, and the new OGA will focus on achieving it. Having the right economic incen-tives for companies to keep old fields in production and to drill into new small fields near existing ones is likely to be the most effective way of extending the industry’s life.

Maximising recovery will continue to guide future licensing, decom-missioning and third-party access

regulations, and new rules may be needed in these areas to encourage joint development plans, area uni-tisation and “appropriate access to infrastructure without contraven-ing competition law or weakening market incentives”, according to the DECC. Recommendations towards closer collaboration between gov-ernment and industry, and devel-oping fields in groups rather than individually to maximise their value and investing to prolong the life of existing infrastructure, are unlikely to be affected.

According to the Report, if all its recommendations were imple-mented in full, there was the poten-tial to deliver at least an additional 3-4 billion barrels of oil equivalent over the next 20 years, then worth about £200 billion. With prices now below $50 instead of $110 per barrel, this sum is considerably lower.

revenue tax - levied on fields given development consent before March 1993 - should be scrapped, to encour-age companies to invest once more in the aging fields that pay it.

The UK Energy Secretary Ed Davey has put ex-BG executive, Andy Samuel – newly appointed as the head of the new Oil and Gas Authority – to lead a commission looking at the way for-ward. "Nothing less than radical change will prevent the premature demise of the basin, let alone maximise economic recovery," Dave Blackwood, former head of BP's North Sea business said.

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Located in the ABZ Business Park, off Dyce Drive in Aberdeen, the Service Centre is well positioned to support operators both onshore and offshore. It officially opened during an in-house reception on Tuesday, January 20.

The Centre will offer complete re-pair and quick access to OEM spare parts and testing services for operators along with providing local support for prominent SPX brands which include ClydeUnion Pumps, Bran + Luebbe and Plenty Mirrlees as well as third-party pump brands.

John Greig, general manager of the Service Centre, said: “With our exten-sive installed base and commitment to offering comprehensive support ser-vices to our customers, selecting Aber-deen as the site for this new centre was an easy and logical decision.

“This will be underpinned by our un-derstanding of the North Sea oil and gas

market needs and expectations, such the requirement to be FPAL compliant, for example. This Centre is able to pro-vide tailored OEM engineered solutions that enhance pump reliability and per-formance, which will be complimented by access to OEM spare parts, technical services, training and workshops.”

He added: “Although SPX is a global organisation, the Centre allows us to make quick and clear decisions at a local level, and easily access support from extensive SPX resources within the United Kingdom and across the world.”

The team has the capability to update existing pumps to the latest standards and perform equipment evaluations, upgrades, retrofits, and re-rates, to keep up with changing process requirements.

The Aberdeen team would welcome any requests from customers who would be interested in seeing the facility and understanding its capability.

Based in Charlotte, North Carolina, SPX Corporation is a global, multi-industry manufacturing leader with approximately $5 billion in annual rev-enue, operations in more than 35 coun-tries and over 14,000 employees.

new PiPe-lAy tenSioner booStS MAritiMe develoPMentS’ rentAl fleetMARITIME DEVELOPMENTS HAS added its bespoke 50-tonne 4-track pipe-lay tensioner to its rental range, ready to take up projects from the start of 2015.

The latest addition to the company’s suit of back-deck equipment for hire complements a 400-tonne reel drive sys-tem (RDS) as well as a range of winches, electro-hydraulic power units and ancil-lary products already available for hire. Thanks to its innovative design, the 4-track tensioner can be used vertically, horizontally or on a ramp.

Unlike existing equipment on the mar-ket, the Maritime Developments’ design allows for two of the tensioner’s tracks to open to load or unload the product (pipe) when in vertical mode. Combined with the cylinder shell package and fail-safe hydraulic cylinders and accumula-tors built onto the track, the solution minimises the likelihood of damage to the product during operation; while the flexible design, allowing for it to oper-ate in both 2- and 4-track modes and changeable positions for horizontal, vertical or tilted operation make it a uni-versal and long-term solution for SURF product operators.

The company secured a patent for the design in July 2014. To date, two 50Te units have been delivered to major en-ergy clients since the product’s launch in May 2013. The systems have been used in international projects, including the North Sea and Asia-Pacific.

Mike Gaskin, commercial direc-tor for Maritime Developments, said: “The 4-track tensioner is one of the key products in our equipment range and is bound to drive the business forward, as this latest 50Te tensioner is now avail-

able for hire. The delivery of this product was a stepping stone to developing our vertical lay system, which will complete our full suite of back-deck equipment.

Aberdeen’S hydro GrouP eXPAndS cAble cAPAbilitieS; winS new buSineSS HYDRO GROUP PLC, a global designer and manufacturer of underwater cables and connectors for subsea, underwater, topside and onshore applications, has boosted its portfolio with new state-of-the-art machinery. As a result it has se-cured £2million worth of new defence contracts for 2015.

The company has installed and com-missioned an advanced armouring line at its facility in Bridge of Don, Aberdeen, enabling the company to offer cable prod-ucts which will improve and support sub-sea operations. The six-figure investment extends Hydro Group’s product line pro-viding the company with armouring ex-pertise, offering custom-designed single and multi-layered steel armoured cables in galvanised improved steel and corro-sion resistant steels.

Doug Whyte, Hydro Group Managing Director, said: “The system will allow us to manufacture mechanically protected ca-bles which can withstand higher stresses in subsea and defence operations. As well

as contra helical armoured subsea control cables, which act to neutralise the ten-sion and compression forces that occur in the wires each time the cable is bent or flexed.”

Continuing Mr Whyte said, “The in-stallation is the first of two armouring lines with the second line, which will have greater capacity in size and overall lengths, being installed after completion of our facility extension later in the year.

Graham Wilkie, Sales Director at Hydro Group said: “We are currently one of few companies in the UK to offer this cutting edge technology. The new armouring line demonstrates a significant advancement in our capabilities and skill set, and fur-ther enhances the scope of work we can offer the industry.”

Hydro Group is at the forefront in the development and innovation of subsea product technologies, with involvement from prototype concept through to de-sign, manufacture and project manage-ment. Hydro Group manufacture the

complete package including FAT at its state-of-the-art facilities in Aberdeen, Scotland; umbilical cables, electrical and optical connection systems / assemblies for data, power and signal transmission. The company's customer base include all blue chip and major operators and con-tractors in both domestic and interna-tional subsea markets.

SPECIALIST BACK-DECK equipment provider Maritime Developments has won contracts worth in the region of £7m. Among the deals, the company, which supports subsea industry operations worldwide, has secured the first order for its innovative portable overside vertical lay system (PVLS), which is manufactured in Peterhead. It will install the system, along with a 4-track tensioner to support a major North Sea field development.

The business has also delivered a pack-age of 10 winches, ranging from five-tonne to 40-stonne specifications. It is the third winch package provided to the same client, to support product handling at a number of locations around the world, with a fourth scheduled for delivery later this year. Each package also features a Maritime Developments 10-tonne over-bender tensioner.

The order brings the value of electri-cally-driven items of deck machinery delivered by the business since it set up an electrical department in 2012 to more than £12 million.

Derek Smith, chief executive officer at Maritime Developments, said: “These or-ders exemplify the growth we have experi-enced within the business in recent years,

and highlight our commitment to build long-term relationships with clients who recognise the rigour and professionalism we apply to everything we do."

Meanwhile, Maritime Developments has delivered a 500-tonne reel drive sys-tem (RDS) to a global energy services business in support of a project in the United States. It is the fourth RDS order executed by the business since the prod-uct's launch in 2013: three 400-tonne sys-tems have already been supplied to global clients.

In addition, a Maritime Developments programme, focused upon designing and introducing its first 4-track 75-tonne ten-sioner, is nearing completion, while the company has already added its bespoke 4-track 50-tonne pipelay tensioner to its rental range.

The business has also entered a part-nership agreement with high perfor-mance pipeline manufacturer Magma Global. The joint venture will design and manufacture a complete back-deck pack-age for deployment and retrieval of Mag-ma's unique m-pipe® product.

The company has a design and business office in Aberdeen and its manufacturing facilities in Peterhead.

MAritiMe develoP-MentS winS contrActS worth £7 Million

Established in 1999, Maritime Devel-opments designs, manufactures and delivers back-deck equipment for the global oil, gas and renewables sectors.

Rigtech Independent Limited was established in 2001. The company operates worldwide offering

services and training to the oil, gas and marine industry both on & offshore. We are members of the

British Safety Council, Aberdeen Chamber of Commerce, International Association of Drilling Contractors

and British Standard Institute. We are accreditied to ISO 9001:2008.

Rigtech Independent Limited. Head Offi ce2nd Floor - Salvesen Tower • Blaikies Quay • Aberdeen AB11 5PW • Unitied Kingdom

T: +44 (0) 1224 580 022 • F: +44 (0) 1224 580 044 • E: [email protected] • W: www.rigtech.net

SERVICES Survey & Inspection

Audits

Commissioning

Management: Maintenance / Project /

Health Safety Enviroment (HSE)

Training

Hazard Assessment

Third Party Expert Witness

Investigation Services

Thermographic Imaging (NDT)

Manpower Services

Dropped Object Survey

API Standard 53 Gap Analysis

PUWER Surveys

Asset Integrity Management

TRAININGRigtech Independent Limited offers a

number of IADC accredited training courses

including:

Rig Inspection Workshop

Drilling Equipment

Well Control Equipment

Jacking Systems

Maintenance

Safety

RECENT CONTRACTS Rig Engineering Services to Canadian

Natural Resources Ltd

Monitoring of Drilling Programmes for

North Sea Platforms

Condition Evaluations of Swamp Barges

for Investment Banks

Representing C.A.T. Oil AG during

construction of Rig Fleet in Texas, USA

Provision of Safety Offi cers for various

North Sea Platforms, UK

IADC Accredited training courses on

behalf of DPR, Nigeria

Crane and Jacking Inspections on behalf

of Shelf Drilling


StAtS GrouP PlAnS further eXPAnSionABERDEENSHIRE-BASED OIL and gas pipeline engineering specialist STATS Group is planning for further interna-tional expansion after securing an addi-tional US$6.5 million investment from the UK’s Business Growth Fund. The invest-ment follows on from an initial US$11.75 million of growth capital from BGF in March 2012. Since this initial funding, Stats Group said, it has doubled its an-nual revenue to around US$45 million and created 145 additional jobs as well as opening operational bases in Canada, the Middle East and the US.

STATS Group plans to use the new

efc GrouP coMPleteS chineSe ShiPyArd contrAct; winS £3.65M new buSineSSABERDEEN HEADQUARTERED EFC Group, a leading designer and manufac-turer of instrumentation, monitoring, control and handling systems for the global oil and gas industry, has completed a £1.3 million contract to design and build a Blow Out Preventer (BOP) and diverter control system for China based Dalian Shipbuilding Industry Offshore Co (DSIC Offshore).

In addition, it has picked up other con-tract to the tune of £3.65 million, includ-ing two BOP control system contracts with Ensco worth more £1.65 million, which includes a £650,000 equipment contract to supply Ensco’s 5005 rig in the Asia Pacific region, and a £1 million equipment and installation contract for Ensco’s 5004 rig, managed by its Euro-pean region.

The system for the Chinese shipyard is installed on-board DSIC’s new build jack up drilling rig, JU2000E-13. DSIC is sup-plying the rig to drilling contractor Apex-indo, where it will be known as ‘Tasha’. Bob Will, CEO at EFC Group, said: “This is a major contract for EFC, continuing our growth plan to become world class leader in control systems for both rig upgrades and new builds alike. It is also a signifi-cant project that’s been supported by our manufacturing base in Forres which gives us the additional capacity required to un-dertake projects of this scale.

“EFC aims for this to be the start of a strong relationship with DSIC. In the new build market as a whole, we know there

is a high demand on shipyards and their current vendors to delivery on time and on budget and we have invested in our facilities and resources to support this.”

The BOP and diverter control system delivers a robust solution with central ar-chitecture on a fibre optic network. These systems are used to control the blowout preventer to seal, control and monitor the well and are critical for ensuring the safety of the crew, the rig, well integrity and the environment.

Kenneth Gibbs and Jean Wojcik at Apexindo, said: "We are pleased that DSIC chose EFC Group to supply its BOP con-trols technology as part of the rig pack-age. The high quality of the equipment used and the stringent safety levels that EFC Group works to were important fac-tors for us.”

EFC Group’s new £1 million contract is with another of the world’s leading drill-ing contractors, which will see the Group upgrade the BOP and diverter control sys-tems on-board a semi-submersible drill-ing unit, using products which are DNV and API 16D compliant. EFC Group will also supply a choke control system and HPHT monitoring system to the vessel.

This contract award follows the com-pletion of a £1 million project with the same client last year, which saw EFC Group supply a BOP & Diverter control system for another semi-submersible.

EFC Group CEO Bob Will said: “These are some major contract awards for EFC Group, which involve the delivery of

equipment critical to ensuring well in-tegrity. We are recognised for our niche experience in this area and our safety-centric approach, which has been further endorsed by our investment in API mono-gramming licenses for BOP and choke control systems. We are delighted we continue to secure major deals as a result of this expertise.”

Picture Caption: EFC’s Surface BOP HPU can be supplied modular or as one integrated unit to fit rig requirements.

Aberdeen’S enerMech eXPAndS in norwAyMECHANICAL ENGINEERING SER-VICES company, EnerMech, is to expand its workforce in Norway by more than 20 percent in the next year. It will boost its existing staff in Stavanger and Bergen from 60 to 75, and plans to invest NOK 32.5 million (£3m) in new equipment.

Trond Møller, EnerMech General Man-ager in Norway, said: “We are recruiting high quality managers and technicians to add to our 60-strong Norwegian team and next year will make a significant invest-ment in new equipment and infrastruc-ture… “We believe the service industry needs to be patient and with market in-dicators for the medium to longer term looking promising, EnerMech is fully committed to Norway and prepared for an upswing when the market corrects.” EnerMech already has office, workshop and storage facilities in Stavanger and Bergen and is looking at the potential for a third Norwegian base.

Formed in April 2008, EnerMech now has a 2500-strong workforce. The com-pany specialises in providing integrated supply, operations, maintenance and engineered solutions in its core services of Cranes and Lifting, Valves, Hydraulic products and services, Industrial Services, Process, Pipeline and Umbilicals (PPU), Equipment Rental and Training services.

GAlvAnizerS weAther the StorMTHE UK GALVANIZER’S Association (GA) predicts its industry will have a buoyant year, despite plunging oil prices. Iqbal Johal, Marketing Manager for GA said the industry is braced for the diffi-culties being faced in the North Sea and that the Association can help.

“We understand the current price pressures being faced by all operators but would stress that amidst the uncer-tainty, there is an advisory body here to help. We answer thousands of calls every year, providing technical data and performance advice, that isn’t purely about the suitability and longevity of the coating, it is also about optimizing design solutions and eliminating waste. Our practical and timely advice on in-ternational standards, design and in-spection to both operators and clients have enabled installation of plant that saves time, money, and provides peace of mind.”

Having weathered the recent reces-sion, last year saw the galvanizing in-dustry fighting back with an increase of 5 percent on the amount of steel galva-nized across the UK and Ireland (total-ling over 600,000 tonnes). This trend is

forecast to continue in 2015 funded in part by large government infrastructure projects such as The Forth Crossing, the Aberdeen Bypass (AWPR) and the ongo-ing construction of the two Queen Eliza-beth Class aircraft carriers at Rosyth.

Iqbal Johal continues “the specialist infrastructure works that are currently being undertaken by our members, or are in the pipeline, translate seamlessly into the marine environments of oil and gas. These are legacy projects that are not subject to short term volatility but will be there for the next 50 years to come and longer. From defence and nuclear through to petrochemical, gal-vanizing really is being chosen for its performance, a performance that can be guaranteed despite the need for strin-gent cost reduction”.

The GA was incorporated 65 years ago, and today it answers in excess of 1,500 enquiries on its helpline, offering free advice to specifiers with technical issues ranging from standards, performance, design detailing and suitability of the use of galvanizing within many diverse environments. For more info, see Hot Dip Galvanizing magazine.

capital to fund its continued expansion, particularly in the US, where it has won contracts worth more than US$15 million.

BGF’s regional director for Scotland Simon Munro said: “I’m delighted that we are investing more capital in STATS and continuing to back Pete Duguid and his team. Since our initial investment in 2012, the company has gone from strength to strength, doubling turnover, creating jobs and expanding globally. Follow-on invest-ments are an important part of the BGF model. By supporting businesses that we know and have a proven track-record, we can help them to grow even further.”

INFORMEDoff shoreaberdeen.com | February 2015 | Off shore Aberdeen | 17

finAliStS Announced for the 2015 SPe offShore AchieveMent AwArdSTHE SHORTLIST FOR the Society of Pe-troleum Engineers (SPE) 2015 Offshore Achievement Awards was announced on 12th January, recognising some of the UK offshore industry’s strongest talent,.

Sponsored by TAQA in association with rigzone.com, the annual awards are organised and hosted by the SPE’s Aberdeen Section and recognise ex-ceptional performance across a range of categories. The 12 awards celebrate individual achievements, company performance and significant innova-tions in safety and technology.

Ian Phillips, SPE Aberdeen director and chief executive of the Oil and Gas Innovation Centre, said: “The 2015 Off-shore Achievement Awards have again attracted an exceptionally high calibre of entrants and we are delighted to announce the very strong line-up of finalists this year. Once again, judges were impressed by the talent and per-formance demonstrated in the UK off-shore industry.

“These awards are a great platform for companies and individuals to gain recognition and this year, we have had more entries than ever. There was a particular increase in nomina-tions in the Emerging Technology and Small Company categories which is extremely encouraging. It is vital to the longevity of the energy industry that new technologies are continu-ally being developed and new, smaller players often play a key role in this in-novation.”

“We are also pleased to announce the shortlist for this year’s new cat-egory, Outstanding Graduate Pro-gramme, and are confident that the initiatives devised by each company will inspire others to ‘grow their own’ skilled personnel.”

More than 500 industry profession-als are expected to attend the awards ceremony, taking place at the Aber-deen Exhibition and Conference Cen-tre (AECC) on Thursday 12 March 2015.

The SPE Aberdeen Section is the largest in the UK with more than 2,500 members and is run entirely by vol-unteers. SPE Aberdeen won the SPE International Award for Section Ex-cellence for the fifth consecutive year in 2014.

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innovAtor (SPonSored by MAerSk oil) • Expro North Sea • Proserv • Return to Scene • WEB Rigging Services

eMerGinG technoloGy (SPonSored by neXen) • Churchill Drilling Tools • Delphian Ballistics • Paradigm Flow Services

SAfety innovAtionS (SPonSored by Met office) • Nautronix • Senscient • The Survitec Group

environMentAliSt (SPonSored by twMA) • CETCO Energy Services • Paradigm Flow Services • Sureclean

eXPort AchieveMent • Alba Power • Tekmar Energy • Wireline Engineering

workinG toGether (SPonSored by oPito) • Decom North Sea • Maersk Oil • Senscient

outStAndinG GrAduAte ProGrAMMe (SPonSored by robert Gordon univerSity)

• ACE Winches • Maersk Oil • Petrofac Offshore Projects and Operations

younG ProfeSSionAl (SPonSored by nAlco chAMPion)

• Brendan Forbes, Sparrows Group • Rory Gregor, Petrofac • Murray Kerr, SengS Subsea Engineering Solutions

inSPirinG leAder (SPonSored by Mol GrouP) • Murray Kerr, SengS Subsea Engineering Solutions • Mal Lowe, Petrofac • Dr Liane Smith, Wood Group Intetech

GreAt SMAll coMPAny (SPonSored by wood GrouP PSn)

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• Aker Solutions • Proserv • Stork

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• To be announced at the ceremony

the 2015 offShore AchieveMent AwArdS finAliStS Are:


enerGy inStitute celebrAteS the beSt StudentS in AberdeenTHE ENERGY INSTITUTE (EI) celebrated some of Aberdeen's best MSc students by hosting a special competition at the end of 2014. The event, sponsored by Cono-coPhillips, was organised by the Energy Institute’s Aberdeen, Highlands and Is-lands branch to celebrate the best energy papers from MSc students at Robert Gor-don University (RGU) and the University of Aberdeen (UoA).

This annual event is held to bring to-gether industry and academia, showcas-ing the latest thinking and research from MSc students and a chance to network with prospective future employers.

From some 390 candidates graduating this year, six students were shortlisted by the two Universities. The judging panel included senior industry figures from Verus Petroleum, Petrofac, PCL, Siccar Point, Meta, Strategic Decomm and Ram-boll O&G.

The overall winner, who received £250, was Darren Coughlan - MSc Oil & Gas Engineering (with Distinction) from UoA. His winning thesis was entitled, Model-ling down-hole drilling fluid temperature profiles.

Newton Duarte from Brazil, a recent graduate from the MSc Petroleum Pro-duction Engineering course at RGU, re-ceived the second prize of £150 for his thesis, Optimisation of a wall thickness logging tool. The third prize of £100 went to Ignacio Fernandez from the MSc Petro-leum, Energy Economics & Finance (with

SPAniSh ShiP yArd And norweGiAn oPerAtor Pro-vide tuG fleet for AberdeenTHE GONDAN SHIPYARD in Asturias in northern Spain has supplied Norwegian operator, Østensjø Rederi, with the fifth of five tugs that it operates from Aberdeen. The productive collaboration between the Norwegian shipowner and the Span-ish shipyard has resulted in a modern and efficient fleet of tugs for the port.

This fleet of tugs "Vortex", "Velox", "Tenax", "Apex" and "Phenix", were built by Gondan shipyard, with each consecu-tive tug incorporating improvements over its predecessors. Some of them, like the Vortex, besides working as an escort ves-sel, also works as "anchor handling" in the North Sea platforms. It is a very versatile tugboat, also prepared for rescue in open waters.

The two company’s combined expe-rience has resulted in the design and construction of tugboats that meet the strictest environmental regulations and incorporate technological innovations, both in equipment and in design, to make them safer and more effective.

Østensjø Rederi currently maintains

new network for Aberdeen oil And GAS ProfeSSionAlSAN ABERDEEN-BASED business-to-business networking organisation, which aims to enhance collaboration in the oil and gas industry, has been set up and is targeting further growth.

The Aberdeen Oil and Gas Network (AOAGN) is the first group aimed spe-cifically at businesses and professionals working in the oil and gas industry, which offers opportunities for both online and offline networking.

Its owner, Lesley Lewis, has eight years’ procurement experience in the oil and gas industry and believes that the network will open doors for companies looking to develop in 2015 and beyond. “We’ve expe-rienced an encouraging level of growth since the launch of the network with members already seeing the benefits of joining in terms of making new business contacts,” she said.

“We offer an opportunity for members from companies of all sizes to network in a relaxed, informal atmosphere, which I believe sets us apart from other similar

Distinction) course at UoA for his the-sis, The economics of exploration in the UKCS: a case study on the central north sea and West of Shetland.

Nigel Bradburn, Chair of the local En-ergy Institute branch says: "The judges thoroughly enjoyed the opportunity to engage with the University students on some of the key themes affecting the sec-tor. The submissions covered a variety of topics across the exploration, drilling, projects and operations phases of our industry and demonstrated the type of thinking needed to tackle the many chal-lenges we face. The energy industry is ever evolving and innovation is critical to our future - these two world renowned Uni-versities bring to the marketplace some of these pioneering ideas and solutions.”

Nigel added: "At a time of potential economic slowdown in oil and gas, the students have shown a willingness to challenge conventional practices and de-liver more value, and in doing so, help to contribute towards the long term viability of the UKCS."

Host Bill McKenney, General Man-ager - Capital Projects, ConocoPhillips (UK), said: ”ConocoPhillips was delighted to support the Energy Institute and host the MSc Student “Best Energy Paper” Competition in Aberdeen; the standard and quality shown by all of the present-ers was of an exceptionally high technical standard, which bodes well for the future of our industry.”

events focused on the oil and gas industry. Our aim at AOAGN is to help members raise their business profile, their business’ potential and connect with other industry professionals.”

“In my experience it is increasingly diffi-cult for smaller companies to get on to the approved vendors list of large businesses. We provide a valuable forum which al-lows people to engage with other indus-try professionals; enhancing connectivity and building lasting relationships, which can ultimately lead to more business being won.”

AOAGN is an online B2B networking community aimed at professionals work-ing in the oil and gas industry, including the marine, power and energy sectors. It aims to provide a forum for members to share ideas and intelligence, network and potentially gain new business. Any-one interested in becoming a member of AOAGN should contact Lesley Lewis at [email protected] or call 01224 968128.

a fruitful collaboration with Astilleros Gondan and continues building vessels in the slips of this shipyard. A year ago the Gondan yard also delivered the “Edda Ferd”, an advanced Offshore Supply Ves-sel (PSV) - the third PSV that Astilleros Gondan build for Østensjø Rederi.

Other leading ship-owners that buy from the Gondan Shipyard include Nor-

way’s Simon Møkster, and Italy’s Fratelli Neri, together with Spanish owners and organizations. At present, the Shipyard has workload until 2016, with projects including an Oceanographic ship for the Institute of Marine Research in Norway, and the second Platform Support Vessel for Simon Møkster – which will be deliv-ered at the beginning of 2016.

OPTIMUS SEVENTH GENERATION, an Aberdeen headquartered behavioural change consultancy, said 2014 had been a record breaking training year for the com-pany, including successful completion of a new program for one of the world's top petrochemical companies.

In 2014, 5300 delegates, across 15 proj-ects in 13 countries attended an Optimus Seventh Generation training workshop, resulting in a growing demand for the company’s products and services from a range of industries.

The company also launched and com-pleted the first of its new Induction Plus™ programmes, successfully rolling out the training for SABIC UK Petrochemicals, a world leader in the Petrochemical indus-try.

Optimus Seventh Generation Chief Ex-ecutive, Derek Smith said: “2014 saw the company achieve several key objectives, including our Coaching for High Perfor-mance programme receiving Institute of Leadership and Management (ILM) en-dorsement.

“Our training programmes saw an in-crease of 76% on the previous year, with 98% of attendees recommending the training, a result we’re delighted with, as it is a testament to the dedication and passion of the Optimus Seventh Genera-tion team. In addition, we’re pleased that our new cost effective offering, Induction Plus™, has successfully been brought into the marketplace.”

Induction Plus™ is a four hour informa-tive and motivational induction aimed at projects experiencing a large influx of

oPtiMuS Seventh GenerAtion celebrAteS record breAkinG yeAr for trAininG

new, often subcontracted, labour during construction projects or shutdowns.

Mr Smith continued: “The induction combines the information required to comply with the company’s safety rules, alongside a motivational element to en-sure delegates leave with an awareness of the hazards specific to the asset or proj-ect. Those involved also obtain a height-ened level of risk perception as well as the clearly stated expectations of the leader-ship team, enabling them to actively influ-ence their own and their team's personal safety during the project.”

Yvonne Storey, UK Turnaround Group Manager at SABIC UK Petrochemicals said: “The feedback from the contract teams has been very positive. People en-joyed the sessions and, in some cases, this new and inclusive approach helped them to realise the personal importance

to them and their work colleagues. This is a model that we will be adopting, and further enhancing, for the future.”

Mr Smith continued: “We’re delighted with the positive feedback from SABIC fo-cussing on our latest product launch. We have an exciting year ahead, working on new products that will centre on the be-haviours and decisions making required to defend against major accident hazards. We feel it is important to move ahead with new innovations, focus on meeting changing client needs during a challeng-ing period for the oil and gas industry.”

Since its formation in 2003, Optimus Seventh Generation has built a diverse portfolio of global customers, focusing on high hazard industries both within the UK and internationally, with offices in Aberdeen, Rio de Janeiro and Perth Australia.

INFORMEDoff shoreaberdeen.com | February 2015 | Off shore Aberdeen | 19

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MAXoil celebrAteS 10th AnniverSAryABERDEEN-BASED CONSULTANCY, Maxoil Solutions, is celebrating its 10th anniversary. It believes continued com-mitment to maximising optimisation in the global oil and gas industry will be the key driving force behind the next phase in its growth.

Maxoil was founded in 2004 by Dr Wally Georgie and Mel Dow to bring together experienced consultants with a focus on operational expertise. Both remain at the heart of the business, which has expanded from its Aberdeen roots to incorporate a base in Houston and a strong presence in Perth, Australia, and Stavanger in Norway as well as other key energy regions globally.

Senior management team members from across the world joined together in Aberdeen for a two-day gathering designed to celebrate the 10-year milestone and pre-pare for the next chapter in the company’s story.

Maxoil offers a range of specialised pro-cess and production chemistry consul-tancy services, enabling clients to achieve process performance optimisation by ap-plying effective knowledge to new projects and operating assets.

Managing director Mel Dow said: “The business and our vision was built on the foundations of a holistic approach, blending our core disciplines of process engineering and production chemistry combined with hands-on operations expe-rience gained, under the umbrella of a sin-gle consultancy to really make a difference to issues that hurt our Clients; whether

they be uptime, performance, environmen-tal or financial. That ethos remains vitally important to us.”

“We have invested to expand our pool of specialists and train the next generation of engineers and chemists, both in the UK and the US, and are also committed to ex-panding our range of services. The indus-try has moved forward since 2004 and we are proud to have been integral to optimis-ing asset performance through expertise and innovation. ”

eccoSe coMPleteS SeAbed PrePArAtionABERDEEN-BASED ECOSSE Subsea Systems (ESS) has successfully com-pletely a major boulder clearance and seabed preparation campaign on behalf of Denmark’s DONG Energy. The subsea engineering specialist has cleared almost 50,000 boulders and other obstructions from 33 routes spread over a distance of 40km at the Westermost Rough wind farm, located 8 km off the Yorkshire coast.

ESS deployed its multi-functional SCAR seabed plough and, working from the Havila Jupiter vessel, completed plough-ing and surveying operations within 20-metre corridors located between 33 turbines and the offshore sub-station.

The 72 day campaign, which had been mobilised in a 47-hour time-frame from Aberdeen, was delivered on time and within budget, and demobilisation took less than 24 hours. ESS’s highly expe-rienced offshore management and op-erations team included survey and ROV specialists.

Mike Wilson, managing director of said: “Another successful seabed clearance project has been completed safely and ahead of schedule on behalf of a leading European energy group. The work cov-ered multi-pass boulder clearing on up to 33 routes, covering an area of 720,000 square metres and involved complex sea-bed navigation with ROV back-up to en-sure pinpoint accuracy between passes.”

The Westermost campaign was ESS’s third seabed clearance contract in the re-newable sector – following on from Baltic 2 and Humber Gateway projects.

Ecosse Subsea Systems Ltd was estab-lished in Aberdeen in 1996 and specialises in offshore engineering consultancy and subsea technology for the subsea energy and offshore renewables markets. Its ser-vices include: SCAR trenching; subsea lifting; engineering consultancy; person-nel supply and technology development.

In partnership with other innovation-led companies, Ecosse Subsea Systems has developed a range of patented tech-nologies, with other patents pending, in pipe lay and spooling, wave energy con-version and subsea lifting.

Maxoil has specialist areas of expertise in operations assurance, flow assurance, fluids separation, produced water man-agement, sand and solids management, gas treatment and transport, chemical treatments and contaminants, process troubleshooting, advanced diagnostics, de-bottlenecking and technical awareness training.

Founding director Wally Georgie said: “The Maxoil team has grown to include 40 specialists globally in a variety of disci-

plines, with extensive operational experi-ence. We have demonstrated the benefits of bringing that knowledge together with a team approach and are looking forward to providing solutions to fresh challenges in the industry. Maxoil is, for example, ex-tending the application of our expertise successfully to the North American and Australian unconventional operations.”

Maxoil Solutions has a presence in Lon-don, Houston, Stavanger, Kuala Lumpur and Perth, Australia, as well as in Aberdeen.

INTERVIEW| February 2015 | offshoreaberdeen.com20 |

Q Has the oil price fall changed your invest-ment or business development plans? - In particular anything that might affect Aber-

deen – what presence do you currently have there/what makes it a good base?Today, the UK’s oil and gas industry faces arguably the most challenging period in its turbulent history. According to Oil & Gas UK, capital investment, which reached a record high of £14.4 billion in 2013, is ex-pected to fall by more than half to about £7 billion by 2016, unless the rate of maturing new developments increases.

Production from assets, many working well be-yond their design life expectancy, fell by 38 per cent between 2010 and 2013. That downturn in produc-tion equates to a drop of around 500 million barrels of oil equivalent (boe) over the period and resulted in lower tax receipts of approximately £6 billion for the Treasury.

In exploration, just 15 wells were drilled on the UKCS in 2013, compared to 44 in 2008, a fact which highlights the critical nature of the sector’s situation.

But there are reasons for optimism: In 2020, the De-partment of Energy predicts that an estimated 70 per cent of primary energy consumed in the UK will still come from oil and gas. And, Oil & Gas UK indicate 25 new fields are expected to come on-stream over the next two years.

To meet these economic and operational chal-lenges, and also the upcoming opportunities of de-veloping tomorrow’s safer and sustainable energy supply, we are committed to representing and sup-porting the oil and gas industry in Aberdeen, the UK Continental Shelf and beyond. While we are monitor-ing the global geopolitical tensions over energy issues globally, and the energy decisions that are made by Government and operators here in the UK, we have no intention of reducing our technical capability for the industry in Scotland, the rest of the United King-dom or in any part of the world.

Aberdeen is an important strategic hub for our business, and we wish to maintain our presence lo-cally to where our clients are situated, so that we con-tinue to provide the confidence needed for owners, operators and contractors that their assets perform as intended, cost effective, and are safe to operate.

And, we will continue to service current and new customers in Scotland and the UK in a way we always have done, reflecting our heritage and our continued commitment to independence, technical excellence and public benefit. For example, our investment with the University of Aberdeen has established a centre for Safety & Reliability Engineering. Based in the School of Engineering, the Centre aims to provide a focus for world-class research and postgraduate teaching in safety and reliability engineering.

This is just one example of the many aspects to our presence in Aberdeen. For Lloyd’s Register, the signif-icance of such alliances with more than 50 academic institutions around the world, goes beyond showing a commitment to advancing technical innovation by supporting research, development and training. It also recognises the vital role that innovation plays in supporting economic growth and, through that, as-suring the continued prosperity of the industries that are vital to society.

Q How are your products and services (assur-ance, standards, certification, expert advice) developing now and in the future in the

UKCS? Are you moving into any new areas?While the oil price is a challenge, cost is what every operator and supplier to the oil and gas industry is focused on. So those initiatives that nurture techni-cal innovation can no longer be an afterthought for business or government; they must be central to any organisation’s strategy for sustainable growth and market leadership. They are central to our growth too. Adapting that sort of thinking into what we do is going to be a very interesting part of how we move forward.

If we consider the future of the UK continental shelf - 475 installations, 10,000km of pipelines, 15 onshore

terminals and 5,000 wells will eventually need to be decommissioned. Over the next 25 years, decom-missioning costs are forecast to be in the region of £31.5bn, but decommissioning will not be an option for many operators on current economics because of the expense. The issue of maintaining the integrity of an asset at late life has become more increasingly pertinent in the current climate (and is predicted to be a key theme for the next 12-24 months).

We are therefore driving the development of new concepts and technologies through collaborative R&D, and our focus is firmly on innovation through our Global Technology Centres. In a larger context, technology developments that help improve produc-tivity, reduce costs and enhance quality are today’s pressing issues across the total energy supply chain.

We have got to find ways to radically help industry pull costs down and do things differently.

Despite the challenges of reducing costs, ensuring that assets and workforce operate in a safe manner remains key, and we have the knowledge to help industry apply this. Through our drilling expertise, asset integrity services, inspection methods and the combined capability of LR Senergy, we have a deep and broad market offering to help oil and gas compa-nies manage their systems, improve their cost base and maintain quality. In order to remain profitable in this economic climate, companies need to extract maximum value from their operations – we have the expertise to help industry remain competitive.

In the last 18 months, we have seen the debate gather momentum on how industry needs to con-tinue to address the challenge of driving Enhanced Oil Recovery with aspirations of moving from 40% to 70% on recoverable reserves. Our global research (www.lr.org/technologyradar) has helped to draw out these key issues and trends from personnel in the oil and gas industry. Some of the findings include:

1. innovation is drawing on a range of technologies, rather than any single breakthrough

2. a variety of technologies looks set to have a high impact in the coming years relating to extending the life of existing assets -- enhanced oil and gas recovery (EOR)

3. Near-term impact -- automation -- remote and subsea operation is identified as firms seek to cope with challenging environments

4. High-pressure, high-temperature (HPHT) drill-ing and multi-stage fracking are also expected to have a major impact, but are expected to be fully de-ployed from 2020

Production from the North Sea has always been a challenge and, as we increasingly face global compe-tition, standing still is simply not an option.

Q Have you seen any fall in revenues/are you looking at any cost savings for North Sea ser-vices? – Is there pressure from your clients

to cut the price of your services due to the oil price cuts? Any examples?In any downturn there is naturally pressure across the supply chain to provide goods and services at a more competitive rate. Maximising economic value is on the board room agenda of many oil and gas opera-tors globally, but downgrading safety and quality and putting both infrastructure and workforce at risk is just not an option, even if savings are needed.

Economic issues and operational complexities are increasing the technical assurance needs of compa-nies operating in the energy supply chain. The world of business and technical assurance, safety and integ-rity has a challenging contribution to make in today’s energy and cost-sensitive climate. We are working proactively with our client base here in the UK and across the world to ensure they receive all the sup-port and guidance our experts can offer.

Q What are your views on how the weak oil price might impact on oil and gas companies and the future of the North Sea?

The current economic issues around the sustainabil-ity of the North Sea oil and gas industry has called into question a number of things we have taken for granted. Most obvious is the availability of finance and consequently the future of large energy infra-structure projects. However, some of the best opera-tors can now profit at far lower prices because they’re learning how to operate more efficiently.

If you look at the business challenges we face today, you realise industry needs to embrace technology even more. Collectively, we need to look harder at technology to help solve many of those issues. This is where we will see new mergers and joint ventures begin to take shape as the cost for innovating and creating new operational efficiencies can be shared collectively.

Across the supply chain operators will also demand higher levels of integrity from their contractors on equipment, systems and personnel. Crew compe-tence and specific training to reduce downtime and the heavy costs associated with equipment failure, will be of critical importance to tomorrow’s winners. Manufacturers will have to review their equipment designs for functionality and failure, and make ad-justments based on new requirements.

The responsibility for ensuring the future of the oil and gas industry lies with each of us – business, aca-demics, regulators and government alike. By work-ing more collaboratively, more intelligently and with a greater vision, we can achieve much more!

TIM WALSH, SVP OF GLOBAL ASSET INTEGRITY SERVICES AT LLOYD’S REGISTER ENERGY’S ABERDEEN OFFICE.

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ACROSS DOWN1 Of vast size (7) 2 Awards for bravery or sporting prowess (6)5 Radioactive gas (5) 3 Reckons; guesses (9)10 Prepare for publication (4) 4 One who conducts medical operations (7)11 Officially recorded or enrolled (10) 6 Change; alter; correct (5)12 Workers who install and fix piping, waterworks, etc. (8) 7 Dish prepared with 8 down (8)13 Small mosquito-like insect (5) 8 Bacon and -----; traditional breakfast (4)14 Daze; knock out (4) 9 Isaac ------; sci-fi author (6)15 Goes back to; returns (8) 15 Drilling platform (3)18 Journey by ship (8) 16 Thirty-day month (9)20 Tube to convey gas, liquids, etc. (4) 17 Controversial way of extracting shale gas (8)22 Cord; rope; electrical lead (5) 19 Freezer compartment of refrigerator (3-3)24 Fused or joined with metal alloy (8) 20 Nuclear-submarine missile system (7)25 Last in series of demands; ultimatum (5, 5) 21 Tune; song (6)26 Horizontal bar or joist on cranes, etc. (4) 23 Cutting edge (5)27 Concur; go along with (5) 24 Strong-box (4)

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Offshore Aberdeen February 2015

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