Archive: Tue Feb 2019

  1. Energy bill cash should be spent on clean UK-made power, union says

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    Money raised from household energy bills should be spent on UK-made clean power rather than importing from foreign countries, according to GMB Union.

    The union’s national secretary, Justin Bowden, said today that “it makes no sense” to rely on other countries for clean energy when the UK could be investing in creating its own.

    Mr Bowden was attacking the UK Government’s decision to invest in huge transmission cables linking the UK with Europe.

    He said UK policy “demands a rethink” on the grounds of energy security.

    Mr Bowden added: “UK investment in interconnectors needs an urgent review.

    “It makes absolutely no sense for the country to rely on other countries to keep our lights on, when they are doing the same thing.

    “The money raised from household energy bills should be spent on reliable, cost-effective lower carbon energy sources in the UK rather than relying on imports which may not be available.  In an increasingly uncertain world, energy self-sufficiency is common sense.

    “We should not spend our time and money looking for silver bullets that may not exist.”

    Mr Bowden also hit out at wind and solar energy, which he believes is not being adequately harnessed and are producing a fraction of their installed capacity.

    In January, a giant supercable linking Peterhead with Norway was approved by Aberdeenshire Council.

    The North Connect transmission link will see the renewable energy markets of Scotland and Norway trade energy via  a converter station at Stirling Hill, Boddam to an offshore transmission cable across the North Sea.

    Developers plans were accepted to lay a 415-mile cable from Peterhead to the Norwegian west coast, due to begin in 2023.

  2. Cuadrilla loses appeal to drill second Lancashire fracking site

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    Cuadrilla has lost an appeal to drill a second fracking site in Lancashire.

    The energy firm had hoped to establish a four-well site at Roseacre Wood, nearby to its current drilling facility at Preston New Road.

    A planning application was initially denied by Lancashire County Council in 2015 over concerns on the impact to the area.

    Cuadrilla appealed and the company was allowed to set out its case on the issue of highway safety, however the Ministry of Housing, Communities and Local Government has today refused planning permission.

    In a letter, it states the Secretary of State agrees with the original inspector that the issue has not been “satisfactorily addressed”.

    A spokesman for Cuadrilla said: “We are naturally disappointed about the decision on Roseacre Wood and will examine the details in full before reaching a position. However, we continue to be focused on the shale gas exploration site in Preston New Road, where we have recently released very encouraging flow test results from the UK’s first horizontal shale gas well.

    “Cuadrilla and its investors remain committed to this opportunity and the overall prize for the UK, which includes energy security, jobs and revenue for the country. These are all well within our grasp at Preston New Road and we seek to further prove this concept in the weeks and months to come.”

  3. An investor view on oil’s twilight

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    The global oil industry’s foundation of ever-expanding demand will probably crumble and that may hurt profits sooner than expected, according to a London fund manager.

    The sector faces stagnating demand within seven-to-ten years and that means it may lose the ability to bring itself back into balance when oil prices drop, Nick Stansbury, who helps oversee $1.3 trillion at Legal & General Investment Management Ltd. as head of commodities research, said in an interview.

    The fact that the industry may face much lower growth rates soon is something management needs to address now, because the slower pace of rising demand may not be enough to spur crude prices that justify projects with decade-long investment cycles, Stansbury said.

    In the past, oil-price slumps have stimulated demand increases as consumers have taken advantage of lower costs. Meanwhile, longer-term growth in the global economy and population rises have continued to push crude consumption higher.

    Now, the sector could lose its ability to recover from price slumps entirely as global oil demand peaks, which is expected in the 2030s, and it could even be sooner than that.

    “What matters is when the demand hits a plateau, not the absolute peak year,” Stansbury said. “It’s really hard to argue it’s not a near-term problem.”

    Even oil major BP Plc’s own forecasts show oil demand growth drops to about 0.5 percent a year after 2025, compared with 1.3 percent now, as electric vehicles become more popular and energy efficiency improves. Stansbury argues it’s that lower pace which might not be enough to drag crude prices back up, after a fall.

    Investors Prod Climate Polluters as Trump Unpicks Paris Deal

    Companies should soon be ready to prioritize returning cash to investors rather than over-spending on new oil and gas projects or trying to develop renewable-energy businesses, he said.

    “Within the next 10 years, we’re going into a window of uncertainty.” Legal & General is asking energy companies to “very clearly articulate how your capital allocation is robust.”

    The electrification of the world energy system means different parts of the oil industry will begin competing with each other to supply a decreasing pool of customers amid potentially low prices, Stansbury said.

    The shift will be a big deal for global markets because the energy industry has been built with more than $10 trillion of investor capital and the sector provides a fifth of every dollar paid as FTSE 100 dividends. In 2017 alone, oil and gas investment amounted to $716 billion, according to the International Energy Agency.

    The challenge of climate change within energy investment is becoming a key focus for fund managers. There’s $32 trillion under management — including LGIM, Californian pension group CalPERS and Pacific Investment Management Co. — in the Climate Action 100+ program. That’s where investors prod companies to adopt business plans that ensure their emissions drop rapidly during the next few decades in line with the Paris climate deal targets.

    Stansbury said Legal & General will favor management teams today that commit to responsibly “run-off” existing fossil-fuel businesses when the time is right and return the money to investors, rather than pursuing expansion in declining markets. The investors reckon they can probably deploy the capital better than conflicted management teams running coal, oil and gas companies.

    The investors are seeking to push executives to gradually replace the world’s energy system without hurting the pace of economic growth, a tricky task because governments have not yet agreed consistent climate measures such as carbon pricing under United Nations talks.

    “We don’t want them to stop all investments today because it’s too early and the risk is that you under-invest in the energy system,” he said. “But the winning companies will be those whose management teams understand the risks and get ready to put their businesses into that very slow, gradual, run-off mode.”

  4. EDF latest big six company to increase prices

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    More than a million energy customers on EDF’s standard variable tariff face a 10% price increase from April 1.

    Gas and electricity bills will rise by an average £118 to £1,254 – up to the level of Ofgem’s new price cap – for 1.3 million existing customers on EDF’s standard variable tariff, comparison site uSwitch.com has reported.

    Prepayment meter customers will also face an average £106 or 9% price rise, according to information released by the company to price comparison sites.

    EDF is the second firm to push up prices following an announcement by Ofgem last week that there would be an increase to the energy price cap.

    On Monday, E.ON announced an average 10.3% price increase from April 1 for around 1.8 million customers on its standard variable gas and electricity tariff, meaning bills will rise by around £117 to £1,254.

    Rik Smith, energy spokesman at uSwitch, said: “As soon as Ofgem increased the price cap level it became almost inevitable that most customers on standard deals would see their bills rise right up to the cap.

    “EDF Energy are the second of the Big Six suppliers to increase their prices, and we wouldn’t be surprised to see a domino effect with other energy companies following suit.

    “EDF Energy customers will see their bills rocket by £118 on average a year from April 1, and their standard tariff will be £286 more expensive than the cheapest deal available today.

    “But some households on standard tariffs will be hit harder than the average if their supplier prices up to the cap, which could push their bills to the edge of affordability.

    “People who are already struggling with their bills are the ones who will suffer most if they are conned by the idea that the price cap represents a ‘fair’ deal.”

    E.ON said on Monday it expected to see “similar movements” take place across the energy industry.

    Last week, Ofgem said it will increase the price cap for default and standard variable gas and electricity tariffs by £117 to £1,254 a year from April 1 due to hikes in wholesale costs.

    The watchdog said previously that those affected will still pay a “fair price” for their energy as the increase reflects a genuine rise in underlying wholesale costs, rather than provider profiteering.

  5. Lightsource BP to hold public meeting on giant Angus solar farm

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    Lightsource BP has announced that it will hold a public consultation on a giant solar farm planned for Angus.

    The BP-minority owned solar firm said it will outline proposals for the Berryhill Road project on Monday at Fowlis Easter Hall.

    The proposed subsidy-free solar installation plans to generate around 48,250 megawatt-hours (MWh) of clean and renewable energy annually that would power 14,621 homes.

    Lightsource BP said the firm will also outline its biodiversity plans during the meeting.

    No construction date has been set for the project.

    Conor McGuigan, director of business development for Europe, Lightsource BP said: “We want to ensure that local communities in and around Fowlis are informed of our plans to develop the project, and so, we look forward to meeting elected representatives, local businesses and residents at the community information event.

    “In addition to gaining feedback, we also want to provide a forum to give residents the opportunity to ask any questions they may have about the project or solar energy in general.”

    The Angus solar farm will be the just shy of the largest solar farm in Scotland, second to the Milltown Airfield project in Moray.

    Developer Elgin Energy wants to cover Milltown Airfield with around 200,000 solar panels to take advantage of the area’s long summer days.

    The firm intends to submit plans in the coming months and could begin construction on the 280-acre former RAF base as soon as 2020.

  6. Aberdeen Lord Provost set for new energy role

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    Aberdeen Lord Provost Barney Crockett is to seek the presidency of the World Energy Cities Partnership (WECP).

    A vote on a new president and vice-president will take place at the WECP’s annual meeting, which is to be held in Aberdeen in September.

    The period of office is two years. The non-profit group aims to increase collaboration between the partners involved.

    “Aberdeen’s future is ever more international. We’ve always punched above our weight but now more than ever we have to show commitment to our worldwide future,” said Mr Crockett.

  7. Renewables to outdo oil and gas on cost by 2025, report claims

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    New-build renewable energy will outdo traditional oil and gas on generation cost by 2025, according to new data.

    Analytics firm McKinsey Energy Insights’ (MEI) 2019 Global Energy Perspective report claims that, as renewable energy projects become more powerful and competitive on price, they will be able to beat fossil fuels on price in most countries.

    Data from the report also indicates global energy demand will begin to “plateau” by 2035.

    The study claims a “decoupling” between economic growth and energy demand will occur as investment in renewable energy increases.

    The report adds that oil demand is projected to “slow down substantially and peak in the early 2030’s, while natural gas will continue to grow its share of global energy demand (the only fossil fuel to do so)” before plateauing and then showing a decline after 2035.

    Christer Tryggestad, senior partner at McKinsey, said: “For the very first time, we are on the cusp of seeing global economic growth decouple from rising energy demand: a truly historic moment.

    “Our scenario is bolder than comparable studies, with energy demand declining faster and sooner, but this reflects what we see in the sector.”

  8. Updated: Five years added to the clock for pair of North Sea fields

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    RockRose Energy said today that the production lives of two North Sea fields had been extended by at least five years to 2029.

    More than 2 million barrels of oil equivalent (boe) have been added to the reserves estimates for the Ross and Blake fields.

    London-listed RockRose acquired its 30.82% interests in the two assets through its acquisition of Idemitsu Petroleum UK in 2017.

    Operated by Repsol Sinopec Resources UK (RSRUK), the fields lie about 70 miles north-east of Aberdeen and produce via the Bleo Holm vessel.

    Last year, RockRose commissioned a report to determine whether Bleo Holm needed to be replaced, or could be kept going for longer.

    The vessel is owned by Dutch firm Bluewater and was installed in 1999.

    Westhill-based i3 Energy hopes to use the vessel to handle production from the Liberator field in the outer Moray Firth.

    The Idemitsu transaction also handed RockRose 50% of the nearby Tain satellite discovery, also operated by RSRUK.

    RockRose said the partners intended to complete the field development plan (FDP) by the end of 2019.

    Tain would add 6.1m boe to RockRose’s portfolio.

    Meanwhile, the Arran development is progressing to schedule with first gas planned for the first quarter of 2021, providing net reserves of 8.6m boe.

    RockRose owns 30.43% of Arran, having purchased stakes from Dana Petroleum and Zennor Petroleum last year.

    Shell recently took over as operator of the project and intends to tie the field back to its Shearwater platform in the central North Sea.

    And following maintenance work, the Dana-operated F02a Hanze oil field – 20.0% owned by RockRose – has returned to full production.

    RockRose shares had risen 10.85% to £7.15 by 11am.

    RockRose executive chairman Andrew Austin said: The extension of field life at Ross and Blake, supporting the Tain development, further grows the group’s 2P reserve base, demonstrating the impact of our continued investment in organic growth. As a result, the company today holds 2P+2C of at least 50.9m boe in the portfolio.

    “In addition, the programme of infill drilling in the Netherlands has already yielded positive results and lengthens our production profile. The development of Arran remains on track with capex commitments being funded entirely from cashflow.

    “The life of the majority of our assets continue to be extended, however we are successfully and efficiently progressing active decommissioning programmes where necessary in conjunction with our partners.

    “Overall, we remain focused on continuing to invest in our portfolio to extend field life where possible and to explore options for further value accretive acquisitions.”   

  9. Add Energy recruits as it continues contract spree

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    Consultancy Add Energy has recruited 19 staff and contractors to its Aberdeen base in the last month following a series of contract awards.

    The firm’s Asset Integrity and Management (AIM) division in the city has secured work worth more than £250,000 since the start of the year.

    Add Energy said the latest agreements support a range of operators, contractors and power generation plants in regions including the UK, Norway, US and Trinidad and Tobago.

    It follows a further £1.1m of new wins announced at the end of last year, with the work allowing Add to go on a recruitment drive.

    Peter Adam, executive vice president for the AIM business, described it as a “flying start” to the year.

    He said: “We are really pleased with this and it is down to a lot of hard work in terms of our business development last two years.

    “It’s also good having the spread between power generation and oil and gas.

    “All the roles are Aberdeen-based and I think it is testament to the hard work of the team. It’s all about trying our hardest to support clients and add value so they come back for more services.

    “With oil and gas production expected to increase over the next five years, maintenance and integrity management is critical to both safe and efficient operations. We look forward to working with our clients to enhance their activity.”

    Add’s Scottish AIM business plans to continue its recruitment drive going forward, with a focus on its North American operations and the Middle East.

    Between Aberdeen and Houston it currently employs more than 100 people, carrying out contracts globally.

    The AIM branch turned over £17m last year and this is expected to grow to around £20m by the end of 2019.

    Mr Adam added: “Since 2004 the business has always been very international and our clients have taken us with them around the globe.

    “It’s also to do with where the oil regions pick up first with the recovery of the oil price.

    “I think we’ll see a strong year in North America for us. We want to provide focus there and more support from the leadership level going forward.

    “We also want to transfer knowledge from our Aberdeen base, giving some of our younger people the opportunity to travel and use that to take across the knowledge culture of our business as well.

    “We’re off to a flying start and are optimistic that we will be able to keep the momentum going throughout 2019 and to continue to build, and grow the division which will see us further expand our presence in key global regions.”

  10. Renewables specialist moves into Dundee Port

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    An offshore wind specialist has taken premises at the Port of Dundee as it unveiled plans to double its number of staff to 30 by the end of this year.

    Mark Robson, managing director of Coast Renewables, said offshore wind had the potential to transform the city.

    His firm, which was established in 2013, specialises in the construction, maintenance and service of wind turbines.

    Coast, which currently employs 15 staff, has worked on major renewables projects for some of the biggest turbine manufacturers and energy firms such as SSE and EDF Renewables.

    Mr Robson said: “We are taking on another three staff this week and are looking to grow to have around 30 people on the books this year.

    “We specialise in site management for construction of the windfarms. We will go on site to build them, commission them and then maintain and service the turbines.

    “The price of offshore wind per megawatt is very low now. Offshore wind is looking favourable as a source of energy. I think there will be busy times ahead. Onshore wind subsidies are changing so that’s not as busy as it has been.

    “In the future maintenance and service is going to be where the work is as there will be a lot of turbines out of the water.”

    Coast has previously worked on EDF’s flagship Fallago Rig windfarm project in the Scottish Borders, the Blyth offshore demonstration site and SSE’s Keadby windfarm in North Lincolnshire, which at the time it became operational in summer 2014 was the biggest onshore site in England.

    The firm also constructed the first commercial offshore windfarm in Denmark and is currently working on EDF’s biggest onshore windfarm in Dufftown.

    Mr Robson said he felt many people in Dundee didn’t realise the potential impact the sector could have in the city in the coming years.

    “You couldn’t get a better site for offshore wind in Dundee. There is a lot happening at the port and it’s going to be really busy,” he said.

    “The timing is right for us to grow.

    “I don’t think people in Dundee know how big this sector could be for the city.

    “It’s changed lots of fishing towns down the south east coast like Grimsby, Hull has been regenerated…

    “Dundee can play a huge part in the offshore wind industry and as a growing city we need to do more and win this work for the local area.

    “The opening of our new offices in Dundee can provide employment opportunities locally and also highlight the city’s desire to play a pivotal role in the future growth of the industry.”

  11. More clarity on the way for North Sea decom costs, says OGA

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    More clarity is expected on North Sea decommissioning costs by the end of the month, according to the chief executive of the Oil and Gas Authority (OGA).

    Andy Samuel was addressing an inquiry into the public cost of decommissioning oil and gas infrastructure yesterday at Westminster.

    He said that in recent years many operators have had class five, or highly uncertain, estimates on their decommissioning costs, which is gradually improving.

    Mr Samuel was joined by the Department for Business, Energy and Industrial Strategy and the Offshore Petroleum Regulator for Environment and Decommissioning, outlining their efforts to achieve an overall cost reduction of 35%.

    With fresh stats on cost estimates expected at the end of the month, Mr Samuel believes operators are becoming accurate.

    He said: “All we can do is strongly encourage early planning.

    “Once a year I get the chief executives, the managing directors for the UK, in a very open session where we show benchmarks of how their planning metrics are.

    “72% of their cost estimates were class five. That surprised them. They went back to their teams and said ‘we need to do better, the OGA has flagged this, this is frankly a bit embarrassing’.

    “The next year we were very pleased that they had gone down to 49%.

    “I fully expect when we get the data for last year, which we’re going to get at the end of this month, we will see a further reduction.”

  12. Storm Erik causes new peak for British wind generation

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    A new record was set for British wind generation last week, thanks to Storm Erik.

    On Friday, the National Grid reported Great British wind generation peaked at 15.32 gigawatts (GW), providing 36% of the UK’s electricity demand.

    The UK utility regulator confirmed last night that between 12:15pm to 1:45pm wind was being generated at its highest level ever.

    The new data beats the previous record of 15.04GW, recorded on December 18 last year.

    RenewableUK’s executive director Emma Pinchbeck said: “At one of the coldest times of the year, when we need it most, wind is generating over a third of Britain’s power needs, setting a new clean energy record. It’s yet another demonstration of how our energy mix is shifting to renewables, with onshore and offshore wind in the vanguard.

    “This transition is set to continue apace; we’re currently finalising a sector deal that will see offshore wind alone generating at least a third of our electricity by 2030. This will secure £48bn of new investment and support 27,000 highly-skilled jobs.

    “Onshore wind is already the cheapest source of new power in the UK and can make a major contribution to meeting our carbon reduction targets and keeping bills down”.

    In September, RenewableUK hailed a “historic milestone” as the country’s wind generation passed 20 gigawatts.

    Renewable UK said the milestone showed “phenomenal growth” in the sector, coinciding with the trade body’s 40th anniversary.

    Wind power accounted for half of all power coming from UK renewables in 2017.

    The first commercial wind farm went operational in 1991, with wind deployment climbing to 5GW by 2010.

    In January, turbine blades at Aberdeen Bay windfarm clocked record speeds during gale force winds, the project operator Vattenfall confirmed.

    Storm winds which battered Scotland averaged up to 67mph in the north-east, causing the world’s most powerful blades to hit a top speed of 192mph.

    It’s understood the 262 foot rotor blades at the site, also known as the European Offshore Wind Deployment Centre (EOWDC), managed to complete a six second rotation, resulting in near 200mph speeds.

  13. 1,500 companies hit by cyber attacks every day

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    UK businesses were hit by around 1,500 cyber attacks per day during 2018.

    According to analysis from Beaming, a business ISP, the volume of attacks on British firms was almost a quarter (23%) higher last year than in 2017.

    The company’s analysts identified more than 1.3 million unique IP addresses used by criminals to launch cyber-attacks on UK firms. Just under a fifth (16%) of these IP addresses were in China.

    The most common target for cybercriminals in 2018 was IoT applications such as building control systems and networked security cameras that could be controlled remotely online.

    Graeme Gordon, chief executive of IT service business IFB, said there are two types of companies; those who know they have been compromised – and everyone else.

    He said: “Cyber security is the concern of every business as more of what we do everyday is increasingly digital and increasingly online.

    “There is a constant background hum from intruders, some simply fishing but with an increasing number of attacks coming against the intellectual property and finance information held by businesses of all sizes.

    “Sometimes this hum is lost in the overwhelming volume of data we generate and use in our lives.

    “These sometimes manifest themselves as social engineering attempts through phishing emails, connection requests on social media trying to get you to click and open or click and share so you can be researched and compromised later.

    “In business, the ability to access and control devices in this way is a huge issue – imagine having every traffic light in Aberdeen red at the same time or every mobile phone in your company calling a premium rate number, or shutting down a refinery or gas platform by compromising the fire control system.

    “Key simple steps to help you are; have the best foundation at all time, use the best antivirus and malware monitoring and protection software, and make sure you treat all your users the same way.”

  14. Next up for Fukushima clean up: What does melted fuel feel like?

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    The owner of Japan’s wrecked Fukushima Dai-Ichi power station is trying this week to touch melted fuel at the bottom of the plant for the first time since the disaster almost eight years ago, a tiny but key step toward retrieving the radioactive material amid a $195 billion clean up effort.

    Tokyo Electric Power Co. Holdings Inc. will insert a robot developed by Toshiba Corp. on Wednesday to make contact with material believed to contain melted fuel inside the containment vessel of the No. 2 reactor, one of three units that melted down after the March 2011 earthquake and tsunami.

    “We plan to confirm if we can move or lift the debris or if it crumbles,” Joji Hara, a spokesman for the utility known as Tepco, said by phone Friday. Tepco doesn’t plan to collect samples during the survey.

    Japan is seeking to clean up the Fukushima disaster, the world’s worst atomic accident since Chernobyl, which prompted a mass shutdown of its reactors. Tepco will bear the bulk of the costs — estimated in December 2016 to total 21.5 trillion yen — and faces the uphill task of removing the melted fuel in the reactor buildings. Because of the high radioactivity levels inside the facility, only specially designed robots can probe the unit.

    The Toshiba machine weighs about 1 kilogram (2.2 pounds) and is equipped with a camera, thermometer, dosimeter and has tongs that can check the solidity of deposits and lift roughly 2 kilograms, according to Hara and the company’s website.

    Japan aims by March 2020 to determine how to collect melted fuel from at least one of the three reactors and start retrieving it in 2021, according to a government road-map. Decommissioning of the plant is estimated to take 30 to 40 years.

    Tepco is also planning a survey inside the containment vessel of the No. 1 unit sometime between April and September, which may include collecting a small portion of deposits, according to Hara.

  15. Shell hires Diamond Offshore rig for North Sea work

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    Diamond Offshore has confirmed one of its rigs has been newly-hired by Shell for work in the North Sea.

    In a fleet status update, the rig owner said the Ocean Valiant has been picked by the energy giant for a contract starting in late December of this year, ending in March 2021.

    The Ocean Valiant is currently carrying out work for Total in the North Sea.

    Details of the Shell deal have not been disclosed but analytics firm Bassoe estimates the rig’s day rate is $130,000.

    Diamond also has the Ocean Patriot, Ocean Endeavour and Ocean GreatWhite lined up with work for Apache, Shell and Siccar Point respectively this year.

    In a separate announcement, Diamond yesterday released its fourth quarter results, with yearly pre-tax losses widening to £176.1m, compared to a £16.6m loss in 2017.

    Chief executive Marc Edwards said: “We continued to make strong progress with another active contracting quarter resulting in approximately 33 months of additional backlog secured.

    “Among the new fixtures is a 15-month contract for the Ocean Valiant and a one-year contract for the Ocean Onyx, which we are upgrading and reactivating for the new work.

    “Additional awards were for the Ocean Apex and Ocean Monarch in Australia.”

    The driller said it has secured a backlog of £1.5bn as of the first of January this year, not including a £105m commitment from one of its customers.

  16. Egypt devises new contracts to attract more oil and gas investors

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    Egypt is finalising details of a new type of oil and gas contract to attract even more foreign investment than the $10 billion already coming into its energy industry this year.

    The contract will provide investors with incentives to explore for fossil fuels in undeveloped areas, Egypt’s oil minister Tarek El-Molla said in an interview. He didn’t provide details of the changes to the contract.

    “We’re improving the cost-recovery process to be faster, less bureaucratic and more efficient,” El-Molla said. The government will launch a new bid round in the Red Sea this quarter, he said.

    Egypt plans to award on Tuesday more than a dozen concessions to explore for oil and gas, El-Molla said during a conference in Cairo attended by Total SA Chief Executive Officer Patrick Pouyanne and BP Plc’s Bob Dudley.

    The most populous Arab nation, wants to become a gas re-exporting hub on the doorstep of Europe, and the contract overhaul is part of a broader plan to liberalize its energy industry. Italian firm Eni SpA’s discovery of the giant offshore Zohr gas field in 2015 reignited waning investor interest in Egypt’s oil and gas industry, the country’s biggest single magnet for foreign direct investment.

    Arrears

    Officials told Bloomberg in October that the new oil and gas contract would allow investors to control their share of production rather than sell to the government at preset prices. The officials, who asked not to be identified because the discussions were private, said terms could be tweaked depending on the investment.

    Egypt’s existing production-sharing agreements give investors about a third of a project’s output to help cover exploration and production costs. The rest is split with the government, which has the right to buy the producer’s entire share at the preset price.

    International oil companies have long complained about the contracts. Egypt struggled before Zohr’s discovery to attract major new energy investments. Its current investment model drew greater scrutiny after 2011, when the country began to experience fuel shortages and power blackouts.

    The government halted gas exports at the time, diverting the fuel for local use and stopping payments to investors for their share of output. Arrears to international oil and gas companies mounted, peaking at $6.2 billion in 2012, and stood at $1.2 billion in July.

    LNG Exports

    Production from the Zohr field along with BP’s West Nile Delta project reversed the shortage. Output soared, allowing the government to end liquefied natural gas imports and resume exports. The country has conducted a test run on its gas pipeline to Jordan, and said it will supply Lebanon via a link that has been idle for years.

    Egypt’s gas riches have transformed the LNG demand outlook in the Middle East. The region was a bright spot for LNG in 2015, driven by Egyptian imports. Now shipments have plummeted so much that it could take a decade for demand to recover.

    Royal Dutch Shell Plc, which operates the country’s Idku LNG plant, can now restart regular output after being restricted to occasional cargoes over the past few years. The company will export 17 cargoes in 2019, El-Molla said.

    While gas exports are rising, Egypt still has to import much of the oil products it needs for heating, transportation and power generation. The country is investing $9 billion to expand refining capacity and plans to stop fuel imports in about four year, El-Molla said. The Egyptian Refining Co.’s new $3.7 billion processing plant is part of that effort, and will begin operations by the middle of 2019, he said.

  17. Total inks multi-million seismic supervision deal

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    French oil-giant Total has inked a seismic supervision deal with UK firm Specialist Marine Consultants (SMC).

    The framework agreement will see SMC provide a number of seismic support services globally, with work already underway in the Middle East.

    Total would not reveal the contract value but SMC described it as being ” significant in value”.

    SMC has worked with a number of large firm across the energy sector, such as Technip, Orsted, E.on, Centrica, Vattenfall and ExxonMobil.

    The firm described the deal as an example of its “continued growth” and the “diversification of its services”.

    Ian Coates, managing director of SMC, said: “We are delighted with the award of this contract from Total.

    “SMC sees this as a significant step in our expansion within the oil and gas market and our work with total represents further growth for us within the seismic exploration sector.”

  18. Updated: Petrofac facing £400m legal fight over bribery allegations

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    Petrofac is facing the prospect of a £400 million payout to investors amid legal action linked to an alleged bribery scandal at the oil services firm.

    Last week David Lufkin, the former global head of sales at Petrofac, pleaded guilty to offering corrupt payments in an attempt to secure contracts in Saudi Arabia worth £2.7 billion and contracts in Iraq worth £566 million.

    Yesterday, litigation funder Innsworth and law firm Keystone said that they are analysing potential claims and are actively putting together a group of shareholders to launch action against Petrofac.

    Ian Garrard, managing director of Innsworth, said the group is in a “pre-eminent position to assemble and fund a shareholder group action against Petrofac”.

    Innsworth, which helps fund lawsuits and then takes a portion of the damages if successful, is also behind a shareholder claim against car giant Volkswagen over the emissions scandal.

    The allegations of bribery, corruption and money laundering at Petrofac relate to oil contractor and consultancy Unaoil.

    Shares in Petrofac collapsed in 2017 when the Serious Fraud Office (SFO) announced its investigation into the companies.

    Chief executive Ayman Asfari, a Tory party donor, and the then chief operating officer Marwan Chedid were both arrested and questioned under caution but later released without charge.

    Petrofac’s stock was again hit when Mr Lufkin admitted charges at Westminster Magistrates’ Court last week, tumbling by more than a quarter.

    Innsworth, which is funded by Elliott, is engaging investors who held shares from 2010.

    Petrofac said last week that no charges have been brought against any group company, current officers, employees or board members.

    Rene Medori, chairman of Petrofac, said at the time: “The SFO has chosen to bring charges against a former employee of a subsidiary company.

    “It has deliberately not chosen to charge any group company or any other officer or employee. In the absence of any charge or credible evidence, Petrofac intends as a matter of policy to stand by its employees.

    “Petrofac has policies and procedures in place designed to ensure that we operate at the highest levels of compliance and ethics.”

    Petrofac shares were trading flat at 395p in morning trade.

    The company established its presence in Aberdeen through acquisition in 2002 and has a number of offices in the Granite City.

    Petrofac has 3,000 UK workers, including 1,800 offshore, and 660 in its Aberdeen offices.

    It recently opened a new “innovation zone” at its base at Bridge View, on North Esplanade West, with the intention of using digital technology to help clients keep a lid on costs.

    Petrofac provides a range of services for UK North Sea clients. It has 25 years’ experience of providing operations and maintenance for clients including BP, EnQuest and Total.

    The company has also worked on brownfield engineering and construction modification projects for the likes of Chevron, Repsol Sinopec Resources UK and Apache.

    Last year, Petrofac sold its 20% stake in the Greater Stella Area, in the central North Sea, along with its 24.8% interest in the FPF1 floating production facility, to Ithaca Energy.

    A number of Petrofac workers employed on BP platforms will be balloted by the Unite trade union over the next few weeks following a dispute over rotas.

     

     

  19. Scientists create wind and solar power flags

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    Scientists at Manchester University have created flags that generate wind and solar power.

    The new energy-harnessing flags generate wind and solar power through movement and solar cells embedded within the flag.

    Manchester University say they are the first to study flags which “simultaneously harvest wind and solar energies using inverted flags”.

    The flags are able to power remote sensors and small-scale portable electronics.

    Jorge Silva-Leon, from Manchester’s School of Mechanical, Aerospace and Civil Engineering and lead-author of the study, said: “Under the action of the wind, the flags we built bend from side to side in a repetitive fashion, also known as Limit-Cycle Oscillations.

    “This makes them perfectly suited for uniform power generation from the deformation of piezoelectric materials.

    “Simultaneously, the solar panels bring a double benefit: they act as a destabilizing mass which triggers the onset of flapping motions at lower wind speeds, and of course are able to generate electricity from the ambient light.”

    The aim of the study is to allow cheap and sustainable energy harvesting solutions which can be deployed and left to generate energy with little or no need for maintenance.

    The strategy is known as “deploy-and-forget” and is the anticipated model that so-called smart cities will adopt when using remote sensors.

    Dr Andrea Cioncolini, co-author of the study, added: “Wind and solar energies typically have intermittencies that tend to compensate each other.

    “The sun does not usually shine during stormy conditions, whereas calm days with little wind are usually associated with shiny sun.

    “This makes wind and solar energies particularly well suited for simultaneous harvesting, with a view at compensating their intermittency.”

  20. Two pipelines hold open season to move crude oil from Permian Basin to Houston Ship Channel

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    Developers of two separate pipeline projects have combined forces to move crude oil from the Permian Basin of West Texas to multiple destinations along the Houston Ship Channel.

    As construction for the 850-mile Gray Oak Pipeline draws to a finish, a joint venture led by Phillips 66 Partners has teamed up with Houston pipeline operator Kinder Morgan to move crude oil to more destinations.

    Designed to move 900,000 barrels of crude oil per day by the end of the year, one of the end points of the Permian Basin to Gulf Coast pipeline is the Phillips 66 Sweeny Refinery in Brazoria County.

    Under a new agreement between Phillips 66 Partners and Kinder Morgan, customers of the Gray Oak Pipeline will now also be able to use the Kinder Morgan Crude and Condensate Pipeline to move crude oil from Sweeny to terminals along the Houston Ship Channel in Galena Park, Pasadena and Channelview.

    Phillips 66 Partners and Kinder Morgan announced on Monday that the two companies have launched a joint open season allowing customers to book joint transportation service along both pipeline networks.

    The Gray Oak Pipeline was originally announced as a joint project between Phillips 66 Partners and San Antonio-based refining company Andeavor in December 2017. At the time, Phillips 66 Partners had a 75 percent stake in the 900,000 barrel-per-day pipeline, while Andeavor held 25 percent.

    Ohio-based refining company Marathon Petroleum Corp. bought Andeavor and its share of the pipeline project in October.

    Canadian pipeline operator Enbridge exercised an option in December to buy a 26.25 percent stake in the Gray Oak Pipeline.

    Expected to be in service by the end of 2019, the Gray Oak Pipeline will move crude oil from the Permian Basin and Eagle Ford to storage terminals and refineries in Corpus Christi and Brazoria County.

    This article first appeared on the Houston Chronicle – an Energy Voice content partner. For more from the Houston Chronicle click here.

  21. California company seeks to build $1bn refinery in Permian Basin

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    A California company is seeking to build a $1 billion refinery that will make gasoline and diesel near the Permian Basin town of Kermit.

    Meridian Energy Group announced plans on Monday that it has partnered with a subsidiary of the Houston energy conglomerate Winkler Companies and is seeking to build a 60,000 barrel per day refinery just north of the West Texas town.

    Although the project is the engineering and design phase, Meridian Energy CEO William Prentice told the Houston Chronicle that the company’s Houston office already has options on two properties off State Highway 18 just north of Kermit and plans to file a permit application with the Texas Commission on Environmental Quality within four months.

    With the increase of 18-wheelers and other vehicles on the roads of the Permian Basin, Prentice said the refinery will take advantage of locally produced crude oil and sell the gasoline and diesel locally.

    “If the refinery were in operation right now, every single barrel would be sold within 100 miles,” Prentice said. “There’s been such an increase in demand.”

    Meridian is no stranger to building refineries that process domestically produced light sweet crude.

    The company is building its Davis Refinery near Theodore Roosevelt National Park in western North Dakota.

    Once complete, the 49,500 barrel per day refinery will process crude oil from the Bakken Shale to make gasoline and diesel for sale in distribution in the region.

    Meridian originally sought for the North Dakota refinery to process 55,000 barrels of crude oil per day but faced opposition from environmentalists.

    The company made its own decision to streamline both the productivity and efficiency of the refinery.

    This article first appeared on the Houston Chronicle – an Energy Voice content partner. For more from the Houston Chronicle click here.

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