North Sea oil production slumped by nearly 11% in the third quarter of 2014. New figures showing the sharp drop in output coincide with growing fears about low oil prices and their impact on the future of the offshore industry. One expert has warned the offshore sector is “close to collapse” because of the current low Brent oil prices, which yesterday rose slightly to about $62 per barrel.
Schlumberger has been awarded a drilling contract on the Mariner field by Statoil and its co-venturers. The work will be delivered from the company’s Aberdeen base and it will be responsible for al number of services. A total of 22 drilling and well services are included in the scope, including a logistics support responsibility.
The big economic development this year was one which no economic forecaster had predicted – a dramatic drop in the crude oil price. Brent crude has fallen around $50/barrel from the average price in 2011-13. The most significant impact so far has been on Russia and the value of the rouble. The other very large oil producers in the world – Saudi Arabia and the United States – should be less heavily affected. The US is a net oil importer so consumers will gain more than producers lose. Saudi Arabia has very strong financial reserves to weather the storm.
Yesterday, the European Court of Justice issued its judgement in the case of Karsten Kaltoft, a 5ft 7in child minder from Denmark who, in his 15 years in that role, has never weighed less than 25 stone. Mr Kaltoft's employment was terminated, and he felt that it was on the grounds of his obesity. The European Court of Justice was asked to rule on two key questions: First, is it unlawful to discriminate against someone on the grounds that they are obese? Second, can obesity amount to a disability, which it is unlawful to discriminate against?
Oil and gas expert Alex Kemp said he did not agree with comments made which claimed the North Sea was “close to collapse”. Robin Allan, chairman of the independent explorers association Brindex, said it is “almost impossible to make money” with the oil price below $60 a barrel. However Mr Kemp said the current investment in new fields had been predicted to lessen when oil prices were at $90 a barrel.
This footage shows how onshore and offshore personnel will be able to train and exercise for oil spills. The North Cape Maritime Training Centre in Honningsvåg in Norway now contains the world’s only oil spill simulator where onshore and offshore personnel isolated or together, can train in the tools and stages of oil spill combating operations. It has been created by Aptomar together with Transas in close cooperation with the North Cape Maritime Training Centre in Honningsvag.
Oil and gas firms may have to charter boats or hire bigger helicopters to accommodate overweight workers after the European Court of Justice (ECJ) decided obese people can be classed as disabled. Businesses are being warned to expect widespread and expensive consequences after law chiefs in Luxembourg ruled that being overweight qualifies as a disability. The judgment follows the sacking of Karsten Kaltoft, a 25-stone childminder from Denmark.
US drivers are paying less than $2.50 a gallon at the pump for the first time in more than five years. Retail gasoline averaged $2.477 a gallon yesterday, data from the Heathrow, Florida-based motoring group AAA showed. That’s down from this year’s peak of $3.696 in April and the first time it has dipped below $2.50 since October 2009.
Wintershall has estimated a further 40million barrels of oil could be recovered from the Maria field in Norway. The company said the planned recoverable resources will reach about 180 million barrels of oil in total. Previous estimates had been around 140 million barrels. It said the new assumptions are the result of extensive laboratory tests and studies as well as model calculations.
Canadian operator Enbridge shut down one of its pipelines after a leak at the Regina Terminal in Saskatchewan. A release from the line within the on-site pumping station had been reported. A spokesman said there was no impact to the public, wildlife or waterways following the incident.
The Russian economy must adapt to the reality of oil prices that could fall as low as $40 a barrel, President Vladimir Putin said as he faces the worst financial crisis since coming to power in 2000. “I don’t know how quickly it will happen if prices stay at today’s level, or if they will drop lower than $60, $40,” Putin said today at his annual press conference in Moscow. “The economy will structure itself accordingly, however much is necessary.” The US and Saudi Arabia, which with Russia are the world’s three biggest crude producers, may be colluding to push down the price of oil, Putin said.
Apache has cut its contractor rates by 10% according to reports. The move comes just a day after WGPSN revealed it would be making 10% cuts to its contractor rates, as well as freezing salaries from January. It follows a previous 10% cut for UK-based onshore contract workers in May.
Apache has appointed a new board member. Peter Ragauss joins the company after eight years as senior vice president and chief financial officer of Baker Hughes.
Electricity generated from renewables in Scotland has matched that produced from fossil fuels for the first time. Both sources accounted for 32% of total electricity generated in 2013, according to figures released by the UK Department of Energy and Climate Change. Scotland continues to be a net exporter of electricity, exporting 28% of generation compared to 26% in 2012.
North Sea “close to collapse” says the man from Brindex. I am of course referring to remarks made to the BBC by its chairman Robin Allan, who then goes on to say that the UK’s offshore industry has been in such territory before. The 1986 oil price crash was a shocking event and did terrible damage at the time. However, it also marked the start of a turning point as the North Sea gradually started to mature. Various initiatives in the 1990s designed to tackle key issues like rocketing costs helped and they were timely given the next slump that started with a gradual oil price slide in 1997, bottoming out in late 1998 at less than $10 a barrel for a few days.
Marathon Oil has estimated its investment and exploration budget will be 20% lower for 2015. The company said the capital program of around $4.5billion for next year will reflect a significant weighting to the company’s high return investment opportunities in the US as well as lower exploration spending. Marathon said the “continuing dynamic change” in crude oil markets, together with the expected impact to oilfield service cost, mean it will need additional time before the budget is finalised.
The UK’s oil industry is “close to collapse” but the falling oil price could have a net benefit to the UK economy, according to experts. Robin Allan, chairman of the independent explorers’ association Brindex, said it is “almost impossible to make money” with the oil price below 60 US dollars (£38) a barrel and there will be no new investments. But accountants PricewaterhouseCoopers (PwC) said the falling oil price “should be a net benefit to our economy as a whole, even if there is some losers in the UK oil and gas sector and in particular places like Aberdeen”.
Subsea 7 will be making changes to its organisational structure by switching to two global units. The company said the move will be made to strengthen its capabilities and competiveness. A Northern Hemisphere and Life of Field Business unit will comprise the UK and Canada region, Norway and the Gulf of Mexico. The life of field and I-Tech division will be managed globally.
Oil workers could be offered incentives to ditch the commute and move closer to the city in a bid to meet green targets.
A pledge by US policymakers that they will be patient in their approach to raising interest rates helped ease global market jitters today. The latest meeting of the US Federal Reserve highlighted optimism over the country’s economic performance but appeared to rule out a rates rise in the first quarter of the year. The message lifted the Dow Jones Industrial Average on Wall Street by more than 1.5% and helped the FTSE 100 Index improve 35.3 points to 6371.9 after a strong session for Asian markets overnight.
Crude oil production from US wells is poised to approach a 42-year record next year as drillers ignore the recent decline in price pointing them in the opposite direction. US energy producers plan to pump more crude in 2015 as declining equipment costs and enhanced drilling techniques more than offset the collapse in oil markets, said Troy Eckard, whose Eckard Global LLC owns stakes in more than 260 North Dakota shale wells. Oil companies, while trimming 2015 budgets to cope with the lowest crude prices in five years, are also shifting their focus to their most-prolific, lowest-cost fields, which means extracting more oil with fewer drilling rigs, said Goldman Sachs Group Inc.
The former head of US security company Blackwater USA, Erik Prince, was hired by South Sudan to help repair damaged oil facilities and boost output cut by a year of civil war. Prince’s Frontier Services Group Ltd. (500), a Hong Kong-listed logistics and transportation company, is being paid 18.7 million euros ($23.3 million) by South Sudan’s Ministry of Petroleum to transport supplies to and perform maintenance on the production facilities at the oil fields, Chief Executive Officer Gregg Smith said. About 30 employees including pilots, engineers and logistics technicians have been using helicopters and airplanes to reach South Sudan’s oil fields since September, Smith said.
A north-east firm has been awarded a two-year contract extension for the provision of specialist contractors with Shell UK. Aberdeen-based firm CSL has been awarded the extension of an existing onshore and offshore frame agreement with the oil giant across its Upstream International Europe region for the provision of client representation. The contract covers provision of experienced senior client, diving, marine and engineering representatives to support subsea teams.
International Tubular Services (ITS) has become the second Scottish business to self-report having benefited from a potentially corrupt payment, and reach a civil settlement which sees them paying over a substantial sum to the Civil Recovery Unit. My advice to other Scottish firms with bribery and corruption “skeletons” would be to come clean now to reduce the risk of being subject to a criminal investigation and more significant penalties after a self-reporting deadline expires next June. Aberdeen-based ITS admitted it had benefitted from a profit of £172,200 as a result of a corrupt payment made by a former Kazakhstan-based employee to secure additional contractual work in the former Soviet republic.
The decision by Wood Group PSN to chop the rates paid to its limited company offshore and onshore contract workers and freeze the pay of most onshore employees here in the UK comes as no surprise. Wood Group PSN is right to take a stand, especially on the issue of independent contractors, given the rates that they have been able to command over the past decade or so. OK, this is the second reduction that the group has sought to impose on the so-called IR35 brigade, bringing the total cut announced this year to approaching 20% for some.