Manup Industry Roundup - W1023: NEWSL -01
Good morning!
In an era where bad news on the climate comes thick and fast, the latest International Energy Agency report on global CO2 emissions at least came with a few pinches of positivity.
Total global CO2 emissions from energy and industrial processes grew by 0.9% to 36.8 gigatons?in 2022. That is a smaller increase than was originally feared, but it's a miniscule win: as it still takes us up to an all-time high
Below are the oil and gas stories and news that made headlines this week carefully curated by?Manup.
Summary of the news
Global CO2 Emissions Rose Less Than Initially Feared In 2022
Global energy-related carbon dioxide emissions rose by under 1% in 2022 – less than initially feared – as the growth of solar, wind, EVs, heat pumps and energy efficiency helped limit the impacts of increased use of coal and oil amid the global energy crisis, according to IEA new CO2 Emissions in 2022 report
According the report, while the increase takes total emission to 36.8 billion tons, the highest level ever, the increase is smaller than what had been feared following a year in which the global energy crisis sparked by Russia's invasion of Ukraine drove many countries to fire up long-shunned coal and oil power plants.
The soaring price of fossil fuels and concerns about the security of global energy supplies provoked by the energy crisis have also proven a boon for renewable energy sources, the growth of which continued in 2022 and helped to alleviate the rise in carbon emissions
(Reasons behind better results in 2022:?Growth of solar, wind, electric vehicles, heat pumps and energy efficiency helped limit the impacts of increased use of coal and oil amid the global energy crisis)
Global energy-related CO2 emissions grew in 2022 by 0.9%, or 321 million tonnes, according to the report. The additional 321 million tonnes of energy-related emissions took the total to a new high of more than 36.8 billion tonnes. Energy-related emissions accounted for more than three-quarters of the production of greenhouse gasses.
The 0.9% increase was less than the global economic growth rate of 3.2% in 2022, returning to a decade-long trend broken last year by the 6% jump due to the post-Covid rebound in global economic activity.
CO2 emissions from coal grew by 1.6% as the global energy crisis continued to spur a wave of gas-to-coal switching in Asia, and to a lesser degree in Europe
CO2 emissions from oil grew even more than those from coal, increasing by 2.5% but still remaining below pre-pandemic levels. Around half of the year-on-year increase in oil’s emissions came from aviation as air travel continued to rebound from pandemic lows.
China’s emissions were broadly flat in 2022 as strict Covid-19 measures and declining construction activity led to weaker economic growth and reductions in industrial and transport emissions.
The European Union’s emissions fell by 2.5%, thanks to record deployment of renewables helping ensure the use of coal was not as high as some observers had anticipated.
A mild start to the European winter and energy savings measures in response to Russia’s invasion of Ukraine also contributed.
In the United States, emissions grew by 0.8% as buildings increased their energy consumption to cope with extreme temperatures.
Excluding China, emissions from Asia’s emerging and developing economies increased by 4.2%, reflecting their rapid economic and energy demand growth
Azule Energy Awards $7.8B In Contracts For Agogo Development Project
Angola-based Azule Energy has awarded $7.8 billion worth of contracts for the development of the Agogo Integrated West Hub Development project in Block 15/06, offshore Angola.
The contracts were awarded to;
Yinson for the provision of a Floating Production, Storage and Offloading (FPSO) unit as well as field maintenance services
Baker Hughes for the supply of a Subsea Production System
Aker Solutions for the supply of an Umbilical System
Saipem for the provision of Rigid Flowlines and Subsea Structure Transportation and Installation.
Subsea 7 will supply Risers, Flowlines and Subsea structures transportation and installation while TechnipFMC has been selected to supply of Risers and Flowlines.
Adriano Mongini, Azule Energy CEO, that, “The signing of these contracts marks the start of a new wave of major investment in the deep water of Angola and it will deliver a significant value of activities for the country’s oil and gas industry.”
Representing one of the biggest upstream projects being developed in the country, the development will include the drilling of 36 new wells; the installation of 100km of rigid flowlines, 100km of flexible flowlines and 100km of umbilicals; as well as the installation of an FPSO with a production capacity of 120,000 barrels of oil per day, gas injection capacity of 230 million standard cubic feet per day and water injection capacity of 120,000 barrels per day.
The hydrocarbons set to be processed at the Agogo Integrated West Hub will be sourced from the Agogo and Ndungu fields, leveraging the new Agogo FPSO unit and an existing FPSO at the Ngoma project. The project is expected to be operational from mid-2026.
Shell Makes Another Deepwater Oil Discovery Offshore Namibia
Shell and state-owned QatarEnergy has made a new oil discovery at a deepwater exploration well around 270km offshore Namibia.
This is the country's third oil discovery in just over a year after the Graff-1 well discovery made by Shell and the Venus discovery made by TotalEnergies.
This light oil discovery was made in the Jonker-1X deepwater exploration well in the PEL-39 exploration license, which is located 270km offshore Namibia.
Using the Deepsea Bollsta semi-submersible drilling rig, the Jonker-1X well was drilled to a total depth of 6,168m in a water depth of 2,210m.
The drilling operations started in December 2022 and were safely concluded this March, according to QatarEnergy
The PEL-39 exploration license is held by a consortium comprised of Shell (operator with a 45% interest), QatarEnergy (45%), and the National Petroleum Corporation of Namibia (NAMCOR) (10%)
Manup?client has several drilling gigs lined up in Africa and the Gulf of Mexico. To get access to project like this, join our exclusive community of professionals?here
Offshore Rig Scrapping Lowest In Years As Recovery Intensifies
From 2014 to 2018, during the deepest period of the rig market downturn, there was a yearly average of 43 rigs – jackups, semisubmersibles (semis) and drillships – permanently removed from the active fleet, mostly through scrapping or conversion for non-drilling purposes.
Demand during the same period was 8% lower (549 rigs versus 505) than the previous five-year average and it spurred rig owners to rethink the size and quality of their fleets.
Then when commodity prices and rig demand began to show signs of improvement during 2019, a 21% drop in attrition was recorded compared to the 2014-2018 period.
This was attributed to drilling contractors seeing the early signs of potentially putting assets, some of which had previously been circling the drain, back to work should demand and dayrates rise sufficiently.
Of course, the 2019 market recovery was short lived when in 2020 the coronavirus pandemic obliterated rig demand and with it came a 35% jump in rig attrition against the previous year.
Between 2020 and 2021, the average age of rigs being retired fell to an all-time low, and during this time we saw drillships as young as eight years old being removed from the active fleet.
The industry is now once again amid a rig market upcycle that really took hold in the latter half of 2021, with higher demand and utilization now being recorded in all three offshore drilling rig segments.
This is no doubt one of the main reasons behind the substantially lower level of attrition last year. No drillships were removed from the active fleet in 2022, while just nine jackups and six semis were retired, the majority of which were over 30 years old.
This indicates that rig owners are hanging on to vintage or cold-stacked tonnage, as is generally the case in a rising rig demand and day rate market. However, the available supply of active (non-cold stacked) rigs, especially jackups and drillships, is shrinking fast and there has already been word that several rigs, which have been idle for multiple years, are being bid into tenders where rig owners do not have any active rigs to bid.
Reactivations favored over newbuilds so far
As the supply/demand balance tightens, the reactivation of rigs has been on the rise with approximately 25 jackups, three semis and nine drillships brought back to life since 2021. However, the level of newbuilds being delivered from shipyards hasn’t increased to the same level witnessed during the short-lived 2019 recovery period.
During 2019, 25 new jackups, four semis and two drillships were delivered from shipyards in the Far East or Singapore but 2022 brought with it just 10 deliveries in total, which is even less than the number delivered during 2020 (11 rigs).
Most of the remaining stranded newbuild rigs available, of which there are 22 jackups, 15 drillships and eight semis, are owned by the shipyards and drilling contractors continue to be very cautious when it comes to purchasing such a rig.
However, 2023 could be the year the tide turns on this, especially if the level of demand continues to improve.
In the last quarter of 2022, Transocean announced that it had signed a purchase agreement as part of a joint venture for the 7th generation ex-West Aquila drillship for US$200 million from the Daewoo shipyard. Meanwhile, Saipem confirmed it had exercised its option to buy the 7th generation Santorini drillship (originally ordered by Ocean Rig), which it had been bare-boat chartering from Samsung Heavy Industries since 2021. it’s understood that various drilling contractors are eyeing the remaining drillships left in yards.
New rig orders unlikely in near term
The level of new rig construction contracts being awarded has all but stopped, with just two new rigs ordered since 2015. Therefore, it is unlikely that the industry will see a wave of new construction anytime soon and instead drilling contractors will look to their own idle fleets or already under-construction or stranded units to meet their client’s needs if current supply runs out.
Other stories we are following…