Manup Industry Roundup - W1823: NEWSL -02

Good morning!

With a third of the year gone, it looks like U.S. oil production is on track to set a new annual production record in 2023. The previous record was set in 2019 at 12.3 million barrels per day, with the EIA's current estimate for this year at 12.4 million barrels per day.

While U.S. production is currently on track to set a new record, it is far from a certainty given the current oil market.

Below are the oil and gas stories and news that made headlines this week carefully curated by Manup.

Oil & Gas Updates

• IEA: Gas market report, Q2-2023 – Analysis
• Aker Solutions secures contract for the largest oil project ever undertaken in Congo
• Subsea 7 bags sizeable Gulf of Mexico deal
• U.S. oil production on track to hit a record high this year

Renewable Energy Watch

• Dogger bank B offshore substation jacket stands
• Dragados and Siemens Energy win $7.7bn offshore grid connection contract

IEA: Gas Market Report, Q2-2023 – Analysis

Pressure on the European and global gas markets has eased since the beginning of 2023 due to favorable weather conditions and timely policy actions. By the end of Q1 2023, European hub and Asian spot liquefied natural gas (LNG) prices had fallen below their summer 2021 levels, albeit remaining well above their historic averages.

The steep decline in natural gas demand reduced the need for storage withdrawals in Europe and the United States over 2022/23 winter. As a result, storage sites closed the heating season1 with inventory levels standing well above their five-year average. This is expected to reduce injection demand during the summer of 2023, and potentially ease market fundamentals.

The improved outlook for gas markets in 2023 is no guarantee against future volatility and should not be a distraction from measures to mitigate potential risks. Global gas supply is set to remain tight in 2023 and the global balance is subject to an unusually wide range of uncertainties.

These include adverse weather factors, such as a dry summer or a cold Q4, lower availability of LNG and the possibility of a further decline in Russian pipeline gas deliveries to the European Union.

This new issue of the quarterly Gas Market Report provides an overview of recent gas market developments during the 2022/23 heating season, with a forecast for 2023

Read full report here

Aker Solutions Secures Contract For The Largest Oil Project Ever Undertaken in Congo

Norwegian offshore engineering contractor Aker Solutions has secured a deal with TotalEnergies to provide its deepwater standard subsea production systems (SPS) for three additional infill wells tied back to the Moho Nord field in the Republic of the Congo.

Under the order, Aker Solutions will deliver its standard and configurable deepwater subsea production systems (SPS), including subsea x-mas’ trees (XMT), control systems, wellhead, and related tie-ins and distribution systems for the Moho Nord field.

The operations will commence directly, with final deliveries scheduled for the first quarter of 2025.

The Moho Nord is a deep offshore oil project situated 75km off the Congolese coast and at depths of 750 to 1,200 meters.

The field which represents more than half of Congo’s oil production is developed through 34 wells tied back to a tension leg platform, and to Likouf FPU

It came on stream in March 2017 and is the largest oil project ever undertaken in the Republic of the Congo. TotalEnergies is the operator of the field (53.5%), with partners Chevron (31.5%) and Société Nationale des Pétroles (SONAP) Congo (15%).

Subsea 7 Bags Sizeable Gulf of Mexico Deal

Oslo-listed offshore contractor Subsea 7 has sealed a deal worth up to $150m with Louisiana-based LLOG Exploration Offshore, for the Salamanca development project, which includes the Leon and Castile fields, in the US Gulf of Mexico.

The contract scope includes the installation of three infield subsea pipeline systems, as well as the design and fabrication of subsea structures.

Subsea development will consist of two pipeline systems for the Leon field, located in Keathley Canyon 686, and one pipeline system for the Castile field, located in Keathley Canyon 736.

The infield pipelines will produce and flow from wellsite PLETs to the Salamanca FPS in water depths ranging from 1,800 to 2,000 meters.

The scope also includes the installation of oil and gas export pipelines which depart from the Salamanca FPS and tie into existing pipeline transport systems approximately 48 kilometers away.

Project management and engineering will commence immediately at Subsea7’s office in Houston, Texas, with offshore activity expected to begin in 2024.

U.S. Oil Production On Track To Hit A Record High This Year

One of 2023 energy predictions was “Total U.S. oil production will again rise, and set a new annual production record.”

The previous annual record was set in 2019 at 12.3 million barrels per day (bpd), and by the end of 2022 monthly production was just about back to that level following the devasting Covid-19 impact on the industry in 2020.

A third of the year is now behind us, so let’s check in on this prediction.

The Energy Information Administration (EIA) presently shows monthly production for January and February only. For those two months, oil production was 12.5 million bpd, a significant increase from December 2022’s level of 12.1 million bpd.

For March and April, we have to estimate the production rate based on the EIA’s weekly Petroleum Status Report (PSR). According to the U.S. Petroleum Balance Sheet for the Week Ending 3/31/2023, the four-week average oil production for March was 12.2 million bpd. That’s a good estimate for March.

Through three weeks of April, the production rate had risen slightly to 12.25 million bpd. Final April numbers may vary a bit from this, but it’s close enough to give us an estimate for the first third of the year.

Averaging the monthly numbers for January through April gives an average year-to-date production of 12.37 million bpd. That will slightly eclipse the 2019 record if that rate holds for the rest of the year. It will be close, but as I said previously it’s a coin toss.

The most recent EIA projections are that U.S. crude oil production is expected to increase to new records in 2023 and 2024. The EIA forecasts that U.S. crude oil production will average 12.4 million bpd in 2023 and 12.8 million bpd in 2024. The main drivers of this growth are expected to be increased production in the Permian region and the Federal Offshore Gulf of Mexico.

In conclusion, the first third of 2023 has shown promising signs for U.S. oil production, with the potential to surpass the previous annual record set in 2019. While it remains a close call, the EIA’s projections for 2023 and 2024 agree that the industry is on track to achieve new records in the coming years.

This growth will undoubtedly help blunt the influence of OPEC and Russia on the U.S. economy and energy landscape.

Renewable Energy Watch

Dogger Bank B Offshore Substation Jacket Stands

Heerema Marine Contractors’ semi-submersible crane vessel (SSCV) Thialf has installed the offshore substation jacket for the Dogger Bank B offshore wind farm in the UK.

After returning from the Baltic Sea, the vessel Thialf was deployed on the Dogger Bank A & B offshore wind farms to install the jacket foundations for the project’s two offshore substations.

The jacket components were being transported to the project site onboard the cargo barges Saipem 44 and Wagenborg 11 towed by tow tugs AHT Fram Prince and AHT Carlo Martello.

Saipem is responsible for the transportation and installation of the Dogger Bank A and B substations, being delivered by Aibel, under a contract the company signed in 2020 with the Dogger Bank Wind Farm joint venture partners.

Aibel plans to deliver the Dogger Bank B substation topside in Q2 of 2024, and the Dogger Bank C offshore platform is expected to be delivered in Q2 2025.

The 3.6 GW Dogger Bank Wind Farm is being built in three 1.2 GW phases some 130 kilometres off the UK coast.

The project, owned by a joint venture between SSE Renewables (40%), Equinor (40%), and V?rgr?nn (20%), will be the world’s largest offshore wind farm once completed, providing enough electricity to power roughly six million UK homes a year.

Offshore construction started last year with the first monopile foundations installed in July 2022 and the first wind turbines are set to be installed soon.

Dragados and Siemens Energy win $7.7bn offshore grid connection contract

Spain’s Dragados Offshore in consortium with Germany’s Siemens Energy has been awarded a €7bn ($7.77bn) contract by Dutch-German transmission system operator TenneT to design, build and install three offshore windfarm energy converter platforms in the German North Sea.

The converter platforms BalWin3, LanWin2, and LanWin4 will collect the alternating current generated by several wind farms and convert it into high voltage direct current (HVDC) which will then be reconverted into alternating current at onshore stations approximately 200 km away in the German towns of Wilhelmshaven and Heide.

The construction of these converter platforms, each weighing around 34,000 tonnes, will generate more than 2,000 jobs per platform providing workload until 2031.

This project is part of Germany’s energy transition plan, which calls for the construction of a major offshore wind power generation network. Dragados Offshore was recently awarded six other HVDC projects of the same type. In late March, TenneT awarded 11 contracts worth a total of around $25.5bn to connect North Sea wind farms to the grid. These went to Hitachi and Petrofac consortium and another one comprising Sembcorp Marine, GE and McDermott.

Other stories we are following…

• Saipem authorized by ExxonMobil to proceed with oilfield project offshore Guyana
• Phillips 66 Profit More Than Triples Year on Year
• Shell beats expectations with $9.6 billion in first-quarter profit, boosted by fuel trading
• Callon Petroleum to acquire Permian Basin assets, exit Eagle Ford Shale
• Crescent Energy acquires Eagle Ford assets from Mesquite Energy for $600 million
• Aramco in talks with Sinopec, TotalEnergies on $10 billion natural gas investment
• With Russia’s role in the global energy system falling, a select few nations are set to benefit
• Turkey Makes Huge 1-Billion-Barrel Oil Discovery
• AI-driven Tech Promises to Cut Offshore Well Drilling Times, Costs, and Boost Safety
• U.S. crude sets worlds most important oil benchmark for first time
• Moray West wind farm powers ahead with $2.5bn investment

Cheers!