Manup Industry Roundup - W2023: NEWSL -02
Good morning!
According to the Financial Times oil drilling equipment is being auctioned off due to lack of demand. Baker Hughes data, also shows that U.S. oil and natural gas rig count has declined 6% in the year-to-date to 731 last week. This decline especially the dropoff in natural gas drilling has surprised analysts.
Below are the oil and gas stories and news that made headlines this week carefully curated by Manup.
Oil & Gas Updates
Renewable Energy Watch
Shale Drillers Are Auctioning Off Rigs at Bargain Basement Prices
The much-touted second shale boom has lately been getting a reality check as equipment demand declines sharply, a worrying sign that drilling in U.S. shale energy regions is leveling off.
The Financial Times has reported that next week, Texas auctioneer Kruse Asset Management will auction off two unused, top-of-the-line drilling rigs valued at $40 million and $30 million when built in 2019 at starting bids of just $12.9M and $2.3M, respectively.
According to Baker Hughes data, U.S. oil and natural gas rig count has declined 6% in the year-to-date to 731 last week, reversing a steady climb since the depths of the pandemic.
The current tally is a far cry from the nearly 2,000 rigs that were running around mid-2014 at the peak of the shale boom. Last week, rig count for gas-directed rigs dropped by 16, or 10% --the steepest weekly fall since 2016.
Expectations for another shale boom are getting tamped down due to rising costs as well as limited supplies of labor and equipment that continue to hamstring efforts by U.S. shale producers to quickly ramp up production.
Still, a number of experts have predicted that U.S. production will continue growing. A week ago, the Energy Information Administration (EIA) forecast U.S. crude production will rise by about 5% in 2023, while fuel demand will increase 1%.
U.S. crude oil exports for the month of April surpassed forecasts, hitting a record 4.5 million barrels per day in March thanks to a strong Chinese market due to rising fuel demand. U.S. crude exports grew 22% last year from 2021 after Russia's invasion of Ukraine led the U.S., the EU, and Canada to ban imports of Russian oil and dramatically altered global flows.
China is the world’s second-largest oil consumer and has recorded an economic resurgence ever since it rolled back its strict zero-covid policies. April exports to China surged to ~850,000 barrels per day, the highest level since May 2020.
Report: US Gulf Of Mexico Oil Production Leads On GHG Intensity
The U.S. National Ocean Industries Association (NOIA) has released a comprehensive report on global oil production emissions completed by ICF, entitled the “GHG Emission Intensity of Crude Oil and Condensate Production.”
According to NOIA, the report finds that the greenhouse gas intensity of US oil production, particularly in the U.S. Gulf of Mexico, is significantly lower than most other regions around the world.
Some conclusions from the study:
??Total US oil production has a carbon intensity 23% lower than the international average outside of the US and Canada.
??The US Gulf of Mexico has a carbon intensity 46% lower than the global average outside of the US and Canada, outperforming other nations like Russia, China, Brazil, Iran, Iraq, and Nigeria.
??Using the largest crude category from the Gulf of Mexico (API Gravity 37.5), instead of similar crudes from outside the US and Canada, could result in a 50% reduction in the average international carbon intensity.
The report includes a sensitivity analysis of global methane emissions, indicating that US production, especially in the Gulf of Mexico, performs much better relative to the global average in terms of emissions intensity even when measured using other methane estimation methodologies.
Read full report here
Saipem Wins Two Offshore Contracts For $850 million
Italian oilfield services provider Saipem has secured two new offshore contracts with an overall value of approximately $850 million.
In the first contract, Saipem was awarded an EPCI contract by Turkish Petroleum Offshore Technology Center (OTC) for the second phase of the Sakarya FEED and EPCI projects.
This entails the EPCI of a 16” pipeline, 175km long, at a 2,200-meter water depth, in the Turkish Black Sea waters. Offshore operations will begin in the summer of 2024 and will be conducted by Saipem’s vessel Castorone.
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Recall that Saipem had recently completed the first phase of the Sakarya Gas Field Development project, awarded by Turkish Petroleum OTC in 2021.
The other contract was awarded by EnQuest Heather for decommissioning the existing Thistle A Platform in the UK sector of the North Sea, around 510km northeast of Aberdeen, in a water depth of 162m.
Saipem’s activities include the engineering, preparation, removal, and disposal of the jacket and topsides, with possible extension to further subsea facilities. The activities will be carried out by the Saipem 7000 semi-submersible heavy-lifting vessel.
It's also worth noting that last month, Saipem secured three new offshore EPCI contracts and two front-end engineering design (FEED) competition deals, totaling approximately $650 million.
Most recently, the Italian oilfield services provider was awarded a two-year extension by Eni for one of its drillships, which is currently working in the U.S. Gulf of Mexico.
UK Awards First Offshore Carbon Storage Licenses
The North Sea Transition Authority (NSTA) has offered 12 companies awards for 20 carbon storage licenses in the UK’s first-ever CO2 storage licensing round.
The NSTA launched the UK’s first-ever carbon storage licensing round in June 2022, with applications closing in September.
The 20 licenses in total are around 12,000 square kilometers in size - that is a little bigger than Yorkshire, the UK's largest county - and are located near Aberdeen, Teesside, Liverpool, and Lincolnshire.
The NSTA claims that first CO2 injection could follow within six years and once the new storage sites are in operation, they could store up to 30 million tonnes of CO2 per year by 2030, approximately 10% of total UK annual emissions, which were 341.5 million tonnes in 2021.
In the budget this March, UK Chancellor Jeremy Hunt announced that the government would allocate up to ￡20 billion ($24.83 billion) to support CCUS, starting with projects on the East Coast, Merseyside and North Wales.
Up to 100 CO2 stores could be needed for the UK to meet its net zero aims by 2050.
According to the NSTA, the licenses feature a range of geological store types and were chosen based on geology, proximity to existing infrastructure (as at Bacton off the coast of Norfolk) and links to industrial clusters as potential users.
Also considered was the need to share offshore space with other seabed users such as offshore wind developers and petroleum operations.
Once a CCS license is issued, licensees must also obtain a seabed lease from The Crown Estate or Crown Estate Scotland before taking their project forward. And further consent and approvals will be needed ahead of any appraisal activity on carbon storage licenses.
Among the awarded licenses, EnQuest has successfully secured the offer of carbon storage licenses as part of the first round of UK carbon sequestration licenses issued by the NSTA.
Renewable Energy Watch
Allseas, Heerema To Install 14 Offshore Converter Stations For TenneT
TenneT has signed multi-year framework agreements with Allseas and Heerema Marine Contractors for transport and installation of at least 14 2-GW offshore platforms.
The fourteen 2-GW converter stations will be installed in the Dutch and German parts of the North Sea. The framework agreement covers at least 28 slots until 2031—14 slots for transport and installation of a jacket and 14 slots for transport and installation of a topside.
Heerema will deploy the Sleipnir semisubmersible crane vessel as well as an owned floatover barge, and Allseas will use its single-lift installation vessel Pioneering Spirit for the installation of the jackets and topsides. Both vessels have been used several times in recent years to install jackets and topsides for TenneT in the Dutch and German North Sea.
Heerema has been awarded about 60% of the available slots, while Allseas has been awarded about 40% of the slots. Additional work can be added to the awarded contracts. The awarded slots are not linked to specific 2-GW projects.
The HVDC suppliers building the jackets and topsides for TenneT (Hitachi Energy/Petrofac, GE/Sembcorp, GE/McDermott, and Siemens/Dragados) can choose from the suppliers whereby Heerema and Allseas can install both jackets and topsides.
Boskalis will act as a subcontractor to Allseas, building one or two new transport vessels specifically for the 2-GW program that will meet the most stringent future legislation standards on sustainability and emissions.
Other stories we are following…
Cheers!