new base 1002 special 19 february 2017 energy news

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NewBase 19 February 2017 - Issue No. 1002 Senior Editor Eng. Khaled Al Awadi

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE

UAE: Abu Dhabi’s Adnoc NDC unit launches latest mega jack-up drilling rig

[email protected] Chris Nelson

National Drilling Company (NDC), an Adnoc Group company, has celebrated the inauguration of its new state-of-the-art jack-up rig, Al Hudairiyat, in the Hamriyah Free Zone in Sharjah. This adds to the range of new offshore rigs acquired by NDC and manufactured in the UAE by Lamprell.

"NDC’s acquisition of new state-of-the-art jack-up rigs is underpinning Adnoc’s objective to maximise the value of our resources, pioneering profitable and efficient technologies that will support our capabilities to meet the demands of an ever-changing energy market, and continue to have a positive impact on the Abu Dhabi economy for generations to come," said the NDC chief executive Abdalla Saeed Al Suwaidi. "The inauguration of Al Hudairiyat marks another milestone on our ambitious journey to longer term strategic growth and competitiveness."

The latest rig brings the total number built so far to eight, including the NDC 5 Al Shuwehat Super 116E, launched in 2014. One more rig is in the pipeline.

"We are responsive to short term needs and requirements across the Adnoc Group and, at the same time, stay abreast of the long term plans."




A jackup rig or a self-elevating unit is a type of mobile platform that consists of a buoyant hull fitted with a number of movable legs, capable of raising its hull over the surface of the sea.

The mega project of building nine world-class jack-up rigs has provided a major boost, not only for the partners involved, but for the UAE in general. All the rigs were built to international standards and demonstrate the country’s world standard engineering capability.

NDC’s partnership with Lamprell to manufacture offshore jack-up rigs has made the UAE the first – and only – country in the region capable of building such critical, high-tech oil and gas rigs.

"We are proud of the on-time delivery of this advanced jack-up rig to NDC, our largest client," said Christopher McDonald, the chief executive of Lamprell. "This helps to cement our deep relationship with our key client, NDC. As we complete this major project to the required high standards and quality, we are proud to construct this latest rig in the UAE for use in the UAE, further strengthening our existing solid ties."

ABOUT NDC

NDC is the largest drilling contractor in the Middle East, providing its clients with quality drilling, work-over, and well maintenance services, while maintaining the highest safety, integrity, and environment standards and also implementing the best international practices of quality, efficiency and enhancing productivity.

Established in 1972, NDC was the first venture of the ADNOC Group of Companies. Today, the company operates a large fleet of land rigs, offshore rigs, and island rigs, as well as a Multi-Purpose Service Barge and 6 Water-Well Rigs.

NDC's role in supporting the oil sector in the UAE is widely acknowledged and appreciated. The company achieved prominent status in the drilling industry in UAE and became the preferred choice in providing services such as drilling, electric logging, and wire line.

Since Rig ND-1 began work in 1973, NDC’s drilling fleet has drilled over 7,000 wells. The company works closely with its clients in order to both identify those clients’ long-term plans and to be one step ahead in its operational capability to meet those requirements.

NDC is internationally recognized for its safety standards. It also gives special emphasis to environment conservation at all land, offshore, and island locations.




Oman mulls taking early payments for oil deliveries By Reuters

The government of Oman is considering financing structures that let it get advance payments from oil traders, reducing the government's need to borrow more money from banks, sources familiar with the matter said.

Under the proposed structures, Oman's national oil company might get paid as much as two years before oil was delivered, in exchange for price discounts on the oil, the banking sources said, declining to be named because the matter is not public.

The government, which is running a large budget deficit because of low oil prices, is considering such a step because it wants to limit its new borrowing. One reason for this is that it feels any rapid increase in government debt could in the long term hurt Oman's credit ratings, the sources said.

Oman Oil Co, the finance ministry and the central bank did not respond to emails seeking comment. Advance payment deals have been made by other oil producers, including Russia's Rosneft.

The sources said the Omani government had made no decision on whether to use such a structure. Sources at several oil trading companies which deal with the region said they had not been approached by Omani officials to discuss the matter.

State-owned Oman Oil Co originally considered raising debt via a pre-export financing (PXF) loan for its upstream unit, Oman Oil Company Exploration & Production, banking sources told Reuters last October.

The loan would have had a structure similar to a $4 billion syndicated loan raised last June by Petroleum Development Oman, another Omani state-linked firm. In PXF loans, which are often used by commodity producers, the borrower obtains money based on confirmed orders for its production.




But as oil prices have crept up over the past several months, with Brent crude rising to around $55 a barrel from last year's average of $45, "the tone of the discussions has changed slightly, from ‘we need money’ to ‘let’s find other avenues’," one of the sources said.

The finances of all six wealthy oil exporting countries in the Gulf have been hurt by the plunge of oil prices since mid-2014. But Oman, which lacks the huge oil and financial reserves of its neighbours, has been hit particularly hard.

The government posted a budget deficit of 4.94 billion rials ($12.8 billion) in the first 11 months of 2016 compared with a deficit of 4.07 billion rials a year earlier, Finance Ministry data shows.

In November, Standard & Poor's cut its outlook for Oman's BBB- sovereign credit rating to negative from stable, saying Oman’s efforts to stabilise its finances might take longer than expected and the economy’s external debt could exceed its liquid external assets by more than anticipated.

For 2017, the government has projected a budget deficit of 3 billion rials, which it plans to finance partly with 400 million rials of domestic borrowing and 2.1 billion rials of international borrowing.

Oman has appointed banks for a new U.S. dollar-denominated bond issue, which is likely to take place in March, bankers said.

Last month, an Oman-based source and a Qatari official told Reuters that Oman was negotiating with other Gulf Arab states to secure a multi-billion dollar deposit in its central bank that would increase its foreign exchange reserves. Oman's finance ministry denied the report.




Morocco: Chariot Oil & Gas awarded Kenitra Offshore Exploration Permit Source: Chariot Oil & Gas

AIM-listed Chariot Oil & Gas, the Atlantic margins focused oil and gas exploration company, has announced that its wholly owned subsidiary, Chariot Oil & Gas Investments (Morocco), has been awarded a 75% interest and operatorship of the Kenitra Offshore Exploration Permit, Morocco, in partnership with the Office National des Hydrocarbures et des Mines ('ONHYM') which holds a 25% carried interest.

Portfolio management: new exploration permit

Kenitra was formerly part of the Rabat Deep permit

Kenitra, with an area of approx. 1,400km2 and in water depths ranging from 200m to 1,500m, was formerly part of the Rabat Deep Offshore Exploration Permits I-VI ('Rabat Deep'), in which the Company now has a 10% interest and a capped carry on the RD-1 well which is anticipated to be drilled in early 2018. This acreage was recently relinquished, as required under the Moroccan Hydrocarbon Code, on the entry into the current licence period of Rabat Deep. Kenitra is also adjacent to the Company's 75% interest in the Mohammedia Offshore Exploration Permits I-III ('Mohammedia').

De-risking: seismic programme

Through 3D seismic data acquired in 2014 on Mohammedia, Chariot identified the LKP group of prospects in the shallow-water clastics in the Lower Cretaceous play which have gross mean prospective resources ranging from 182mmbbls to 350mmbbls in four prospects as described in the most recent audit by Netherland Sewell and Associates Inc.

Separately, Chariot has also identified the deep-water turbidite equivalent of these shallow-water clastics in a new large lead, Kenitra-A, which is partially covered by 3D seismic data and has a gross mean prospective resource of 464mmbbls as estimated by the Company. These prospects and leads all have Class III AVO seismic attributes that are supportive of the presence of hydrocarbons and the RD-1 well has the potential to further de-risk these targets.

In order to fully describe the Kenitra-A lead and to define prospectivity throughout this play, Chariot is pleased to announce that, in conjunction with its partner, ONHYM, it has commenced its seismic acquisition campaign covering both Mohammedia and Kenitra.

This acquisition, conducted by Polarcus, will enable the Company to develop the portfolio of drillable prospects and potentially identify additional material prospectivity. This seismic campaign will fulfil the work commitment for the current licence phase on both licences.




India approves award of 31 contracts as part of the Discovered Small Field Bidding Round - Cabinet Committee on Economic Affairs (CCEA) / energy-pedia

India's Cabinet Committee on Economic Affairs has given its approval to award 31 contract areas (23 onshore and 8 offshore) of discovered small fields. The awards were made under the Discovered Small Field Bidding Round, which was launched in New Delhi om May 25th 2016.

The small fields have been discovered by National Oil Companies i.e. Oil & Natural Gas Corporation Ltd (ONGC) and Oil India Ltd (OIL). The award of the contracts is expected to provide faster development of fields and facilitate production of oil and gas thereby increasing energy security of the country.

According to the government, the small fields have not been developed due to various reasons such as isolated locations, small size of reserves, high development costs, technological constraints, fiscal regime etc.

It is expected that in-place locked hydrocarbons volume of 40 Million Metric Tonnes (MMT) oil and 22 Billion Cubic Meters (BCM) of gas will be monetised over a period of 15 years. The production from these contract areas will supplement the domestic production.

For early monetization of these fields, in September, 2015, Cabinet approved 69 marginal fields for offer under Discovered Small Fields Policy. Out of these, 67 Discovered Small Fields were put into 46 contract areas and put on offer through online international competitive bidding. A total of 134 e-bids were received for 34 contract areas. A total of 47 companies submitted bids, out of which 43 weree Indian companies and rest four were foreign companies.

These contract areas have been awarded under the new regime of Revenue Sharing Model.Below is a map of the Contract Areas on offer under the Discovered Small Field Policy. For a listing of the Contract Areas, see link below map.




US Shale Drilling Is on a Roll as OPEC Cuts Keep Oil Above $50 by Bailey Lipschultz

Shale wildcatters pushed ahead on the biggest surge in U.S. oil drilling since 2012 as the explorers take advantage of prices above $50 for more than two months.

Rigs targeting crude in the U.S. rose by 6 to 597 this week, the highest total since October 2015, according to Baker Hughes Inc. data reported Friday. Drillers have added 72 rigs since 2017 began, the best start in five years. The expansion is spreading in Texas and Oklahoma, with the Granite Wash play leading the increase this time around.

Producers are cashing in on a more stable oil market, with prices swinging between $50 and $55 a barrel as the Organization of Petroleum Exporting Countries and 11 other nations cut back production to help reduce global supplies. Saudi Arabia told OPEC it reduced its oil output by the most in eight years, according to the group’s monthly report released Monday.

“We’re seeing the rise that we anticipated to take place given the OPEC cuts,” Bloomberg Intelligence analyst Andrew Cosgrove said by phone. “These gains are spreading to other plays, and this is something we’re expecting will continue through the first half given the stability in the price of oil.”

Oil producers have brought 281 rigs back to work since drilling bottomed out in May, the biggest gain since producers added 361 rigs over the nine months through June 2012.

U.S. crude inventories rose to 518.1 million barrels last week, the highest in weekly data going back to 1982, according to the Energy Information Administration.




Drilling Boom

Drilling is booming in a few shale plays -- led by the Permian Basin in West Texas and New Mexico and the Scoop and Stack formations in Oklahoma -- as they offer good returns at a $50 oil price. Producers including Diamondback Energy Inc. and Occidental Petroleum Corp. remain focused on the Permian, while Marathon Oil Corp. intends to double down on its assets in Oklahoma.

Diamondback climbed to a record close Wednesday after beating earnings estimates, while Occidental looks to sell assets in South Texas so it can continue to expand in the Permian. Marathon plans to double its number of rigs in the Scoop and Stack to 10 this year.

The Permian remains the most attractive play for investors this year, according to a Bloomberg Intelligence survey. The Midland and Delaware basins within the Permian helped the oilfield reach a new high of $26 billion in merger and acquisition activity last year.

This week other parts of Texas and Oklahoma began to shine, with the Granite Wash Basin adding five rigs and the Barnett Basin adding two.

“The Granite Wash is located in the Mid-Continent region, which is seeing a return of private operators,” said Cosgrove. “Given the rise in oil prices, this has become one of the basins that we anticipate will grow.”




NewBase 19 February 2017 Khaled Al Awadi

NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE

Oil prices settle at WTI $53.40 & Brent $55.72, week declined Reuters + Newbase

Oil prices were little changed on Friday, with U.S. crude posting its first weekly decline in five weeks, as pressure from a stronger dollar, rising drilling and record stockpiles in the United States offset efforts by major producers to cut enough output to reduce a global glut.

U.S. energy companies added oil rigs for a fifth straight week, Baker Hughes said, extending a nine-month recovery as drillers take advantage of crude prices that have held mostly over $50 a barrel since OPEC agreed to cut supplies in late November.

The Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, agreed to cut output almost 1.8 million barrels per day (bpd) during the first half of 2017.

Estimates suggest compliance by OPEC is around 90 percent, and Reuters reported on Thursday that OPEC could extend the pact or even apply deeper cuts from July if global crude inventories fail to drop to a targeted level.

"It's encouraging that it may not be a six-month deal but one of the issues is if you look at OPEC and other members basically reducing their supply and U.S. shale producers profiting from it, that's going to produce some turmoil," said Mark Watkins, regional investment manager at U.S. Bank Private Client Group.

"At some point, it's going to be difficult for that agreement to stay in place when member countries can drill more and make more money." Brent crude futures were trading at $55.72 per barrel at 2:36 p.m. ET (1936 GMT), 7 cents above their last close.

U.S. West Texas Intermediate (WTI) crude futures settled up 4 cents at $53.40 per barrel.

Oil price special

coverage




Book squaring in the WTI contract for March delivery ahead of its expiration on Tuesday also pressured prices, traders said. The U.S. market will be closed on Monday for the Presidents Day holiday. Both benchmarks were on track for losses on the week. WTI ended the week down nearly 1 percent and Brent for a 1.7-percent fall.

Oil prices, however, were holding within an average of about $1.30 per barrel so far this year, one of the most range-bound periods since the price slump began in mid-2014.

U.S. gasoline futures were leading the losses in the energy complex, slumping nearly 2 percent. The gasoline crack spread <RBc1-CLc1 >, a key indicator of refining margins, fell more than 11 percent early in the session, hitting one-year lows.

Rising U.S. output has helped boost crude and gasoline inventories to record highs last week, amid faltering demand growth for the motor fuel.

The dollar rose following mildly hawkish view from Federal Reserve Chair Janet Yellen and surprising strong U.S. data on retail sales and consumer prices. A stronger U.S. dollar makes it more expensive for holders of other currencies to buy the greenback-denominated commodity.

U.S. drillers add oil rigs for fifth straight week: Baker Hughes Reuters + NewBase

U.S. energy companies added oil rigs for a fifth straight week, extending a nine-month recovery as drillers take advantage of crude prices that have held mostly over $50 a barrel since OPEC agreed to cut supplies in late November.

Drillers added six oil rigs in the week to Feb. 17, bringing the total count up to 597, the most rigs since October 2015, energy services firm Baker Hughes Inc said on Friday.

During the same week a year ago, there were 413 active oil rigs.

Since crude prices first topped $50 a barrel in May after recovering from 13-year lows last February, drillers have added a total of 281 oil rigs in 34 of the past 38 weeks, the biggest recovery in rigs since a global oil glut crushed the market over two years starting in mid 2014.




Baker Hughes oil rig count plunged from a record 1,609 in October 2014 to a six-year low of 316 in May as U.S. crude collapsed from over $107 a barrel in June 2014 to near $26 in February 2016.

U.S. crude futures traded around $53 a barrel on Friday, putting the contract on track to fall for the first week in five, as record high U.S. crude stocks and rising production undermine efforts by the Organization of the Petroleum Exporting Countries (OPEC) and other producers to drain a global oil glut.

U.S. shale oil production for March is expected to rise by nearly 79,000 barrels per day - the most in five months - to 4.87 million bpd, its highest rate since May last year, government data showed on Monday.

Analysts said they expect U.S. energy firms to boost spending on drilling and pump more oil and natural gas from shale fields in coming years now that energy prices are projected to keep climbing.

Futures for the balance of 2017 were trading around $54 a barrel, while calendar 2018 was fetching less than $54.50.

BOA Merrill said this week U.S. shale oil production could grow by 3.5 million bpd to 2022, delivering more than 80 percent of incremental non-OPEC barrels.

Shale producers, however, are facing their first production cost hike in five years as industry activity picks up and energy service providers hike fees to take a bigger share of the profits generated by higher oil prices. The break-even production costs will rise an average of $1.60 to $36.50 per barrel this year, according to data from Rystad Energy, which surveys producers.

Analysts at U.S. financial services firm Cowen & Co said in a note this week that its capital expenditure tracking showed 37 exploration and production (E&P) companies planned to increase spending by an average of 45 percent in 2017 over 2016.

That spending increase in 2017 followed an estimated 48 percent decline in 2016 and a 34 percent decline in 2015, Cowen said according to the 64 E&P companies it tracks.




NewBase Special Coverage

News Agencies News Release 19 Feb. 2017

EIA’s short-term global oil demand outlook considers the role of economic activity .. U.S. EIA, Short-Term Energy Outlook,

Oil plays a crucial role in the global economy—from the production of goods to the transportation of people and freight. For this reason, economic activity and oil consumption tend to move together, particularly in developing economies. This relationship makes gross domestic product (GDP) an important driver of oil consumption.

In developing its Short-Term Energy Outlook (STEO), EIA considers measures of economic growth that reflect whether growth is disproportionately occurring in countries that consume a lot of oil (with respect to their total economic output) or in countries that consume relatively little oil.

In addition to a GDP forecast for the United States, EIA uses an economic growth forecast weighted by levels of oil consumption for the Organization for Economic Cooperation and Development (OECD) region, for the non-OECD region, and for the world. An EIA working paper provides additional explanation of the methodology for the STEO’s oil consumption-weighted GDP.

A potential shortcoming of using an aggregate oil consumption-weighted GDP growth rate as an indicator of world oil consumption growth is that it does not account for differences across countries in the sensitivity of oil consumption to changes in economic activity. The elasticity of oil use to GDP, a measure of the responsiveness of oil demand to changes in economic activity, tends to be larger for emerging economies (i.e., non-OECD countries) than for advanced economies (i.e., OECD countries).




Oil Doesn't Care About Your So-Called Data By Liam Denning

The oil market just doesn't care about these "numbers," OK?

This week offered a prime example. On Wednesday, the Energy Information Administration released its usual roundup of oil inventory numbers. These came in somewhat wide of expectations: 9.5 million barrels of crude oil flowed into U.S. storage tanks last week, versus a median expectation of 3.5 million.

The Bloomberg Terminal tracks the surprises in the weekly U.S. oil data, expressing the difference in the actual number versus the median expectation as a multiple of the standard deviation in the survey estimates. On that basis, this week's surprise was 9 times the standard deviation of estimates -- a big number, but only the fifth biggest surprise in the past year, either positive or negative. The biggest was 14.4 times -- and that was last week's figure.

What's odd is that these huge, and unexpected, inflows of oil to storage seem to have been ignored. More oil in tanks means excess supply, which should depress prices. But when that big surprise was sprung on the market last week, for example, oil actually traded up by 1.7 percent over the following six hours, according to Bloomberg data. Similarly, oil traded up initially after Wednesday's report hit the web this week.

Besides those movements on the day, the cumulative effect of all this extra oil should be having an impact.

Still Filling

Almost 190 million barrels have flowed into storage tanks in the past three years, with almost 40 million so far this year

Note: Cumulative change in U.S. commercial crude oil stocks.




Looking back to 1980, just over 10 million barrels flow into storage tanks across a typical January and February (see this). As of last Friday -- with about two more weeks of February to go -- we were already at 39.1 million barrels this year.

You would hardly know that by looking at the price action, though:

Surprisingly Indifferent

Oil inflows have almost all been higher than expected, with the last two readings way above estimates -- yet prices are curiously unmoved

Note: Surprise ratio calculated as actual change in oil inventory less median estimate, divided by standard deviation of survey estimates.

As my colleagues at Bloomberg News noted, speculative positioning in the main crude futures contracts is at record long levels, with OPEC members' pledge to cut supply along with several other countries being the catalyst for bulls to pile in.

So far this year, they have been able to offset the hard reality of those U.S. oil inventory numbers with some other data points, most notably early indications of OPEC countries mostly following through on their pledges.

On that front, another number reported Wednesday offers some oblique support: U.S. exports of crude oil broke above 1 million barrels a day for the first time since Federal controls were eased. If that oil is going to plug supply gaps overseas, then it's possible U.S. inventory data are a lagging indicator of OPEC's cuts working.

Freight Expectations

Surging U.S. exports of crude oil may indicate supply shortfalls elsewhere




As bull arguments go, though, this is a leaky one. Besides those huge, unexpected U.S. inventory increases, it is early days on those OPEC cuts. And, as my colleague Julian Lee points out, initial high compliance with targets may not last.

Indeed, one sign of that comes from OPEC itself. Thursday brought another report, this time from Reuters, quoting unnamed sources inside OPEC saying the organization may extend or even deepen supply cuts after the initial six-month agreement ends in June.

There are two things to consider about this report. First, in saying that OPEC might continue its cuts if they haven't worked by the summer, it tells the market nothing it didn't already know.

Second, if OPEC's strategy is actually working properly, then it's worth dwelling on why its members feel the need to talk up another round of it already.




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Khaled Malallah Al Awadi, Energy Consultant MS & BS Mechanical Engineering (HON), USA Emarat member since 1990 ASME member since 1995 Hawk Energy member 2010

Mobile: +97150-4822502 [email protected] [email protected]

Khaled Al Awadi is a UAE National with a total of 25 years of experience in the Oil & Gas sector. Currently working as Technical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for the GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were spent as the Gas Operations Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years, he has developed great experiences in the designing & constructing of gas pipelines, gas metering &

regulating stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation, operation & maintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE and Energy program broadcasted internationally, via GCC leading satellite Channels.

NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE

NewBase February 2017 K. Al Awadi




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