Hertel wins contract for Statoil platform

Hertel Offshore have signed a €70 million contract with Hyundai Heavy Industries for the engineering, design and construction (EPC) of the new accommodation for Statoil’s Aasta Hansteen platform.

The Norwegian contract follows on from Hertel's award for Statoil’s Valemon Living Quarter (LQ) project in 2011 and the Shell Norge Draugen Additional Living Quarter project in 2012 – both currently under construction in its Rotterdam facility.

The project is on a lump sum EPC basis and will draw on the in-house capabilities of Hertel Offshore. Work has already started and delivery is scheduled for April 2015. Design will be based on the stringent Norsok standards and Statoil requirements. Several Hertel innovations will be used including prefab cabins to facilitate an efficient construction process.

Peter van Aken, Managing Director said: "We are very proud to work alongside Hyundai Heavy Industries and it is a privilege to build such a state of the art LQ. This project will also further strengthen Hertel’s presence on the Norwegian Continental Shelf."

The Aasta Hansteen Living Quarter will be made of steel and will accommodate 108 persons. The five storey building weighs approx. 2,600 tonnes and will be fully equipped with everything required for offshore operations, such as galley, recreational area, medical room, control room and heli deck.

The Aasta Hansteen gas field is located on Blocks 6706/12, 6707/10, roughly 186 miles (300 kilometers) from land in 4,265 feet (1,300 meters) of water in the Norwegian sector of the North Sea. Statoil serves as the operator, holding a 75% interest; OMV holds 15%; and ConocoPhillips holds the remaining 10% interest.


Valero deal for Foster Wheeler at UK refinery

Zug, Switzerland – Foster Wheeler has signed an 'evergreen agreement' with Valero Energy Ltd for the provision of home office engineering and project support services to Valero’s Pembroke Refinery and other facilities in the UK.

Foster Wheeler will provide home office front-end engineering design and detailed engineering design services to support new development and modification projects at the Pembroke Refinery and other facilities.

Foster Wheeler will also provide other support services including project control and cost estimating. Valero acquired the Pembroke refinery in 2011.

“We know this refinery well, having executed projects for the refinery since the 1980s,” said Umberto della Sala, President and chief operating officer of Foster Wheeler AG, adding that the company has executed projects for Valero elsewhere, particularly in the US.


Challenging opportunities

Edited speech by Bob Dudley, BP group chief executive, at CERA Week, 6 March 2013:

I am often reminded of the contrast between the comfortable places where we discuss and consume energy and the sometimes inhospitable places where we produce it.

In order that people can live in comfort, the natural resource industries need to go to remote, challenging and often hostile environments to access the necessary sources of energy for society.

There is not a nation on earth where people aren’t relying on us every day to deliver the energy they need to do their jobs, heat their homes, get their children to school, and countless other needs. That’s how people emerge from poverty, economies grow and the standard of living rises.

In business we often talk of challenges and opportunities. What we face today in energy is a series of challenging opportunities — from the shales of America to the snows of Siberia.

The opportunities are plentiful, but they are also complex and difficult. And from BP’s perspective, and many other companies in our industry, the message is that we have learned from recent events and we plan to address those opportunities safely, responsibly and reliably.

So to start briefly with the global picture, there’s quite a contrast between demand and supply. For many years it’s been clear demand is rising — and that trend has stayed consistent — but there has been a lot of change in where the supply is coming from.

We estimate that global energy demand is likely to grow by more than a third between now and 2030. According to the projections we make in our Energy Outlook 2030 publication, emerging economies such as China and India are likely to account for almost all that growth — over 90% of it.

Non-fossil energy — nuclear, hydro, biofuels and other renewables — will grow faster as a group than any fossil fuel. But they start from a very low base and will only provide, on a combined basis, about a fifth of all energy in 2030.

Gas will be the fastest growing fossil fuel at around two percent annually. It’s clean, cheap and increasingly available.

Oil will grow more slowly, at less than one percent per year. But that still means the world will need around 16 million barrels a day more in 2030 than today. Let us pause on what that means — that increase alone is nearly the combined daily 2011 production of Russia, Canada and the United Arab Emirates.

Turning to supply, many in the industry used to worry about whether demand on this scale could be met — we weren’t among them, by the way — but there hasn’t been much talk about “peak oil” lately.

Thanks to new frontiers such as shale and the deepwater, our industry is now producing an enormous amount of previously unreachable oil and gas. At current consumption rates, the data suggests the world has 54 years’ worth of proved oil reserves and 64 years’ worth of proved gas reserves in place — and more will be found.

So we are working in a world with ever more diverse sources of supply — and diversity of course increases energy security by avoiding over dependence on any one source.

However this diversity comes at a price. Many of the new supplies are in places that are hard-to-get at: shale oil and gas, tight oil and gas, heavy oil, the deepwater — and, in due course, the Arctic Circle.

And the physical and technological risks are not the only ones. Other factors range from fiscal regimes and other policy-related issues, to geo-political tensions and even the risk of terrorism.

We at BP were brutally reminded of that fact a few weeks ago, when four of our employees and colleagues from other companies were murdered in the terrorist attack on the In Amenas gas plant in Algeria.

Our thoughts are very much with the loved ones of those who died, from BP, Statoil, JGC and other organizations. And our sincere gratitude goes to all who have offered support and sympathy.

BP and Statoil staff and the contracting companies, are incredibly resilient and committed people and we will go on. We will never forget but we will go on with our mission of providing energy to the world. We have spent over 100 years producing energy in tough surroundings and we will not be deterred.

But the new opportunities bring new challenges, and we need constantly to develop our technology, capability and risk management.

The process of reaching out for new resources is going on all over the world, but nowhere more so than in the country that produces the most oil and gas — Russia — and the country that is exhibiting the most spectacular growth in production — here in America.

When Colonel Drake drilled the first modern oil well in Pennsylvania in 1859, he gave birth to a new industry – and one where the US has held the technology edge ever since.

Forty years ago this year, however, there was an oil shock and a future of scarce energy or even “resource wars” was predicted.

BP never subscribed to those fears, and in the last five years, the situation has been transformed.

US crude oil production has soared from an average of five million barrels per day in 2008 to over 7 million barrels per day at the beginning of this year, according to the US Energy Department.

Deepwater Gulf of Mexico exploration and production scarcely existed 20 years ago. In 2011, it provided about 18% of US daily crude production. Alaskan oil was widely expected to run out in late 1990s, yet it is still producing.

North Dakota, which was on hardly anyone’s radar screen a few years ago, has seen its production soar from just over 100,000 barrels per day in 2006 to over a three-quarters of a million last December. Not only has that state now surpassed Alaska as America’s second-largest oil producer, it also pumps more oil per day than the OPEC nation of Ecuador.

Why is this happening? Resources below ground are a prerequisite, but favorable conditions above the ground are also essential.

Almost uniquely among the nations of the world, the US allows private citizens to own the mineral rights beneath their property, “from the Earth’s core to the sky.” In most states, this gives private individuals a personal stake in energy development. It incentivizes entrepreneurs to compete with each other to develop the technologies to access the wealth that lies underground.

So it isn’t surprising that the world-changing technologies of the last two decades were all either developed or advanced in the US: horizontal drilling, hydraulic fracturing — pioneered incidentally by Amoco in the 1940s — to deepwater equipment and of course the 3D and 4D seismic we and others have used to great effect in the Gulf of Mexico and in countries such as Angola and Azerbaijan.

Here is another fact that certainly needs repeating. This industry is not only transforming the energy of America but also the economy of America. Energy has rightly been called the number one job-creating sector in the US economy, with oil and gas employment rising a remarkable 27% since 2008.

And jobs are being created well beyond traditional energy regions, including what some used to call Rust Belt states like Pennsylvania and Ohio. It is a great renaissance. BP has just returned to exploration in Ohio, for example. Increased reserves and lower natural gas prices are also attracting new US investments in manufacturing. Oil and gas taxes are pouring into the Federal Treasury and into many state governments.

Import dependence is falling. In fact, with the abundance of domestic natural gas, a number of LNG export projects are now in the queue, awaiting federal government approval. Just last month, BP signed a 20-year LNG export agreement with Freeport LNG here in Texas.

This sector is turning around America’s balance of trade, helping it compete internationally, creating jobs and breathing new life into its economy. Colleagues — America should be very proud of its energy industry today.

But this is not the only land of opportunity. Many other growing regions are represented here today — including many from Russia

Russia is the biggest country in the world. It also has the largest combined oil and gas reserves, as well as the highest combined production of oil and gas. And in our view, its potential has yet to be realized.

There is enormous scope for increasing Russia’s production — through enhanced recovery in brownfield developments in the Western Siberian and the Volga Urals fields. And also through exploration and production in greenfield developments in Eastern Siberia and the Yamal Peninsula. Russia also has the potential to develop its own shale and tight oil.

What Russia and the US have in common is that each will require energy investment on an epic scale, undertaken by energy partners who are not daunted by the obstacles and have the resources, experience, capability and appetite for the task.

And I would certainly put BP in that category.

We are a global company and select investments carefully from a world of opportunities. We have gas plays in Asia and the Middle East, and deepwater possibilities in the Atlantic and Indian Oceans, from Africa to South America, the South China Sea and the Great Australian Bight.

So I close on a note of optimism. History in our business has favoured the optimists. The resource wars that were predicted when I joined the industry never came to pass. In fact the world’s energy companies have produced more oil in the last 40 years than was thought to exist on the entire globe in 1979.

And in terms of our own company, if I may end on this note, we have faced challenges in recent years — in America, Russia and elsewhere. But as I said at the beginning, this is not a business for the faint-hearted or the easily discouraged. And we are neither.


ADNOC taps Shell for huge sour gas project

Abu Dhabi National Oil Co. (ADNOC) has chosen Shell to participate in a 30-year JV to develop the major Bab sour gas reservoirs in Abu Dhabi.

Shell beat off competition from Total for the contract, reportedly worth up to £6.5 billion. It will hold a 40% stake in the JV, with ADNOC holding 60%.

The two companies will now enter a period of commercial and technical work leading to the development of the challenging sour gas reservoirs, 150km south-west of the city of Abu Dhabi. The JV is to be the operator, and that the gas will supply the local market in the UAE.

“We have more than 60 years’ experience of safe and successful sour gas field development globally and we will apply this experience, along with our leading research and development, and technology expertise, to the development of the Bab resource," said Peter Voser, Shell’s CEO.

"We will also work closely with ADNOC to enhance the technical expertise of its workforce through effective knowledge transfer," added Voser.


Qatar JV to build £1.5bn refinery

Qatar JV to build £1.5bn refineryDoha, Qatar – Qatar Petroleum (QP) has signed a joint venture agreement with Total, Idemitsu, Cosmo, Marubeni and Mitsui for the new Laffan Refinery 2 (LR2) Project.

The new LR2 condensate refinery is similar to the first Laffan Refinery (LR1), which started operations in 2009, with a similar processing capacity of 146,000 barrels per day. Construction of the new $1.5 billion project is expected to be completed in the second half of 2016.

The site will be operated by Qatargas Operating Co. Ltd (Qatargas) and will have a daily production capacity of 60,000 barrels of naphtha, 53,000 barrels of jet fuel, 24,000 barrels of gasoil, and 9,000 barrels of liquefied petroleum gas (LPG).

Under the JV agreement, the LR2 ownership structure will be composed of QP (84%), Total (10%), Idemitsu (2%), Cosmo (2%), Marubeni (1%) and Mitsui (1%).

The project is part of Qatar’s plans to better exploit its hydrocarbon resources and expand its industrial base, including by expanding and developing the country's condensate processing, refining and export capacities.

The new refinery will give Ras Laffan a total installed condensate refining capacity of about 300,000 barrels per day, making it one of the largest single site facilities of its kind in the world.

A currently under construction diesel hydrotreater (DHT) expected to be commissioned in the second quarter of 2014, will have enough capacity to process all the light gasoil from both LR1 and LR2 into ultra-low-sulphur diesel.