Crude Oil Price by oil-price.net

Oil and Gas Energy News Update

Friday, May 20, 2011

Commodity Corner: Oil Settles Higher After Sharp Drop

- Commodity Corner: Oil Settles Higher After Sharp Drop

Friday, May 20, 2011
Rigzone Staff
by Matthew V. Veazey

Crude oil for June delivery gained $1.05 to end a volatile trading day at $99.49 a barrel.

The front-month contract plunged to an intraday low of $95.99 as the U.S. dollar gained 0.75 percent against the euro. Oil becomes a better value for investors holding non-U.S. currencies when the dollar grows weaker because crude is priced in dollars.

Given the relative value of the expiring June oil contract relative to the higher July contract price, however, oil rebounded later Friday as investors sensed a buying opportunity. Crude topped out at $99.49 for the day and is down less than 0.2 percent for the week.

A day after falling 2.6 percent following a U.S. Energy Information Administration report showing a higher-than-expected build in inventories, June natural gas gained 14 cents to settle at $4.23 per thousand cubic feet. Buoying Friday's rally were forecast models predicting above-normal temperatures throughout the eastern U.S. for the remainder of the month. Warmer conditions in the region would likely boost demand for electricity to power air conditioners.

June natural gas traded within a range from $4.08 to $4.26 Friday. It is down 0.5 percent for the week.

The June gasoline contract gained a penny to end the day at $2.94 a gallon. It fluctuated from $2.86 to $2.96. June gasoline has fallen 4.2 percent since last Friday.

Oil & Gas Post

Promote Your Page Too

Schilling Seeks to Reach New Depths in ROV Technology

- Schilling Seeks to Reach New Depths in ROV Technology

Friday, May 20, 2011
Rigzone Staff
by Karen Boman

Demand for remotely operated vehicles (ROVs) in the offshore oil and gas industry, which uses ROVs for well drilling and development, production facility construction and inspection, repair and maintenance, will continue to grow as strong oil prices and the global economy recovery spur worldwide exploration and development efforts.

Since its establishment in 1985, Schilling Robotics has primarily focused on ROV development for the oil and gas industry. The company's slogan, "So Deep, No One Comes Remotely Close," sums up the company's aim of expanding the technical capabilities of ROVs.

The evolution of subsea systems from mostly static to more dynamic and complex mean that ROVs must be capable of performing complex tasks, said Tyler Schilling, CEO and founder and Schilling Robotics. This evolution has occurred as exploration and production efforts move further in the world's deepwater regions.


Last year, the company launched its Heady Duty (HD) ROV system that can accommodate specific needs of the inspection, maintenance and repair, drill support and medium-duty construction markets. Schilling won the Offshore Technology Conference (OTC) Spotlight on Technology award for its HD ROV, which is rated for 13,123 feet (4,000 m) to allow for more effective remote deepwater intervention.

Development of this ROV was driven by Schilling's goal of wanting an ROV that could conduct service and repair activities in less than an hour. "Changing out a pump on a conventional hydraulic power unit can take three to six hours to do properly, and is expensive, with the most expensive as much as $9 a second to operate," Schilling said. "Being able to eliminate a three to five hour repair operation is a huge savings for our customers." Schilling said efforts are underway to map these technologies for fast service and repair for Schilling's UHD ROV model.


The Davis, California-based company has been collaborating with FMC Technologies to improve remote intervention of subsea equipment. Schilling accepted an investment from FMC in the company last year because "the direction we believe remote intervention needs should go in are related," said Schilling. While Schilling conducted all the development work on its HD ROV, input from FMC helped Schilling better understand the requirements that oil and gas companies have for ROV technology.

As part of this collaboration, Schilling has been working to developing an ROV system in which the camera and other equipment will target visual aids that FMC has installed on its subsea equipment panels. This allows the ROV system to do automatic work on the panels. Developing ROVs and subsea equipment together makes for more efficient and effective subsea intervention operations, Schilling said. "We believe further extensions of this technology will have ROVs capable of reading codes from those symbols and knowing what the characteristics of those underwater devices. This means that operators will not need to keep track of quite as much specification information. Information will be automatically retrieved, not unlike bar coding at the store that tells the cash register what item you're scanning."


This joint development is a new practice within the energy industry, but if we can cut the time it takes to do a single activity, it would really help customers, Schilling said. "It's not uncommon to have a circumstance in which an ROV can't actually perform the activity intended by the sea floor equipment designer, so operators have to improvise offshore to get a task done," Schilling said. "We're trying to bring about circumstances in which the ROV and the subsea floor equipment are designed together."

Since the Macondo oil spill in the Gulf of Mexico last year, which brought ROV and other offshore work in the region to a halt, Schilling has seen its customers wanting accessories for ROVs that allow them to deliver fluids, and that can override a blowout preventer at a much higher rate. While the BOP is typically actuated from the drilling rig, an ROV can be used as a backup if remotely closing it fails. The ROV will fly over the BOP with a hot stab, plug the hot stab into a panel, causing it to close.


One general trend Schilling sees for ROVs is greater degree of automation, or intent interface, for ROVs. "Rather than an operator pushing all the little buttons to make this complicated machine work, they tell the machine what they intend to do, and the machine takes care of the rest," Schilling said.

This trend has led Schilling to focus on making machines easy to use as their use in offshore oil and gas grows. The company has developed a method to simplify hot stabs, which are used to power hydraulic tools, transfer fluid, perform chemical injections, and to monitor pressure, in which a robot arm on the ROV places a hot stab in a receptacle on a subsea tree.


Schilling also has developed a stationkeeping system for its UHD and HD ROVs to automatically position an ROV; before that, ROVs had to be controlled manually, meaning an ROV pilot would have to monitor the ROV's position in relation to a Christmas tree and issue corrective commands through a joystick. Now, a computer monitors the ROVs' position, allowing the pilot to focus on the job he or she is getting paid for, which is getting quality video, Schilling said..


Additionally, the company has developed a wrist-mounted camera to allow ROV pilots to perform closer inspection tasks. This product is available to any customer who buys a manipulator from Schilling.

Breakthroughs in silicon and software technology enabled the evolution of cars, and Schilling believes the adaptation of more silicon and software in subsea equipment and ROVs will help the oil and gas industry take advantage of the efficiencies of productivity. However, the cost of packaging electronics for use in the ocean is huge, and many times more expensive than in other industries. Serviceability of parts, which is expensive, is another hurdle.

Oil & Gas Post

Promote Your Page Too

Pride, Ensco Enter MOU in Merger Lawsuit

- Pride, Ensco Enter MOU in Merger Lawsuit

Friday, May 20, 2011
Pride International Inc

Pride announced it and the other named defendants in the previously disclosed stockholder class action lawsuits filed in the Delaware Court of Chancery related to the proposed merger with Ensco entered into a memorandum of understanding with the plaintiffs to settle the litigation. As part of the memorandum of understanding and subject to the approval of the Ensco board of directors, Pride and Ensco agreed to, among other things, enter into an amendment to the merger agreement.

The amendment would reduce the fee payable by Pride in connection with certain terminations of the merger agreement to $195 million from $260 million. The amendment also would shorten the "tail period" for certain transactions that could trigger a termination fee from 12 months to nine months after termination. Under the amendment, the $195 million fee would be payable by Pride if the agreement is terminated under specified circumstances, including (1) the decision by the Pride board of directors to accept a superior proposal, (2) an adverse change in the recommendation of the Pride board of directors or (3) a failure to obtain approval by Pride stockholders after public disclosure of an alternative business combination proposal before the stockholder meeting and either the Pride board of directors determines such proposal to be a superior proposal or, within nine months after termination of the merger agreement, Pride enters into a definitive agreement or consummates an alternative business combination proposal.

The amendment also would eliminate the "force the vote" provision applicable to Pride such that Pride would not be required to submit the adoption of the merger agreement to its stockholders if the Pride board of directors made an adverse recommendation change.

Pursuant to the memorandum of understanding, Pride has also agreed to make certain additional disclosures related to the proposed merger in an SEC filing.

The memorandum of understanding also provides, among other things, that the parties will seek to enter into a stipulation of settlement which provides for the release of certain claims held by such class. The stipulation of the settlement will be subject to customary conditions, including court approval. There can be no assurance that the parties will ultimately enter into a stipulation of settlement that receives court approval. The memorandum of understanding is also subject to the approval of the Ensco board of directors.

Oil & Gas Post

Promote Your Page Too

Delek, Noble Energy Reconsider Developing Noa

- Delek, Noble Energy Reconsider Developing Noa

Friday, May 20, 2011
Knight Ridder/Tribune Business News
by Amiram Barkat, Globes, Tel Aviv, Israel

Sources inform "Globes" that Delek and Noble Energy are about to decide to develop the offshore Noa natural gas field near Yam Tethys and the Gaza Strip. Development of the field could ease the expected natural gas shortage if the gas flow from Egypt does not resume in full.

Until recently, Delek and Noble Energy said that there was no economic justification to spend $200 million to develop the two billion cubic meters Noa gas field. Development would take a year.

However, the prevailing high prices for natural gas have changed the picture. The price the two companies obtained in their gas supply contract with Hadera Paper -- $8.50 per million British Thermal Units, 50 percent above 2009 prices -- translates into $300 million per billion cubic meters.

Delek says prices are set according to the same formula used to set the price in the company's 2009 contract with Israel Electric Corporation (IEC), and it attributes the entire rise in the price in the Hadera Paper deal to the higher price of oil, to which natural gas prices are linked.

The financial report for the first quarter of Delek unit Delek Drilling indicates that the suspension in natural gas deliveries from Egypt did not greatly affect the company's revenue, partly because of the increased gas deliveries were sold at the same price as regular deliveries.

Delek and Nobel Energy reportedly supplied 100 million cubic meters of gas from Yam Tethys because of the suspension of Egyptian deliveries during the first quarter. Yam Tethys supplied 800 million cubic meters of gas during the first quarter.

The financial report also indicates that, despite the crisis in Egyptian gas deliveries, Israeli demand for natural gas slightly exceeded government projections. Demand reportedly increased because of increased use of natural gas by IEC, which for the first time preferred natural gas instead of coal for the generation of electricity, due to the sharp rise in the price of coal in recent months.

The price of coal has reached $120-130 per ton, comparable to $5.50 per million BTU for natural gas. When the excise on fuel and externalities are factored in the cost of coal equals the cost of natural gas, except that coal is more polluting and harmful to the health.

Copyright (c) 2011, Globes, Tel Aviv, Israel

Oil & Gas Post

Promote Your Page Too