BP Moscow Office Resumes Work After Raid; Documents Sealed

- BP Moscow Office Resumes Work After Raid; Documents Sealed

Monday, September 05, 2011
Dow Jones Newswires
MOSCOW
by William Mauldin

BP's Moscow office resumed work Monday following a raid last week by Russian court officials, a spokesman in Moscow for the U.K. oil giant said.

Documents gathered by the court bailiffs are currently sealed inside the office, and no papers have been removed, said the spokesman, Vladimir Buyanov.

BP said Friday that the search had been halted for 10 days and that it would challenge the operation in court.

Russian bailiffs on Wednesday and Thursday entered the BP office with special police armed with automatic weapons, as part of a search requested in a $3 billion lawsuit by investors in a traded unit of the oil company's Russian joint venture.

BP has called the lawsuit "absurd" and the search "unfounded" and directed at the wrong unit of the company.

The minority investors' attorneys said the search was carried out according to Russian law, regardless of which BP unit was searched.

The minority investors are seeking documents related to BP's Russia joint venture, TNK-BP Ltd., and to a failed Arctic deal between BP and state-controlled oil company Rosneft, as part of a lawsuit brought in Siberia's Tyumen Region Arbitration Court.

The minority investors, who live in Tyumen, have filed suits against BP and two of the U.K. company's executives at TNK-BP, claiming at least $3 billion in lost opportunities as a result of the failed Arctic deal with Rosneft.

The raid suggests BP's difficulties in Russia are likely to continue despite its efforts to put the fiasco of the Rosneft deal behind it, energy analysts said. BP initially disclosed the landmark alliance with Rosneft in January but found a deal blocked by opposition from its billionaire partners in TNK-BP Ltd.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Aker Solutions to Create 500 UK Jobs Next Year

- Aker Solutions to Create 500 UK Jobs Next Year

Friday, August 19, 2011
Aker Solutions

Aker Solutions aims to create 500 new UK jobs over the next year. In a bid to grow its business substantially, Norway-listed Aker Solutions is set to recruit 300 staff to its Aberdeen operation and create 200 positions at the company's newly established west-London engineering office.

The move follows a successful start to the year for the oil and gas engineering and technology services company, which has increased its order backlog by 19 percent since January 1st. It said that market outlook for both the UK and Norwegian North Sea as well as Brazil, West Africa and Asia Pacific remains strong.

"Last year we decided to take a much more proactive recruitment approach. Since then our strategy has been to man up ahead of the big waves of work that we know are coming. That offers much greater predictability for our customers and ourselves," said Alan Brunnen, a managing director with Aker Solutions in Aberdeen. The company aims to recruit 300 new employees in Aberdeen alone.

The majority of positions in Aberdeen are for the subsea technology business where 200 new posts will be created. A further 70 positions are being recruited to support work for maintaining and upgrading North Sea oil platforms in order to extend their field life. Aker Solutions' well service business, which provides technologies and services aimed at increasing oil recovery from producing wells, requires a number of technical and ancillary personnel. As does the drilling technology business, which provides drilling systems and life-cycle services to support new generation drilling assets that are entering the UK North Sea.

New London office

By tapping into the London oil and gas market, Aker Solutions in the next year aims to hire approximately 200 engineering personnel to its new London offices with a target of 500 by the end of 2015. Located in Chiswick Park, this global engineering hub will support field development projects for the North Sea and worldwide.

"Our company has had a historical presence in London, so this is a re-entry to an engineering market we know very well. So far we have received more than 2 000 job applications, which underlines that there is scope to grow this business rapidly," said Valborg Lundegaard, head of engineering in Aker Solutions.

Alan Brunnen added, "We anticipate that workload levels will remain high over the coming years, which is why we are staffing up our UK organization now. We want to be well placed to capitalize on future opportunities that arise in our markets".

Aker Solutions is one of Scotland's largest employers with a workforce of more than 2 500 people. In addition the company has smaller offices and facilities in Great Yarmouth, Maidenhead, Stockton-on-Tees and Whitstable. The company employs 17 000 employees plus 6 000 contract staff in 30 countries worldwide, and has annual revenues of approximately GBP 3.9 billion.

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UK Oil Industry Confidence Increases on Quarter

- UK Oil Industry Confidence Increases on Quarter

Wednesday, August 17, 2011
Dow Jones Newswires
LONDON
by Alexis Flynn

The outlook of firms producing oil and gas in Britain improved in the second quarter from the previous three months, data from Oil & Gas U.K. showed Wednesday, although the industry body said business confidence remains "fragile" in the wake of a tax increase announced in March.

Oil & Gas U.K. said overall industry confidence increased modestly from 51 to 54 points. The index measures a number of economic indicators and gauges overall industry confidence on a 100-point scale, with a rating above 50 indicating a more positive outlook and a rating below 50 representing a more negative viewpoint.

Industry confidence fell 12 points on a quarterly basis in May after Chancellor of the Exchequer George Osborne in March imposed a large and unexpected tax rise on the sector, increasing the state's take on oil and gas profits to 32% from 20% overnight.

The government has since announced a concession to North Sea producers by offering some relief for investments in marginal fields.

Ken Cruickshank, Oil & Gas U.K.'s supply chain manager, said that while confidence had improved among the majors, the outlook among independent operators had soured further.

"While it appears that some companies may feel reassured by the Treasury's willingness to engage on ways to mitigate the negative impact of the tax increase on investment, the confidence of many independent operators in particular continued to decline in the second quarter," Cruickshank said.

Copyright (c) 2011 Dow Jones & Company, Inc.

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UK O&G Industry Successfully Tests Emergency Spill Response Equipment

- UK O&G Industry Successfully Tests Emergency Spill Response Equipment

Thursday, August 11, 2011
O&G UK

The UK oil and gas industry has successfully tested its ability to deploy a well capping device in the waters west of Shetland. As part of the industry's commitment to further strengthen the UK's emergency response capabilities, the Oil Spill Prevention and Response Advisory Group (OSPRAG) has undertaken a number of initiatives to improve well engineering and oil spill response capability, including the development of a well capping device for use in UK waters to seal-off an uncontrolled subsea oil well in the unlikely event of a major well control incident.

The purpose of the recent Emergency Equipment Response Deployment (EERD) exercise was to simulate the logistical process of transporting a well capping device, loading it on to a vessel and lowering it over the side before fixing it to a specially-built simulated well on the sea floor.

The exercise was project-managed and executed by Total E&P UK on behalf of Oil & Gas UK and ran from July 16-26, 2011 at a site in block 206/4, around 75km north west of Shetland.

The various stages of the exercise included:

• Exercise site prepared by deploying a specially-built landing base to the seafloor at a depth of 300 meters to accurately simulate a subsea well.
• Remotely operated vehicles (ROVs) used to deploy subsea oil dispersant (in this instance, a non-toxic fluorescent dye).
• Heavy-duty cutting shears deployed to sever a subsea marine riser pipe. This would be done in a real-life scenario in order to clear the riser out of the way to make room for the cap to be landed.
• Capping device deployed over the side of a multi-service vessel using a crane.
• Device landed on to the well, locked on to the base and activated using ROVs.
• All equipment, including the landing base, recovered.

Oil & Gas UK's chief executive, Malcolm Webb, said, "The UK oil and gas industry has a very high level of confidence in its ability to prevent blowouts. We haven't experienced one here in over 20 years – in which time over 7,000 wells have been drilled.

"No matter how unlikely a blowout is, we recognize the importance of being prepared for low-probability, worst-case scenarios. This is why we regularly test our emergency response capabilities and why we wanted this particular exercise to be as realistic as possible.

"Its success proves we can not only quickly mobilize and deploy the capping device, but also incorporate the use of a wide variety of other related equipment, such as subsea dispersant and cutting shears, which in a real-life situation would be used as part of the same operation.

"The next stage will involve a full debrief involving all participants to identify any learning opportunities and Oil & Gas UK will share these findings throughout the industry."

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Endeavour Makes Headway in US, UK in 2Q11

- Endeavour Makes Headway in US, UK in 2Q11

Wednesday, August 03, 2011
Endeavour International Corp.

Endeavour reported adjusted EBITDA for the second quarter of 2011 was $7.6 million compared to $13.1 million in the second quarter of 2010 and $4.1 million in the first quarter of 2011. On a GAAP basis, net loss was $15.6 million for the second quarter of 2011 as compared to net income of $0.6 million for the same quarter in 2010.

Business Highlights:

• North Sea:
  • Commenced drilling operations at Bacchus
  • Agreement of commercial terms for the processing and transportation of the Greater Rochelle production on the Scott Platform
  • Contracts awarded for the pipeline and umbilical's for the development of Greater Rochelle area
• U.S. Onshore:
  • Announced the acquisition of 50,000 net acres in Marcellus Shale with existing production and pipeline infrastructure
  • 8 gross wells brought on production through July in Louisiana and East Texas
  • 4 additional gross wells completing or drilling in Louisiana
• Financial:
  • Increased available capital in July resulting in cash on hand of approximately $245 million

"During the second quarter financial results were as expected, while we made substantive progress on our U.K. development projects and our U.S. Haynesville unconventional gas play. Adding to this progress, our announced strategic acquisition of acreage and infrastructure gives us exposure to 1.0 to 1.3 trillion cubic feet of gross recoverable natural gas resource potential in the Marcellus area. We are confident that the balanced portfolio can deliver significant growth in both oil and natural gas production in the near-term," said William L. Transier, chairman, chief executive officer and president. "During July, the Company enhanced its flexibility and growth potential by adding approximately $100 million in available liquidity in addition to funding the $110 million needed for the Marcellus acquisition. The additional capital provides the resources to take advantage of opportunities for growth from existing and emerging parts of our portfolios, while also providing liquidity in case of any unforeseen events."

Operational Update

North Sea

The drilling of the three planned development wells is underway in the Bacchus field in Block 22/06a in the Central North Sea. Production from the development is expected to begin in the fourth quarter. The Company has a 30% working interest in the field.

In the Greater Rochelle area, the Company awarded two contracts for the design and fabrication of components for the subsea development that will link production for processing and transport to the nearby Scott platform. The contract for the drilling rig for the development will be finalized during the third quarter. Endeavour is operator and holds a 44% ownership interest in the Greater Rochelle development which is now comprised of Blocks 15/26b, 15/26c and 15/27.

U.S. Onshore

Endeavour will assume operated interests in leasehold, producing wells, pipeline and related facilities held by SM Energy Company and its minority partners in McKean and Potter Counties. The transaction increases Endeavour's leasehold interest in the Marcellus shale to approximately 93,000 gross (68,000 net) acres with more than 300 identified drilling locations in McKean and Cameron counties alone. The purchase will strengthen the Company's position in one of the most active and low-cost U.S. shale plays and provides significant production and reserve potential. The transaction is expected to close in the fourth quarter. In the Company's existing Marcellus acreage in Cameron County, two horizontal wells are waiting on completion, while the existing Daniel Field gathering infrastructure is being expanded.

During the quarter, Endeavour brought six gross wells on production in its Haynesville and Cotton Valley plays in Louisiana and East Texas, respectively. In July, production commenced from two additional gross wells with four other wells currently completing or drilling.

In the Montana Heath shale oil play, the Company and its partners expect to launch drilling operations on four vertical wells in the third quarter. In the Alabama Devonian shale gas play, Endeavour has successfully drilled and cased a horizontal re-entry of a previously drilled vertical pilot well. This well is anticipated to be completed and tested by the fourth quarter.

Financing Update

During the second quarter, the Company completed the redemption of all of its outstanding $81.25 million of 6% Senior Notes due 2012. The Notes were exchanged at 100% of principal amount plus accrued and unpaid interest.

In July, Endeavour closed on its private placement of $135 million aggregate principal amount of 5.5% convertible senior notes due 2016, including the full exercise by the initial purchasers of their option to purchase an additional $15 million principal amount of the offering. The Company intends to use the net proceeds of the offering primarily to fund its announced acquisition of operated interest in the Pennsylvania Marcellus shale play. Endeavour also expanded its credit facility by $75 million under the terms of its Senior Term Loan.

In addition, the Company entered into a letter of credit facility agreement with Commonwealth Bank of Australia in the amount of pounds Sterling 20,600,000 (approximately $33 million). Associated with the letters of credit was the release of the restrictions on approximately $33 million of cash.

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Report: UK O&G Production Declines Continue

- Report: UK O&G Production Declines Continue

Monday, August 01, 2011
Rigzone Staff
by Karen Boman

UK oil and natural gas production declined in 2010, mirroring the larger trend seen over the past decade, the UK Department of Energy and Climate Change (DECC) reports.

In the Digest of United Kingdom Energy Statistics (DUKES) 2011 report, DECC reports that primary energy production in 2010 totaled 158.1 million tones of oil equivalent, down 5.3 percent from 2009. Production has fallen each year since 1999, and is down 46.9 percent on 1999 levels, an average rate of decline of 5.6 percent.

Crude oil production, which includes natural gas liquids (NGLs), in 2010 was 63 million tones, 7.7 percent lower than in 2009, and now accounts for 44 percent of primary energy production.

DECC notes that net imports of crude oil and NGLs rose to meet demand with oil exports decreasing by six percent. Net imports grew to just under 9 million tones or around 13 percent of the UK's demand.

The decrease in oil production over the past 10 years shows a sharp rate of decline between 2002 and 2006, with a shallower profile in later years. The main factor behind this flattening effect was the Buzzard field development, which compensated for the sharper falls seen in existing fields. On average, crude oil production has been decreasing by around seven percent a year.

Gross UK gas production has been decreasing since 2000, and in 2010 was down 4.3 percent from 2009. Gross gas production has fallen by 47.3 percent since its peak in 2000. Gas imports in 2010 were almost a third higher than in 2009, mainly because of lower production and higher demand.

Liquefied natural gas (LNG) is increasingly important as a source of imports to supplement existing ones. In September 2010, imports from shipped LNG surpassed the gas imported via pipeline from Norway for the first time; in 2010, LNG imports accounted for 35 percent of the UK's total commercial imports.

UK primary energy consumption in 2010 grew by 3.2 percent, largely driven by the colder weather in 2010. Total oil consumption in the UK fell marginally in 2010; the majority of final consumption of oil, around 75 percent, was consumed in the transport sector. Energy use for transport fell by one percent in 2010 compared to 2009, largely due to falls in aviation fuel resulting from disruptions due to snow and volcanoes.

Overall gas demand grew by 8.4 percent in 2010, with gas demand for electricity generation growing by 3.5 percent; gas's share of the UK's supply of electricity was 47 percent.

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Dron & Dickson Score Contract Wins in UK North Sea

- Dron & Dickson Score Contract Wins in UK North Sea

Friday, July 29, 2011
Dron & Dickson

Dron & Dickson has secured £55million in UK North Sea contract wins for the first half of 2011.

During the last 6 months the company has landed both new and extended contracts with oil majors such as Nexen Petroleum U.K Ltd, BP, Talisman Energy (UK) Limited and ConocoPhillips.

Work has included the provision of electrical goods to support maintenance of offshore assets and hazardous area inspection services to meet operational requirements in the North Sea.

Dron & Dickson operations director Colin Maver said, "It's been a really fantastic year so far, our most successful yet in terms of activity levels. We have secured a number of significant contract wins and have also seen a marked increase in work load from existing clients.

"We have invested heavily in developing exceptional QHSE standards and a competency-assured workforce. We are also IRATA accredited and I believe that this has contributed significantly to the record levels of business we are winning."

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UK Govt Raises Field Allowance for N. Sea Investment

- UK Govt Raises Field Allowance for N. Sea Investment

Tuesday, July 05, 2011
HM Treasury

The Government announced that the annual rate of the Ring Fence Expenditure Supplement (RFES) for the North Sea fiscal regime will be increased from 6% to 10%, following discussions with industry initiated at the 2011 Budget. This provides extra support for investment in the North Sea, including in marginal fields that qualify for the current field allowance, and will also support the ongoing considerations on new categories of field allowance.

In the Budget, as part of a package of measures to help motorists cope with high petrol prices, the Government announced a Fair Fuel Stabilizer that would be funded by higher taxation of the profits from oil and gas companies when oil prices are high. The Government said at that time that it would consider with the oil and gas industry the case for a new category of field that would qualify for field allowance to support investment in marginal fields.

In the course of those discussions with industry, the Government has identified that the ability of a company to benefit fully from the field allowance is dependent on whether a company has sufficient current taxable income against which to off-set expenditure. This is addressed to some extent by the Ring Fence Expenditure Supplement, which currently allows companies with insufficient taxable income to uprate losses by 6% for six accounting periods.

The increase to 10% announced today will help ensure existing field allowances work more effectively and equitably to support investment in marginal fields. It also brings RFES in line with the discount rate typically used by the sector.

The Government will continue to engage with oil and gas companies on the case for new categories of field qualifying for field allowance.

Justine Greening, Economic Secretary to the Treasury, said, "The Government was clear at the Budget that it would engage with oil and gas companies, including to consider the case for further support for marginal projects. Today's change demonstrates our commitment to ensure current allowances work effectively and equitably, and lays the groundwork for further constructive discussions on field allowances."

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BP Sells Stakes in UK Fields to Perenco

- BP Sells Stakes in UK Fields to Perenco

Tuesday, May 17, 2011
BP plc

BP has agreed to sell its interests in the Wytch Farm, Wareham, Beacon and Kimmeridge fields to Perenco UK Ltd ('Perenco') for up to $610MM in cash. The price includes $55MM contingent on Perenco's future development of the Beacon field and on oil prices in 2011-13.

The sale of these interests is part of BP's plan, announced in July 2010, to divest up to $30 billion of assets by the end of 2011. Before today's agreement, BP had already announced sales agreements totaling around $25 billion.

BP group chief executive Bob Dudley said, "Today's agreement brings us even closer to the target of $30 billion of divestments by year end that we set out last summer. It demonstrates that we do have assets of quality that other operators see as more strategically valuable to them than to BP, thus unlocking value for our shareholders."

An immediate payment of $500MM has been made, a further $55MM will be paid on completion which is expected at the end of 2011 with the remaining $55MM contingent on submission of the Beacon field development plan and oil prices. Completion of the sale is subject to partner preemption rights and a number of third party and regulatory approvals.

The divestment of Wytch Farm is an outcome of BP's strategic aim in the UK to invest in a more focused North Sea business portfolio in the northern North Sea, central North Sea, West of Shetland and Norway.

Trevor Garlick, regional president for BP North Sea, said, "The North Sea Region is a very important area for BP and we will sustain a significant business here for the long term. We are currently investing around $4B per annum of capital and operating expenditure, which includes four major new field development projects in the UK and two in Norway."

It is expected that impacted BP employees based at Wytch Farm will transfer with the asset to Perenco.

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Study: Tax Grab Undermines Confidence in UK Energy Sector

Study: Tax Grab Undermines Confidence in UK Energy Sector

Tuesday, May 10, 2011
Aberdeen & Grampian Chamber of Commerce

Rising confidence and increased investment in the oil and gas sector has been severely undermined by the UK Government’s sudden Budget tax grab in March, reveals the 14th Aberdeen & Grampian Chamber of Commerce Oil and Gas Survey.

The survey found that the tax changes have raised many serious concerns as to current investment plans and the potentially changed value of North Sea assets. This has arguably made the North Sea less competitive and more marginal which will lead to less investment and a reduction in drilling activity and production.

The survey, sponsored by national law firm McGrigors and conducted by the Fraser of Allander Institute, is the 14th in the survey series and draws on responses from oil and gas operators and contractors to identify current trends, investment, research and development, exploration and employment. The findings are used to identify how the performance of this sector might impact on the wider business community.

Data was being gathered when the Chancellor made his shock announcement and a number of respondents had completed and returned their questionnaires. In marked contrast those returning surveys after the announcement tended to be less optimistic about the future.

The majority of operators reported rising exploration and development activity in 2010 and expect these trends to continue through 2011 although they are now re-assessing future projects. A large number of both operators and contractors reported rising trends in employment in 2010 and anticipate increasing trends in 2011.

Robert Collier, Chief Executive of Aberdeen & Grampian Chamber of Commerce, said: “This survey has come at a critical time for the oil and gas sector in this region. Until recently there were consistent signs of recovery and optimism, together with a developing upturn in investment. The sector had more confidence about the future potential until the March Budget put this optimism in doubt by introducing the tax changes without consultation. Trust between the industry and government is now at an all-time low.

“Our findings show that current business optimism is higher in the UKCS than the last survey, but this is a lagging indicator. The forward indicator of business optimism in the UKCS over the next year shows a drop in confidence which is a clearer representation of what the industry is expecting.”

Bob Ruddiman, McGrigors’ Head of Energy, said: "This is the first empirical data I have seen to demonstrate the very tangible damage which the Westminster Government's so-called 'tax raid' has had upon investor confidence around the North Sea.

“The research clearly highlights the divergence in attitude between respondents who completed the survey before and after the changes were announced. There is a clear appetite for investment but new markets seem increasingly attractive.

“We can only hope that, although the Westminster government retains control over UK oil and gas rights, the First Minister-elect Alex Salmond will stick to his pledge to ‘batter down the door of Chancellor George Osborne’ and put this at the top of the new administration’s agenda during any negotiations with Whitehall."

“This survey does however highlight the areas in which there is considerable confidence and the industry has proved in the past that it is resilient and will survive unexpected events. The challenge for the industry is to rebuild confidence and to continue to demonstrate our world class capability on the world stage.”

The key findings from this 14th survey are:

•   This survey was being conducted when the Chancellor announced the unexpected tax increase, and a number of respondents had completed and returned their questionnaires; those returning after the announcement tended to be less optimistic and more cautious as to the year ahead. It is important to remember the timing of the survey and the Chancellor’s actions when considering the main trends.
•   At the turn of the year there was widespread evidence of rising confidence, increasing investment in both conventional and new areas (carbon capture and storage and renewables), global oil prices were remaining high and on an upward trend and demand was increasing.
•   The unexpected tax changes in the March budget raised many concerns as to current investment plans, the potentially changed value of North Sea assets to both potential sellers and buyers arguably made the UKCS less competitive and more marginal and would lead to less investment, drilling activity and production.
•   Business confidence remained on a level trend amongst operators in 2010, the adverse effects of the budget changes undercutting the optimism of our previous survey, and underpinning the expectations that net trends in business confidence will ease over the next year. Amongst contractors, confidence continued to improve, however, unlike our previous three surveys contractors are more cautious as to the business situation in the year ahead.
•   The majority of operators reported rising exploration and development activity, and level production activity in 2010, and expect these trends to continue through 2011. Although one operator noted “following the 2011 budget several areas will be closely analysed and revised before any commitment” is made. Rising trends in the value of UKCS based work in 2010 were reported by a third of contractors and a further 62% reported a level trend. Looking forward more than 50% anticipate rising trends in the value of UKCS based contract work in 2011.
•   The majority of operators and contractors reported rising trends in employment in 2010 and anticipate increasing trends in 2011.
•   Investment continues to be directed towards improving the extraction process and improving yields. Amongst contractors investment in staff and new markets were most frequently cited, and more are seeking to develop both a decommissioning and a renewables capacity.
•   The UKCS continues to be seen as competitive, especially in the areas of subsea, deep water and brown field development.
•   The main business constraints/drivers as seen by operators continue to be the commodity price, economic climate, tax relief and allowances, level of demand and lift costs. Amongst contractors the level of demand, loss of staff to other companies and oil companies’ Opex were the most highly rated factors.

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BME UK Announces West Africa Contract Win

BME UK Announces West Africa Contract Win

BME UK

BME UK on Wednesday announced a contract worth GBP500,000 for the provision of its Specialised Machinery And Reduced flow Technology (SMART) in West Africa.

The company which designs and manufactures engineering equipment for the construction, marine and oil and gas industries will deploy seven of its personnel from Aberdeen, to carry out the work in the Bonga Field in Nigeria. This landmark deal follows the award of two further contracts with Hunting Energy Services International Ltd and BIS Salamis, both of which will be delivered by BME's operations in Aberdeen.

Scot Borland, director of BME UK comments, "The contract win in West Africa has been achieved in conjunction with local our partner, GCA. The work on the Bonga Field will utilise our revolutionary SMART system, to undertake deep tank and vessel cleaning. We have specially designed this technology to deliver outstanding results while reducing the waste, which deep tank and vessel cleaning produces; in some cases the level of waste is reduced by as much as 80%.

"Seven people from Aberdeen will travel to Nigeria to install and operate the SMART equipment. Training provision also forms part of the contract scope and six West African nationals will receive on-site training."

Aberdeen based Hunting Energy Services International Ltd will also be using BME UK's SMART system. Scot continues, "We have been awarded a contract by energy services provider Hunting Energy Services (Well Intervention) Ltd. This will be fulfilled from our offices in Aberdeen and is for the provision of a containerised ultra high pressure jetting unit and associated training."
Additionally the company has been contracted to undertake activity for leading international industrial services firm, BIS Salamis with the award of an order for the provision of six vertical air receiver frames.

Scot continues, "The technologies we supply are designed to provide results of the highest quality whilst having the added benefit of producing lower amounts of waste. This is therefore better for the environment and helps companies to comply with waste minimisation program requirements. Customers using our SMART system also benefit from lower costs because the amount of contaminated waste products which need to be treated or disposed of is reduced.

"We have recently invested GBP750,000 in the launch of our Specialist Cleaning Services; these initial contract wins validate our decision to make this level of investment and mean that we are well on the way to achieving our target of doubling our turnover to GBP3.4 million."

BME UK designs and manufactures a range of equipment for the construction, marine, oil and gas and decommissioning sectors. This includes decontamination modules for the treatment and disposal of NORM, high pressure fluid pumps for on and offshore use, munchers, handling systems, pipe cleaning systems phosphate systems, heat exchanger and bundle cleaning equipment, as well as traditional spoolers, powerpacks, workshops.

From its headquarters in Aberdeen, BME UK also offers a 24/7 maintenance back up services for clients who own or operate their own water/fluid pumps/pipe handling and cleaning systems. BME's skilled engineers have a wealth of knowledge on a range of pumps and work in global locations. Specialised Cleaning Services, a division of BME UK, provides full bundle cleaning services including surface preparation, internal and external pipe cleaning, drain cleaning, vessel cleaning and shutdown, waste removal and decommissioning services for global operators.

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O&G UK Disappointed after UK Tax Talks

O&G UK Disappointed after UK Tax Talks

Tuesday, April 19, 2011
Dow Jones Newswires
by Alexis Flynn

The group representing major U.K. oil and gas producers said Thursday it was disappointed following talks with Chancellor of the Exchequer George Osborne on the impact a large tax increase on North Sea production would have on the industry.

Oil & Gas UK Chief Executive Malcolm Webb said, "Notwithstanding the Chancellor's requirement to raise money, [we] explained why both the unexpected nature and the scale of the increase to between 62% and 81% tax has damaged investor confidence and will hamper investment, maximum recovery of the U.K.'s oil and gas and job creation. Disappointingly, the Chancellor has a different view."

However, Webb said the Treasury requested further talks on how a mooted price floor mechanism, which would see the tax lowered in the event that prices dropped substantially, would work in practice. He said that it also wanted to discuss new and further field allowances, as well as continued dialogue on issues around decommissioning, to be concluded by Budget 2012.

A Treasury spokesperson told Dow Jones Newswires, "Today's meeting was constructive and while the Chancellor was clear that there would be no change in policy, he agreed to work closely with industry on the three areas for discussion set out in the Budget; setting the trigger price, stability in decommissioning and field allowances to support further investment."

Analysis: UK North Sea Drilling Activity, Production Decline

Analysis: UK North Sea Drilling Activity, Production Decline

Friday, April 15, 2011
Rigzone Staff
by Karen Boman

While debate continues over how proposed changes to the UK's tax regime will impact North Sea oil and gas production, exploration activity declined in the first quarter of this year and weakness in oil output for the UK North Sea is expected to continue.

Nine exploratory and appraisal wells were drilled on the UK Continental Shelf (UKCS) during this year's first quarter, a 25 percent decline from the same period in 2010 and the previous quarter, according to a report by Deloitte's Petroleum Services Group. Five of those wells have been started in the Central North Sea; two in the Southern North Sea; one in the Northern North Sea, and one on the Faroe-Shetland Escarpment.

Prior to the announcement of tax increases by the UK government, Deloitte said that, despite the decrease in drilling activity, industry outlook for UK drilling had initially appeared positive this year as the average Brent Blend oil price continued to rise. Deloitte noted that there were indications that increased Brent prices and tax incentives were encouraging companies to

return to pre-recession strategies.

However, the announcement of tax increases has had a negative effect on industry optimism and a number of companies have already announced that they intend to put appraisal and development projects on hold. "At present, it is unclear how these factors will affect levels of drilling activity over the coming months," Deloitte said in the report.

Deloitte reported seeing more farm-in activity than asset acquisitions in the first quarter, noting that farm-in activity for this quarter was higher than fourth quarter 2010. The uptick in farm-in activity could be indicative of companies beginning to return to corporate strategies that were in place pre-recession. The increase in farm-ins could also be attributed to the continued rise in oil prices, which may provide incentive for companies to increase their equalities in reserves.


UK Oil Production Weakness

Last month, Barclays Capital reported that it anticipated weakness in UK total oil liquids output to continue as no major field start-ups to boost output are in sight.

UK total oil liquids output averaged 1.3 million b/d in December, a year over year decline of 128,000 b/d, with production falling by 111,000 b/d across 2010 as a whole. The decline is a step up from the declines in 2008 and 2009, when output declined by 106,000 b/d and 73,000 b/d, respectively.

Barclays expects output to fall by .15 million b/d this year, and it's fair to say that the UK Treasury's proposed tax hike on UK North Sea oil and gas production will hurt UK oil production, said Amrita Sen, oil analyst for Barclays. "Because it's a mature basin, production costs in general are already higher, so if you add additional costs, it will be difficult to incentivize research and development efforts for technology in this area."

The tax increase announcement has already prompted Norway-based Statoil to put plans on hold to develop two heavy oil fields in the UK North Sea in light of the proposed tax hike. This delay and other possible delays mean ongoing weakness in UK oil output will continue.

Sen estimates that an additional 100,000 b/d of oil is needed to maintain current UK oil production, and that an additional 200,000 b/d of oil is needed to maintain existing Norwegian oil production, which is experiencing even steeper declines than UK oil production.

New Production Coming Online

Weakness in oil output is expected to continue; however, new oil and gas production is expected to come online within the next year. Endeavour International Corporation expects oil production from its Bacchus development on UK Block 22/6a in the Central North Sea to begin during the second half of this year, and gas production from its Columbus development on UK Block 23/16f to begin in 2012.

In late February, the UK Department of Energy and Climate Change (DECC) approved Endeavour's Rochelle Field Development Plan (FDP) for Block 15/27 in the Central North Sea, now known as East Rochelle. The current FDP calls for the subsea development to be linked by a 18.6-mile pipeline to production facilities on the Scott Platform. First production is planned for the second half of 2012. West Rochelle, which was successfully appraised in October 2010, will be integrated into this development plan as the second phase.

DECC also has approved RWE Dea's field development plan for the Clipper South gas field in the UK North Sea. The field will be developed by five horizontal wells, each containing up to six hydraulic fractures, connecting to a wellhead platform and then piped to the LOGGS PR platform. First gas is expected in the first quarter of 2012, with production is anticipated to reach a maximum rate of 100 MMcf/d.

O&G Employment Outlook for UK

Salaries in the UK oil and gas industry through 2010 were some 50% lower than those in other oil and gas regions, such as the U.S. or Norway, as the UK oil and gas industry was dragged down by the recession experienced by the overall UK economy. While these are now rising, they are still lagging some way behind their counterparts. "Consequently, many international companies are targeting the UK as a location in which they can recruit highly skilled talent at relatively low costs," said Matt Underhill, managing director for oil and gas at Hays Recruiting.

"The one positive sign in the market regards salaries is that day rates for contractors have shown some excellent growth and this is usually a pre-cursor to staff salaries following suit," Underhill noted.

Partnership in clean energy prospers

Partnership in clean energy prospers

Apr 11, 2011
Guy Warrington

While fossil fuels may have been the framework within which energy co-operation between the UK and the UAE began, we are now increasingly focusing on working together to develop and pioneer new technologies based on alternative and renewable energy.

The Abu Dhabi Future Energy Company's Masdar City is the prime example. This features the expertise of British companies such as Foster+Partners, which has designed the city's Master Plan and completed the recently inaugurated Masdar Institute, and Mott MacDonald, which is delivering infrastructure development and design.

The Masdar Institute complex uses 51 per cent less energy than a typical building of its size.
Further collaboration between the UK and the UAE is reflected in the work being done on the London Array, an offshore wind farm under construction in the Thames Estuary, which will generate enough power for almost 500,000 homes.

Clean living: solar panels are installed on the roof of a residential building at Masdar Institute.  

Duncan Chard / Bloomberg News

Its first foundations were installed last month, and it is expected to become the world's largest offshore wind farm when completed. Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, has invested more than Dh1.7 billion (US$462.8 million) in this project through Masdar.

Both our governments recognise that energy sources of the future must diversify. However, in the short term, reality will follow vision only if profitability is not compromised.

Adapting to an uncertain climate: a world of commercial opportunities, an Economist Intelligence Unit report commissioned by UK Trade & Investment, focuses on the commercialisation of low-carbon goods and services.

About 150 companies based in the Gulf, among a global total of more than 700, were polled about the potential business opportunities involved in adapting to anticipated changes in the global climate.

The results show that while the Middle East and Africa are right on the global average in responding actively in terms of planning or adapting to the effects of climate change, the UAE is well above the average in taking action on these issues. This is not surprising, given the leadership the UAE has shown in committing to a low-carbon economy, which is leading a drive of wider engagement by the business community.

It has become clear that successful businesses of the future will be those that see the opportunities, and act on them.

Many British companies, such as Atkins, the engineering consultancy responsible for UAE landmarks such as the Burj Al Arab and the Dubai Metro, have embraced the challenge, building adaptation into their short and long-term business plans. Professional service companies, such as PricewaterhouseCoopers in the UK, have teams to help businesses capitalise on climate-fuelled opportunities, as well as manage the risks.


The British government is also working to boost investment and create innovation in the UK energy market by creating a green investment bank, and launching an ambitious electricity market reform programme.

These present great opportunities for future partnership, especially given the UAE's commitment to being a world-class low-carbon leader.

Areas for future development include the world's largest offshore wind regime and new nuclear power construction across the UK.

While climate change is an issue that will affect businesses in all sectors of the economy, creating, identifying and acting on opportunities for innovation and commercialisation are significant.

By working together in partnership, as governments and through enterprise, the UK and the UAE can lead the way in securing prosperity through adaptation, for today, and for generations to come.

UK Oil Tax Hike to Benefit Smaller Acquisitive N. Sea Producers

UK Oil Tax Hike to Benefit Smaller Acquisitive N. Sea Producers

Friday, April 08, 2011
Dow Jones Newswires

by  Sarah Kent & Iain Packham

The U.K.'s new levies on oil production could benefit small North Sea producers eager to snap up aging fields from international energy giants looking to minimize their exposure to the tax increase.

The tax, which increases the charge on profits from U.K. oil and gas production to 32% from 20%, is likely to force oil majors to lower the sale price of aging offshore fields, providing bargains for the smaller companies already in the market to buy them.

This could speed up the shift in ownership of North Sea assets, from the large companies that dominated production in the region when output was at its peak to smaller companies specializing in recovering oil and gas from fields well into their decline.

"I do see a silver lining. Fewer companies will be coming into the [North Sea]," said EnQuest's Chief Executive Amjad Bseisu. "There will be fewer buyers and more sellers because of the deterioration and degradation in the tax situation."

The tax increase, which took the industry by surprise, narrows already-slim profit margins on many of the older North Sea fields, where declining reserves are becoming more expensive to extract.

Larger companies tend to invest only when they expect a higher returns, and they usually view the expense of breathing new life into a mostly-depleted field as not worth the small reward. Smaller companies, which tend to have fewer qualms about lower returns, are now finding they can snap up assets at a fraction of the price of as little as two weeks ago when the tax was introduced.

Among the large international oil companies active in the North Sea, Statoil, Total and BASF subsidiary Wintershall have all said they are reviewing investment plans. Meanwhile, smaller independent oil companies including Valiant Petroleum and EnQuest have said that the tax hike will benefit their ongoing strategy to buy more North Sea reserves.

"The tax increase will make assets more peripheral to major companies because they will decrease in value," said Peter Basset, an oil and gas analyst at Westhouse Securities. "After a period of reflection quite a lot of assets will come on to the market at a lower price."

North Sea investment has profound consequences for global oil prices. The Brent blend, used as a pricing benchmark for much of the crude bought and sold in Europe and Asia, is produced from North Sea fields. Declining output has caused Brent prices to fall out of step with the global market in the past, and could do so again without continued investment in older fields and exploration.

The bargain hunting has already begun. Earlier this week Ithaca announced its acquisition of Hess' interest in two North Sea fields for $74.6 million and Ithaca's 10% stake in three North Sea exploration blocks.

Cenkos Securities said this is the equivalent of paying $14.30 a barrel for the assets, compared with $17.50 a barrel paid last October by Faroe Petroleum for an 18% stake in the Blane field.

The deal works out especially favorably for Ithaca as it expects to be shielded from the rise in taxes, at least initially. It posted a loss of $215 million at the start of 2011, which it estimates will exempt it from cash taxes for the next five years. In the U.K. companies are able to offset losses against their profits when paying tax. Other small North Sea operators are in a similar position.

However, the window of opportunity for smaller oil producers could be closing. The oil industry is lobbying the U.K. government for more favorable tax terms, including extra incentives for natural gas production, lower taxes on marginal fields and a tax reduction if oil prices drop. Some companies may hold off from selling their assets until the tax issue is settled.

"Until there is absolute clarity from the government as to what the fiscal regime will be, I can't see many large deals getting done," said James Hosie, an analyst at RBC Capital Markets.

Total: UK Open to Mitigating Effect of Oil Tax Rise

Total: UK Open to Mitigating Effect of Oil Tax Rise

Wednesday, April 06, 2011
Dow Jones Newswires
by  James Herron

The U.K. government appears willing to consider measures to mitigate the effect of a recent large increase in tax on oil and gas producers, following a meeting with oil industry representatives last week, a senior executive at French oil company Total said Wednesday.

Representatives of the Department of Energy and Climate Change and the Treasury "realized that the concerns of industry are real...not just a selfish reaction," said Patrice de Vivies, Total's vice president of Exploration and Production in northwestern Europe.

Oil companies and many industry analysts have said the increase in the supplementary tax charge on their profits to 32% from 20% will hurt investment in the North Sea.
The measure was introduced in response to the rise of oil prices above $100 a barrel, but De Vivies said there is no justification for imposing the tax on gas fields, for which the price is equivalent to $55 a barrel.

"[They] will have to give extra incentives to gas fields," which make up the bulk of remaining U.K. resources, or face declining investment, he said. Total is reviewing all of its potential new projects in the U.K. following the change, he said.

Total Chief Executive Christophe de Margerie will meet soon with U.K. Chancellor of the Exchequer George Osborne to discuss the tax increase, De Vivies said.

Dow Jones Newswires put De Vivies' comments to the U.K. Treasury, who responded by referencing statements made by ministers in the wake of last week's meeting.
Energy and Climate Change Secretary Chris Huhne said at the time: "We're going to be considering some of the points that they [the industry] made. There are elements of what the Chancellor announced which were up for consultation, including the issue of the oil price at which the fair fuel stabilizer operates."

Separately, RWE Dea, the oil and natural gas unit of German utility RWE, said Wednesday the planned tax increase is "unpleasant" and should be retracted.
"We've learned about the U.K. government's plan to increase the tax and indeed found ourselves very flatfooted," said RWE Dea Chief Executive Thomas Rappuhn at the company's annual press conference in Hamburg.