It’s time to get your St John First Aid training

First Aid Rigforce

Spring is on the way, which means asthma season is just about to start. We wanted to take the opportunity to encourage everyone – whether you work in the oil industry or not – to complete a little practical upskilling with a St John Ambulance First Aid course.

We talked earlier in the year about how critical First Aid training is, especially in Australia. Less than 5% of Australians have a First Aid certificate, and we have the highest rates of asthma and allergies in the world – both potentially life-threatening conditions, especially for children.

Around 40 of Rigforce’s offshore crew have completed First Aid training over the past year, and the St John First Aid trainers have been fantastic to work with. St John offer an exceptional service which literally saves lives and they do it year-round in every major city in Australia. They also offer a range of vital information and medical essentials – like First Aid kits and supplies – and have a huge suite of nationally accredited and non-accredited courses for the home and the workplace.

Courses are open to everyone and most can be completed in a day. Book online or make an enquiry through the St John Ambulance Australia website.

 

Rigforce communications are intended to provide general information and commentary and should not be taken as professional or legal advice.

Is now the time to invest in oil stocks?

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 “Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.” – Warren Buffett

Is it time to start thinking about investing in oil stocks? The wise words of Warren Buffett are a very relevant reminder that ‘bucking the trend’ in gloomy conditions isn’t just about staying optimistic – it can be a very smart and very profitable investment strategy.

Commodities, with the exception of a few outliers such as gold and lithium, have been stock market poison for the last five years, and the oil price is still a long way from the sort of stability which appeals to investors. We’ve recently experienced 20% fluctuations in the space of a few weeks, and the market swings wildly every time there is a hint of any change (think of the Nigerian supply interruptions , the Canadian wildfires and this week’s US petrol stocks draw). I’ve seen rock-solid oil price predictions for everything from $30 to $75 by the end of the year. So it’s a terrible time to be investing, right?

Not at all. If you cut through the noise and the reactive short-term assessments, there are several very promising signs of imminent recovery. Here’s why I think now is the perfect time to start looking for opportunities to invest in oil stocks.

The first sign is confidence. Current market conditions are evidence of a deep and enduring pessimistic outlook – in the last the year, the RBA’s index of commodity prices has plunged even lower than the levels we saw in the aftermath of the GFC. And this comes at the end of five years of near-constant free fall from the glory days of 2011-2012. It’s hard to imagine things getting much worse than they are now, and that is, ironically, the reason they’re most likely to improve. In a market based on confidence, a prevailing sentiment that things can only get better will generate its own momentum; confidence begets confidence. We may already be seeing the beginnings of this phenomenon, with steep upward movement – with a few hiccups – in the first half of 2016.

Second, I would look to the nature of the oil market itself. Oil is by nature, a finite resource: it can only be produced from existing sources which will eventually be exhausted. It follows that there will always be pressure on supply over a long period of time. Historically, any protracted slump in oil prices is followed by an up-tick as consistent demand reasserts itself and languishing production works to catch up. The chances of this improvement increase the longer the slump lasts, and go up exponentially past the two-year mark. The supply glut is already starting to ease, which means this price recovery is likely not far away.

And the third indicator, which will be key to the long-term recovery of the market, is the viability of US shale rigs. A lot of the development which went on in the US was initiated not by the big companies who fund their own operations, but by junior players who rely primarily on bank loans for finance. Lower barriers to entry combined with loans underpinned by $80-90 oil prices allowed these producers to proliferate, contributing to the current supply glut. These smaller operators will struggle to secure these loans under current conditions – banks are far more cautious about funding oil development programs with prices hovering around $45. As the current batch of shale wells starts start to decline (which often happens within a year of starting production), we’re likely to see a swathe of small and mid-size producers removed from the market, at least for the short term. This is exactly the sort of correction required for a re-balancing of the global market – and the EIA is in fact predicting that the supply and demand curves will start to match up in the next year.

The consensus is that these factors all point to a turnaround – and while they’re not exactly low-hanging fruit, oil stocks are becoming more and more attractive the longer these conditions go on. Those who seize the opportunity earlier rather than later will likely see their confidence rewarded.

Rigforce communications are intended to provide general information and commentary and should not be taken as professional or legal advice.

The Rigforce Quarterly

Oil, Oil Price, Price of Oil, Rigforce

The financial year is over yet again, and we’re looking back on a tumultuous twelve months in the oil and gas industry.

The rally in oil prices from last quarter has been maintained to a large degree this quarter and global rig counts are up for the first time in years. Here’s a snapshot of what we were up to at Rigforce last quarter, and the big numbers from the industry worldwide.

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Rigforce Dossier: Nigeria

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The Federal Republic of Nigeria is Africa’s largest economy with a GDP of USD$1.1trillion2. Nigeria has Africa’s largest oil production capacity and was also the world’s fourth-largest exporter of LNG in 2015. Nigeria is a member of OPEC.

Built on the Barrel

Oil accounts for 98% of Nigeria’s export earnings, 84% of government revenue, and 14% of national GDP. Current figures place Nigeria’s proven oil reserves at 37.2 billion barrels1, making it the world’s tenth most oil-rich nation. Almost all of this oil is found in the swamps of the Niger Delta, or offshore.

Not Trickling Down

Nigerian government officials remain majority stakeholders in the nation’s oil profits. According to Africa’s Standard Bank, the government has made over USD$1.6trillion profit in the last fifty years, while over 62% of the population are below the poverty line2.

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The Niger Delta Avengers

The Niger Delta Avengers (NDA) are a militant group aiming to give control of the Niger Delta’s resources to the impoverished local people. Their chief tactic is to sabotage oil production infrastructure, usually with explosives, to deprive the government of its main source of income. They have claimed nearly 30 attacks since May 2016.

Supply Shock

Until recently, Nigeria was Africa’s largest oil producer, at around 2.2m bpd in 2015. To date, NDA attacks have reduced Nigeria’s oil production by a third.

The Numbers

  • Nigeria’s maximum production output is 5m bpd. It currently produces around 1.4m bpd.
  • Global oil prices rose to almost $50 in March/April, due in part to the supply interruption caused by the Nigerian attacks.
  • The economy contracted by 36% in the first quarter of 2016, and is heading for recession.

 

Sources:

  1. 1. U.S. Energy Information Administration (U.S. EIA), “Nigeria Country Analysis Brief,” May 2016
  2. Population below poverty line, World Fact Book, CIA

 

Rigforce communications are intended to provide general information and commentary and should not be taken as professional or legal advice.  

Greater Enfield development set to create “several hundred WA-based jobs”: Woodside

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Woodside has doubled down on its commitment to the North West Shelf this year, with a recent ASX announcement that it has approved the development the Greater Enfield Project.

The project will require six new subsea production wells and six water injection wells, with first oil expected in 2019.

Greater Enfield is located 60km off Exmouth and will make use of the existing Ngujima-Yin FPSO installation, located over the Vincent oil field. Woodside CEO Peter Coleman credits innovations in technology and contracting, as well as the use of the existing FPSO infrastructure, for making the development possible. He also said the project is a great example of Woodside’s “phased and sustainable” approach to growth.

It is expected that most contracts will be awarded by the second half of 2016, with local opportunities to be advertised on the ProjectConnect website. In an interview with BP Digital, a Woodside spokesperson cemented a strong commitment to local content, confirming that “Woodside is planning for several hundred WA-based jobs to be secured as part of the project execution and operations.”

This is obviously great news for local industry, and possibly a sign that the measured approach of local operators is starting to pay off. Even better, it comes on the back of more encouraging developments from Quadrant and Carnarvon Petroleum, who have just completed a revised wireline logging program on the Outtrim East-1 well. While full analysis of the core will take months to finalise, the latest update is that “early interpretation of fluorescence data indicates the well has discovered the presence of hydrocarbons in the target interval.” Combined with the extremely positive results from Roc-1 earlier in the year, it could signal more potential for development very close to home.

 

Rigforce communications are intended to provide general information and commentary and should not be taken as professional or legal advice.  

Brexit: What now for the North Sea?

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The world is still reeling from the Brexit vote, and look headed for more turmoil in the short term. While the oil and gas industry is hopefully witnessing the first stirrings of a recovery, the trouble in Europe is making itself felt.

One of the biggest issues is the prospect of another Scottish independence vote, which is looking increasingly likely according to First Minister Nicola Sturgeon. An independent Scotland would assume sole control over its territorial waters, which include the majority of the UK’s current oil production assets in the North Sea.

How will this affect the industry in the region? The short term outlook is not bright. Producers in the North Sea are already spending 40% less this year compared to 2014. North Sea production is notoriously costly, and the reduced returns from low crude prices over the past few years have hit hard. Add to this the years of potential regional instability which are predicted – with or without Scottish independence – and a lack of big new prospects, and there are some definite downside risks. Political uncertainty is never good for investment.

In the previous Scottish independence vote, major energy companies, including BP and Shell, were vocal in supporting Scotland’s continued union with the rest of the UK. It remains unclear what position they will take over any new vote – the details of the post-Brexit UK will need to be hammered out first. But long term stability will be the key, and the coming months will tell if that stability is more likely with Scotland as a member of the UK or the EU.

BUT – it’s not all bad news! All political predictions aside, most commentators agree that the single biggest deciding factor in the fortunes of the North Sea is economics. While Scotland’s dreams of a Norwegian-style energy fund (proposed before 2014’s failed vote) are not feasible under the current market conditions, a stronger Brent crude price will deliver stimulus to the region, regardless of whether it stays in the UK or leaves. The current devaluation of UK currency could be another windfall for producers, who pay their costs in pounds but sell their stock for US dollars. Better prices and cheaper running costs could very well equate to more investment and exploration once the dust settles, which is what the North Sea so desperately needs.

 

Rigforce communications are intended to provide general information and commentary and should not be taken as professional or legal advice.  

 

Well Control Training FAQ: who needs it and why is it important?

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We’ve had a lot of crew required to undergo well control training lately.  It’s a challenging course, especially at the higher levels, but it’s vital for anyone with a role in well control on the rig.

We’ve put together a quick FAQ of the different levels of training and what they require.


 

1. Who runs the training?

Training standards are set by the International Well Control Forum (IWCF) and training courses are run through IADC who conduct the Wellsharp program (formerly WELLCAP).

 


 

2. How is the training conducted?

Each IWCF Drilling Well Control course is conducted over five days, in groups of no more than 15. The courses involve a combination of classroom sessions, practical exercises and simulations.

 


 

3. How is the training assessed?

Exams

Each course is assessed with a combination of exams. The first is a 1-hour multiple choice Equipment test in which you will be asked to identify equipment and components from diagrams and schematics.

The second exam focusses on Principle and Procedures, and consists of multiple choice questions and Kill Sheet calculations. Candidates are allowed between 1.5 and 2.5 hours to complete this exam, depending on the course.

Candidates must achieve 70% or above in all sections to pass.

Practicl Assessment

Level 3 and Level 4 also require a Practical Assessment. Candidates must demonstrate the practical and technical skills required to complete the well kill operation.

 


 

4. How much does it cost?

Currently, each course costs around $2800 AUD.

 


 

5. What are the different levels and who needs to complete them?

IWCF LEVEL 2 – Introduction to Drilling Well Control

This is the course for first-time trainees and must be completed before progressing to higher levels.

Level 2 covers the theory, practice and equipment involved in well control. It provides an introduction to the rig and its systems, as well as explaining the BOP and other vital components of controlling the well.

IWCF Drilling Well Control LEVEL 3  – Surface OR Combined Surface/Subsea DRILLER

This course is designed for any role required to shut in a well: senior operational and engineering personnel, drilling superintendents, drilling engineers, OIMs, drilling supervisors, tool pushers and drillers.

Level 3 provides the knowledge and practical skills required for safe well control on the rig, and you will need to choose to sit the IWCF assessment examination for either Surface or Combined Surface/Subsea BOP accreditation.

IWCF Drilling Well Control LEVEL 4  – Surface OR Combined Surface/Subsea SUPERVISOR

Level 4 is Well Site Supervisor training. As with Level 3, participants must choose whether to sit the assessment for Surface or Combined Surface/Subsea operations.

 


 

6. How long is it valid?

Level 2 Certification is valid for five years.

Level 3 and 4 Certification are valid for two years.

 


 

If you need any more information about well control training, please get in touch with us at Rigforce. The IADC and IWCF websites also have a huge amount of information and a breakdown of specific course content.

 

Rigforce communications are intended to provide general information and commentary and should not be taken as professional or legal advice.  

 

Just browsing: Is it worth getting excited about Australian exploration?

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There’s a lot of news about oil and gas exploration at the moment, especially close to home.

Quadrant Energy had great results at the Roc-1 and Levitt-1 wells and recently announced their funding of more than 20,000 km2 of new 2D and 3D seismic acquisition offshore Carnarvon – the largest single seismic acquisition activity in Australian oil and gas history. BHP Billiton has raised its exploration budget for 2016 (split 50/50 between the US and Australia). Shell says Australia is key to the company’s LNG growth aspirations globally.

So when will they start producing? If you’re brave enough to read the comments on any of these reports, you’ll inevitably come across people asking, ‘what’s the point?’ Exploration is great, but why should we get excited if these companies are ‘just browsing’ and not planning to drill anything?

And it’s an understandable objection. Oil companies have been stacking their rigs in record numbers, and there have been no big announcements about new drilling operations for some time. So why all the optimism around new prospects, when existing asset developments are being deferred?

BHP’s official comment gives a clear answer: “While we are focused on value and cash flow preservation as we manage through this period of lower prices, we retain the option to develop our resources as prices recover to maximise the value of these quality assets.”

The key is timing. A lower oil price obviously makes investing in production far less profitable. But it also means that companies can turn their energy and resources towards laying the groundwork for the future. During a downturn, services are less expensive and so are long-term assets; these are much better investments than the running costs of a rig that’s barely breaking even. When the oil price recovers, these companies will have a greater number of options for ramping up production, and the resources on hand to do it.

So yes, it’s definitely worth getting excited about exploration in Australia! Exploration is a sign that all of these companies are fully expecting the oil price to recover, and planning strategically for when it happens. And the amount of exploration that’s happening in Australia is good reason to hope that when market conditions improve – which could be sooner rather than later – there will be plenty of activity right on our doorstep.

The Canadian wildfire: what happens now?

Firefighting Canada

Many Alberta evacuees are slowly returning to their communities, but the Fort McMurray wildfire continues to burn and is expected to take months to fully contain and extinguish.

Covering over 5,000 square kilometers and prompting the evacuation of around 90,000 people, the fire looks set to become the costliest disaster in Canadian history.

With so much uncertainty around how and when basic infrastructure will be restored, many in our industry are naturally beginning to ask, what about the oil sands producers?

Thousands of workers were evacuated from oil sands operations in the path of the fire, with many emergency crews lending a hand to the firefighting effort. These operations accounted for a quarter of Canada’s oil production – about 1 million bpd – and the Albertan economy loses $70 million a day until work resumes. The disruption has had a significant impact on the global market, reducing supply and contributing to the recent lift in the oil price.

There is some good news in that most of the oil sands operations have escaped major damage from the fires. While several employee accommodation lodges were lost, the construction of the oil sands plants and their distance from the trees protected them from the worst of the damage. This week major companies like Suncor have begun a staged restart of operations and plan to have most employees back at work within the next few days.

So can we expect a return to sub-$30 oil prices once Canadian production is back to normal?

Most experts don’t think so. A host of other factors have come into play alongside the disruption to Canadian supply, including attacks on oil production facilities in Nigeria and the lowest US production rate since September 2014. And while OPEC is standing strong on its policy of limitless production, stockpiles in the US fell 1.37 million barrels last week and most predictions maintain an oil price of around $50 in the short to medium term. It’s quite likely that Canadian producers will in fact be able to enjoy some of the more favourable conditions their absence has enabled.

 

Rigforce communications are intended to provide general information and commentary and should not be taken as professional or legal advice.

An unconventional look at the offshore industry and its technology.

Rig technology

The offshore oil and gas industry is second only to space travel in its level of technological advancement. In the last few decades, our industry has been involved in some of the biggest breakthroughs and crossovers in the scientific world.

This week we’ve pulled together a few of the more remarkable technological achievements, from safety to (almost) science fiction.

  1. We can now drill and operate in water over 3km deep.

This was unthinkable only 20 years ago. To put the distance in perspective, it’s about as far as you’d get if you ran for fifteen minutes, straight down. Dynamic positioning systems and new drilling technologies allow rigs and production platforms to maintain position over these deepwater wells, even in the worst conditions.

  1. Nanotechnology is real and it’s changing the world.

Originally found only in science fiction, nanotechnology was initially developed for medical applications. It involves the creation and use of particles 1-100 nanometres in size (a nanometre is one billionth of a regular metre) in chemical and engineering processes. We’re only seeing the beginnings of nanotechnology’s offshore applications, but it’s already being used in everything from safer acid replacements to nanodiamond drilling bits.

  1. We’re (still) leading the world in safety innovation.

Australian-based Optalert has developed sunglasses which monitor eye movement and blinking reflexes to monitor drowsiness and fatigue. Designed for equipment operators, the lifesaving technology has been validated by Harvard Medical School researchers.

  1. Sensors based on dolphins are being developed.

The Scottish Centre for Sensors and Imaging Systems (CENSIS) is developing a sonar system based on bottlenose dolphins. The incredible detection capabilities of the dolphins – which can differentiate between the contents of aluminium bottles using their natural sonar – has inspired a new type of signal processing technique. The researchers said that the new sensor technology could help extend the life of oil and gas pipelines by using remotely operated vehicles to detect blockages.

  1. We’re at the forefront of environmental protection technology.

Contrary to the common perception – and maybe because of it – the oil and gas industry is actually responsible for some of the world’s leading environmental protection technology. Norwegian company Aptomar has developed BlueDeal a new system for offshore operations which will monitor the sea surrounding an installation and ensure that the oil company is operating within environmental requirements. Designed to be quick and cost effective, the technology has a number of potential crossover uses in offshore industries.