Daily Archives: March 7, 2017

Credit: Scripps Institution of Oceanography

Above: This map shows the Newport Inglewood Rose Canyon Fault, and underwater topography off the coast of Southern California, and the San Onofre Nuclear Generating Site, or SONGS, site, February 2017.

The offshore Newport-Inglewood and Rose Canyon faults are part of the same fault system and could produce earthquakes of a magnitude 7.3 or greater, according to a study released by the Scripps Institution of Oceanography Wednesday.

The faults, which run from San Diego to Los Angeles, had previously been considered separate.

RELATED: Seismic Research Explores San Onofres Earthquake, Tsunami Risks

Instead, they are actually one continuous system running from San Diego Bay to Seal Beach in Orange County, then on land through the Los Angeles basin, according to the study, published in the American Geophysical Union's Journal of Geophysical Research.

"This system is mostly offshore but never more than four miles from the San Diego, Orange County, and Los Angeles County coast," said lead author Valerie Sahakian, who performed the work during her doctorate at Scripps.

"Even if you have a high 5- or low 6-magnitude earthquake, it can still have a major impact on those regions which are some of the most densely populated in California," said Sahakian, now a postdoctoral fellow with the U.S. Geological Survey.

An offshore quake could register as much as 7.3, however, while one on land could hit 7.4, she said.

Researchers processed data from previous seismic surveys, and supplemented it with high-resolution underwater topography data gathered offshore by Scripps researchers between 2006 and 2009 along with seismic surveys conducted aboard Scripps research vessels in 2013.

The disparate data have different resolution scales and depth of penetration, which allowed the scientists to define the fault architecture at an unprecedented scale and create magnitude estimates with more certainty, according to Scripps.

The fault system most famously produced a 6.4-magnitude quake in Long Beach that killed 115 people in 1933.

Researchers have found evidence of earlier earthquakes of indeterminate size on onshore portions of the fault, finding that at the northern end of the fault system, there have been between three and five ruptures in the last 11,000 years. At the southern end, there is evidence of a quake that took place roughly 400 years ago and little significant activity for 5,000 years before that.

The Rose Canyon Fault runs alongside the northern San Diego County coast, comes inland around La Jolla, extends under downtown San Diego and winds up offshore again off Imperial Beach.

The authors conclude that further study is needed to improve the understanding of the threat posed to urban areas between Tijuana and Los Angeles.

Researchers at the Nevada Seismological Laboratory assisted with the study, which was funded by Southern California Edison.

To view PDF documents, Download Acrobat Reader.

More:

Study: Offshore Fault System Could Produce 7.3 Earthquake - KPBS

Image: SemiSubmersible Sevan Driller

Investment Thesis

The offshore drilling industry is suffering through the worst bear cycle in history. The oil crash that began late in 2014 had a terrible effect on the offshore drilling players such as Transocean (NYSE:RIG), Seadrill (NYSE:SDRL) or Noble Corporation (NYSE:NE) and another dozen or more companies struggling to avoid a financial meltdown, due to a basic lack of work, dismal day rates and rig oversupply, which is the unavoidable trichotomy of an offshore drilling bear market that continues unabated as I speak today.

Oil majors have reduced exploration CapEx to a bare minimum just barely higher in 2017 but still painfully insufficient.

I have followed this sector closely for years and tried to report the slow degradation of the business environment until now and I am still waiting to see some meaningful signs of a potential recovery. However, of late, we may have experienced an important change in the oil market that may lead to a bottom for offshore drilling and a possible recovery late in 2018 or early 2019?

OPEC and non-OPEC producers have agreed to cut production by a little less than 1.8 MBOPD, and quickly in December 2016 the price of oil began to trend up, at least until January 2017. Unfortunately, oil prices have stalled abruptly after reaching a range of $53-$56 per barrel, due to a booming US shale new activity -- especially in the Permian sector and doubt about the effectiveness of this supply reduction long-term.

Yet, some analysts are still forecasting slightly over $60 a barrel in 2018, which is enough to change the dynamic in the offshore exploration, notably in the deepwater segment which needs about $63 per barrel to be economical. Nonetheless, the situation is not an easy one and a potential to return to the $40's a barrel is also a present and real danger.

While waiting for concrete signs of tendering activity, it is important to know what exploration sectors will provide for the deepwater and ultra-deepwater business in the near future?

One important area that could help the offshore industry to survive this downturn is India offshore, which is the main topic of my article today. ONGC is active and is about to award three rigs on a three-year contract for its KG-DWN-98/2 block.

Description of the Krishna Godavari basin:

Total oil initially in place in the KG-DWN-98/2 block is estimated at 106 million cubic meters, production of only 26.71 million cubic meters is envisaged during 2019-2031.

Similarly, the gas initially in place is estimated at 69.57 billion cubic meters "BCM," of which only 51.33 BCM can be produced during 2018-34.

On December 23, 2016, we learned from Upstream that ONGC submitted offers for two units able to drill in 1500 meters of water, and one rig to drill in 600 meters.

[Translated from Norwegian] Seadrill is one of several bidders in a tender for three deepwater rigs from India's state oil company ONGC, reports Upstream, according to TDN Finans. The rigs will be used on flagship block KG-DWN-98/2 outside India's east coast. The first part of the tender process consists according to news agency two dynamically positioned drillship or semi rigs to drill in 1,500 meters. It is in this category Upstream sources mention Seadrill that one of the bidders, with the drillship "Sevan Driller". In addition participates among others Transocean , Vantage Drilling (OTCPK:VTGDF), Universal Energy Resources, Noble Drilling ((NYSE:NE)) and Ocean Rig (NASDAQ:ORIG).

On March 3, 2017, We learn again from Upstream that ONGC is now close to award the three 3-year contracts.

Three leading international drilling contractors are poised to win three-year, deep-water rig contracts from India's Oil & Natural Gas Corporation (ONGC) for its flagship Block KG-DWN-98/2 development off the country's east coast.

ONGC requires two 1500-metre, dynamically positioned drillships or semi-submersibles in one category and a single anchor-moored rig capable of drilling in 600 meters of water in the second.

London-headquartered giant Seadrill and Singapore's Vantage Drilling are expected to win three-year rig charter contracts in the 1500-metre category, while Brazil's Queiroz Galvao Oil & Gas (QGOG) is likely to win a three-year rig contract in the 600-metre category, sources said.

On February 27, 2017, commercial bids were opened by ONGC and the results are indicated in a small table below:

Seadrill with its Subsidiarie Sevan Drilling.

Sevan Drilling ASA (SEVDR.OL) (OTCPK:SDRNF), listed on the Oslo stock exchange: SDRL owns 50.11% (14.897 million shares) of the company.

Semisubmersible Sevan Driller (2009)

Actually Ready stacked in Singapore

Drillship Platinum Explorer

(2010)

Actually Ready stacked in India

Midwater Semisub Olinda Star

(1983)

Actually Ready stacked in Brazil

Transocean (RIG) is said to be the biggest loser in this fight for survival. The company offered no less than three drillships in the first category and one semisubmersible in the second category:

More than a dozen rigs were offered by nine contractors in the 1500-metre category.

Transocean is believed to have offered the highest bid with $166,750/d for the three drillships offered. For the second category, Transocean was the second bidder with $146,050/day (only three bidders in this category with the Semisubmersible Hakuryu-5 from Japan drilling but seems to have been disqualified?

Conclusion:

Let's all be honest here. Who in its right business mind and most importantly, why, a company is willing to commit to a 3-year drilling contract at a certain operating loss? The basic reasoning is evading my understanding. It doesn't make any sense. To paraphrase Galileo Galilei "and yet it moves", I would say, and yet offshore drillers do it.

First topic: What is the actual average day rates for Semisubmersibles and Drillships. According to IHS Markit.

Day rates are quite constant since October 2016 which is a sign that we are now at breakeven level.

As an example, let's calculate a breakeven cost using Transocean, which is the leader in this sector. I took this table from my article about Transocean 4Q'16 results. If you want to read it please click here.

Day rate for RIG fleet.

Dayrate

2016 Estimated

$K/d

4Q'16

$k/d

3Q'16

$k/d

2Q'16

$k/d

1Q'16

$k/d

4Q'15

$k/d

3Q'15

$K/d

2Q'15

$K/d

4Q'14

$k/d

Operating and Maintenance expenses were $314 million in 4Q'16 and total revenues were $974 million for the same period. Operating and maintenance expenses are 32.2% of the total revenues. I do not even talk about the debt here...

I we apply to the average day rate 4Q'16 for UDW we have a breakeven price per day of, $490,600/d x 32.2% = $158,000/d

Thus, I consider that $158k/d is a good estimate of what could be considered as "breakeven operating price" for a drillship in 2017, in general. This simple calculation justifies the day rate offered by Transocean for the three drillships at $167k/d including tax.

Transocean offers its service at breakeven operating costs for 3-years. Now, how can Vantage drilling Inc., or Sevan Drilling can justify such day rate?

I am sure, many will find a way to justify this move, but, the fact of the matter is that the companies working for ONGC will consistently lose money, and for the next three years, period.

The Industry is not thinking straight, in my judgment. The price war has gone too far, and should not be even tolerated.

Risks of labor abuse and all kinds of neglect of basic maintenance costs may result to catastrophic hiccup down the road. The Industry should meet and create a minimum guideline with a minimum viable day rate under which it is not allowed to go.

Important note: Do not forget to follow me on SDRL and other offshore drillers. Thank you.

Disclosure: I am/we are long RIG AND OTHERS.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

Read the rest here:

Seadrill - 3 Offshore Drillers Poised To Win The 3 ONGC 3-Year Tenders - Is It Really Worth It? - Seeking Alpha

LINTHICUM HEIGHTS, Md. - Offshore wind developers discussed plans to bring wind farming to Maryland Tuesday.

The Business Network for Offshore Wind (the Network) sponsored a breakfast to introduce Deepwater Wind and US Wind to industry leaders.

The developers submitted proposals to the Maryland Public Service Commission to build the first offshore wind farm off Maryland's coast.

Offshore wind power is inevitable. If we want to meet our clean energy goals, if we want to hedge our bets against fossil fuel volatility, if we also want to have the lights come on around the most congested areas where the load centers are (which are our coast) then we have to have offshore wind, said Liz Burdock, the executive director at Business Network for Offshore Wind.

In Maryland, offshore wind is much more powerful than onshore wind, and in 2013, the Maryland Offshore Wind Energy Act was passed creating subsidies for offshore wind facilities.

The application process opened last year and this year, the Maryland Public Service Commission will review and potentially approve one of the two projects.

We've proposed the Skipjack Wind Farm, which is a 120 megawatt project that's located 17 miles off the coast of Ocean City, Maryland. It'll consist of 15 wind turbines and it'll produce enough power for about 35,000 Maryland homes, said Clint Plummer, the vice-president of development for Deepwater Wind.

Deepwater Wind is the developer of Americas first offshore wind farm launched off Block Island in Rhode Island last December. Also competing for approval is U.S. Wind.

This is a huge economic development project, which will employ 5,000 or more people over the course of a generation as we not only build our project but build out the Port of Baltimore and Ocean City to support projects up and down the east coast, said Paul Rich, the project development director for U.S. Wind.

Part of the financing for the projects will come from Marylanders who pay for public utilities. The act made available up to $1.9 billion in financing, but it also put a cap on the monthly charge to consumers.

The Maryland law establishes a cap of no more than $1.50 per customer per month, said Plummer.

However, rate payers won't see an increase in their bills until the turbines start spinning and that's not anticipated til around 2022. Proponents of the projects also call it a nominal fee for something that will potentially change the way Americans generate power.

The opportunity to bring a Silicon Valley of offshore wind is very real and we need to seize this opportunity as Marylanders, Rich said.

Packed house for @DeepwaterWind @uswindinc breakfast meeting #moveosw pic.twitter.com/1Vqbv1n8fM

According to officials, The Northeast regional pipeline of offshore wind would create about 75,000 jobs.

The meeting was held at the Maritime Conference Center Maritime Institute.

There will be two public hearings on the proposed projects. The first will be on Saturday, March 25, beginning at noon in the cafeteria of Stephen Decatur Middle School located at 9815SeahawkRoad, Berlin, Maryland 21811. The second hearing will be held on Thursday, March 30, at 6 p.m. in the Joint Committee Hearing Room in the Legislative Services Building located at 90 State Circle, Annapolis, Maryland 21401.

The Public Service Commission is expected to make a decision on May 17, 2017.

The first offshore wind project was installed in Denmark in 1991.

Download theABC2News app for theiPhone,KindleandAndroid

WMAR Staff contributed to this report.

Link:

Offshore wind developers talk plans to bring first wind farm to Maryland's coast - ABC2 News

A poster for Nazanin Sahamizadehs play Manus, which follows the lives of seven Iranian men who flee Iran only to wind up in the offshore detention centre run by Australia on Papua New Guineas Manus Island. Photograph: Nazanin Sahamizadeh

A Tehran playwright wants to bring her production, Manus, to Australia to help the outside world hear the voices of refugees held on the remote island.

Nazanin Sahamizadehs play follows the lives of seven Iranian men who flee by various means from Iran, seeking protection and freedom, only to wind up in the offshore detention centre run by Australia on Papua New Guineas Manus Island. The play centres around their time on the island and their struggle to cope with the violence, indignities and privation of their indefinite detention, and the uncertainty over their futures.

The seven-man production is in the middle of a two-month run at the Qashqai Hall of Tehrans City Theatre complex and Sahamizadeh hopes to soon take it further afield.

I wish, firstly, to perform it in Australia and then in other places in the world, to allow people to hear the voices of refugees, she told the Guardian. And I hope to create a movement towards closing Manus and Nauru camps as soon as possible and helping to free the refugees held there.

Sahamizadeh said few people in Iran were aware of Australias offshore detention regime, despite Iranians being the largest cohort of detainees on both of Australias offshore islands.

There is no information about these camps at all in Iran and no news about the events and disasters that have been happened there, she said. Maybe just a few people have heard a brief headline of news.

I thought only Reza Barati had been killed by camp authorities but others have also died in the camps.

She said she had been stunned to learn of the detention centre on Manus ruled illegal and unconstitutional by the supreme court more than 10 months ago and that men had been held there for more than three years.

It is so tragic and shocking, she said. Because Australia is first-world country and a pretender [to uphold] human rights. But this behaviour with refugees and asylum seekers is completely against humanity.

The play deals with violence in the island camps and the deterioration of the protagonists mental and physical health. But the show does not aim to preach, Sahamizadeh insisted.

Ive mostly tried to give audiences awareness and make them think, instead of giving them just message.

She said people brought, and left with, different attitudes towards the issue of irregular migration and of those who seek asylum.

Some believe that refugees should not use illegal ways and government has right to deal with them but the majority are saying that these camps should be closed and government should not act like this.

She said the play, despite its controversial subject matter Irans theocratic regime is sensitive to the issue of its citizens fleeing to claim protection and refuses to accept failed asylum seekers forcibly returned to its territory has not attracted the attention, nor opprobrium, of authorities.

My play is a social show and not political and is for ordinary people and not authorities.

Hossein Babaahmadi, a former asylum seeker held on Manus who has since returned to Iran, spoke at a performance of the play, telling the audience he was still suffering from his time seeking asylum and in detention.

Only those who been through this can imagine this journey every single moment of it was like death.

More here:

Australia's 'shocking' offshore immigration regime inspires play staged in Iran - The Guardian

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide

Read more from the original source:

Offshore Wind Farms in Japan - JD Supra (press release)