Category Archives: Offshore

Published on February 27th, 2017 | by Susan Kraemer

February 27th, 2017 by Susan Kraemer

Dependence on Russianfossil energy is one weapon Putin has used to subvert democratic rule in neighboring nations. Like most of the worldspetro-states, Russia is anautocracy. But one nation having none of that is Estonia.

Gas dependence on Russia has negative consequences across the region. One is corruption, as the Kremlin and its proxies buy the political support of foreign leaders in order to maintain Russias predominant market position in their countries. In Ukraine, for example, a group of pro-Russian oligarchs grew rich off of gas deals as they subverted the effectiveness of Ukraines democracy.

This dependence has the effect of subverting youngdemocracies that depend on Russian gas.

Just the need for low, or at least affordable, energy prices encourages some central and Eastern European countries to follow the Kremlins line on foreign policy. In private, for example, Hungarian officials admit that a major factor behind the countrys pro-Russian statements and public declarations against sanctions on Russia is related to energy. Hungary hopes that its pro-Russian stance will win it lower gas prices, but the cost is to degrade the European Unions cohesion.

Hungary was for 20years a democracy. Now Hungaryhas reverted toautocracyunder strongman Viktor Orban.

But one of Russias border nations in the Baltic, Estonia, has taken a boldapproach. Estonia had beenimporting all of its natural gas for heating and hot water from Russia, but that ended last year.

In mid-2016, together with Lithuania, Estonia put a stop toits gas imports from Russia. Now Norways Statoil will instead provide gas for heat and hot water in the country.

Despite the challenges due to its position between European democracies and Putins autocracy in Russia,Estonia is looking to increase its clean energy capacity. Ithas already overshot its clean energy generation targets for 2020.

Starting almost a decade ago, Estonian developer 4Energia has been going through the environmental and technical permitting of what was proposed as a 700 MW to 1,000 MW wind farm northwest of the island of Hiiumaa in the Baltic Sea.

(4Energia is also known as Nelja Energia: Nelia means four, referring to four clean energy sources the firm plans to specialize in: wind, water, biomass and solar.)

Six years ago, the director of the Lithuanian Wind Energy AssociationSaulius Piksrys told Wind Energy Update:

The main challenge for the development of wind energy generation facilities in the Baltic States are vested interests among companies importing electricity from Russia. Powerful lobbyists are able to slow down the process significantly, even impeding the relevant law-making.

It has taken 4Energia years to develop the Hiiumaa Offshore Wind Farm. Finally, with all that paperworknow in hand, the last hurdle is financing.

Image Credit: Wikimedia: Baltic Sea off Estonia

4Energia has proposed to utilize the EUs cooperation mechanism to help finance the Hiiumaa Offshore Wind Farm, its largest Baltics project.

As a very small nation of just 1.3 million, it is not easy for Estonia to justify such a massive offshore wind farm that further overshoots its own country climate targets under the EU Directive. Estonia has already met its EU target of 25% renewable energy by 2020, and it exports surplus renewable energy to its neighbors.

One approach being taken to finding funding, is presenting the project as a way for another country that is not meeting its target to finance it under the EU Cooperation Mechanism, whereby:

Joint projects:Two or more EU countries can co-fund a renewable energy project in electricity or heating and cooling, and share the resulting renewable energy for the purpose of meeting their targets. These projects can but do not have to involve the physical transfer of energy from one country to another.

A partnership like this could be a win-win. An EU member state that is not able to meet its targets could be the financing partner. Financing a project elsewhere would qualify such a partner as having met its own 2020 target. Such an arrangement could also be beneficial in getting wind turbine orders from the array if financed by a nation with an industrial wind sector.

But the peculiar combination of factors that would be needed, of being at risk of not meeting its own target AND yet having its own growing industrial wind sector is an unusual combination.

The UK, or even better, France, might be a good potential financing partner. Both France and the UK are at risk of missing their targets but while the UK imports most of its turbinesfrom Germany, France is expanding its domestic wind manufacturing.

It is unrealistic to expect a small nation of 1.3 million like Estonia to set up its own domestic supply chain for building this offshore wind farm, even such a large one. Instead, the turbines, towers, nacelles and cables will be imported, with Germanys Enercon and Finlands WinWind acting as the main suppliers.

While 4Energia is the largest wind developer in the Baltics, to date its projects have been only on land.

Offshore wind development is generally more challenging than onshore, but the Baltic Sea does offer a relatively easy transition geologically, with a shallow and sandy seabed. Costs are lower in the sheltered Baltic Sea than in the more exposed North Sea, because lower wave heights reduce the costs of construction and ongoing maintenance. 4Energia will use ice-proof gravity-based foundations.

In turn, this ease of access for performing maintenance results in more productive hours of operation which further lowers costs again. 4Energia projects that the Hiiumaa Offshore Wind farm would have a very high capacity factor of approximately 50%, and promptand easy maintenance would be needed to achieve that.

In addition to 4Energias project, an equally ambitious Estonian offshore wind project has just begun the multi-year permitting process, this one in the Baltic Seas Riga Gulf.

Eesti Energija is the countrys state-owned primary power generator, distributor, and supplier. Its renewable arm just submitted its application to build another gigantic offshore wind farm south of Kihnu Island in the Bay of Riga. This too is proposed at a 7001,000-MW capacity. (Applicants seem to be given leeway in finalizing capacity in Estonia.)

In addition to these two huge offshore wind farms, another smaller project has made its application to begin its own environmental permitting. Neugrund, a startup firm, proposes to develop the Neugrund Offshore Wind Farm on Estonias North coast up by the Gulf of Finland. The planned capacity is between 100 MW and 234 MW.

Image Credit: Wikimedia Market in the Estonian old historic town of Tallinn

Estonia isexpanding its clean energy to the point of being a clean energy exporter, and has shifted its gas buys to state-owned Statoil, in the worlds only oil-rich liberal democracy, Norway.

The independent state of Estonia can only exist permanently in a space of democratic values, said Estonian president, Kersti Kaljulaid at this weeksEstonian Independence Day. A small state cannot function in a geopolitically tense place such as ours if it is internally undemocratic.

Related stories:

Why Putin Wants A Trump Kleptocracy Russian Military Threat Halts Giant Offshore Wind Project NATO Renewable Energy To Penetrate Into Russian Petro-State Who Benefits If Russian Oil Sanctions End? Trumps Lies Threaten Wind Techs: Fastest-Growing US Job

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Tags: 4Energia, autocracy, Baltics, democracy, Eesti Energija, Estonia, Neugrund, offshore wind, Putin, Russia, WinWind

Susan Kraemer writes atCleanTechnica, CSP-Today and Renewable Energy World. She has also been published at Wind Energy Update, Solar Plaza, Earthtechling PV-Insider , and GreenProphet, Ecoseed, NRDC OnEarth, MatterNetwork, Celsius, EnergyNow, and Scientific American. As a former serial entrepreneur in product design, Susan brings an innovator's perspective on inventing a carbon-constrained civilization: If necessity is the mother of invention, solving climate change is the mother of all necessities!As a lover of history and sci-fi, she enjoys chronicling the strange future we are creating in these interesting times. Follow Susan on Twitter @dotcommodity.

Originally posted here:

Estonia To Finance 1000 Megawatt Offshore Wind Farm At Hiiumaa - CleanTechnica

By Amey Stone

Many energy sub-sectors have rebounded nicely along with oil prices. But thats not the case with offshore drillers.

It takes much higher energy prices for offshore rigs to be in demand, which is the main reason the sector has lagged.

But Jim Brilliant, portfolio manager ofCM Advisors Fixed Income Fund (CMFIX), a top rated short-term bond fund, thinks those higher oil prices are coming.

Meantime, bonds of companies like Diamond OffshoreDrilling (DO),Era Group (ERA), Transocean (RIG) and Rowan(RDC) look cheap relative to their future cash flows and have much wider spreads than other energy bonds, he says. Coupons are in the 7% range and some trade at discounts.

Brilliant believes demand for energy is going to rise sharply in the next five years, requiring more production than U.S. shale oil fields can muster. That will lead to higher crude prices and profitable offshore drilling.

The market still perceives there is global oversupply of oil and that shale will solve and fill gap, he says. We believe the gap is much larger than what shale can provide.

Brilliant is avoiding retailers due to the same energy dynamic, which he expects to lead to higher gas prices and lowerconsumer spending.

His fund has a 10-year average annual return of 4.68% putting it in the top 2% of Morningstars short-term bond fund category. It is up 8.5% in the past year.

With corporate spreads narrowing,Its harder to find values, says Brilliant, but were funding some.

Related reading: Barrons Jack Willoughby wrote thatTransoceansstock has potential to rise as much as 35% in this weeks issue.

Original post:

Top Fund Manager Sees Value in Offshore Drillers - Barron's (blog)

JEREMY WILKINSON

Last updated16:44, February 28 2017

ANDY JACKSON/Stuff.co.nz

Veterinarian Gemma Kinross says Maui the kitten had a "full belly" but was "very dirty" after being found on an off shore oil rig.

A kitten that stowed away on a container ship toan offshore oil and gasrig had to be specially flown off by helicopter.

Named Maui- after the gasfield off the coast of Taranaki she was found on- the three-month old kitten won over workers at the site, and has even been adopted by one.

Maui was flown first-class by helicopter off the field once she was discovered, but not before she was spoilt with sardines and milk by the Maui team.

ANDY JACKSON/Fairfax NZ

Shona Salisbury from St Aubyn Veterinary Clinic spends some time with stow away kitten, Maui.

Shell New Zealand chairman Rob Jager said it was likely she'd climbed into a shipping container while it was being loaded, and wasn't discovered until she was at the platform roughly 50kilometres off thecoast.

READ MORE: *Help, it's a wasp: the daftest Fire Service callouts in the past year *Cat stuck up tree in New Plymouth had to be hosed down *Mega moggie captures heart of New Plymouth woman *Council reunites cat's body with owner for farewell *Cat missing for two years is reunited with New Plymouth owners *Slice of cat heaven in New Plymouth

"It's unusual to have a small animal or bird found offshore but it has happened before," he said.

ANDY JACKSON/Fairfax NZ

Maui came in a bit dirty and shy but is pretty much back up to full health.

"Now one of the guys from the Maui team is taking her home. He looked after her when she was offshore and has convinced his wife they should keep her.

"Unless someone claims her."

Animals aren't allowed on the platform and fortunately Maui didn't cause any damage duringher short stay.

STOS

Rebekah Smith, platform medic, at Maui B with Maui the kitten.

Workers managed to lure her into a cage borrowed from a local vet with a rasher of bacon, then loaded her onto a specially-requested helicopter.

She's now staying at St Aubyn Vet Clinic in New Plymouth until her new family takes her home.

Vet Gemma Kinross said she got a call from one of her clients asking to borrow a cage to take to the Maui B platform.

Stuff

Maui the kitten's journey from New Plymouth to the Maui B gasfield roughly 49 kilometres off the coast.

"It was all a bit confusing, I just thought they meant the port," she said.

"But then they said it needed to be pretty fast because there was a helicopter waiting."

Aside from coming in a bit shy, dirty and slightly traumatised from her helicopter ride, Maui was healthy even after a few nights at the platform.

"We have no idea what her start in life was like, we checked for a microchip straight away," Kinross said.

"It seems like everyone loved her, someone rang today saying they would have her as soon as she could leave."

Kinross suspected Maui was seeking food when she got into the container andit looked like she had stowed away to the right place, coming back with a full belly from the crew's attentions.

Maui isn't the first cat to stowaway on and oil and gas ship. In 2001 a cat called Colin's stowed away on the methanol tanker Tomiwaka from New Plymouth to South Korea.

Colin'sbelonged to one of the tanker terminal workers at Port Taranaki, but after falling asleep on board the Tomiwaka she set sail for international waters.

On her arrival back home by air New Plymouth's mayor Peter Tennent named her an honourary ambassador of the district. Sadly she passed away in 2007.

-Stuff

Read more:

Kitten stowaway gets first-class treatment on offshore Taranaki gasfield rig - Stuff.co.nz

By Lamine Chikhi | ALGIERS

ALGIERS Algeria's Sonatrach wants to start offshore oil drilling and has begun discussions with U.S. operators Exxon Mobil Corp (XOM.N) and Anadarko (APC.N) as well as Italy's Eni (ENI.MI), a source at the state energy company told Reuters on Sunday.

The North African OPEC member nation has struggled to attract oil investment in recent years because of tough terms that have made foreign companies wary.

Sonatrach last year began a more flexible approach to bilateral talks with foreign partners.

Low oil prices have also pressured Sonatrach, prompting it to focus on developing production at more mature fields in the southern Sahara and bringing online delayed gas projects. Offshore drilling could offer another area for growth.

"Seismic operations carried out by Sonatrach have shown an interesting potential in the areas including Bejaia and Oran," said the source, who asked not to be identified. Bejaia is an eastern port and Oran is a port city in western Algeria.

Algeria needs the know-how and expertise of major international firms to launch offshore drilling, the source said.

"Foreign partners, including Anadarko, Exxon Mobil and Eni were invited by Sonatrach to provide technical assistance given the experience they acquired in the Gulf of Mexico and deep water in Mozambique," the Sonatrach source said.

"The offshore is complementary to our operations in the south. It will also contribute to boosting our output," the source said.

The source did not give any information on the timing or scale of any offshore projects.

Such details, including when the drilling will start, are expected to be announced soon by Sonatrach's leadership, the source said.

Algeria's earnings from oil and gas fell to $27.5 billion in 2016 from $35.7 billion in 2015 and more than $60 billion in 2014.

Algeria's oil output was previously estimated at 1.1 million barrels per day (bpd) but it has cut production by 50,000 bpd under an agreement between OPEC and non-OPEC producers aimed at raising crude prices.

(Editing by Patrick Markey and Jason Neely)

BAGHDAD Iraq signed a $500 million agreement with ABB to implement energy projects, Prime Minister Haider al-Abadi's office said in a statement on Sunday.

SYDNEY Australian gold output hit a 17-year high of 298 tonnes in 2016 as higher bullion prices drove mining companies to dig deeper, a sector survey released on Sunday showed.

CANNON BALL, N.D. Opponents of the Dakota Access Pipeline who were pushed out of their protest camp this week have vowed to keep up efforts to stop the multibillion-dollar project and take the fight to other pipelines as well.

Read more:

Exclusive: Algeria's Sonatrach in talks to begin offshore drilling - source - Reuters

February 26th, 2017 Grant Rowles Europe, Offshore 0 comments

Norways Eidesvik Offshore has sold 2009-built offshore construction vessel Viking Poseidon to an unnamed buyer.

Eidesvik says a deposit has already been paid and delivery is expected to take place mid-March.

The sale will have a positive effect of around NOK180m ($21.5) according to Eidesvik, after it recorded a NOK130m ($15.5m) impairment charge on the vessel in the fourth quarter of 2016.

Viking Poseidonrecently came off a contract with Siemens Wind Power supporting operations in the German sector.

The vessel was previously on charter to Harkand, who cancelled the contractin May 2016 after into went into administration.

Grant Rowles

Grant spent nine years at Informa Group based in London, Sydney, Hong Kong and Singapore. He gained strong management experience in publishing, conferences and awards schemes in the shipping and legal areas, working on a number of titles including Lloyd's List. In 2009 Grant joined Seatrade responsible for the commercial development of Seatrades Asia products. In 2012, with Sam Chambers, he co-founded Asia Shipping Media.

Original post:

Eidesvik offloads offshore construction vessel - Splash 247

Last year, I was endlessly ringing the alarm bells about Japanese financials, particularly the impact of negative rates on profitability (e.g. net interest margin) and of money market reform and dollar strength on offshore funding, i.e. funding for overseas operations. (See here, here, and here.)

With all of the 'happenings' going on in the U.S. currently as it relates to politics and financials, it's been easy to forget about the global reality... that is, that a third of the world's credit assets are still negative-yielding, that deflationary pressures are still alive and well despite the positive trend shift in the U.S. and other key areas (e.g. PPI in China), and that the Japanese financial sector is still under significant stress.

So, returning to the topic of Japanese financials, in its CLSA Japan Investors Forum presentation this year, Mitsubishi UFJ Financial Group (NYSE:MTU), one of the "Big 4" of the Japanese financial institutions, sought to lay out how it is addressing these ongoing situations and how it plans to achieve growth in the future. Of particular note was the focus on negative rate impact and non-JPY (i.e. offshore) funding for its foreign operations; if MUFG felt it necessary to address these issues in front of its large institutional investor clients, it must be of ongoing concern.

Negative Rate Impact and Offshore Funding

On negative rate impact, MUFG states its impact on lending has generally been in line with expectations. If you've been a follower of mine, you're probably well aware of the "in-line expectations" of the effects of NIRP in Japan, but to review, the effects have been namely:

What is most concerning is MUFG's "initiatives" to counter the effects of NIRP. MUFG offers little substance on how it is trying to counter its declining profits as a result of NIRP; the details it does present amount to mere sales promotion, pushing customers into alternative investment products and other strategies. That's all well and good, but where is the concrete guidance? No mention of the impact of NIRP as it relates to exposure to synthetic derivatives, e.g. IRSs or CDSs, (not that any bank provides proper info on derivatives exposure anyway) or MUFG's high exposure to variable rate products on the asset side of the BS leaves me with more questions and concerns than before.

As for offshore funding crunch concerns, MUFG does seek to allay fears of any such contagion occurring.

By relative comparison, MUFG's exposure to the commercial paper (CD/CP) market - where most of this contagion related to dollar strength and money market reform has taken place - is smaller than that of other institutions. And that 70% of its offshore funding is backed by customer deposits is reassuring. However, regardless, overseas business will continue to suffer the effects of a stronger dollar, as we've already seen, from H1'15 to H1'16, the impact from exchange rate losses for overseas business with Japanese corporates depressed gross profits to the tune of ~20 billion.

Light Natural Gas Exposure

Now, losses from money markets or forex are negative but are small enough to be mitigated. What is most concerning to me is recent events regarding the LNG (light natural gas) sector. Japan is the world's largest importer of LNG, mainly from the U.S. and Canada. For much of the past several years, natural gas prices have remained depressed along with crude and other energy products. However, as recently as this Tuesday, futures plunged by nearly 10% as the possibility of an El Nio event, i.e. warmer climate, in the U.S. increased; natural gas prices are down over 30% year-to-date and it's only been two and a half months. (See here, here, and here.)

From a macroeconomic perspective, this may sound great as Japan now gets to import energy on the cheap, however, from the perspective of a financial institution underwriting the finances of an LNG E&P or shipping company, this could spell big trouble.

The question we need to ask is: How much exposure does MUFG actually have to energy price volatility, specifically the latest LNG volatility?

Total and net exposure to the energy/mining sectors has been decreasing over time and now sits at ~9.1 trillion, or $80 billion; most large-scale financial institutions have pretty sizeable exposure to energy and commodities so this is not inherently unusual or negative. However, let's take a closer look.

Most of that exposure is concentrated in midstream (pipelines/vessels) and upstream (E&Ps) corporate credit in the Americas (mainly U.S. and Canada producers) and Japan (LNG ships/transport). If prices are plunging (in an environment of already depressed prices), this could disrupt the entire "LNG Revolution" which had promised to be Japan's cheap energy alternative to nuclear.

MUFG states that exposure to commodity price risk is limited in that only 38% of MUFG's project finance credit exposure contains such risk, however it bases such a definition on the notion that "...projects whose revenues are determined based on oil/gas process volume or facility operational days [is not exposed to commodity price risk]." This is questionable. If the natural gas market is in severe stress, that will affect volumes and whether or not those facilities remain operational, no? Thus, I am skeptical at how MUFG determines projects are completely free from commodity price risk for a commodity company.

Conclusion

MUFG is by no means in crisis mode. In fact, as detailed in its presentation, there are many reasons to invest in potential growth for the future, such as Bitcoin participation, RegTech, and AI-driven investing. (However, these are highly competitive fields with players that have a lot more capital to expend, so some caution is warranted.) But, the potential short-term impact from negative rates, dollar strength, offshore funding concerns, and LNG volatility could be acute and severe. And MUFG's response to these possible contingencies leaves me with more questions than answers.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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.

Follow this link:

Mitsubishi UFJ Financial Group: More Questions Than Answers (Negative Rates, Offshore Funding, And LNG Exposure) - Seeking Alpha

Offshore wind companies have spent years struggling to convince skeptics that the future of U.S. energy should include giant windmills at sea. Their job just got a lot harder with the election of Donald J. Trump.

The Republican president -- who champions fossil fuels and called climate change a hoax -- has mocked wind farms as ugly, overpriced and deadly to birds. His mostvirulent criticism targeted an 11-turbine offshore project planned near his Scottish golf resort that he derided as monstrous.

Companies trying to build in the U.S., includingDong Energy A/S and Statoil ASA, are hoping to change Trumps mind. They plan to argue that installing Washington Monument-sized turbines along the Atlantic coast will help the president make good on campaign promises by creating thousands of jobs, boosting domestic manufacturing and restoring U.S. energy independence.

We are a billion-dollar heavy industry that is set to build, employ and invest, Nancy Sopko,director of offshore wind and federal legislative affairs for the industry-funded American Wind Energy Association, said in an interview. We have a great story to tell to this administration.

The push to win over the Trump administration comes as offshore wind is on the brink of success in North America after a decade of false starts.Costs are falling dramatically. Deepwater Wind LLC completed the first project in U.S. waters in August. And in September, the Obama administration outlined plans toease regulatory constraints and take other steps to encourage private development of enough turbines to crank out 86,000 megawatts by 2050. Thats about the equivalent of 86 nuclear reactors.

We are an industry on the rise,ThomasBrostrom, Dongs general manager of North America, said in an interview. We want very much to come in and explain to the new administration what we can do for job creation and energy independence.

A White House spokeswoman did not respond to requests for comment.

The stakes are big. Dong, Statoil, Deepwater and other companies secured a total of 11 leasesto build offshore wind farms. To move forward, developers will need permits from multiple agencies and, in some instances, federal grants to refurbish ports. For instance, Deepwaters 30-megawatt wind farm off Rhode Island benefited from a $22.3 million U.S.Transportation Department grant to upgrade piers and terminals for use as a staging area.

To be clear, installing turbines at sea requires years of planning, and Trump may be out of office by the time some developers need federal approvals. State governments, meanwhile, remain the biggest drivers of renewable energy development, because they can mandate that utilities get a certain amount of power from offshore wind or other sources.

Nevertheless, offshore developers need a basic level of cooperation in Washington to keep the nascent industry moving forward. "They dont want to lose the progress that theyve made, said Frank Maisano, a Washington-based energy specialist for the lobbying firm Bracewell LLP.

Shoring up Trump administration support will require developers to shedclimate change talking points and dispel any notions that offshore wind is an environmental relic of the Obama administration, said Timothy Fox, an analyst at Washington-based ClearView Energy Partners LLC. It may help that two of the biggest developers -- Dong and Statoil -- have deep roots in offshore oil and natural gas.

Jobs will be at the crux their message. Erecting 600-foot (183-meter) turbines along the Eastern seaboard may boost employment in struggling port towns from South Carolina to Maine, generating an estimated 31,000 jobs in the Mid-Atlantic alone, according to the National Renewable Energy Laboratory. And if the industry booms, turbine manufacturers including Vestas Wind Systems A/S and Siemens AG have said they may open U.S. factories.

"Logically there should be a good match here with the Trump administration," Kit Kennedy,the Natural Resources Defense Councils director of energy and transportation, said in an interview. "We will see if ideology gets in the way."

Persuading the president himself could be challenging. The bare-bones energy plan posted on the White House website calls for increasing coal, oil and gas production -- but makes no mention of wind or other forms of clean energy. Trump in 2012 tweeted: Not only are wind farms disgusting looking, but even worse they are bad for peoples health.

Ultimately its unclear whether Trumps 140-character appraisals of wind energy will translate into U.S. policy, or if they were simply reactions to windmills potentially spoiling views from his golf coursein Aberdeenshire, Scotland. Either way, the commander-in-chiefs personal support may not be crucial for developers in the U.S.

The key figures for offshore wind companies to persuade are deputy secretaries, directors and others within the Interior and Energy departments. A central player is the yet-to-be-named director of the Bureau of Ocean Energy Management, an Interior Department agency responsible for granting leases to offshore oil, gas and wind developers.

The industry may already have a few key allies. Rick Perry, Trumps proposedenergy secretary, oversaw a record expansion of wind energy during his time as Texas governor. And at least one high-ranking official who has supported offshore wind at the Bureau of Ocean Energy Management -- Acting Director Walter Cruickshank -- remains in place.

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Trumps rise to power does not appear to have curbed offshore wind developers enthusiasm about the U.S. market. Weeks after the election,Norways Statoil paid a record$42.5 million for a lease to develop a site off the coast of New York. And at least nine companies -- including a unit of oil giant Royal Dutch Shell Plc. -- have qualified to bid next month for a lease to build off North Carolina.

There is a misconception that wind energy is all driven by climate change,said Danish ambassador Lars Gert Lose,who is helping Fredericia, Denmark,-based Dong with lobbying efforts. But this is a very competitive industry.

See the original post here:

Dream of Offshore U.S. Wind Power May Be Too Ugly for Trump ... - Bloomberg

The numbers speak for themselves. Tourists spent more than $20 billion in South Carolina in 2015, setting a record high for the state. That number tops the previous year by nearly a billion dollars.

In 2014, tourism supported one of every 10 jobs in South Carolina. It generated well over $1 billion in direct tax revenue for the state and local governments.

And tourism revenue has increased almost without exception every year for nearly three decades. There are no signs of that trend slowing, much less reversing itself.

But imagine the devastation of the South Carolina economy if those tourism dollars suddenly went somewhere else. Imagine if the states coastal communities lost their summer visitors, if fishermen were finally forced completely out of business, or if the natural environment of the coastline was forever damaged.

Thats the very real possibility that some seem willing to trade for oil and natural gas drilling off the South Carolina coast. But again, its not just about hypotheticals. Its about the numbers.

Estimates from the American Petroleum Institute, an oil and gas lobbying group, put the 20-year economic impact of drilling offshore of South Carolina at just $2.7 billion. Again, thats $2.7 billion over 20 years.

In other words, oil and gas might generate less than 1 percent of the economic impact that tourism has on South Carolinas economy. And a single major spill would risk the tourism industrys vitality for years.

Even exploration using seismic testing risks marine wildlife, particularly marine mammals who can become disoriented by the loud blasts.

Its not worth it.

Seismic testing was stopped offshore of South Carolina just about a month ago, but exploration companies already are gearing up to try again. So conservation groups are preparing to fight back.

Not surprisingly, every coastal government in South Carolina has come out against opening the states waters to offshore drilling. So have Reps. Mark Sanford, R-S.C., Jim Clyburn, D-S.C. and Tom Rice, R-S.C. So did Henry McMaster when he was lieutenant governor.

Given the cold, hard numbers its hard to imagine that the states other leaders in Columbia and Washington would still support such a reckless plan.

Gov. McMaster, in particular, has the opportunity to differentiate himself from his predecessor, Gov. Nikki Haley, by reasserting his opposition to offshore drilling and oil exploration in S.C. waters. Throughout his career as S.C. attorney general and lieutenant governor, Mr. McMaster strongly supported environmental protections. He should continue to do so as governor.

Sens. Tim Scott, R-S.C., and Lindsey Graham, R-S.C., should also stand up against any future effort to open up Atlantic waters to oil and gas drilling.

It just doesnt make sense to risk $20 billion a year and the states largest economic sector for an industry that might at best bring in a mere fraction of that over the next two decades.

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Numbers against offshore oil | Editorials | postandcourier.com - Charleston Post Courier

Shares of Nordic American Offshore Ltd. NAO, -39.02% plummeted 41% toward a record low in premarket trade Friday, after the operator of platform supply vessels announced a share offering, which would nearly triple the shares outstanding, that priced at a sharp discount. The company announced late Thursday a public offering of 33.3 million shares, but said early Friday that it was boosting the offering to 40 million shares. The company recently had about 20.7 million shares outstanding, according to FactSet. The share offering priced at $1.25, which was 39% below Thursday's closing price of $2.05. Nordic American said the underwriters of the offering have reserved about $10 million worth of the new share for sale to Nordic American Tankers Ltd., the company's largest shareholder, and $2 million worth of new shares to Executive Chairman Herbjorn Hansson. The company plans to use the proceeds from the stock offering for general corporate purposes and for the expansion of its fleet. The stock has tumbled 31% over the past three months through Thursday, while the S&P 500 SPX, +0.15% has gained 7.2%.

See original here:

Nordic American Offshore's stock plunges after big stock offering prices at deep discount - MarketWatch

Investment thesis

Shares of Hornbeck Offshore Services (NYSE:HOS) are an attractive security, even if the industry is in trouble. Unlike its competitors, HOS is well positioned to survive the market downturn.

What is going on?

The outlook for the worldwide Offshore Support Vessel market is bleak and turning darker every day. Shares of Hornbeck Offshore Services plummeted by 22% on February 16 after the company posted its earnings. On that single day, the trading volume reached over 8 million shares, which is one-fourth of the total shares outstanding.

The OSV market is extremely oversupplied. Currently, close to 200 vessels face demand for less than 100.

Over a year ago, HOS already showed signs of strength compared to its competitors: a cleaner balance sheet, a much newer and high-spec fleet, excellent management, and relatively late debt maturities. Now, the market has come to recognize this situation, and even after the recent cut in market prices, HOS still has the largest capitalization among its competitors.

During the earnings call, Hornbeck Offshore's CEO, Todd Hornbeck, made a very interesting comment:

"Third, and as I said earlier, we believe value creation in the offshore vessel space cannot begin, again, without meaningful acquisitions of high-spec assets and businesses over the overleveraged industry players. Given our ultra high-spec fleet profile, successful operating track record, ample cash position, and public company platform, we think we are the natural acquirer in such a transaction, especially in the domestic Jones Act market.

Earlier in this cycle, the industry mantra was lower for longer. The message we have recently been hearing from our customers, almost uniformly, is that they now see oil prices as lower forever. They no longer view this as a U-shape recovery, but an L-shaped recovery, or so we're told.

Deepwater projects can work in that kind of world, but not at economics that drive key pieces of the supply chain out of business. Lower forever must also mean greater efficiencies and reliability in this supply chain. Smart acquisitions can achieve those objectives in the OSV space, given the high operating risk and capital-intensive nature of this business. And for this industry, such acquisitions are necessary."

This has puzzled a few fellow investors. (How can a company in such dire situation turn to acquire "assets and businesses"?) But actually, Mr. Hornbeck has already stated multiple times that he could use the revolving credit facility to finance acquisitions.

Let's take a look at some key balance sheet items:

Cash on hand is certainly not enough to repay the debt. The company's cash position has decreased by $43 million in the last year, or 16%. But the debt starts to mature in late 2019. There is plenty of time for a recovery and for management to find options and creative solutions.

Let's compare Hornbeck Offshore's situation with Tidewater, the largest player in the industry. Tidewater has not defaulted only because the debtholders are granting limited waivers for covenant compliance. Its current liabilities are $2.3 billion, and current assets are $1.16 billion. The company is struggling for survival and is at the mercy of its lenders, but still paid $3 million to management for "Talent Retention".

Looking ahead

We can get a glimpse of the future if we look at the North Sea OSV market, where Solstad Offshore recently acquired 3 competitors. Among those are Farstad Shipping.

Farstad Shipping could not meet its obligations, so the debtholders converted to equity. This meant a wipeout for shareholders, because the shares outstanding jumped from 39 million to 4.9 billion.

Immediately after that, all shares of Farstad were converted into class B shares of Solstad Offshore (the acquirer). The combined Solstad plus Farstad is much larger, and the former debtholders of Farstad can cash out by simply selling their new Solstad shares in the open market. Solstad did not need to lay out cash, and the company acquired very clean assets.

GOM situation

The Gulf of Mexico offshore industry will always need some OSVs, and someone must be there to manage those assets. When debtholders take over failed competitors, they will probably take the logical steps towards maximizing value and cashing out as much as they can.

Many companies that operate in the Gulf have extremely negative cash flows. Some are unable to meet 2017 commitments - like Island Offshore and Gulfmark. As the saying goes, "If something cannot go forever, then eventually it must stop". There are too many companies operating in the OSV market - too many vessels, too many headquarters, and too many G&A expenses.

Consolidation in the industry is going to happen, and there will be a lot of pain for shareholders.

One Bright Side

In the US zone of the Gulf, offshore operations are forced to hire Jones Act-qualified vessels. Those vessels must be owned, crewed and operated by Americans. And if they are owned by a foreign entity, even for one day, the vessels stop qualifying forever.

In order to maximize value in the event of a consolidation, all the assets need to be put under a competent American management with long experience in this industry. This points to very few companies, like HOS and SEACOR Holdings (NYSE:CKH).

Takeaway

My thesis is this: By now, a significant portion of debtholders in the industry are hedge funds that have acquired the debt (i.e., the companies!) at a very low cost basis. They will merge them with the survivors, just like it happened in the North Sea, and sell their new shares in the market.

(That's why they want to do it with a company that is already public - there is no point in merging with Edison Chouest and then be stuck with an illiquid stake in a private company.)

Some facts about HOS:

Yes, there are other companies besides Hornbeck that could be acquirers. Also, HOS could go to zero and be wiped out. But the story is getting better every day. I believe that at current prices, even after a some dilution of current shareholders, the stock could bring a very reasonable return in a few years.

For investors, this has been an exciting roller coaster ride, and the development of this crisis stirs both our interest and our nerves.

Disclosure: I am/we are long HOS.

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.

Read more from the original source:

Hornbeck Offshore: A Consolidator In The Offshore Supply Vessel Industry - Seeking Alpha