Category Archives: Offshore

WASHINGTON, D.C. -- A new modelling approach developed and validated by the Southwest Research Institute (SwRI) presents a major step forward in understanding how offshore blowout preventers (BOPs) are likely to function if employed during a blowout. Results from the study funded by the Bureau of Safety and Environmental Enforcement (BSEE) were presented today at the Ocean Energy Safety Institutes Public Technology Assessment Program Forum.

The emergency closure of a wellbore with a BOP is a highly complicated process in which high strength steel pipe must be cut and pinched closed under extreme pressure and flow conditions, said SwRIs Steven Green. SwRI is under contract with BSEE to develop and validate a methodology for conducting an analysis of a BOP closure event using existing commercially available software for advanced structural and fluid dynamics simulations. We have also developed a database tool that, when completed, will hold simulation results and allows BSEE and industry to interactively assess the basic design requirements of a BOP under its expected operating conditions, Green said.

Blowout preventers use multiple methods to prevent hydrocarbons from ascending through drill pipes and reaching surface operations. How well they would perform during a blowout, as opposed to activation to prevent a blowout, has been a concern for both the industry and regulators. The research performed by SwRI is part of BSEEs larger effort to advance the design of BOPs so that they function effectively under emergency conditions.

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Model advances analysis of offshore BOP closure during extreme conditions - WorldOil (subscription)

The Internal Revenue Service says that hiding money or assets in unreported offshore accounts remains on its 2017 list of tax scams known as the Dirty Dozen.

Since the first Offshore Voluntary Disclosure Program (OVDP) opened in 2009, there have been more than 55,800 disclosures and the IRS has collected more than $9.9 billion from this initiative alone.

In addition, another 48,000 taxpayers have made use of separate streamlined procedures to correct prior non-willful omissions and meet their federal tax obligations, paying approximately $450 million in taxes, interest and penalties. The IRS conducted thousands of offshore-related civil audits that resulted in the payment of tens of millions of dollars in unpaid taxes. The IRS has also pursued criminal charges leading to billions of dollars in criminal fines and restitutions.

"Offshore compliance remains a top IRS priority. We've collected $10 billion in back taxes in recent years with 100,000 taxpayers making use of our voluntary disclosure programs," said IRS Commissioner John Koskinen. "The IRS receives more foreign account information each year, making it harder to hide income offshore. I urge taxpayers with international tax issues to come forward and get right with the system."

Compiled annually, the Dirty Dozen lists a variety of common scams that taxpayers may encounter anytime, but many of these schemes peak during filing season as people prepare their tax returns or hire people to help with their taxes.

Illegal scams can lead to significant penalties as well as interest and possible criminal prosecution. The IRS Criminal Investigation Division works closely with the Department of Justice to shut down scams and prosecute the criminals behind them.

Hiding Income Offshore

Over the years, numerous individuals have been identified as evading U.S. taxes by attempting to hide income in offshore banks, brokerage accounts or nominee entities. Then access the funds using debit cards, credit cards or wire transfers. Others have employed foreign trusts, employee-leasing schemes, private annuities or insurance plans for the same purpose.

The IRS uses information gained from its investigations to pursue taxpayers with undeclared accounts, as well as bankers and others suspected of helping clients hide their assets overseas.

While there are legitimate reasons for maintaining financial accounts abroad, there are reporting requirements that need to be fulfilled. U.S. taxpayers who maintain such accounts and who do not comply with reporting requirements are breaking the law and risk significant fines, as well as the possibility of criminal prosecution.

Since 2009, tens of thousands of individuals have come forward to voluntarily disclose their foreign financial accounts, taking advantage of special opportunities to comply with the U.S. tax system and resolve their tax obligations. And, with new foreign account reporting requirements being phased in over the next few years, hiding income offshore is increasingly more difficult.

At the beginning of 2012, the IRS reopened the Offshore Voluntary Disclosure Program following continued strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. This program will be open for an indefinite period until otherwise announced.

Third-Party Reporting

Under the Foreign Account Tax Compliance Act (FATCA) and the network of intergovernmental agreements between the U.S. and partner jurisdictions, automatic third-party account reporting has entered its second year. The IRS continues to receive more information regarding potential non-compliance by U.S. persons because of the Department of Justices Swiss Bank Program. This information makes it less likely that offshore financial accounts will go unnoticed by the IRS.

Potential civil penalties increase substantially if U.S. taxpayers associated with participating banks wait to apply to OVDP to resolve their tax obligations.

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IRS Cracks Down on Offshore Tax Cheats - CPAPracticeAdvisor.com

What happened

Shares of Hornbeck Offshore Services (NYSE:HOS) sank deep into the red on Thursday morning, plunging more than 22% by 10:30 a.m. EST after reporting its fourth-quarter results.

Hornbeck reported a net loss for the fourth-quarter of $19.2 million, or $0.53 per share, which was $0.08 per share wider than last quarter and $0.05 per share worse than analysts expected. Driving the decline was continued weakness in the offshore oil and gas market, which put pressure on vessel utilization and dayrates. In addition, general and administrative costs rose during the quarter due to an increase in incentive compensation expenses.

Image source: Getty Images.

Even more concerning was the company's outlook. Hornbeck noted that it currently has 44 of its 62 offshore supply vessels idled due to lack of work. However, it expects to idle an average of 46 vessels in future quarters because it doesn't see any improvement in market activities. Those challenging market conditions led the company to issue a warning concerning its future liquidity needs. Hornbeck noted in its earnings release that while it expects to have the financial resources to operate through the end of next year,

The Company does not currently expect to have sufficient liquidity to repay its three tranches of funded unsecured debt outstanding that mature in fiscal years 2019, 2020 and 2021, respectively, as they come due, absent a refinancing or restructuring of such debt. Refinancing in the current climate is not likely to be achievable on terms that are in-line with the Company's historic cost of debt capital. The Company remains fully cognizant of the challenges currently facing the offshore oil and gas industry and continues to review its capital structure and assess its strategic options.

On the one hand, the company does have time to address this issue. However, the problem is that more time might not be the solution because the outlook for the industry remains bleak as there is a real risk that conditions could continue growing worse. For example,Diamond Offshore Drilling (NYSE:DO) recently warned that it has "yet to see a floor in the declining demand of deepwater assets." Because of this, Diamond Offshore Drilling doesn't see a recovery in the offshore drilling market occurring until 2019 or 2020. While others are optimistic that a recovery could start to take shape as early as next year, there's a real possibility that Hornbeck's financial stress could deepen if conditions worsen.

Oil prices have improved and stabilized above $50 a barrel, butthat's still not enough to ignite a recovery in the offshore drilling sector. Most offshore service companies believe crude needs to improve to more than $60 per barrel before producers start expanding their drilling budgets, which might not arrive for quite some time. Given that outlook, and Hornbeck's potential liquidity problems, this is a stock that investors are better off avoiding for the time being.

Matt DiLallo has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Liquidity Warnings Send Hornbeck Offshore Services, Inc.'s Stock Plunging - Motley Fool

Professional Diversity Network: Offshore Investment Fund, Dropping Revenue, Mad Customers Seeking Alpha Whenever a company lists its address as a post office box on an island, as IPDN's Chinese investor does, it's a red flag indeed it's TheStreetSweeper's skull and crossbones. Cheap $2 warrants for 246,445 shares of IPDN stock were set free on Feb. 14. and more »

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Professional Diversity Network: Offshore Investment Fund, Dropping Revenue, Mad Customers - Seeking Alpha

Oil States International (NYSE:OIS) reports Q4 earnings Thursday. Analysts expect revenue of $176.76 and eps of -$0.22. The revenue estimate implies a 1% decline sequentially. Investors should focus on the following key items.

Land Drilling Performance Should Be Stellar ...

Results from Oil States' land drilling operations will likely be stellar. Q3 revenue from the segment increased 14% sequentially as animal spirits returned to the oil patch. I expect a repeat performance this quarter. The North America rig count was up by over 20% during the quarter. Competitors such as Core Labs (NYSE:CLB), Baker Hughes (NYSE:BHI) and Halliburton (NYSE:HAL) showed outperformance in North America this quarter. That bodes well for Oil States.

The company receives about 26% of its revenue from Wellsite Services. The lion's share of its customers are located in the Permian basin where drilling activity has been robust. Another double-digit revenue increase would not be out of the question. There are still thousands of drilled, yet uncompleted wells. If oil prices remain robust then Wellsite Services could have a strong first half of 2017.

... While Offshore Would Likely Disappoint

The company's offshore segment will likely disappoint again. Offshore sustained the company during the oil price rout. However, its revenue fell 2% sequentially last quarter. That was likely a bad omen. Oil States' long-term offshore contracts might be expiring at a time when oil prices do not justify additional investment in the sector.

Experts believe offshore will not rebound until 2018 or 2019. That's problematic as the segment now represents over 75% of total revenue. Another single-digit decline by Offshore could trigger a revenue miss. A weak outlook from management could sink the stock.

Will EBITDA Margins Hold Up?

Oil States' EBITDA margins have ranged from 7%-8% over the past few quarters. Management has done a yeoman's job of cutting costs to stem losses and cash burn. However, if its largest segment takes a turn for the worst it could be difficult to maintain EBITDA margins. Moreover, if the company pares costs any further it might cut into muscle and hurt efficiency.

Conclusion

Growth in land drilling revenue will not likely be robust enough to offset the decline in Offshore. I also expect weak guidance for Q1 2017 due to Offshore's demise.

Disclosure: I am/we are short BHI, HAL.

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

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Will Offshore Stymie Oil States? - Seeking Alpha

ANCHORAGE, Alaska Natural gas for at least 10 days has leaked from an underwater natural gas pipeline in Alaskas Cook Inlet and floating ice has prevented divers from reaching the site.

The gas is bubbling from an 8-inch pipeline in 80 feet of water about four miles off shore. The pipeline belonging to Hilcorp Alaska, LLC, moves processed natural gas from shore to four drilling platforms in the inlet.

The Alaska Department of Environmental Conservation is investigating the leak. In an email response to questions, spokeswoman Candice Bressler said the agency is assessing public health and environmental risks.

We believe the risk to public health and safety is small, the agency said. Environmental risk is less easy to quantify since a monitoring and assessment program is not yet in place.

The federal Pipeline and Hazardous Materials Safety Administration also is investigating.

The Coast Guard warned mariners to stay at least 1,000 feet from the bubbling gas. Another federal agency expressed concern over possible adverse effects on marine mammals.

Our greatest concern is for endangered Cook Inlet beluga whales and impacts to their critical habitat, said Julie Speegle, spokeswoman for the fisheries section of the National Oceanic and Atmospheric Administration. The natural gas discharge is within the winter foraging area for the whales, she said.

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Natural gas leaks from offshore pipeline in Alaska - Press Herald

In support of its planned 750 MW offshore wind farm off the coast of Maryland, Baltimore-based US Wind Inc. has teamed up with JDR Cable Systems Ltd., which is supplying underwater power cables for the project.

US Wind is one of two applicants for the offshore renewable energy credit a process currently under a 180-day public comment period overseen by the Maryland Public Services Commission. (The other applicant is Deepwater Wind.)

Were interested in putting together a whole new offshore wind industry right here in Maryland, and bringing JDR here is a big piece of that puzzle, comments Riccardo Toto, president of US Wind.

For the wind farm, JDRs scope of work includes project management, as well as engineering and manufacturing 122 miles of inter-array cables, 112 miles of export cables and other cable accessories. JDR will also provide cable installation and testing.

The cable manufacturing is expected to commence in 2018, and delivery and installation are planned for 2019 and 2020. Engineering work is scheduled to begin later this year.

US Wind officials say this partnership marks the start of bringing 5,000 manufacturing jobs to Maryland and generating over $16 billion in net economic output over the life of its wind farm.

We are extremely proud to be selected by US Wind for the full cable package, notes David Currie, CEO of JDR Cable Systems. This partnership will strengthen Maryland and Baltimore as a regional business hub and support additional job creation.

Toto adds, This new partnership with JDR brings us one step closer to establishing Maryland as the hub for offshore wind manufacturing for the entire East Coast of the U.S. Were ready to get to work.

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US Wind Secures Cabling Partner For MD Offshore Project - North American Windpower

Crimes against humanity have been committed in Australias offshore immigration detention centres, a petition before the International Criminal Court has claimed.

Handout / Reuters

ID: 10539857

The submission, from the Global Legal Action Network and the Stanford International Human Rights Clinic, urged the court to investigate potential crimes against humanity committed against asylum seekers by individuals and corporate actors within the island prisons.

As recent leaks reveal, these privatised facilities entail long-term detention in inhumane conditions, often including physical and sexual abuse of adults and children, the network said in a statement.

It accused Australian governments of contracting out the running of facilities to private corporations in order to avoid responsibility.

Nevertheless, that liability for international crimes can be traced not only to direct perpetrators on the ground, but also to public officials and corporate officers and directors, the statement read.

Stefan Postles / Getty Images

ID: 10539837

Let this be a warning to people donating to GetUp! that you are being ripped off by these wacky causes, a spokesperson for Dutton said this week.

The Australian government said last year that it would at some point shut down its detention centre on Papua New Guineas Manus Island, where 871 men are still detained.

Handout / Reuters

ID: 10539823

At Australias other offshore immigration centre, on the tiny Micronesian island of Nauru, there are still 372 people detained.

The Australian government has subjected asylum-seekers on Nauru to egregious abuses that amount to torture and flout international law, a report released last year by Amnesty International found.

The human rights group found refugees on Nauru had been denied medical treatment, suffered abuse and been subject to inhumane treatment.

Earlier this month, a heavily pregnant Kuwaiti refugee held in detention on Nauru had to wait several days to be flown to Australia after doctors said she was in a critical condition and needed an emergency C-section.

The 37-year-old was suffering from the potentially life-threatening condition of preeclampsia and had a large fibroid, or benign tumour, on the wall of her uterus.

Mandel Ngan / AFP / Getty Images

ID: 10540097

Everyone feels so hopeless and helpless, an Iranian refugee detained on Manus Island told BuzzFeed News.

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Australia Accused Of Committing Crimes Against Humanity In Offshore Detention Centres - BuzzFeed News

Doug Fraser @dougfrasercct

CHATHAM This June, the state will solicit bids seeking offshore wind farms to produce 400 megawatts of electricity. Its the first of four phases of what state officials hope will be 1,600 megawatts of offshore power; 15 percent of what the state uses annually, enough power to replace what will eventually be lost when Pilgrim Nuclear Power Station shuts down.

Submitting a bid in June will be the first tangible step for a group of Marthas Vineyard residents who started the Vineyard Power energy cooperative six years ago in response to a lot of the things they didnt like about the now-defunct Cape Wind project. They have 1,400 members and say the cooperative represents 5,000 people on the island.

Richard Andre, president of Vineyard Power, said their prospects improved dramatically whenGov. Charlie Baker signed legislation in August that required that power utilities solicit and contract for 1,600 megawatts of offshore wind as part of their energy portfolio by 2027.

Then, we knew we would have a buyer for our power, Andre said.

Vineyard Power representatives came to the headquarters of the Cape Cod Commercial Fishermens Alliance in Chatham on a stormy Wednesday to get feedback from fishermen.

Perhaps it was fitting that there werent many fishermen in the audience because Andre said that unlike Cape Wind, which was sued by Vineyard fishermen and hotly contested by many Cape fishermen, they havent received any negative feedback.

We identified our site in 2009 as an area with the least amount of fishery conflicts, Andre said.

The process was helped considerably by the federal government in 2009 when the Bureau of Energy Management mapped out areas of the ocean with good wind and relatively few conflicting uses or environmental concerns. John Pappalardo, CEO of theCape Cod Commercial Fishermens Alliance, was part of the team that helped to eliminate large areas that were valuable for fishing, shellfishing or for fish habitat.

This zone was much larger. We shaved a huge piece out of it primarily because of scallops, Pappalardo said.

At over 500 feet tall, the 40 to 70 turbines that would be constructed in the first phase would be spaced over a half mile apart. Andre told the audience there would be no reduced speed or areas closed to navigation or fishing. Still to be determined would be whether there could be anything like a kelp or mussel farming operation using components of the turbine. There would be money available to reimburse fishermen displaced during construction work.

By locating them 12 miles offshore, Andre said the turbines would only be visible on extremely clear days and even then would be far off in the distance.

We wanted a different model than Cape Wind. We wanted there to be local benefit, local employment, and local input into the project, Andre told the audience. Weve met with over 20 fishing groups since March of 2016.

Vineyard Power partnered with Vineyard Wind, which holds the lease on the 260 square miles of ocean 12 miles south of the island. Vineyard Wind is a subsidiary of Copenhagen Infrastructure Partners, a Danish company that invests pension funds from Northern Europe. It has $3.5 billion in assets, Andre said, and is primarily focused on renewable energy projects. CIP has managed and invested in over 1,000 megawatts of offshore wind turbines currently being built in Europe, according to its website.

Three companies, Deepwater Wind, another Danish company Dong Energy, and Vineyard Power hold the three federal leases in federal waters south of the Vineyard that were designated as appropriate for offshore wind through an ocean zoning process. In September, the three companies signed letters of intent to use the state-run $113 million New Bedford Marine Commerce Terminal, which had been built in anticipation of the ill-fated Cape Wind offshore wind farm being constructed.

This December, Eversource acquired 50 percent ownership of the offshore wind farm proposed by Dong Energy.

All three offshore wind companies could be submitting bids this summer, Andre said. Price is the primary consideration and he anticipates the winning bid will be in the mid-teens per kilowatt hours as compared with Cape Winds prices which were over 20 cents. Each subsequent bid phase is required to start at a lower price than the previous ones as improved technology and economies of scale hopefully will reduce costs. Europe, where they have been doing it for decades, has seen offshore wind drop to 10 cents, Andre said.

The area south of the Vineyard has been rated the best or second best on the East Coast for the strength and consistency of its wind, Andre told the audience. Vineyard Wind ships were out on Nantucket Sound this summer and fall doing seismic and sonar testing on the sea bed to determine what type of foundation would be required for the turbines.

Environmental studies of impacts on birds and marine life, and permitting, will continue for another two years. Construction could start as early as 2020 and take two years. It will take about 2,000 construction workers for the first phase and Andre said the plan is to employ a lot of local workers. The company with the winning bid would also have to get state permits to run cables, which will be buried 6 feet deep in the sea bed, to the mainland.

Follow Doug Fraser on Twitter:@dougfrasercct.

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Vineyard Power vying for offshore wind farm - News - capecodtimes ... - Cape Cod Times (subscription)

February 15, 2017 8:33 PM

GROTON, Conn. (CBSNewYork/CBS News) A Russian spy ship patrolling the East Coast was located near a U.S. submarine base off the coast of Connecticut Wednesday.

The ship, known as an AGI (Auxiliary, General Intelligence), was located 30 miles from Groton, Connecticut, CBS News national security correspondent David Martin reported.

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U.S. Rep. Jim Himes (D-Connecticut) sits on the House Permanent Select Committee on Intelligence. WCBS 880s Steve Scott asked Himes what the ship was doing off the Connecticut coast.

First of all, people should understand that this is not unprecedented, and this is not an offensive ship that is going, you know, land troops or start a war, Himes said. This is an intelligence and reconnaissance ship that largely has technologies and weve got plenty of it as well that can collect signals, intelligence, and listen in on, you know, all sorts of transmissions and that kind of thing. But the Russians had a purpose in sending the ship to the area, Himes said.

But the Russians had a purpose in sending the ship to the area, Himes said.

But what it really is, of course, its a political statement by Russia, saying, OK, when the White House is in turmoil, when you dont have a national security adviser, were going to provoke a little bit and see what the response is, which of course is what weve seen from North Korea; what weve seen from Iran, and one of the really concerning aspects about the turmoil that were seeing right now in our national apparatus, he said.

Himes agreed that the Russians goal was to test President Donald Trump to see how far they can go.

One of the discouraging things here, of course, is that our potential enemies our real and potential enemies right now are looking at the disarray in the White House, Himes said. Theyre looking at the fact that the president appears to be at war with the intelligence community who is paid to advise him, and theyre saying, Hey lets see, if we put our toe over this line over here, how the Americans respond.

Groton is the home of Naval Submarine Base New London, which the Navy describes as the Home of the Submarine Force.

According to the bases website, 6,500 military personnel are stationed there and 1,000 civilian employees work there.

The ship had made a port call in Cuba and has been working its way up the East Coast. Its expected to turn around and head south toward Cuba.

The presence of foreign vessels and aircraft near U.S. territory is nothing new. In 2015, there was a flap about a Russian spy ship hanging out in a spot where trans-Atlantic cables are laid.

The ships voyage comes as U.S. officials say Russia secretly deployed a cruise missile in December that is specifically banned by a treaty signed in the final years of the Cold War. The missile is capable of carrying a nuclear warhead.

Also, just five days ago, an incident similar to last years buzzing by Russian jets of a U.S. Navy destroyer in the Baltic Sea happened again, this time in the Black Sea

First, a Russian patrol plane made a low pass close to the USS Porter, then two Russian jet fighters were followed a short time later by a third. U.S. officials called the fly-bys unsafe and unprofessional.

On Thursday, Gen. Joseph Dunford, chairman of the Joint Chiefs of Staff, is expected to meet with his Russian counterpart in Azerbaijan, CBS Radio News correspondent Cami McCormick reports.

A statement from Dunfords office released on Wednesday said the meeting will be to discuss a variety of issues including the current state of U.S.-Russian military relations. The U.S. suspended military relations with Russia after its annexation of Crimea in Ukraine in 2014.

A spokeswoman told McCormick the meeting has been planned for months.

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Russian Spy Ship Spotted Offshore From Connecticut; Congressman Says Goal Is To Test US - CBS Local