Monthly Archives: May 2017

News & Observer

What Trump's offshore drilling plans mean for NC coast News & Observer President Donald Trump's move last week to expand offshore drilling in the Atlantic and Arctic oceans rekindles the debate over the viability of oil and gas drilling and seismic testing off the coast of North Carolina. Trump's executive order calls for ... Republican and Democratic lawmakers speak out against Trump's offshore drilling orderThinkProgress Trump's Offshore Oil Drilling Push: Five Essential ReadsDeSmog (blog) Trump's drilling order exposes rift among SC lawmakersCharlotte Observer MassLive.com -NJ.com -WSAV-TV all 35 news articles »

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What Trump's offshore drilling plans mean for NC coast - News & Observer

The Pentagon wants to continue a ban on offshore drilling in the eastern Gulf of Mexico thats set to expire in five years.

A.M. Kurta, the acting under secretary of Defense for personnel and readiness, told a Florida lawmaker in a letter publicly released Monday that military training and related exercises in the eastern Gulf, which borders Florida, necessitate a continuation of Congresss ban on drilling.

The letter Kurta wrote to Rep. Matt Gaetz (R-Fla.) adds a new wrinkle to the Trump administrations drive to dramatically increase offshore oil and natural gas drilling.

An ordersignedMonday by Interior Secretary Ryan Zinke says the department will look at the entire Gulf of Mexico for potential drilling.

And the oil industry is gunning for the eastern Gulf,tellingreporters yesterday that drilling there could create thousands of new jobs and billions of dollars in new investment.

But the Pentagon is pushing back against drilling in the eastern Gulf, near Florida.

The moratorium ensures that these vital military readiness activities may be conducted without interference and is critical to their continuation, Kurta wrote to Gaetz in response to a letter inquiring about the drilling ban.

Emerging technologies such as hypersonics, autonomous systems, and advanced sub-surface systems will require enlarged testing and training footprints, and increased DoD reliance on the Gulf of Mexico Energy Security Acts moratorium beyond 2022. The moratorium is essential for developing and sustaining our nations future combat capabilities.

The military uses the eastern Gulf as a training ground, the U.S. militarys largest training facility in the world. Floridas hosts numerous military bases, including a major Air Force base near Tampa and naval stations in Key West, Panama City and Pensacola.

For decades, the federal government has prevented drilling in the eastern Gulf, due mostly to the military needs. The ban was formalized in 2006, thanks to legislation sponsored by Sen. Bill NelsonBill NelsonOvernight Regulation: Senate confirms SEC pick | House GOP passes 'comp time' bill | Senate confirms Trump's SEC pick Pentagon wants offshore drilling ban maintained in eastern Gulf MORE (D-Fla.) and then-Sen. Mel Martnez (D-Fla.), but that expires in 2022.

Nelson, who staunchly defends the drilling ban against any policy that could even slightly threaten it, filed legislation earlier this year to extend the prohibition through 2027.

Trumps order specifically asks Interior to consult with the Pentagon as it formulates new drilling plans.

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Pentagon wants offshore drilling ban maintained in eastern Gulf - The Hill

A surfer survived while holding on to his board some 32 hours after being swept out to sea from while attempting to surf along the west coast of Scotland, according to the UK Maritime and Coastguard Agency.

Matthew Bryce, 22, of Glasgow was rescued by helicopter on Monday night and was recovering at a hospital in Belfast, Northern Ireland, on Tuesday.

I am so grateful that I am now receiving treatment in hospital, Bryce said in a statement. "I cannot thank those enough who rescued and cared for me, they are all heroes."

Water temperatures dropped as low as 46 degrees while Bryce was at sea. He was conscious but suffering from hypothermia at the time of his rescue.

"He was kitted out with all the right clothing including a thick neoprene suit and this must have helped him to survive for so long at sea," said Dawn Petrie, a spokeswoman for the coast guard operations center in Belfast that coordinated the search.

Bryces family alerted authorities midday on Monday after he failed to return from Machrihanish beach, where he went to surf the previous morning.

"Hope was fading of finding the surfer safe and well after such a long period in the water, and with nightfall approaching we were gravely concerned," Petrie said.

But then the rescue crew spotted something in the water 13 miles offshore. Coast guard Capt. Andy Pilliner, pilot of helicopter, said they initially thought it was a buoy.

"We went around, dropped down the height a bit, came in and then that moment, when you go, 'Oh! it is actually a surfboard and there is actually someone on it waving,'" Pilliner said. "It's just a great feeling, it's just what you're hoping for, but daren't."

charles.schilken@latimes.com

Twitter: @chewkiii

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Scottish surfer rescued 13 miles offshore after holding on to his board for 32 hours - Los Angeles Times

As some exhibitors waited for oil and gas professionals to stop by their booths at the Offshore Technology Conference this week, one German company, ELA Container, found that it had all the business it wanted.

ELA Container, which designs and builds offshore living quarters, found that business has surged during the oil downturn, when offshore project managers have time to shop for smaller and cheaper living arrangements for offshore crews, said Katharina Pleus, a marketer for ELA.

The company made its OTC debut in 2016 when attendance suffered in the wake of plunging oil prices and returned this year, even as the industry struggles to recover. The company just opened a Houston branch, Pleus said.

This is the right time to step into the market, said Pleus. Last time was a bad year, but it was busy for us.

The companys exhibit at NRG Park featured two 20 foot by 8 foot living containers, stacked on top of each other. They look like standard shipping containers but are built to offshore requirements, reinforced with several millimeters of steel and fire resistant components. (The containers will withstand up to 60 minutes of flame and heat, Pleus said.)

A container with two beds, each in a separate room and joined by a bathroom, costs $90,000. A simple empty container costs around $15,000. They are cheaper, narrower and shorter than the typical containers made in the U.S., Pleus added.

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Offshore business for German company thrives during a bust - FuelFix (blog)

While the oil price crash lasted from the middle of 2014 to early 2016, the market for offshore rigs started to decline well before that and is still on the downswing. In the fourth quarter of 2016, Diamond Offshore Drilling (NYSE:DO) was able to surprise investors a bit with a better-than-expected quarter. This time, though, results fell back in line with what we would expect from a company suffering through a more than three-year slump.

Despite this environment, Diamond's results weren't all that bad, really. Here's a look at how the company did this past quarter and what investors should make of Diamond's stock in the future.

Image source: Getty Images.

*IN MILLIONS, EXCEPT PER-SHARE DATA. DATA SOURCE: DIAMOND OFFSHORE EARNINGS RELEASE.

What has helped keep earnings afloat for many rig companies over the past year has been the ability to cut costs, especially with those related to rigs that are either warm stacked (idle but kept ready to go if a customer wants it quickly) or cold stacked (significant shutdown of equipment in anticipation of a long idle time). In many cases, costs for these stacked rigs were cut in half or more.

It seems, though, that rig companies have pulled all the levers they can on cutting costs as of late, because operating cost cuts today are no longer keeping up with declines in revenue. That's why we saw such a sharp drop in earnings for Diamond year over year. The decrease from the prior quarter isn't as concerning as it looks because Diamond realized a $0.29-per-share gain related to an early termination payment for one of its midwater floaters.

That said, investors shouldn't be too discouraged by these results. The company has been able to maintain profitability with less than 50% of its total fleet utilized. Also, Diamond has been able to maintain a 94.3% operational utilization rate for the quarter, which means that the rigs that are under contract aren't experiencing much downtime.

DATA SOURCE: DIAMOND OFFSHORE EARNINGS RELEASE. CHART BY AUTHOR.

It also is a good sign that Diamond has been able to find work for some of its rigs. Last quarter, two of its ultra-deepwater rigs started work on long-term contracts, and management was able to follow up this quarter with new contracts for two rigs. Its Ocean Monarch rig obtained a contract extension through the end of 2018, and Ocean Patriot will start a new two-year contract once its current contract is complete in the second quarter of 2018.

These contract awards touch on a theme that Diamond CEOMarc Edwards mentioned in the prior quarter's release. He said that it is going to be easier to market "hot" rigs -- those that haven't been stacked -- becausethey are ready to go on day one. This will play rather well into Diamond's hands over the long run as most of its newer assets are still hot while its older fleet consists of mostly the ones that were stacked.

About the shorter-term rig market, Edwards said:

We believe that it is still too early to call it bottom in deepwater utilization although we could be witnessing the first signs of a trough in falling rig demand. However, even when demand stabilizes, there will likely still be an oversupply in the sixth-generation asset class. At a major industry conference here in Houston during February, many of the operating companies who contract deepwater assets, however, have stated that deepwater can compete on a financial returns basis with shale on North American light tighter oil.

Diamond has done great work in managing its fleet both during the high point of the industry by not being overly exuberant with its expansion plan and during the crash by preserving capital and prioritizing its marketing. Today, a decent chunk of its most valuable assets are still on the water and getting new contracts as a result. At the same time, the company's balance sheet has held up remarkably well. With a half-dozen or so older rigs on the books that are less likely to get much work in the future, don't be surprised if the company scraps a few of its stacked rigs someday.

Overall, however, Diamond looks like the kind of company investors can get behind if they are looking to bet on the offshore oil and gas industry bouncing back over the next several years. Considering how cheap shares trade for today -- 0.5 times tangible book -- that seems like a solid thesis.

Tyler Crowe 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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Diamond Offshore's Earnings Dive, but Investors Shouldn't Fret ... - Motley Fool

An employee stands on the deck of a pilot boat in view of the Ocean Princess oil platform, operated by Diamond Offshore Drilling Inc., in the Port of Cromarty Firth in Cromarty, U.K., on Tuesday, Feb. 16, 2016. Matthew Lloyd/Bloomberg

Deep-water oil production companies are trying to figure out how to work better together, produce projects more quickly and cut costs.

Operators have collaborated on research and development projects for years, Chevron vice president Roy Krzywosinski told attendees at the Offshore Technology Conference at NRG Park on Tuesday. But companies have often struggled to work together, bogging down on administrative nuts-and-bolts.

Now the collaborators have re-started an old agency to cut through the red tape and focus on projects. The group, called the DEEPSTAR Offshore Operators Committee, will be administered by an external party and focused on core R&D, Krzywosinski said.

RELATED: Offshores big tech idea? Simplify, standardize and lower costs

We need a sense of urgency, he said. Offshore drillers are in a race to make deep-water drilling competitive with the onshore U.S. shale revolution. Costs must come down, Krzywosinski said. Ultimate recovery must come up.

In the shale gas, look what theyre doing with their well programs. Theyre drilling so many wells, he said. And if operators can cut 15 minutes out of the drilling time for each well, that makes a real difference, Krzywosinski said. You bring a manufacturing mindset into that space.

But offshore collaboration wont work, he continued, if it takes the lions share of time figuring out how to collaborate.

The new DEEPSTAR committee, he said, will focus on R&D collaboration, cooperation with suppliers and standardization.

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Offshore needs 'sense of urgency,' Chevron VP says - FuelFix (blog)

Malta's prime minister Joseph Muscat has called a snap election for 3 June following allegations his wife owns an offshore firm in Panama.

The vote will take place during Malta's EU presidency, which ends on 30 June.

The Labour leader told a crowd in Valletta on Monday (1 May) that the accusations against him and his family were baseless.

"Everybody knows about the attacks made in the past few days on me and my family. I have nothing to fear because truth is on my side and I am clean," he said.

The scandal erupted after Maltese blogger Daphne Caruana Galizia claimed Muscat's wife Michelle held shares in Egrant Inc, a firm named in last year's massive data leak from Panama-based Mossack Fonseca law firm.

While it is not illegal to hold an offshore account, it can be used to hide assets from tax authorities.

Such revelations have already seen Iceland's prime minister resign from office.

Nationalist Party (PN) leader Simon Busuttil has said Muscat must also step down.

The leaked cache of papers did not show the owners of Egrant, but instead revealed links to a Malta-based auditing firm Nexia BT.

An inquiry in Malta has since been launched to find evidence tying Egrant with the prime minister and his wife.

Muscat told Maltese media that he would step down from office if the inquiry revealed any ties.

"I am confident the inquiry will not find anything, because I know there is nothing to find," he said.

Muscat's chief of staff Keith Schembri and Labour minister Konrad Mizzi held shares in other firms also managed by Mossack Fonseca through Nexia BT.

Both Schembri and Mizzi had set up the secret companies after they took office in March 2013. The two at the time had also been negotiating an energy deal with Azerbaijan.

Galizia in her blog said large sums of money had been moved between bank accounts in Azerbaijan and accounts held by Egrant Inc. and the offshore firms belonging to Schembri and Mizzi.

The shady dealings sparked large demonstrations in Malta last week with thousands reportedly taking to the streets against corruption.

A delegation of MEPs from the parliament's Panama tax inquiry committee had visited Malta earlier this year.

Schembri, along with the Nexia BT accountants who set up the offshore accounts, refused to meet them.

Far-left Portuguese MEP Miguel Viegas, who was among the deputies in the delegation, said at the time that the Panama revelations had raised serious questions about ties between Malta's political class and money-laundering.

"Members of both the conservatives and the social democrats in Malta have serious questions to answer relating to their involvement in money-laundering and tax evasion as exposed in the Panama Papers," he said.

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Malta PM calls snap election over offshore scandal - EUobserver