Amec Foster Wheeler ploughs ahead with planned disposal of North Sea business

Amec Foster Wheeler ploughs ahead with planned disposal of North Sea business

Written by  – 10/08/2017 8:26 am

Amec Foster Wheeler chief executive Jonathan Lewis

Oil services and engineering firm Amec Foster Wheeler is ploughing ahead with previously announced plans to dispose of North Sea operations in order to meet competition requirements ahead of a end of year merger with Wood Group.

Amec said the competitive process for the divestment was “already well underway”.

It comes as half year results show a slide in revenue due to “challenging conditions” in the upstream oil and gas and solar markets.

Profits before tax increased to £77million for the first six months of 2017, compared to a loss of £446million last year.

Revenues narrowed from 2016’s £2.8billion to £2.3 billion in the same period, a decrease of 24% year-on-year.

Amec Foster Wheeler said that although underlying revenue was down 24% it had been offset by “better operational performance and contract close outs”.

And chief executive Jonathan Lewis said the £2.2billion merger with Wood Group remains on track to complete later this year.

He added: “I am encouraged that the first wave of benefits of the transformation programme we began last year is now evident.

“Operational discipline has improved, we have more than delivered on our cost saving targets and we have also seen the first tangible signs of sustainable growth: in the retained operations, trading margin is up 180 basis points compared to H1 last year with a 2% increase in the order book since the year end.

“Although, as expected, some of our end markets remain challenging, I am pleased that we are making progress across the business – reinforcing the value of a multi-discipline and multi-market customer offering.

“Looking forward, I am confident Amec Foster Wheeler is now moving in the right direction, and I believe that our people and shareholders will have an exciting future as part of the Wood Group, once the deal closes in the fourth quarter.”

Amec FW said underlying revenue fell 18% in the oil, gas and chemicals market due to “longstanding” conditions across upstream markets.

However North Sea volumes increased due to hook up projects.

The firm also made its first steps in unconventional US oil and gas recovery with progress made into eight “small” shale projects.

Amec said the all share offer from Wood Group was set to close in Q4, subject to clearance from the UK Competition and Markets Authority.

The company has also been drawn into a Serious Fraud Office Probe involving historic allegations of corruption involving Unaoil.

Read more about this here.

In the half yearly results Amec confirmed the investigation but said it was “not expected” to impact on the merger with Wood Group.

As at June 30, the firm had £989million of net debt

 

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Shell gets two Lomond warnings from HSE

Shell Oil Spill in the North Sea

Shell gets two Lomond warnings from HSE

Written by   Wednesday, 09 August 2017 09:16

Shell has been given two safety warnings from the UK’s Health and Safety Executive (HSE) on its Lomond facility in the Central North Sea.

Map of Lomond and surrounding Shell assets. Map from Chrysaor.

Lomond is 145nm east of Aberdeen, in Block 23/21a at 83.3m water depth.

According to the HSE, Shell has failed to maintain and test its plant and equipment; and has failed to implement a gas detection system.

The reports states that Shell had failed to maintain the test and plan equipment, specifically the Erskine Process Module (EPM), High Integrity Protection System (HIPS), and associated valves to allow a full end-to-end test of the system in accordance with Shell’s maintenance and testing procedures. Failure to do so has proven Shell to be unable to demonstrate that the system is in effective working order.

The HSE’s inspection found associated valves passing resulting in an inability to test the HIPS transmitters in situ; the last HIPS end-to-end proof test occurred in April 2014; and Shell’s procedures and performance standard require an annual test, in which the HSE said that it appeared to have only occurred once in over three years.

Shell has a deadline of 31 August to comply with this notice.

HSE’s second notice is for the Lomond’s gas detection system.

The UK regulator said that the supermajor failed to install fixed point detectors in the EPM (specific areas are Main Deck East, West and East Mezzanine level, Upper Deck and Weather Deck) and the Lomond process Module (specific areas are Main Deck east, Intermediate Deck process West and Lomond Utilities), or provide adequate justification of their omission.

“You cannot therefor demonstrate the adequacy of your fire and gas detection system of only line of sight detectors,” the HSE report states.

Shell has until 29 September to comply with this notice.

The supermajor confirmed to OE of receiving the notices on Lomond platform, which is currently shut down for planned maintenance, and said that the company is working to address the requirements.

“Shell UK can confirm that we have been issued with two HSE Improvement Notices on 31 May in relation to maintenance / testing procedures and the fire and gas detection system within a small number of process modules at our Lomond installation in the Central North Sea,” a Shell spokesperson said. “We are currently working to address the requirements of these Improvement Notices.”

Lomond was a BG Group asset, which Shell acquired following the Shell/BG combination in 2016.

Shell is the 100% owner and operator of the facility, however, the supermajor entered an agreement in January to divest Lomond in January, in addition to a package of its UK North Sea assets to Chrysaor for up to US$3.8 billion.

The entire package deal includes Shell’s stake in Buzzard, Beryl, Bressay, Elgin-Franklin, J-Block, the Greater Armada cluster, Everest, Lomond and Erskine, plus a 10% stake in Schiehallion.

The deal is expected to close in 2H 2017, and is subject to partner and regulatory approvals.

 


 

Unite the Union , welcomes  the HSE inspections and more inspections should take place  especially  after it had come to light  recommendations had not been implemented   however it’s disappointing the UK Governments cuts in the public sector budget  means cuts to staff and resource of the Health & Safety Executive (HSE) this puts offshore Oil & Gas sector workers at a higher risk as there are fewer inspections taking place in this high-risk hazard sector.

http://www.hse.gov.uk/offshore/law.htm

 

 

 

hse


 

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Competition fears raised over Wood Group, Amec FW merger

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 amfw
Competition fears raised over Wood Group, Amec FW merger

Written by  – 03/08/2017 6:02 am

Robin Watson, chief executive of Wood Group.

Energy service firms Wood Group and Amec Foster Wheeler (AFW) expect to complete their merger this year despite the UK competition watchdog flagging up concerns about the deal.

The Competition and Markets Authority (CMA) said the firms were two of the main suppliers of key upstream oil and gas services in the North Sea and that the tie-up could hit customers’ efforts to secure fair deals.

But Wood Group and AFW said they had already proposed measures which they expect to quash the CMA’s concerns.

In May, Wood Group offered to divest most of AFW’s North Sea oil and gas business as it looked to pre-empt competition fears.

Today, Aberdeen-headquartered Wood Group said those plans were already at an “advanced stage”.

“AFW commenced a formal marketing process in May, which has attracted interest and is progressing well,” Wood Group said in a statement.

Wood Group said it had been working constructively with the CMA and would now formally submit its proposals to the watchdog. The company expects a final decision from the CMA in October.

The CMA’s misgivings centre on a potential lack of competition in the supply of engineering, construction, operation and maintenance services in the North Sea.

The watchdog warned today that it would have to launch an in-depth investigation into the merger if the measures proposed by Wood Group did not go far enough.

Kate Collyer, deputy chief economic adviser at the CMA, said: “It is clear that Wood Group and AFW have a particularly strong market position in the supply of key services to the upstream offshore oil and gas sector in the UK.

“The merger would remove the rivalry between two of the four main suppliers of these services.

“Based on our initial investigation, this could significantly reduce customers’ ability to obtain competitive bids, which could lead to increased prices and affect the competitiveness of the oil and gas industry in the UK.”

Wood Group chief executive Robin Watson said: “Both sets of shareholders overwhelmingly supported the proposed combination and we continue to believe that the proposed remedy will be sufficient to obtain clearance from the CMA.

“We remain fully committed to completing the transaction in quarter four this year.”

Wood Group has said about 1,300 global energy service jobs were under threat from the proposed merger.

Read: Wood Group-Amec Foster Wheeler tie-up threatens 1,300 jobs

 


Protect your rights at work, your terms & Conditions, if you are TUPEd transferred into Wood Group

TUPE

http://www.unitetheunion.org/uploaded/documents/TUPE%20guide%20201411-19741.pdf


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Unite is the largest trade union  for offshore workers in the North Sea UKCS

Have a voice, take action and make change happen. Join the union

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Industry report: Scotland set for 100 year oil boom West of Shetland

 

Written by Michael Gray
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Increased oil investment in Scotland’s Atlantic waters has led to a growth in the strength of Scotland’s oil and gas sector. In recent months reports have focus on the new Clair Ridge field, a massive £4.5 billion oil investment project.

A new industry report goes even further and estimates that these recent investments represent only a fraction of a 100 year oil boom for Scotland’s Atlantic Margin.

The report, commissioned by Oil and Gas People, the world’s largest oil and gas industry jobs board, with support from North Sea oil and gas industry experts, conclude that untapped oil and gas in the West Coast will last for at least 100 years, with a whole value of more than £1 trillion.

Investors Chronicle reported that politicians in Westminster were underestimating the value of Scotland’s oil and gas to undermine the case for Scottish independence. Former Chancellor Dennis Healey admitted that this ploy was used in the 1970s.

Atlantic Margin can substantially enhance Scotland’s finances

Such an expansion in West Coast oil and gas would be as significant an economic transformation as the original explosion in North Sea oil and gas in the 1970s. This would also have a significant impact on Scotland’s overall finances. It would give Scotland further finances in invest in the growing renewables sector, other manufacturing sectors and improve public services.

north-sea_1855640bOil rich countries such as Norway, Qatar, Kuwait have been transformed as a result of their natural resources. In contrast, Westminster Government has squandered North Sea oil and failed to establish an energy investment fund.

When contacted regarding the report, Professor John Howell, Chair in Geology and Petroleum Geology at the University of Aberdeen has commented:

“This is another piece of work from the industry that highlights the massive unexplored potential that lies in the West of Shetland region.”

Other sources in the industry include Hurricane Energy who reported that the Lancaster field has ‘well exceeded expectations‘. Other reports highlight the growth in production and activity across the region due to advances in exploration technology. Oil and gas investment hit a record high last year of £13 billion.

Today both Professor Alex Kemp from the University of Aberdeen and Kevin Forbes, Chief Executive of Oil and Gas People, were interviewed on BBC Radio Scotland. Both commentators agreed that this oil boom is developing with potential for long-term growth.

Conclusion

This is potentially one of the most important stories of the independence debate. While David Cameron has sought to play down the value of Scotland’s oil, industry experts and commentators have explained how valuable it is and its importance long into the 21st century.

Voters in Scotland will decide on the 18th of September whether Scotland or Westminster should receive the tax revenue from this important resource.

 

 

 

Shell gas release on Brent Charlie had potential for ‘fire or explosion’, says HSE

Shell gas release on Brent Charlie had potential for ‘fire or explosion’, says HSE

Written by  – 03/08/2017 7:30 am

Brent Charlie

Production on one of Shell’s oldest North Sea assets has been shut in for nearly three months after a gas leak sparked fears of the potential for a “fire or explosion”.

Non-essential workers were downmanned from the supermajor’s Brent Charlie platform following the suspected release back on May 19.

At the time Shell said production has been halted and that the source of the leak had been “isolated”.

Now it has emerged that production is still shut in at the ageing facility, 110 miles north-east of Shetland, months later.

The Brent field has been in production since the early 1970s and is one of the oldest and most prolific North Sea discoveries.

The Brent Charlie was the last of four platforms installed in the area, arriving in 1978.

Shell has now been served with a prohibition notice over the potential for “fire and explosion” in relation to the latest leak.

The Health and Safety Executive (HSE) said the oil giant had failed to act under the Offshore Prevention of Fire regulations.

The watchdog said the breach related to the possibility of an uncontrolled release of flammable or explosive hydrocarbons from safety critical pipework in the platform’s Column Four leg.

A Shell spokeswoman said: “Shell UK can confirm that we received a Prohibition Notice on 27th May 2017 in relation to pipe work integrity on our Brent Charlie installation in the northern North Sea.

“We continue to work through the necessary actions required to enable safe restart of the installation.”

During the May incident, platform personnel were brought to muster, as is standard practice. All 176 workers were safely accounted for and no injuries were reported.

Shell said production has been halted and the leak has been “isolated”.

The oil major has not given any information on the volume of gas involved but there is not through to have been any associated environmental issues.

Shell was hit with a prohibition notice earlier this year over safety concerns on the same platform.

HSE said Shell had failed to put appropriate controls in place to protect workers from dangerous gases in one of the platform’s legs.

The watchdog said the company had identified the risks of exposure to hydrogen sulphide and hydrocarbon gas while accessing the column C1 leg.

But Shell did not adequately describe how control measures would be “organised, controlled, monitored or reviewed”, according to HSE.

The prohibition notice was served early in February.

Prohibition notices dictate that work activity in a certain area or on a particular process must stop immediately.

Jake Molloy, RMT regional organiser, said issues in the legs of the Brent field platforms had been a “recurring” problem.

He added: “It is an issue that they have not been able to get a grip on.

“Hence they have been hit again with another notice.

“As long as it is shut in there’s no immediate danger to the guys on board from hydrocarbons.

“But managing this needs to be a top priority.”

The decommissioning of Brent field, which has produced oil for 40 years, is one of the most complex engineering projects of its kind and is expected to take a decade to complete.

Shell floated the idea of leaving the legs of three of the four platforms in place on the seabed earlier this year.

The field has more than 140 wells, 64 storage shells and 28 pipelines.