LNG

Production companies seeking efficient and cost-effective methods of increasing their output are forecast to increase spending by almost 20 percent in 2023 to total $58 billion for additional oil and natural gas resources to satisfy global demand for energy such as LNG and pipeline gas and for necessary activities like petroleum refining and chemicals production to make products such as pharmaceuticals.

May 19 (LNGJ) - Houston-based TechnipFMC has been awarded a significant contract by European LNG and pipeline natural supplier Equinor to provide riserless light well intervention (RLWI) services on the Norwegian Continental Shelf. “The two-year contract runs from 2024 to 2025, with options to extend for each of the three subsequent years,” said Equinor.

   TechnipFMC said it would provide production enhancement, production data, and pre-plug-and-abandonment services to Equinor using RLWI, which enables well interventions from a monohull vessel, eliminating the need for a riser and the rig required to connect the riser to the subsea well. Instead, remotely operated Well Control Systems are used to facilitate operations on the seabed.

The leading Western subsea oil and gas field services companies Schlumberger, Aker Solutions and Subsea 7 plan to join forces to form a separate joint venture to deliver a step change in subsea production economics as energy exploration and production is set to gather pace amid the supply crisis.

The three companies propose to help customers unlock reserves, reduce time to first oil and lower development costs while simultaneously delivering on their decarbonization objectives.

The proposed joint venture will comprise the subsea businesses of Schlumberger and Aker Solutions, with Subsea 7 purchasing 10 percent of the joint venture for $306.5 million.

“This combination brings together deep reservoir domain and engineering design expertise, an extensive field-proven subsea production and processing technology portfolio, world-class manufacturing scale and capabilities, and a comprehensive suite of life-of-field solutions to customers all over the world,” said a statement.

It added that the transaction was subject to regulatory approvals as well as other customary closing conditions and is expected to close during the second half of 2023.

Following completion of the transaction, Schlumberger will own 70 percent of the joint venture, with Aker and Subsea 7 owning 20 percent and 10 percent respectively.

Transaction details

The Board of Directors of the joint venture will consist of three representatives from Schlumberger, two from Aker and one from Subsea 7.

The new joint venture will form part of the Subsea Integration Alliance, currently an unincorporated alliance between Schlumberger and Subsea 7.

The alliance will be extended by 10 years from the transaction completion date.

“This joint venture will bring together world-class businesses that are uniquely positioned to provide subsea technologies to help our customers improve recovery and reduce overall subsea development costs,” said Olivier Le Peuch, Chief Executive of Schlumberger, whose main offices are in Paris and Houston.

“Customers will benefit from enhanced services that leverage digital and technology innovation to drive improved performance while increasing energy efficiency and reducing CO2 emissions,” added Le Peuch.

Schlumberger CEO Peuch had forecast in January 2022 that a super-cycle may be underway for natural gas and oil markets.

Kjetel Digre, CEO of Norway-based Aker Solutions, said that by combining strong and complimentary competence and technologies, this compelling combination will deliver an industry step-change that will benefit all involved and the customers.

Economics case

“The offshore market activity is increasing, and this joint venture will drive enhanced offerings both in terms of subsea production economic,” added Digre.

John Evans, CEO of Subsea 7, said he was excited to build on the highly successful alliance with Schlumberger and partnership with Aker Solutions.

“This new joint venture is a critical step as we collaborate on the integrated subsea projects that drive maximum value for our customers,” added Evans for Subsea 7, headquartered in London and domiciled in Luxembourg.

Other transaction details show that Aker will receive $306.5M from Schlumberger which will be settled in the form of shares in Schlumberger.

The shares will be settled based on the volume-weighted average trading price of Schlumberger shares in the 10 business days preceding the closing of the transaction and are subject to a lock-up period of a minimum of 180 days.

Subsea 7 will purchase a 10 percent interest in the joint venture from Aker Solutions for $306.5M, which will be settled in cash.

Of this, 50 percent will be settled upon closing of the transaction and the remainder will be settled, with interest, by June 30, 2024.

Aker will receive $87.5M in proceeds from a vendor note from the joint venture. Of this, at least 50 percent will be paid, with interest, one year after the transaction closes and the remainder within two years.

TechnipFMC, the company that has put on hold its de-merger into two separate entities for subsea and LNG projects because of Covid-19 and the oil slump, has launched with services firm Halliburton Company a new technology product for subsea wells.

TechnipFMC and Halliburton introduced their trade-marked Odassea system, which they described as the first distributed acoustic sensing solution for subsea wells.

“The technology platform enables operators to execute intervention-less seismic imaging and reservoir diagnostics to reduce total cost of ownership while improving reservoir knowledge,” they explained.

“The Odassea service integrates hardware and digital systems to strengthen digital capabilities in subsea reservoir monitoring and production optimization,” their statement added.

Halliburton provides the fiber optic sensing technology, completions and analysis for reservoir diagnostics while TechnipFMC provides the optical connectivity from the topside to the completions.

“Through the collaboration, operators can accelerate full field subsea fiber optic sensing, design and execution,” they stated.

TechnipFMC has two main offices in both Houston and Paris and said in March 2020 it was delaying plans to separate into two companies because of volatile market conditions created by the coronavirus outbreak.

The company had first announced the proposal in August 2019 and planning was well advanced when the pandemic and oil price slump impacted markets in mid-March.

TechnipFMC then said on March 16, 2020 that the global pandemic, a sharp drop in oil prices and heightened volatility in global financial markets had “created a market environment that is not currently conducive to the company’s separation” plans.

On the latest joint venture, TechnipFMC and Halliburton said they were delivering solutions with the technology to multiple subsea projects at all stages from conceptual design to execution and installation.

“This project enables an enhanced level of reservoir understanding for our customers and expands our unique integrated subsea solution,” said Christina Johansen, Vice President of TechnipFMC Subsea Product Manufacturing.

”We are proving that we can leverage the competencies and know-how to drive the change our industry needs for a higher level of sustainability,” she stated.

With the de-merger on hold TechnipFMC has still overhauled its divisions with Onshore-Offshore having been renamed Technip Energies, in-line with the new scope of the business.

The company said in its most recent earnings that despite the challenges and a softening of near-term LNG markets, the long-term fundamentals for natural gas, and LNG in particular, remained strong.

The two other TechnpFMC divisions are Subsea and Surface Technologies.