Gauging the Gulf: Anticipated Production Declines

Gauging the Gulf: Anticipated Production Declines

Monday, March 28, 2011
Rigzone Staf
by  Trey Cowan

As of the most recent data provided by the EIA (October 2010), crude oil production coming from the Gulf of Mexico makes up approximately 29% of total U.S. daily production. We would note that this is a drop from the month of May when the Gulf contributed to 31% of all crude production.

In the U.S. Energy Information Administration's July Short-term Energy Outlook, the EIA projected that the moratorium would result in lost production of approximately 82,000 bbl/d on average during 2011 or a cumulative 30 million barrels.

Given how early in the game it was when the government made these projections, we doubt they fully considered how slowly the permitting process would resume once they rescinded the moratorium. Using average decline rates, taking the slow resumption into account, we believe the average lost production in 2011 will approximate 95,700 bbl/d or 35 million barrels in total.

The chart above illustrates that after the hurricanes of 2004 & 2005, it took several years to regain production crippled by the storms. The years 2009 and 2010 benefit from projects started in the previous six years that resulted in Gulf of Mexico production exceeding the prior peak set early in the decade.

The impact from suppressed drilling in the Gulf of Mexico over the next two years will be mitigated by operators exploiting horizontal drilling for oil in regions like the Bakken and Eagle Ford shale. This boost in the lower 48, along with the anticipated declines in production from the gulf, suggests the percentage of production from offshore sources will drop. We are anticipating that the Gulf of Mexico's annual contribution will drop from 30% to approximately 26% in U.S. supplies over the next two years.

Brazil OGX Plans Investments of $2B in 2011 -CFO

Brazil OGX Plans Investments of $2B in 2011 -CFO

Monday, March 28, 2011
Dow Jones Newswires

by  Jeff Fick

 

OGX expects to invest about $2 billion in 2011 as it ramps up exploration efforts and produces its first oil, the company's chief financial officer said Monday.

"This will be for drilling exploratory wells and production at the extended-well test," CFO Marcelo Torres said during a conference call with analysts. The independent driller, which is still in the pre-operational phase, expects to produce its first oil from an extended-well test at the Waimea prospect in the third quarter.

Part of the 2011 capital expenditure budget will be directed at pioneer wells in the Para-Maranhao Basin, said Chief Executive Officer Paulo Mendonca. The company expects regulators to issue a license to start drilling OGX's first wells in the basin in "two weeks," Mendonca said. The drilling platform hired to spud the wells is on site and ready to start work once the license is approved, the executive added.

In the Espirito Santo Basin, meanwhile, OGX is focused on post-salt prospects, Mendonca said. While Brazil's much-ballyhooed pre-salt region extends into the basin, the depth of the pre-salt targets puts them out of OGX's reach at the moment.

"We have to do 3D seismic, but the locations we are looking at are in the post-salt. Maybe in the future it will be possible to think about pre-salt," Mendonca said. The executive noted that pre-salt targets in the region were at about 10,000 meters deep, a depth at which OGX is not yet authorized to drill.

"In the future, perhaps, we can find something not so deep," he said.

Late Friday, OGX reported a fourth-quarter 2010 loss of 123.4 million Brazilian reais ($74.3 million), compared with a loss of BRL100.6 million a year earlier. OGX is still in a pre-operational phase and reported only financial earnings from cash on hand. OGX said it holds BRL4.8 billion in cash.

Editorial: Oil NIMBY-ism

Editorial: Oil NIMBY-ism

Monday, March 28, 2011

The Washington Post

When was the last time an American president stood before an audience in a foreign country and announced that he looked forward to importing more of its oil? Answer: Just over a week ago, when President Obama joined political and business leaders in Brasilia in hailing the fact that their newly discovered offshore petroleum reserves might be twice as large as those in the United States. Americans "want to help with technology and support to develop these oil reserves safely, and when you're ready to start selling, we want to be one of your best customers," Mr. Obama said.

Brazil is probably a more stable, secure supplier than, say, Libya. Still, the president's words were ironic. Brazil already produces vast quantities of a fuel - ethanol - that the U.S. government, under a policy long supported by presidents and farm-state members of Congress from both parties, has promoted as a green alternative to gasoline. But the United States, protecting its own heavily subsidized ethanol industry by means of a 2.5 percent tariff and a 54-cent-per-gallon duty, prevents Americans from importing all but trivial amounts of the stuff from Brazil. Therefore, we need more oil - much of it imported. In Brasilia, Mr. Obama spoke of strengthening U.S.-Brazilian technical cooperation on ethanol but did not propose allowing U.S. protectionist measures to lapse after their scheduled expiration on Dec. 31.

As for offshore drilling, Mr. Obama's enthusiasm for punching holes in the ocean floor off Brazil is hard to reconcile with his decision, announced Dec. 1, to keep the waters off the East and West coasts and the eastern Gulf of Mexico off-limits to exploration indefinitely. His policy was a reversal of an earlier decision he had made to open some of those areas. We can understand that reversal, after the massive oil spill in the western Gulf last year. And, demonstrating a measure of flexibility even after the disaster, the administration has announced five deep-water drilling permits in the western Gulf since the spill.

The vast majority of U.S. shores, however, have remained off-limits for decades. This, too, is a policy made by two parties, with Republicans opposing drilling when it suited them; President George W. Bush prevented drilling off the Florida Gulf Coast in part to boost his brother Jeb's 2002 run for a second term as governor. But it is tough to reconcile with U.S. eagerness to "help" Brazil pump oil off its coasts and ship it here. U.S. companies, enticed by government loan guarantees, are already lined up to sell Brazil drilling equipment and services. Forget the implications for U.S. dependency on foreign sources. What does this posture say about American regard for the natural environment outside U.S. territory?

Privileged residents of scenic landscapes in America have long cried "NIMBY" - "Not In My Back Yard" - to stave off unwanted but necessary projects, from railway tracks to wind farms to power lines. Now NIMBY-ism, it seems, has become U.S. policy on offshore oil production. But the Nigerias, Angolas and Brazils of the world do not have that luxury. This makes no sense, economically or environmentally, and, sooner or later, a more balanced view must prevail. 

Marcellus Panel Looks for Common Ground at First Meeting

Marcellus Panel Looks for Common Ground at First Meeting

Monday, March 28, 2011
Pittsburgh Post-Gazette
by  Laura Olson

The public comments at the end of Friday's inaugural meeting of the state Marcellus Shale Advisory Commission showed part of the challenge facing that panel during the next four months.

One county commissioner stood up to laud the number of jobs that gas drilling has brought to his community. He was followed by a northeastern resident who said her property value has plummeted because of the surrounding well pads, and another woman citing concerns about water quality.

"I moved up here to be at peace with nature," Wyoming County resident Joanne Fiorito told the panel. "You have now ripped my American dream apart, and I am appalled and outraged."

The 30-member panel has 120 days to assess how the state is managing natural gas drilling, as well as find some policy agreement between those skeptical of the booming business and those benefiting from it.

The group will report back to Gov. Tom Corbett in mid-July on what changes they recommend to balance job growth and environmental protection.

Their first task during the meeting, which lasted for more than four hours, was dividing the topics to be tackled among four work groups -- health, safety and environmental protection; economic and workforce development; infrastructure; and local impacts and emergency response.

Those groups will begin their work shortly, and give an update of their progress at the commission's next meeting on April 27.

A locally assessed impact fee on gas drillers will be part of those talks, said Lt. Gov. Jim Cawley, the commission's chairman. But a statewide severance tax, which the Corbett administration opposes, is "off the table," he added.

Several of the commission members -- who represent state government, local communities, environmental advocates, industry leaders and academia -- noted a need for some form of levy or fee to help local governments with rising costs.

Mr. Cawley said he'd like to see figures on what the drilling industry is costing municipalities and counties in additional road construction, staffing, emergency response calls and other growing demands.

Several on the panel talked about using a "fact-based" process to figure out how to responsibly grow the drilling industry, and to present Pennsylvania as the best place for drilling companies to invest.

"We have to win," said Nicholas Haden, vice president of Reserved Environmental Services, a wastewater treatment facility in New Stanton, Westmoreland County. "The Marcellus Shale is not the only shale play in the world."

Presenters giving a snapshot of the industry's activities relayed data on how much interest the Marcellus, and the state's other shale formations, already have garnered.

Southwestern Pennsylvania is near the forefront of activity, with Washington and Greene among the top five counties for number of wells. Department of Environmental Protection statistics show Washington with 305 wells drilled since 2007 and 179 in Greene, which puts them third and fourth behind Bradford and Tioga.

Those wells, and others in the works, are expected to bring more than 10,000 industry jobs to the state's southwest by 2014, said Tom Murphy, of Penn State's Marcellus Center for Outreach and Research.

But amid the presentations came questions to be discussed in the coming months: How should the state help non-drilling businesses, which are losing workers to higher-paying gas companies and having trouble filling the resulting openings?

And how many hotel rooms and apartment buildings should towns add to accommodate an industry that tends to move money and manpower quickly if markets shift?

Some lessons may be found in looking at the southern shale gas-producing states, said Teri Ooms, of the Institute for Public Policy and Economic Development.

A major complaint in Arkansas, and in some parts of Pennsylvania already, is road damage and congestion, said Ms. Ooms. She said one strategy that helped ease tensions was posting truck routes and advertising when those roads would have heavy traffic.

Other problems and solutions will be the source of much-welcomed debate by the commission and members of the public, said Mr. Cawley.

"We want to hear it from all sectors, because we want to provide a blueprint to Gov. Corbett in the middle of July that truly outlines all of the benefits as well as any potential impacts so that he can make an informed decision," he said.

Begich Proposes Federal Coordinator for OCS

Begich Proposes Federal Coordinator for OCS

Monday, March 28, 2011
Alaska Journal of Commerce
by  Tim Bradner

Alaska U.S. Sen. Mark Begich told the Alaska Legislature he will introduce legislation establishing an Arctic outer continental shelf federal coordinator and creating a joint regional lease and permit processing office for Alaska's OCS region, modeled after the federal gas pipeline coordinator position.

The new federal coordinator would have authority to work across many agencies involved in permitting, including the U.S. Environmental Protection Agency, U.S. Army Corps of Engineers and the Interior Department.

The bill would be introduced soon, Begich spokeswoman Julie Hasquet said.

Begich spoke in Juneau in his annual address to the Legislature.

"The federal OCS coordinator would work with the state of Alaska and affected local governments to streamline development in the Chukchi and Beaufort seas, which hold such promise for future oil and gas development," Begich said.

He also urged serious discussion of which federal agency should have jurisdiction over air permitting.

Begich argued for federal air quality permit authority in the Arctic OCS region to be brought under the Department of the Interior, which now has jurisdiction over air permits in the Gulf of Mexico.

This would take away the U.S. Environmental Protection Agency's current authority for air quality permits in the Arctic OCS.

An air quality permit for Shell's proposed exploration in the Beaufort Sea is now bogged down in appeals before the Environmental Review Board, an internal EPA appeals panel.

"We need to address the two different air permitting systems in the country. There are currently two processes and two different federal agencies overseeing air permits -- one for the Gulf of Mexico and one for everyone else -- including the Arctic," Begich said in his speech. "This makes no sense. It's not fair and it puts companies with projects in the Arctic at a competitive disadvantage. We need to level the playing field. It's time to move all air permitting under the Interior Department."

Shell reacted favorably to Begich's suggestions.

"The senator clearly understands the challenges facing responsible operators, like Shell, as well as the need for a regulatory process that is predictable and accountable," company spokesman Curtis Smith said in a statement. "A federal OCS regional coordinator for Alaska could go a long way in making that happen. Shell has already spent five years and over $50 million trying to secure an air permit for our drilling rig but with no success. The Senator's effort to align Arctic air permitting under the Department of Interior, as it is in the Gulf of Mexico, is one Shell supports."

Marcellus Impact Fee Proposal In The Works

Marcellus Impact Fee Proposal In The Works

Monday, March 28, 2011

Knight Ridder/Tribune Business News

by  Brad Bumsted, The Pittsburgh Tribune-Review

 

Republican senators will introduce legislation to impose a fee on Marcellus shale drillers in a few weeks, in an effort to offset costs municipalities experience dealing with the growing natural gas industry, said a top Senate staffer.

Senate President Pro Tempore Joe Scarnati of Jefferson County, the party's highest-ranking senator in the GOP-controlled General Assembly, could be lead sponsor of the bill, said his chief counsel Andrew Crompton.

Counties where drilling occurs would benefit the most monetarily, but lawmakers likely will try to compensate contiguous municipalities, Crompton said. Those municipal boundaries could cross county lines, he said, so "contiguous counties could well get money."

Lt. Gov. Jim Cawley said yesterday a shale advisory panel he chairs will report to Gov. Tom Corbett in 120 days and include a recommendation on assessing a local impact fee to help municipalities defray costs such as road repairs and first responder units.

Corbett has said he would consider a fee to help local government finances. But the money should not go to the state, he said.

The Senate might produce a different interpretation. Scarnati "believes local needs are paramount, but knows that there needs to be a statewide portion, likely for 'Growing Greener' projects and/or hazardous site cleanup," Crompton said.

Cawley said the administration would not impose a severance tax on gas extraction, and the Marcellus Shale Advisory Commission wants evidence of damage that's occurring from drilling operations.

"We want to understand what the actual impact is," he said.

It's not clear whether the full Senate would vote on a bill before the commission concludes its work. Crompton said senators do not want to usurp the commission, but Scarnati senses urgency among local government officials and doesn't want to wait until fall to address it.

The commission will consider a range of issues, such as environmental impacts and the extent to which natural gas eventually could be used to fuel state vehicles, prisons and schools, Cawley said.

Corbett's critics have said the commission's makeup is industry-heavy. It includes drilling company executives, business representatives, six members of Corbett's cabinet, a member of the Public Utility Commission, environmentalists, local government officials and the governor's energy executive, Patrick Henderson.

"This is a very interesting group of cheerleaders," Virginia Cody of Wyoming County told the panel during its first meeting.

Joanne Fiorito, who lives near drilling sites in that county, said she moved there "to be at peace with nature."

"You have ripped my American dream apart, and I am appalled and outraged," she said. 

Kosmos Hits Paydirt Offshore Ghana

Kosmos Hits Paydirt Offshore Ghana

Monday, March 28, 2011
Anadarko Petroleum Corp.
by  SubseaIQ

Anadarko announced a deepwater discovery at the Teak-2 prospect, located in the West Cape Three Points Block offshore Ghana. The Teak-2 exploration well encountered approximately 90 net feet of high-quality oil, condensate and natural gas pay in stacked
Campanian- and Turonian-age reservoirs.

"The Teak-2 discovery is another confirmation of our geologic model that adds to the substantial resource potential of the area and
extends the success of our multi-well exploration program on the West Cape Three Points Block," said Bob Daniels, Anadarko Sr. Vice
President, Worldwide Exploration. "We are very pleased with the results encountered in this discovery, which will be further evaluated with future appraisal activity. We continue to work with our partners and the Republic of Ghana to advance our exploration and appraisal programs, as well as the increasing number of development opportunities in both the West Cape Three Points Block and adjacent Deepwater Tano License."

The Teak-2 well was drilled using the Atwood Hunter rig to a total depth of 11,185 feet in water depths of approximately 2,900 feet. The well is approximately 5,900 feet southwest and fault separated from Teak-1, and approximately two miles northeast of the Mahogany-2 well. After preserving the well at Teak-2 for future use, the partnership plans to mobilize the rig to drill the Banda prospect, also located in the West Cape Three Points Block.

Anadarko owns a 30.875-percent working interest in the West Cape Three Points Block, which is operated by Kosmos Energy (30.875-percent working interest). Other co-owners in the block include Tullow Oil plc (22.896-percent working interest), the E.O. Group (3.5-percent working interest), Sabre Oil & Gas Holdings Ltd (1.854-percent working interest) and the Ghana National Petroleum Corporation (10-percent carried interest).

EnCore Sidetrack Delivers Additional Pay

EnCore Sidetrack Delivers Additional Pay

Monday, March 28, 2011
EnCore Oil plc

by  SubseaIQ

 

EnCore announced that the Burgman side-track well 28/9-4z located on UKCS Central North Sea Block 28/9 has successfully encountered hydrocarbons in the targeted Lower Tay sandstone interval.

The well was drilled directionally with a hole angle up to 64 degrees to a Total Depth of 5,237 feet Measured Depth (M.D.). Initial analysis indicates net oil pay of 135 feet over a gross reservoir interval of 135 feet (M.D.), equivalent to 64 feet of net vertical oil pay over gross vertical interval of 64 feet True Vertical Thickness. Preliminary log analysis indicates an average porosity of 38%, significantly better than in the original Burgman well. Initial estimates suggest a likely STOOIP in the range of 80 - 120 mmbbls.

This result now concludes the current drilling program on Block 28/9 and following completion of this well, the Transocean GSF Galaxy II heavy duty jack-up rig will be demobilized. The Galaxy II has drilled three successful wells during this drilling campaign, resulting in two substantial discoveries at Varadero and Burgman, and an appraisal of Catcher North.

Commenting on the result, Alan Booth, EnCore's Chief Executive Officer, said, "This is an excellent result and supports the partnership's geophysical model for the identification of Tay sands over the Burgman structure. The sand thickness and quality was very much at the upper end of our pre side-track expectations. The confirmation of another important discovery in the license is a fitting end to this phase of drilling. On behalf of EnCore I would like to thank our co-venturers for their help and support and look forward to continuing to work with them as we progress further appraisal and development work on the Block. We would also like to thank ADTI, Transocean and all the offshore crew and service providers that helped deliver a safe and successful drilling program. EnCore is now looking forward to the results of drilling at Cladhan, which we hope will be within the next 10 days or so.
 
"I would like to take this opportunity to make some general comments, not specific to our discoveries in the Catcher area, on the recent fiscal changes announced in the budget. The EnCore team have been directly involved in the discovery of a number of the UK's most important recent oil and gas fields, one of which now accounts for more than 10% of current UK oil production, and so we recognize the need to encourage the discovery and ultimately the production of the UK's indigenous resources.

"Whilst unexpected tax changes are never welcome, given the current state of the nation's finances, one can at least rationalize the desire to raise revenues from fields that have already paid back their risked investments during a time of very high oil prices. However, failure to encourage the discovery of new fields as well as the development of newer, smaller and difficult fields on fair and predictable fiscal terms is in no one's interest. Undeveloped and undiscovered oil and gas pays no taxes, creates and sustains no employment and a slowdown in UKCS activity will simply increase the UK's reliance on imported oil and gas from less politically stable, if not as fiscally unpredictable, parts of the globe. I welcome the Government's indication that it is prepared to discuss with the industry the enhancement and broadening of the recently introduced Field Allowances which I believe, if properly structured, could mitigate the effects of these changes and continue to incentivise those companies who wish to continue to invest in finding and developing the UK's offshore natural resources."

The equity in the Block 28/9 joint venture partnership is as follows: EnCore Oil plc (15 percent., Operator), Premier Oil (35 percent.), Wintershall (UK North Sea) Limited (20 percent.), Nautical Petroleum (15 percent.) and Agora Oil & Gas (15 percent.).

Statoil Receives BOEMRE's Sixth GOM Drilling Permit

Statoil Receives BOEMRE's Sixth GOM Drilling Permit

Monday, March 28, 2011
BOEMRE

by  SubseaIQ

 

The Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) has approved a sixth deepwater drilling permit that complies with rigorous new safety standards implemented in the wake of the Deepwater Horizon explosion and resulting oil spill.

This includes satisfying the requirement to demonstrate the capacity to contain a subsea blowout. The approved permit is a revised permit to drill a new well for Statoil Gulf of Mexico LLC's Well #1 in Alaminos Canyon Block 810 in 7,134 ft. water depth, approximately 216 miles off the Texas coastline, south of Texas City.

"This permit is the sixth we have approved since February 17, when industry demonstrated that it had the capacity to handle subsea blowouts and spills. Some say we are now proceeding too quickly; some say we are still proceeding too slowly. The truth is, we are proceeding as quickly as our resources allow to approve permit applications that satisfy our rigorous safety and environmental standards," said BOEMRE Director Michael R. Bromwich. "We will continue to do so."

Statoil's Well #1 is a new well. The operator had a rig under contract and an approved Permit to Drill a New Well when activities were suspended due to the temporary drilling suspensions imposed following the Deepwater Horizon oil spill.

As part of its approval process, the bureau reviewed Statoil's containment capability available for the specific well proposed in the permit application. Statoil has contracted with the Helix Well Containment Group to use its capping stack to stop the flow of oil should a well control event occur. The capabilities of the capping stack meet the requirements that are specific to the characteristics of the proposed well.

BOEMRE has worked diligently to help industry adapt to and comply with new, rigorous safety practices. These standards ensure that oil and gas development continues, while also incorporating key lessons learned from the Deepwater Horizon oil spill. This new permit meets the new safety regulations and information requirements in Notices to Lessees (NTL) N06 and N10, and the Interim Final Safety Rule.

Eni Inks MoU for Ukraine Upstream Cooperation

Eni Inks MoU for Ukraine Upstream Cooperation

Monday, March 28, 2011
Eni S.p.A

The Minister of Ecology and Natural Resources Mykola Zlochevskiy of Ukraine and Eni CEO Paolo Scaroni signed in Kiev a Memorandum of Understanding defining the framework for possible cooperation initiatives in exploration and production of hydrocarbons in Ukraine.

The parties agreed to collaborate on the study of initiatives in conventional and unconventional oil and gas on the basis of a mutual sharing of data, competencies and technology. They also arranged to set up a joint working team that will begin the evaluation of such opportunities.

During his visit to Kiev, Eni CEO Paolo Scaroni also had the opportunity to meet with the Minister of Energy and Coal Industry Yuriy Boyko to discuss possible cooperation in Ukrainian upstream sector.

Anadarko to Mobilize Rig to W. Africa

Anadarko to Mobilize Rig to W. Africa

Monday, March 28, 2011

Anadarko Petroleum Corp.

 

Anadarko has finalized plans for its previously announced 2011 drilling campaign in the Liberian Basin. To carry out this program,
Anadarko intends to mobilize the Discoverer Spirit drillship from the Gulf of Mexico to West Africa after it finishes completion activities
on the third Caesar/Tonga well. Subject to the finalization of a contract amendment with the rig owner, the Discoverer Spirit is expected to begin drilling in West Africa during the third quarter.

As part of this program, Anadarko plans to drill its first Mercury appraisal well, located approximately seven miles west of the Mercury
discovery well offshore Sierra Leone in Block SL-07B-10. In addition, the company plans to drill the Jupiter exploration prospect on the
same block later in the year. Anadarko operates Block SL-07B-10 with a 65-percent working interest.

Offshore Liberia, the company plans to drill the Montserrado exploration well on Block 15, which is operated by Anadarko with a
57.5-percent working interest. Further to the east, on Block 10, Anadarko recently completed the acquisition of a 2,400-square-kilometer 3D seismic survey. Processing of the survey is expected to take approximately six to nine months, and with the
acquisition of this data, Anadarko will have 3D seismic information covering virtually all of its acreage in the Liberian Basin.

"Mobilizing the Discoverer Spirit to West Africa ensures our ability to deliver upon our exploration and appraisal programs in a timely
fashion in an area that offers tremendous potential with more than 30 identified Jubilee-like prospects on our acreage," said Al Walker,
Anadarko President and Chief Operating Officer. "We plan to keep the ENSCO 8500 rig in the Gulf of Mexico to conduct an extended well test at Lucius and, once we receive drilling permits, we are confident that we will be able to utilize the ENSCO 8500 and contract a
deepwater rig of opportunity to resume our development and exploration programs in the Gulf."

Exillon Appraisal Discovers Oil in Russia

Exillon Appraisal Discovers Oil in Russia

Monday, March 28, 2011

Exillon Energy plc

 

Exillon, with assets in two oil-rich regions of northern Russia, Timan-Pechora ("Exillon TP") and West Siberia ("Exillon WS"), announced that appraisal well 5 (EWS I - 50P) successfully found oil on the northern extension of the East EWS I field.

Appraisal well 5 (EWS I - 50Р) was designed to test a 5 sq km northern extension to the East EWS I field. The new appraisal contained pre drill estimates of 13.3 million barrels of possible reserves (Miller and Lents December 2010 reserves report). The well encountered the Jurassic P reservoir at 1858 m which is 2 meters higher than previously thought. Results of wire line logging combined with oil shows and sample analysis whilst drilling, have confirmed the presence of 13.9 m of gross oil pay within the Jurassic. The well was spudded on 9 March 2011 was drilled in 18 days on a northern part of the East EWS I field. Testing of the well will be completed by the end of April.

Statoil Wraps Up Ops Offshore Egypt

Statoil Wraps Up Ops Offshore Egypt

Monday, March 28, 2011
Statoil
by  SubseaIQ

The Kiwi well in the Egypt's El Dabaa License (Block 9) was completed this week and the Discoverer Americas drillship will soon head back to the US Gulf of Mexico.

The exploration well targeted the Kiwi prospect in the El Dabaa license, located in the Mediterranean west of the Nile Delta, with a water depth of around 2,700 meters at the drill site.

Extensive logging has been performed in the well, and preliminary results show that the well is dry.

The offshore operations were completed safely and the results of the well will now be further evaluated and integrated into the understanding of the area before any new decisions about the acreage are made.

Statoil is the operator and holds 80% equity in the license. Sonatrach International Petroleum E&P, a wholly owned subsidiary of the Algerian state oil and gas company, holds the remaining 20%.

Seadrill Scores BHP Duo

Seadrill Scores BHP Duo

Monday, March 28, 2011

Seadrill Ltd.

Seadrill has been awarded two new contracts by BHP Billiton Petroleum for Offshore Vigilant in Trinidad and Offshore Resolute in Vietnam.

The three well drilling assignment for Offshore Vigilant is expected to take 150 days, and the contract value is approximately US $20 million. The two well assignment for Offshore Resolute is expected to take 90 days, and the contract value is approximately US $11 million.

Commencement of operations under the new contract for Offshore Vigilant is scheduled for the third quarter 2011, in direct continuation of existing contract and mid May 2011 for Offshore Resolute. The contract for Offshore Vigilant includes options for an additional four wells with anticipated duration of 200 days.

Alf C Thorkildsen, Chief Executive Officer in Seadrill Management, said, "This is Seadrill's first assignment for BHP. We consider this as an excellent opportunity to develop a strong relationship with BHP, one of the world's largest natural resource companies. Representing a total contract value of US$31 million, the two assignments improve the earnings visibility for our jack-ups in 2011 at market rates."

Cooper Spuds Parsons Well

Cooper Spuds Parsons Well

Monday, March 28, 2011

Cooper Energy

 

Cooper announced that the Parsons-4 development well in PPL224 spudded at 10:30 pm on Friday, March 25, 2011. The current operation is cementing the 9⅝” casing at 640 meters.

Parsons-4 is the second appraisal/development well on the Parsons Oil Field in the current drilling program and follows the recently successful Parsons-3 well. Parsons-4 is targeting the Namur oil reservoir to the south of the Parsons-1 discovery well. The well will be drilled to a total depth of 1,412 meters and is expected to take 9 days to drill and complete.

Production Exceeds Milestone at ExxonMobil's West Qurna I Field

Production Exceeds Milestone at ExxonMobil's West Qurna I Field

Monday, March 28, 2011

Exxon Mobil Corp.

 

ExxonMobil Iraq Limited, together with the South Oil Company of Iraq and co-venturers Shell West Qurna B.V. and Oil Exploration Company of Iraq, announced a major production milestone in the redevelopment of the West Qurna I oil field in Southern Iraq.

Initial field production of 244,000 barrels per day has now increased to 285,000 barrels per day, which exceeds the 10 percent improved production target established under the technical services contract.

Dheyaa Jaafar, director-general of the South Oil Company, said, "This is a major milestone in West Qurna I achievements and is a result of the teamwork and efforts of the West Qurna I co-venturers. The continued redevelopment of the West Qurna I field will make a significant contribution to Iraq's energy resources and prosperity for the benefit of the Iraqi people."
"This important development has been made possible by a strong partnership with the South Oil Company based on common values and goals," said James Adams, vice president of ExxonMobil Iraq Limited. "ExxonMobil is an industry leader in the timely and cost effective execution of complex long-term projects and we are committed to working with the South Oil Company to help fulfill Iraq’s strategic energy development plans."

Under the terms of the contract, day-to-day production operations have transferred to the West Qurna I field operating division, which is staffed by personnel from the South Oil Company and ExxonMobil. The day-to-day operations include drilling new wells, working over existing wells, and debottlenecking and optimizing facilities. More than 1,600 Iraqis are engaged in West Qurna I field operations.

ExxonMobil subsidiary Exxon Mobil Iraq Limited (60% interest) is the lead contractor working with the South Oil Company of Iraq to redevelop and expand the West Qurna I field along with the Oil Exploration Company of Iraq (25% interest) and Shell West Qurna B.V., a Royal Dutch Shell affiliate (15% interest)

Total CEO: Gas Production in Yemen Almost Normal

Total CEO: Gas Production in Yemen Almost Normal

Monday, March 28, 2011
Dow Jones Newswires
by  Adam Mitchell

Total continues to produce liquefied natural gas in Yemen at close to normal levels, Chief Executive Christophe de Margerie said Monday.

Like a number of other countries in the region, Yemen is in political crisis with protests against the regime there.

Total's priority in the country is the safety of its workers and its installations, de Margerie told reporters, adding that it will produce there for "as long as we can."

The company currently is producing "almost normally," he said, without elaborating.

OGX Reports Operational Reports for 2010

OGX Reports Operational Reports for 2010 

Monday, March 28, 2011
OGX S.A.

OGX announced its 2010 results. The following financial and operating information is presented on a consolidated basis, in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board - IASB, in reais (R$), unless stated otherwise.

"2010 was a year of tremendous achievements for OGX. Our drilling success and identification of extraordinary accumulations in the Campos, Santos and Parnaiba basins validated the geological models developed by our team, revealed the significant potential of our portfolio located mostly in shallow waters, and encouraged the mapping of additional prospects. With 9 drilling rigs now at our disposal, we are also prepared to enter another exploratory cycle in under-explored basins, such as the Espirito Santo and Para-Maranhão, as well as commence seismic studies in five recently-acquired blocks in Colombia," commented Mr. Paulo Mendonça, OGX's General Executive Officer.

"In particular, I would like to highlight our accomplishments in the Campos Basin, where we achieved a success rate of 100% and registered excellent discoveries, most of them located in an extensive carbonate platform, which had its production potential proved through one of the best horizontal well drill-stem tests ever performed in Brazil," added Mr. Mendonça.
"With all necessary equipment already procured from renowned suppliers, the drilling of the first production well and related drill-stem test both completed, we are on track and poised to reach a very important milestone for OGX with the initiation of production in the third quarter of 2011. The successful horizontal well drill-stem test recently performed in Waimea, where we will begin our production, surpassed our expectations. We look forward to conducting the upcoming extended well test, which signals the beginning of production and, ultimately, commercialization of our resources," noted Reinaldo Belotti, Production Officer of OGX. 

2010 Highlights and Subsequent Events

• Drilling of 26 wells during the year of 2010 and 11 in the subsequent months in the Campos, Santos and Parnaíba Basins;
• Confirmed the existence of important oil-bearing regions in the Campos basin: an extensive carbonate platform in the Albian section, as well as important sandstone reservoirs in the Tertiary of the BM-C-41, BM-C-42 and BM-C-43 blocks in the south of the Campos Basin, and another one in BM-C-39 and BM-C-40 blocks, more to the north, with large discoveries in the Santonian, Albian and Albian-Cenomanian sections;
• Performed several drill-stem tests, proving high levels of productivity in several discovered accumulations;
• Concluded the drilling of the first horizontal well (OGX-26HP) of the Waimea accumulation, which tested and confirmed the productive potential of 40,000 barrels per day and productivity index of 100m³/day/kgf/cm² in carbonate reservoirs in the Campos Basin. OGX's production phase will commence at this well through an extended well test (EWT);
• Three discoveries in the Santos Basin, with the identification of liquid hydrocarbons and associated gas;
• Revealed the great hydrocarbon-bearing potential in the Parnaíba Basin with the results obtained in the drilling of the wells OGX-16 and OGX-22, allowing for a volume estimate of potential resources of approximately 15 trillion cubic feet (Tcf) of natural gas in the region;
• Acquired five high-potential exploratory blocks in three onshore basins in Colombia: Cesar-Ranchería, Lower Magdalena Valley and Middle Magdalena Valley Basins;
• Procured all of the essential equipment for beginning production in the Waimea accumulation in the Campos Basin. 

Exploratory Campaign

2010 was a year of extraordinary accomplishments and major achievements for OGX, notable for significant discoveries and the confirmation of the high productivity potential of our main hydrocarbon accumulations. We intensified our exploratory campaign and conducted important drill-stem tests that confirmed the Company's geological model and the potential of the discoveries we have made. These tests yielded fundamental information that provided for a better understanding of the reservoirs that had been discovered in the Campos Basin, allowing us to further enhance the calibration of the production model to be put into place.

At the moment we are drilling the 39th well of OGX, which added to the four other wells drilled by Maersk Oil, bring the total number of wells drilled in the Campos, Santos and Parnaíba Basins to 43 in approximately 18 months since the beginning of our exploratory campaign. Of the 43 total wells, 26 were drilled in 2010, demonstrating the intensification of our activities, and resulting in important discoveries, some of them in areas that until now had been under-explored, including the Parnaíba onshore basin in the interior of the state of Maranhão. These results were made possible due to both a more robust operating structure and the superior geological knowledge that has been acquired about the region. We expanded the number of available drilling rigs from four to nine and now have nearly 5,000 people working on our behalf including outsourced personnel. 

Campos Basin

We ended 2010 with 18 wells drilled in the Campos Basin, all of which identified hydrocarbons, confirming a success rate of 100% in this basin. Of this total, 11 were drilled in the BM-C-41, BM-C-42 and BM-C-43 blocks and allowed for the identification of several accumulations in different geological ages, confirming the presence of a vast oil-bearing province in these blocks. Through the wells OGX-2A, OGX-3, OGX-5, OGX-6, OGX-7A, OGX-8, OGX-10, OGX-15, OGX-20, OGX-21D, OGX-26HP, OGX-28, as well as the MRK-3/4 wells, we have also confirmed the existence of an extensive carbonate platform in the Albian section with great permo-porosity conditions and good quality oil. Moreover, we recorded important discoveries in the Tertiary age and in the Aptian section, reaffirming the enormous potential of the region.

We also began our drilling activities in the blocks BM-C-39 and BM-C-40, located between the Peregrino and Polvo fields, and have obtained excellent results, especially with the OGX-14 (Peró), OGX-18 (Ingá) and OGX-25 (Waikiki) wells. For OGX-14 and OGX-18, drill-stem tests were performed which identified production potential of 3,000 barrels/day using a vertical well for the Peró accumulation that could reach 15,000 barrels/day using a horizontal well, and 8,000 to 12,000 barrels/day through a vertical well at the Ingá accumulation that could reach 25,000-35,000 barrels/day through a horizontal well. The tests also enabled us to measure the quality of the oil at approximately 27° API in each accumulation. Well OGX-25, also known as Waikiki, was an exceptional discovery with the largest detected net pay of approximately 145 meters in the Albian-Cenomanian section.

In addition to the exploratory wells, the first appraisal well for the Waimea accumulation, OGX‐21D (BM-C-41 block) was drilled. It was converted into a horizontal well, OGX-26HP, which extended 1,000 meters within the carbonate reservoirs of the Albian section of the Waimea accumulation, originally discovered by well OGX‐3. The well OGX-26HP, which will be OGX's first production well, was tested and registered a productivity index (PI) of 100m³/day/kgf/cm², one of the highest seen to date in Brazil, as well as a production potential of 40,000 barrels/day and oil gravity of approximately 20° API. This well is currently equipped for an extended well test (EWT) that could record flows of up to 20,000 barrels/day and reach even higher flow levels in a definitive project scenario. The results to date have exceeded initial expectations regarding the Waimea accumulation and offer an even more solid foundation for the initiation of OGX's production phase.

Besides this, two other appraisal wells in the Pipeline (OGX-36D) and Waikiki (OGX-35D) accumulations confirmed their extensions, advancing significantly the delineation of these accumulations, which are respectively located in the southern and northern blocks of the Campos Basin. These directional wells, which were drilled at respective distances of 2.6km and 2.0 km from the wildcat wells, were the pilots for the horizontal wells in these accumulations. Therefore, OGX initiated the drilling of the first horizontal well in the Pipeline accumulation (OGX-39HP) which will be used in the future for production in this area. 

Santos Basin

With respect to the Santos Basin, of particular note was the drilling in the Natal prospect (OGX-11D) in the BM-S-59 block adjacent to the Mexilhão field, which identified liquid hydrocarbons and associated gas in the Santonian section with net pay of around 75 meters. The liquid hydrocarbons proved to be of excellent quality, rated at about 41° API, indicating a higher level of attractiveness of the project. Two other wells registered important discoveries: Belém (OGX-17, with net pay of 43 meters in the Albian section), located in the BM-S-56 block; and Aracajú (OGX-19, with net pay of 40 meters in the Santonian section), located in the BM-S-58 block.

Drilling of the OGX-12 (Niterói), OGX-23 (Ilhéus) and OGX-24 (Itagi) wells has been concluded and resulted in shows of non-commercial hydrocarbons. However, the information acquired through these wells has been of great importance in the calibration of a new geological model for the region. In addition, with the transfer of exploratory rights of the BM-S-29 block from Maersk to OGX, the Company now owns 100% of this block, which is in the evaluation phase. To date, the company's success rate in the Santos Basin has been approximately 60%. 

Parnaíba Basin

In the Parnaíba Basin, the Company's subsidiary OGX Maranhão, drilled two wells in the PN-T-68 block, reaffirming the great oil-bearing potential of this new frontier which had not been explored since the 1980s. In the first well, OGX-16 (Califórnia), an important gas discovery was made in the Devonian section with a drill-stem test that encountered 1,900-psi pressure and generated a flame 15 meters long. In addition, evidence of gas was also encountered in the Pimenteiras and Itaim formations, also in the Devonian section. The data obtained through this drilling campaign, coupled with the seismic information recently acquired in the area as well as technical analysis, have made it possible to identify approximately 20 prospects similar to the one drilled by OGX-16 and to estimate a volume of resources of approximately 15 trillion cubic feet (Tcf) of natural gas for our portfolio in this region. In the second well, OGX-22 (Fazenda São José), two accumulations were found with net pay of 49 and 47 meters in the Poti and Cabeças formations, respectively. The top of the Poti formation was tested with exceptional results which indicated a production potential of up to 3.4 million m³ per day in Absolute Open Flow (AOF).

These estimates point to a production potential for the region of approximately 15 million cubic meters per day of natural gas. Based on this relevant new data, OGX decided to review the scope of its exploratory campaign for the region and boosted the forecast for the number of wells to be drilled from 7 to 15. 

Drilling Activity in Progress operated by OGX

• 1-OGX-30-RJS, also known as Salvador prospect, is being drilled by the rig Ocean Quest in the BM-S-58 block in the Santos basin. Drilling was initiated on January 11th;
• 1-OGX-33-RJS, also known as Chimborazo prospect, is being drilled by the rig Pride Venezuela in the BM-C-41 block in the Campos basin. Drilling was initiated on February 3rd;
• 1-OGX-34-MA, also known as Bom Jesus prospect, is being drilled by the rig QG-1 in the PN-T-68 block in the Parnaíba basin. Drilling was initiated on February 13th;
• 1-OGX-37-RJS, also known as Potosi prospect, is being drilled by the rig Ocean Ambassador in the BM-C-43 block in the Campos basin. Drilling was initiated on March 6th;
• 3-OGX-38-MA, the first appraisal well of the Fazenda São José accumulation, is being drilled by the rig BCH-05 in the PN-T-68 block in the Parnaíba basin. Drilling was initiated on March 25th;
• 9-OGX-39HP-RJS, first horizontal well of the Pipeline accumulation, is being drilled by the rig Ocean Star in the BM-C-41 block in the Campos basin. Drilling was initiated on March 25th. This well will be used in the future for production in the area.

The drilling rig Sea Explorer, which drilled well 9-OGX-26HP, an appraisal well of the Waimea accumulation in which the extended well test (EWT) will be performed, will drill the third appraisal well of the Pipeline accumulation.
The drilling rig Ocean Lexington has just drilled well 3-OGX-35D, the first appraisal well of the Waikiki accumulation, which will be used as a pilot for a horizontal well.
The jack up rig, Ocean Scepter, will start operating soon and will be dedicated to the Pará-Maranhão Basin. 

Beginning of Production

The beginning of OGX's production is expected for the third quarter of 2011. This will be an important milestone in the Company's history and will contribute to its ongoing growth trajectory in the coming years. The production will be in the Waimea accumulation, in block BM-C-41 in the Campos Basin, through an extended well test (EWT), which could record flows of up to 20,000 barrels/day.

The technology that will be employed for this first project has been widely applied within the oil industry and calls for using wet christmas trees and flexible lines that will be directly connected to the FPSO OSX-1. The well was prepared for production using the subsea centrifugal pumping method.

All of the key equipment for this phase of production has already been contracted from globally renowned suppliers and some pieces have already been delivered. Suppliers of equipment and services include: Schlumberger (Integrated Project Management and equipment and services for well completion), GE Oil & Gas (subsea X-trees), Wellstream (flexible lines and a vessel for launching the lines), Oceaneering (control umbilical), Baker Hughes (electrical subsea pumping) and OSX, which will supply the FPSO OSX-1. This FPSO (Floating Production Storage & Offloading system) is currently in Singapore, undergoing modifications to its processing plant in order to conform to the characteristics of the Waimea oil and is expected to arrive in Brazil by mid 2011.

More Gas Wells for Southwest Virginia?

More Gas Wells for Southwest Virginia?

Monday, March 28, 2011
Knight Ridder/Tribune Business News

by  Debra McCown, Bristol Herald Courier, Va.

 

Another county might soon be added to the list of those producing natural gas in Southwest Virginia: Washington. But only if the county will change its zoning ordinance to allow it.

The Virginia Gas and Oil Board has approved the creation of two drilling units and forced pooling orders for the first of four proposed gas wells in the Benhams area of Washington County.

Forced pooling is a process authorized by Virginia law that allows gas companies to drill even without leases from all affected property owners and that provides the uncooperative owners a default one-eighth royalty. The system is the subject of a set of class-action federal lawsuits in which coalfield landowners claim that gas companies benefit at the expense of citizens -- and that promised payouts are not always delivered.

Charlie Bartlett, a geological consultant who's long advocated for Washington County's gas potential, said he also has long advocated for landowners getting their rightful royalties when gas is produced from beneath their land, and he's making it a point to go about the project in Washington County the right way.

He also said that Washington County could ultimately have many more gas wells.

"If those [first ones] are successful, it will lead to a couple of dozen wells," Bartlett said. "So basically we're hoping for the establishment of a new gas field in Washington County."

Abingdon-based Southeast Land and Mineral wants to drill the proposed wells in an area about a mile north of Benhams, Bartlett said, about five miles north of Bristol and eight miles northwest of Abingdon. He also said the county has gas development potential in the area "between about the North Fork of the Holston and about Route 700."

Were Washington County to enact a severance tax, each well could generate thousands of dollars in revenue, Bartlett said, not to mention thousands in royalties for landowners and the creation of jobs.

"We're hoping that we can make them [Southeast Land and Mineral] some money, make the landowners some money, make the county some money and make the state some money, and everybody will be happy," Bartlett said.

Regarding the concerns raised by the federal lawsuits, Bartlett said he does not anticipate any effects on his project -- except the possible assurance that landowners would get fairer treatment under the law.

First, however, the project, financed by a coal investor from Kentucky, must hurdle the zoning ordinance that currently prohibits natural gas drilling in Washington County. And if the county agrees to change the ordinance to allow drilling, that would open the county for any gas company to operate.

"It would be sort of ridiculous for us to use gas from other places and not allow gas to be drilled here," Bartlett said.

Bartlett said he's run into some skepticism from county zoning officials. But Odell Owens, the county supervisor who represents the district where the wells are proposed, said it's an idea worth exploring.

"If we're sitting on natural gas that the landowners can benefit from extracting, and also if it can serve as a revenue source for the county, we have to look at it," Owens said, adding that experts likely will be asked to speak before the board.

While Owens said the county's groundwater resources are precious, he suggested that if drilling can be done safely -- protecting that natural resource -- he'd be supportive.

County Administrator Mark Reeter said he doesn't know why the county's zoning ordinance doesn't mention -- and therefore doesn't allow -- drilling, and county officials are just beginning to research what gas drilling is about.

At a Feb. 22 meeting of the Washington County Board of Supervisors -- more than six months after the county's Board of Zoning Appeals affirmed a decision denying permission to drill -- a man representing the company came to extol the virtues of gas production.

"We need to get all the energy we can from beneath the soils of the U.S. instead of being held hostage," Gus Sorensen of Bristol told the board members. "I hope that any sort of rules and regulations can be taken care of so we can extract this energy."

At a county board meeting last week, Damascus resident Judith McBride spoke in opposition to the zoning change that would allow drilling, citing potential risks to water supplies from wastewater disposal. Originally from Pennsylvania, McBride compared the impact of drilling on her family farm back home to the effects of strip mining.

In Abingdon, long an economic center for the coal and gas-producing region of Southwest Virginia and home to many who moved away from the environmental downside of life in coal country, it's not clear yet how residents will react to the proposal.

However, there is no coal -- only gas -- in Washington County.

And, Bartlett said, he has no intention of drilling near the town of Abingdon. Plus, he said, the county, through its zoning ordinance, could restrict drilling to certain areas.

Contango Completes Drilling GOM Well, Notes Reserves Estimate

Contango Completes Drilling GOM Well, Notes Reserves Estimate

Monday, March 28, 2011

Contango O&G Co.

 

Contango has drilled a successful exploratory well at its Swimmy prospect located Offshore Gulf of Mexico on Vermilion block 170. The Company's independent third party engineer estimates this well to have 8/8ths proved reserves of 48 billion cubic feet of natural gas and 1.2 million barrels of condensate, approximately 55 billion cubic feet equivalent (Bcfe), or 37.5 Bcfe net to Contango's 68% net revenue interest.

Production is expected to begin this fall at an estimated rate of 15 million cubic feet equivalent per day (WMmcfed), net to Contango. Estimated net costs to Contango, to acquire, drill, complete, and bring this well to full production status are approximately $26.5 million.

Kenneth R. Peak, Contango's Chairman and Chief Executive Officer, said, "We expect this discovery will replace our production for the fiscal year ended June 30, 2011. Production for the six months ended December 31, 2010 was approximately 18.7 Bcfe. As a result of this well, our all-in estimated offshore Gulf of Mexico finding and development (F&D) costs for fiscal year 2011 are now estimated to be about $1.20/mcfe. The costs used in this calculation include $8.7 million for a potential second well at Vermilion 170; $9.5 million from our earlier dry hole at Galveston Area 277 (His Dudeness); and the $26.5 million outlined above, all net to Contango."

Mr. Peak continued, "Currently, our two Eloise wells are both shut-in for remedial work. Prior to being shut-in, they were producing at a combined rate of 5.0 Mmcfed, net to Contango. Our plan is to recomplete our Eloise South well uphole in the CibOp section as our Dutch #5 well. This recompletion is estimated to cost approximately $6 million, with an estimated initial production rate of approximately 8.5 Mmcfed, both net to Contango. Our Eloise North well recently sanded up and we are currently attempting to repair the well to restore production. If we are unsuccessful, our plan is to recomplete the well uphole in an upper Rob-L section at a net cost of approximately $0.5 million and an estimated initial production rate of approximately 1.5 Mmcfed, both net to Contango. We plan to have both of these wells on-line by mid-summer."

"We submitted our permit to the BOEM to drill our Vermilion 170 well on September 29, 2010, received permission to spud the well on February 16, 2011 and began drilling on February 24, 2011. We estimate this one well will help sustain dozens of jobs and pay royalties to the federal government in excess of $50 million. On March 3, 2011, we submitted an exploration permit to drill our Eagle prospect at Ship Shoal 134. We are hopeful that we will receive a permit to drill this prospect sometime this summer, but due to hurricane season, we may not spud the well until the October/November 2011 time frame.

Noble Adds High Specification Jackups to Fleet

Noble Adds High Specification Jackups to Fleet

Monday, March 28, 2011
Noble Corp.

Noble has exercised two of its four options with Sembcorp Marine's subsidiary Jurong Shipyard for the construction of additional high-specification heavy duty, harsh environment JU3000N jackup drilling rigs. This order will bring to four the total number of new jackup rigs the Company will have under construction.

Total delivered costs are estimated at approximately $235 million per rig, including project management, spares, and start-up costs, but excluding capitalized interest. Payment terms are consistent with the order of the two rigs placed in December 2010: 20 percent of the construction price due at contract signing, 20 percent due at steel cutting, and the remainder due at rig delivery. Unit deliveries from the shipyard are expected in the third quarter of 2013 and first quarter of 2014. The Company still has options for up to two additional units which must be exercised by January 1, 2012. As previously disclosed, the option units are priced based on the original unit price, plus a potential escalation factor, with future deliveries scheduled in six-month increments beginning in late 2014.

The Friede & Goldman JU3000N design is an enhanced evolution of the JU2000E design and represents the latest generation of high specification jackup drilling rig with greater capacities and capabilities than most existing units. The rigs, which are approximately 231 feet in length and 270 feet in breadth, will have the capability to operate in water depths up to 400 feet and drill to depths of 30,000 feet. The rigs will each have a seventy-five foot cantilever, 2.5 million pounds of hook load capacity, a high capacity mud circulating system, and a 15,000 psi blow out preventer system. The units are capable of off-line pipe handling and offer accommodations for up to 150 people.

"Noble's fleet evolution is well underway as we focus on adding rigs with superior technology, equipment, and capabilities," said David W. Williams, Chairman, President and Chief Executive Officer, Noble Corporation. "With the addition of two more JU3000N units, Noble will have four out of the eleven jackups in existence or under construction with hoisting capacities of 2.5 million pounds. We expect ultra-premium units such as these to be in high demand and look forward to serving our future customers' growing needs in this key market segment."