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Oil and Gas Energy News Update

Friday, June 10, 2011

Oil & Gas Post - All News Report for Friday, June 10, 2011

Friday, June 10, 2011

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Commodity Corner: Oil Falls on Saudi Production Report

- Commodity Corner: Oil Falls on Saudi Production Report

Friday, June 10, 2011
Rigzone Staff
by Matthew V. Veazey

The prospect of more Saudi crude on the world market and a stronger dollar contributed to a 2.6 percent dip in oil futures Friday.

Crude oil for July delivery settled at $99.29 a barrel after Saudi Arabian newspaper reported that the kingdom plans to boost oil production. The reported unilateral move by the world's largest oil exporter follows OPEC's inability earlier this week to decide on raising member countries' production quotas.

Also applying downward pressure to the oil futures price was a strengthening U.S. dollar. The Dollar Index, which gauges the value of the greenback against other major currencies, gained 0.9 percent Friday. Because oil is priced in dollars, the commodity becomes a less attractive buy for investors holding other currencies when its value increases.

Oil traded within a range from $98.79 to $102.15 Friday. Compared to the June 3 settlement price, oil is down 0.9 percent for the week.

July natural gas gained nine cents Friday to settle at $4.76 per thousand cubic feet. Thanks to weather forecast models predicting another heat wave later this month from the Midwest to the East Coast, demand for natural gas to generate electricity to power air conditioners is expected to soar.

Front-month natural gas fluctuated from $4.66 to $4.77, and the July contract price is up 1.1 percent for the week.

July gasoline lost two cents to end the day at $3.02 a gallon. The gasoline futures price peaked at $3.05 and bottomed out at $2.98 during Friday's trading. For the week, gasoline is up one percent.

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Rosneft CEO: Chevron to Exit Joint Black Sea Project

- Rosneft CEO: Chevron to Exit Joint Black Sea Project

Friday, June 10, 2011
Dow Jones Newswires
KRASNODAR (Dow Jones Newswires)
by Jacob Gronholt-Pedersen

Rosneft is seeking new partners for its Val Shatsky project in the Black Sea because Chevron is likely to leave the block, Eduard Khudainatov, the CEO of the Russian state-owned oil major, said Friday.

"We had some disagreements," said Khudainatov.

When asked whether Rosneft will develop the Val Shatsky block in the Black sea together with Chevron, Khudainatov said: "Obviously not."

"Chevron still wants to work with us on offshore projects. Now we're considering where we will work (together)," he said.

Copyright (c) 2011 Dow Jones & Company, Inc.

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May Federal Budget Deficit Comes in at $58 Billion

- May Federal Budget Deficit Comes in at $58 Billion

Jun 10, 2011

The Federal Government's budget deficit came in at $58 billion in May, down 58% from May 2010, the Treasury Department reported today in its monthly budget statement.

In a once a year revision, the Treasury also said it now expects the Troubled Asset Relief Program to cost a total of $48 billion. That's down from an estimate in August of 2009 that the total cost of the program could reach as high as $341 billion.

The government is getting more back for its investments in banks than it originally estimated it would, an official said. The downwardly revised re-estimate doesn't represent money in or out. It is essentially an accounting change.

The deficit has totaled $927 billion through the first eight months of the year, down $8 billion from the $935 billion reported over the same period in 2010.

The government spent $233 billion in the month, while total receipts were $175 billion. $30.9 billion was spent on interest payments to service the national debt, while receipts increased 19% from last May.

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Curlew to Commence Completion Ops at Fairydell Well

- Curlew to Commence Completion Ops at Fairydell Well

Friday, June 10, 2011
Curlew Lake Resources Inc.

Curlew announced completion operations will commence early next week on the New Pool Wildcat well at Fairydell, land conditions having become favorable.

The Curlew FBA 9-14-57-24 W4M well has been drilled and cased to total depth in the Wabumun formation. Drill cuttings and logs have indicated several porous sands with oil staining and/or natural gas indicators in the Mannville formations, which will be tested for potential oil and/or gas production.

The Company also plans to carry out further seismic data acquisition and interpretation in this area. Curlew Lake has a substantial position in Township 57, Range 24 West 4th Meridian where 3-D seismic is expected to indicate multiple targets on our lands.

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BGP Concludes Challenging Seismic Survey for Saudi Aramco

- BGP Concludes Challenging Seismic Survey for Saudi Aramco

Friday, June 10, 2011
BGP Inc.

BGP Crew 8615 announced the completion of the S54 2D seismic acquisition contract for Saudi Aramco.

In the 48 months since the commencement of the S54 seismic survey in February 2007, more than fifty thousand kilometers of 2D data were acquired. The work area was located in the desert and far away from the city, which made the logistical support to be extremely difficult. The most challenging issues are the complex terrain and dramatic changes of elevation, which greatly increased operational difficulty.

The effort of all members of Crew 8615, along with the support of BGP headquarters, enabled them to overcome many difficulties during the operation. The crew reached more than six million man-hours without an LTI. Outstanding performance in difficult terrain as well as a commitment to client satisfaction guaranteed BGP's success in this operation.

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Searcher Seismic, Partner to Begin Seismic Acquisition in Bjornoya Basin

- Searcher Seismic, Partner to Begin Seismic Acquisition in Bjornoya Basin

Friday, June 10, 2011
Searcher Seismic Pty Ltd.

Searcher Seismic in conjunction with its project partner MAGE announced the commencement in acquisition of the Bjornoya Basin North (BBN11) 2D Non-Exclusive Seismic Survey in the Norwegian Barents Sea utilizing the seismic vessel the RV Professor Kurentsov. The survey is sponsored by Front Exploration, a "High North focused" exploration company based in Northern Norway.

The BBN11 2D Seismic Survey is a high resolution 2D seismic survey of 3,121 kms that in particular targets the shallow prospective sedimentary section along the Bjornoyrenna Fault Zone Complex. The survey provides a dense infill to the existing seismic data resulting in improved data coverage to a 1 x 1 km grid pattern. The BBN11 Survey will be seamlessly integrated with Searcher’s ongoing regional Havspurv 2D Seismic Survey utilizing similar high resolution acquisition parameters.

The BBN11 Survey provides a total coverage of 2100 located in the vacant area about 30 kilometers north of the recent giant Skrugard oil discovery (250-500MMbbl recoverable reserves).

The data is scheduled to be completed in processing during 4Q 2011.

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Southern Bay Preps for Fracking Ops at Fayette Well

- Southern Bay Preps for Fracking Ops at Fayette Well

Friday, June 10, 2011
ureka Energy Ltd.

Eureka provided an update on drilling at the Blackjack Springs Unit 1H, the first well at its Pan de Azucar Eagle Ford Shale project in Fayette County, on-shore Texas USA. As per the latest Operator reports, the well has successfully reached a Total Depth of 16,680 ft, and has been subsequently cased and cemented in preparation for fracking operations.

Mr. Ian McCubbing, Chairman of Eureka stated that, "We are very pleased to have reached this key milestone with the well, and look forward to the fracking operations being undertaken which will provide us with important productivity information in the Pan de Azucar acreage. This is a significant step in the Company's appraisal and development strategy for what is its first exploration activity outside of the Sugarloaf AMI."

The well which was drilled by the Operator, Southern Bay Operating, LLC, a wholly-owned subsidiary of GeoResources Inc., achieved a horizontal section of approximately 6320 ft., and was drilled through the main target zone of the Eagle Ford Shale in accordance with the drilling plan.

The fracture stimulation operations are expected to be undertaken within the next few weeks, immediately after the Operator has completed fracture stimulation operations on its two Flatonia wells located less than 10km south west of Eureka's Pan de Azucar area.

The Blackjack Springs Drilling Unit is a 916 acre pooled unit to which Eureka has contributed 86 acres for its 9.4% working interest. The unit is immediately adjacent to the remaining 675 acres (EKA WI 100%) that make up the balance of the Pan de Azucar project.

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Santos Acquires Stake in Carnarvon Basin

- Santos Acquires Stake in Carnarvon Basin

Friday, June 10, 2011
Santos Ltd.

Santos announced its acquisition of a 75% interest in the Carnarvon Basin permits WA-323-P and WA-330-P that host Winchester, a large prospect which has a geological setting similar to the recent Zola gas discovery.

The farm-in agreement with Octanex N.L was conditional on various regulatory approvals including renewal of the permits, which have now all been received.

Santos Vice President WA & NT, John Anderson, said Winchester presented a significant growth opportunity for Santos in Western Australia, and planning was underway for a 3D seismic survey later this year.

"Under the arrangement with Octanex we have three years in which to drill a well, but we interpret Winchester as a robust prospect so we are considering bringing that forward, possibly by the end of next year," he said.

"It's an attractive prospect, in shallow water and if successful, is well located for a variety of development options."

Under the farm-in, Octanex will be free-carried in respect of its 25% interest through the 3D survey, the first well and other exploration costs, except for any follow-up wells.

Santos is operator of both permits.

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Subsea 7 Wins Petronas Contract in Malaysia

- Subsea 7 Wins Petronas Contract in Malaysia

Friday, June 10, 2011
Subsea 7

Subsea 7 announced the award of the Kumang Cluster Project by Petronas Carigali to Subsea 7 Malaysia Sdn Bhd. This award further cements Subsea 7's position in Asia Pacific and Middle East Region.

The project involves the transportation and installation of subsea structures, 5km of umbilical cable, pipeline jumpers and electrical flying leads, including the pre-commissioning of an existing 24" 5km pipeline and new umbilical in the Kumang Field.

The workscope comprises project management and engineering associated with the installation of the subsea equipment. A combined team from Subsea 7 and PETRONAS Carigali will deliver the project enabling greater development and understanding of deepwater technologies and allow most operations to be completed utilizing diverless intervention techniques. The work involves a high level of Malaysian content and will be managed by Subsea 7's office in Kuala Lumpur.

The project will be completed in two phases utilizing Rockwater 2 in 2011.

Dick Martin, Subsea 7's Vice President for Asia said, "Subsea 7 is delighted to be awarded the contract by PETRONAS Carigali to work on this prestigious project. This award underlines and further enhances our reputation in Malaysia in particular to provide safe and quality services to strategic partners such as PETRONAS Carigali."

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Cooper Terminates Farmout Agreements with GB

- Cooper Terminates Farmout Agreements with GB

Friday, June 10, 2011
Cooper Energy Ltd.

Further to the COE announcement made on March 8, 2011 regarding:
  • Farm-out of 9.165% of PEL100
  • Farm-Out of 20% of PEL495
  • Farm-Out of 10% of PEL110

to GB Energy (GBX), Cooper Energy advised the Conditions Precedent to each Farm-Out Agreement have not been satisfied.

Cooper Energy has terminated the Farmout Agreements on the basis the Conditions Precedent were not satisfied. Cooper Energy will retain the interests the subject of the Farm-Out Agreements.

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Kitan Field Start-up will be G'Day for Eni

- Kitan Field Start-up will be G'Day for Eni

Friday, June 10, 2011
Rigzone Staff
by Jaime Kammerzell

The Kitan field in permit JPDA 06-105 in the Timor Sea is 500 km off the Australian coast and 170 km off the Timor-Leste coast, northwest of the existing Bayu Undan gas condensate field. Eni announced it had made an oil discovery there in March 2008.

Kitan Field Start-up will be G'Day for Eni

The Songa Venus semisubmersible drilled the well to 3,568 m (11,706 ft) in 310 m (1,000 ft) of water and encountered significant hydrocarbons.

Kitan Field Start-up will be G'Day for Eni
Songa Venus
Eni then drilled the Kitan-2 well later that month to confirm the oil accumulation. Initial test results indicated a flow rate of 6,100 b/d. The field has an oil density of 59 degrees API.

Eni operates the Kitan field with a 40% interest in the jointly-owned permit along with Inpex, with a 35% share, and Talisman Resources with a 25% share.

Eni declared the Kitan field as a commercial discovery on April 11, 2008. The partners estimate that Kitan holds about 68.8 million stock tank barrels of oil initially in place (STTOIP), with a 50% recovery factor, which would put ultimate recovery around 34.6 MMstb. In other words, the field has about 30 to 40 MMbbl and may produce up to 20,000 b/d when it comes online later this year, just 3 years after commercial declaration.

Development Plan

The Autoridade Nacional de Petroleo (ANP) approved the Kitan field development plan on April 22, 2010. The field is in the Joint Petroleum Development Area, which is jointly administered by Timor-Leste and Australia. It is expected to reach first oil later this year (second half of 2011). The total approximate project cost is around $1 billion.

Eni is developing Kitan through three subsea completion wells, Kitan-3, Kitan-4 and Kitan 2-ST1, tied back to an FPSO. Eni contracted FMC Technologies to manufacture and supply the subsea equipment. FMC has provided the three subsea production trees and all associated control systems and umbilicals. The company's Asia Pacific deepwater subsea organization has managed this engineering, procurement and construction (EPC) project. And FMC's operations in Singapore and Malaysia has engineered, manufactured and delivered all equipment.

Eni also contracted Bluewater Energy Services for the chartering, operation and maintenance of the Glas Dowr FPSO, complete with mooring system, including provision of logistics and ancillary services at the Kitan field. The initial contract is good for 5 years after start of production, but can be extended up to 10 years.

In September 2010, Bluewater Energy asked Sebcorp Marine to upgrade the Glas Dowr. The shipyard repaired the vessel to extend its life another 10 years as well as upgraded the FPSO's internal turret mooring and transfer systems. The marine, utility, electrical and communication, safety, control, monitoring, and production systems were also upgraded. The vessel was re-delivered to the owners in 2Q 2011 for deployment.

Kitan Field Start-up will be G'Day for Eni
Bluewater Glas Dowr
Eni planned to utilize local labor and goods as the Timor Sea holds strong future potential for the operator. The operator has been present in Australia since 2000 and in Timor-Leste since 2006.

Eni also awarded Technip a contract to provide project management and engineering, to supply and install 23 km of flowlines and riser, and to install the umbilical system. Offshore installation started in the first half of 2011 using the Venturer construction vessel from Technip's fleet.

Australia Rigs

Australia has 10 rigs currently contracted to drill in its waters — one jackup, one drillship, and eight semisubmersibles.

Atwood Oceanics' Atwood Osprey semisubmersible has the highest dayrate in the high $400s. The rig is contracted to Chevron, which is currently drilling the Zagreus-1 well.

Atwood also has its Atwood Eagle semisubmersible contracted to Chevron with a dayrate in the high $300s. The rig is currently drilling the West Tryal Rocks-4 well.

Kitan Field Start-up will be G'Day for Eni
Atwood Osprey
Diamond Offshore also has two semisubmersible contracted. The Ocean America is drilling the Argus-2 well for Woodside at a dayrate in the low $400s, and the Ocean Patriot will start its contract with PTTEP at the end of June at a dayrate in the low $200s.

Kitan Field Start-up will be G'Day for Eni
Ocean Patriot
Maersk Drilling, too, has two semisubmersibles contracted to Woodside. The Maersk Discoverer is drilling the Opel-1 well at a dayrate in the mid $400s and the Nanhai VI has a dayrate in the low $300s.

Kitan Field Start-up will be G'Day for Eni
Maersk Discoverer
Stena and Transocean each have one semisubmersible contracted. The Stena Clyde is drilling the Mutineer-4 well for Santos at a dayrate in the high $200s. And the Transocean Legend is drilling the Chester-2 well for Hess at a dayrate in the low $300s.

The Ensco 109 jackup is the only jackup working off Australia today. The rig is drilling for Apache at a dayrate in the mid $100s.

Likewise, the only drillship contracted to work in Australian waters is the Noble Discoverer, which is contracted to Shell at a dayrate in the mid $100s. However the drillship is currently in New Plymouth, New Zealand, having mooring equipment repaired that was damaged during a storm.

Kitan Field Start-up will be G'Day for Eni
Noble Discoverer

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Shell to Set Record with Prelude Floating LNG Structure

- Shell to Set Record with Prelude Floating LNG Structure

Friday, June 10, 2011
Rigzone Staff
by Karen Boman

Shell's Prelude floating liquefied natural gas (FLNG) facility, which will be deployed in the Browse Basin offshore Northwest Australia, will be the largest floating structure ever built. At 1,601 feet long, the facility will be the length of 175 Olympic swimming pools, and at 600,000 tonnes, weigh six times of that of the largest aircraft carrier.

It will include 260,000 tonnes of steel, about five times more than was used to build the Sydney Harbor Bridge. The facility also will produce enough offtake to supply 90 percent of Hong Kong's energy needs.

While Shell will achieve a technological breakthrough with the facility, the forecast increase in energy demand due to the growing global population and emerging economies of countries such as China, as well as the need to reduce global greenhouse gas emissions, is driving Shell's FLNG development.

Shell to Set Record with Prelude Floating LNG Structure
Shell's Prelude Floating LNG

"We really do envision the next few years to be a golden age of gas," said Neil Gilmour, Shell' general manager for floating LNG, at a meeting in Houston this week. Gilmour was referencing the recent report by the International Energy Agency (IEA) that natural gas would play a greater role in the global energy mix. IEA estimates that global use of gas will rise by more than 50 percent from 2010 levels and account for more than a quarter of global energy demand by 2035.

The ability to quickly construct and deploy LNG facilities that could be utilized on multiple fields will become critical as global energy demand rises. To meet this need, Shell sought to create Prelude as a FLNG facility as a design template that could be standardized. Gilmour said he anticipates that Shell will be able to deploy its vessel design more quickly and efficiently in time as it carries out more projects.

Shell's board last month made the final investment decision for the project, but the project's development has been underway for some time. The initial investment in the design phase, which included around 650 workers and generated 1.6 million project man hours and nearly 3,000 engineering drawings, was critical for Shell to ensure the vessel's integrity and design, Gilmour said, noting that, "since this is going to be cloned, we wanted to get the fundamentals right."

Production of liquids will depend upon the specifics of each gas reserve, and the upstream design will be project specific. Shell's design is aimed at fields containing between 2 to 3 Tcf of gas or larger, but is standardized to maximize redeployment opportunities with fields as small as 1.5 to 2.0 Tcf considered feasible. Fields larger than 3 Tcf also can be developed using multiple FLNG facilities.

The structure, which will be used to produce the Prelude and Concerto fields, has been designed to withstand metocean conditions of up to a Category 5 cyclone and waves up to 65 feet high, meaning that the vessel will not need to be moved or disconnected. The vessel will be towed to the site, located approximately 124 miles offshore in once construction is complete, and is fitted with steam-driven generators to create electrical power on board the facility. Gas-driven generators may be used in the future, but Shell determined that steam-driven would be the most efficient at this time.

The facility, which will be located over the Prelude field, will produce 3.6 million tones per annum (mtpa) of LNG, 1.3 mtpa of condensate and .4 mtpa of LPG, which will be offloaded every six to seven days. The facility will have storage capacity of 220,000 cubic meters of LNG, 90,000 cubic meters of LPG, and 126,000 cubic meters of condensate, with a double row membrane for LNG/LPG storage. Prelude and Concerto are estimated to hold 3 Tcf of gas.

The concept will have a wide enough design envelop to accommodate gas with varying carbon dioxide (CO2) content to allow the processing of a range of different feed gas compositions without the need to redesign significant parts of the topsides. The gas in fields that could be tied back to Prelude, which lie within a 62 mile radius of the structure's site, have a CO2 content of between seven and eight percent, Gilmour said. Gilmour anticipates the hull will have a 50 year life span; after the first 25 years, the hull will be dry docked for refurbishment before being redeployed another 25 years.

Construction will take place at Geoje Island shipyards in South Korea, one of the few places in the world with a dry dock big enough to construct a facility of this size. Seven thousand workers, including 250 from Shell, will work on the dry dock construction phase, which is expected to last six months. One limiting factor in FLNG size will be the number of dry dock facilities available for construction of larger vessels such as Geoje Island, meaning that more emphasis will be placed upon making more efficient use of space for adding equipment on board, Gilmour said.

Besides Australia, Gilmour sees opportunity for floating LNG projects offshore East Africa, Indonesia, New Zealand, Brazil, Venezuela, West Africa and the Mediterranean Sea. Gilmour said that a floating LNG facility could be the solution for areas with territorial disputes or that would require a bilateral agreement on a field development plan, and a more acceptable option than pipelines.

Utilizing the Prelude FLNG design on the Sunrise FLNG facility in the Timor Sea will be even easier than for Prelude because Sunrise is bigger and has gas containing lower levels of carbon dioxide. "The fact that we got the Sunrise LNG project is a big tick in the box for Shell," Gilmour said.

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JetBlue Airways Reports May Traffic Up 10.6%

- JetBlue Airways Reports May Traffic Up 10.6%

Jun 10, 2011

JetBlue Airways Corporation (NASDAQ:JBLU) reported today that May traffic increased 10.6% to 2.54 billion revenue passenger miles, up 2.30 billion RPMs in May of 2010.

The airline's total capacity increased 8.9% in the month, resulting in a 1.3-point increase in load factor to 82.6%.

The company's preliminary completion factor was 99.6%, while its on-time performance was 76.2%.

Year to date, JetBlue's traffic is up 7.6% over the first five months of 2010, with capacity up 3.9% and load factor up 2.8 points to 81.3%.

JetBlue Airways has a potential upside of 33.6% based on a current price of $5.52 and an average consensus analyst price target of $7.38.

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Chevron Interested in Arctic Exploration Deal With Russia's Rosneft

- Chevron Interested in Arctic Exploration Deal With Russia's Rosneft

Jun 10, 2011

Shares of Chevron (NYSE:CVX) are down after OAO Rosneft Chief Executive Eduard Khudainatov told Bloomberg that the oil major is interested in working with his company off the Russian Arctic coast.

BP (NYSE:BP) had been in a similar deal with Rosneft until the deal fell apart earlier this year.

Chevron shares are down 1.34%, or $1.37, to $99.83.

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Toyota Motor Estimates 31% Drop Full Year Net Profit

- Toyota Motor Estimates 31% Drop Full Year Net Profit

Jun 10, 2011

Toyota Motor (NYSE:TM) said today it expects its net profit to fall by almost a third this year, as production continues to be disrupted 3 months after the massive earthquake and tsunami that struck Japan on March 11th.

The company predicted its profit for the full year ending in March 2012 would decline 31% to $3.5 billion.

Analysts had been expecting a profit of $5.28 billion, and the company reported $5.1 billion in profit for the year ending March 2011.

The company expects full year sales to decline 2%, and said global production wouldn't recover completely until November.

Toyota Motor has a potential upside of 14.3% based on a current price of $80.84 and an average consensus analyst price target of $92.4.

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General Motors Recalling 47,401 Cadillac SRX vehicles

- General Motors Recalling 47,401 Cadillac SRX vehicles

Jun 10, 2011

General Motors (NYSE:GM) is recalling certain 2011 Cadillac SRX vehicles for failing to conform to the requirements of Motor Vehicle Safety Standard 208, "occupant crash protection." A program in the aribag system may result in the right rear occupant not being protected in certain frontal and side crashes. GM dealers will reprogram the module free of charge. The recall is expected to begin on or about June 17.

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Lundin Primes Bit for North Sea Drilling

- Lundin Primes Bit for North Sea Drilling

Friday, June 10, 2011
Norwegian Petroleum Directorate

he Norwegian Petroleum Directorate has granted Lundin Norway AS a drilling permit for well 16/2-7, cf. Section 8 of the Resource Management Regulations.

Well 16/2-7 will be drilled from the Bredford Dolphin drilling facility at position 58°46'48"N 02°39'16"E after completing drilling of wildcat well 16/3-4 for Lundin in production license 501.

The drilling program for well 16/2-7 relates to drilling of a wildcat well in production license 501. Lundin is the operator with an ownership interest of 40 percent. The other licensees are Statoil Petroleum AS with 40 percent and Maersk Oil Norway AS with 20 percent.

The area in this license consists of parts of blocks 16/2, 3, 5 and 6. The well was drilled approximately five kilometers south of the oil discovery well 16/2-6 (Avaldsnes) in the central North Sea.

Production license 501 was awarded on 23 January 2009 (APA 2008). This is the third well to be drilled in the area of the license.

The permit is contingent upon the operator having secured all other permits and consents required by other authorities before starting the drilling activity.

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Det norske, Partners Sign Agreement for Block in Barents Sea

- Det norske, Partners Sign Agreement for Block in Barents Sea

Friday, June 10, 2011
Det norske oljeselskap ASA

Det norske and partners DONG and Edison have signed agreements for production license 613 at the Ministry of Petroleum and Energy.

Production license 613 was awarded in the 21st licensing round. The license is located in the northern part of Loppa High in the Barents Sea. The license covers blocks 7322/10 and 11.

The work program that the companies have now committed themselves to, includes acquisition of 3D seismic over the area. The decision to drill an exploration well must be taken within three years. Acquisition of seismic is planned to start already this year, and the first partner meeting will take place as early as next week.

Work with this license will be placed at Det norske's office in Harstad.

Licensees in PL 613:
  • Dong E&P Norge (operator) 40 percent
  • Det norske oljeselskap 35 percent
  • Edison International Norway 25 percent

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Europa O&G Looks Ahead at 2011 Exploration

- Europa O&G Looks Ahead at 2011 Exploration

Friday, June 10, 2011
Europa O&G Holdings plc

Europa provided an Operational Update outlining activity planned for the remainder of 2011 and into 2012.


Since the operational and weather related issues reported in early March, group production has increased some 100% to a current average of 260 bopd. Gross revenues are currently running at $750,000 per month.

West Firsby-9 is currently on jet pump production from Zone 1 and is producing an estimated 50 bopd. Previously, Zone 2 produced at an estimated average of 50 bopd. West Firsby-7 Zone 1 has been producing approximately 90 bopd for the last 2 weeks with an estimated water cut of 75%, a strong improvement on previous performance before re-perforation.

There is significant potential for additional production from Crosby Warren by repeating the highly successful 1987 stimulation of Crosby Warren-1. This is planned for August and is anticipated to provide incremental production of between 50 and 150 bopd.


The Romanian appraisal well Voitinel-2, anticipated to be spudded in September, is to be a relatively conservative appraisal stepout to prove up to 35 bcf of gas-in-place which would allow for the initiation of a pilot production project for the northern part of Voitinel.

A second appraisal-exploration well, likely to be on the Solca Prospect, situated between the Voitinel and Paltinu gas discoveries and designed to test the upside in the Voitinel trend play, is expected to be drilled in early 2012.

On Europa's flagship appraisal project, Berenx, work has been underway for several weeks on the engineering design for a Berenx-3 appraisal well in late 2012/early 2013. In the meantime, the highly encouraging results from the recent CGGV processing of the Lacq Ouest 3D volume has given sufficient encouragement to acquire additional 3D data over the western part of the Berenx structure. It is anticipated this survey will be acquired in 4Q 2011 with a view to maturing contingent resource numbers and choosing a firm well location by 2Q 2012.


With regard to UK exploration, Europa, Egdon Resources and Celtique Energie have agreed, subject to DECC approval, to equalize working interests across contiguous licenses PEDL180 and PEDL182, situated to the south and east of Crosby Warren. This will increase Europa's overall exposure to the play, including the Broughton oil discovery and a joint 3D seismic survey planned for later in 2011 will firm up drilling plans for the licenses.

Following the decision by the Surrey Planning Committee to overturn the County Planning Officer's recommendation to allow exploration drilling at Holmwood, the Company has consulted counsel and in the light of their comments and partners' support to appeal the decision, the intention is to move forward with this process. Further updates will be provided in due course.

In Romania, the Company has lodged the required documentation with the government agency to appraise the Barchiz-1 oil discovery well by deepening it to up to 2,500m in order to penetrate the anticipated repeat section of the Oligocene Sandstone reservoir encountered in nearby wells. The Barchiz Prospect therefore remains only partially tested due to the premature cessation of drilling operations at 1,450m following technical problems. It is hoped that approval will be given shortly and that the well can be deepened in October.

A program of 2D seismic acquisition is planned for the coming months in the Brodina and Cuejdiu licenses in the East Carpathian oil play. It is hoped that these additional surveys, totaling approximately 200km, will provide a well location for 2012.

Paul Barrett, Managing Director of Europa, said, "This update demonstrates our strong conveyor belt of appraisal and exploration projects for the remainder of 2011 and beyond. The plan for the next 18 months is shaping up to see the Company firstly drill up to 3 exploration wells with net resource potential of up to 48 MMbo, secondly to appraise up to 80 bcf net contingent resource and thirdly to be in a position to drill a well on a 1.7TCF potential net resource onshore France."

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Caza Charges Ahead at Texas Wells

- Caza Charges Ahead at Texas Wells

Friday, June 10, 2011
Caza O&G Inc.

Caza provided an operational update on the Company's San Jacinto, Bongo and Windham projects.

San Jacinto Property, Midland County, Texas: Caza, as operator, was able to secure a rig ahead of schedule and is currently drilling the Caza Elkins 3401 well on the San Jacinto (Wolfberry) property. The well has reached the intermediate pipe point at 4,670 feet. Caza will run electric logs and cement the 9 5/8ths inch casing prior to drilling ahead. The well should take approximately 25 more days to drill to a total depth of 11,200 feet and is targeting the Wolfberry, Strawn and Devonian formations, which produce oil in the immediate area. All subsequent wells will be drilled to approximately 10,500 feet to test the Wolfberry and Strawn formations. The Caza Elkins 3402 well will be drilled immediately following the Caza Elkins 3401 well with the same rig. The property covers approximately 480 acres with five proven undeveloped locations.

Caza has a 100% working interest before completion and an 85% working interest after completion in the first well with a 63.75% net revenue interest. In all subsequent wells on the San Jacinto property, Caza will have a 75% working interest and a 56.25% net revenue interest.

Bongo Property, Wharton County, Texas: The O.B. Ranch #2 appraisal well, which is a direct offset to the O.B. Ranch #1 discovery well is drilling ahead and is currently on schedule. Intermediate casing was set at 7,600 feet, and the well is currently drilling at 8,811 feet. The Company is pleased to announce that log data has confirmed the presence of natural gas in the Frio formation at approximately 5,530 feet. The well is targeting the Eocene, Cook Mountain interval between 12,400 and 12,900 feet, which is the stratigraphic interval producing in the O.B. Ranch #1 well, with an anticipated total depth of 13,500 feet. Data from this well will be integrated into Caza's ongoing seismic modelling effort in Wharton County, Texas, which will be used to better understand the potential size of the Cook Mountain anomaly at Bongo, as well as other potential targets in the area.

The Company has also completed remedial operations on the O.B. Ranch #1 well. Since completing the operations, the well is producing in line with Company expectations at average daily rates of 92 barrels of oil, 674 thousand cubic feet of natural gas and 37 barrels of water.

Caza has a 45.28% working interest and a 33.51% net revenue interest in the Bongo property and wells.

Windham Property, Upton County, Texas: The Caza 158 #3 well on the Windham property has reached its target depth of 9,824 feet, and Caza has elected to participate in the operator's proposal to complete the well. The operator intends to perforate and fracture stimulate all potentially productive intervals seen on the logs simultaneously within the wellbore, which include the Spraberry/Wolfcamp, Penn and Strawn formations. The Caza 158 #3 will be the fourth well drilled and completed on this property. The Caza 158 #1, 158 #2 and 162 #1 wells are currently at various stages in their respective fracture stimulation programs, but are all producing oil and natural gas.

Caza currently has a 25.0% working interest and an 18.75% net revenue interest in the Windham property and wells.

W. Michael Ford, Chief Executive Officer commented, "We are pleased with the status of our ongoing operations at San Jacinto, Bongo and Windham with all three projects progressing on, or ahead of, schedule. The Company is pursuing a balanced strategy of growing both our production and reserve base in order to build further shareholder value, and these projects should provide continued growth in both these areas along with increased revenues. I look forward to updating the market on the progress of these projects, as well as others, in due course."

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Eni Sells Stake in TAG Pipeline

- Eni Sells Stake in TAG Pipeline

Friday, June 10, 2011
Eni S.p.A.

Eni signed a purchase agreement with Cassa depositi e prestiti Spa (CDP) for the sale of 89% of the existing shares, corresponding to 94% of the economic rights held in Trans Gasleitung Austria GmbH.

Trans Gasleitung Austria GmbH is the company owning the transport rights for the Austrian section of the pipeline that connects Russia to Italy and that, in 2010, reported total revenues of 270 million euro.

This operation is part of the commitments taken by Eni in response to the European Antitrust Commission ruling on September 29, 2010, and it is subject to its approval.

The sale provides for the payment of €483 million, plus reimbursement of a shareholder loan granted by Eni to the company equal to 192 million euro (a total of $986MM), and these amounts will be subject to review at the closing date as per market practice.

The parties have also agreed to recognize an additional charge based on some earn-out mechanisms linked to the occurrence of certain events.

Following the conclusion of the operation, the ship-or-pay contract signed by Eni with TAG will remain into force.

By virtue of the nature of the counterparty and the economic importance of the contract for Eni, the transaction takes the form of an operation with a related party of minor importance for which a non-binding opinion has been required from the Committee for Internal control.

Mediobanca – Banca di Credito Finanziario S.p.A. and Rothschild S.p.A. for Eni and Credit Suisse for Cassa Depositi e Prestiti issued fairness opinion on the operation based on the assessment methodologies currently used for this type of operations.

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Farstad Shipping Snags 6 Contract Renewals from Woodside

- Farstad Shipping Snags 6 Contract Renewals from Woodside

Friday, June 10, 2011
Farstad Shipping ASA

Farstad Shipping has been awarded the following charter contracts:

AHTS Far Strait, AHTS Lady Caroline, PSV Far Spirit and PSV Lady Grace have all been extended for 365 days while AHTS Far Stream and PSV Far Swan have been extended for 180 days. All vessels are on charter with Woodside in Australia in support of their drilling and/or production operations.

In addition Esso Australia has exercised another 3 month option for PSV Lady Kari-Ann. The vessel will remain supporting Esso's offshore production operations in Bass Strait.

Total value of the contracts is approximately NOK 380 million.

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Norwegian Govt Gives Go-Ahead to Statoil's $3.7B Valemon Plan

- Norwegian Govt Gives Go-Ahead to Statoil's $3.7B Valemon Plan

Friday, June 10, 2011

The plan for development and operation of the Valemon gas and condensate field in the North Sea was approved by the Norwegian parliament on June 9. Production start-up is planned for 2014.

The Valemon field is one of Statoil's largest development projects on the Norwegian continental shelf (NCS) in the next few years.

The recoverable reserves are estimated at 206 million barrels of oil equivalents – including 26 billion cubic meters of gas, five million cubic meters of condensate and one million cubic meters of natural gas liquids (NGL).

The partners will invest almost NOK 20 billion in the platform, pipelines and production wells.

Development of Valemon involves a fixed platform with a steel jacket for the separation of gas, condensate and water. The normally unmanned platform will be remotely controlled from the Kvitebjørn platform when drilling operations are completed in 2016/17.

Gas from Valemon will be transported via the existing pipeline from Huldra to Heimdal, a hub which enables the gas to be exported to European markets.

The condensate will be piped to Kvitebjørn for stabilization and further transport to the Mongstad refinery in Hordaland.

At peak, Valemon is expected to produce approximately three billion cubic meters of gas annually.

"Production from Valemon will enable us to utilize spare capacity in the processing facilities on the Kvitebjørn and Heimdal platforms. Meanwhile, the platform and transport systems provide an excellent basis for the development of further oil and gas fields in the area," said Statoil senior vice president of NCS field development Ivar Aasheim.

The Valemon reservoir is complicated because it is fragmented, but also because of its high pressure and high temperature.

The contract for building the Valemon topsides was recently awarded to Samsung Heavy Industries, following broadly based international competition between pre-qualified suppliers. The contract is worth an estimated NOK 2.3 billion.

Design work will be carried out by the Grenland Group in Sandefjord, Norway and Technip in Malaysia. Grenland Group will also build the flare stack. Hertel Marine in the Netherlands will be responsible for the construction of the accommodation quarters.

The contract for steel jacket construction was previously awarded to Heerema Vlissingen B.V., while Heerema Marine Contractors Nederland B.V. landed the contract for transport and mating of jacket and topsides.

Saipem was awarded the contract for installation of the topside facilities. Pipeline design was awarded to IKM Ocean Design.

The Valemon field is located in the North Sea between Kvitebjørn and Gullfaks South, roughly 160 kilometers west of Bergen.

Licensees are Statoil (operator – 64.275%), Total (2.5%), Enterprise Oil Norge (3.225%) and Petoro (30%).

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US Challenged over Approval of Shell Gulf Drilling Plan

- US Challenged over Approval of Shell Gulf Drilling Plan

Friday, June 10, 2011
Dow Jones Newswires
WASHINGTON (Dow Jones Newswires)
by Ryan Tracy

Environmental groups Thursday sued the Obama administration over its approval of a Shell plan to drill for oil deep under the Gulf of Mexico.

The suit was the opening salvo in what could be a lengthy legal fight over U.S. drilling policy following the resumption of oil and gas exploration after the Deepwater Horizon disaster. It came a day after ExxonMobil announced one of the largest oil discoveries ever in the Gulf, signaling that as oil companies use newly issued federal permits to return to the area after last year's oil spill, they are also likely to face more legal battles.

"Before new deepwater Gulf drilling occurs, the government must make a realistic assessment of the risk to the Gulf's ecosystem, its communities, and the many jobs that depend on tourism, fishing and recreation. It has utterly failed to do so here," said David Guest, an attorney with Earthjustice, which filed the suit on behalf of the Sierra Club, the Gulf Restoration Network and the Florida Wildlife Federation.

The groups alleged that federal regulators violated environmental laws when they approved Shell's plan to drill eight wells about 72 miles off the Louisiana coast last month and asked the Eleventh Circuit of the U.S. Court of Appeals in Atlanta to nix the approval.

The review of Shell's proposal was conducted under a new regulatory regime that was instituted after Deepwater Horizon and designed to improve safety and strengthen environmental protection. It found no evidence that the plan would significantly affect the quality of the "human environment."

The environmental groups say the government underestimated the likelihood of a major oil spill and failed to account for weaknesses in the company's plan to contain or prevent a blowout like the one that occurred in the Gulf last year.

A spokeswoman for the Bureau of Ocean Energy Management, Regulation, and Enforcement, which approved Shell's plan, declined to comment.

Shell spokeswoman Kayla Macke said in an email that Thursday's legal filings "fail to take into account the comprehensive nature of the approved exploration plan," which "reflects numerous improvements to enhance safety and to protect the environment."

"We will fully assist the government in defending this plan," Macke said.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Petrobras Discovers Hydrocarbons in Espirito Santo Basin

- Petrobras Discovers Hydrocarbons in Espirito Santo Basin

Friday, June 10, 2011

Petrobras announced the discovery of a hydrocarbons accumulation in the Cretaceous reservoirs of Espírito Santo Basin.

The discovery resulted from the drilling of well 1-BRSA-926D-ESS (1-ESS-205D), informally know as Brigadeiro, at a water depth of 1,900 meters, located in the BM-ES-23 Concession area, block ES-M-525, 115 km off the coast of the State of Espírito Santo.

The discovery was confirmed through wireline logging and fluid sampling, in the reservoirs located at a depth of approximately 4,200 meters, with vertical porous thickness of approximately 125 meters.

Petrobras is the operator of the consortium for exploration of block BM-ES-23 (65%), which is also composed of Shell Brasil Petróleo Ltda (20%) and Inpex Petróleo Santos Ltda (15%).

The consortium will give continuity to the activities in the concession area, where two other wells are being drilled, referring to the Minimum Exploratory Program. After the conclusion of this Program, the consortium will forward an Evaluation Plan proposal to the ANP designed to delimit the discovered accumulation.

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Statoil Gets OK for Development of Visund South Fast Track

- Statoil Gets OK for Development of Visund South Fast Track

Friday, June 10, 2011

The Norwegian Ministry of Petroleum and Energy has approved the plan for development and operation for Visund South. Production is planned to start up in the third quarter of 2012, and a subsea template is already on its way out to the field.

Visund South, which is located 10 kilometers from both the Gullfaks C and Visund A platforms in the North Sea, is a subsea development consisting of a template with four slots, from which three wells will be drilled and tied to Gullfaks C for processing.

"With the approval of the ministry, this first project in a series of fast-track developments is well underway, just four months after the PDO was submitted in January. This also means we're one step closer to our goal of halving the time taken from discovery to production," said Statoil senior vice president of Norwegian continental shelf field development Ivar Aasheim.

In the course of June everything will set for the installation of the seabed template, so that the project can commence drilling in August.

The template is the first one built that has its basis in a standard catalogue for subsea equipment, which was compiled in collaboration with the suppler industry. This catalogue will be used for the forthcoming fast-track developments.

Visund South will be installed on the field in conjunction with the Marulk development, which Statoil is carrying out now on behalf of operator Eni.

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