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Oil and Gas Energy News Update

Friday, June 17, 2011

Oil & Gas Post - All News Report for Friday, June 17, 2011

Friday, June 17, 2011

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Commodity Corner: Oil Down 6.3% for the Week

- Commodity Corner: Oil Down 6.3% for the Week

Friday, June 17, 2011
Rigzone Staff
by Matthew V. Veazey

Crude oil for July delivery lost $1.94 to settle at $93.01 a barrel Friday. Since June 10, oil futures have fallen 6.3 percent.

Pessimism about the U.S. economic outlook and its implications for oil demand contributed to Friday's selloff. A source of this negative investor sentiment was the International Monetary Fund (IMF), which on Friday observed that global economic activity is slowing down "temporarily." In addition, the IMF lowered its 2011 economic growth forecast for the U.S. by three percentage points to 2.5 percent.

Providing a cushion to falling oil futures, however, was a stronger euro. Priced in dollars, crude oil becomes more attractive to investors holding other currencies when the greenback weakens. The euro rose 1.25 percent against the U.S. dollar Friday as the prospects brightened for a resolution to the Greek debt crisis. The leaders of European Union heavyweights France and Germany presented a more unified front Friday in working toward a plan to help Greece restructure its crushing national debt.

French President Nicolas Sarkozy and German Chancellor Angela Merkel lately have had differences of opinion on the role that private banks should play in the bailout, with Merkel arguing that private institutions should be pressured to assume some of the risk. After meeting with Sarkozy Friday, Merkel relented somewhat from her earlier position by advocating a more voluntary role by private banks.

Crude oil traded within a range from $91.84 to $95.40 Friday.

July natural gas continued to be buffeted by weather forecasts showing milder temperatures in the Upper Midwest and Northeast. The front-month contract lost 8.5 cents to end the day at $4.325 per thousand cubic feet.

Natural gas fluctuated from $4.32 to $4.45. For the week, it is down 9.1 percent.

July gasoline ended the day flat, again settling at $2.95—the intraday high. The contract price bottomed out at $2.87, and it is down 2.3 percent for the week.

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Aker Briefs on Blind Faith Ruling

- Aker Briefs on Blind Faith Ruling

Friday, June 17, 2011
Aker Solutions

The final ruling has been delivered in the proceedings between subsidiaries of Aker Solutions and Chevron concerning delivery of the Blind Faith platform. The platform was installed in the Gulf of Mexico and started production in 2008. The ruling will result in a recordable loss of approx NOK 220 million for Aker Solutions in the second quarter 2011. The net cash effect is estimated at USD 10 million negative.

The financial effects described above will be divided between subsidiaries of Aker Solutions and Kvaerner, with 25 percent to Aker Solutions and 75 percent to Kvaerner.

The arbitration hearing took place in January and February 2011. A subsidiary of Kvaerner (upon consummation of the ongoing demerger from Aker Solutions) initiated arbitration proceedings regarding compensation for various changes to the work and associated acceleration work. Chevron U.S.A. Inc. presented various warranty claims and other claims against Aker Solutions.

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SeaBird Awards Two 2D Contracts

- SeaBird Awards Two 2D Contracts

Friday, June 17, 2011
SeaBird Exploration plc

SeaBird reported that two new 2D contracts have been awarded.

The Aquila Explorer has been awarded two LOI's for surveys of combined 4,600 line km in Indonesia for approximately two months work prior to her previously announced contract on May 6. The vessel will now be working in direct continuation until mid September 2011.

The Hawk Explorer after completing her scheduled dry-dock in Las Palmas will mobilize to Mediterranean Sea where she will commence a 1,500 line km survey until mid July 2011.

The combined contract values for these contracts are approximately USD 5 million.

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Cano CFO to Resign

- Cano CFO to Resign

Friday, June 17, 2011
Cano Petroleum Inc.

Cano Petroleum announced that Michael J. Ricketts informed Cano of his decision to resign from his positions as the Senior Vice President and Chief Financial Officer of Cano and from all other positions he holds with Cano or any of its subsidiaries, effective as of the close of business on June 20, 2011. Mr. Ricketts is resigning to accept a position at another company. The Board of Directors of Cano believes that it is in the final stages of its search for a Chief Financial Officer to succeed Mr. Ricketts and expects to announce a successor in the near future.

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Gazprom Neft, Shell to Mull JV for Western Siberia Projects

- Gazprom Neft, Shell to Mull JV for Western Siberia Projects

Friday, June 17, 2011
Dow Jones Newswires
by Malgorzata Halaba

Gazprom Neft, the oil arm of Gazprom, said Friday it has signed a cooperation agreement with Shell Exploration Company BV, a unit of U.K. energy giant Shell.

The companies will assess the potential of creating a joint venture to pursue projects in Western Siberia and areas both inside and outside of Russia, and to further develop cooperation between the two companies in upstream and downstream, the statement said.

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

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Semco Maritime Contracts 2nd Transocean Rig in North Sea

- Semco Maritime Contracts 2nd Transocean Rig in North Sea

Friday, June 17, 2011
Semco Maritime A/S

Two contracts for the world's largest rig company, Transocean, will be carried out in Tromsø and Bergen. This strengthens Semco Maritime's strategy to service clients in the entire North Sea area.

Semco Maritime A/S has won their second order this spring for upgrade of a floating rig, semi-submersible; a project to be carried out in a Norwegian harbor. This latest contract for upgrade of Transocean Winner, strengthens Semco Maritime's strategy to carry out rig projects in any harbor in the North Sea area.

Transocean Winner is a large rig which can operate in water depths up to 1500 meters; it will arrive at a yard and service area in Askøy north of Bergen in August and in the following 45-50 days, Semco Maritime will carry out an extensive upgrade, repair and piping installations to optimize the rig for new projects in the Norwegian sector of the North Sea. The work will be carried out as a close cooperation between the Danish and Norwegian divisions of Semco Maritime and with local sub suppliers. Senior Vice President for rig repair, Hans-Peter Jørgensen, expects around 150 employees from Esbjerg and Stavanger to be working on Transocean Winner during its stay in Askøy.

"We have entered an agreement with Bergen Group, who will provide for yard facilities, personnel, logistics, anchoring and catering. We will carry out this contract employing staff from this partnership," said Hans-Peter Jørgensen.

The contract with the world's largest rig operator, including SPS and upgrade of Transocean Winner worth approximately DKK 100 million, also comprises two options for similar projects.

The project succeeds a smaller Transocean contract for a semi-submersible-rig Polar Pioneer which is being upgraded and repaired in Tromsø at the moment. The rig is scheduled to leave Tromsø again June 19.

"These two contracts are our first rig projects in Norway for a number of years and they are an important step in the right direction to fulfill our strategy of serving Norwegian, British and Danish clients in the entire North Sea area. This is the first time we have the main contract for semi-submersibles, It is an interesting market, as upgrades of this type of rigs is more complex and extensive than upgrade of jack-up rigs," said Hans-Peter Jørgensen.

The main contracts for the two Transocean rigs represent a value of about DKK 200 million and thus contribute to a good start of 2011 in one of Semco Maritime’s main markets.

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Costa Rica's Chinchilla Says No to Oil Drilling; Maybe to Natural Gas

- Costa Rica's Chinchilla Says No to Oil Drilling; Maybe to Natural Gas

Friday, June 17, 2011
Knight Ridder/Tribune Business News
by Adam Williams, The Tico Times, San Jose, Costa Ric

Costa Ricans don't want oil drilling in their country. But extraction of natural gas is on the table, said President Laura Chinchilla.

One month after Chinchilla said "the unstoppable rise of fuel prices could result in the worst energy crisis in human history," talk of oil drilling in Costa Rica made headlines last week when U.S.-based Mallon Oil, a subsidiary of South Dakota-based Black Hills Corporation, announced it plans to pursue through international trade agreements the rights to explore and drill for oil and natural gas in the Central American country (TT, June 10).

While Chinchilla responded by saying that oil drilling is off the table, she said her administration would consider granting the company a contract to explore and drill for natural gas in the Northern Zone's Alajuela province, where the company owns a concession to a large oil and gas block. That decision is expected in two or three months, she said.

"Natural gas is less of a pollutant [than oil] and could prove to be an important alternative fuel," Chinchilla said, while noting that Costa Rica has relied in the past on industries that produce pollution, including mining, to bring economic growth. "We are evaluating the criteria of timeliness and convenience, and the review is being directed toward satisfying public interest and to respecting the principles of environmental protection," she said.

In 2000, Mallon Oil won a 20-year concession for exploration and production of oil and natural gas in northern Costa Rica, but some 200 court appeals filed mostly by environmental groups have until now blocked the project from advancing. Last April, the Constitutional Chamber of the Supreme Court rejected the last of those appeals.

The company has invoked the Central America Free Trade Agreement (CAFTA) to pressure Costa Rica's government into signing a drilling and exploration contract. In the past seven months, company representatives sent letters to Costa Rican officials warning that the country could face "legal, economic and international consequences" if the 11-year-old exploration contract is not honored. The first letter was sent November 2010 to Foreign Trade Minister Anabel Gonzalez, and a second one was sent March 31 to Costa Rica's ambassador in Washington, D.C., Muni Figueres.

Despite Chinchilla's toe-the-line response, when news spread that Costa Rica would consider natural gas or oil exploration, environmental groups quickly organized an anti-oil rally that lasted several hours Saturday at San Jose's Plaza de la Cultura outside the historic National Theater.

Protesters carried signs that said "No to oil exploration" and "Don't destroy our beautiful Costa Rica." Demonstrators dressed in black and covered their faces in funeral veils. Others blocked a major downtown thoroughfare while covering themselves in black paint.

"We can't allow our government to continue to sell our country to [satisfy] the greed of multinational companies," Fabian Pacheco, of the group Oil Watch International, shouted through a megaphone. "We are selling off our most precious resources for the sake of profit. It is our responsibility to stop this corruption and block the government from selling Costa Rica."

A spokesman for Black Hills Corporation did not respond by press time to questions sent by email by The Tico Times.

"[Mallon Oil] has made several requests to government officials and the Environment Ministry [MINAET] to discuss different options in the process," Environment Minister Teofilo de la Torre told The Tico Times this week. "The company has also sent several requests to Costa Rica's ambassador in the U.S. to encourage the Executive Branch to make a decision about the contract."

Mallon Oil spent the last decade trying to obtain the required permits to start oil and gas exploration here. In public bidding in 2000, the company won rights to the northern oil and gas block under then-President Miguel angel Rodriguez (1998-2002).

In 2002, President Abel Pacheco imposed a moratorium on oil exploration, citing the potential environmental consequences it could have on a country that depends on tourism to generate jobs and revenue (TT, June 7, 2002). Three years later, the government revoked a concession it had granted in 1998 to U.S.-based Harken Holdings to exploit oil blocks on the Caribbean coast in Limon province. The company sued the Costa Rican government in Costa Rican courts.

History Repeating Itself?

At last Saturday's rally, Costa Rican lawmakers Jose Maria Villalta, of the Broad Front Party, and Juan Carlos Mendoza, of the Citizen Action Party (PAC), stood alongside Luis Diego Marin, regional coordinator of the environmental group Preserve Planet, and echoed a decade-old mantra: studies on the environmental impact of oil and gas drilling are lacking.

"If you were to go to the Environment Ministry's National Technical Secretariat [SETENA] and request a copy of the environmental impact study for this proposed project, you'd find that there isn't one," Marin said. "It's just another example of our government's hypocrisy. They claim to support the development of renewable energy and then they announce weeks later that they'd support oil and gas exploration."

De la Torre, Chinchilla's environment minister, said that "no environmental impact study has yet been approved" by MINAET or SETENA, and that an "ample study" must be conducted and approved before any exploration process can begin. The study would be used to assure that no wildlife, forests, wetlands, local communities or indigenous groups would be impacted by the project in the San Carlos region.

"I have been hearing for years that the development of projects won't damage anyone's land and will bring prosperity. But as a Maleku, every time there is development in our region, we lose more of our forest and homeland," said Phil alvarez, a member of the northwestern Maleku indigenous tribe that took part in the protest. "The government has already taken over 90 percent of my tribe's land. Let's stop them from taking anymore," he said.

After a series of speeches, protesters marched down Avenida Segunda, a main transit route through the city, blocked traffic and scattered coal across the pavement. Chants of "No to oil" echoed off nearby buildings.

"People always claim oil and natural gas will result in development or progress, but development always comes with destruction of something else," said Inge Kitzing, a rally attendee. "Protests have been used to stop several projects in the past, including the Crucitas gold mine [in the Northern Zone], and we are not going to allow this project to destroy our environment either."

But while the demonstrations unfolded in downtown, some onlookers shook their heads.

"Wasn't it announced that the concession was to explore for natural gas, not oil," asked Paola Villalobos, a middle-aged woman watching as she waited to cross the street. "Why is everyone dressed in black? Those are completely different resources."

Others said they disagreed with the Costa Rican blockade on oil exploration.

"We are such a country of contradictions," said Flora Campos, who stopped at the intersection to watch the protest. "We always say that we want to develop and prosper, but when an opportunity comes along to do so, there are always groups that block you from doing so. One way to become a much wealthier country is to allow for oil."

While Chinchilla ruled out oil exploration, a study to influence the decision whether or not to grant Mallon Oil a gas-drilling contract is expected by the end of the year.

"The Executive Branch has decided that exploration would be used for natural gas, and not for oil," De la Torre said. "Natural gas is more in line with the intentions of the country to develop energies in a more 'green' way."

Copyright (c) 2011, The Tico Times, San Jose, Costa Rica

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Nido Reaches TD at Gindara Well

- Nido Reaches TD at Gindara Well

Friday, June 17, 2011
Nido Petroleum Ltd.

Nido, on behalf of the SC 54B Joint Venture, provided the following update on the Gindara-1 well.

Since the last update, the Gindara-1 well has been drilled from 3,530 meters MD (3,508 meters TVDss) to the revised Total Depth (TD) of 3,660 meters MD (3,638 meters TVDss) in the primary Nido Limestone reservoir section. Current operations are pulling out of the hole to run wire-line logs.

While drilling the Nido Limestone at 3,560 meters MD (3,538 meters TVDss) the well intersected the predicted good quality reservoir section in the Nido Limestone which extended down to the revised TD of the well at 3,660 meters MD (3,638 meters TVDss).

Although indications are that the good quality limestone reservoir section is water bearing, it has not been possible to definitively determine if the fluids in the reservoir are hydrocarbons or water due to the combination of a potential deep invasion of the reservoir by the drilling mud and technical problems with the Logging Whilst Drilling (LWD) logging equipment. Therefore, a comprehensive wire-line logging program is being run to confirm the fluid type within the good quality Nido Limestone reservoir section.

Jon Pattillo, Nido's Head of Exploration commented, "We have encountered the high quality limestone reservoir section that was predicted pre-drill. Although indications are that the good quality limestone reservoir is water bearing, it is possible that the drilling fluid has invaded the limestone reservoir due to its good porosity. We have not been able to definitively determine if this is the case due to technical problems with the LWD logging tool and so we are running a comprehensive logging program to confirm the fluid type within the reservoir. This program will take a few days to complete and Nido will provide a further update on the results when they become available."

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Kashagan's Second Phase Concept to Be Presented in Sept.

- Kashagan's Second Phase Concept to Be Presented in Sept.

Friday, June 17, 2011
Knight Ridder/Tribune Business News
by A. Maratov, Trend News Agency, Baku, Azerbaijan

The concept for the Kashagan Field's second phase of development will be revealed in September, according to Chairman of JSC National Company KazMunaiGaz Kairgeldy Kabyldin.

Kashagan is a major oil and gas field in Kazakhstan, located north of the Caspian Sea. Kashagan's geological reserves are estimated at 4.8 billion tons of oil, according to Kazakh geologists.

In the second half of 2010, the head of the KMG said that the terms of implementing the second phase of the Kashagan field may be postponed to 2018-2019. The delay will affect the start of the Caspian oil transportation system project.

As the Kazakh Oil and Gas Minister Sauat Mynbayev said earlier, the postponement of the second phase is due to high costs, which may be incurred by consortium participants. At the same time Mynbayev stressed that the discussions regarding postponement of the second phase will not affect the terms of commercial oil production at Kashagan.

The largest participants of the Kashagan project are currently the companies Eni, KMG Kashagan B.V., Total, ExxonMobil, and Royal Dutch Shell (winner of 16.81 percent of the consortium). Other participants are ConocoPhillips -- 8.4 percent and Inpex -- 7.56 percent.

Copyright (c) 22011, Trend News Agency, Baku, Azerbaijan

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Skarv FPSO's Stay Extended at Kvaerner Stord Yard

- Skarv FPSO's Stay Extended at Kvaerner Stord Yard

Friday, June 17, 2011
BP plc

The Skarv FPSO stay at Kvaerner Stord yard has been extended to mid July 2011.

This is due to more work than anticipated with the pressure testing of the process plant, completion and hand over of equipment and systems. This work is best completed while the vessel is at the yard.

Our priority is safe, compliant and efficient start up of production which is now deferred from 3Q to 4Q 2011. In the period between tow out and start up the vessel will be installed and connected to the subsea infrastructure including pull in of risers, completion of commissioning and full system integration tests and start up preparations.

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Delta to Sell Remaining Assets to Wapiti

- Delta to Sell Remaining Assets to Wapiti

Friday, June 17, 2011
Delta Petroleum Corp.

Delta Petroleum has entered into a Purchase and Sale Agreement (PSA) with Wapiti to sell its remaining non-operated interests in various non-core assets for $43.2 million. The transaction is expected to close by the end of June.

The non-operated, non-core assets to be sold to Wapiti consist of Delta's remaining working interests in the fields of the DJ Basin and Texas. The working interests being sold in this transaction constitute the non-operated portions of these fields that were retained by Delta when Delta sold properties to Wapiti in August of 2010.

Carl Lakey, Delta's CEO, commented, "As we discussed on our last conference call, the expected proceeds from the sale of these non-core assets will allow us to fund current and future drilling activity in the Vega Area and reduce our senior secured debt balances. Our borrowing base with Macquarie will decrease by $22 million to $33 million as a result of the sale. The sale of the remaining non-core assets makes Delta essentially a pure Piceance Basin company. The Vega Area has been and will remain the focus of the Company's capital and efforts."

Macquarie Capital (USA) Inc. and Evercore Group, L.L.C. acted as financial advisors to Delta in connection with this transaction.

The Company also announced that it has recently finished completion activities on the 2C well and is transitioning to flow-back activities.

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Petrobras Acquires Blocks Offshore Gabon

- Petrobras Acquires Blocks Offshore Gabon

Friday, June 17, 2011

Petrobras, has acquired, by means of its wholly-owned subsidiary Petrobras Participaciones S.L. – PPSL, 50 percent of the stakes in the Ntsina Marin and Mbeli Marin Blocks, located in the Coastal Basin of Gabon, offshore the Gabonese Republic, on the Western Coast of Africa. The region has geological structures that are considered comparable to the areas developed in Brazil.

The blocks were purchased from Ophir Energy, which is headquartered in the UK and will keep the remaining 50 percent of the interests. The deal was completed today and is pending final approval by the Government of Gabon.

The region the two blocks are in covers an area of 6,683 square kilometers, in water depths ranging from shallow to up to 2,400 meters. Petrobras commits to carry out a minimum program, which includes 2,000 square kilometers of 3D seismics until March 2012.

After this stage, Petrobras has the right to assess whether or not it will remain in the next phase of the exploration program, which includes drilling wells.

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Cowen Cuts Estimates on Solar Companies

- Cowen Cuts Estimates on Solar Companies

Jun 17, 2011

Cowen Lowered its estimates on First Solar (NASDAQ:FSLR), Suntech (NYSE:STP) and Trina Solar (NYSE:TSL) after revising its model to account for price erosion in the solar industry. The firm believes First Solar will emerge as a long-term winner citing its low cost, strong margins and balance sheet. Cowen believes Suntech is also well positioned due to its product quality and brand name. The firm believes Trina Solar will emerge a winner in a consolidating market citing its capital position and low cost structure. Shares of all three names remain Outperform rated.

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Valiant Finalizes Sagex Deal, Reports Drilling Date for License P471

- Valiant Finalizes Sagex Deal, Reports Drilling Date for License P471

Friday, June 17, 2011
Valiant Petroleum plc

Valiant provided the following update with regard to its offer to the shareholders of Sagex to acquire the entire issued and to be issued share capital of Sagex for a total consideration of NOK 64.1 million (£7.1 million).

As at the close of the Offer on June 10, 2011 Valiant had received acceptances in excess of 94% of the total number of voting shares in Sagex on a fully diluted basis, significantly in excess of the two thirds acceptance condition. Working in close collaboration, Valiant and Sagex have also made progress on seeking all necessary corporate, third party and regulatory consents, which remain key conditions to the Offer. Valiant remains confident that the transaction will reach completion ahead of the long stop date of August 31, 2011.

Reflecting the significant progress on moving the Offer towards completion, an interim board of directors of Sagex was elected via an Extraordinary General Meeting on June 14, 2011 comprising representatives of two of Sagex's major shareholders and Sandy Shaw, an executive director of Valiant.

Valiant has also been informed by Sagex that the first of its two planned Norwegian exploration wells is anticipated to commence operations on License P471 by early August 2011. The well will be drilled by the Borgland Dolphin semi-submersible rig and target Chamonix, a potentially large Cretaceous stratigraphic prospect, and the secondary Cortina target of Jurassic age. Sagex holds a 20% working interest and the license partners are OMV (50%, operator) and Noreco (30%).

Further updates on the Offer will be provided in due course.

Peter Buchanan, CEO of Valiant, commented, "We would like to take this opportunity to thank the outgoing Sagex board of directors for their hard work and professionalism over the past few months, which has made Valiant's offer for Sagex possible. We look forward to working towards successful completion of the Offer with both Sagex's management team and new board of directors."

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Woodside Delays Pluto LNG Start

- Woodside Delays Pluto LNG Start

Friday, June 17, 2011
Woodside Petroleum Ltd.

Woodside has revised the expected cost and schedule of the Pluto LNG Project following its regular review of the progress of the project.

The first LNG cargo is now estimated for March 2012. The revised estimate is attributable to slower than expected progress on the commissioning of the onshore gas plant, seven weeks of direct weather delays and an allowance for an increased contingency.

The revised estimate is expected to result in a A$900 million increase in cost to a total of A$14.9 billion (100% project). This estimate includes arrangements with customers affected by the delay.

Woodside CEO Peter Coleman said that while delays in mega-projects such as Pluto were not uncommon, he was disappointed to have to advise of a change in the schedule.

"While we would like to start up the project as quickly as possible, we will not be doing so until we are satisfied the commissioning work has been completed in a thorough and safe manner," Mr. Coleman said.

"It is important to take a long-term view. Pluto is an attractive project underpinned by 15-year sales contracts which will provide significant value to Woodside shareholders."

Bad weather has also contributed to a delay in the North West Shelf Oil Redevelopment Project, with poor sea states hindering the completion of critical subsea work on the project. A mechanical fault was also experienced with a contractor's installation support vessel.

The redevelopment, which includes the installation of the Okha floating production, storage and offloading facility, is now scheduled for start-up in October 2011. There is not expected to be any material change to the cost of the A$1.8 billion project (100% project).

The schedule changes for the Pluto and NWS Oil Redevelopment projects will affect Woodside's 2011 production target. The company's 2011 production target is now between 62 and 64 million barrels of oil equivalent.

Woodside holds 90% equity in the Pluto LNG Project and 33% equity in the NWS Oil Redevelopment Project.

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Maersk Invests $1B in Golden Eagle Development Plan

- Maersk Invests $1B in Golden Eagle Development Plan

Friday, June 17, 2011
Maersk Oil

Maersk Group has approved its investment of $1 billion in the Field Development Plan for the Golden Eagle Area in the UK North Sea. Maersk Oil has a non-operated interest in the fields of 31.56% and its estimated share of reserves is expected to be around 45 million barrels of oil equivalent.

Subject to partner and regulatory approvals, construction of a platform and other infrastructure will begin in November this year. First oil is expected in 2014 with initial production rates at between 60,000-65,000 barrels of oil a day; Maersk Oil's share is expected to be 19,000-21,000 bpd.

"The approval of the field development plan is an important step towards getting production going in the Golden Eagle Area. The area is home to one of the largest discoveries in the UK North Sea in recent years, and we are pleased to be partners in such a promising field development," said Martin Pedersen, Managing Director of Maersk Oil UK.

The Golden Eagle Area comprises the Golden Eagle and Peregrine fields. Peregrine was known as Pink, while the Hobby discovery is now defined to be part of the Golden Eagle field. The fields were discovered 2007-2009 in Block 20/1 located 110 kilometers North East of Aberdeen. The fields are operated by Nexen (36.5%) with Maersk Oil, Suncor and Edinburgh Oil and Gas as partners.

Operator Nexen has estimated the Golden Eagle Area contains 140-150 million barrels of oil equivalent in gross recoverable contingent resources, making it one of the largest oil discoveries in the UK North Sea in recent years. Maersk Oil's estimated share of reserves is expected to be around 45 millions of barrels of oil equivalent.

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Analysis: Latin America Rig Activity Grows

- Analysis: Latin America Rig Activity Grows

Friday, June 17, 2011
Rigzone Staff
by Karen Boman

Latin America oil and gas activity is booming, with year-on-year rig activity increases from April 2010 to April 2011 in Argentina, Brazil, Colombia, Ecuador and Venezuela, according to a recent report by London-based Evaluate Energy.

The five countries have experienced at least a 15 percent increase in active rigs from the April 2010 count. In Brazil, the average number of rigs grew from 85 in April 2010 to 108 in April 2011, and in Venezuela, the average number of rigs grew from 88 in April 2010 to 110 in April 2011. However, Colombia has leapfrogged the pair within two years to become the second most active country on the continent behind Mexico, with the average number of rigs growing from 79 in April 2010 to 111 in April 2011.

Ecuador has seen its rig activity increase from an average 18 rigs in April 2010 to 24 rigs in April 2011, but rig activity remains relatively low. Argentina has experienced significant growth, with the average number of rigs in April of this year at 91 compared with 78 in April 2010, but that growth was far less dramatic than the previous year, when the average number of rigs grew from 52 in April 2009.

Further increases in rig activity may be seen in the future thanks to YPF's discovery of an estimated 150 million barrels of shale oil in Argentina's Neuquen province, continued drilling activity in Brazil's highly productive pre-salt reserves and the finalization of contracts for Colombia's 2010 licensing round.

Mexico was the only Latin American country to experience a decline in rig activity since April 2010. Though it remains the country with the highest number of active rigs in the region, the level has fallen significantly since its own boom in mid-2009.

To address the decline in rig activity and production levels, Mexico's government has changed its energy policy, and state energy company Pemex recently reported it would seek to increase foreign investment in the nation's oil industry and increase focus on exploration in areas such as the Mexican portion of the Gulf of Mexico.

"Overall, the present and future of Latin America are both looking promising. If the new discoveries in Argentina, Brazil and Colombia eventually bear fruit, and Mexico's policy changes have the desired affect, the global oil and gas industry could look extremely different in the near future," Evaluate said.

Colombia's Heavy Oil Plays

Opportunities in Colombia's heavy oil plays, primarily in southeastern Colombia in the heavy oil belt in the Llanos Basin, continue to expand in both developed and underexplored areas, IHS noted in the IHS Herold 2011 Regional Resource Assessment: Opportunities in Colombia's Heavy Oil Play Continue to Grow.

The two most attractive areas in the Colombia oil play for investors and companies seeking acquisitions are the Llanos basin southwest of the Rubiales oil field, and in the Putumayo basin around the developing Capella oil field, said Donald McIvor, senior energy financial analyst and author of the report.

The two largest Colombian heavy oil discoveries to date are the Rubiales field, with 4.38 billion barrels of oil in place, and the Capella field, with 2.2 billion barrels of oil in place. "We also believe two other very large areas — the eastern Llanos basin and the Putumayo basin southwest of the Capella field — have potential for heavy oil discoveries," McIvor said, "but the license holders are doing very little to evaluate them."

Since 2008, the proven and probable reserves of the Rubiales field and four satellites have increased nearly three fold. Additionally, significant discoveries southwest of the Rubiales field have been made in the past 18 months, and the possibility exists that a very large part of the Llanos basin east and northeast of Rubiales is prospective for heavy oil. A large, heavy oil field in the Putumayo Basin is under development by Sinochem Group and Canacol Energy, and numerous discovery opportunities exist around that field and between it and the Andes Mountains, McIvor said.

While production has grown in recent years due to increased investment in secondary oil recovery oil fields, there has not been a big, new discovery recently, said Georgia Cooper, area coordinator for Colombia and Mexico in the Global E&P Reporting Service at IHS. Additionally, the Colombia government must address some key issues, particularly around infrastructure and transportation, to facilitate growth in oil and gas investment. Steps being taken to improve infrastructure include the approval by Ecopetrol's board of a US $3.39 billion modernization project for the Barrancabermeja refinery, which is expected to be completed in 2016.

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Ex-BP Chief's Vallares Lifts IPO Size to $2.18B

- Ex-BP Chief's Vallares Lifts IPO Size to $2.18B

Friday, June 17, 2011
Dow Jones Newswires
by Alexis Flynn & Selina Williams

Vallares, the new investment vehicle headed by financier Nathaniel Rothschild and former BP chief executive Tony Hayward, raised GBP1.35 billion ($2.18B) to invest in emerging-market oil and gas assets, some 35% more than it had anticipated.

Hayward said the level of support "demonstrates the confidence investors have in the strong fundamentals of the resources sector," and said the company will now search for "suitable acquisition opportunities."

Vallares is a cash shell that will use the capital raised to merge or invest with existing companies. Hayward said last week it would look at assets worth between GBP3 billion and GBP8 billion.

Co-founder Julian Metherell said the majority of investor interest came from U.S. and U.K. long-only funds and hedge funds, with some support from Middle Eastern sovereign wealth funds.

Vallares' founders--Hayward, Rothschild, Metherell and Tom Daniel--invested GBP100 million, of which GBP80 million is in ordinary share capital and GBP20 million in incentivized shares and securities designed to ensure an acquisition happens within a mandated timeframe.

Metherell said it was "very likely" Hayward would head an acquired company, marking his return to the spotlight less than a year after he left BP in the wake of the Deepwater Horizon disaster and Gulf of Mexico oil spill.

"He is a world-class CEO. I think any partner who wanted to come into Vallares would be hard pressed to find a better person to run a company than T. Hayward," said Metherell.

Metherell said voting rights for any majority owners following a transaction would be capped at 29.9%.

Vallares earlier Friday placed 133 million ordinary shares at GBP10 a share. Conditional dealings began Friday under the ticker symbol VLRS, and at 0927 GMT they were trading down five pence, or 0.5%, at 995 pence, slightly underperforming a 0.2% decline in the FTSE 100 index.

Admission to the London Stock Exchange and unconditional dealings on the main market for listed securities is expected 0700 GMT on June 22.

Vallares is so named in a nod to Rothschild's earlier commodities venture Vallar, and the two companies' business models do chime. Rothschild last year raised $700 million before buying Indonesian coal assets valued at some GBP3 billion. Shares in Vallar have risen 21% since their summer 2010 debut.

Credit Suisse is acting as global coordinator and joint bookrunner, J.P. Morgan Cazenove is acting as joint bookrunner and Evolution Securities is acting as co-lead manager in the share placing.

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

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Aminex Spuds Well Offshore Tanzania

- Aminex Spuds Well Offshore Tanzania

Friday, June 17, 2011
Aminex plc

Aminex announced the spudding of the Nyuni-2 well, offshore Tanzania. The well spudded shortly after 00:00 hours this morning, local time, June 17.

Nyuni-2 is being drilled from a surface location on the small Nyuni Island, approximately 30 kilometers off the mainland of Tanzania, to the south of the Rufiji River delta, using the Caroil-6 land rig. The well will target the same Neocomian sandstones which form the reservoirs in the nearby Songo-Songo gas field and in the Company's own Kiliwani North gas field reservoir. An additional target is an Aptian/Albian sandstone reservoir which was logged as gas-bearing in the Nyuni-1 well, which was drilled but not tested in 2004.

Nyuni-2 will be deviated to the south-east at an angle of 29 degrees from vertical to target a bottom-hole location approximately 1.200 meters away from the island. Total measured depth is likely to be 3,325 meters and total vertical depth 2,964 meters subsea. It is estimated that drilling to target depth will take 9-10 weeks.

Nyuni-2 will be the fourth exploration well drilled in the Nyuni area by Aminex as operator, and two of the previous wells discovered gas in commercial quantities.

Significant drilling events at Nyuni-2 will be reported to shareholders when appropriate.

Partners in the well are:
  • Ndovu Resources (Aminex) 65% (operator)
  • RAK Gas 25%
  • Bounty Oil 5%
  • Key Petroleum 5%

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Statoil: Subsea Compression Boosts Gas

- Statoil: Subsea Compression Boosts Gas

Friday, June 17, 2011

Statoil and its partners want to compress gas on the seabed to boost recovery. Subsea compression was recently selected as the preferred concept for Gullfaks.

"Gas compression on the seabed represents an important advance in technology, and once again, Statoil is leading the way for development of new technology. This is one of our most important measures for improving recovery from existing fields," said Siri Espedal Kindem, Statoil's vice president of technology.

Since 2008, Statoil and its partners have worked with Framo Engineering to develop technology for compressing wet gas on the seabed. Statoil has now decided to take the concept a step further on the Gullfaks South subsea field.

"This could increase production from the field by three billion cubic metres of gas, which means a six percent increase in recovery," said Ivar Aasheim, head of Field Development on the Norwegian shelf.

The current field recovery rate is already 62 percent. The combination of subsea compression and conventional low pressure production in the later phases could lift the recovery rate to 74 percent, thus also increasing the Gullfaks C lifetime.

Why compression?

Natural pressure declines as a field ages. This means that compression is necessary in order to extract more gas, and to get the gas to the platform.

The standard solution is compression on a platform or from land; however, the closer the compression is placed in relation to the well, the more gas can be extracted. That is why Statoil wants to place the compressor near the wells, on the seabed.

Not just Gullfaks

Statoil is currently working on three subsea compression projects in early stages. On the Åsgard field, the selected concept involves a subsea solution that will help increase pressure from the Mikkel and Midgard reservoirs. This could enhance recovery by 28 billion cubic metres of gas and 14 million barrels of condensate.

Together with operating company Shell, we are also working on a similar seabed solution on Ormen Lange.

"And this is just the beginning. Subsea compression can increase recovery on several small and medium-sized fields in the time ahead. Statoil has already identified more candidates," said Siri Espedal Kindem.

Seabed factories

Today, almost 50 percent of Statoil's production comes from a total of 488 subsea wells.

Statoil's expertise in subsea operations is the key to more efficient production and improved recovery.

"In many cases, subsea facilities make it possible to produce oil and gas that would not otherwise have been profitable to recover. This is how we take responsibility for increasing production from the Norwegian shelf," said Aasheim.

Subsea gas compression is another step in the direction of seabed factories, where operations that currently take place on platforms are moved down to the seabed.

"Processing on the seabed, particularly gas compression, is also very important in developing fields in deep water and vulnerable areas. This is an important technological breakthrough," Kindem concludes.

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Dragon Oil Wraps Up Ops at Dzheitune Well

- Dragon Oil Wraps Up Ops at Dzheitune Well

Friday, June 17, 2011
Dragon Oil plc

Dragon Oil announced the completion and initial testing of the Dzheitune (Lam) 28/156 development well. The Dzheitune (Lam) 28/156 well reached a depth of 2,000 meters and was completed as a single producer by the NIS rig. The initial test result from the well was 3,038 barrels of oil per day ("bopd"). The NIS rig has skidded to the next slot to spud the Dzheitune (Lam) 28/158 well shortly. The Iran Khazar rig is currently drilling the Dzheitune (Lam) B/157 well.

Dr. Abdul Jaleel Al Khalifa, Chief Executive Officer, commented, "I am pleased to report the successful completion and initial testing of the Dzheitune (Lam) 28/156 development well, the fifth well to have been completed within the 2011 drilling program. We continue to optimize well locations to ensure good potential while accessing different areas of the reservoir."

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Aker Wins Daewoo Contract for New Deepwater Drillship

- Aker Wins Daewoo Contract for New Deepwater Drillship

Friday, June 17, 2011
Aker Solutions

Aker Solutions has won a contract from Daewoo Shipbuilding & Marine Equipment to supply a complete drilling equipment package for a new deepwater drillship.

The contract is worth about NOK 540 million. The drill ship will be owned and operated by Tungsten Explorer Company, a subsidiary of Vantage Drilling.

"We are very pleased to have won another contract to deliver our deepwater drilling equipment and systems, which underlines our strong and fruitful relationships with the yard and the team at Vantage Drilling," said Thor Arne Håverstad, executive vice president and head of Aker Solutions' drilling technologies business.

Bill Thomson, VP Assets and Engineering at Vantage Drilling said, "We appreciate the commitment by Aker Solutions to provide a drilling package that meets and exceeds our expectations. This will be the seventh drilling package from Aker Solutions that Vantage will be involved in. As such Aker Solutions' commitment to deliver not only an excellent service during the construction but to provide a first-class customer service when in operations is important to the success of Vantage Drilling."

The equipment will mainly be delivered in 2012.

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Testing Underway at Reef's Ausable Well

- Testing Underway at Reef's Ausable Well

Friday, June 17, 2011
Reef Resources Ltd.

Reef Resources announced the contracted service rig is now on the Ausable #5 well in preparation for the testing and completion. The completion program comprises drilling out cement and a bridge plug in the production casing, swab testing of the lower Goat Island zone and completion of the Guelph formation using a multi-stage selective acid treatment. After acidization the well will be flow tested over a period of several days to ensure clean up. These operations are expected to take between 15 to 25 days to complete.

Reef previously announced the log analysis on the Ausable #5 well, with log analysis indicating 72 meters net pay of oil and NGL's in the Guelph and A2 formations.

Reef will be announcing test results after completion of Ausable #5 and the details of the next development steps in the Enhanced Oil Recovery - Natural Gas Liquids program in due course. The Ausable reef is currently on production and is generating revenue from the initial program which commenced in 4th quarter 2010.

Reef Resources announced the contracted service rig is now on the Ausable #5 well in preparation for the testing and completion. The completion program comprises drilling out cement and a bridge plug in the production casing, swab testing of the lower Goat Island zone and completion of the Guelph formation using a multi-stage selective acid treatment. After acidization the well will be flow tested over a period of several days to ensure clean up. These operations are expected to take between 15 to 25 days to complete.

Reef previously announced the log analysis on the Ausable #5 well, with log analysis indicating 72 meters net pay of oil and NGL's in the Guelph and A2 formations.

Reef will be announcing test results after completion of Ausable #5 and the details of the next development steps in the Enhanced Oil Recovery - Natural Gas Liquids program in due course. The Ausable reef is currently on production and is generating revenue from the initial program which commenced in 4th quarter 2010.

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