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Oil and Gas Energy News Update

Friday, July 8, 2011

Oil & Gas Post - All News Report for Friday, July 08, 2011

Friday, July 08, 2011

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Commodity Corner: WTI Loses 2.5% on Jobs Data

- Commodity Corner: WTI Loses 2.5% on Jobs Data

Friday, July 08, 2011
Rigzone Staff
by Matthew V. Veazey

Following the release of anemic U.S. employment growth figures Friday, the price of light sweet crude oil on the New York Mercantile Exchange fell 2.5 percent to end the day at $96.20 a barrel.

The U.S. Department of Labor reported a slight increase in non-farm payrolls for June: a net gain of only 18,000 non-farm payrolls. The figure is based on the addition of 57,000 private-sector jobs offset by a 39,000-job reduction by local, state, and federal governments during the period.

The net gain for June was far lower than what economists had expected. For instance, Bloomberg reported that its survey of economists anticipated 105,000 additional jobs under the most bearish scenario. Dampening the outlook for crude oil demand further, the Labor Department also reported that the national unemployment rate for June rose to 9.2 percent—a 0.1 percentage point increase from the previous month.

The WTI traded within a range from $95.60 to $99.18 Friday. The Brent futures contract on the IntercontinentalExchange lost 26 cents to settle at $118.33. The Brent price fluctuated from $117.18 to $119.79.

Natural gas futures ended the day higher, settling at $4.205 per thousand cubic feet. The 6.5-cent increase in the August contract price stems from weather forecast models anticipating above-normal temperatures from the Southwest to the Northeast well into next week.

Front-month natural gas peaked at $4.21 and bottomed out at $4.12.

Gasoline for August delivery settled at $3.09 a gallon. The contract price fluctuated from $3.07 to $3.13.

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GM to Offer Free Auto Insurance to Oregon and Washington Residents

- GM to Offer Free Auto Insurance to Oregon and Washington Residents

Jul 8, 2011

General Motors (NYSE:GM) plans to offer free auto insurance though MetLife (NYSE:MET) for one year to residents of Washington and Oregon who buy or lease a GM vehicle through September 6, according to Automotive News. GM is using the program as a test a new sales promotion.

General Motors has a potential upside of 38.7% based on a current price of $31.4 and an average consensus analyst price target of $43.55.

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PetroVietnam Mulls Buying ConocoPhillips Offshore Vietnam Assets

- PetroVietnam Mulls Buying ConocoPhillips Offshore Vietnam Assets

Friday, July 08, 2011
Dow Jones Newswires
by Vu Trong Khanh

State-run Vietnam Oil and Gas Group, or PetroVietnam and its partners are considering buying ConocoPhillips' stakes in three oil and gas projects off the coast of Vietnam, PetroVietnam said.

"The reason why the firm [ConocoPhillips] is selling the stakes might be it is restructuring itself," PetroVietnam Director General Phung Dinh Thuc said in a statement on the website of PV Oil, a PetroVietnam unit. He didn't identify the partners.

ConocoPhillips' assets in Vietnam are valued at up to $1.5 billion, PV Oil said in the statement.

The remarks come at a time when ConocoPhillips is expected to give investors an update on its three-year restructuring plan presented in late 2009 and expanded this year. The plan includes selling up to $17 billion in assets. Conoco Senior Vice President of Planning and Strategy Alan Hirshberg has said in a May the company was looking at leaving countries where it has a small presence.

ConocoPhillips, the third-largest U.S. oil company by market value after ExxonMobil and Chevron, has a 23.3% stake in a group of five fields in Block 15-1, where oil production started in 2003, a 36% stake in Rang Dong Field in Block 15-2 in the Cuu Long basin and a 16.3% stake in the Nam Con Son Gas Pipeline project, it said.

ConocoPhillips spokesman John McLemore declined to comment saying the company's policy is not to discuss market speculation.

As host country, Vietnam has priority rights for any such purchase, Thuc said.

These oil fields are located 180 kilometers southeast of Ho Chi Minh City, in undisputed areas close to Vietnam's big Bach Ho field.

Thuc was quoted in the statement as saying oil production at the fields might have entered a "complicated stage," in an apparent reference to technical--rather than political--complexities.

Thuc referred to an increasingly bitter dispute between Vietnam and China over sovereignty of the South China Sea, or East Sea as it is known in Vietnam, but didn't directly link the dispute to the possible acquisition.

"PetroVietnam reiterates that Vietnam's sovereignty has been acknowledged by the international community, and therefore, it will not change its exploration and production plan in the East Sea," Thuc was quoted as saying.

The Vietnam-China sovereignty row heated up sharply recently when Hanoi accused Chinese vessels of harassing fisherman and cutting the cables of a vessel doing seismic oil exploration work in late May.

"The group will continue to use its Binh Minh 02 for seismic surveys in Vietnam's continental shelf, and will coordinate with related ministries and agencies to protect the operations of the ship," according to the statement. Binh Minh 02 is name of the ship which had its seismic cables cut.

"Our current conduct in the East Sea is being calm, to both contribute to the country's economy and to actively protect the nation's sovereignty in the sea," Thuc said.

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

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ROC to Sell Stake in Mozambique Block

- ROC to Sell Stake in Mozambique Block

Friday, July 08, 2011
Roc Oil Co. Ltd.

ROC has agreed to sell its 75% interest in the Juan de Nova Maritime Profond Block, located in the French Exclusive Economic zone off the coast of Juan de Nova Island (Mozambique Channel), to South Atlantic Petroleum JDN SAS, a wholly owned subsidiary of South Atlantic Petroleum Limited (SAPETRO), for between US $8.0 million and US $8.5 million (depending on date of completion) subject to working capital adjustments. The effective date of the sale is July 1, 2011.

The agreement is subject to normal industry terms and conditions, including the receipt of relevant joint venture waivers or approvals and all necessary government approvals. Due to the approval process completion of the sale may not take place in 2011.

Roc Oil (Madagascar) Pty Limited, a wholly owned subsidiary of ROC, has withdrawn from its 75% interest in the Belo Profond Block, offshore Madagascar (Mozambique Channel) effective June 23, 2011. Marex MC Inc., ROC's current joint venture partner, has elected to take assignment of ROC's entire interest in Belo Profond.

ROC does not carry any value for the Mozambique Channel exploration blocks on the balance sheet.

Commenting on the sale, ROC's Chief Executive Officer, Alan Linn, stated, "The divestment of ROC's interest in the Juan de Nova Maritime Profond Block and its withdrawal from the Belo Profond Block follows the sale of its onshore Angola acreage announced in May. ROC's strategy is to generate future growth through exploration, appraisal and pre-development opportunities located in the focus region of China, South East Asia and Australasia. The deepwater and frontier exploration characteristics of the Mozambique Channel blocks are not consistent with this strategy. ROC's exit from the Mozambique Channel will allow the redeployment of capital and resources to pursue opportunities more consistent with the Company's strategy. ROC will continue to pursue the divestment of its remaining African assets, which are located offshore Equatorial Guinea and offshore Mauritania."

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Doxa to Acquire Additional Interest in Mississippian Oil Play

- Doxa to Acquire Additional Interest in Mississippian Oil Play

Friday, July 08, 2011
Doxa Energy Ltd.

Doxa has exercised its option to acquire a twenty percent (20%) leasehold interest in an existing project situated in the emerging Mississippian Oil Play ("Mississippian Oil Play") in Oklahoma. Under the terms of a previously announced Letter of Intent (see Doxa news April 27, 2011) with Dynamic Production, Inc., as amended, the Company was granted the right to acquire up to twenty percent (20%) interest in existing leases, as well as an ongoing lease acquisition program primarily in Alfalfa, Garfield, Grant and Kay Counties, Oklahoma. Dynamic Production, Inc. of Fort Worth, Texas, is managing the project and has a stated goal of acquiring approximately 18,000 acres within the play. The play is led by Chesapeake Energy Corporation, SandRidge Energy, Inc. and Eagle Energy of Oklahoma, LLC. Doxa estimates that it will ultimately acquire 3,600 net acres in this round of leasing, at a cost of approximately US $2,200,000.

John D. Harvison, President and CEO of Doxa stated, "The Mississippian Oil Play is an emerging horizontal play that has the potential to become one of the most profitable domestic onshore oil plays today, and as such has the potential of providing significant growth for Doxa as well as exceptional value for our shareholders."

According to recent public disclosures by these leading companies, this play exhibits excellent economics with single well estimated ultimate recovery projected at 300-500 MBOE and with drilling and completion costs estimated at US $3.0mil per well. In recent presentations to various professional associations over the past months, SandRidge has reiterated that it expects to achieve over 100% (i)ROR, and a net present value per well of approximately US $5.9mil, based on recent Nymex strip pricing. Based on current knowledge of well spacing disclosures from area operators, Doxa anticipates that up to 72 gross wells may ultimately be drilled on the acreage block, or 14 wells net to Doxa, based on its twenty percent (20%) participation level. The Company plans to release additional information on the proposed acquisition once details are finalized.

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Platts: OPEC Pumps 29.57 MMbpd in June

- Platts: OPEC Pumps 29.57 MMbpd in June

Friday, July 08, 2011

The Organization of the Petroleum Exporting Countries' (OPEC) pumped an average 29.57 million barrels per day (bpd) of crude oil in June, an increase of 530,000 barrels per day as Saudi Arabia, Kuwait and the United Arab Emirates (UAE) boosted production, a Platts survey of OPEC and oil industry officials and analysts showed July 8. In May, OPEC production was 29.04 million bpd.

Despite the sizable month-on-month increase, however, the June volume was lower than the 29.8 million bpd estimated for February, when the escalating unrest sweeping across North Africa and the Middle East was beginning to affect Libyan production. Increases totaling 760,000 bpd were partly offset by combined reductions of 230,000 bpd.

"These numbers show that OPEC still has a lot of work to do, because the world's economy is going into a period where demand rises, and the loss of Libyan output makes meeting that demand problematic," said John Kingston, director of news for Platts, a leading global energy, petrochemicals and metals information provider and publisher of this monthly survey report.

"What isn't certain is just how much of that hole will be filled by the release of oil from strategic stocks ordered by the International Energy Agency, and how much of the burden of supplying the market will be lifted from OPEC because of that action," Kingston said.

Saudi Arabia boosted output by 450,000 bpd to 9.5 million bpd in June, accounting for the biggest single volume increase. But participants in the survey said that not all of the increment would be exported because of higher demand from the domestic power generation sector.

Saudi production has been climbing in recent months in an attempt to compensate for lost volumes from Libya. The Saudis even created two "special" crude blends aimed at replicating the higher quality Libyan grades, although these failed to attract refiners.

At OPEC's June 8 meeting, Saudi Arabia pushed for a 1.5 million bpd output increase on top of estimated actual production of 28.8 million bpd. But Iran, which currently holds the OPEC presidency, Algeria, Angola, Ecuador, Libya and Venezuela opposed an increase and the talks broke up in disarray, leaving OPEC to issue a statement saying that "no formal decision was reached on a production agreement" and that the group would next meet on December 14 in Vienna.

The failure to reach a deal on production levels effectively renders the previous agreement, in place since January 2009 and which set a target of 24.845 million bpd for the 11 members bound by quotas, redundant.

Leaving the meeting, Saudi oil minister Ali Naimi said the kingdom and its Gulf neighbors would unilaterally boost production to ensure that markets were not left short of oil.

OPEC's own economists had forecast a big jump in demand for OPEC crude in the second half of the year, the Vienna secretariat's monthly oil market report for May projecting that the call on OPEC would rise by as much as two million bpd between the second and third quarters.

Two days after OPEC's acrimonious June 8 meeting, the secretariat published a new market report forecasting the call on OPEC crude at 30.9 million bpd in the third quarter--2.1 million bpd more than the second quarter call--and 30.5 million bpd in the fourth. This would leave a "sizable gap" between estimated production from OPEC and projected demand for its crude, the report said.

The International Energy Agency's (IEA) June 23 decision to release 60 million barrels of emergency oil stocks, however, has prompted some speculation as to whether Saudi Arabia will increase production to the extent that might have been anticipated immediately after the OPEC meeting.

The IEA said the effect of the disruption of Libyan crude exports had become more pronounced and that the normal seasonal increase in refiner demand over the summer would further exacerbate the shortfall.

The IEA said greater tightness in the oil market could undermine global economic growth, and that it would review the impact of the stock release within 30 days of June 23 to determine if a further release was necessary.

Global crude futures prices initially fell sharply after the IEA announced its stock release, but have since recovered all of that price ground.

Some participants in the survey, meanwhile, have revised their estimates of Venezuelan production following the International Energy Agency's re-evaluation of its Venezuelan supply methodology last month. This has resulted in the Platts survey's Venezuelan estimate rising to 2.35 million bpd in June from 2.23 million bpd in May.

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Novatek Boosts Production in 2Q11

- Novatek Boosts Production in 2Q11

Friday, July 08, 2011
OAO Novatek

Novatek reported preliminary production data for the second quarter and first half 2011.

Gross production for the second quarter totaled 12.13 billion cubic meters of natural gas and 1.04 million tons of liquids (gas condensate and crude oil). Gross natural gas production increased by 3.72 billion cubic meters, or by 44.2%, and gross liquids production increased by 157 thousand tons, or by 17.8%, as compared with the corresponding gross production in the second quarter 2010.

In the first half 2011, gross production for Novatek totaled 25.56 billion cubic meters of natural gas and 2.06 million tons of liquids. Natural gas production increased by 7.17 billion cubic meters, or by 39.0%, whereas gross liquids production increased by 316 thousand tons, or by 18.1% as compared with the corresponding gross production in the first half 2010.

In the second quarter and first half 2011, Novatek processed 982 and 1,956 thousand tons, respectively, of unstable gas condensate at the Purovsky Gas Condensate Processing Plant.

The Company's preliminary stable gas condensate export volumes amounted to 753 thousand tons for the second quarter 2011 as compared to 536 thousand tons in the corresponding period of 2010. At 30 June 2011, we had approximately 206 million cubic meters of natural gas and 274 thousand tons of stable gas condensate in transit or storage and recognized as inventory.

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Norse Energy Briefs 2Q Production Results

- Norse Energy Briefs 2Q Production Results

Friday, July 08, 2011
Norse Energy Corp. ASA

Norse Energy provided a second quarter 2011 production and sales update. The Company is pleased to report gross production, recorded at its field meter stations, of approximately 6,650 Mcf/d (1,185 BOE) in 2Q11, a decrease of 8% from 7,200 Mcf/d (1,282 BOE) in 1Q11. Gross production volumes, to be reported in the 2Q11 financial statements may deviate somewhat from this early estimate. Net volume will also be reported in the 2Q statements.

Two new horizontal Herkimer wells completed after the frost laws drilling pause began the initial ramp up during the past few days and a third well is currently drilling through the Herkimer with good gas shows. Current production is averaging approximately 7,100 Mcf/d (1,264 BOE). In addition, the company has approximately 1,400 Mcf/d (249 BOE) of gas shut-in pending installation of in-field pipeline connections and pipeline to our new Dominion Transmission interconnection and meter station.

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Faroe Clinches Credit Facilities for Future Growth Plans

- Faroe Clinches Credit Facilities for Future Growth Plans

Friday, July 08, 201
Faroe Petroleum plc

Faroe announced the signing of two new banking credit facilities, which provide substantial additional finance to underpin the Company's growth plans.

The two facilities are:
  • NOK 1 billion (approx. £110 million) Norway Exploration Financing Facility, of which NOK 500 million (approx. £55 million) is initially committed by the participating banks, and a further NOK 500 million is available on an uncommitted "accordion" basis. Faroe Petroleum currently has approximately 20 exploration licenses offshore Norway and expects to drill 12 exploration and appraisal wells in Norway by the end of 2013. This facility is designed to have the capability of financing the majority of Faroe's exploration and appraisal costs on the Norwegian Continental Shelf. The facility will mature on 31 December 2014.
  • US $250 million (approx. £156 million) Reserve Base Lending Facility, of which US $125 million (approx. £78 million) is initially committed by the banks, and a further US $125 million is available on an uncommitted "accordion'' basis. This facility is available to finance approved capital expenditure, operating costs and acquisitions. The facility will mature on June 30, 2016, with an amortizing repayment profile from June 2013.

Six participating banks have been selected and brought together as one group to provide the two facilities pro rata. The participating banks are BNP Paribas and Lloyds TSB Bank plc, as Mandated Lead Arrangers, together with Commonwealth Bank of Australia, DnB NOR Bank ASA, Royal Bank of Scotland plc and SEB. BNP Paribas are also acting as Facility Agent and Security Trustee under both facilities, with Lloyds TSB Bank plc acting as Technical and Modelling Bank under the Reserve Base Lending facility.

At 1 July 2011 the Group had cash balances of approximately £84.2m and, together with the cash flow from its existing producing assets, which now include the Blane oil field, and the forthcoming production income from the Brage, Njord, Ringhorne East and Jotun fields in Norway, the Group is well financed.

Commenting on the new facilities, Iain Lanaghan, Finance Director, said, "We are delighted to have concluded this financing exercise, and to have received such strong support from our banks, all of whom took part in a competitive process to participate in these facilities. The new facilities provide us with substantial new funding to support the growth of the Group."

"With an exciting drilling program ahead, of which the majority of wells will be drilled in Norway, the new Norway Exploration Financing Facility provides us with a powerful and efficient means of maximizing our equity participation for minimum cost. The combination of our new Reserve Base Lending facility and strong cash flow from our significantly enhanced portfolio of producing assets ensures that Faroe Petroleum is well funded for investment growth in our core areas."

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FET Expands Capabilities with SVP Products Purchase

- FET Expands Capabilities with SVP Products Purchase

Friday, July 08, 2011
Forum Energy Technologies Inc.

Forum Energy Technologies (FET) announced the acquisition of SVP Products. The company sells Forum's Wood Flowline and Phoinix product lines, including swivels, plug valves, relief valves, chokes, pup joints and manifold trailers from three facilities in North, East and West Texas. SVP also performs critical repair and recertification services of these products from its locations as well as from its fleet of mobile units. SVP's customer relationships and service capabilities strengthen Forum's Production and Infrastructure division, which provides completion products, engineered process and production systems, measurement and monitoring systems, construction and field services, and a full range of valve and other flow control products. Terms of the transaction were not disclosed.

Cris Gaut, FET's chairman and chief executive officer, explained the importance of the acquisition. "SVP significantly expands the sales channel and service capabilities for our completion products offering and complements our Wood Flowline and Phoinix completion product offerings. SVP has an excellent reputation in the marketplace for customer service, knowledge and dependability. We are very pleased to partner with Jay Nabors, SVP's founder, and the team at SVP. Our goal is to help expand SVP's business to serve clients across the North American shale plays."

Jay Nabors, President of SVP, commented on becoming part of Forum. "Forum is building a great company with a compelling offering to our pressure pumping customers. We are pleased to become part of an energetic, growing organization."

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BMT Group Appoints Risk Management Specialist

- BMT Group Appoints Risk Management Specialist

Friday, July 08, 2011
BMT Group Ltd.

BMT Group announced the appointment of Jayne Matthews as Manager, Operational Risk. Jayne will be responsible for leading and managing risk and risk support activities, as well as the internal audits of BMT Group and BMT subsidiary companies. She will also take charge of controlling BMT's unique Sustainability Management System (SuMS).

Jayne has over 20 years' experience working in quality management. She also holds a BA in Biochemistry, PHD in Biological Sciences, Post Graduate Certificate in Quality Management, membership of the Chartered Quality Institute and is a Chartered Quality Professional.

Jayne joins BMT Group having run her own management consultancy business for a number of years, specializing in the development of management systems which focused on both quality and the environment.

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Nonfarm Payrolls Rose By 18,000 In June, Missing Consensus Estimates For A Rise Of 125,000

- Nonfarm Payrolls Rose By 18,000 In June, Missing Consensus Estimates For A Rise Of 125,000

Jul 8, 2011

The U.S. economy added jobs at a slower pace in June than in May, suggesting that the slowdown in the economy might be longer-lasting and more severe than previously expected.

Nonfarm payrolls rose by 18,000 in June, below consensus estimates for a 125,000 gain.

Job gains in May were revised down to 25,000 in May from the initial estimate of 54,000.

The unemployment rate rose to 9.2% in June from 9.1% in May, reaching the highest level since December. Economists had expected the unemployment rate to remain steady.

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Eni Takes Risk; Develops Nikaitchuq Field

- Eni Takes Risk; Develops Nikaitchuq Field

Friday, July 08, 2011
Rigzone Staff
by Jaime Kammerzell

Eni began oil production at the Nikaitchuq field in February 2011. The field is located in the Beaufort Sea off the North Slope of Alaska in 3 meters of water. It is also Eni's first operated Arctic project.

Eni owns 100% interest in the Nikaitchuq field, which is a risk for the operator. The Nikaitchuq field is a marginally economic field with cold viscous crude oil. The reservoirs are about 4,000 ft TVD with long step outs. However, Eni also reaps all the benefits of its hard work. The operator estimates recoverable reserves at 180 MMbbl and expects Nikaitchuq to produce for over 30 years with peak production of 28,000 b/d. Total investment will amount to about $1.45 billion.

Field Development

In January 2004, Kerr-McGee drilled the Nikaitchuq No. 1 vertical well, which tested more than 960 b/d of 38 degree API crude oil from the Sag River Formation. Kerr-McGee then drilled the Nikaitchuq No.2 well 9,000 ft southeast of the No.1 well in March 2004 and successfully extended the accumulation down dip.

Kerr-McGee operated the NW Milne Point field with a 70% interest in 2004. Armstrong Alaska, Inc. held the remaining 30% interest.

Nearly a year later, Kerr-McGee tested the Schrader Bluff reservoir at the Nikaitchuq No. 4 horizontal appraisal well. The well tested at rates of up to 1,200 b/d and the oil tested at 16 to 17 degrees API. Kerr-McGee estimated the discovery to hold 100-200 MMboe.

Eni, which previously bought out Armstrong Alaska's 30% interest, bought out Kerr-McGee's operatorship and 70% interest in the Nikaitchuq field in April 2007.

The development plan called for 71 wells, including oil producers, water injectors, and water source/disposal wells. Eni planned to drill one-third of the wells from shore and the remainder from an artificial island to be constructed about 2.8 mi from shore in Phase 2 of the field's development.

Field development started Jan. 25, 2008. Though the operator slowed drilling and development operations in March 2009, all wells should be completed by 2014.

Eni is drilling the Nikaitchuq wells horizontally through thin layers of oil-bearing rocks. They are at 4,000 ft VD and have a horizontal reach of up to 20,000 ft. The produced oil is viscous and thick. So to speed the flow, Eni injects water from the Ivishak formation and produced water. The Ivishak water is about 195 degrees, which when mixed with the crude (about 87 degrees) will help it move through the subsea pipeline to the processing facility quicker.

Eni contracted an offshore rig for the offshore drilling pad in 3Q 2010. The offshore wells require electric submersible pumps, which are housed on the drilling pad.

Eni designed the onshore processing plant at Oliktok Point to handle sand and water as well as crude. Two process modules built in Louisiana weigh about 4,000 tons each. They will work with 22 smaller module units, built in Alaska, to treat up to 40,000 b/d of heavy crude with sand and up to 120,000 b/d of water.

A 3.8-mile-long under seabed pipeline bundle, which is the heaviest bundle ever installed in the Arctic, connects the offshore facility to the onshore facilities. Eni contracted INTECSEA to perform the Pre-FEED, FEED, detail design and construction support on the subsea flowlines. The flow line and utility bundle connect to the onshore facility at Oliktok Point. The pipleline bundle was installed in 2008 and includes an outgoing pipe that takes water to the drilling pad, a diesel line, and cables. Hot water flows out to the drilling pad through a concrete-coated pipe.

Production flowline bundle included:
  • 3 phase PIP production flow line 18-inch x 14-inch
  • 12-inch water injection Flow line (2-inch insulation/1-inch concrete)
  • 6-inch spare Flow line (single wall)
  • 4-inch x 2-inch PIP diesel line
  • Fiber optic cable with bundle
  • Separate fiber optic and power cable bundle
Nikaitchuq Field

Alaskan Future

In 2008, Eni won 18 exploration leases in northern offshore Alaska in Lease Sale 193.

The blocks are in the Chukchi Sea, in 30 to 50 m of water. According to the company, this area possesses a high exploration potential recognized by several oil majors who competed for the blocks. Eni jointly owns 14 of the leases with Statoil-Hydro and wholly owns four of the leases. These leases position Eni as a major player in Alaska.

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Va. Senators Push Offshore Drilling

- Va. Senators Push Offshore Drilling

Friday, July 08, 2011
Daily Press, Newport News, Va.
by Cory Nealon

U.S. Sens. Jim Webb and Mark Warner, both Virginia Democrats, introduced legislation to compel the federal government to open Virginia's coast to oil and natural gas exploration.

In a joint statement issued Wednesday, the senators said the United States can reduce its reliance on foreign oil and cut trade deficits by tapping into domestic energy reserves.

"We must pursue robust policies that include the expansion of our domestic energy resources in a safe and secure manner even as we develop conservation, renewable and efficient energy measures," Webb said.

The bill comes seven weeks after Democrat senators rejected similar legislation approved by the Republican-led House of Representatives. Unlike the failed GOP bill, Webb and Warner's proposal would direct to Virginia 50 percent of the revenues generated from offshore drilling.

Neither Webb nor Warner estimated how much money Virginia might receive or how many jobs the industry might create.

Citing data from the Southeast Energy Alliance, Gov. Bob McDonnell previously said that 80 percent of Virginia's share of revenues would equal $132 million annually. According to a 2010 state law, that money would be directed to transportation projects while the remaining 20 percent would be used to promote offshore wind power.

Like McDonnell previously, the senators called on the Department of Interior to expand the 2.9-million acres -- a tract slightly larger than Delaware -- under consideration for drilling. Located 50 miles off Virginia's shore, the area could provide 6.5 days worth of oil and 18 days of natural gas for the U.S., according to decades old seismic data.

The senators also directed the Interior Department to begin leasing sites off the coast as early as 2012. The plan may face resistance from inland lawmakers, such as Sen. Jeff Bingaman, D-New Mexico, who previously fought efforts to give Virginia a share of drilling revenues.

Virginia was set to become the first Atlantic coast state to allow offshore drilling but the Deepwater Horizon accident, which killed 11 and sent a deluge of oil into the gulf last year, prompted the Obama administration to shelve the plan.

Environmental activists, citing the growing demand for oil in China, India, and other countries, said offshore drilling will do little to bring down high gasoline prices. They said the U.S. should invest in renewable energy sources.

"People still remember the disaster in the gulf coast just last year and do not want to see a similar tragedy visited upon Virginia Beach," Glen Besa, director of Sierra Club's Virginia chapter, said in a statement.

Both the Navy and NASA previously expressed concerns about the proposed drilling area. The Navy conducts training exercises off the coast while NASA launches rockets from Wallops Flight Facility on the Eastern Shore.

Webb, Warner, and other politicians say the offshore drilling industry and associated federal agencies co can co-exist.

Copyright (c) 2011, Daily Press, Newport News, Va.

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NPD Kicks Off Seismic Survey in Barents Sea

- NPD Kicks Off Seismic Survey in Barents Sea

Friday, July 08, 2011
Norwegian Petroleum Directorate

Just after midnight on July 8, the Norwegian Petroleum Directorate (NPD) started acquisition of seismic data in Norway's new maritime zone in the Barents Sea.

PGS will be conducting the acquisition on behalf of the NPD using the vessel R.V. Harrier Explorer.

This is the first time this area will be systematically mapped. The seismic acquisition activity will continue until the first half of September 2011, with a possible extension of a couple of weeks. The acquisition will be 2D seismic, which means that one long streamer – 8100 meters – is fastened to the vessel. The seismic lines have variable spacing – from 5 to 15 kilometers.

NPD geophysicist and project coordinator Lars Jensen tells us that the sea area to be mapped is quite large. He says that the NPD plans to complete acquisition of seismic data next summer so that the results will be ready in the spring of 2013.

The data acquisition will take place using PGS' GeoStreamer technology. This is a new technology for seismic acquisition, characterized in part by the fact that the streamer is towed somewhat deeper in the water than is the case in conventional seismic acquisition. This means that the cable can withstand higher waves, making the acquisition activity less weather-dependent and thus more efficient.

The Harrier Explorer is coming from Jan Mayen, where the vessel has been shooting seismic for the NPD for about 3.5 weeks. So far, Lars Jensen is pleased with the GeoStreamer technology, and says that the acquisition activity has gone very well and with no weather delays.

The acquisition will start with five SSE-NNW lines. The plan is then to acquire a few lines in the north-south direction in order to complete the southernmost part of the area first.

Daily reports will be issued from Vardø radio stating the position of the seismic vessel for the next 24 hours.

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Bowleven Gets Exploratin Extension at Etinde Permit

- Bowleven Gets Exploratin Extension at Etinde Permit

Friday, July 08, 2011
BowLeven plc

Bowleven announced the following update on activities on the Etinde Permit, offshore Cameroon.

  • One year extension to Etinde PSC exploration phase
  • Cameroon LNG project progressing; gas sales term sheet signed by Etinde joint venture and SNH/GDF Suez
  • Sapele-2 testing program ongoing; update now expected in around two weeks

Etinde PSC Extension

In accordance with the provisions of the Etinde PSC, Ministerial approval has been received from the Government of Cameroon for a one year extension to the exploration phase of the Etinde PSC (to December 21, 2012). The Etinde Permit comprises blocks MLHP-5, 6 and 7 and planning for continuing exploration and appraisal activities during 2012 across the Etinde Permit is already underway.

Cameroon LNG

The GDF Suez and SNH initiative to advance the monetization of the substantial undeveloped gas resource within Cameroon via an in-country gas aggregation scheme to supply an LNG facility is progressing. On June 30, 2011, GDF Suez, SNH and the Etinde joint venture signed a term sheet that includes the principles intended to govern the sale and purchase of gas to the proposed LNG facility.

Sapele-2 testing program

The Sapele-2 well was drilled to appraise both the Lower and Deep Omicron discoveries and a testing program is ongoing. Mechanical difficulties, which have now been resolved, were encountered during testing activities and consequently results are now expected in around two weeks.

Kevin Hart, Chief Executive of Bowleven, commented, "We are delighted with progress made in securing an exploration extension for Etinde and in agreeing outline terms for the sale of gas to the proposed Cameroon LNG facility. The Etinde PSC extension allows us to maintain momentum in pursuing our dual strategy of targeting high impact exploration in Cameroon whilst also focusing on converting resources to reserves. We eagerly await the test results from Deep and Lower Omicron at Sapele-2."

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TGS to Start Seismic Acquisition in Russian Arctic Sea

- TGS to Start Seismic Acquisition in Russian Arctic Sea

Friday, July 08, 2011
TGS-NOPEC Geophysical Co. ASA

TGS will commence acquisition of a new 7,700 km 2D survey in the Russian Arctic Sea. Data acquisition will begin in early August with 4,500 km in the Laptev Sea before the vessel moves to the East Siberian Sea to acquire an additional 3,200 km. The survey is in partnership with Dalmornefte Geophysica Yuzhno-Sakhalinsk (DMNG) under the 2D Cooperation Agreement previously announced in a press release on January 4, 2011.

The seismic data will be acquired by M/V Akademik Fersman and will be completed in early 4Q 2011. Data processing from the new acquisition will be performed by DMNG and available to clients from late 1Q 2012. The survey is supported by industry funding.

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Galoc JV to Upgrade FPSO

- Galoc JV to Upgrade FPSO

Friday, July 08, 2011
Otto Energy Ltd.
by SubseaIQ

Galoc Production Company (GPC) reported an update regarding an upgrade of the mooring and riser system for the FPSO Rubicon Intrepid operating at the Galoc field.

The new turret mooring system is designed to substantially increase the reliability and uptime of the FPSO and is a crucial component to enable the Galoc Joint Venture to move ahead with Phase 2 development.

Otto owns 31.38% of GPC, which has a participating interest of 59.84473% in the Galoc field.

Otto Chief Financial Officer and Acting CEO Matthew Allen said, "The upgrade of the FPSO system will substantially improve the uptime of the Galoc field, which is an important revenue-generator for Otto. In addition, it provides a vital platform from which to embark on our planned Phase 2 development of the field, which we expect to approve early next year."

"Engineering work on the new system is already well underway, and we look forward to the upgraded FPSO returning to the Galoc field before the end of 2011."

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Cooper Spuds Wheatons-1 Well

- Cooper Spuds Wheatons-1 Well

Friday, July 08, 2011
Cooper Energy Ltd.

Cooper reported that the Wheatons-1 exploration well in PEL92 spudded at 1100 hours Thursday, July 7, 2011. The surface hole has been drilled to 678 meters and the current operation is making preparations to run the 9 5/8" casing.

The well's primary objective is the Namur Sandstone with secondary objectives in the Birkhead, Hutton and Poolowanna Formations. Wheatons-1 is located 10 km northeast of the Parsons oil field and 6.4 km northwest of the Callawonga oil field. The well will be drilled to a total depth of about 1,860 meters and is expected to take about 10 days to drill and evaluate.

The primary objective Namur Sandstone, which is the oil reservoir in the nearby oil fields, is estimated to contain 0.551 million barrels of Prospective Resources (P50). The deeper formations would be expected to add to this estimate if they result in discovery.

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Petrobras Confirms Commercial Potential of Lula Well

- Petrobras Confirms Commercial Potential of Lula Well

Friday, July 08, 2011
by SubseaIQ

Petrobras announced that well 9-RJS-660, located in Lula field, registered the Company's highest volume of production for May, reaching an average production of 28,436 barrels of oil per day (bpd). This well is the first to produce on a commercial basis in the Santos Basin pre-salt.

This result confirms the high potential of Brazil's pre-salt reservoirs, and, if we consider oil and natural gas production, the volume reached 36,322 barrels of oil equivalent per day (boed).

The well is interconnected to FPSO Cidade de Angra dos Reis and is the first of six production wells to be connected to the FPSO. Besides this well, a gas injection well is already connected to the platform, which, since the beginning of April 2011, reinjects produced gas into the reservoir through 9-RJS-660. Two injection wells are also planned, of which one will be of water, and the other will alternate injection of water and gas.

The FPSO Cidade de Angra dos Reis is expected to be producing around 100 thousand bpd throughout 2012.

The consortium developing the production in block BMS-11, where Lula field is located, is composed of Petrobras, which is the operator, with a 65% stake, BG Group, with 25%, and Galp Energia, with 10%.

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Total to Fast-Track North Sea Atla Field

- Total to Fast-Track North Sea Atla Field

Friday, July 08, 2011
Det norske oljeselskap ASA

Total E&P Norge has, on behalf of the partnership in license 102C, submitted a plan for development and operation (PDO) for Atla to the authorities. In addition to Total which is the operator, the partnership in 102C consists of Petoro, Centrica and Det norske, with a 10 percent interest.

The discovery on Atla (formerly called David) was made in oktober 2010. Gas-condensate was proven in the Brent formation. Comprehensive tests and sampling was carried out. According to plan, the exploration well from 2010 will also be used as a production well, which has great significance for the projects profitability. Total investments are estimated to 1.4 billion NOK ($258.7 million).

"Atla is a prospect we have known about for a long time, in which we succeeded to enter, and one we have promoted in the drilling schedule. We are very pleased with the work Total has put down in this small-scale discovery, as the operator."

"The license managed to quickly develop a good solution for development. This is the first development project we, Det norske, participate in. It also represents the beginning of a series of development projects in the coming years, which will give us a considerable production," said Erik Haugane.

Atla is situated in the central part of the North Sea, 20 kilometers northeast of the Heimdal Field. The discovery will be produced using a subsea installation connecting with an existing pipeline between Heimdal and Skirne. Total is also operator of the Skirne Field.

Recoverable reserves are estimated to be 12 million barrels of oil equivalents.

Licensees in 102C are:
  • Total E&P Norge AS (40 %)
  • Petoro AS (30 %)
  • Centrica Resources (Norge) AS (20 %)
  • Det norske (10 %)

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Chevron, Apache, PTTEP Awarded Australia Exploration Permits

- Chevron, Apache, PTTEP Awarded Australia Exploration Permits

by Ross Kelly
Friday, July 08, 2011
Dow Jones Newswires

Chevron, Apache and Thailand's PTT Exploration & Production (PTTEP) are among six companies that have been awarded new offshore oil and gas exploration permits by Australia's government.

Resources and Energy Minister Martin Ferguson on Friday estimated that exploration work on the six permits in waters off Western Australia and South Australia states will have a combined value of nearly A$137 million over three years, with further investment possible depending on exploration success.

Special conditions have been placed on PTTEP, which was responsible for the Montara oil spill offshore northern Australia in 2009. These include lodging governance processes with the regulator prior to drilling, preparing a spill mitigation report, and being open to a peer review of drilling operations at the regulator's discretion.

Other companies to win permits include MEO Australia and little-known Australian firms Flow Energy Ltd. and Bight Petroleum Corp.

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

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Transocean: Rig Off Ghana Remains Stable after Taking On Water

- Transocean: Rig Off Ghana Remains Stable after Taking On Water

Friday, July 08, 2011
Dow Jones Newswires
by Ryan Dezember

Transocean said Thursday that the deep-water drilling rig off Ghana that was evacuated Wednesday after it took on water remains stable.

The company is working on unmooring the Transocean Marianas, which is anchored some 46 miles offshore, and plans to tow it to sheltered water to inspect damage, spokesman Guy Cantwell said.

It will likely be at least a week before a full damage assessment can be made, Cantwell said.

There have been no injuries and a skeleton crew remain aboard the vessel, Cantwell said. And because the rig was not drilling when it began taking on water, there is no risk of an oil spill.

Transocean owned the Deepwater Horizon, which exploded last year while drilling a well for BP in the Gulf of Mexico, killing 11 and touching off the worst offshore oil spill in U.S. history. Since then Transocean has faced scrutiny over its safety procedures and maintenance of the world's largest offshore drilling fleet.

More than 100 workers were evacuated from the Marianas on Wednesday when it was discovered to have taken on water. A semisubmersible rig, the Marianas floats on large ballast tanks, or pontoons, which are filled with water for stability during drilling and emptied to ease transport. It was built in 1976 and upgraded to drill in depths up to 7,000 feet in 1998.

The rig had been drilling for ENI and was in the process of being moved to drill an exploration well for Kosmos Energy and partners that include Anadarko, Tullow Oil and Ghana's national oil company.

The Marianas was expected to arrive on site next week and Kosmos on Thursday asked Ghana for more time to begin drilling the prospect while it searches for a new rig.

The loss of income from the Marianas, which earned $450,000 a day on its contract with ENI, will likely trim Transocean's earnings by 15 cents per share this year, analysts with Tudor, Pickering, Holt & Co. said in a client note.

"As of now we are assuming rig does not work for rest of 2011," the Houston-based analysts said.

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

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Lundin Hits Gas Pay in Barents Sea

- Lundin Hits Gas Pay in Barents Sea

Friday, July 08, 2011
Lundin Petroleum AB

Lundin, operator of production license 438, has completed well 7120/2-3S on the Skalle prospect as a gas discovery. A comprehensive logging and coring program has been acquired.

The well is situated approximately 25 kilometers north of the Snohvit Field in the south western part of the Barents Sea. The primary target for the well was to prove hydrocarbons in reservoir rocks from both the Cretaceous and the Jurassic age. Gas was proven in three separate zones.

The initial gross contingent resource range for the Skalle discovery is estimated at between 88 to 280 billion cubic feet (bcf) (15 to 50 million barrels of oil equivalent (MMboe)). There is a potential for a deeper oil leg in the lower Cretaceous reservoir of Skalle and an upside potential in Skalle substructures.

The results of the well will be further analyzed to determine the appraisal program for the discovery.

Ashley Heppenstall, President and CEO of Lundin Petroleum commented, "The Skalle gas discovery is close to existing infrastructure with upside potential both in nearby substructures and other prospects on the license. We remain confident regarding the oil prospectivity of Lundin Petroleum's Barents Sea acreage."

The well 7120/2-3S is the first exploration well in PL438 and was drilled to a vertical depth of approximately 2,600 meters below sea level.

Well 7120/2-3S was drilled using the rig Transocean Leader, which now will move to PL265 in the Greater Luno Area in the Norwegian North Sea to drill the Aldous Major South exploration well 16/2-8. Statoil ASA is the operator of PL265 and Lundin Petroleum has a 10 percent interest.

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