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Oil and Gas Energy News Update

Wednesday, July 13, 2011

Oil & Gas Post - All News Report for Wednesday, July 13, 2011

Wednesday, July 13, 2011

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Commodity Corner: Oil Gets Boost from EIA, Bernanke

- Commodity Corner: Oil Gets Boost from EIA, Bernanke

Wednesday, July 13, 2011
Rigzone Staff
y Matthew V. Veazey

Oil futures received a boost Wednesday from the latest inventory data from the U.S. Energy Information Administration as well as testimony by Federal Reserve Chairman Ben Bernanke. The WTI benchmark on the New York Mercantile Exchange gained 62 cents to settle at $98.05 a barrel. Brent futures, meanwhile, rose $1.03 to end the day at $118.78 a barrel.

The EIA reported that U.S. commercial crude oil inventories declined sharply last week. According to the agency, oil stocks fell by 0.9 percent to 355.5 million barrels. The 3.1 million barrel week-on-week decline exceeded analysts' expectations. A panel of analysts surveyed by Platts, for instance, predicted a relatively modest 2.1 million-barrel draw.

Testifying before a U.S. House panel Wednesday, Bernanke hinted that the central bank may initiate a third attempt to stimulate the economy by printing more money to buy Treasury bonds. This "quantitative easing" monetary policy approach is designed to improve liquidity in the economy by enticing banks to make more loans to businesses and consumers. A third round of quantitative easing, or "QE3," would be bullish for oil because the Fed would weaken the value of the U.S. dollar by making money more widely available to banks. For investors holding currencies other than the greenback, dollar-denominated crude oil would become a better value.

The WTI peaked at $99.21 and bottomed out at $96.53 while Brent futures fluctuated from $117.01 to $119.50.

Front-month natural gas gained seven cents to settle at $4.40 per thousand cubic feet. Sizzling temperatures extending from the Midwest to the East Coast, with more to come beginning this weekend after a brief respite, have boosted cooling demand.

The intraday range for natural gas during midweek trading was $4.31 to $4.42.

Gasoline futures rose by a nickel to end the day at $3.15 a gallon. The commodity traded within a range from $3.08 to $3.175.

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DEC Chief Defends Plan For Fracking

- DEC Chief Defends Plan For Fracking

Wednesday, July 13, 2011
The Buffalo News, N.Y.
by David Robinson

State Environmental Conservation Commissioner Joseph Martens says he doesn't see a double standard in new natural gas drilling recommendations that would bar a controversial practice in parts of the state and not others.

His department's recommendations for regulating the natural gas drilling technique known as hydraulic fracturing would bar the practice in the Syracuse and New York City watersheds, but would open about 85 percent of the gas-rich Marcellus Shale region to drillers.

Martin, in a meeting Tuesday with reporters and editors of The Buffalo News, said the New York City and Syracuse watersheds were singled out as deserving special protection because they are the only supplies of unfiltered drinking water in the state.

A surge in natural gas drilling, along with the increased truck traffic that comes with it, potentially could jeopardize the ability to tap those watersheds as drinking water supplies that do not require filtering.

If that happened, the municipalities that rely on those watersheds for drinking water could be forced to build costly water treatment plants that, in the case of New York City, could carry a tab as high as $9 billion, Martens said.

Martens said the Department of Environmental Conservation's recommendations protect water supplies elsewhere in the state by barring drilling within 500 feet of the boundary of primary aquifers or private wells. Drilling also would be prohibited within 2,000 feet of a public drinking water supply.

"Our regulations are stricter than any other state," Martens said.

"We have very ambitious setbacks from all water supplies," he said. "I would say we've taken a cautionary and prudent approach."

But State Sen. Daniel Carlucci, DClarkstown, questioned why what's good for a large swath of upstate New

York is not allowed in the two watershed areas.

"It does, however, raise a troubling paradox," Carlucci wrote this week in a letter to the DEC. "If the threat of potential pollution is too great to subject the New York City and Syracuse watersheds to, why would it then be acceptable to subject water sources in the rest of the state to the same potential contamination?"

The recommendations also would ban high-volume hydraulic fracturing on state-owned land, including parks, forests and wildlife-management areas, and in flood plains.

Kate Sinding of the Natural Resources Defense Council noted that the DEC recommendations "inexplicably" would allow individual landowners to waive the 500-foot buffer around private drinking water wells. "They should not put landowners in a position of balancing potential economic gain against risking their health and safety," she said.

Drilling advocates contend the prolific horizontal wells could provide a major economic boost to upstate New York, creating thousands of jobs and helping to hold down natural gas prices by bolstering supplies.

More than 3,000 horizontal wells have been drilled and hydraulically fractured in the Marcellus Shale area of Pennsylvania, but none in New York because of a moratorium imposed by the state while the DEC developed new rules.

Horizontal wells go straight down for about a mile, then gradually turn at almost a 90- degree angle and continue for a half mile to nearly a mile horizontally, through the Marcellus Shale.

Drillers then inject millions of gallons of water, chemically treated to kill bacteria and prevent scale buildup up on pipes, into the well at high pressure to produce tiny cracks in the rock to free the gas. They also use small explosive charges.

The technique allows drillers to tap into much larger supplies of gas from a single drill site, which can have as many as six wells extending out in different directions. A single well can cost more than $4 million, but successful wells can produce gas at very high rates.

Opponents contend that the process, which uses millions of gallons of water mixed with chemicals and sand, could contaminate drinking water supplies and cause other environmental damage through increased truck traffic and the construction of roads and pipelines through rural areas.

Any drilling boom, however, probably would miss most of Western New York, with the likely exception of the easternmost portion of Allegany County. Unlike the layer across much of Central New York, geologists said the Marcellus Shale throughout most of the western part of the state is too thin and shallow to hold vast quantities of natural gas. Instead, most of the drilling is expected to focus on the portions of the Southern Tier from Steuben County eastward to Delaware County.

Copyright (c) 2011, The Buffalo News, N.Y.

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Shell Executive Is Optimistic about Alaska Drilling

- Shell Executive Is Optimistic about Alaska Drilling

Wednesday, July 13, 2011
Houston Chronicle
by Jennifer A. Dlouhy

The Obama administration moved Tuesday to synchronize work by more than a dozen agencies with roles in vetting drilling in Alaska, as a top Shell executive said he is optimistic the company will be able to drill there next summer.

The administration's move seeks to quell complaints by oil companies and their advocates in Congress who say the permitting process is broken and has stalled promising exploration projects in Alaska and nearby waters.

The administration launched a working group, headed by Deputy Interior Secretary David Hayes, that will bring together seven Cabinet-level departments and other agencies. Hayes said the panel would "facilitate safe and responsible development in Alaska."

"We are committed to proceed in a balanced, science-driven way that addresses the needs of industry, of the environment and of local communities," he said during a forum on Arctic drilling sponsored Tuesday by the Center for Strategic and International Studies.

The new government working group won't replace the host of state and federal permits that oil companies must secure before they begin drilling in the region. And Hayes rejected the notion that the move constituted "streamlining" of environmental safeguards or other requirements that govern oil and gas exploration in Alaska.

But, at the same time, he said, "this is a one-stop shop for coordination of permitting. This group will ensure that there is good coordination in that regard."

'A positive step'

Sen. Lisa Murkowski, R-Alaska, called the administration's move "a positive step."

"A broken federal permitting process has for years held up responsible development of our offshore oil and natural gas resources in Alaska," she said. Murkowski added that she hopes the panel is "successful at closing what has been an endless loop of approvals, appeals and delays."

Sen. Mark Begich, D-Alaska, said the group could go a long way to "untying the procedural knots that have stalled development" in offshore Alaska and the National Petroleum Reserve.

One of those delayed projects is Shell Oil Co.'s plan to drill exploratory wells in the Beaufort and Chukchi seas. The company had hoped to launch work on its first Beaufort well after ice cleared this summer but scrapped the plans in February, after a federal Environmental Appeals Board rejected two essential air permits issued by the Environmental Protection Agency.

The EPA just issued new draft air quality permits for Shell's proposed Arctic drilling, and EPA officials say they are confident that the documents will withstand the legal challenges that derailed last year's permits.

Shell Alaska Vice President Pete Slaiby said he too is optimistic. He predicted the company will have working air quality permits by mid-October and then will prevail in any legal challenges before the appeals board.

Shell is asking federal regulators for permission to drill up to five wells in both the Beaufort and Chukchi seas during next year's three-month drilling season, with those projects sharing some of the same assets and infrastructure. If federal regulators don't approve drilling in both seas, the company might not pursue either project next year, Slaiby said, because it wants the efficiencies of doing both at once.

Although the Bureau of Ocean Energy Management, Regulation and Enforcement is now reviewing Shell's proposed Beaufort exploration plan, its separate drilling blueprint for the Chukchi Sea is on hold, pending the outcome of a court-mandated review of the government's sale of drilling leases where that work is planned.

The Interior Department is facing a court-ordered Oct. 3 deadline to decide whether to affirm that lease sale, after updating environmental assessments. The government cannot approve drilling on those leases unless the sale is affirmed.

Warning from activists

Environmentalists have warned that it could be difficult to clean up any oil spilled in slushy Arctic waters. Cold, icy conditions also mean it could take far longer than in the much warmer Gulf for spilled oil to naturally break up in the water. And they insist the risks are too great for animals in the region as well as the native communities that live off those resources.

In response, Shell has bolstered its Arctic drilling proposals with new emergency equipment and plans for responding to a blowout. For instance, the company would use two drillships in the region, ensuring one would be on hand to drill a relief well if necessary. Shell also has committed to developing a containment system that could be deployed to trap and siphon off gushing crude.

Copyright (c) 2011, Houston Chronicle

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American Standard Kicks Off Permian Basin Drilling Program

- American Standard Kicks Off Permian Basin Drilling Program

Wednesday, July 13, 2011
American Standard Energy Corp.

American Standard has commenced a 10 net well drilling program in Andrews County, Texas.

ASEN plans to drill the University Andrews 42 #2 well to the Devonian formation and then subsequent wells will be drilled to the Strawn formation and completed in the Strawn, Wolfcamp, Spraberry and Lower Clearfork formations. The Company will own 100% working interests in all 10 wells.

The Company anticipates the Viking Rig #20 to move in the latter part of this week to the University Andrews 42 #2 well to begin this drilling program.

ASEN has engaged Cambrian Management, Ltd. ("Cambrian") to oversee the drilling program and completion of these wells. Cambrian is widely recognized in the industry for its track record for highly successful drilling and completion of Wolfberry wells in the Permian Basin over the past 10 years.

Upon completion, ASEN's wells will be turned over to our affiliated partner XOG Operating for ongoing operations. Utilizing this relationship for our operations will provide cost control and reliable operations with a seasoned operator with 30 years of experience operating in the Permian Basin of west Texas.

ASEN currently produces over 800 barrels of oil equivalent per day (BOEPD) from 27.67 net wells in the Permian, Bakken and Eagle Ford combined. This initial drilling program is expected to increase our net well count by more than 35%, and is expected to increase daily production by more than 100% in the first quarter 2012, to a projected cumulative production of approximately 2,000 BOEPD.

Scott Feldhacker, CEO of ASEN commented on the potential impact of this drilling program on the Company's growth outlook. "We are optimistic that these 10 wells will have a significant impact on the growth prospects for ASEN. We hold a high number of potential drilling sites in the Permian today with 100% working interests, which allow ASEN to control its growth outlook and capital budget expenditures."

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Petrolympic IDs Oil at Chittam Ranch Well

- Petrolympic IDs Oil at Chittam Ranch Well

Wednesday, July 13, 2011
Petrolympic Ltd.

Petrolympic provided an update on the drilling of its appraisal well 80-2v on the Chittam Ranch property. The company has completed logging and taking Side Wall cores from the 80-2V. These cores have been sent to the lab and the initial analysis has revealed oil showings in the core from at least three oil bearing horizons including the Georgetown. Casing has been set and cemented to Target Depth. Given the results to date, the Company has decided to complete in the Georgetown and has already perforated two zones with plans to perforate additional zones. Petrolympic is currently awaiting arrival of the Stimulation crew, scheduled to be on site before the end of July. Petrolympic expects to announce production rates following completion of the well.

"We are very encouraged by the core that has been sent to the lab for analysis and we are eager to begin completion of the well," said CEO Mendel Ekstein. "The delay in the obtaining the Stimulation crew is indicative of the rapid growth of drilling activity in area. We continue to be very pleased with our decision to diversify our resource base and expand into the United States. Our goal now is to quickly move into the production phase of this project."

During drilling of the well, Petrolympic penetrated 7 oil and gas bearing horizons with the initial target horizon for production being the Georgetown. The Chitham Ranch well is being drilled by Petrolympic as part of an earn in agreement with Texas HBP and Shell Western E&P, pursuant to which Petrolympic has the right to earn a 50% working interest (yielding a 37.5% net revenue interest) in the Chittim Ranch property

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Force Fuels Begins Phase II of Drilling Plan

- Force Fuels Begins Phase II of Drilling Plan

Wednesday, July 13, 2011
Force Fuels Inc.

Force Fuels announced the beginning of Phase II of its drilling plan with Carroll Energy, which includes preparing the reports needed to complete 15 new wells on the properties Force Fuels acquired.

Force Fuels anticipates completing the geological analysis and field study within two weeks so the Company can move forward with the final drilling permit filings. Once the final permits are issued, Force Fuels will schedule the drilling contractor and other service work as needed.

"This is the last Phase to complete prior to drilling the 15 new wells. As I stated in a recent press release, we expect initial production rates from the 15 wells to produce a combined total of approximately 150 Barrels Per Day (BPD), totaling 4,500 barrels per month, in addition to the production from the recently opened previously shut-in wells. We are both proud and excited to enter the production phase," stated Tom Hemingway, President and CEO.

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BP Evacuates Personnel from Valhall Platform after Fire Erupts

- BP Evacuates Personnel from Valhall Platform after Fire Erupts

Wednesday, July 13, 2011
Rigzone Staff
by Robin Dupre

BP has evacuated personnel from its Valhall oil platform in the Norwegian sector of the North Sea after a fire erupted, stated a Reuters report.

The fire started in a compressor on the production platform in the oil field on Wednesday.

"No persons are injured and no one is missing," BP spokesman Jan Erik Geirmo told state broadcaster NRK. "We see this as a serious incident."

The company closed the field's production until further notice.

The Valhall oil field lies in the Norwegian North Sea on Blocks 2/8 and 2/11 in 230 feet (70 meters) of water. Hess currently owns 64% of the Valhall field, while BP holds the remaining 36%.

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Petronas Charigali, Turkmenistan Sign New Contract

- Petronas Charigali, Turkmenistan Sign New Contract

Wednesday, July 13, 2011
Knight Ridder/Tribune Business News
by H.Hasanov, Trend News Agency, Baku, Azerbaijan

The Malaysian state-owned Petronas Charigali petroleum company (operating in the Turkmen sector of the Caspian Sea since 1996), the State Agency for Management and Use of Hydrocarbon Resources under the Turkmen President, and the State Concern Turkmengas have signed an agreement for natural gas sales, an official Turkmen source reported.

This agreement coincides with the opening of a gas processing plant with a design capacity of 10 billion cubic meters of gas per year. It was built in the Caspian Sea town of Kiyanly. At the initial stage, the production will reach 5 billion cubic meters of gas.

The new plant will allow the company to begin exporting the associated natural gas from Turkmenistan, on whose resources Europe relies, with an attempt to diversify the sales markets.

One option to deliver Caspian resources is the Trans-Caspian Pipeline between Azerbaijan and Turkmenistan. This communication may be part of the large-scale Nabucco pipeline project.

As for oil, Petronas began the commercial production and export of raw material in May 2006, by using an oil transport route which passes through Azerbaijan and Iran.

Malaysia's Petronas Charigali is widely represented in Turkmenistan on the Turkmen market. The company signed the PSA with the Turkmen government in 1996 for the development of the Turkmen sector of the Caspian Sea. The contract area includes the fields Diyarbekir, Magtamguli, Ovez, Mashrikov, and Garagol- Denis.

Copyright (c) 2011, Trend News Agency, Baku, Azerbaijan

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CB&I Scores Engineering, Construction Contract for Northeastern Facility

- CB&I Scores Engineering, Construction Contract for Northeastern Facility

Wednesday, July 13, 2011

CB&I has been awarded a contract, valued in excess of $300 million, for a new natural gas processing plant in the Northeastern U.S.

CB&I's work scope includes the engineering, procurement and construction of a 200 million cubic foot per day natural gas processing plant, including full fractionation and treatment capabilities, storage tanks and loading systems. In addition, CB&I's Lummus Technology business sector is providing its proprietary NGL-MaxSM recovery technology. The contract is scheduled for completion in 2012.

"This contract is a great example of CB&I's ability to leverage the synergy of our technology, storage and EPC capabilities to provide a single-source solution to natural gas producers," said Philip K. Asherman, President and CEO. "As gas production ramps up in U.S. shale basins, we are well positioned to support the infrastructure development needs of these strategically important projects."

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Gasco Briefs Operations for 2Q11

- Gasco Briefs Operations for 2Q11

Wednesday, July 13, 2011
Gasco Energy Inc.

Gasco Energy provided an interim operations update on its Riverbend Project in Utah's Uinta Basin and on its California projects in the San Joaquin Basin.

Riverbend Project Second Quarter 2011 Operations Update

Completion Operations

Gasco is finalizing the federal drilling permits for its two Green River Formation oil wells, (GSX-operated / 100% WI). The Company is satisfying all of the well permitting requirements that are necessary to drill on federal lands and expects to spud both wells during the third quarter, as previously announced. The Company anticipates that completions for both wells will follow shortly after both wells have been drilled. As previously disclosed, the Company has elected to defer its up-hole natural gas well recompletion program until the latter part of the third quarter and into the fourth quarter in anticipation of stronger seasonal natural gas prices.

At June 30, 2011, Gasco operated 133 gross wells. Gasco currently has an inventory of 18 operated wells with up-hole recompletions and has one Upper Mancos well awaiting initial completion activities.

Quarterly Production

Estimated cumulative net production for the quarter ended June 30, 2011 was 947 million cubic feet equivalent (MMcfe), a 17.8% decrease from 2Q10 production of 1,152 MMcfe. The 1.3% decline in sequential quarterly equivalent production, 947 MMcfe in 2Q11, as compared to 959 MMcfe in 1Q11, is primarily attributed to a third-party gathering company's compressors being down and/or performing below design specifications. High line pressures over the past quarter days have reduced production by approximately 95 MMcf and 760 barrels of liquids.

Gasco posted improved liquids volumes of 10,000 barrels of liquids for 2Q11, as compared to 7,600 barrels in 1Q11, a 31.6% increase sequentially. The Company attributes the oil production growth to increased condensate production from its new recompletions and to well workovers.

Natural gas volumes of 887 MMcf for 2Q11 were down 2.8% sequentially, as compared to 913 MMcf in 1Q11.

California Projects Update

Northwest McKittrick

The operator of this shallow oil prospect continues to work with the California State Agencies to acquire the appropriate permits. While some progress has been made, final approval is still pending from the California Fish and Game Department. Gasco continues to work with the operator and California officials in getting the permits as quickly as possible. Based on the information provided, the Company continues to believe that drilling may begin in the third quarter.

Willow Springs

The operator of this oil prospect has been analyzing the recently acquired 3D seismic data and is currently high-grading drillable locations based upon the ongoing 3D interpretation. Well permitting has commenced, and Gasco understands that the project is still on schedule to have its initial well spud by year-end 2011.

Antelope Valley Trend

The operator of these oil and liquids-rich prospects is in the process of drilling 3D seismic shot-holes and anticipates data acquisition to begin next month. Gasco expects that drilling on the trend will occur in 2012.

Gasco continues to develop new prospects and acquire acreage along the west side of the San Joaquin Basin. The new prospects are a continuation of the structural and stratigraphic geologic model that Gasco has been working for the past nine years that has yielded recent success along the west side as demonstrated by discoveries and field development by other operators with similar geologic models.

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Select Energy Services Acquires Western Company of Texas

- Select Energy Services Acquires Western Company of Texas

Wednesday, July 13, 2011
Select Energy Services LLC

Select Energy Services announced the acquisition of The Western Company of Texas, a Fort Worth, TX, based water transfer company with operations in the Bakken, Barnett, Eagle Ford, Granite Wash and Haynesville.

"Western has grown to become a leading provider of water transfer services in the Bakken Shale and represents a tremendous growth opportunity for our Rockies Region," said John Schmitz, CEO of Select. "Dale Behan and his team have developed significant relationships with many of the leading producers in North Dakota, Texas, Oklahoma and Louisiana, and we look forward to developing those relationships further as we introduce Select's Water Solutions approach to sourcing, transfer, treating, and disposal, while providing the highest quality service in the industry."

This acquisition represents Select Energy Services commitment to become the leading water solutions and oilfield service provider in shale plays throughout the U.S.

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GE O&G Names New CEO

- GE O&G Names New CEO

Wednesday, July 13, 2011
GE Energy

GE Energy, which has grown from $29 billion in revenue to over $40 billion since 2006, announced that Dan Heintzelman, currently CEO of GE Energy Services, has been named CEO of GE Oil & Gas. Heintzelman succeeds Claudi Santiago, who has served as CEO of GE Oil & Gas for the last 12 years and is retiring from GE in December.

"Claudi Santiago has led GE Oil & Gas during a period when it became a global leader in its industry," said GE Chairman and CEO Jeff Immelt. "Claudi's strategy of investing wisely in core technology and expanding into areas to provide more complete solutions for our customers proved to be the right one for GE and investors."

Immelt also stated, "Dan Heintzelman is exactly the right leader to succeed Claudi at Oil & Gas. Dan is one of GE's most experienced business leaders and brings a unique mix of operational excellence and customer focus to the role."

Steve Bolze, CEO of GE Power & Water, will now lead an expanded portfolio with the addition of Power Generation Services (formerly part of Energy Services) to the Power & Water business. With both the equipment and services businesses under his leadership, Bolze will lead a global organization that delivers full lifecycle solutions for power generation customers.

Dan Janki, currently GE Energy's chief financial officer, has been named CEO of the newly formed business within Energy, GE Energy Management. This business will consist of technology solutions for the delivery, management, conversion and optimization of electrical power for customers across multiple energy-intensive industries. Janki will be succeeded as Energy chief financial officer by Lynn Calpeter, currently chief financial officer for NBC Universal.

John Krenicki, GE vice chairman and CEO of GE Energy, said, "We have built an Energy business that is broader, deeper and more diverse than at any time in its 100+ year history. Just in the last few months, we've announced $11 billion of acquisitions, significantly expanding our portfolio, global footprint and capabilities. We have an opportunity right now to take advantage of the breadth and scale of our capabilities and ultimately deliver better solutions for our customers. And we are fortunate to have the bench strength in our leadership team to support this mission."

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Penspen Lands 2nd PMS Contract with Al-Khafji Joint Operations

- Penspen Lands 2nd PMS Contract with Al-Khafji Joint Operations

Wednesday, July 13, 2011
The Penspen Group

Penspen has been awarded a new five-year contract to provide project management services (PMS) to Al-Khafji Joint Operations (KJO), a joint venture between Aramco Gulf Operations and Kuwait Gulf Oil Company, in its development of the Khafji and Hout Fields on the Kuwait / Saudi Arabia border.

The contract follows on from the previous PMS contract awarded to Penspen by KJO in 2005. The scope of works includes all aspects of managing the engineering, detailed design, procurement and construction of KJO's oil and gas projects in Khafji. Penspen's core project management team will be based on site with a number of satellite teams based in Contractors' offices around the world.

The project is expected to employ approximately 200 people for five years and will include major onshore and offshore Field Development from FEED through Tendering, Detailed Design and Construction. Specific services provided will include:
  • Review of Design Basis and Scoping Papers(DBSP) for all KJO Projects
  • Supervise FEED Preparation by other Engineering Contractors and issue tender for EPC Contracts
  • Commercial and Technical Review of EPC Contractors Bids
  • Technical Review and Approval of EPC Contractors Design by Satellite Team
  • Follow up Material Procurement and Supervise Construction and Commissioning
  • Technical Support to KJO and Satellite Teams from Core Team
  • Contract Administration and Project Controls for all KJO Projects

In February this year, Penspen won The British Business Forum Award of Merit at The British Business Forum Excellence Awards in Kuwait for its previous exemplary work on the contract.

Penspen's Director of PMS, Chris Williams, said, "We are delighted to have been re-awarded this contract. Our work in Saudi Arabia for Khafji Joint Operations builds on our many decades of experience in the region. It is one of our key objectives to provide outstanding technical service for our clients, and in doing so, to establish successful long-term client relations. We very much look forward to working with KJO for the next five years."

KJO Executive Director, Projects, Jamal Jaafar, said, "KJO are pleased with Dar/Penspen's previous contract performance and happy to renew this working association for another 5 years. This clearly gives uninterrupted continuity to manage our Industrial Projects in an efficient professional way that we have come to expect from Dar/Penspen, and we wish them success in achieving the new contract objectives."

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Gulmar Vessel Sets Sail for Port Gentil

- Gulmar Vessel Sets Sail for Port Gentil

Wednesday, July 13, 2011
Gulmar Offshore Ltd.

DP2 Construction Vessel Gulmar Condor is sailing from the Gulf of Mexico to Port Gentil (Gabon) where she will work for Vaalco under a charter with Dynamic Industries from the US. Vessel Charter is firm till mid December 2011 with potential extensions. Gulmar Condor, equipped with a 120T AHC deep water crane, 1100m2 of deck space and 128 accommodations, will then remain in the West Africa region to work on the subsea spot market.

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Eliminating Tax Deductions on U.S. Energy Cos Could Increase Debt -Study

- Eliminating Tax Deductions on U.S. Energy Cos Could Increase Debt -Study

Wednesday, July 13, 2011
American Energy Alliance

Louisiana State University Endowed Chair of Banking and nationally-renowned economist Dr. Joseph R. Mason released a just-completed study that finds the Administration's proposal to carve out U.S. energy firms from receiving certain tax deductions would have a net negative impact on federal revenues. In his study, "Budget Impasse Hinges on Confusion among Deficit Reduction, Tax Increase and Tax Reform: An Economic Analysis of Dual Capacity and Section 199 Proposals for the U.S. Oil and Gas Industry," Dr. Mason finds repealing tax deductions for American energy manufacturers would result in:
  • $30 billion in Federal tax revenue at the expense of some $341 billion in economic output;
  • Over 155,000 lost jobs, $68 billion in lost wages, and $83.5 billion in reduced tax revenues; and,
  • A net fiscal loss of $53.5 billion in tax revenues.

"The administration's proposal to eliminate tax deductions on U.S. oil and gas companies is grossly counterproductive toward the goal of increasing federal revenues," Dr. Mason said. "Such a move would have a net negative impact on revenue, thereby increasing federal deficits.

"If the goal is deficit reduction, a far more meaningful approach would be reforming federal tax and business policies that encourage economic growth. Expansion of oil and gas exploration and production on the Outer Continental Shelf, for example, would generate an estimated $11 billion annually in Federal tax revenue in the short run, and $55 billion annually in Federal tax revenue in the long run.

"Reform supports business development in both developing and developed countries, alike. The best reformers have several things in common. First, their reforms are part of a broad agenda of boosting global competitiveness and, second, they never stop. Even developing countries previously stung by fiscal imbalances and committed to business reform rarely retreat to increased taxes as a way to raise revenues. The U.S. should also step up to the challenge of reform."

Dr. Mason's conservative economic analysis employs the same government modeling – the U.S. Commerce Department's RIMS II system.

Dr. Mason's report was sponsored by the American Energy Alliance ("AEA"). To learn more and get exclusive information on upcoming projects, sign up for AEA's In The Pipeline.

Thomas Pyle, president of the American Energy Alliance, issued the following statement in response to the study's findings:

"This study confirms that President Obama's insistence on imposing discriminatory tax changes on American oil and gas companies has nothing to do with deficit reduction – it has everything to do with satisfying his anti-energy agenda. The president's insistence on these senseless tax hikes is further proof of his outright hostility to the oil and gas industry - an industry that provides over 9 million jobs and billions in revenue to the federal government."

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Gov. Regulates Marcellus Drilling Activities

- Gov. Regulates Marcellus Drilling Activities

Wednesday, July 13, 2011
Office of the Governor Earl Ray Tomblin

Gov. Earl Ray Tomblin, joined by West Virginia Department of Environmental Protection (DEP) Cabinet Secretary Randy Huffman, Legislators, and natural gas industry representatives announced the filing of an executive order that directs the DEP to promulgate additional environmental regulations governing Marcellus Shale drilling activities.

"This executive order is the first step in my long-term plan to ensure responsible development of Marcellus Shale," Gov. Tomblin said. "The good-paying jobs predicted with this development must include the protection of our public's health and safety as well as that of our environment. I want to thank our citizens who have voiced their concerns about Marcellus Shale drilling and want to assure them that I recognize this emerging segment of the natural gas industry warrants my immediate attention to ensure responsible development."

By directing Secretary Huffman to use his existing emergency rule making authority, Gov. Tomblin is calling for additional regulations concerning: water withdrawals, stream and groundwater protection, and public notice.

Executive Order 4-11 outlines several requirements of natural gas companies including but not limited to:
  • Marcellus Shale drilling applicants seeking to drill within the boundaries of a municipality must file a public notice of intent to drill.
  • Surface land use that will disturb 3 or more acres must be certified by and constructed in accordance with plans certified by a registered professional engineer.
  • Companies withdrawing over 210,000 gallons of water a month must file a water management plan with the DEP and adhere to certain specified standards.
    • Before fracking begins, such companies must also provide a list of additives that will be used in the frack fluid, and after fracking is complete, the additives actually used.
  • When using water from a public stream, a company must identify the designated and existing uses of that stream.

"I am pleased that the natural gas industry supports my decision to pursue reasonable environmental regulations to ensure responsible development of the Marcellus Shale," Gov. Tomblin said. "Regulatory certainty is important not only to the industry, but also to our great citizens."

The executive order also instructs the DEP to further review the agency's overall authority over drilling activities related to horizontal wells.

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ConocoPhillips Updates Bohai Bay Cleanup

- ConocoPhillips Updates Bohai Bay Cleanup

Wednesday, July 13, 2011

ConocoPhillips provided additional information in regards to the oil spill incidents that occurred in Bohai Bay, People's Republic of China on June 4th and June 17th 2011, and the ongoing clean up and containment program that is underway.

On June 4 seepage on the seabed was observed along a naturally occurring fault near the ConocoPhillips-operated Peng Lai B Platform. The majority of seepage has been stopped following prudent adjustment of certain production activities. A containment device was designed and constructed and put in place as a precaution should the seep occur from the main source again. Trace amounts of oil, estimated to be no more than liters per day, continue to seep out intermittently near the original seep location and occasionally cause minor surface sheens. Booms are deployed around the immediate surface area and are containing and collecting any such oil.

In a second incident, oil and gas bubbles were observed on the surface June 17 near another platform (C Platform) during drilling operations. The platform is about two miles away from the seabed seep near Platform B. Expert teams were immediately mobilized to contain the release. A cementing procedure successfully stopped the release within 48 hours, and the well was stabilized, plugged and abandoned. Trace amounts of bubbles are occasionally observed from the sea floor, and these bubbles continue to be monitored. Absorbent boom is in place in appropriate locations. Final clean up operations are ongoing.

ConocoPhillips responded quickly to both events and mobilized extensive clean-up equipment, facilities and personnel, including substantial resources made available by our co-venturer China National Offshore Oil Corporation ("CNOOC"). Relevant authorities were promptly notified, along with CNOOC. Almost 3,000 meters of absorbent and inflatable booms were deployed to contain the oil sheen, and 33 vessels (workboats, fishing boats and tugs) supported clean-up activities. ConocoPhillips is appreciative of the support provided by CNOOC during the containment and cleanup effort and to the State Oceanic Administration (“SOA”) for their guidance during these unfortunate events.

ConocoPhillips' current estimates of the aggregate amount of fluid spilled from the two incidents ranges from between 1,500 barrels (240 cubic meters) to 2,000 barrels (320 cubic meters) of oil and oil-based drilling fluids. The company is working with independent experts to validate the total spill quantity. During these incidents, no oil sheen reached the shoreline, and there were no injuries to personnel.

On July 13th, the SOA instructed ConocoPhillips to suspend production from Platforms B and C, and this order was complied with immediately. This shut in will result in a temporary reduction of approximately 17,000 barrels of oil per day net after royalties to ConocoPhillips. According to the SOA order, this temporary shut in will be in effect until the risks of another spill are eliminated. While the detailed causes of these incidents are still under investigation, ConocoPhillips will continue to work diligently and safely to finalize clean up activities and will be implementing additional reservoir management and field operating procedures to eliminate risks of additional releases.

ConocoPhillips will work closely with SOA and CNOOC to minimize the impact to the environment. Working safely and in an environmentally prudent manner is always the top priority to ConocoPhillips.

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Phoenix Drills Ahead at Marathon Well

- Phoenix Drills Ahead at Marathon Well

Wednesday, July 13, 2011
Petsec Energy Ltd.

Petsec advised that as at July 12, 2011, the Marathon #2 well had reached a measured depth of 18,845 feet (5,744 meters), 7 inch liner had been set and preparations were being made to drill ahead. The well is projected to reach its total depth of 21,000 feet (6,500 meters) within approximately 2 weeks.

The Marathon #2 well is a follow up to the successful #1 well and is situated in approximately 8 feet (2.4 meters) water depth and is located approximately 900 meters from the #1 well location. The #2 well is designed to serve as a development well for the field as well as to test deeper exploratory reserve potential on the Marathon structure.

Participating working interests in the well are:
  • Petsec Energy Ltd 8%
  • Phoenix Exploration Company LP (operator) 65%
  • Private Companies 27%

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OMV Completes Acquisition of Petronas Carigali

- OMV Completes Acquisition of Petronas Carigali

Wednesday, July 13, 2011

OMV successfully completed the acquisition of the entire share capital of Petronas' E&P operating entity in Pakistan from PETRONAS International Corporation Limited (Petronas) as of July 11, 2011. The government of Pakistan has provided its non-objection to the share transfer and change of control transaction pursuant to applicable laws in Pakistan.

Jaap Huijskes, member of the OMV Executive Board responsible for Exploration and Production, stated, "The acquired production, development and exploration licenses will strengthen OMV's position in the top league of foreign gas producers in Pakistan. OMV is well on the way to achieve the goal of increasing equity production in Pakistan to around 25,000 boe/d by 2014."

The acquired portfolio considerably strengthens OMV's position in Pakistan. With the completion of the share and change of control transaction, OMV increases its production by about 1,000 boe/d to 15,000 boe/d. The acquisition includes the Mubarak and Mehar exploration licenses as well as the Mehar and Mubarak development and production leases in the Indus Basin in central Pakistan. Through this acquisition, Pakistan gains a strong strategic position within the E&P portfolio and will help OMV reach its long-term growth objectives.

OMV started operating in Pakistan in 1991. The current gross production operated and processed by OMV (PAKISTAN) amounts to 530 mn scf/d (90,000 boe/d), which represents around 13% of Pakistan's gas supplies. The country offers growth potential supported with prospective as well as underexplored acreage. The good business environment and strong local energy demand support the growth aspirations.

Balanced international E&P portfolio

In 1Q/2011, OMV's oil and gas production was 304,000 boe/d. Its proven reserves were about 1.15 bn boe at year-end 2010. In its core countries Romania and Austria, OMV is focusing on reducing the natural decline and on enhancing the recovery rates from mature fields. Future growth is expected to come via new field developments, exploration and acquisitions internationally. OMV intends to grow the existing portfolio to and beyond critical mass, on a production per country basis, and is looking to find new growth areas within the Caspian, Middle East and North Africa regions where OMV can leverage on its existing E&P exposure.

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China Orders ConocoPhillips to Stop Penglai Operations

- China Orders ConocoPhillips to Stop Penglai Operations

Wednesday, July 13, 2011
Dow Jones Newswires
by Jing Yang

China's State Oceanic Administration said Wednesday that it has ordered ConocoPhillips to halt operations at platforms B and C at the Penglai 19-3 oil field in northeastern China's Bohai bay, due to slow progress in containing an oil spill at the field.

Oil is still leaking at the platforms, an oil slick still extends over the nearby area and there are signs that another oil spill could occur at Platform B, the administration said in a statement on its website.

"The measures that ConocoPhillips has taken so far are temporary and remedial...[and] risks of an oil spill recurring still exist" posing a significant threat to the Bohai marine ecosystem, it said.

Bohai bay has been the site of two spills in recent weeks, including a spill at Cnooc Ltd.'s offshore Suizhong 36-1 oil field.

The agency has asked the U.S.-based energy major to investigate thoroughly to ensure the source of the oil leak is plugged. "Operations aren't permitted to resume until oil spill risks are fully eliminated," it said.

ConocoPhillips said last week that the oil spill at Penglai 19-3--a joint venture with Cnooc Ltd.--had been contained and that output had fallen by 10%-15% due to the cleanup efforts. The company's China unit isn't immediately available to comment.

The Penglai field, discovered in 1999, produced an average 56,000 barrels a day in 2010, and is expected to reach 60,000 barrels a day this year, according to ConocoPhillips, which operates of the field.

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

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Halliburton awarded contract from Chevron for integrated services

- Halliburton awarded contract from Chevron for integrated services

Jul 13, 2011

Halliburton (NYSE:HAL) announced that it has been awarded a contract from Chevron (NYSE:CVX) for integrated services for shale natural gas exploration in Poland. Work on the initial shale gas exploration drilling program is expected to begin in the fourth quarter and the contract award is for three years, with extension opportunities. Halliburton services to be provided will include drilling services, mud logging, cementing, coiled tubing, slickline services, well testing, completion and hydraulic fracturing. Halliburton will support the project with project management services. Halliburton has a potential upside of 21.1% based on a current price of $52.66 and an average consensus analyst price target of $63.76. Halliburton is currently above its 50-day moving average (MA) of $48.44 and above its 200-day of $43.06. In the last five trading sessions, the 50-day MA has climbed 0.31% while the 200-day MA has risen 0.73%.

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Falcon Finalizes Beetaloo Basin Transaction with Hess

- Falcon Finalizes Beetaloo Basin Transaction with Hess

Wednesday, July 13, 2011
Falcon O&G Ltd.

Falcon O&G announced that the Beetaloo Basin Evaluation and Participation Agreement between Falcon Oil & Gas Australia Limited ("Falcon Australia") and Hess Australia (Beetaloo) Pty Limited ("Hess Australia") dated April 28, 2011 (the "Agreement") is now in effect and the seismic survey phase of the project will begin once the necessary regulatory permits are finalized.

On closing (July 13, 2011) Hess Australia made a US $17.5 million payment to Falcon Australia. Hess Oil and Gas Holdings Inc. ("Hess") also paid Falcon US $2.5 million and Falcon issued Hess a warrant exercisable for 10,000,000 common shares in the capital of Falcon ("Common Share") at a price of CDN $0.19 per Common Share for a period from November 14, 2011 until January 13, 2015. Upon receipt of all necessary regulatory permits, Hess Australia will commence the process of acquiring seismic data over Exploration Permits 76, 98 and 117 in the Beetaloo Basin, Northern Territory, Australia (the "Agreement Area"). After completion, processing and interpretation of the seismic data, Hess Australia may elect to acquire 62.5 percent ownership in the Agreement Area and continue to the next phase of the work program which includes conducting a five well program to explore and appraise the Agreement Area, beginning in 2012.

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Oilex Continues Ops to Demobilize Rig at Cambay PSC

- Oilex Continues Ops to Demobilize Rig at Cambay PSC

Wednesday, July 13, 2011
Oilex Ltd.

Oilex advised that operations are continuing to demobilize the Black Pearl rig and associated drilling equipment.

Mobilization of the equipment required to conduct the large volume multi-stage fracture stimulation of the Y Zone tight gas reservoir is near completion and rigging up is progressing. In total, 16 zones will be stimulated in 8 stages over the length of the horizontal section of the well bore (approximately 600 meters).
  • Report date: July 12, 2011
  • Status:
    • Demobilizing drilling rig
    • Mobilizing fracture stimulation equipment
  • Past Week's Operations Demobilizing drilling rig
  • Objective Cambay Eocene "tight" reservoir Y Zone
  • Total Depth (TD) 2,740 meters

The participating interests in the Cambay PSC are:
  • Oilex Ltd (Operator) 30%
  • Oilex NL Holdings (India) Limited 15%
  • Gujarat State Petroleum Corporation Ltd 55%

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Petrofac, Petronas Sign MOUs, Strengthen Relationship

- Petrofac, Petronas Sign MOUs, Strengthen Relationship

Wednesday, July 13, 2011
Petrofac Ltd.

Petrofac has signed two memoranda of understanding (MOU) with Petroliam Nasional Berhad (PETRONAS).

The first MOU records the undertaking by Petrofac and PETRONAS to accelerate production from Block PM304, offshore Peninsular Malaysia, with a third phase of development. Petrofac owns a 30% equity share and is the Operator of PM304, which includes the Cendor and West Desaru fault blocks. Petrofac intends to accelerate the development of the West Desaru fault block by introducing an Early Production System which will involve both utilising current export facilities and also upgrading and deploying a Mobile Offshore Production Unit which is in the process of being purchased. This approach is expected to bring forward first oil production from West Desaru into the fourth quarter of 2012. The second phase development of the Cendor fault block, also in Block PM304, is expected to start up in the second quarter of 2013, bringing the overall production capacity of Block PM304 to around 60,000 barrels per day.

The second MOU outlines the intention between Petrofac and PETRONAS to collaborate in the area of competency development, capability building and education activities. This will involve a technical training partnership between Petrofac Training Services and Institut Teknologi Petroleum PETRONAS (INSTEP) to develop competency-based training for operations and maintenance personnel, as well as lecture and seminar programs with the Universiti Teknologi Petroleum (UTP).

Ayman Asfari, Petrofac Group Chief Executive, commented, "We have been working with PETRONAS since 2004, when we began the development of PM304 with the Cendor fault block. This is a relationship we value highly and which continues to deepen. We have today entered into two arrangements that will accelerate the development of PM304 and support PETRONAS in their continuous efforts in enhancing Malaysian capability in the oil & gas sector. In combination, we are providing a solution which addresses important strategic targets for PETRONAS and serves to underpin the strength of our Integrated Energy Services offering."

Dato' Shamsul Azhar Abbas, PETRONAS' President and Chief Executive said, "From the early stages of their entry into Malaysia's oil & gas upstream development PETRONAS has viewed Petrofac as one of its strategic partners. This view is reflected by the MOUs we have exchanged today. Going forward, PETRONAS will be able to access and benefit from a broader range of capabilities from across the Petrofac group, building on our existing partnership. We look forward to our continued collaboration with them."

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Northern Petroleum's Operations Unaffected by Italian Ban

- Northern Petroleum's Operations Unaffected by Italian Ban

Wednesday, July 13, 2011
Northern Petroleum plc

Northern announced an update to its preliminary examination, dated July 2, 2010, of the environmental proposals as first detailed in a posting on the official Ministry of the Environment web-site in late June 2010 and attributed to Environment Minister Stefania Prestigiacomo. Legislative Decree 128/10 came into force with effect from August 26, 2010.

In summary, Legislative Decree 128/10 ("the Decree"):
  • Has no impact on Northern's current reported reserves of 53.2 mmboe in Italy;
  • Has no significant effect on the exploration prospectivity of the Southern Adriatic;
  • Continues to have no significant impact on the exploration prospectivity of the West of Sicily Thrust Belt, however a successful application was submitted to reshape part of one application which fell within the zone covered by the Decree; and
  • Has had a greater, but largely limited, effect upon other offshore areas where near shore gas is the predominant target.

The new legislation covers liquid hydrocarbons activities within five nautical miles of the coast baseline and all hydrocarbon activities within twelve nautical miles of a marine or coastal protected area. The majority of Northern's permit areas are further offshore.

Acting in consideration of the above, the specific updates covering the effects of the Decree upon the Group's activities in each of the areas offshore Italy are outlined below.

Southern Adriatic (permits and applications)

The Decree has no impact upon the established reserves held within Northern's two permits or the exploration prospectivity of the Southern Adriatic as a whole.

No communications have been received from the Ministry of Economic Development or the Ministry of Environment regarding either of these awarded permits.

In respect of the permit applications, Northern has successfully submitted amendments to reshape part of application d149D.R-.NP to the extent to which it fell within the zone covered by the Decree, while three further applications, namely d61F.R-.NP, d71F.R-.NP and d72F.R-.NP which were marginally affected, have been slightly modified by the Ministry of Economic Development in order to stay clear of the zone covered by the decree. The remaining applications, namely d60F.R-.NP, d65F.R-.NP and d66F.R-.NP remain totally unaffected.

West of SicilyThrust Belt (permits and applications)

For the six permit area closest to the Tunisian boundary there is a minor effect in terms of area upon only one of the six blocks, being the eastern part of G.R20.NP. Northern continues to evaluate that the prospectivity of the permit area remains untouched, while the interpretation of the Decree still remains unclear as far as awarded permits. No communications have been received from the Ministry of Economic Development or the Ministry of Environment regarding any of the awarded permits.

An application to suspend permits G.R17.NP, G.R18.NP and G.R19.NP has been made by the partners as part of a prudent license management process for the entire West of Sicily Thrust Belt area.

Northern has successfully submitted amendments to reshape application d25G.R-.NP to the extent to which it fell within the zone covered by the Decree, while the Ministry of Economic Development has slightly modified the shape of application d362C.R-.NP to exclude a small area that was intersecting the restricted zone. Application d21G.R-.NP is substantially affected by the restrictions introduced, but as of today no communications have been received from any Ministry regarding this block. The remaining application d26G.R-.NP remains totally unaffected.

Sicily Channel (permits and applications)

There remains no effect upon permit C.R146.NP and the adjacent application d351C.R-.NP, which contain the very large Vesta prospect.

Permit C.R147.NP, which is located north of Pantelleria Island and in close proximity to the recent ADX Energy Lambouka discovery, remains affected by areal extent, but four identified prospects are within areas of the license that remain unaffected and only two prospects fall within the restricted zone. However the interpretation of the Decree still remains unclear as far as awarded permits. No communications have been received from the Ministry of Economic Development or the Ministry of Environment regarding the C.R146.NP and C.R147.NP permits.

Permits C.R146.NP and C.R147.NP have also been successfully suspended at Northern's request as a prudent license management measure.

Closer to the coast of Sicily, the Company has four further applications.

Northern's previous interpretation of the impact on application d358C.R-.EL was that the area of greatest interest would not be materially affected. However the Operator of this application, a subsidiary of Petroceltic International ("Petroceltic"), has recently received a letter from the licensing authority (the Ministry of Economic Development) rejecting this application. Both Northern and Petroceltic disagree with the Ministry of Economic Development's interpretation of aspects of the Decree that have given rise to the rejection decision, and the Operator is considering an appeal against this decision, as is an applicant's statutory right.

Northern has successfully submitted amendments to reshape application d29G.R-.NP to the extent to which it fell within the zone covered by the Decree. Application d347C.R-.NP is substantially affected by the restrictions, but no communication from the Ministry of Economic Development or the Ministry of Environment has been received as of today, and therefore no action has been taken regarding this block. The remaining application d30G.R-.NP remains totally unaffected.

Ionian Sea (applications)

The greatest effect to Northern of the Decree remains in this area, as previously reported.

The new legislation excluded most of the area of two preliminary awards d59F.R-.NP and d64F.R-.NP, and following a period of consultation with the Ministry of Economic Development, Northern has now received notification rejecting these applications. Northern disagrees with the Ministry of Economic Development's interpretation of aspects of the Decree that have given rise to the rejection decision, and has immediately instructed its Italian legal counsel to appeal against these decisions, as is our statutory right.

Two further applications, d63F.R-.NP and d75F.R-.NP are also substantially affected by the restricted zone, but no communication from the Ministry of Economic Development or the Ministry of Environment has been received as yet, and therefore no action has been taken regarding these blocks. Application d77F.R-.NP is marginally affected by the restricted zone (less than 1% of the area of the application), and the area covered by application d78F.R-.NP is completely unaffected. As yet, no communication from the Ministry of Economic Development or the Ministry of Environment has been received. However both these applications are within the area where liquid hydrocarbons exploration has been banned and Northern has therefore submitted work program modifications aimed at refocusing the exploration on these blocks to gas only, in order to progress the application process.

Impact on Permit Awards

Given the lack of advance consultation by the Ministry of Environment with the licensing authority in advance of the initial announcement of this initiative, one of the immediate responses of the licensing authority was, in the absence of legislation, to place a moratorium of the award of new offshore permits. Northern's plans for a 2D seismic survey in Q4 of last year were as a consequence postponed. As of 30 June 2011, one year on, no new offshore permits have been issued since these proposals were first announced.

Derek Musgrove, Managing Director of Northern, commented, "I believe that, Northern has not been badly affected save in the Ionian Sea, which is not one of our most significant core areas. We have always conducted our offshore operations with due consideration to marine parks, sensitive coastal areas and the environment in general, and this will remain a priority.

"One 2D and two 3D seismic surveys are in planning for the second half of 2011 on our Southern Adriatic permits. This will allow not only for the progression of the Rovesti and Giove oil discoveries, which holda combined 53.2 million barrels of probable reserves, but also enable the de-risking of the significant exploration potential within these two permits.

"I am hopeful that further permit awards in the Southern Adriatic may soon be forthcoming. Should this be the case then Northern would expect to start planning additional seismic activity shortly thereafter.

"We continue to focus much of our human resources towards progressing the Southern Adriatic, the West of Sicily Thrust and Fold Belt where we are partnered with Shell, and the Sicily Channel and Ionian Sea areas. Our objective remains to enter into agreements to bring new partners into these areas."

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Amerisur to Begin Data Interpretation at San Pedro Block

- Amerisur to Begin Data Interpretation at San Pedro Block

Wednesday, July 13, 2011
Amerisur Resources plc

Amerisur announced an update on operations in Colombia and Paraguay.


The Company applied for a modification of the Platanillo Global Environmental License to the Ministry of Environment, Housing and Territorial Development (MAVDT) on January 21, 2011. That modification contemplated the construction of an access road to the southern part of the field and 8 new drilling locations within that section. The Company has maintained a close contact with MAVDT and has promptly provided all the information and assistance required by the environmental authorities. The proposal is under review by MAVDT.

It is expected that the drilling program will be underway during 4Q 2011. Given the delays occasioned by the permitting process the Company expects to complete 3 new wells during 2011, however the drilling program would continue consecutively should results merit, thus completing the total of 6 new wells during 1H 2012.

San Pedro Block Paraguay

The 13,000 km Aeromagnetometry program was completed on time and on budget and Fugro is well advanced with the data processing. The Company expects to begin interpretation during July 2011.

John Wardle, CEO, said, "The tremendous growth of activity in the Petroleum and Mining sectors in Colombia has placed an unprecedented load upon regulatory resources. This is an extraordinary situation, never seen before in the Colombian industry and has had an extraordinary effect upon the operations of all Operators in the country. Our respect for the environment where we work is paramount and is an integral part of our business. I believe we have maintained these high standards in our work and proposals to date. All preparations for the drilling program are complete, and have been so for some time, hence once we receive the approval of the environmental modification I expect to achieve rapid progress."

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