Oil and Gas News: 08/19/11

Friday, August 19, 2011

Oil & Gas Post - All News Report for Friday, August 19, 2011

Friday, August 19, 2011

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Commodity Corner: Oil Ends Week Lower

- Commodity Corner: Oil Ends Week Lower

Friday, August 19, 2011
Rigzone Staff
by Saaniya Bangee

Light, sweet crude posted a slight loss Friday, pressured by yesterday's bearish stock sell-off, as well as a series of negative economic data.

Oil futures ended the week 12 cents lower, settling at $82.26 a barrel Friday and down 3.7 percent for the week. Oil prices traded as low as $79.17 after an earlier intraday peak of $83.55, which was caused by an early rise in the stock market.

Crude gained some support Friday from a weaker dollar. The Dollar Index, which measures the dollar against a basket of major foreign currencies, traded at 74.002 from 74.216. The greenback reached a new post-World War II low against the Japanese yen.

Meanwhile, the September Brent contract price settled $1.63 higher at $108.62 a barrel. The intraday range for Brent was $106.43 to $109.30 a barrel.

Natural gas for September delivery gained nearly 5 cents, or 1.2 percent, to settle at $3.94 per thousand cubic feet. Natural gas fluctuated between $3.90 and $3.97 for the last trading session of the week.

Front-month gasoline advanced 5.80 cents to finish at $2.84 a gallon Friday. RBOB rose for a second straight week.

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Magnum Hunter: Proposed Acquisition in Williston Basin Did Not Close

- Magnum Hunter: Proposed Acquisition in Williston Basin Did Not Close

Friday, August 19, 2011
Magnum Hunter Resources Corp.

Magnum Hunter announced that the previously announced proposed acquisition by its wholly owned subsidiary, Williston Hunter ND, LLC, of oil and gas properties in the Williston Basin in North Dakota from Eagle Operating, Inc. ("Eagle") did not close yesterday due to unresolved issues between the parties resulting from what Magnum Hunter considers to be Eagle's intentional and bad faith breach of its obligations under the Purchase and Sale Agreement ("PSA"). In the proposed acquisition, Magnum Hunter would have acquired from Eagle for total consideration of $57 million ($55 million in cash and $2 million in Magnum Hunter restricted common stock), the remaining approximate 48% working ownership interest in the Williston Basin properties owned by Eagle, subject to Eagle's retention of a variable overriding royalty interest not exceeding 2% on certain properties.

The acquisition would also have resulted in the settlement of two pending lawsuits between the Company and Eagle currently filed in the United States District Court for the District of North Dakota (Northwestern Division), which litigation is now expected to continue. Management of Magnum Hunter does not consider this pending litigation to be of any material nature to the Company.

Magnum Hunter has today filed a new lawsuit against Eagle in the United States District Court for the District of North Dakota (Northwestern Division) asking the court to order Eagle to comply with its obligations under the PSA and complete the sale of the properties to the Company on the specific terms outlined in the PSA. Magnum Hunter is also seeking monetary damages, including compensatory, consequential and general damages, for Eagle's material default under the PSA. The Company intends to vigorously pursue all available remedies against Eagle.

As of August 18, 2011, Magnum Hunter had total liquidity including cash and availability under its various credit facilities of approximately $75 million, of which approximately $55 million is currently available to continue to fund its upstream capital program focused on the Company's high growth unconventional resource plays. In addition, Magnum Hunter has a commitment from its bank group to provide an additional $42.5 million in borrowing capacity for the purchase of the Eagle properties referenced above. Moreover, Magnum Hunter continues to pursue various non-dilutive alternatives to provide access to capital in order to fund capital budget needs later in fiscal year 2012.

Additional information regarding the Company's lawsuit against Eagle, including a copy of the complaint filed by the Company Friday in the United States District Court for the District of North Dakota (Northwestern Division), is contained in a Report on Form 8-K also filed today by the Company with the Securities and Exchange Commission.

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Aker Solutions Brazil Appoints New Subsea President

- Aker Solutions Brazil Appoints New Subsea President

Friday, August 19, 2011
Aker Solutions

Egil Boyum has been appointed president of Aker Solutions' subsea business in Brazil. Boyum, a Norwegian citizen, has been employed by Aker Solutions since 1984 and has held a range of management roles during this time.

"We have doubled the business since 2008 and need to strengthen our management capabilities to facilitate the continued growth. Hence we have recently recruited several new managers in Brazil and most recently, Egil Boyum, who is one of our most experienced managers," said Mads Andersen, executive vice president of Aker Solutions' subsea business area.

Boyum is an industry veteran and has held a wide range of roles from technical positions in his early career to being global head of operations, heading up global aftermarket and SVP of subsea systems. Boyum's current role of SVP involves heading up the win and client relationship function of major subsea products in Aker Solutions.

Boyum will replace Marcelo Taulois who has been leading Aker Solutions' Brazilian business since 2001. Taulois has developed new market opportunities through the three Brazilian hubs in Curitiba, Rio das Ostras and Rio de Janeiro and has also been a key player in the successful implementation of Aker Solutions' global policies and strategies within these regions. Aker Solutions will now look for other opportunities for Taulois within the company.

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RBG Appoints President at Kazakh Business Unit

- RBG Appoints President at Kazakh Business Unit

Friday, August 19, 2011
RBG

RBG has appointed Ian Henderson as president of its Kazakhstan business unit. Mr. Henderson will operate from RBG's base in Aktau City, Kazakhstan.

Mr. Henderson joined RBG in March 2011 as commercial manager and has more than 20 years experience in the oil and gas industry. He has worked in a wide range of senior project, contract and commercial positions for companies such as Statoil, FosterWheeler and Halliburton, delivering major projects across North Africa, the Middle East and North Sea.

Mike Kochalski, international director, RBG, said, "I am very pleased to welcome Ian to our team. His experience, industry knowledge and technical expertise makes him a great asset to the company. Kazakhstan is one of our strongest growth areas and I am confident Ian's appointment will see the area continue to flourish.

"We are experiencing high demand for our integrated services across the region and Ian will play a key role in ensuring we capitalize on this, whilst continuing to deliver the excellent standards in safety, quality and service delivery our clients expect."

Mr. Henderson, said, "RBG is going through an exciting period of growth and change which I'm delighted to be part of. I look forward to working with our expert in-country team to growing our client-base and service offering across the region. The great work carried out in previous years has given us an excellent foundation to accelerate our growth and expand our operations."

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Delmar Completes Mooring Installation at WhoDat Field

- Delmar Completes Mooring Installation at WhoDat Field

Friday, August 19, 2011
Delmar Systems Inc.

Delmar Systems has completed preset mooring systems installation and facility connection operations of the Mississippi Canyon 547 "A" floating production facility as part of the WhoDat Field development for LLOG Deepwater Development Company, L.L.C.

Delmar provided project engineering for anchor/mooring system design, fabrication oversight, installation engineering, operation procedures, and installation services for the facility's installation. Delmar also assisted LLOG and the facility designer/builder EXMAR in certification verification authority (CVA) review and regulatory approval for the mooring system.

In addition, Delmar procured, marshaled, and stored the twelve leg suction anchor, chain, polyester, chain mooring system at Delmar's state-of-the-art 11-acre Fourchon dockside facility. The mooring legs were connected to the pre-installed suction anchors using Delmar's patented subsea mooring connector. The Delmar subsea connector allows the mooring line to be easily connected to each preset suction anchor using a conventional anchor handling vessel (AHV) as opposed to larger, more expensive construction vessels that are normally used for permanent installations.

Delmar preset all twelve suction anchor mooring systems using a single conventional AHV. Once the facility arrived on location, Delmar connected the facility to the preset mooring systems using two conventional AHVs and supported by a field ROV support vessel. Facility connection operations were efficiently completed in seven days.

"Delmar was able to use existing contracted AHVs to drive maximum efficiency and cost savings for LLOG. We completed the project under budget and under the allocated time estimates. By making the best use of vessel tonnage and Delmar's proven experience with AHVs, Delmar completed the project safely, without any accidents, injuries, or associated lost time," said Brady Como, Delmar's Executive Vice President.

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Santos 1H Earnings More Than Double

- Santos 1H Earnings More Than Double

Friday, August 19, 2011
Santos Ltd.

Santos announced a net profit of $504 million after tax for the half-year ended June 30, 2011, 155% higher than the previous first half.

The 2011 headline result includes a $246 million profit after tax from asset sales, including the sale of a 15% interest in the GLNG project to Total and KOGAS announced in December 2010 and completed in the current half-year.

Underlying net profit was up 12% to $236 million primarily due to lower production costs and exploration expense, and higher net finance income as interest associated with development projects was capitalized.

Production of 22.9 million barrels of oil equivalent (MMboe) was 5% lower than the 2010 first half. Key factors impacting production were Santos’ share of GLNG reducing from 60% to 30% following the sale of interests to Total and KOGAS, combined with lower Western Australian gas production primarily due to adverse weather and additional maintenance.

First half sales revenue of $1.1 billion was in line with the corresponding period. The favorable impact of higher commodity prices in the first half was offset by the stronger Australian dollar and lower sales volumes.

Half year results Highlights

Production 22.9 MMboe, down 5%
Sales volumes 27.6 MMboe, down 3%
Average A$ oil and gas prices up 32% and 1% respectively
Sales revenue $1,101 million, up 1%
EBITDAX $1,089 million, up 66%
Net profit after tax $504 million, up 155%
Underlying net profit after tax $236 million, up 12%
Operating cash flow $681 million, up 27%
Strong balance sheet: $6.7 billion of funding capacity
Interim dividend of 15 cents per share fully franked with underwritten DRP

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Aker Solutions to Create 500 UK Jobs Next Year

- Aker Solutions to Create 500 UK Jobs Next Year

Friday, August 19, 2011
Aker Solutions

Aker Solutions aims to create 500 new UK jobs over the next year. In a bid to grow its business substantially, Norway-listed Aker Solutions is set to recruit 300 staff to its Aberdeen operation and create 200 positions at the company's newly established west-London engineering office.

The move follows a successful start to the year for the oil and gas engineering and technology services company, which has increased its order backlog by 19 percent since January 1st. It said that market outlook for both the UK and Norwegian North Sea as well as Brazil, West Africa and Asia Pacific remains strong.

"Last year we decided to take a much more proactive recruitment approach. Since then our strategy has been to man up ahead of the big waves of work that we know are coming. That offers much greater predictability for our customers and ourselves," said Alan Brunnen, a managing director with Aker Solutions in Aberdeen. The company aims to recruit 300 new employees in Aberdeen alone.

The majority of positions in Aberdeen are for the subsea technology business where 200 new posts will be created. A further 70 positions are being recruited to support work for maintaining and upgrading North Sea oil platforms in order to extend their field life. Aker Solutions' well service business, which provides technologies and services aimed at increasing oil recovery from producing wells, requires a number of technical and ancillary personnel. As does the drilling technology business, which provides drilling systems and life-cycle services to support new generation drilling assets that are entering the UK North Sea.

New London office

By tapping into the London oil and gas market, Aker Solutions in the next year aims to hire approximately 200 engineering personnel to its new London offices with a target of 500 by the end of 2015. Located in Chiswick Park, this global engineering hub will support field development projects for the North Sea and worldwide.

"Our company has had a historical presence in London, so this is a re-entry to an engineering market we know very well. So far we have received more than 2 000 job applications, which underlines that there is scope to grow this business rapidly," said Valborg Lundegaard, head of engineering in Aker Solutions.

Alan Brunnen added, "We anticipate that workload levels will remain high over the coming years, which is why we are staffing up our UK organization now. We want to be well placed to capitalize on future opportunities that arise in our markets".

Aker Solutions is one of Scotland's largest employers with a workforce of more than 2 500 people. In addition the company has smaller offices and facilities in Great Yarmouth, Maidenhead, Stockton-on-Tees and Whitstable. The company employs 17 000 employees plus 6 000 contract staff in 30 countries worldwide, and has annual revenues of approximately GBP 3.9 billion.

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Siemens Welcomes New CEO of Compression and Solutions

- Siemens Welcomes New CEO of Compression and Solutions

Friday, August 19, 2011
Siemens

Terrance N. Ivers, 53, new CEO of the Compression and Solutions Business Unit of the Oil & Gas Division effective August 1, 2011, has succeeded Donald Weir, who has decided to leave Siemens. Since 2007 Ivers was the president of Amec Paragon, an international project management company and service provider to the upstream and midstream (especially pipeline) industries.

Ivers is a mechanical engineer and began his career at KBR, a leading international supplier for the oil and gas industry. At KBR he held a number of managerial positions in the fields of pipelines and offshore engineering where he gained outstanding experience in the oil and gas business. From 2004 to 2007, Ivers served as Chief Operating Officer for Alliance Wood Group Engineering.

"We would like to thank Donald Weir for his achievements for our company," said Tom Blades, CEO of the Oil & Gas Division. The Compression and Solutions Business Unit offers products and solutions for the oil and gas market. "With his extensive experience, deep understanding and broad network in the oil and gas industry, Terrance Ivers is the right person to further advance and develop our business," added Blades. Ivers will be based in Houston, Texas, one of the most important centers for the oil and gas sector. Activities in Houston significantly influence both the local U.S. market as well as international business.?

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Shell Announces It Closed Leak In North Sea

- Shell Announces It Closed Leak In North Sea

Aug 19, 2011

Royal Dutch Shell (NYSE:RDS.A) announced that it has closed a valve from which oil was spilling into the North Sea.

The company said that this is a "key step" in stopping the leak at its Gannet Alpha platform, the worst North Sea oil spill in more than a decade. The company also said that it will observe the flowline to make sure the valve remains sealed.

Over 1,000 barrels of oil has spewed into the sea since a pipeline was found to be leaking August 12, according to Shell, though it claims that after closing the well.

Royal Dutch Shell (NYSE:RDS.A) has a potential upside of 33.8% based on a current price of $62.67 and an average consensus analyst price target of $83.83.

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Cooper Starts Drilling at Perlubie-2 Well

- Cooper Starts Drilling at Perlubie-2 Well

Friday, August 19, 2011
Cooper Energy Ltd.

Cooper announced that the Perlubie-2 appraisal/development well in PEL92 spudded at 10:00 am, Friday, August 19, 2011. The current operation is drilling the surface hole.

Perlubie-2 is targeting the Namur oil reservoir and is located 0.8 km to the southeast of the Perlubie-1 and 0.6 km to the northeast of Perlubie South-1 production wells. Perlubie-2 will be drilled to a total depth of 1,362 meters and is expected to take 8 days to drill and complete.

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Nido to Acquire Additional 2D Seismic at SC 54B

- Nido to Acquire Additional 2D Seismic at SC 54B

Friday, August 19, 2011
Kariki Energy

The recent discovery of a 187 meter hydrocarbon column in the Gindara-1 well in SC 54B, although not commercial, has highlighted the exploration prospectivity of the block when considered in combination with the potentially encouraging results from the reprocessing of seismic over the central and southern parts of the SC 54B permit. The Pawikan lead in the southern part of the block has been identified on existing regional seismic data and is estimated by the Operator to have the potential to contain 700+ MMbbls oil (in-place, unrisked).

The Operator, Nido Petroleum, has advised Kairiki that it is currently reviewing the opportunity to acquire further 2D seismic in the next few months over the Pawikan lead utilizing a seismic vessel that may be in the area at that time. This additional seismic, which would be cost effective, is intended to mature the Pawikan lead for possible drilling in the future. Any proposed seismic program will be subject to Joint Venture approval.
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This seismic acquisition in SC 54B coupled with the ongoing farmout of our interests in SC 54A, which involves the funding of a drilling program by the farminee, would significantly progress Kairiki's exploration and evaluation efforts over the next 12 to 18 months.

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Statoil Extends Eidesvik Contract

- Statoil Extends Eidesvik Contract

Friday, August 19, 2011
Eidesvik Offshore

Statoil has declared its option for one year extended period for the Time Charter party with Eidesvik, (through its subsidiary Eidesvik Shipping AS), for the environmental friendly LNG power PSV Viking Queen. The extended period starts primo November 2011. Statoil has further two optional yearly extended periods on this contract.

Statoil ASA has also declared a one month extended period for the Time Charter Party for the PSV Viking Athene.

Photo Taken by Viking Athene from Viking Queen

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GE Acquires Commtest, Terms Not Disclosed

- GE Acquires Commtest, Terms Not Disclosed

Aug 19, 2011

General Electric (NYSE:GE) announced the acquisition of Commtest, a provider and designer of machinery health information systems.

GE Energy's Bently Nevada product line, a global leader in condition monitoring will incorporate Commtest products into its portfolio and enhance an already robust line up.

Art Eunson, general manager for GE's Bently Nevada product line said, "The acquisition of Commtest allows us to significantly upgrade our portable vibration data collection and analysis capabilities. Bently has an extensive portfolio of continuous monitoring solutions, sensors and transducers, software and supporting diagnostic instillation services, but the Commtest acquisition will help us bring our customers a more integrated offering that takes into account the health of the entire plant."

General Electric (NYSE:GE) has a potential upside of 47.2% based on a current price of $15.34 and an average consensus analyst price target of $22.58.

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Yingli Green Energy Topped Q2 Estimates, Top Line Up 27%

- Yingli Green Energy Topped Q2 Estimates, Top Line Up 27%

Aug 19, 2011

Yingli Green Energy (NYSE:YGE) reported Q2 EPS of $0.34, ahead of consensus estimates of $0.27 per share. Revenues for the quarter rose 27.4% year-over-year to $680.6 million, topping consensus estimates of $613.8 million.

Mr. Liansheng Miao, Chairman and Chief Executive Officer of Yingli Green Energy commented, "I'm pleased to announce that we had our best quarter ever in terms of PV module shipments, which increased by 36.6% over the previous quarter. With the significantly increased shipments, we managed not only to expand our global market share, but also to extend our sales geographies."

Yingli Green Energy has a potential upside of 60.4% based on a current price of $5.63 and an average consensus analyst price target of $9.03.

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Suncor Reviewing New U.S. Sanctions Against Syria

- Suncor Reviewing New U.S. Sanctions Against Syria

Aug 19, 2011

Suncor Energy (NYSE:SU) is reviewing new U.S. sanctions imposed on the Syrian government and a company spokesman said they would adhere to any that affect its otperations.

Suncor operates the $1.21 billion Ebla project there, which supplies natural gas to the domestic market.

Suncor Energy (NYSE:SU) has a potential upside of 71% based on a current price of $30.06 and an average consensus analyst price target of $51.39.

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A Snapshot of Brazil

- A Snapshot of Brazil

Friday, August 19, 2011
Rigzone Staff
by Trey Cowan

Brazilian offshore drilling activities are faring much better than worldwide operations. Total average utilization for Brazil's mobile offshore drilling fleet is 94 percent, which compares quite favorably to the global average of 80 percent. Similarly, average dayrates are much higher in Brazil than compared to the rest of the world. Currently, rigs (i.e. drillships, jackups, and semisubs combined) are garnering rates in the high-$310s while global average dayrates are in the mid-$230s.

The favorable disparity for both operating efficiency and dayrates is due largely to fleet mix. Most of the rigs operating off the coast of Brazil are exploring for oil in deeper waters. Hence, very little drilling in the region is accomplished using jackups; which typically command the lowest dayrates in the industry.

Brazil's semisub fleet utilization (a regional fleet of 52 competitively marketed rigs) is 98 percent, quite high by industry standards. Its drillship fleet, while much smaller at 17 marketed rigs, will continue to grow as newbuild equipment is delivered into the region. The jackup fleet is the smallest of the mix with just three competitive rigs on lease in the region. All three are currently under contract. Given the vast quantity of Brazil's discoveries, demand for offshore rigs shows only signs of growing as the country looks to further tap its ample reserves.

Recent News From the Region

Pacific Drilling announced that its ultra-deepwater drillship the Pacific Mistral has been awarded a three-year contract by Petróleo Brasileiro S.A. (Petrobras) for operations in Brazil. The contract is expected to commence in the fourth quarter of 2011. Estimated maximum contract revenues, including mobilization and client requested modifications, are approximately $536 million.
Rockhopper recently completed interpretation of its fast track new seismic data in PL032 and PL033. Seismic data shows that the Sea Lion Main Complex ("SLMC") will extend to the south and a new high case area extends over 90km2. Also, two new fan prospects were identified within the new seismic data, Casper and Kermit. Following completion of drilling operations on well 14/10-6, Rockhopper is committed to drill three further wells using the Ocean Guardian.
Petrobras has commenced production from the P-56 platform at the Marlim Sul field in the Campos Basin. The unit began production through well 7-MLS-163HPRJS and will potentially generate around 16,000 bopd. The P-56 platform, installed in a water depth of 5,479 feet (1,670 meters), is designed to handle up to 100 Mcf/d when it reaches maximum capacity. This is expected to take place in the first quarter of 2012.
The Sevan Brasil, which is under construction at Cosco Shipyard in China, is on schedule to be delivered during the first quarter of 2012. Upon delivery, the rig will set sail for Brazil to begin its six-year contract with Petrobras.

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Brazil's Pre-Salt Reserves to Boost Latin American Oil Production Growth

- Brazil's Pre-Salt Reserves to Boost Latin American Oil Production Growth

Friday, August 19, 2011
Rigzone Staff
by Karen Boman

Brazilian state energy company Petrobras' plans to develop its offshore pre-salt oil reserves will contribute in part to what Barclays Capital calls a "sizable upward shift" in hydrocarbons production through 2011 through 2020, according to Barclays' Global Energy Outlook. Brazil and Colombia are expected to experience increases hydrocarbons production during that time period, most concentrated in oil versus natural gas, Barclays noted.

Petrobras has unveiled plans to spend US $127.5 billion, or 57 percent of the resources under Petrobras' 2011-2015 Business Plan of US $224.7 billion, on exploration and production efforts. The company plans to increase total oil and gas output from 2.7 million boe/d in Brazil and abroad to 4 million in 2015 and 6.4 million in 2020.

Pre-salt output alone will add up to nearly 2 million boe/d in 2020, pushing the pre-salt's contribution to production from two percent today to 18 percent in 2015 and 40.5 percent by 2020. Petrobras will achieve this growth by setting up 30 extended well tests over the next five years, including 20 in the pre-salt cluster, and 10 in the post-salt area. Additionally, the company will spend US $1.3 billion per year on technology, which will include funding for efforts explore new frontiers, oil recovery and develop a new generation of offshore and undersea production systems.

Petrobras last month also confirmed the commercial potential of its Lula discovery in the pre-salt Santos Basin in water depths ranging from 6,890 feet to 7, 218 feet. Lula produced 28,436 b/d, according to Subsea IQ, and is the first well to produce from Brazil's high touted pre-salt offshore reserves. The well is interconnected to Cidade de Angra dos Reis FPSO and is the first of six production wells to be connected to the FPSO. Petrobras expects for the FPSO to produce around 100,000 b/d d throughout 2012.

Other companies are seeing significant potential in Brazil's pre-salt area. BG Group in June upgraded its estimate of its pre-salt Santos Basin interests to some 6 billion Boe net to BG Group with an upside potential of 8 billion BOE net. The new estimates results from the company's internal analysis of data gathered from drilling, appraisal and other data, including data collected from 29 wells drilled in BG's existing discoveries.

"Robust economics and solid progress with the fast-track development program will see gross installed production capacity rising steadily to reach more than 2.3 million boe per day by 2017," said BG Group Chief Executive Sir Frank Chapman.

Other companies active offshore Brazil include OGX, which has identified the presence of hydrocarbons in the Santonian section of well 1-OGX-47-RJS in the BM-S-59 block in the shallow waters of the Santos Basin, according to Subsea IQ. The operator found a hydrocarbon column of about 430 feet in sandstone reservoirs of the Santonian section with about 167 feet of net pay. The OGX-47 well, named Maceio, lies about 68 miles off the coast of Rio de Janeiro in a water depth of 607 feet. The Ocean Quest semisub drilled the well.

Chevron reported last month that it plans to drill a well later this year in the pre-salt section beneath its Frade field offshore Brazil. The company will drill the well using Transocean semisubmersible Sedco 706, according to RigLogix. "If successful, we'll be in a great position to take advantage of our existing production facilities," said George Kirkland, vice chairman and EVP of Global Upstream and Gas at Chevron.

Petrobras' ambitious drilling plans include constructing newbuild rigs within Brazil; these plans make it likely that service companies will beef up investments in Brazil to meet their customers' needs. National Oilwell Varco (NOV) this week signed contracts to supply drilling equipment packages for seven drillships to Estaleiro Atlantico Sul, including drilling riser and pressure control equipment. The value, over the term of the deliveries, is approximately $1.5 billion. Pete Miller, Chairman, President and CEO of National Oilwell Varco, said the company is investing heavily in Brazil to manufacture more of the products and technologies National Oilwell Varco provides to its oil and gas customers, and to service the rapidly growing installed base of NOV drilling equipment in the region.

Sedco 706

The significant distance at which pre-salt reserves lie offshore Brazil means that operators will likely continue to favor floating production systems as field development solutions. Brazilian waters will be the most active region for future floating production projects, with 50 potential floater projects in the planning cycle, according to a recent report by International Maritime Associates Inc. Of the 50 potential projects, 26 are planned for ultra-deepwater, or water depths greater than 4,921 feet; five are planned for deepwater, or water depths between 3,280 feet and 4,921 feet, and 19 for water depths less than 3,280 feet.

Keppel Shipyard is on track to complete the modification and upgrade of FPSO OSX-1, the first floating production storage and offloading FPSO unit for OSX Brazil S.A. Chartered to OGX Petroleo e Gas Participacoes S.A., the FPSO will be deployed in the Waimea field in the Campos Basin offshore Brazil. The FPSO is expected to leave Keppel in this year's third quarter; production is expected to begin in this year's last quarter at a rate of up to 20,000 b/d from the OGX-26 well.

OGX in June unveiled its business plan related to discoveries in the Campos and Parnaibas basins. Waimea and the Waikiki production is expected to begin in the fourth quarter of 2013. In 2013, the company expects to have three Floating Production Storage Offloading FPSOs (OSX-1, OSX-2 and OSX-3) and two Wellhead Platforms "WHPs" (WHP-1 and WHP-2) in place with a total of ten horizontal production wells onstream in these two projects. OGX expects to achieve 150,000 b/d of production from the Campos Basin in 2013 in these two production complexes from 10 horizontal wells producing an average of 15,000 b/d each.

The gas production ramp-up in the Parnaíba Basin is expected to begin in the second half of 2012. OGX has one project covering two accumulations in the PN-T-68 block, which is 46.7% owned by OGX, and is expected to achieve gross production of 5.7 million m3 of natural gas per day (approximately 200 MMcf/d), or approximately 36,000 BOE/d in 2013 (approximately 15,000 BOE/d net to OGX).

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Shell Stops North Sea Pipe Leak

- Shell Stops North Sea Pipe Leak

Friday, August 19, 2011
Dow Jones Newswires
LONDON
by Alexis Flynn

Shell has stopped a leak from an underwater pipe at its Gannet Alpha platform that had been spilling crude oil into the North Sea for more than a week, the Anglo-Dutch major said Friday.

"Today, Shell divers closed the relief valve from which oil had been seeping at a rate of less than one barrel a day," said Shell. "Now there will be a phase of monitoring the flowline [the pipe] to check that it remains sealed," it added.

Shell has been battling a leak at the 18-year-old installation since last Wednesday. It estimates some 218 tons of crude oil have already spilled into the sea since then, though this isn't expected to reach land. Shell and U.K. environmental authorities say they expect the oil to be naturally dispersed through wave action.

"Closing the valve is a key step," said Glen Cayley, technical director of Shell's exploration and production activities in Europe. "It was a careful and complex operation conducted by skilled divers, with support from our technical teams onshore. But we will be watching the line closely over the next 24 hours and beyond."

However, some 660 tons of residual oil remain in the depressurized pipe, which has been secured on the seabed with concrete mats. The next phase of the operation will be to remove this remaining oil from the pipe.

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

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Gulf Shores Starts Drilling Ops in Southeast Saskatchewan

- Gulf Shores Starts Drilling Ops in Southeast Saskatchewan

Friday, August 19, 201
Gulf Shores Resources Ltd.

Drilling has commenced on the 4-2-15-33W1 well in the Wapella area of Southeast Saskatchewan, said Gulf Shore Resources. Gulf Shores Resources Ltd. is paying 47.5% of the cost of this well to earn a 47.5% working interest. The well offsets the producing 5-2-15-33W1 Bakken oil well in which the Company also owns a 47.5% working interest.

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BOEMRE to Hold First GOM Lease Sale since Spill

- BOEMRE to Hold First GOM Lease Sale since Spill

Friday, August 19, 2011
BOEMRE

Secretary of the Interior Ken Salazar and Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) Director Michael R. Bromwich announced that BOEMRE will hold the first oil and natural gas lease sale in the Gulf of Mexico since the Deepwater Horizon explosion and oil spill. Consistent with steps President Obama announced in May 2011 to expand domestic oil and gas production safely and responsibly, the proposed Western Gulf of Mexico Lease Sale 218 is scheduled to be held in New Orleans on December 14, 2011. The sale will include all available unleased areas in the Western Gulf Planning Area offshore Texas.

"This sale is an important step toward a secure energy future that includes safe, environmentally-sound development of our domestic energy resources," Secretary Salazar said. "Since Deepwater Horizon, we have strengthened oversight at every stage of the oil and gas development process, including deepwater drilling safety, subsea blowout containment, and spill response capability. Exploration and development of our Western Gulf's vital energy resources will continue to help power our nation and drive our economy."

"BOEMRE has taken aggressive steps to renew our commitment to the responsible stewardship of the U.S. Outer Continental Shelf," said Director Bromwich. "The decision to hold this sale was made after careful analysis of the best scientific information available and consideration of all public comments received."

The proposed lease sale encompasses about 3,900 un-leased blocks covering approximately 20.6 million acres. The blocks are located from 9 to about 250 miles offshore, in water depths ranging from 16 to more than 10,975 feet (5 to 3,346 meters). BOEMRE estimates the proposed lease sale could result in the production of 222 to 423 million barrels of oil and 1.49 to 2.65 trillion cubic feet of natural gas.

As part of the Administration's commitment to provide incentives for diligent development, and to ensure receipt of fair market value for the lease rights sold, BOEMRE proposes to increase the minimum bid amount for blocks in water depths of 1,312 feet (400 meters) and greater to $100 per acre. The minimum bid for those water depths in previous sales was $37.50 per acre.

This change is based on a rigorous historical analysis of the last 15 years of lease sales in the Gulf of Mexico. The analysis, adjusted for energy prices at time of each sale, demonstrates that leases that received high bids of less than $100 per acre have experienced virtually no exploration and development activities. In light of this analysis, BOEMRE has concluded that the increase will have little to no adverse impact on the timing or magnitude of production from tracts offered in this sale. Raising the minimum bid will discourage companies from purchasing leases they are unlikely to explore in the near term.

"BOEMRE is proposing this increase in an effort to ensure that areas with the greatest resource potential are developed, and to decrease the amount of leased acreage that is warehoused and goes unexplored," Director Bromwich said. "The change in terms will better ensure that the nation's resources are being developed in a timely manner."

The minimum bid amount for leases in the much more heavily explored and produced shallower water depths will remain at $25 per acre.

The lease sale will include environmental stipulations requiring that operators protect biologically sensitive features, as well as marine mammals and sea turtles. These stipulations will require trained observers to ensure compliance and restrict operations when conditions warrant.

Lease Sale 218 is the last remaining Western Gulf Planning Area sale scheduled in the 2007 – 2012 Outer Continental Shelf Oil and Natural Gas Leasing Program. The terms and conditions outlined in the package are not final. Different terms and conditions may be employed in the Final Notice of Sale, which will be published at least 30 days before the sale.

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Countdown to First Gas at Gajah Baru

- Countdown to First Gas at Gajah Baru

Friday, August 19, 2011
Rigzone Staff
by Jaime Kammerzell

Premier Oil is set to bring its Gajah Baru natural gas field online in October 2011. The field is in Block A in the West Natuna Sea, Indonesia, in 269 feet (ft) of water, which is near Premier's West Natuna Gas Project.

According to Premier Oil, gas from West Natuna is sold to Singapore under a 27 year gas sales contract in conjunction with other production sharing contracts through the West Natuna Transportation System gas pipeline. When signed in 1999, contract deliveries were expected to be 325 MMscf/d of gas (block A share 120 MMscf/d), but volumes exceed these levels today.

Premier signed separate gas sales agreements with SembCorp Gas, Indonesia's Perusahaan Listrik Negara and Universal Batam Energy for contract gas sales volume of up to 145 Bbtu/d.

Premier Oil operates the field with 28.67 percent interest with co-owners Kufpec holding 33.33 percent interest, Amerada Hess with 23 percent interest and Petronas with 15 percent interest.

Premier drilled the Gajah Baru-1 discovery well in 2000. The well tested to have proven gas columns in eight separate reservoir sands in the Arang formation. According to Premier, the well flowed 40 MMscf/d during testing.

Transocean's Trident XVII jackup drilled the Gajah Baru-1 slim hole well to 5,290 ft.

Trident XVII

In September 2004, Premier drilled the appraisal well, Gajah Baru-2, to 9,010 ft and proved the presence of hydrocarbon reserves in stacked Miocene reservoirs of the Arang formation and the Oligocene sands of the Gabus formation. Premier drilled the top section of the well to 2,214 ft with 13 3/8" casing using a casing-while-drilling technique, establishing a new world record for this method at the time.

Based on appraisal drilling conducted in October 2004, the operator estimates that the field contains 325 Bcf (54 MMboe) of gas.

The field is expected to produce 100 MMcm/d.

Production Plan

Premier Oil received project sanction in 2010. The operator planned to develop the field with subsea wells tied back to a central processing platform and a wellhead platform connected by a bridge.

The wellhead platform was installed in 3Q 2010 and weighs about 900 tons with a jacket weight of about 1,400 tons.

Topsides construction for the central processing platform, which weighs 8,200-tonnes, was completed in June 2011, and left the SMOE fabrication yard in Batam, Indonesia, later that month. Together with the jacket, which weighs about 4,700 tons, the central processing platform includes compression, separation, glycol regeneration, gas metering, mechanical refrigeration, utilities and living quarters for 60 men.

Saipem installed the central processing platform over a jacket that Japan's Nippon Steel in Indonesia built.

Wellhead Platform

The West Callisto jackup is drilling 12-14 exploration and appraisal wells before the end of the year.

West Callisto

Premier will export produced gas through a 16-inch pipeline 2 miles to the onshore Semgas facility in Singapore. The pipeline rests 262 ft under the water's surface.
Contracts

In May 2009, while Premier waited for project approval, the operator awarded several contracts. The first of which went to Saipem and SMOE Indonesia, who received a $430 million contract for the engineering and construction of a central processing platform, a wellhead platform and a subsea gas pipeline.

PT SMOE Indonesia's portion of the contract entails part procurement, construction engineering, construction, hook-up and commissioning of the two platforms, while PT Saipem Indonesia's scope of work, worth about $280 million, covers engineering design, procurement, transportation and installation of the platforms and the subsea pipeline.

The central processing platform will be installed using the floatover method, while other platform facilities and pipeline will be installed using Saipem's Castoro Otto derrick/lay barge. The marine activities will be completed in 4Q 2011.

Castoro Otto

Premier also awarded Nippon Steel Batam a contract to construct the wellhead deck, piles and conductors. The company will also install the central processing platform's jacket and piles.

In August 2009, Premier contracted Process Group to supply a monoethylene glycol regeneration unit for the central processing platform and to supply a produced water treatment unit for the platform, which will be used to separate oil from the produced water. It will be able to treat 2,400 b/d of produced water.

In February 2010, Premier awarded Hutchinson Offshore a contract to provide leg mating and deck support facilities.

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Beach Seals Tie-In Deal with Senex

- Beach Seals Tie-In Deal with Senex

Friday, August 19, 2011
Beach Energy Ltd.

Beach has signed an agreement with Senex to tie-in the Growler Field (Beach 40%) to the Lycium oil field. It has also agreed with Senex to construct a trunkline from Lycium to the Moomba facility, however, the tie-in of this section remains subject to approval from the South Australian Cooper Basin (SACB) Joint Venture (~Santos Ltd 67%, Beach 20%, Origin Ltd 13%).

It is anticipated that the flowline from the Growler Field will be constructed in two main sections. The first section, directly from the Growler Field to the Lycium oil field, will consist of a six inch flowline with an initial capacity of approximately 8,000 barrels of oil per day. The equity interests for this section of flowline will be Beach 40% and Senex 60%.

Pending approval from the SACB Joint Venture, the main trunkline will service the whole of Beach's operated and non-operated Western Flank acreage and is planned to run between Lycium and the Moomba facility. The capacity of this eight inch trunkline is expected to be in the order of 15,000 barrels of oil per day. The equity interests for this section will be Beach 60% and Senex 40%.

Beach will undertake both the construction and operatorship of the flowlines, with the total cost of approximately $40 million to be effectively shared between Beach and Senex.

These flowlines will provide Beach with access to the Growler Field during times of flooding in much the same way it has for Beach's PEL 92 acreage during the recent flooding events. The second trunkline will also provide for increased production flows from Beach's operated PEL 91 and PEL 92 acreage as a result of recent development, appraisal and exploration success in the area.

The six well approved exploration program set down for PEL 104 and PEL 111 is expected to commence in October 2011, when flood waters are forecast to recede to levels where access can be restored. A number of Birkhead targets have been identified by the Operator which has had an exploration drilling success rate of 80% in the acreage to date.

The tenure of the Beach Operated Western Flank PEL's 91 and 92 have been granted a twelve month extension by PIRSA in acknowledgment that flooding has delayed exploration in the area. It is expected that the flowlines will be commissioned around June 2012.

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ConocoPhillips Says Bohai Bay Cleanup Almost Complete

- ConocoPhillips Says Bohai Bay Cleanup Almost Complete

Aug 19, 2011

ConocoPhillips China (NYSE:COP) says the cleanup from the oil spills in China's Bohai Bay is nearly complete, with minimal impact to the environment.

The company said it "sincerely regrets" the incidents in Bohai Bay and "accepts its responsibilities.

ConocoPhillips (NYSE:COP) has a potential upside of 29.8% based on a current price of $63.79 and an average consensus analyst price target of $82.8.

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Lundin Spuds Batu Hitam Well Offshore Malaysia

- Lundin Spuds Batu Hitam Well Offshore Malaysia

Friday, August 19, 2011
Lundin Petroleum AB

Lundin has commenced the drilling of the Batu Hitam prospect located in Block PM308A, offshore the east coast of Peninsular Malaysia.

The Batu Hitam-1 well will test the hydrocarbon potential of a large basement high structure located in the east of the PM308A block. The objectives of the well are Oligocene sandstones in a four-way dip closure and fractured pre-Tertiary basement in the underlying horst block.

The planned total depth is 2,450 meters subsea and the well will be drilled using the jackup drilling rig Offshore Courageous. The well is expected to take approximately 40 days.

Lundin Petroleum operates and holds 35 percent interest in PM308A through its subsidiary Lundin Malaysia BV. Partners in PM308A are JX Nippon Oil & Gas Exploration (Peninsular Malaysia) Limited with 40 percent interest and PETRONAS Carigali Sdn. Bhd. with 25 percent.

Lundin Malaysia BV operates 6 Blocks in Malaysia, namely PM308A, PM308B, PM307, SB303, SB307 and SB308.

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Statoil Primes Bit for North Sea Drilling

- Statoil Primes Bit for North Sea Drilling

Friday, August 19, 2011
Norwegian Petroleum Directorate

The Norwegian Petroleum Directorate (NPD) has granted Statoil Petroleum AS a drilling permit for well 15/8-2, cf. Section 8 of the Resource Management Regulations.

Well 15/8-2 will be drilled from the COSLPioneer drilling facility, at position 58°24'55.1"N 01°32'49.90"E. COSLPioneer is a new drilling facility that was built in China. The facility was docked at Sandnes this summer to be prepared for its first assignment on the Norwegian shelf.

The drilling program for well 15/8-2 concerns the drilling of a wildcat well in production license 303. Statoil Petroleum AS is the operator with a 100 percent ownership interest.

The area in this license consists of a part of block 15/2 and parts of blocks 15/3, 15/5, 15/6 and 15/8. The well will be drilled about ten kilometers west of the Sleipner Vest field in the central part of the North Sea.

Production license 303 was awarded on December 12, 2003 (APA 2003). This is the seventh well to be drilled in the license area.

The permit is contingent upon the operator securing all other permits and consents required by other authorities prior to commencing the drilling activity.

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Technip Bags Gig at Anadarko's Lucius Field

- Technip Bags Gig at Anadarko's Lucius Field

Friday, August 19, 2011
Technip

Anadarko has issued a Letter of Intent to Technip for the engineering, construction and transport of a 23,000 ton Truss Spar hull for their Lucius field development. This field is located in approximately 7,100 feet (2,165 meters) of water, in the US Gulf of Mexico.

This Letter of Intent allows Technip to begin preliminary work on the project including purchase of long lead items for the hull in advance of the planned sanction date of December 2011.

The Lucius Spar will have a capacity of more than 80,000 barrels of oil and 450 million cubic feet of natural gas per day.

Technip's operating center in Houston, Texas, will provide the overall project management. The detailed hull design and fabrication will be carried out by Technip's yard in Pori (Finland), where most of the previous Technip Spar projects have been manufactured.

This Spar will be the fifteenth delivered by Technip (out of eighteen worldwide) and thus demonstrates both the leadership of the Group for this kind of floating platform and its ability to tackle ultra deep water developments. It also confirms the Pori yard track record expertise and great capabilities to deliver state-of-the-art platforms.

First oil is scheduled for 2014.

The Lucius Spar will be jointly owned by Anadarko (35%), Plains E&P (23.3%), ExxonMobil (15%), Apache (11.7%), Petrobras (9.6%) and Eni (5.4%).

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