Commodity Corner: Oil Falls Amid Softer Demand Outlook

- Commodity Corner: Oil Falls Amid Softer Demand Outlook

Friday, September 02, 2011
Rigzone Staff
by Matthew V. Veazey

Light sweet crude oil for October delivery lost nearly three percent Friday after the U.S. Department of Labor announced that the U.S. economy added zero jobs last month.

The WTI settled at $86.45 a barrel, a $2.48 day-on-day decline, after the Labor Department reported that the loss of 17,000 government jobs in August offset the addition of the same number of private-sector jobs during the period. According to media outlet MSNBC, the government last reported zero job growth 66 years ago. The Labor Department also announced that the unemployment rate held steady at 9.1 percent.

The unimpressive employment figures support the view that the U.S. economy is experiencing a double-dip recession, lowering expectations for oil demand.

Brent futures also ended the day lower, losing 1.7 percent to settle at $112.33 a barrel. The benchmark traded within a range from $111.57 to $113.51. The WTI peaked at $88.99 and bottomed out at $85.42.

By noon Friday, one-third of Gulf of Mexico natural gas production had been shut-in as Tropical Storm Lee ambled toward the Louisiana coastline. That was not enough to counter the aforementioned dismal economic prospects, however; October natural gas lost more than four percent Friday to settle at $3.87 per thousand cubic feet.

Front-month natural gas fluctuated from $3.85 to $4.065 during floor trading. Reformulated gasoline for October delivery lost a nickel to end the day at $2.84 a gallon after trading within a range from $2.795 to $2.90.

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Dow Chemical Awarded $12.8 Million by Department of Energy To Develop Photovoltaics

- Dow Chemical Awarded $12.8 Million by Department of Energy To Develop Photovoltaics



Sep 2, 2011

As part of the U.S. Department of Energy's SunShot initiative, Dow Solar, a business unit of The Dow Chemical Company (NYSE:DOW), has been awarded a $12.8 million, 3-year grant to fund a program to dramatically reduce the cost of building integrated solar products. The program's goal to ensure that solar power is a viable source for the nation's power needs and economic growth, and accelerate widespread solar adoption.

The Department of Energy grant will help fund a $22.4 million program that brings together leaders from across the entire value chain, including solar solutions providers, national laboratories, universities, leading electronics companies and national home builders to create a new solar technology that reduces the total installation costs and provide reliable, low cost solar energy to residential consumers.

Dow Chemical (NYSE:DOW) has a potential upside of 53.4% based on a current price of $26.83 and an average consensus analyst price target of $41.15.

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Halliburton Filed Claims Against BP In Texas State Court

- Halliburton Filed Claims Against BP In Texas State Court



Sep 2, 2011

Halliburton (NYSE:HAL) filed claims against BP (NYSE:BP) in Texas state court for negligent misrepresentation, business disparagement and defamation related to the April 20, 2010, Macondo incident.

The company also moved to amend its claims against BP in the multi-district litigation in New Orleans, Louisiana, to include fraud.

Halliburton has a potential upside of 66.9% based on a current price of $43.02 and an average consensus analyst price target of $71.79.

Full news
- Halliburton Sues BP In Texas - Alleges Misrepresentation <<


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Weather Watch: Tropical Depression Stalls Over GOM

- Weather Watch: Tropical Depression Stalls Over GOM

Friday, September 02, 2011
Rigzone Staff
by Karen Boman

Shell reported Friday that Tropical Depression #13, which has winds near 35 mph and is stalled over the Gulf of Mexico, is impairing its efforts to evacuate staff from its deepwater operations.

The company has evacuated 550 workers and is using all available resources to safely evacuate employees. The number of personnel evacuated Friday will depend on weather conditions, "and we will only transport personnel if safe to do so", the company said.

Shell has shut in the Auger, Enchilada, Brutus and the Europa subsea field. Shell's non-operated downstream infrastructure partners have proceeded in evacuating their facilities and their actions have resulted in some production shut-ins as well.

The National Hurricane Center (NHC) reports that Tropical Depression No. 13 has maximum sustained winds near 35 mph with higher gusts. NHC forecasts the depression to strengthen during the next 48 hours, with the depression possibly becoming a tropical storm later Friday.

NHC reports winds of tropical storm force are being reported on oil rigs north and east of the storm's center at elevations of a few hundred feet. The center of the cyclone is expected to approach the coast of southern Louisiana during the weekend. A tropical storm warning is in effect from Pascagoula, Miss., to Sabine Pass, Texas.

The storm system's greatest impact will be on production, as producers have moved to shut in oil and gas supply, but the tropical disturbance will not likely cause major damage to oil and gas infrastructure, said Dan Leonard, senior meteorologist at Weather Services International (WSI). The storm is expected to bring 30-40 mph winds to the Gulf production region east of the mouth of the Mississippi River, even after it makes landfall.

The tropical disturbance in the Gulf is unusual as most systems that go into the Gulf of Mexico usually develop in the Atlantic Ocean or the Caribbean Sea, said Leonard. The tropical depression, which will strengthen over the next 24 to 36 hours, will stall along the immediate Louisiana coast Sunday and Monday before moving up through Louisiana and Alabama at mid-week next week. "The system is significant in that you'll have a long duration wind event in one area for so long."

Tropical Storm Katia, which had previously strengthened to a Category 1 hurricane, is not expected to impact the Gulf of Mexico.

Enterprise Products Partners has shut in its Poseidon and Cameron Highway pipelines due to the storm in the Gulf. The two pipelines have combined actual throughput of 250,000 b/d, with a net impact of 100,000 b/d on Enterprise.

The company also has evacuated workers from its nine operated platforms at High Island Block 85, South Marsh Island 205, Garden Banks Block 72, East Cameron Block 373, Mustang Island Block A-103, Viosca Knoll Block 817, West Delta Block 68, High Island A264 and West Cameron Block 167.

The Cameron Highway Pipeline serves multiple refineries in the Texas City and Port Arthur, Texas areas; Poseidon serves refiners in the Houma, La., area. Both pipelines also connect to other pipeline systems onshore.

The company is monitoring the storm to determine when it's safe to resume operations, said company spokesperson Rick Rainey.

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BP Briefs on Russia Office Raid

- BP Briefs on Russia Office Raid

Friday, September 02, 2011
BP plc

On Thursday night the bailiff of the Federal Bailiff Service (FSSP) for Moscow passed a resolution to postpone the execution of enforcement procedures against BP Exploration Operating Company Limited (BP EOC) until September 10, 2011. The postponement was introduced in response to a petition filed by BP EOC regarding the necessity to get clarification from the Arbitration Court of Tyumen Region. The required clarifications concern the judicial act which was the basis for the executive actions.

BP EOC believes that the Court Decision which allowed the inspection and copying of documents in the Moscow office of the company contradicts the applicable Russian legislation, contains outrageous requirements and was made in support of an unfounded lawsuit. BP EOC is not a defendant in the legal claim by TNK-BP Holding minority shareholders and is neither a direct nor an indirect shareholder of TNK-BP Holding. The keywords "oil" and "gas", on which the search in documents was authorized to be carried out, allows the seizure of virtually all corporate documentation of BP EOC, including confidential documents.

In addition, the Arbitration Court of Tyumen ordered the bailiffs to allow the representatives of Andrei Prokhorov, a minority shareholder of TNK-BP, to participate in the examination and confiscation of documents and then to turn them over to such representatives instead of the court. BP EOC believes that this process has been a misuse of the Russian Arbitration Procedure Code.

The decision taken by the bailiffs will allow BP EOC time to appeal against the decision of the Arbitration Court of Tyumen region under normal conditions and to require the complete cancellation of any enforcement proceedings under the unfounded lawsuit by Andrei Prokhorov.

At present, all examined documents of BP EOC remain in office in a sealed cabinet. The company expects to resume normal operation of the office on Monday, September 5.

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Salamander to Sell Stakes in Indonesia

- Salamander to Sell Stakes in Indonesia

Friday, September 02, 2011
Salamander Energy plc

Salamander has agreed terms with Risco Energy for the sale of Salamander Energy (Java & Sumatra) B.V. through which the Group holds five percent interests in the Offshore Northwest Java (ONWJ) and Southeast Sumatra (SES) PSCs respectively. The cash consideration is $55 million plus working capital adjustments of $1.3 million, with a further deferred cash consideration payable upon the buyer's participation in any extension of the ONWJ PSC.

Highlights

• Salamander has agreed to sell its five percent interests in the ONWJ and SES PSCs to Risco, with an effective date of 30th June 2011. The initial cash consideration for the transaction is $55 million plus working capital adjustments of $1.3 million. The deal is not subject to any additional approvals.
• In addition, a deferred cash payment is to be made upon confirmation of Risco's participation in the extension of the ONWJ PSC. The amount of the deferred payment will be dependent on the timing and level of participation in the ONWJ PSC extension. For a 5% participation, the payment will be capped at $4 million. The payment will be pro-rated to the 5% interest.
• Production attributable to the net 5% interests in the first half of 2011 averaged c. 6,000 boepd and proved and probable reserves attributable to the interests are estimated to be 13 million barrels of oil equivalent as at the mid-year 2011.

Background

The ONWJ and SES PSCs came into production in 1971 and are currently in long-term decline. The assets are currently operated by PT Pertamina Hulu Energi (ONWJ) and CNOOC SES Ltd. (SES).

• The PSCs are currently in their second extension phase, and are due to expire in January 2017 (ONWJ) and September 2018 (SES).
• The assets were originally acquired by the Group in the first half of 2006, since when the ONWJ and SES fields have produced approximately 12.5 million barrels of oil equivalent net to Salamander.
• During the first half of 2011, the interests generated approximately $6.3 million of cash flow post-tax and capex net to the Group.

James Menzies, Chief Executive, Salamander Energy, said, "We have realized excellent full cycle returns on the investment in these mature assets, and this is a timely moment for exit. The strategic motivation for this deal is to re-deploy capital from declining assets into operated, material growth projects where Salamander has influence."

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Gazprom Neft Buys Oilfield in Orenburg Region

- Gazprom Neft Buys Oilfield in Orenburg Region

Friday, September 02, 2011
OAO Gazprom Neft

The Gazprom Neft Group has acquired 100% of ZAO Centre of Science-Intensive Technologies, which holds exploration and production licenses for hydrocarbons in the Tsarichanskoye field – the largest of those discovered in the Orenburg region in recent years. According to Gazprom Neft's estimates, recoverable hydrocarbon reserves in the field may exceed 25 million tons.

"Gazprom Neft is familiarizing itself with a new territory – the Orenburg region, which will become, in the long run, another oil production center for the company. Gazprom Neft is planning to expand its presence in the region, both through the development of the underlying asset – the Eastern part of the Orenburg field, and through engaging other blocks to ensure a synergistic effect," said Vadim Yakovlev, the First Deputy CEO of Gazprom Neft.

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EnQuest Lowers Production Target for 2011

- EnQuest Lowers Production Target for 2011

Friday, September 02, 2011
EnQuest plc

EnQuest updated its production targets for the full year 2011. The S7 production well in the Conrie field, discovered earlier this year, and the S8Z well in area 6 of the Don Southwest field both started production during August 2011. The S7 Conrie well came on production at lower than expected rates. The S8Z well started production at the expected initial rate, but has declined more quickly than anticipated. EnQuest is in the process of testing and assessing the well results. EnQuest does not expect a material change in ultimate recovery of reserves in the Don Southwest field and is studying whether a further well or sidetrack is needed.

As a result of the production uncertainty on both wells, EnQuest expects average production for the full year 2011 in a range between 23,000 Boepd to 24,500 Boepd.

Alma Development Project

EnQuest has submitted the first draft of the proposed Field Development Plan ('FDP') for the Alma (formerly Ardmore) Development in the Central North Sea. This first draft FDP has been submitted to DECC specifically for the Alma field, with a separate FDP to follow shortly for the Galia (formerly Duncan) field; final approval of these FDP's is anticipated in time for full project sanction before year end. If approved, the project is scheduled to start production in the second half of 2013; peak production is expected to be in excess of 20,000 Boepd. EnQuest is looking forward to being in a position to provide full details on the Alma and Galia development project following full project sanction.

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Blackdog Preps to Drill Well in Alberta

- Blackdog Preps to Drill Well in Alberta

Friday, September 02, 2011
Blackdog Resources Ltd.

Blackdog is participating in the drilling of an approximate 3000 meter deep Leduc Reef Exploration well (the "Well") near Sylvan Lake, Alberta. The target was defined using extensive 3D seismic analysis and the Company believes the target is prospective for light oil.

Under the terms of a farm in agreement, Blackdog is paying 25% of all costs to testing or abandonment to earn a 15% working interest ("W.I.") in the Well and entire section of land the Well is situated on. The Company believes that a successful well could lead to the drilling of two additional wells on the same section of land.

Also under the terms of the farm in agreement, Blackdog received an option, at the Company's discretion, to participate in the drilling of a second Leduc Reef Exploration well in the Sylvan Lake area. Blackdog would pay 25% of all costs to testing or abandonment to earn a 16.25% W.I. in this well and the land it is situated on. Blackdog has a 72 hour window from the casing or abandonment of the first exploration well to exercise this option.

The first well has been spud and the Company expects to announce results during the month of September.

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Pemex Secures Close to 10% Stake in Repsol

- Pemex Secures Close to 10% Stake in Repsol

Friday, September 02, 2011
Dow Jones Newswires
MADRID
by Ilan Brat

Repsol said Friday that Mexico's state-owned oil company has purchased an additional 4.62% stake in the company.

The purchase nearly doubles Petroleos Mexicanos SA's ownership in Repsol to around 9.4%, and comes as Pemex carries out an agreement with fellow Repsol shareholder Sacyr Vallehermoso to vote together in an attempt to exert more control over the Spanish oil firm's board.

The purchase of 56.4 million shares would be worth EUR1.12 billion at Repsol's closing price of EUR19.8 on Friday.

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

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Baker Hughes Acquires Stake in Verdande Energy

- Baker Hughes Acquires Stake in Verdande Energy

Friday, September 02, 2011
Baker Hughes Inc.

Baker Hughes and Verdande Technology announced that a subsidiary of Baker Hughes has acquired a minority equity stake in Verdande Energy AS, a subsidiary of Verdande Technology AS, and will become a user of Verdande Technology's case-based reasoning (CBR) software platform for oil and gas applications.

This CBR technology, called DrillEdge™, is a real-time intervention tool constructed on the principle of case-based reasoning, a problem-solving process that identifies similar issues from relevant wells drilled in the past and offers similar solutions. This immediate intervention-while-drilling response provides a thorough, fast and practical real-time bridge between past experience and current operations. Under the terms of the agreement, Baker Hughes will be involved in further developing the capabilities.

"The DrillEdge platform is expected to help operators lower risk, increase their rate of penetration and reduce non-productive time while drilling," said Scott Schmidt, president of Drilling and Evaluation for Baker Hughes. "Integrating this capability into our portfolio of real-time optimization and remote drilling services complements our BEACON remote operations platform. The technology is expected to help our customers expand their understanding of their wells without increasing their workload as they continue to drill more demanding and technically challenging wells."

"This strategic arrangement delivers immense benefits to our customers seeking to improve drilling performance and drive operational efficiencies by joining our technology with Baker Hughes' extensive network," said Lars Olrik, chief executive officer of Verdande Technology. "It helps a small company like ours strengthen its place in the market, access a global support and operational network and further develop the technology at a more rapid pace."

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Halliburton Sues BP In Texas - Alleges Misrepresentation

- Halliburton Files Lawsuit Against BP

Friday, September 02, 2011
Halliburton Co.

On September 1, 2011, Halliburton filed claims against BP in Texas state court for negligent misrepresentation, business disparagement and defamation related to the April 20, 2010, Macondo incident. Halliburton has also moved to amend its claims against BP in the multi-district litigation in New Orleans, Louisiana, to include fraud.

These allegations are based upon BP providing Halliburton with inaccurate information prior to performing cementing services on April 19, 2010, and BP's use of and omission of that information in subsequent public statements, filings and governmental investigations.

Halliburton has learned that BP provided Halliburton inaccurate information about the actual location of hydrocarbon zones in the Macondo well. The actual location of the hydrocarbon zones is critical information required prior to performing cementing services and is necessary to achieve desired cement placement.

Halliburton remains confident that all the work it performed with respect to the Macondo well was completed in accordance with BP's specifications for its well construction plan and instructions, and that Halliburton is fully indemnified under the contract.

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Halliburton Sues BP In Texas - Alleges Misrepresentation

Friday, September 02, 2011
Dow Jones Newswires
by Melodie Warner

Halliburton filed a negligent misrepresentation, business disparagement and defamation lawsuit against BP in Texas state court related to the April 2010 Macondo explosion and oil spill in the Gulf of Mexico.

Halliburton has also moved to amend its multi-district litigation in New Orleans to include fraud claims against BP.

The oilfield-services company alleges BP provided Halliburton with inaccurate information--such as the actual location of hydrocarbon zones in the Macondo well--before cementing services began on April 19, 2010. Halliburton also claims BP has used and omitted that information in subsequent public statements, filings and governmental investigations.

"This lawsuit is the latest attempt by Halliburton to divert attention from its role in the Deepwater Horizon incident and its failure to meet its responsibilities," BP said in a statement. The energy giant said it has accepted responsibility for responding to the spill and is accordingly paying costs and compensation. BP "expects other parties to accept their responsibilities and bear their share of the costs," the statement said.

Last fall, BP released a report that largely faulted Transocean, the owner of the Deepwater Horizon drilling rig, and Halliburton for last year's disastrous Gulf of Mexico oil spill. While government investigations have generally assigned blame to both BP and its contractors, Transocean disclosed an internal investigation in June that focused almost entirely on decisions made by BP.

Halliburton said Friday it remains confident that all the work it performed was completed in accordance with BP's specifications, and that Halliburton is fully indemnified under the contract.

Shares of Halliburton were trading 2.8% lower at $41.83 moments after the opening bell.

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


LINK 
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Latest Deepwater Horizon Headlines


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TAG Enters Farmout Agreement with Apache in NZ East Coast Basin

- TAG Enters Farmout Agreement with Apache in NZ East Coast Basin

Friday, September 02, 2011
TAG Oil Ltd.

TAG Oil reported that it has entered into a farmout agreement with Apache to explore and potentially develop oil and natural gas resources in the East Coast Basin of New Zealand.

Apache has agreed to conduct a multi-phased exploration, appraisal and potential development program within TAG's East Coast Basin exploration permits PEP 38348, PEP 38349 and PEP 50940. The Permits comprise in excess of one million prospective acres of onshore oil and gas opportunities located on the southeast portion of the North Island. TAG currently holds a 100% working interest in the properties.

Apache has agreed to pay for a portion of TAG's direct costs incurred to date, as well as providing TAG a full carry on three phases of operations to a maximum agreed cost in each phase. If the agreed cost is exceeded in any phase, or if additional operations are conducted, Apache will pay a majority share of any drilling or seismic costs in the specified percentages set out in the Agreement.

Each phase of operations will include an aggressive program of both 2D / 3D seismic and drilling with Apache earning an increasing interest in the Permits as follows:

• Phase 1: Apache will earn a 50% interest in 5,120 acres of the Permits after operations are conducted and by committing to Phase 2.
• Phase 2: Apache will earn a 25% interest in the Permits after operations are conducted and by committing to Phase 3.
• Phase 3: Apache will earn a 50% interest in the Permits after operations are conducted and by committing to Phase 4 operations.

Subject to certain conditions, the planned exploration work program will be conducted over the next four years. Seismic operations will start in 2011 with drilling to commence in 2012.

Apache will be the Operator for all activities undertaken pursuant to the Agreement, excluding the initial four vertical wells of the work program that TAG will operate with Apache's assistance. Apache will spend up to $100 million upon completion of Phase 3 to earn a 50% interest in the Permits. At the end of Phase 3 operations TAG will remain as operator of the Permits. If Apache commits to Phase 4 operations, all costs will then be shared equally between Apache and TAG going forward.

TAG Oil CEO, Garth Johnson, commented, "TAG Oil is excited and honored to partner with Apache in the East Coast Basin to achieve a common goal of converting the potential of the East Coast Basin to proven reserves with integrity, respect and excellence in a safe and environmentally responsible manner. We are planning an aggressive exploration program with Apache with a starting date of September 2011 to initiate seismic acquisition with drilling to begin in early 2012"

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China Ocean Watchdog Orders Operations Halt at Penglai 19-3 Oil Field

- China Ocean Watchdog Orders Operations Halt at Penglai 19-3 Oil Field

Friday, September 02, 2011
Dow Jones Newswires
BEIJING
by Wayne Ma

China's State Oceanic Administration said Friday it is ordering a halt to all drilling and oil and gas production at the Penglai 19-3 oil field at Bohai Bay, which is operated by ConocoPhillips China.

The directive comes amid mounting public criticism against the U.S. oil company that it has been slow to act and provide information about oil spills at the field beginning in early June.

ConocoPhillips submitted a report Wednesday to the SAO and said it believed it had satisfied all the requirements laid out by the SOA for cleaning up and investigating the spill.

A ConocoPhillips spokesman said the company couldn't immediately respond to the statement, which was posted on the SOA's website.

Conoco must submit a marine environmental impact report and won't be able to restart operations until it receives approval, the SOA said.

The U.S. company hasn't satisfied the requirements for cleaning up and investigating the oil spill, it said, adding that Conoco was slow to act on the plan to clean up and investigate the spills though it made some progress in later stages.

The field's platform C hasn't been fully cleaned up and there are still leaks in the surrounding area, while cleanup measures at platform B are insufficient, it said

While operations are halted, Conoco should be willing to be strictly supervised by its joint-venture partner China National Offshore Oil Corp., or Cnooc., to prevent any new oil spills or environmental hazards, it said.

Conoco said last week that while it has sealed off all leaks at the field, residual oil, which is expected to dissipate, continues to seep from two leaks at the rate of one or two liters a day.

ConocoPhillips is responsible for operating the oil field, which has the capacity to produce 160,000 barrels of crude oil a day, in its joint venture with Cnooc.

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

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