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Oil and Gas Energy News Update

Wednesday, September 7, 2011

Oil & Gas Post - All News Report for Wednesday, September 07, 2011

Wednesday, September 07, 2011


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Commodity Corner: Oil Follows Stocks' Lead

- Commodity Corner: Oil Follows Stocks' Lead

Wednesday, September 07, 2011
Rigzone Staff
by Matthew V. Veazey

Thanks to a German court ruling supporting bailouts in the euro-zone, world equities markets posted healthy gains Wednesday. The WTI and Brent crude oil benchmarks followed suit.

Light sweet crude oil for October delivery gained nearly four percent to end the day at $89.34 a barrel. Brent, meanwhile, climbed 2.7 percent to settle at $115.80 a barrel. Buoying stock markets on both sides of the Atlantic as well as Asia was the German Constitutional Court's rejection of an attempt to block German involvement in bailouts of other euro-zone countries.

The Dow Jones Industrial Averaged gained nearly 2.5 percent while the S&P 500 and Nasdaq rose by 2.86 percent and 3.04 percent, respectively. In Europe, the London-based FTSE 100 finished more than 3.1 percent higher and the CAC 40 in Paris gained 3.63 percent. Major exchanges in Shanghai, Tokyo, and Hong Kong posted more modest increases.

The WTI traded within a range from $86.15 to $89.74 while the Brent contract price fluctuated from $112.81 to $115.98.

Natural gas for October delivery managed to break the $4.00 mark, peaking at $4.04 per thousand cubic feet. The midweek momentum faded by the close of floor trading, however, with the front-month contract settling at $3.94 for the second straight day.

October natural gas bottomed out at $3.90 Wednesday.

The price of a gallon of gasoline gained nearly nine cents to settle at just under $2.91, also the intraday high. The price floor during Wednesday's trading was $2.82.

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BP Appeals Russian Court Ruling That Permitted Office Search

- BP Appeals Russian Court Ruling That Permitted Office Search

Wednesday, September 07, 2011
Dow Jones Newswires
ABERDEEN
by Alexis Flynn

BP said Wednesday its subsidiary BP Exploration Operating Company Ltd. is appealing a Russian court order that allowed bailiffs to search the company's Moscow office last week.

BP said the raid by authorities, to seize documents related to a lawsuit filed by a minority shareholder in BP's Russian joint venture TNK-BP, was unlawful as BP EOC had no connection with TNK-BP.

The minority shareholder is seeking compensation for losses following the failure of BP's Arctic exploration agreement with Rosneft.

"BP EOC believes that the court decision contradicts the applicable Russian legislation and is misconceived," said the U.K. energy giant.

"The request to BP EOC to hand over documents is based on an inaccurate and false premise and should not be allowed to stand," BP said in a statement. "The ruling authorizes a search for documents which would allow the plaintiff's representatives to gain access to almost all corporate documentation of BP EOC, which cannot be lawful or reasonable."

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

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Industry Professionals Optimistic about N. Sea Future -Study

- Industry Professionals Optimistic about N. Sea Future -Study

Wednesday, September 07, 2011
GL Noble Denton

Oil and gas industry professionals are optimistic that there will be increased investment activity in the North Sea next year, according to a poll conducted Tuesday at the Offshore Europe conference in Aberdeen. 57% of participants believe that activity will increase, while 22% think that activity will decrease in the region. 21% of survey respondents had no opinion on the matter.

The poll forms part of a survey being conducted by the Economist Intelligence Unit and commissioned by global independent technical advisor GL Noble Denton. It will contribute to a comprehensive report on the outlook for the sector, to be published in January 2012. The report will gather the opinions of oil and gas professionals and provide a complete view of the challenges the sector expects to face next year and beyond.

Pekka Paasivaara, Member of the GL Executive Board, said, "The result of this poll clearly shows that recent concerns over hefty taxes, aging assets and increased operating costs have not dampened optimism for further investment in North Sea oil and gas operations next year.

"This finding will be valuable to the research that GL Noble Denton has commissioned the Economist Intelligence Unit to undertake, and it will be interesting to see whether this optimism for investment in North Sea operations is reflected in other regions."

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MWCC's First Non-Member Gets Permit Approval

- MWCC's First Non-Member Gets Permit Approval

Wednesday, September 07, 2011
Marine Well Containment Co.

Marine Well Containment Company (MWCC) announced that Petrobras America Inc. (PAI) is the first non-member to have cited MWCC's system to receive an approved drilling permit.

PAI contracts with MWCC for the right to cite the MWCC system in its permit application to the Bureau of Ocean Energy, Management, Regulation and Enforcement for a deepwater well in the U.S. Gulf of Mexico.

The agency approved the PAI application on September 2 to drill a development well at its Cascade field approximately 180 miles south of the Louisiana coast in water depth of 8,200 feet.

"MWCC is a not-for-profit, independent organization available to all deepwater U.S. Gulf of Mexico operators," said Chief Executive Officer Marty Massey. "Even if an operator is not a member of MWCC, our system can be made available on a well by well basis and cited in respective applications for permits to drill."

The MWCC member companies include Chevron, ConocoPhillips, ExxonMobil, Shell, BP, Apache, Anadarko, BHP Billiton, Statoil and Hess. These 10 companies operated approximately 70 percent of deepwater wells drilled in the U.S. Gulf of Mexico between 2007 through 2009.

All MWCC members have equal ownership, with each paying a proportional share of the system development and operating costs. System equipment and services are available to members and can be made available to non-members for use in the U.S. Gulf of Mexico.

An expanded containment system is on track for delivery in 2012. In addition to operating in water depths up to 10,000 feet, the system will have the capacity to capture up to 100,000 barrels of fluid and handle up to 200 million cubic feet of gas per day.

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Tethys Posts Initial Logging Results from Kalypso Well

- Tethys Posts Initial Logging Results from Kalypso Well

Wednesday, September 07, 2011
Tethys Petroleum Ltd.

Tethys announced the initial logging results of its KBD01 (Kalypso) exploration well drilled in the Kul-Bas block some 50 km north west of the Doris oil discovery.

The well has now reached total depth in what is initially interpreted to be rocks of Carboniferous age. Electric logs just run over the deeper section indicate more than 100 meters of gross potential hydrocarbon bearing zones in what is interpreted to be shelf limestones of Carboniferous age. Hydrocarbon shows were also noted whilst drilling. This is in addition to the hydrocarbon indications noted on logs and drill data in the overlying Jurassic section (logged prior to drilling this deeper hole section).

7-inch liner is now about to be run after which a comprehensive testing program on both the Carboniferous and Jurassic intervals is planned following agreement and approvals from the appropriate Kazakh authorities. Obtaining these approvals could take some 2 months (with mobilization of testing equipment to follow thereafter), as this is an exploration well and, unlike appraisal wells, no estimated testing program could be submitted prior to finishing the well.

The nearest field which produces from similar Carboniferous shelf limestones is the Alibekmola field, some 250km to the north in the pre-Caspian Basin Subsalt. It is likely that the limestone interval will require acidisation and possible fracture stimulation to achieve optimal production performance (as do other similar fields). This will be evaluated as part of the test program planning.

Meanwhile, elsewhere in Kazakhstan the AKD06 Doris oil appraisal well is drilling ahead at a depth of 1,755 meters towards the Aptian sandstone target.

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GE Selected for Centrica's Projects in N. Sea, Irish Sea

- GE Selected for Centrica's Projects in N. Sea, Irish Sea

Wednesday, September 07, 2011
GE O&G

GE O&G has signed contracts totaling more than $15 million to provide subsea systems to Centrica Energy Upstream of Aberdeen for use in projects in the North Sea and the Irish Sea.

GE reported at Offshore Europe 2011 that it will supply four shallow water vertical tree (SVXT) subsea tree systems for fields in the U.K. Southern North Sea gas basin and the East Irish Sea, and one MVXT system for use in the U.K. Central North Sea.

"The SVXT systems incorporate GE's latest design for shallow water applications and offer new, innovative features to meet Centrica Energy's specific requirements," said Matt Corbin, regional leader—United Kingdom and continental Europe for GE Oil & Gas. "The SVXT tree system is smaller and lighter than any traditional shallow water systems on the market and also offers the lowest installed cost."

The SVXT subsea tree merges horizontal and vertical tree technology, reducing weight by 20 percent, decreasing height and also delivering essential functionality in a pre-engineered, pre-configured modular style. Low-cost installation is achieved through a design that enables deployment using standard offshore jack-up drilling rigs without the need for major modifications.

The MVXT Tree System will be deployed in the Central North Sea and is a standard structured M-Series Vertical Subsea Tree, Nominal 18-3/4" - 5" x 2" 10K system.

"Centrica is at the forefront of developing marginal fields by using new and innovative approaches. The right technology is key to ensuring the economic viability of these fields so we're delighted to be working with GE on its new subsea tree technology," said Greg McKenna, commercial director for Centrica Energy Upstream.

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Viking Moorings Inks 2-Year Agreement with Deep Sea Anchors

- Viking Moorings Inks 2-Year Agreement with Deep Sea Anchors

Wednesday, September 07, 2011
Viking Moorings

Viking Moorings has signed a two-year agreement with Norwegian company, Deep Sea Anchors (DSA) to supply its industry leading deep water 'torpedo' anchors to mooring installations worldwide. The announcement was made at Offshore Europe in Aberdeen where Viking Moorings is exhibiting in the Deep Water Zone.

The agreement, which will cover all regions of the world outside Norway, will allow Viking Moorings to provide an even greater breadth of integrated anchoring solutions to its clients with, once a suitable project is identified, an exclusive agreement with DSA put in place to supply it anchors.

The Deep Penetrating Anchor (DPA), also known as the 'torpedo' anchor, is a dynamically installed anchor which is released freely from a predetermined height over the seabed using gravity as the installation force. The anchor penetrates well below the mudline and sets into stiff clay sediments providing a secure and cost effective anchoring solution irrespective of water depths and allowing for both taut leg and catenary mooring installations.

Other benefits include simplified installation, precise positioning and the elimination of the need for hydraulic and electrical lines which are often used for traditional anchor installations.

"Viking is all about providing greater innovation, greater choice and the optimal mooring solution for our customers," said Viking Moorings Chief Executive – Mooring Solutions, Wolfgang Wandl.

"Having considered a number of our recent mooring installations to be ideal for torpedo anchoring, the formal teaming up with DSA, one of the few providers of such anchors, was an obvious fit. There's no better forum to showcase these new capabilities than the Deep Water Zone and Offshore Europe this year and we look forward to a mutually collaborative arrangement with DSA."

"Deep Sea Anchors is very pleased to have signed this agreement with Viking Moorings," said Ivar Erdal, CEO of Deep Sea Anchors. "Working with Viking Moorings is a perfect match for us, combining our unique anchoring solutions for soft seabed and deep waters with Viking Moorings' comprehensive mooring services and dedicated team of experts.

He continued, "Viking Moorings' knowledge and presence in many countries and regions where our DPA's can be applied with success and to the great benefit of clients was a major reason for entering into this agreement. Being a small and focused company, market entrance remains a challenge - a challenge which can be made easier through this agreement."

Using gravity, the DPA™ anchor starts its descent under cable control before accelerating at up to 100 kilometers per hour for the final 75 meter drop, shooting the anchor deep into the seabed sediments to attain sufficient holding capacity. The anchor penetrates typically 25-35m into stiff clay sediments thus allowing for taut leg as well as catenary mooring. The anchors are not affected by waves and can be deployed at depths of between 500 and 3000 meters. Deep Sea Anchors is based in Trondheim, Norway.

Viking Moorings provides total mooring solutions to operators and drilling contractors, consisting of initial mooring design and analysis, rig move procedures, risk assessments and safety approvals, equipment rental, installation and support, chain inspection, spooling services and logistics services, marine sales, repair and maintenance.

Through a comprehensive evaluation of seabed conditions, Viking Moorings decides upon the optimal anchoring solution for each client whether it be a DPA or more traditional anchoring solution. Other anchors that Viking Moorings supplies to its customers includes the Vryhof Stevpris MK6 and MK 5 anchors, the Vryhof Stevshark anchor, the Stevin anchor, the Bruce Twin Shank and Dennla MK4 anchors and a number of others.

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Swire Oilfield Services Sets Up Shop in Aberdeen

- Swire Oilfield Services Sets Up Shop in Aberdeen

Wednesday, September 07, 2011
Swire Group

Swire Oilfield Services has started work on its £4million Aberdeen headquarters, which will create up to 50 new jobs on completion.

The construction is part of a £50million investment for the company this year, supporting its global business development strategy. Around £20million is earmarked for North Sea operations, including providing new rental fleet units and support infrastructure.

The premises, which will be able to house 150 employees, will more than double the existing headquarters' capacity of 70 people. Its opening will create new positions in areas such as finance, human resources, marketing, fleet design and global fleet procurement positions; underpinning the company's commitment to the north-east of Scotland.

The new headquarters will be based in the Altens Industrial Estate on Souter Head Road. The building work is due for completion in summer 2012.

Chief operating officer, Rupert Bray said, "The Aberdeen headquarters is a significant move, both internationally and regionally. Its opening will contribute to the success of our global business development strategy, as well as helping to consolidate the position of Swire Oilfield Services as a leader in its field. The new headquarters will also contribute towards the local economy, creating a range of new jobs requiring a variety of different skills."

As part of the £50million global investment, Swire Oilfield Services has also recently opened its North America corporate office in Houston, an area with a fast expanding marketplace. Located in one of the major oil capitals, the strategically positioned office will house the North American executive management and Houston commercial teams. Centrally locating the company in a growing marketplace, the new office will serve as the corporate hub for Swire's North American operations as well as supporting other regions around the globe.

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Cobalt Names COO

- Cobalt Names COO

Wednesday, September 07, 2011
Cobalt International Energy Inc.

Cobalt announced that Van P. Whitfield has been promoted to the new position of Chief Operating Officer. Mr. Whitfield previously held the position of Executive Vice President, Operations and Development.

Joseph H. Bryant, Cobalt Chairman and Chief Executive Officer said, "Van has been an indispensable member of Cobalt's management team from the earliest days of the company, and I believe this new role will take advantage of the full range of his management talent and experience. Van's many years of senior management experience in worldwide operations will serve him well in his expanded role. As Cobalt executes its deepwater exploration program in two of the world's highest potential basins, the Board of Directors and I are very pleased that Van has accepted this position, and are confident that he will excel in this new role."

Mr. Whitfield joined Cobalt in May 2006. Mr. Whitfield has 37 years of experience leading oil and gas production operations and marketing activities in North America, the United Kingdom and Europe, Africa, the Middle East and Asia. Prior to joining Cobalt, Mr. Whitfield served in executive positions at CDX Gas LLC, BP Exploration (Angola) Limited, and was seconded to ExxonMobil Saudi Arabia (Southern Ghawar) Ltd in the position of Vice President, Power and Water. Mr. Whitfield has also held the positions of Senior Vice President of BP Global Power, President and General Manager of Amoco Netherlands BV and Production Manager of Amoco (U.K.) Exploration Company. In addition, he has held numerous operational and technical leadership positions in various Amoco Production Company locations throughout the globe. Mr. Whitfield has a Bachelor of Science Degree—Petroleum Engineering from Louisiana State University and is a graduate of the Executive Program at Stanford University.

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Schlumberger Offers Intervention Services through SERVCO

- Schlumberger Offers Intervention Services through SERVCO

Wednesday, September 07, 2011
Schlumberger Ltd.

Schlumberger announced at the Offshore Europe 2011 Oil and Gas Conference and Exhibition the combining of its fishing and intervention services, which will be delivered through SERVCO services. The new service organization will offer fishing and pipe recovery, wellbore departure, wellbore abandonment, and thru-tubing well intervention tools and services.

"Increased and more challenging industry activity especially in shale plays and additional government regulations for offshore drilling in the United States and the North Sea is growing demand for well intervention and abandonment services," said Wesley Heiskell, vice president, SERVCO services. "With SERVCO services we have a global network of experts dedicated to this important service area."

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All Evacuated Personnel nearly Returned - BOEMRE

- All Evacuated Personnel nearly Returned - BOEMRE

Wednesday, September 07, 2011
BOEMRE

Offshore oil and gas operators in the Gulf of Mexico are re-boarding platforms and rigs, and restoring production following Tropical Storm Lee. The Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE) Hurricane Response Team is monitoring the operators' activities. The team will continue to work with offshore operators and other state and federal agencies until operations return to normal.

Based on data from offshore operator reports submitted as of 11:30 a.m. CDT Wednesday, personnel remain evacuated from a total of 21 production platforms, equivalent to 3.4 percent of the 617 manned platforms in the Gulf of Mexico. Production platforms are the structures located offshore from which oil and natural gas are produced. Unlike drilling rigs, which typically move from location to location, production facilities remain in the same location throughout a project's duration

Personnel have been evacuated from 4 rigs, equivalent to 5.7 percent of the 70 rigs currently operating in the Gulf. Rigs can include several types of self-contained offshore drilling facilities including jackup rigs, submersibles and semisubmersibles.

As part of the evacuation process, personnel activate the applicable shut-in procedure, which can frequently be accomplished from a remote location. This involves closing the sub-surface safety valves located below the surface of the ocean floor to prevent the release of oil or gas. During the recent hurricane seasons, the shut-in valves functioned 100 percent of the time, efficiently shutting in production from wells on the Outer Continental Shelf and protecting the marine and coastal environments. Shutting-in oil and gas production is a standard procedure conducted by industry for safety and environmental reasons.

From operator reports, it is estimated that approximately 36.9 percent of the current oil production in the Gulf of Mexico has been shut-in. It is also estimated that approximately 18.1 percent of the natural gas production in the Gulf of Mexico has been shut-in. The production percentages are calculated using information submitted by offshore operators in daily reports. Shut-in production information included in these reports is based on the amount of oil and gas the operator expected to produce that day. The shut-in production figures therefore are estimates, which BOEMRE compares to historical production reports to ensure the estimates follow a logical pattern.

After the storm has passed, facilities will be inspected. Once all standard checks have been completed, production from undamaged facilities will be brought back on line immediately. Facilities sustaining damage may take longer to bring back on line. BOEMRE will continue to update the evacuation and shut-in statistics at 1:00 p.m. CDT each day as appropriate.

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API: Policy Shift Could Create 1.4 Million New Jobs

- API: Policy Shift Could Create 1.4 Million New Jobs

Wednesday, September 07, 2011
American Petroleum Institute

U.S. oil and natural gas policy changes could generate more than 1.4 million new jobs, $800 billion in additional government revenue, and 10 million barrels worth of added daily oil and natural gas production by 2030, according to a study by Wood Mackenzie released Wednesday by API. New jobs could be added in every state.

"Our industry has kept more than 9 million Americans employed through some of the toughest economic times in America's history, and we created thousands of jobs just last month," said API President and CEO Jack Gerard. "The study shows we could provide another 1.4 million jobs, with as many as one million created in just the next 7 years, and thousands of shovel-ready jobs available next year. It's time our national energy policy let America take advantage of this opportunity."

"The creation of these jobs is within the president's control," Gerard added. "The policy changes involve actions he can take unilaterally. They do not require a super committee of Congress, and they do not require new legislation."

The policy changes include opening non-park federal onshore and offshore areas to development where now prohibited, returning permitting in the Gulf of Mexico to historical levels, approving the Keystone XL and other pipelines, and establishing a regulatory environment that permits full development of the nation's oil and gas resources, including those locked in shale formations.

U.S. oil and natural gas consumption would not necessarily increase as a result, according to API. The changes would allow America to produce at home a much larger percentage of the oil and natural gas it consumes, reducing imports. "If the full potential of domestic oil and gas production could be achieved while also increasing imports of Canadian oil, all of America's liquid fuels could come from secure North American sources within 15 years," Gerard said.

Wood Mackenzie is a Scotland-headquartered consulting firm with extensive experience analyzing oil and natural gas industry issues. API sponsored the study.

API represents more than 480 oil and natural gas companies, leaders of a technology-driven industry that supplies most of America's energy, supports 9.2 million U.S. jobs and 7.7 percent of the U.S. economy, delivers more than $86 million a day in revenue to our government, and, since 2000, has invested more than $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives.

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Computer Model May Be Able to Predict Pipeline Fractures

- Computer Model May Be Able to Predict Pipeline Fractures

Wednesday, September 07, 2011
Rigzone Staff
by Karen Boman

A computer model designed by the Massachusetts Institute of Technology's (MIT) Impact and Crashworthiness Lab to test automobile components could also be utilized to predict how pipelines may fracture in offshore drilling accidents.

As a case study, a team at the lab simulated the forces involved in the 2010 Deepwater Horizon explosion in the Gulf of Mexico, finding that their model accurately predicted the located and propagation of cracks in the oil rig's drill riser – the portion of pipe connecting the surface drilling platform to the seafloor. In a side-by-side comparison, the researchers found that their model's reconstruction closely resembled an image of the actual fractured pipe taken by a remotely operated vehicle shortly after the accident occurred.

The group presented their results at the International Offshore and Polar Engineering Conference in June. The lab received a small grant from Shell and invested some of its own resources to prepare the paper for the conference. Three major oil companies have expressed interest in using the computer model, said Tomasz Wierbzbicki, professor of applied mechanics at MIT.

Wierbzbicki said such a simulation could help oil and gas companies identify stronger or more flexible pipe materials that could help minimize the impact of a future large-scale accident. "We are looking at what would happen during a severe accident, and we're trying to determine what should be the material that would not fail under those conditions," Wierzbicki said. "For that, you need technology to predict the limits of a material's behavior."

A decade of intense research took place before the original MIT fracture technology found industrial applications, said Wierzbicki. The steel and automotive industry were first to recognize the value of the technology. "We have developed a substantial research program with the applications to these industries. This program is supported in my lab by 14 major domestic and overseas companies." MIT also is working with an aerospace company to utilize the methods and procedures of this technology.

Wierzbicki over the years has fine-tuned a testing method that combines physical experiments with computer simulations to predict the strength and behavior of materials under severe impacts. To safety-test materials used in automobile bodies, Wierzbicki first cuts small samples from a candidate such as steel, using a high-pressure water jet.

He then sprays the sample with a fine pattern of speckles, covering the surface with tiny dots. After the spray dries, Wierzbicki clamps the cutout into a machine, which subjects specimens to different types of loading. A motion-capture camera, set up in front of the sample, takes images as it crumples, sending the images to a computer, which plots the image's dots along a grid to show exactly when and where deformations occur.

By testing different shapes and sizes of materials under various pressures, Wierzbicki can determine a material's overall mechanical properties, such as its strength and ductility. Knowing this, he says, it's possible to create a simulation to predict a material's behavior in any configuration, under any conditions. Determining the exact limits for materials is especially important for offshore drilling, he says, where pipes are continually subjected to tremendous pressures at great depths.

Since the researchers were unable to obtain a sample from the actual collapsed riser, they consulted an offshore-drilling handbook, finding that the riser was likely made from X70, a grade of steel commonly used in such risers. The material's mechanical properties closely matched those of TRIP 690, a grade of steel the team had previously tested in the lab.

The researchers drew up a computer model of the drill riser — a large-diameter pipe attached at one end to a large rectangle, representing the surface drilling platform. The team then ran a simulation that partially reconstructed the Deepwater Horizon accident: After methane gas erupted and shot to the surface, setting the entire platform on fire, the oil rig began to list and sink. The researchers simulated the sinking by slowly angling the rectangular platform downward.

As a result, the attached drill riser began to bend. A color-coded simulation showed points along the pipe where it was likely to crack: Green and blue meant the material was intact; yellow and red indicated it was at its breaking point. The group found four red areas where cracks — and oil leaks — were especially likely to occur.

The group had one point of comparison: an image, taken by an underwater robot shortly after the accident, of the ruined pipe. When the researchers compared their model with the real-life image, they found an almost perfect match. Wierzbicki sees the results as an encouraging first step in applying the model to materials for offshore drilling.

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US Lawmaker Pushes For Drilling In Alaska Refuge

- US Lawmaker Pushes For Drilling In Alaska Refuge

Wednesday, September 07, 2011
Dow Jones Newswires
WASHINGTON
by Ryan Tracy

The top lawmaker on the U.S. House Natural Resources Committee Wednesday said opening the Arctic National Wildlife Refuge in Alaska to drilling should be part of a plan to reduce the federal debt.

The comments from Rep. Doc Hastings (R., Wash.) came as a separate committee of 12 lawmakers begins work to find more than $1 trillion in budget savings before a November deadline. The oil and gas industry is also pushing more drilling as a way to boost economic growth.

Proposals to drill in the Alaska refuge have failed in Congress before and are sure to draw opposition from conservation advocates. It is far from clear that the deficit committee, which is already facing a tight deadline to reach a compromise, would consider allowing exploration there as part of a plan to increase revenues.

"We must remember that it's not just about cutting spending," Hastings said. "There's no question that Washington D.C. has a spending problem, but we must also look for new ways to generate revenue without raising taxes."

"For the Joint Committee [of lawmakers working on deficit reduction], which is looking at a 10-year window, this could generate several billions of dollars in new revenue to help meet their goal," Hastings said.

The deficit committee is also expected to consider other ways to increase revenue, perhaps including a plan from Democrats to reduce tax breaks for oil companies. The chairman and chief executive of Chevron, who spoke after Hastings at a public event here, said he opposed oil companies being "singled out" as part of a deficit deal. "If you impose punitive measures on my industry, we will invest less. It's simply the way we go through our decision making process," John Watson said.

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

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Russia Can Double Oil Reserves By Tapping Arctic Potential -Lukoil Exec.

- Russia Can Double Oil Reserves By Tapping Arctic Potential -Lukoil Exec.

Wednesday, September 07, 2011
Dow Jones Newswires
SINGAPORE
by Max Lin

Russia can double its oil reserves if the government is determined to exploit the potential in the Arctic, a senior Lukoil Holdings executive said Wednesday.

"The development of Arctic fields needs political will and support from the government," Sergey Chaplygin, chief executive of Lukoil International Trading and Supply Co. said, but didn't elaborate. Lukoil is the country's biggest private oil producer.

Russia, the world's top oil and gas producer, has proven oil reserves of around 60 billion barrels, Energy Information Administration data showed.

Lukoil plans to explore oil production in the Russian Arctic with state oil company Rosneft under a new long-term cooperation agreement that takes effect this month.

Rosneft will also explore in the Arctic area with U.S. energy giant ExxonMobil, in a separate deal.

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

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FuelCell Reported Q3 Results, Top Line Up 65% YoY

- FuelCell Reported Q3 Results, Top Line Up 65% YoY



Sep 7, 2011

FuelCell Energy (NASDAQ:FCEL) reported a Q3 loss of $0.07 per share, narrower than consensus estimates for a loss of $0.09 per share. Revenues for the quarter rose 65.1% year-over-year to $31.2 million, topping consensus estimates of $29.0 million.

Chip Bottone, President and CEO of FuelCell Energy, Inc said, "The team at FuelCell Energy achieved an important milestone this quarter by generating a gross margin for the first time since we began the commercialization process of Direct FuelCells. We are executing our revenue growth plan and benefitting from operating leverage that is driving down costs. We have record product and service backlog of $230.6 million and we are producing at a record rate and have substantially increased our production run rate to a level of 56 megawatts annually compared to 22 megawatts of production for fiscal year 2010."

FuelCell Energy has a potential upside of 186.4% based on a current price of $1.03 and an average consensus analyst price target of $2.95.

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Hess Bids High to Extend Utica Footprint

- Hess Bids High to Extend Utica Footprint

Wednesday, September 07, 2011
Hess Corp.

Hess has entered into an agreement with CONSOL Energy Inc. to acquire a 50 percent interest in CONSOL's nearly 200,000 acres in the Utica Shale in eastern Ohio for aggregate payments of $593 million.

"We are delighted with our entry into the Utica Shale, which enables us to build a strategic acreage position in an emerging unconventional play in the United States," said John Hess, Chairman and CEO of Hess Corporation. "We believe that this acquisition offers significant potential for future growth in reserves and production with most of the land either owned in fee or held by production with high net revenue interests. We are honored to partner with CONSOL, which has a long history and an excellent safety and operating record in the Appalachian basin. We believe that together our companies will build a profitable business and deliver important economic benefits for the residents of eastern Ohio."

Hess will pay CONSOL $59 million at closing, which is expected in October, and $534 million in the form of a 50 percent drilling carry of certain CONSOL working interest obligations over a five year period. The joint exploration and development plan calls for Hess to operate approximately 80,000 acres in Jefferson, Harrison, Guernsey and Belmont counties while CONSOL will operate approximately 120,000 acres elsewhere in eastern Ohio, including Portage, Tuscarawas, Mahoning and Noble counties. Appraisal drilling is expected to commence in the fourth quarter.

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ConocoPhillips To Establish Bohai Bay Fund

- ConocoPhillips To Establish Bohai Bay Fund



Sep 7, 2011

ConocoPhillips (NYSE:COP) announced on Wednesday that it will establish a fund related to the incidents at the Peng Lai field in Bohai Bay, China.

This fund will be designed to address ConcoPhillips' responsibilities in accordance with relevant laws of China and to benefit the general environment in Boahi Bay.

ConocoPhillips (NYSE:COP) has a potential upside of 26% based on a current price of $65.7 and an average consensus analyst price target of $82.8.

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BP Unleashes Additional Reserves at Mad Dog Field

- BP Unleashes Additional Reserves at Mad Dog Field

Wednesday, September 07, 2011
BP plc

BP announced the drilling of a successful appraisal well in a previously untested northern segment of the Mad Dog field in the US Gulf of Mexico.

The well results confirm a significant resource extension for the Mad Dog Field complex, which includes the existing field, in production since 2005, and appraisal drilling of the Mad Dog South field in 2008 and 2009. Pending confirmation through future appraisal drilling, the total hydrocarbons initially in place in the Mad Dog field complex are now estimated to be up to four billion barrels of oil equivalent.

The well, drilled by BHP Billiton on behalf of the unit operator BP, is located on Gulf of Mexico Green Canyon block 738 approximately 140 miles (225 kilometers) south of Grand Isle, LA., in about 4,500 feet (1,371 meters) of water. The well encountered about 166 net feet (50 meters) of hydrocarbons in the objective Miocene hydrocarbon-bearing sands and discovered an oil column of more than 300 feet (91 meters). Transocean's semisub GSF Development Driller I was used to drill the Mad Dog well.

"With these additional hydrocarbon resources north of the main field, Mad Dog has been firmly established as a giant field in BP's Gulf of Mexico portfolio, rivaling Thunder Horse in size of resource," said Bob Dudley, BP group chief executive. "Working with the industry and regulators, we will apply our enhanced standards of safety, reliability and compliance to all of our Gulf activities as we continue to provide important jobs and energy to the nation."

BP maintains a 60.5 percent working interest in Mad Dog. BHP Billiton has a 23.9 percent interest, Chevron Corporation, through its subsidiary Union Oil Company of California, has a 15.6 percent interest.

Due to the materiality of the Mad Dog South finds in 2009, BP has been advancing development options to increase production from Mad Dog by adding another spar production facility with a production capacity of 120,000–140,000 barrels of oil equivalent per day (boed).

"Coupled with the recent exploration success at the discovery at the Moccasin prospect, located in Keathley Canyon, the Mad Dog result re-emphasizes the exploration and development potential of the Gulf of Mexico and the region’s ability to continue to deliver material projects for BP," Dudley added.

On Sept. 6, 2011 Chevron Corporation announced the Moccasin discovery in the Lower Tertiary play on Keathley Canyon block 736. BP has a 43.75 percent working interest in the Moccasin prospect. The prospect is operated by Chevron U.S.A. Inc., also with a 43.75 percent interest, and the co-owner is Samson Offshore Company with 12.5 percent interest.

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SOCO Spuds Well Offshore Congo-Brazzaville

- SOCO Spuds Well Offshore Congo-Brazzaville

Wednesday, September 07, 2011
Lundin Petroleum AB
by SubseaIQ

Lundin announced that drilling of the exploration well Mindou Marine-1, located offshore in Block Marine XI Congo-Brazzaville, has commenced.

The planned depth is approximately 3400 meters below mean sea level and the well will be drilled by using the semi-submersible drilling rig ENSCO 5003. The drilling operation is expected to take 50 days.

The well is targeting a pre-salt Toca formation carbonate reservoir within a combination structural and stratigraphic trap. This well will fulfill the Phase II drilling commitment on the license and is the first of a two to three well program on blocks Marine XI and XIV.

Lundin Petroleum has an 18.75 percent working interest in the license which is operated by SOCO International.

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Eastern African Energy Riches Attract Interest

- Eastern African Energy Riches Attract Interest

Wednesday, September 07, 2011
OilPrice.com
by Joao Peixe

Energy deposits located in east African nations and their offshore coastlines are increasingly drawing foreign investor interest.

Recent surveys have led analysts to estimate that Mozambique has over 6 trillion cubic feet of recoverable natural gas reserves while neighboring Tanzania's natural gas reserves could exceed 7.5 trillion cubic feet.

Petroleum Development Consultants managing director David Aron noted, "The interesting question is whether there will be a (natural gas) liquefaction plant in both Tanzania and Mozambique or whether a single shared location could be developed," adding that Mozambique's natural gas from its Pande and Temane onshore fields could be exported to neighboring South Africa while Tanzanian natural gas, produced from its offshore fields, would be used primarily for power generation, allowing it to reduce its imported energy costs, Nairobi's The East African reported.

Both Tanzania and Mozambique are currently plagued by indigenous energy shortages, which lead to electrical blackouts.

Tanzania, East Africa's second- biggest economy, before its natural gas fields begin production, is seeking to relieve its electricity shortages in the interim by promoting geothermal energy. Tanzanian Energy and Minerals Deputy Minister Adam Malima said, "We are moving toward more environmentally friendly sources of energy as our demand increases. We are looking to the private sector to see if there is interest in geothermal development."

(Joao Peixe is Deputy Editor of OilPrice.com. The original article appears here.)

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Premier Oil Granted Drilling Permit in North Sea

- Premier Oil Granted Drilling Permit in North Sea

Wednesday, September 07, 2011
Norwegian Petroleum Directorate

The Norwegian Petroleum Directorate has granted Premier Oil Norge AS a drilling permit for well 9/1-1 S.

Well 9/1-1 S will be drilled from the Bredford Dolphin drilling facility in position 57°35'37.02"N and 4°00'56.05"E.

The drilling program for well 9/1-1 S concerns the drilling of a wildcat well in production license 406. Premier Oil Norge AS is the operator with a 40 percent ownership interest. The other licensees are Skeie Energy AS with 40 percent and Spring Energy Exploration AS with 20 percent. Production license 406 was awarded in APA 2006.

The area in this production license is located in the southeastern part of the North Sea. It consists of parts of blocks 8/3, 9/1, 17/12, 18/10 and 18/11. Well 9/1-1 S is the first exploration well to be drilled in this production license.

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

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Coastal's Bua Ban North A-05 Encounters Net Pay

- Coastal Bua Ban North A-05 Encounters Net Pay

Wednesday, September 07, 2011
Coastal Energy Co.

Coastal Energy announced the successful results of the Bua Ban North A-05 well and provides an operations update.

The Bua Ban North A-05 well was drilled to a total depth of 5,650 feet TVD. The well encountered 81 feet of gross sand and 35 feet of net pay in the Miocene reservoir with 27 percent average porosity. The well tested the Miocene reservoir on the eastern flank of the Bua Ban North A field. The oil water contact in the well was seen at 3,770 feet. The results of the A-05 well add an additional 1,200 acres to the structural closure area. The Company is planning to drill five to six additional evaluation wells at Bua Ban North before moving the rig to G5/50.

The Bua Ban North B-02, B-03 and B-04 wells have all been completed and tied into the production facilities. The aggregate production rate from Bua Ban North B is approximately 8,200 bopd. Average production at Songkhla A is approximately 4,000 bopd, with production currently being constrained due to a temperature issue. The Company is installing additional cooling units to remedy this issue and restore production to 6,500 bopd. The installation is expected to be complete in approximately two weeks.

Aggregate offshore oil production is averaging 13,700 bopd, and total Company production is averaging 15,800 boepd.

Randy Bartley, Chief Executive Officer of Coastal Energy, commented, "We are very pleased with the results of the Bua Ban North A-05 well. This well was drilled as far north as possible to test the presence of hydrocarbons between Bua Ban North A & B. We have several locations identified which are further south and up to 200 feet structurally higher which we plan to test with the upcoming wells.

"Total production from Bua Ban North B has come in above our expectations and the wells continue to perform better than expected. We are working to resolve mechanical production issues at Songkhla and expect to restore production to previous levels in the coming weeks.

"We expect production facilities to be on location at Bua Ban North A in late October."

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Brinx, Partners Complete Development Oil Well in Oklahoma

- Brinx, Partners Complete Development Oil Well in Oklahoma

Wednesday, September 07, 2011
Brinx Resources Ltd.

Brinx Resources and its partners have completed a new development oil well offsetting the highly successful 2008-3-5 well in southern Oklahoma. Completion of the new 2008-3-5A oil well took place on September 1, 2011.

The 2008-3-5A well immediately started flowing after it was perforated and began producing at a rate of 298 barrels of oil per day and an unmeasured quantity of natural gas. Since completion, the well has been producing at rates between 240 and 300 barrels of oil per day along with some natural gas. Electric log analysis indicates that several additional pay zones still exist above the completed section that will be tested at a later date.

The original 2008-3-5 well began production in May of 2009. As of June 1, 2011, that well had produced over 155,000 barrels of oil and 16.5 million cubic feet of natural gas from a single pay zone. The 2008-3-5 well continues to produce at a stabilized rate of over 100 barrels of oil per day. Engineers have estimated that the upper pay zones could contain over 180,000 additional barrels of oil to be recovered from the 2008-3-5A development well.

Brinx anticipates that it will take part in several additional development well drilling opportunities in Oklahoma in the near future. Also in Oklahoma, the Company expects to participate in a minimum of ten new exploration and development drill programs based on its recently completed 130 square mile 3-D seismic program.

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Wood Group Lands Engineering Gig at BP's Quad 204 Proj.

- Wood Group Lands Engineering Gig at BP's Quad 204 Proj.

Wednesday, September 07, 2011
John Wood Group plc

Wood Group Kenny has been appointed by BP to provide engineering design and project management services for the subsea, umbilical, riser and flowline (SURF) infrastructure for BP's Quad 204 redevelopment project West of Shetland. Wood Group Kenny is responsible for the design of $1.2 billion worth of subsea, pipeline and riser infrastructure for the project. The dedicated engineering team is already 50 strong and will expand to 75 in the near future.

Mike Ogden, Wood Group Kenny's project manager for Quad 204 said, "This project presents significant technical challenges integrating new infrastructure within an existing brownfield development. Specific issues include proving the remaining or extended design life of existing systems, challenging metocean conditions and the inclusion of 21 new risers, 15 new flowlines, a range of structures, a re-designed umbilical distribution and control system and 25 new wells into a restricted area already containing 52 wells. WGK are responsible for engineering the entire SURF system from the trees to the connections within the new FPSO and supporting BP through the delivery, testing, installation and commissioning of these systems."

Andrew Train, BP's Project Director, Offshore Activities said, "The recent sanction of the Quad 204 project represents a very significant investment for BP and its Partners in the North Sea. While the industry at large has been aware of the replacement FPSO, the scale and complexity of redevelopment associated with the subsea system has gone relatively unnoticed. In many ways it is likely that redevelopment of the subsea system will be larger than the original development scheme. To manage a project of this scale and complexity and attract the best talent in the industry we have co-located a growing BP and Wood Group Kenny team in a project office in the center of Aberdeen. This office will be a hub of activity allowing detailed design work to be progressed by Wood Group Kenny and facilitate interaction with key suppliers and contractors."

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Northern Starts Extended Well Test at Markwells Wood

- Northern Starts Extended Well Test at Markwells Wood

Wednesday, September 07, 2011
Northern Petroleum plc

Northern Petroleum has started operations for an extended well test of the Markwells Wood oil discovery in West Sussex. The test will enable Northern Petroleum and its joint venture partners - Magellan Petroleum (UK) Limited and Egdon Resources U.K. Limited - to evaluate the potential and scheme for future development of the Markwells Wood oil accumulation.

The Workover rig arrived on site on Tuesday, September 6, 2011. The production string is being installed prior to the installation of testing facilities to enable testing operations to begin in early October 2011.

Production testing may take 40 days and will utilize a Linear Reciprocal Pump that has a lower height profile, lower noise emission and a smaller footprint than the more traditional 'Nodding Donkey' pump.

Depending on the results of those initial tests, acid stimulation may be applied to the reservoir formation.

Interests in License 126 are as follows:
  • Northern Petroleum (GB) Limited 50%
  • Magellan Petroleum (UK) Limited 40%
  • Egdon Resources U.K. Limited 10%

Derek Musgrove, the Managing Director of Northern Petroleum stated, "Oil was encountered during the drilling of Markwells Wood towards the end of 2010. A core sample in the Great Oolite reservoir formation was successfully recovered and subsequently subjected to many laboratory tests. These established petrophysical characteristics of the formation and preferred stimulation treatments if required. Following completion of this work, the current program was designed and contracts issued."

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Oilex Notes Progress in Cambay Clean-Up Ops

- Oilex Notes Progress in Cambay Clean-Up Ops

Wednesday, September 07, 2011
Oilex Ltd.

Oilex advised that operations to prepare for well clean-up flow and production testing are continuing. Operations to retrieve down hole equipment, open up the remaining fracture stimulation stages and install production tubing will be conducted with a workover rig. Given the likely duration of this phase of the operations will be a few weeks, Oilex will provide the next update on operations when progress has been made.

The Cambay-76H "proof of concept" horizontal well is evaluating the production potential of the Y Zone interval of the extensive deep Eocene "tight" reservoirs in the onshore Cambay Production Sharing Contract area, Gujarat, India.
  • Report date: September 6, 2011
  • Status Preparations for well clean-up flow and production testing
  • Past Week's Operations
    • Sourcing rig and equipment for the planned operation to retrieve tools in well
    • Successfully completed chemical cutting of coil tubing in hole
    • Demobilized surplus equipment, personnel and services.
  • Objective: Cambay Eocene "tight" reservoir Y Zone
  • Total Depth: 2,740 meters including 610 meters horizontal section

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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FOGL Briefs Interim Results for 1H11

- FOGL Briefs Interim Results for 1H11

Wednesday, September 07, 2011
Falkland O&G Ltd.


FOGL announced its Interim Results for the six months ended June 30, 2011.

Highlights
  • Contract signed for the Leiv Eiriksson drilling rig for two firm slots in first half 2012.
  • Operatorship and remaining 51% equity in Northern License Area assigned back to FOGL by BHP Billiton together with a significant cash settlement.
  • Completed the site survey and 2D seismic program.
  • Equity placing raised US $51.8 million before expenses. Cash balance of $110.6 million at period end (2010: $80.4MM).
  • Current available funds, including BHPB settlement, of $150.6 million.

Richard Liddell, Chairman of FOGL, said, "We made good progress during the first half of 2011, during which we negotiated the exit of BHPB from our licenses and regained complete control and operatorship of our license areas while also securing a significant cash payment from BHPB. This was an excellent outcome, which has enabled us to drive forward with the most important phase of our exploration program. In addition, we successfully raised $51.8 million through a share placing, which, combined with existing cash resources and BHPB's payment, leaves us in a strong financial position to drill two wells in 2012. We also signed a rig contract and expect drilling to commence with the Loligo well in the first quarter of 2012. In addition, a number of other prospects have been selected and prioritized as possible targets for the second well in the program."

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