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Oil and Gas Energy News Update

Thursday, September 8, 2011

Oil & Gas Post - All News Report for Thursday, September 08, 2011

Thursday, September 08, 2011


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Volkswagen Halts Planned Merger with Porsche

- Volkswagen Halts Planned Merger with Porsche



Sep 8, 2011

Volkswagen (ETR:VOW) says on Thursday it's planned merger with Porsche (ETR:PAH3) will not go through as planned, at least not yet.

The company said the merger could not be implemented within the time frame agreed upon due to uncertainty of the economy, legal hurdles, as well as proper valuation of Porsche.

In the announcement the company said, "From Volkswagen's perspective, the continuing legal hurdles mean that it is currently impossible to quantify the economic risks of a merger and therefore to perform the valuation of Porsche SE required to determine the exchange ratio. The main causes of uncertainty are the ongoing proceedings and actions brought against Porsche SE in Germany and the USA for alleged market manipulation. According to the information currently available, these legal hurdles are no longer expected to be removed in time. One factor influencing the Board of Management's assessment was an indication by the Stuttgart public prosecutors of the length of time needed for the preliminary investigations."

In the coming weeks, members of Volkswagen's Board of Management will analyze whether there are other potential avenues to explore to complete the agreement. Both companies still believe the planned merger will continue at a later time

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GAO: Water Supply Poses Obstacle to Green River Oil Shale Dev't

- GAO: Water Supply Poses Obstacle to Green River Oil Shale Dev't

Thursday, September 08, 2011
Rigzone Staff

The Green River formation – an assemblage of more than 1,000 feet of sedimentary rocks that lie beneath parts of Colorado, Utah and Wyoming, is estimated to contain up to 3 trillion barrels of oil – or an amount equal to the world's proven oil reserves. However, extracting these oil shale resources is expected to require substantial amounts of water and could impact groundwater and surface water.



The U.S. General Accountability Office (GAO) reported that, while U.S. oil shale development could have significant impacts on the quality and quantity of water resources, the magnitude is unknown because technologies are not yet commercially proven, the size of a future industry is uncertain, and knowledge of current water conditions is limited.

Commercial oil shale development requires water for numerous activities throughout its life cycle, but estimates vary widely for the amount of water needed to commercially produce oil shale primarily because of the unproven nature of some technologies and because the various ways of generating power for operations use differing quantities of water.

The thickest and richest oil shale within the Green River formation exists in the Piceance Basin of northwest Colorado and the Uintah Basin of northeast Utah. GAO reported that water is likely to be available for the initial development of an oil shale industry but that the size of an industry in Colorado or Utah may eventually by limited by water availability.

"Water limitations may arise from increases in water demand from municipal and industrial users, the potential of reduced water supplies from a warming climate, the need to fulfill obligations under interstate water compacts, and decreases on withdrawals from the Colorado River system to meet the requirements to protect threatened and endangered fish species," said Anu K. Mittal, director of GAO's natural resources and environment team, in testimony before the House of Representatives' subcommittee on energy and mineral resources in Grand Junction, Colo. on Aug. 24.

Some analysts project that large scale oil shale development within Colorado could require more water than is currently supplied to over 1 million residents of the Denver metro area and that water diverted for oil shale operations would restrict agricultural and urban development. Potential water demand is further complicated by the past decade of drought in the West and projections of a warming climate in the future, GAO noted.

In the absence of effective mitigation measures, water resources could be impacted by disturbing the ground surface during the construction of roads and production facilities, withdrawing water from streams and aquifers for oil shale operations, underground mining and extraction, and discharging waste waters produced from or used in such operations, Mittal said.



About 72 percent of this oil shale is located beneath federal lands managed by the Department of the Interior's Bureau of Land Management, making the federal government a key player in potential development of this resource. The federal government through the Department of Energy and Interior sponsors research on the impacts of oil shale on water resources.

However, nearly all the officials and experts that GAO contacted said that there are "insufficient data to understand baseline conditions of water resources in the oil shale regions of Colorado and Utah and that additional research is needed to understand the movement of groundwater and its interaction with surface water," GAO reported. Federal agency officials also told GAO that they seldom coordinate water-related oil shale research among themselves or with state agencies that regulate water.

Interest in oil shale as a domestic energy source has waxed and waned since the early 1900s. The Energy Policy Act of 2005 directed BLM to lease its lands for oil shale research and development. In June 2005, BLM initiated a leasing program for research, development and demonstration (RD&D) of oil shale recovery technologies; by early 2007, six small RD&D leases had been awarded, including five in the Piceance Basin and one in Uintah Basin.

Another significant challenge to oil shale development is the technology to economically extract oil from oil shale. The rock needs to be heated to temperatures between 650 and 1,000 Fahrenheit to extract the oil, or retorting. Retorting can be accomplished either by mining oil shale, bringing it to the surface, and heating it in a vessel known as a retort. While this process is done to a limited extent in Estonia, China and Brazil, a commercial mining operation with surface retorts has never been developed in the U.S. because the oil it produces competes directly with conventional crude oil, which historically has been less expensive to produce.

The other method, the in-situ process, involves drilling holes into the oil shale, inserting heaters to heat the rock, and then collecting the oil as it is freed from the rock. Some in-situ technologies have been demonstrated on very small scales, but other technologies have yet to be proven, and none has been shown to be economically or environmentally viable.

GAO's review of available studies indicates that expected total water needs for the entire life cycle of oil shale production range from about 1 barrel (or 42 gallons) to 12 barrels of water per barrel of oil produced from in-situ operations, with an average of about five barrels, and from about two to four barrels of water per barrel of oil produced from mining operations with surface heating, with an average of about three barrels.

Additional economic challenges include transporting oil produced from oil shale to refineries because pipelines and major highways are not prolific in the remote areas where oil shale is located, and the large-scale infrastructure needed to supply power to heat oil shale is lacking. Average crude oil prices also have been lower than the threshold necessary to make oil shale development profitable over time. The influx of workers associated with such projects, as well as their environmental impact, also are issues.

While industry has focused primarily on overcoming technological challenges and trying to develop a commercially viable operation, "the uncertainties associated with the impacts that a commercially viable oil shale industry could have on water availability and quality that should be an important focus for federal agencies and policymakers going forward," Mittal said.

Colorado Reps. Scott Tipton and Doug Lamborn testified at the oversight field hearing that the Obama Administration has repeatedly delayed and hindered oil shale development to the detriment of local economies, job creators and "American families struggling with high energy costs."

"The United States is blessed with tremendous oil shale resources – and we have appropriately been called the 'Saudi Arabia' of oil shale," said Lamborn, noting that the Western U.S. may hold more than 1.5 trillion barrels of oil, enough to supply the U.S. with energy for the next 200 years.

Dan Whitney, heavy oil development manager for Shell Exploration and Production Company, said that the lack of policy and regulatory consistency from one administration to another makes the investment climate even more risky and potentially untenable.

Gary Aho, representing the National Oil Shale Association, said that industry " needs a clear, consistent federal program and a national commitment to develop oil shale. Access to lands and regulatory certainty are crucial to companies starting a new, capital intensive industry."

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UK Govt, Oil Industry Attempt to Resolve North Sea Tax Issue

- UK Govt, Oil Industry Attempt to Resolve North Sea Tax Issue

Thursday, September 08, 2011
Dow Jones Newswires
ABERDEEN
by Alexis Flynn & Sarah Kent

The U.K. government and the North Sea oil and gas industry have set up a joint forum to discuss issues around the fiscal regime, although resolution on possible tax relief for the decommissioning of old fields and installations will likely take some time, Treasury Minister Justine Greening said Thursday.

North Sea oil and gas companies have been vocal in their criticism of Chancellor of the Exchequer George Osborne's decision to raise the top rate of tax on profits from offshore production in the last budget. They have argued that investment in what is a mature and declining basin risks being stymied by an unpredictable and onerous tax regime.

Greening, who was speaking at an industry conference here, said the new forum would include representatives from the Treasury, lobby group Oil and Gas UK and senior officials from the Department of Energy and Climate Change. By meeting on a regular basis, the forum would help the industry get more clarity on potential changes to the tax regime, and discuss possible future tax relief, such as decommissioning.

"What we will try to do is put some certainty in that. Now, obviously we can't always tie the hands of governments going forward, [but] I think what we can do is look to see to what extent we can find a way through this," said Greening.

Head of Oil and Gas UK Malcolm Webb said he was encouraged by the discussions.

"It was a very constructive meeting," said Webb.

However, Greening said it was impossible to say whether the issue around decommissioning would be resolved in time for the next budget

"I'm not going to put a timeline on it. What I can say is we've got a couple of working groups set up, one of them around decommissioning and we would like to very constructively work with the industry on that and we've been encouraged by the progress made. But let's be clear. If sorting out a long-term solution to decommissioning was easy it would have been sorted out a long time ago. We absolutely want to work on this as fast as we can. But what I think matters is getting the right long-term solution, one that stands on its own two feet," she said.

Webb said that although there was still lingering frustration over the unanticipated nature of the earlier tax increase, it was time for both industry and government to look to the future.

"There's some regret, but what the industry is determined to do is to turn the page to overcome the problems that the government has presented us with, and we really were encouraged [by the meeting] today."

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

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GOM Outlook Brighter as Noble Plans 2012 GOM Plans

- GOM Outlook Brighter as Noble Plans 2012 GOM Plans

Thursday, September 08, 2011
Rigzone Staff
by Karen Boman

Noble Energy sees a brighter outlook for the Gulf of Mexico from a year ago, Noble Energy Chairman and CEO Charles D. Davidson said at the Barclays Capital 2011 CEO Energy Conference earlier this week.

While the pace of Gulf of Mexico permitting is slower than that prior to the drilling moratorium following the Macondo oil spill, the pace is more predictable and comfortable as Noble moves forward with its 2012 drilling plans for the Gulf, Davidson said.

The company was the first to receive a deepwater permit after the moratorium's end for its Santiago prospect on Mississippi Canyon Block 519 in 6,500 feet of water; the company announced in May that it had encountered 60 feet of oil pay in a high-quality Miocene reservoir at Santiago. The company is now drilling an updip sidetrack at its Deep Blue discovery in approximately 4,700 feet of water – with drilling results expected in a few weeks -- and will next appraise the Gunflint discovery on Mississippi Canyon Block 948.

Noble had drilled a downdip discovery at Deep Blue, but work was halted due to the moratorium, Davidson said. The company originally encountered 32 feet of net pay in the well; the updip sidetrack is targeting 90 to 200 million BOE gross unrisked, with the chance of success increased from 30 percent to 50 percent. Noble is using Ensco semisubmersible Ensco 8501 for its drilling program in the Gulf.

The company anticipates production from its South Raton discovery to come online late this year and production from its Galapagos project to begin in early 2012, Davidson said. As part of the Galapagos project, Santiago and the Santa Cruz and Isabela discoveries on Mississippi Canyon blocks 563 and 562 will be tied back subsea to the Na Kika production platform. Noble's net production at Galapagos will be over 10,000 b/d of oil.

Noble estimates total gross resources discovered in the Galapagos project, including Santiago, to be 130 million barrels BOE, approximately 75 percent of which is oil, and sees multiple low-risk follow-on opportunities of 65 million BOE gross mean potential. Work is progressing on the topsides and subsea loop system for the project.

Noble's current U.S. Gulf portfolio includes 102 lease blocks covering approximately 400,000 net acres and around 40 prospects and 1.9 billion BOE net of net unrisked resources.

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Rocksource Spins Bit at Phoenix Prospect

- Rocksource Spins Bit at Phoenix Prospect

Thursday, September 08, 2011
Rocksource ASA

Rocksource announced that the drilling rig Borgland Dolphin has commenced drilling on the Phoenix prospect in PL 559 in the Norwegian Sea.

The PL 559 partnership consists of Rocksource (Operator and 60 percent working interest), VNG (30 percent) and Skagen44 (10 percent).

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Karoon Lines Up Semisub Transocean Legend

- Karoon Lines Up Semisub Transocean Legend

Thursday, September 08, 2011
Karoon Gas Australia Ltd.

A drilling contract has been signed with Sedco Forex on Sept. 8 securing the Transocean Legend semi-submersible drilling rig to complete the planned Phase-2 Browse Basin exploration drilling program in the WA-314-P, WA-315-P and WA-398-P permits jointly held by ConocoPhillips and Karoon Gas. The contract comprises five firm wells (fulfilling permit commitments) with options for three additional wells (5-8 wells). Drilling is expected to commence in the fourth quarter of 2011 and is estimated to run for eighteen months to two years ConnocoPhillips is the operator of the jointly held WA-314-P, WA-315-P and WA-398-P Browse Basin permits containing the previously announced Poseidon and Kronos gas discoveries.

The five to eight well drilling program will target the Poseidon trend as well as surrounding prospects, including one prospect in WA-314-P late in the program.

The first well will be be Boreas-1, a crestal well in WA-315-P on a large tilted fault block east of the Poseidon-1 fault block. The results of the drilling campaign will allow the size and quality of the hydrocarbon accumulations within the exploration permits to be determined in preparation for a development decision. Karoon believes that the additional new prospects identified are of sufficient size that, if successful, would result in a meaningful increase in the capacity and economics of an eventual LNG project.

Pursuant to the 2006 Farm-in Agreement between Karoon and ConocoPhillips (Browse Basin) Pty Ltd, ConocoPhillips will be funding 80% of the drilling and testing costs for the initial $125 million of expenditure within WA-315-P.

Based on current forecasted costs Karoon will have sufficient capital at its disposal to complete all drilling activities for the planned program. Karoon is currently well advanced in the process of completing the farmout of its Santos Basin and Peruvian assets, and expects to have reduced financial exposure to both drilling campaigns. A list of potential farm-in partners will be shortlisted in the near future and negotiations are continuing.

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Dart Commences Drilling Ops at China Daijing Proj.

- Dart Commences Drilling Ops at China Daijing Proj.

Thursday, September 08, 2011
Dart Energy Ltd.

Dart Energy has commenced drilling activities at the Dajing project in Xinjiang Province, China, with the spudding of the first two exploration wells (DJD-02E and DJD-10E). This is part of an initial exploration program which will see a total of up to 14 exploration wells drilled prior to year end, and assuming no program delays, Dart would expect first core drilling results to be available in the first quarter of 2012.

This follows approval in August of the 2011 exploration program and budget by the Dajing Joint Management Committee (JMC). The JMC is comprised of representatives of both Dart and its partner at Dajing, China National Petroleum Corporation (CNPC).

In addition to the spudding of the first wells, the following other activities have been completed at the Dajing project:
  • 4 drilling rigs have been mobilized to site
  • 3 on-site desorption units and 2 permeability testing units have been mobilized to site
  • 3 work camps established on-site
  • Site and road construction for 2 other exploration wells has been completed (DJD-O1E; DJD-O4E), with those wells expected to be spud within the next week

Nick Davies, Dart Executive Chairman, said, "We are now operationally underway at Dajing, which is a major milestone for Dart. Dajing has the potential to be a project of substantial scale within the Dart global portfolio, and our attention is completely focussed on executing the exploration drilling campaign diligently, quickly and safely. Dart Energy looks forward to working collaboratively with our partner, CNPC, to unlock the potential of this block."

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Noble to Drill Cyprus A Prospect in 4Q

- Noble to Drill Cyprus A Prospect in 4Q

Thursday, September 08, 2011
Rigzone Staff
by Karen Boman

Noble Energy will relocate one of three deepwater rigs it is operating in the eastern Mediterranean Sea to drill the Cyprus A prospect during this year's fourth quarter, said Noble Chairman and CEO Charles D. Davidson at the Barclays Capital 2011 CEO Energy Conference earlier this week.

Noble said its prospect offshore Cyprus is analogous to the structures it has drilled offshore Israel, and anticipates that prospects offshore Cyprus also will contain gas. Drilling offshore Cyprus is still risky, but they basically are the same system, said Davidson.

"The prospect is an important data point, could change the dynamics further on how gas is marketed in the eastern Mediterranean Sea," Davidson said. "In our view, they have some demand for natural gas, and the scale of the projects in Cyprus will far exceed demand there."

Noble and the Cyprus government signed a production sharing contract to launch exploration activities in the 324,000-hectar economic zone southeast of the island.

According to media reports, tensions have mounted between Cyprus and Turkey over the island nation's plans to begin oil and gas exploration in the eastern Mediterranean Sea. Greek Cypriots, who control Cyprus' internationally recognized government, and Turkish Cypriots are at odds over how revenue from oil and gas production will be shared. Turkey, which backs the Turkish Cypriots, said it would take action if exploration begins before the dispute can be resolved.

Noble operates approximately three million gross acres in the eastern Mediterranean, where is recently acquired additional 3D seismic data and has identified multiple prospects and leads.

The Tamar and Leviathan discoveries offshore Israel, which include 25 Tcf of gross mean resources, are the largest global deepwater gas discoveries made in the past decade. "With the discovery of Tamar, Israel became energy independent in terms of gas," said Davidson. "The discovery of Leviathan has turned Israel into a potential energy exporter."

The company is on track to commission the Tamar production facility in late 2012, with production set to begin in 2013. A rig is on location drilling development wells, and construction of the production platform is underway. The initial development phase calls for five subsea completions with 200 MMcfe/d to 250 MMcf/d per well, and process capacity expanded to 1 Bcf/d at existing onshore facility. Mari-B infrastructure will be utilized as part of this development phase. The Tamar discovery has a resource estimate of 8.4 Tcf.

Noble also is moving ahead with the Noa development, which includes a two-well tieback to the Mari-B facility. First production is expected in the second half of 2012, and will supplement Mari-B deliverability by 100 MMcf/d. Mari-B is nearing full operational reliability, with the Mari-B compression project finalized and second quarter demand up 40 percent from 2010.

"Our current production [in Israel] is extremely strong, with high demand in Israel for gas, with a very strong draw for supplies from Mari-B," Davidson said

Noble expects results in this year's third quarter from its appraisal work to further define the Leviathan resource, which is estimated to hold gross gas resources of 16 Tcf. The company will return to assess deeper stratigraphic sections of Leviathan and is evaluating development scenarios for the discovery, including domestic and export options.

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Treaty to Boost Production at Tx. Leases

- Treaty to Boost Production at Tx. Leases

Thursday, September 08, 2011
Treaty Energy Corp.

Treaty reported on its progress on the project to increase production on its Texas oil leases.

Stephen L. York, President and COO of Treaty Energy Corporation, stated, "We want our shareholders to know that our team has faced the hottest and driest summer in Texas since 1980. The extreme heat and dry climate have considerably affected ground conditions. These conditions have caused failures of equipment and electrical transformers which have led to a decline in the overall production on our existing wells."

Mr. York added, "However, the good news is that Treaty Energy's aggressive work-over plan has been able to offset the decline in production and has even greatly increased the production of the re-worked wells."

"Production on the first eight wells that have been re-worked increased from 8 barrels of oil per day to 26.5 barrels per day," explained Mr. York. He explained further, "Treaty Energy has also recently finished re-working an additional eleven wells, and after about a week of steady production, we are expecting to increase production to about 55 barrels of oil per day."

Treaty Energy has four other leases that are currently not producing as they require a work-over on the injector wells and electrical power lines. Work-over of these leases should be completed by the end of September and is expected to increase overall Texas production to 65 to 70 barrels of oil per day by that time.

Beyond the previously mentioned work-overs, Treaty Energy has 15 shut in wells spread over the Great Eight Leases that have been shut in for more than 12 months. Upon completion of all scheduled work-overs, the Company will then be able to more accurately evaluate the additional shut in wells and re-work them as necessary to bring them back into production.

Mr. York added, "The best estimate of Texas production on the currently owned and paid for leases will be 75 to 90 barrels of oil per day after the rework of the 15 shut in wells. Our goal by the end of 2011 is to be at 200 to 350 barrels of oil per day. This production number can vary based on the number of new wells that are expected to be drilled and completed. We expect to exceed 1,000 barrels per day by the end of June 2012. At $80 per barrel, this will translate to about $29.2 million in gross revenues annually from our Texas oil production alone."

CEO of Treaty Energy Corporation, Andrew Reid, stated, "I am pleased with the current production in Texas and noted that all re-works are being done from the bottom of the well to the top, including pressure testing of the tubing prior to re-installation in the wells. This type of work-over may initially cost more and require more time, however Treaty expects to avoid the higher operational costs that can be associated with stripper wells when using the traditional band-aid methods. Treaty's wells, once worked-over, will require much less maintenance compared to the average stripper wells."

Finally, Mr. Reid said, "We plan to release an update in the week of September 12th on the progress in Belize regarding the first well that we are expecting to drill later this month."

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Clough DORIS, Ichthys Execute Binding Contract

- Clough DORIS, Ichthys Execute Binding Contract

Thursday, September 08, 2011
Clough Ltd.

Clough announced the execution of a binding contract between the Ichthys Joint Venture and Clough DORIS Joint Venture, for the Ichthys LNG Project Offshore Integrated Project Management Support Services (IPMS), which has a limitation on spending until attainment of FID. Receipt of the Letter of Intent for this circa A$250 million contract was announced by Clough on August 9, 2011.

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RBG Clinches Apache Contract Extension in North Sea

- RBG Clinches Apache Contract Extension in North Sea

Thursday, September 08, 2011
RBG

RBG has secured a major £30 million two year contract extension to provide Apache North Sea Limited with fabric maintenance and deck crew services.

The contract, which RBG has held since 2008, will see the continued delivery of a wide range of integrated services, including coatings specification, application and repair, passive fire protection, thermal insulation, special access solutions and scaffolding, across the five Forties field platforms, located in the North Sea.

Working with Apache, RBG has established an excellent safety record over the past three years, recording more than 542,000 hours without a lost time incident. RBG deploys multi-disciplined teams that execute the complex workscopes whilst minimizing pressures on bed space and travel logistics.

Dave Workman, RBG, chief executive officer, said, "Securing this contract underlines our position as the leading support contractor of choice in the UKCS and highlights the benefits of our integrated service offering. The region is still a major growth area and securing this extension positions us well for our plans in the region in 2011 and beyond.

"Over the past 35 years we have established an unrivaled track record for delivering fabric maintenance services across the North Sea. Securing this extension is recognition of the great work our projects team carry out and the safe, quality service they deliver, both onshore and offshore."

Bill Logan, Apache North Sea's production manager, said, "RBG has delivered a high quality service over the past three years and we are happy to continue our working relationship with the company."

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Gould: Oilfield Services Spending Likely to Increase

- Gould: Oilfield Services Spending Likely to Increase

Thursday, September 08, 2011
Rigzone Staff
by Karen Boman

Schlumberger CEO Andrew Gould said he believes that integrated oilfield service companies will play an even more important role in extracting the full potential of existing and new hydrocarbon resources, and that the share of future spending on oilfield services will likely increase.

Oilfield services companies that best help their customers to de-risk and drive project financial performance will ultimately be the most successful, Gould said, adding that the company's approach of applying its unique scientific platform and technical abilities to all parts of its business – supported by its research by development investment of over one billion dollars per year.

Speaking at the Barclays Capital CEO Energy-Power Conference in New York on Sept. 7, Gould said his company has not seen its customers' activity plans impacted by the significant downward revisions of 2011 and 2012 growth forecasts for the major OECD countries, as well as inflation pressure in some key non-OECD countries that is causing concern. However, the company is monitoring the situation closely and is ready to adjust its plans if needed.

"In the past two years, our industry has seen significant volatility, with the largest year-on-year fall in global energy demand in two decades followed by the largest recovery ever seen," Gould said, noting that the world and the energy industry have faced major natural disasters and political unrest and the financial markets have been significantly impacted by both the sovereign debt crisis in parts of the Eurozone as well as the U.S.

The importance of higher exploration activity is best illustrated by the growing supply challenge the industry is facing with the International Energy Agency estimating that around 40 percent of the oil production needed by the end of this decade has yet to be found or developed, Gould said. By 2030, this figure will likely be about 60 percent; natural gas resources show similar trends.

"Adding future reserves is becoming more complex and technologically intense, and is associated with additional cost and risk. With more than half of reserves discovered worldwide offshore and new reserves often located in deepwater and hidden below complex salt structures, the ability to de-risk exploration prospects prior to drilling becomes more and more important," Gould said.

However, statistics show that, on average, two out of three frontier exploration wells today are unsuccessful, indicating that, in spite of advances in seismic technology, the industry still fails to properly manage exploration risk, Gould said. "While seismic technology advances have made significant contributions to better evaluate trap and reservoir risks, almost three-quarters of dry exploration wells are due to inadequate understanding of seal and charge risk."

The last decade has seen a doubling of the number of land and offshore rigs operating worldwide in more difficult, complex and expensive situations, but the general approach to drilling optimization has changed little since the 1980s. "Over the past decades, we have seen excellent examples of advances in individual drilling technologies such as top drives, rotary steerable systems and PDC cutters," Gould noted. "We believe that in order to create the next step change in drilling performance, we need to take a systems approach and move the entire drilling process from being partly an art form to becoming a full-fledged science."

While conventional gas will continue to play a central role in the global supply picture in the next five years, making up more than 85 percent of total gas supply, shale gas development activity continues to grow in the U.S. and worldwide. The U.S. Energy Information Administration estimates that international shale resources are six times higher than those of the U.S. At this time, international shale gas activity remains focused on exploration and pilot projects, but Gould said activity will increase in the coming years and shale gas will begin to have an impact on international supply towards the end of this decade.

Schlumberger's CEO said that the current industry approach to shale development in North America is sub-optimal, as it involves significant cost and resource waste. Thought the energy industry drills horizontal wells spread evenly over acreage, with the entire horizontal section completed and fractured with massive amounts of water proppant and hydraulic horsepower, shale reservoir quality varies both vertically and laterally. "And the standard logging measurements interpretation techniques and modeling workflows used in sandstones and carbonates cannot be directly applied."

Gould noted that the company is seeing signs that the scientific approach to shale developments is gaining momentum and as the international oil companies continues to build their positions in the shale basins both in the U.S., and overseas this trend will only strengthen. "The scientific approach will also be critical overseas as the industry faces more public pressure to minimize the operational footprint and adapt to less available infrastructure compared to North America," said Gould.

Besides investing heavily in the development of new individual drilling technologies that combine the capabilities of its various drilling product lines and creating a powerful technical community by co-locating its GeoMarket drilling experts into drilling support centers, Schlumberger has some of its brightest minds working on creating numerical models able to predict the behavior of the entire drill string as a function of changing surface and downhole parameters, Gould said. The company will have 10 drilling support centers established by year-end; that number will increase to 30 by the end of 2012.

To meet the challenges of more complex, more expensive and more difficult projects, Gould told attendees at the SPE Offshore Europe conference in Aberdeen, Scotland earlier this week that project management skills need to dramatically improve. "Great project managers cannot be created overnight as it's a combination of leadership and technical skills, with the ability to constantly evaluate options. The need to train rand season project managers is becoming acute."

The talent war within the oil and gas industry will be "inflationary and disruptive" as the industry is chasing the same workers and not necessarily adding to the same population at the same rate. Engineers in the U.S. and western Europe can be recruited based on the industry's technology, but only after defending company ethics, proving that the energy industry is not a sunset industry a clear position on climate change. "In the rest of the world, this is unnecessary as oil and gas companies get the pick of students because an oil and gas career is coveted," Gould said.

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Weather Watch: BP Evacuates Nonessential Personnel from GOM Platforms

- Weather Watch: BP Evacuates Nonessential Personnel from GOM Platforms

Thursday, September 08, 2011
Rigzone Staff
by Saaniya Bangee

BP has evacuated nonessential personnel from three of its production platforms in the Gulf of Mexico due to Tropical Storm Nate.

BP spokesman Daren Beaudo said personnel have been evacuated from the Mad Dog, Holstein and Atlantis platforms in the southern Green Canyon section of the Gulf of Mexico.

The storm is expected to move toward the southern tip of Texas but will not make landfall until late Sunday or Monday, according to the National Hurricane Center.

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Hess Boosts Utica Position with $750MM Acquisition

- Hess Boosts Utica Position with $750MM Acquisition

Thursday, September 08, 2011
Hess Corp.

Hess has acquired Marquette Exploration LLC and other leases in Ohio's Utica Shale, boosting its acreage position by 85,000 net acres at a cost of approximately $750 million.

The leases, in which Hess will have a 100 percent working interest, are in Jefferson, Harrison and Belmont counties. Appraisal activities on this acreage are planned to commence in the fourth quarter. Together with the previously announced joint venture with CONSOL Energy, the transactions provide Hess with approximately 185,000 net acres in the Utica Shale play.

"With these transactions, we have built a strategic acreage position in the Utica Shale, allowing us to strengthen our portfolio of unconventional resources in high quality assets, leverage our operating expertise and create significant potential for future growth in reserves and production," said John Hess, Chairman and CEO of Hess Corporation.

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South Africa Awaits Shale Gas Assessment Outcome

- South Africa Awaits Shale Gas Assessment Outcome

Thursday, September 08, 2011
OilPrice.com
by Charles Kennedy

As South Africa has very limited natural gas reserves, the country's Department of Energy is awaiting the outcome of an assessment of the nation's shale gas potential.

South Africa's Department of Energy Deputy Director General for Hydrocarbon Tseliso Maqubela said at the 4th annual Natural Gas Conference, "The truth that we have to face and effectively deal with is that South Africa has very limited gas reserves. We are awaiting the outcome of the assessment of the shale gas potential, which is currently estimated to be around 485 trillion cubic feet. There are also projects afoot to explore the potential of importing natural gas both as liquefied natural gas (LNG) and compressed natural gas (CNG) to meet our country's energy demands," BuaNews news agency reported.

The Department of Energy has noted environmentalists' concerns about the controversial hydraulic fracturing technique, also known as "fracking," used to liberate the natural gas from surrounding rock formations. Maqubela said that an interdepartmental task team was investigating the procedure's possible impact on the environment, led by the Department of Mineral Resources.

The Department of Energy is in the process of reviewing the 2001 Gas Act, with the regulation of LNG and CNG being reviewed as well as concepts for improving the nation's natural gas regulatory framework.

(Charles Kennedy is Deputy Editor of OilPrice.com. The original article appears here.)

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Apache Gets Environmental Nod for Julimar, Brunello Fields

- Apache Gets Environmental Nod for Julimar, Brunello Fields

Thursday, September 08, 2011
Apache Corp.

Apache said a subsidiary has received Australian government environmental approval for development of the Julimar and Brunello offshore natural gas fields that will supply natural gas to the Chevron-operated Wheatstone LNG project.

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Solo Oil Ups Stake in Tanzania Ruvuma Basin

- Solo Oil Ups Stake in Tanzania Ruvuma Basin

Thursday, September 08, 2011
Solo Oil plc

Solo Oil announced an update on its plans for the drilling of an exploration well, Ntorya-1, in the Mtwara Block of the Ruvuma Basin PSA in Tanzania with its partners Tullow Oil and Aminex.

Further to the announcement on June 7, 2011, plans for the Ntorya-1 well have now been finalized with the all major services tendered and the Caroil-6 rig mobilization agreed to follow the current Aminex well Nyuni-2. The well will most likely be spudded in early November and is programmed to take 25 days to drill to a planned TD of 2026 meters.

Solo also announce that it has increased its stake in the Ruvuma Basin PSA from 12.5% to 18.75% in an agreement with Tullow in which Solo will assume the future obligations on the additional interest. Both Solo and Aminex have acquired additional interests in the PSA and Aminex will take over as operator from Tullow with immediate effect. Tullow will retain a 25% interest and will continue to support the joint venture with regional expertise and logistics.

The assignment is subject to final Tanzanian Government approval, which is expected to be granted shortly.

Solo Executive Director Neil Ritson commented, "The Ntorya-1 well, which is a follow up to the Likonde-1 well drilled in 2010, is an important further test of the largely unexplored onshore Ruvuma Basin. Both Solo and Aminex have a strong focus on Tanzania and by gaining a greater participation in the PSA will jointly be able to advance the work program more quickly. The long term potential is significant and we are very keen to continue the work started at Likonde as soon as possible."

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Elko: Luna Spud Date Anticipated Early December

- Elko: Luna Spud Date Anticipated Early December

Thursday, September 08, 2011
Elko Energy Inc.

Elko announced on May 4, 2011, that the Luna well will be drilled by the Maersk Resolve jack up drilling unit. The rig had been secured by Norwegian Energy Company ASA ("Noreco"), the license operator, under a letter of intent. At that time the rig was expected to be available in mid August 2011 and Elko subsequently announced on June 22, 2011 that the rig was anticipated to arrive at the Luna location in the second half of September 2011. Elko has been now advised by Noreco that the rig has been further delayed and the Luna spud date is now anticipated to be in early December 2011. The Maersk Resolve is currently drilling on contract to Maersk Oil and Gas in Denmark and as such the delays are out of the control of Noreco.

As previously announced, the 01/11 partners intend the Luna well to test the overall Rotliegendes play concept. The Luna prospect is located in a small half graben with the pinch out edge to the south east of the structure. The Rotliegendes reservoir is thought to have a high probability of being present at this location based on the seismic interpretation. Uncertainty still exists however on which seismic event represents the top reservoir and where the pinch out occurs.

In addition to the uncertainty on the pinch out position, there is a possibility that the Rotliegendes does not, in fact, pinch out but continues up dip into Lead A. It is therefore possible that Luna and Lead A are connected and represent one feature. The current well location which targets the Luna prospect was picked in order to maximize the information gathered by the well and is designed to address this uncertainty. The Luna drilling program is expected to take about one month in duration.

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Sefton Makes Headway in California, Kansas

- Sefton Makes Headway in California, Kansas

Thursday, September 08, 2011
Sefton Resources Inc.

Sefton Resources announced an operational update on its most recent activities.

Highlights 
  • Oil in California
    • Oil production rises to approximately 135 barrels per day during August.
    • Steam flooding pilot project sees oil production from Hartje #18 well boosted by 60% with increased reservoir pressure recorded at neighboring Yule #5 well.
    • Four wells planned for drilling during November at Tapia Canyon oil field.
    • A subsidiary of Occidental, the fourth largest US oil exploration company, has begun drilling the adjacent Wayside Canyon Oilfield, less than a mile away from Tapia Canyon. (Their field represents a virtual mirror image of Sefton's Tapia Canyon oil field only separated by a series of small faults).
  • Gas in Kansas
    • Letter of intent signed to acquire a fourth gas pipeline plus adjacent wells and leases.
    • Agreement with Southern Star expected to be signed in late September to connect Sefton's pipelines from Leavenworth County to their interstate pipeline.
    • Significant progress with repairing the LAGGS pipeline system.
    • On going discussions with an exploration and production company which has significant acreage along the Vanguard pipeline for transportation of their gas through the Sefton pipeline system.
    • On going acreage acquisition program being developed based on the company's residual trend surface mapping techniques.

Commenting Thursday, Jim Ellerton, Executive Chairman said, "We are making good progress both in California and Kansas and now have in place a strong operational base, strong balance sheet and good cash flows from which to grow the business.

In California, oil production is rising on the back of steaming and we are looking forward to the publication of Dr Ali Farouq's report in October which will give us a clear indication of the potential and value of our interests in California as well as how to fully develop them.

In Kansas, 40-50% of Sefton's target areas for development in Leavenworth County and those in the surrounding areas remain underexplored due to a lack of activity over the past ten years. We believe this presents a significant opportunity for us."

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Technip Lands EPC Gig for Satah Full Field Development

- Technip Lands EPC Gig for Satah Full Field Development

Thursday, September 08, 2011
Technip

Technip, in consortium with NPCC, was awarded by ZADCO an engineering, procurement and construction lump sum contract, worth a total of approximately $500 million (Technip part of the contract: 35%), for the Satah Full Field Development project. This field is located 200 kilometers northwest of Abu Dhabi, United Arab Emirates.

The Satah Full Field Development project's objective is to maximize crude oil production and oil recovery by reducing the well heads' back pressure and introducing of gas injection and gas lift facilities.

The project scope involves offshore brownfield works to the existing well head platforms and production manifold platform, installation of infield pipelines, as well as modifications and installation of new facilities at the Onshore Satah plant at Zirku Island.

This project award is the recognition of our expertise in the growing brownfield projects market in the Middle-East, said Arturo Grimaldi, Senior Vice President of Technip in the Middle East. It also reflects the confidence of our client ZADCO in the strong consortium that we form with NPCC.

Technip's operating center in Abu Dhabi will execute the engineering and procurement activities while construction and installation activities for offshore works will be performed by NPCC. The Onshore construction activities will be carried out jointly by the consortium companies.

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Statoil On Track with Mariner Project

- Statoil On Track with Mariner Project

The concept chosen for the Mariner heavy oil project on the UK continental shelf includes a production, drilling and quarter (PDQ) platform based on a steel jacket, with a floating storage unit (FSU).

Statoil expects a final investment decision in late 2012 and first oil in late 2016.

The Bressay heavy oil project on the UK continental shelf is also progressing according to plan, one year behind Mariner, to ensure transfer of learning and synergies.

The Mariner and Bressay projects were presented at a press briefing by Statoil's executive vice president for Development and Production International, Peter Mellbye, at SPE Offshore Europe 2011 in Aberdeen.

"After a period of uncertainty, I am proud to be able to say that we are back on track with the landmark Mariner and Bressay developments. To be able to once again move these projects forward is important for Statoil and its partners, as well as for the UK and for the Aberdeen region," said Mellbye.

The ultra-heavy oil projects will require pioneering technology in order to be developed. Since its discovery thirty years ago, the Mariner field has been subject to a number of development studies by different operators.

Statoil is the first company ready to put forward a development concept that will fully address the complexities of this field, in particular related to reservoir management, recovery rates and project execution.

Statoil has extensive heavy oil experience, including the successful development of the Grane field in Norway and the Peregrino field in Brazil.

Because of the low well flow rates and early water break-through there is a need for many wells, artificial lift, and a process designed to handle large liquid rates and oil-water emulsions.

A total of 145 reservoir targets for production or injection are planned for Mariner. While the number of well slots at the platforms is less, this will be solved through use of multi-branch technology, sidetracks and reuse of slots.

The Mariner and Bressay projects will entail a gross investment of roughly GBP 6 billion. Statoil estimates lasting employment of at least 700 individuals, mainly locals, directly involved in its operations, and the establishment of a new operations centre in Aberdeen. The indirect employment of numerous others in the supply and service sectors comes in addition to this.

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Reliance, BP Finalize $7.2B Acquisition

- Reliance, BP Finalize $7.2B Acquisition

Thursday, September 08, 2011
Reliance Industries Ltd.

Reliance Industries Limited (RIL) and BP announced the completion of BP's acquisition of a 30 percent stake in 21 oil and gas production sharing contracts (PSCs) that Reliance operates in India, including the producing KG D6 block.

This significant step will commence the planned alliance which will operate across the gas value chain in India, from exploration and production to distribution and marketing. The completion of the deal delivers one of the largest ever foreign direct investments into India.

The two companies will also form a 50:50 joint venture for the sourcing and marketing of gas in India which will also accelerate the creation of infrastructure for receiving, transporting and marketing natural gas.

Mukesh Ambani, Chairman and Managing Director, Reliance Industries, said, "The alliance with BP will boost our efforts to realize the true potential of India's hydrocarbon reserves. The globally renowned expertise of BP and the in-depth domestic experience of Reliance make for a formidable alliance which will deliver unparalleled value for the country in its pursuit of energy security."

"This is the beginning of what we expect to be a long and successful working partnership with Reliance, building on the strengths of each company," said Bob Dudley, BP group chief executive. "This major investment is directly aligned with our strategy of creating long-term
value by forming alliances with strong national partners, gaining material positions in significant hydrocarbon basins and increasing our exposure to growing energy markets."

BP will pay RIL an aggregate consideration of US $7.2 billion subject to completion adjustments for the interests to be acquired in the 21 production sharing contracts. Further performance payments of up to US $1.8 billion could be paid based on exploration success that results in development of commercial discoveries.

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