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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Mancos Oil Drilling Possible in 2012

- Mancos Oil Drilling Possible in 2012

Thursday, August 11, 2011
Knight Ridder/Tribune Business News
by Chuck Slothower, The Daily Times, Farmington, N.M.

The San Juan Basin could see an uptick in Mancos Shale drilling as soon as 2012, an oil and gas industry official said Wednesday.

"We think we'll see a critical mass by next year," said Steve Dunn, drilling and production manager at Merrion Oil and Gas. "We'll see some drilling."

Dunn was touting the potential for an oil boom in the Mancos Shale, a geologic layer deposited about 100 million years ago in the San Juan Basin. His remarks came at Wednesday's San Juan Economic Development Service meeting.

Horizontal drilling and hydraulic fracturing have made it possible for drillers to reach previously unavailable oil and gas deposits deep within shale rock. Plays, as the booms are called, have overtaken the Bakken Shale in North Dakota, the Barnett Shale in Texas and elsewhere.

"We believe the Mancos is going to be the next big play," he said.

Drilling in the Mancos Shale would require 10 to 20 stages of fracturing per well, Dunn said. Once drillers gain experience, the wells could be completed for about $5 million each.

"It takes a lot of money to do it, but there's the potential to make a lot of money if you're successful," Dunn said.

The oil-rich area of the Mancos Shale is mostly south of Farmington, spanning 3,400 square miles in San Juan, Rio Arriba and Sandoval counties, he said.

Drillers increasingly are focusing on drilling for oil as natural gas prices stagnate. Oil, however, hasn't been immune from economic worries. Investors

have driven down the price of oil this week, to $81 on the New York Mercantile Exchange on Wednesday. Natural gas traded for $4.07 per MMBtu on the Henry Hub.

A few wells already have been drilled in the Mancos Shale. EnerVest saw disappointing results for two wells drilled near Lindrith, Dunn said. However, Williams Exploration and Production got promising results from wells drilled near Navajo Lake.

Williams has applied to build eight well pads on Middle Mesa that could host as many as 13 well bores per pad. The project calls for a purpose-built drilling rig that would operate year-round, a major investment for the company.

The Middle Mesa project is slated to begin in fall 2012, pending an environmental impact statement and approval by the U.S. Bureau of Land Management.

Merrion Oil and Gas has been in discussions with several large producers interested in exploring the Mancos Shale.

"I really think Merrion Oil and Gas and our partners will lead the way in this Mancos Shale play," said T. Greg Merrion, the company's president.

Dunn said the Mancos Shale could support 13,000 additional wells.

"Keep in mind, I'm talking about potential here," he said.

Mayor Tommy Roberts said tax incentives play a big role in encouraging oil an gas production. A federal tax credit for coal-bed methane production helped spur the drilling boom during the 1990s.

New tax incentives are a tough sell in an uncertain economy, he said.

"Our state legislators seem to be reluctant to pursue it in an environment where the governor is trying to eliminate tax incentives," he said.

Copyright (c) 2011, The Daily Times, Farmington, N.M.

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U.S. Gas Exports to Mexico Could Grow in 2012

- U.S. Gas Exports to Mexico Could Grow in 2012

Monday, June 27, 2011
Rigzone Staff
by Karen Boman

Exports of U.S. natural gas into Mexico are expected to average 1.3 Bcf/d, a 450 MMcf/d increase from 2010, and the tightening of Mexican supply/demand balances should lead to further U.S. export growth in 2012, Barclays Capital reported last week.

Exports to Mexico grew sharply in the beginning of the past decade before stabilizing in the 850 MMcf/d range from 5001-2010; however, first quarter 2011 exports averaged the highest in the past 10 years.

U.S. gas exports to Mexico represent a relatively small part of U.S. gas balance, or one percent in 2010, and have not attracted much attention, but the exported BTUs are starting to add up, and more important, several factors suggest this trend could continue in the next few years. Barclays expects U.S. flows to Mexico to increase by another 200 MMcf/d in 2012, to an average of 1.5 Bcf/d.

While gas is primarily used for refining and petrochemicals production and reinjection for oil production, power generation has been driving gas demand growth, and plans for generation capacity additions suggest that Mexico's gas consumption should grow rapidly in the next few years.

Domestic production also is in decline, showing a growing need for imports. more than 60 percent of Mexico's gas output comes in association with oil production. While associated gas is growing slightly, non-associated production is steeply declining, with PEMEX reporting a decline of non-associated gas output of 13 percent year/year for the first four months of 2011. "While LNG imports could meet some of the incremental demand, they are disadvantaged in favor of cheaper U.S.- sourced gas," Barclays said in a June 21 report.

Shale gas development in Mexico is one bright spot for Mexican non-associated gas output. Earlier this year, PEMEX reported production of its first shale gas at an exploratory well in the Eagle Ford shale formation in the northeastern state of Coahuila. PEMEX plans to drill 10 additional wells, including in the La Pena and Glenrose formations, targeting gas and condensates.

"While the potential for Mexico shale gas production could be significant, its development is at an early stage, and there is considerable uncertainty about the scale and time-frame for shale production growth," Barclays said.

Mexico has technically recoverable shale gas resources of 681 Tcf, according to the U.S. Energy Information Administration's April report, World Shale Gas Resources: An Initial Assessment of 14 Regions Outside the United States. Mexico has five basins, including the Burgos, Sabinas, Tampico, Tuxpan and Veracruz, and eight gas shale formations.

Thick, organic-rich and thermally mature source rock shales of Jurassic and Cretaceous-age occur in northeast and east-central Mexico, along the country's onshore portion of the Gulf of Mexico Basin. These shales are time-correlative with gas productive shales in the U.S., including the Eagle Ford, Haynesville, Bossier and Pearsall shales.

However, compared with the shale belts of Texas and Louisiana, Mexico's coastal shale zone is narrower, less continuous and structurally much more complex.

Advanced Resources International estimates that the five Mexico onshore basins assessed in the EIA study contain approximately 2,366 Tcf of geologically risked shale gas-in-place. Structural complexity (faulting and folding), excessive depth of over 5,000 meters, and locally thin or absent shale on paleo highs constrain the resource assessment.

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Rosneft Sell-off Could Be Brought Forward to 2012 - Report

- Rosneft Sell-off Could Be Brought Forward to 2012 - Report

Monday, June 20, 2011
Dow Jones Newswires
LONDON
by London Bureau

Russia wants to hasten its planned privatization of state-owned oil giant Rosneft in the wake of the collapsed share swap deal with U.K. supermajor BP, the Guardian reports Monday, citing an interview with one of President Dmitry Medvedev's key economic advisers.

"We want Rosneft to be a normal commercial company," said Arkady Dvorkovich, according to the paper. "The original government proposals were to start [the share sale] in 2013 but maybe now will be brought forward to 2012," Dvorkovich said.

The Russian government was planning to sell more than 85% of its stake in the company in 2013 if BP had gone ahead as planned. Now ministers are looking at bringing this process forward a year, the newspaper reports, adding that state control in the firm could fall below 50%.

The government would be happy if BP bought shares in Rosneft, according to the Guardian.

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

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Shell Expects to Drill in Alaska's Arctic in 2012

Shell Expects to Drill in Alaska's Arctic in 2012

Friday, April 15, 2011
Dow Jones Newswires
by Isabel Ordonez

Shell expects to start drilling in Alaska's Arctic waters in the summer of next year and have in place an oil-containment system specifically designed for the area ready at the same time, the head of the company's U.S. operations said Friday.

"Our aspiration is to drill in the 2012 season," Marvin Odum, president of Shell Oil Co., the U.S. unit of the Anglo-Dutch giant, told Dow Jones Newswires in a interview. "We are hopeful, but also cautions."

Shell still has to obtain a number of permits from the federal government in order to go ahead with its $3.5 billion investment to drill in the state's Beaufort and Chukchi seas. Shell's plans have been delayed by environmental lawsuits and permit issues on top of calls for better spill prevention and containment capabilities following BP's oil spill disaster in the Gulf of Mexico last year.

Odum said the company will wait until about September to see the amount of progress in the permitting process before making a final decision to start deploying the system needed to drilling next summer. "It takes about six months to build up the capacity you need to start the program," Odum said. "This is a very significant resource for the country, which is worth pursuing, and we are focused on getting it done."

Shell is planning to have in place an oil-containment system specifically designed to work in the cold-climate conditions of the Arctic by the time drilling starts, Odum said.

Shell said it has a three-tier, Arctic oil-spill response system consisting of an on-site oil-spill response fleet, near-shore barges and oil-spill response vessels, and onshore oil-spill response teams staged across the North Slope of Alaska that in the event of a blowout or spill could be ready to respond within one hour.

Separately, Odum said he believes it could take a year until the level of drilling activity in the Gulf of Mexico's deep water returns to normal levels, but that it could take longer if the federal government doesn't speed up the permitting process.

The Obama administration imposed a drilling moratorium in the area after BP's oil spill. The ban was lifted in October, but permits started to be issued only in late February.

Shell last month received the first authorization since the spill to drill a new well that complied with new regulations from the government. The company started drilling last week. However, Shell's production in the area will be about 50,000 barrels of oil equivalent a day lower this year due to the impact of the moratorium, Odum said.

The executive said the company is following closely the oil-shale acquisitions some of its U.S. rivals have recently made in the U.S. and that it is working on developing its oil-shale portfolio.

Odum said the world's oil markets are well supplied and that current high oil prices reflect the risk traders are seeing in short-term supply. He added that the ongoing oil glut at the Nymex delivery point of Cushing, Okla., could be solved in 2012 or 2013.

Tanzania Defers Offshore O&G Bidding Round until 2012

Tanzania Defers Offshore O&G Bidding Round until 2012

Monday, April 11, 2011
Dow Jones Newswires
by Nicholas Bariyo

Tanzania has postponed its fourth deep-offshore bidding round to 2012, said state oil company Tanzania Petroleum Development Corp.

The bidding round was to be opened April 12, and was expected to include 13 blocks sitting between 1,200 meters and 3,500 meters of water depth.

"The round has been postponed to give more time for preparations," TPDC said in a statement. "This will include proper demarcation of new blocks using additional new seismic."

TPDC didn't specify the exact date of the new round.

Currently, Tanzania has licensed 12 deepwater blocks and recent exploration works have encountered at least 7.5 trillion cubic feet of natural gas. The country is yet to discover commercial oil reserves.

Sebastian Shana, TPDC's principal petroleum geologist, said at least 13 new blocks have been demarcated, including new areas and relinquished acreage.

Geologists believe that Tanzanian oil and gas exploration areas share similar geological properties with Uganda's Lake Albertine Rift basin, where around 1 billion barrels of oil reserves have been discovered.

Exploration companies already licensed in Tanzania include Shell's local subsidiary Shell International, Orca Exploration, Dominion Gas and Oil, Tullow Oil and Tower Resources.