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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Mid-Con Energy Seeks Approval for IPO

- Mid-Con Energy Seeks Approval for IPO

Friday, August 26, 2011
Tulsa World, Okla.
by Rod Walton

Privately held waterflood oil producer Mid-Con Energy LP is seeking federal approval for an initial public offering as a master limited partnership.

The form S-1 registration request, filed earlier this month with the U.S. Securities and Exchange Commission, estimates a maximum of $140 million in equity from the proposed IPO. If granted, Mid-Con Energy hopes to be listed on the Nasdaq electronic exchange under the ticker symbol MCEP.

"Our management team has significant industry experience, especially with waterflood projects and, as a result, our operations focus primarily on enhancing the development of producing oil properties through waterflooding," the S-1 filing reads.

Mid-Con President Randy Olmstead founded the company seven years ago with capital from equity firm Yorktown Partners. Mid-Con's operating subsidiary, RDT Properties Inc., was started in 1986 to buy and operate mature waterflood properties.

The new partnership was incorporated last month in Delaware. Mid-Con Energy's production is focused on properties in southern and northeastern Oklahoma and Colorado.

The fields "primarily consist of mature, legacy onshore oil reservoirs with long-lived, relatively predictable production profiles and low production decline rates," the federal filing reads. More than 90 percent of Mid-Con's properties are produced under waterflood techniques, in which water is injected into the reservoir formation to displace residual oil and into adjacent production wells.

Mid-Con Energy's proved reserves totaled an estimated 7.9 million barrels of oil equivalent, most of that crude oil.

The master limited partnership structure eliminates corporate taxes on profits. The MLP is required to distribute much of its available cashflow through distributions to unitholders, who are taxed on those payouts.

Mid-Con is the fourth Tulsa energy firm to go public or announce a planned IPO in recent months. On Wednesday, Laredo Petroleum filed its own SEC papers seeking an initial public offering raising up to $450 million in equity.

Tulsa-based propane marketer NGL Energy Partners LP held its IPO earlier this year and is listed on the New York Stock Exchange.

Williams Cos. Inc. plans to set a partial IPO for its exploration and production subsidiary, WPX Energy Inc., later this year. The rest of WPX will be separated in a tax-free spinoff to Williams shareholders in 2012, according to reports.

Copyright (c) 2011 Tulsa World (Tulsa, Okla.)

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Shell Wins Tentative Approval for Offshore Arctic Drilling

- Shell Wins Tentative Approval for Offshore Arctic Drilling

Friday, August 05, 2011
Knight Ridder/Tribune Business News
by Richard Mauer

Shell cleared a major hurdle Thursday in its effort to begin a two-year drilling program in the Arctic Ocean next summer, receiving a conditional exploration permit from the federal agency that oversees off-shore oil development.

The company said it was buoyed by the morning announcement from the Interior Department's Bureau of Ocean Energy Management, Regulation and Enforcement, just as Interior Secretary Ken Salazar was preparing for an Alaska visit next week at the invitation of Sen. Lisa Murkowski, R-Alaska.

That congressional tour, which will also include Sen. Jack Reed, D-R.I., chairman of the Interior Appropriations Subcommittee, will focus on energy issues.

The exploration permit covers an overall program that would drill four wells over two years in Camden Bay of the Beaufort Sea, due north of the coastal plain of the Arctic National Wildlife Refuge.

But the permit is contingent on many other federal permits and approvals, among them governing air pollution from drill ships and companion vessels, oil-spill response plans, marine mammal protection and specific plans for each of the wells. A Shell spokesman in Alaska, Curtis Smith, said the company has been informed that at least the oil-spill response plan is near conclusion and will be approved next week.

Representatives of several environmental organizations, in a joint telephone news conference from Washington, D.C., said they were disappointed by the decision and were studying whether to challenge it in court. Erik Grafe, an Anchorage-based attorney for Earthjustice, said they had 60 days to file a lawsuit.

Grafe and the others said the federal approval was granted before Shell proved it could clean up an oil spill in the Arctic. They said the drilling program should have been subject to a full-blown environmental impact statement with public comment and additional research, not the more limited environmental assessment that the agency conducted.

The agency found no evidence that Shell's exploration "would significantly affect the quality of the human environment," a key for rejecting the need for an environmental impact statement.

Shell is also seeking authorization to drill in the Chukchi Sea about the same time as in the Beaufort. That application is pending.

Alaska's congressional delegation had been pressing for agency action this year and quickly praised the decision.

"Shell has been working to secure approval of this plan for over five years," Murkowski said in a prepared statement. "This is another positive step forward, and I'm hopeful that they will soon be able to move forward with exploration and production in the Beaufort."

She, U.S. Sen. Mark Begich, D-Alaska, and Rep. Don Young, R-Alaska, said the exploration project would create jobs and, if commercial development followed, could forestall problems with the trans-Alaska pipeline associated with declining oil flow.

Shell first won the Beaufort leases in 2005 and 2007. The company began applying for permits, but the Deepwater Horizon oil spill in the Gulf of Mexico in 2010, and the moratorium on new offshore drilling that followed, set Shell back.

In the aftermath of the spill, Shell bolstered its oil-spill prevention and response capability. On the federal side, one government agency, the Minerals Management Service, was replaced with another, the Bureau of Ocean Energy Management, Regulation and Enforcement. Shell had to resubmit its revised plans.

"Since Deepwater Horizon, BOEMRE has made significant improvements to the regulation and oversight of offshore oil and gas development," the agency said through a spokesman. "Permit applications for drilling projects must meet new standards for well-design, casing, and cementing, and be independently certified by a professional engineer per the new drilling safety rule. All of these improvements and experiences will go into further reviews of oil spill response plans."

In addition to obtaining more spill-response equipment, Shell says it is adapting technology being developed for the Gulf of Mexico that would allow drillers to quickly cap a damaged well or direct oil from a blow-out to tankers on the surface.

Copyright (c) 2011, Anchorage Daily News (Anchorage, Alaska). Distributed by Mclatchy-Tribune News Service.

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'Fracking' Has EPA Seal of Approval

- 'Fracking' Has EPA Seal of Approval

Thursday, July 14, 2011
Mclatchy-Tribune News Service.
by Andrew P. Morriss

Natural gas is clean and cheap compared to other forms of energy. Over the last few years, U.S. and world natural gas reserves have soared - U.S. reserves are up by over a third - as we've discovered how to apply the technique known as fracking to unleash gas trapped in deep underground shale formations.

Fracking involves pumping a mixture of water, sand and chemicals under pressure into underground formations, releasing the gas trapped there. Some of the material pumped in returns to the surface; some remains underground where it props open the fractures created in the formation.

The technique has been in use in the United States since the 1940s and it has been used around the world for decades in both oil and gas production. What is new is its effectiveness as methods are refined and the extent of the areas where it can be used cost effectively.

This has revolutionized America's energy picture. Shale gas made up just 1 percent of our gas supply in 2000; today it represents 25 percent.

In the early 2000s, plans were under way to build liquefied natural gas terminals to import natural gas from the Middle East. Today we are retrofitting our ports to allow us to export it. Natural gas prices have fallen to a quarter of their 2000 price, in large part as a result of this dramatic increase in supply.

As we discover new shale formations with recoverable gas, we face some difficult technical and legal issues. The liquid residue can pose risks to ground water and pumping pressurized liquid into the ground can affect neighbors' properties.

However, thus far fracking's dangers are mostly theoretical. Earlier this year EPA Administrator Lisa Jackson - certainly no friend to the hydrocarbon energy industry - told Congress that there had been "no proven cases where the fracking process itself has affected water."

"We have in place a national regulatory system to protect ground water and well developed principles of property law that protect neighbors," she testified. "We don't need more rules, just consistent application of those we have already."

Indeed, all forms of energy production involve side effects. Consider these examples:

• Wind and solar energy production require extensive use of rare earth minerals. Almost all of these minerals are imported from China where their production often triggers environmental disasters. The British Daily Mail's investigation into rare earth production for renewable energy earlier this year quoted Greenpeace China as saying "There's not one step of the rare earth mining process that is not disastrous for the environment."
• Ethanol poses serious threats to water in the Midwest, both from its water-intensive production draining aquifers faster than they recharge and from groundwater pollution from increased fertilizer use in growing corn.
• Nuclear plants require disposal of long term radioactive wastes. Coal plants emit both conventional pollutants and greenhouse gases, while mining risks lives and the environment.

Unless we are willing to drastically reduce our energy use - and so diminish our access to energy-intensive goods like pharmaceuticals and computers - we cannot reject every advance in energy production.

And unlike renewable energy firms such as General Electric and Archers Daniels Midland, the natural gas industry doesn't have its hand out asking for subsidies. Making sure we do not shut down development of our natural gas reserves with ill-considered regulatory measures is critical to our energy future.

(C) 2011 Mclatchy-Tribune News Service.. All Rights Reserved

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US Challenged over Approval of Shell Gulf Drilling Plan

- US Challenged over Approval of Shell Gulf Drilling Plan

Friday, June 10, 2011
Dow Jones Newswires
WASHINGTON (Dow Jones Newswires)
by Ryan Tracy

Environmental groups Thursday sued the Obama administration over its approval of a Shell plan to drill for oil deep under the Gulf of Mexico.

The suit was the opening salvo in what could be a lengthy legal fight over U.S. drilling policy following the resumption of oil and gas exploration after the Deepwater Horizon disaster. It came a day after ExxonMobil announced one of the largest oil discoveries ever in the Gulf, signaling that as oil companies use newly issued federal permits to return to the area after last year's oil spill, they are also likely to face more legal battles.

"Before new deepwater Gulf drilling occurs, the government must make a realistic assessment of the risk to the Gulf's ecosystem, its communities, and the many jobs that depend on tourism, fishing and recreation. It has utterly failed to do so here," said David Guest, an attorney with Earthjustice, which filed the suit on behalf of the Sierra Club, the Gulf Restoration Network and the Florida Wildlife Federation.

The groups alleged that federal regulators violated environmental laws when they approved Shell's plan to drill eight wells about 72 miles off the Louisiana coast last month and asked the Eleventh Circuit of the U.S. Court of Appeals in Atlanta to nix the approval.

The review of Shell's proposal was conducted under a new regulatory regime that was instituted after Deepwater Horizon and designed to improve safety and strengthen environmental protection. It found no evidence that the plan would significantly affect the quality of the "human environment."

The environmental groups say the government underestimated the likelihood of a major oil spill and failed to account for weaknesses in the company's plan to contain or prevent a blowout like the one that occurred in the Gulf last year.

A spokeswoman for the Bureau of Ocean Energy Management, Regulation, and Enforcement, which approved Shell's plan, declined to comment.

Shell spokeswoman Kayla Macke said in an email that Thursday's legal filings "fail to take into account the comprehensive nature of the approved exploration plan," which "reflects numerous improvements to enhance safety and to protect the environment."

"We will fully assist the government in defending this plan," Macke said.

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

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Murphy Receives BOEMRE Approval for GOM Drilling

Murphy Receives BOEMRE Approval for GOM Drilling

Thursday, April 07, 2011

BOEMRE

The Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) approved a deepwater permit for the drilling of a ninth well that complies with rigorous new safety standards implemented in the wake of the Deepwater Horizon explosion and resulting oil spill. This includes satisfying the requirement to demonstrate the capacity to contain a subsea blowout. The approved permit is a revised permit to sidetrack for Murphy Exploration & Production Company Well #A008 in Green Canyon Block 338 in 3,325 feet water depth, approximately 170 miles southwest of New Orleans, Louisiana.

"This permit allows the drilling of the ninth deepwater well since industry demonstrated that it had the capacity to handle subsea blowouts and spills," said BOEMRE Director Michael R. Bromwich. "We will continue to review and approve permits that satisfy our more rigorous safety and environmental standards and that demonstrate the necessary containment capabilities."

Murphy's Well #A008 is a sidetrack well. A sidetrack well is drilled to a new geologic target or a new location within the original target from the existing wellbore. The operator had a rig on location when drilling preparation activities were halted due to the temporary drilling suspensions imposed following the Deepwater Horizon oil spill.

As part of its approval process, the Bureau reviewed Murphy's containment capability available for the specific well proposed in the permit application. Murphy has contracted with the Helix Well Containment Group (HWCG) to use HWCG's capping stack to stop the flow of oil should a blowout occur. The capabilities of the capping stack meet the requirements that are specific to the characteristics of the proposed well.

BOEMRE has worked diligently to help industry adapt to and comply with new, rigorous safety practices. These standards ensure that oil and gas development continues, while also incorporating key lessons learned from the Deepwater Horizon oil spill. This new permit meets the new safety regulations and information requirements in Notices to Lessees N06 and N10, and the Interim Final Safety Rule.