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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Coastal Tests Additional Wells at Bua Ban North B

- Coastal Tests Additional Wells at Bua Ban North B

Friday, August 12, 2011
Coastal Energy Co.

Coastal announced the results of production testing on two additional wells at Bua Ban North B and the appraisal well at Songkhla H.

The Bua Ban North B-05 well was completed using an electric submersible pump (ESP) and is currently producing 2,500 bopd from the Miocene interval. The Bua Ban North B-01 well was completed using an ESP and is currently producing 600 bopd from the Oligocene interval. Total production from the Bua Ban North field is averaging approximately 7,100 bopd. The Company has also completed the B-07 water injection well and expects to complete the three remaining producing wells by the end of August.

The Songkhla H-01 sidetrack was drilled to a total depth of 9,140 feet TVD and downdip from the original wellbore to determine the extent of the field. The well encountered 30 feet of net water bearing sand in the Lower Oligocene interval. Pressure data confirmed the field limit is consistent with internal estimates based on seismic data.

Randy Bartley, Chief Executive Officer of Coastal Energy, commented, "Bua Ban North B continues to exceed our expectations and we are very pleased with the four currently producing wells. We continue to produce the Bua Ban North B wells at two-thirds pump capacity to monitor reservoir performance. Given the reservoir quality and well performance we have seen from the Miocene reservoir thus far, we are now planning to move the rig back to Bua Ban North and drill delineation wells to further define the extent of the Miocene trend. This success has also led us to begin further evaluation and remapping of the Miocene trend along the western side of the basin stretching from Bua Ban North to Benjarong. We expect to begin exploration drilling targeting the Miocene at Bua Ban South in the fourth quarter.

"The results of the Songkhla H-01 appraisal indicate an oil column of approximately 200 feet. We are pleased with the Songkhla H discovery as there are numerous other prospects which can be drilled nearby and, if successful, developed from a central Songkhla H production facility. We plan to apply for a production license in the Songkhla H area and begin developing the area following government approval."

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O&G Industry Wants Water Ban Overturned

- O&G Industry Wants Water Ban Overturned

Friday, July 22, 2011
Knight Ridder/Tribune Business News
by Brian Bowling, The Pittsburgh Tribune-Review

The Pennsylvania oil and gas industry is asking a federal judge to overturn a federal ban on using surface and groundwater in the Allegheny National Forest to conduct hydraulic fracturing at Marcellus shale well sites there.

If the companies are forced to truck in municipal water, that will increase the lifetime operating cost of each well by about $1.5 million to $2 million, the industry motion says.

Erie attorney Matthew Wolford, one of the lawyers representing the industry, said the motion cites both Pennsylvania common law and the language of the deeds for some of the wells.

In the case of the two wells mentioned in the motion, the deeds for the mineral rights specifically mention that the mineral rights owners can use surrounding water for oil and gas drilling, he said. Even without that language, the state's common law gives mineral owners reasonable access to water, he said.

"In Pennsylvania, people don't own the water," he said. "Water is usable by a property owner for various things."

The motion filed in Erie federal court asks U.S. District Judge Sean McLaughlin to find the U.S. Forest Service in contempt of his Dec. 15, 2009, order requiring the agency to promptly process drilling proposals from companies.

A 1980 federal court decision requires companies to give the agency 60 days notice before they start drilling.

Under Pennsylvania law, the federal government -- as the surface property owner -- doesn't have the right to block the mineral owner's access to the minerals, but the 1980 decision and McLaughlin's 2009 decision give the agency some limited control on how the gas companies drill inside the national forest.

Instead of complying with the judge's order, the Forest Service has lengthened the amount of time it takes to process proposals and has "engaged in a pattern of interference with the lawful efforts of (gas industry) members," the lawsuit says.

A spokesman for the Forest Service couldn't be reached for comment. Wyn Hornbuckle, a spokesman for the Justice Department, declined comment. The Justice Department is representing the federal agency in the lawsuit.

Copyright (c) 2011, The Pittsburgh Tribune-Review

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Northern Petroleum's Operations Unaffected by Italian Ban

- Northern Petroleum's Operations Unaffected by Italian Ban

Wednesday, July 13, 2011
Northern Petroleum plc

Northern announced an update to its preliminary examination, dated July 2, 2010, of the environmental proposals as first detailed in a posting on the official Ministry of the Environment web-site in late June 2010 and attributed to Environment Minister Stefania Prestigiacomo. Legislative Decree 128/10 came into force with effect from August 26, 2010.

In summary, Legislative Decree 128/10 ("the Decree"):

• Has no impact on Northern's current reported reserves of 53.2 mmboe in Italy;
• Has no significant effect on the exploration prospectivity of the Southern Adriatic;
• Continues to have no significant impact on the exploration prospectivity of the West of Sicily Thrust Belt, however a successful application was submitted to reshape part of one application which fell within the zone covered by the Decree; and
• Has had a greater, but largely limited, effect upon other offshore areas where near shore gas is the predominant target.

The new legislation covers liquid hydrocarbons activities within five nautical miles of the coast baseline and all hydrocarbon activities within twelve nautical miles of a marine or coastal protected area. The majority of Northern's permit areas are further offshore.

Acting in consideration of the above, the specific updates covering the effects of the Decree upon the Group's activities in each of the areas offshore Italy are outlined below.

Southern Adriatic (permits and applications)

The Decree has no impact upon the established reserves held within Northern's two permits or the exploration prospectivity of the Southern Adriatic as a whole.

No communications have been received from the Ministry of Economic Development or the Ministry of Environment regarding either of these awarded permits.

In respect of the permit applications, Northern has successfully submitted amendments to reshape part of application d149D.R-.NP to the extent to which it fell within the zone covered by the Decree, while three further applications, namely d61F.R-.NP, d71F.R-.NP and d72F.R-.NP which were marginally affected, have been slightly modified by the Ministry of Economic Development in order to stay clear of the zone covered by the decree. The remaining applications, namely d60F.R-.NP, d65F.R-.NP and d66F.R-.NP remain totally unaffected.

West of SicilyThrust Belt (permits and applications)

For the six permit area closest to the Tunisian boundary there is a minor effect in terms of area upon only one of the six blocks, being the eastern part of G.R20.NP. Northern continues to evaluate that the prospectivity of the permit area remains untouched, while the interpretation of the Decree still remains unclear as far as awarded permits. No communications have been received from the Ministry of Economic Development or the Ministry of Environment regarding any of the awarded permits.

An application to suspend permits G.R17.NP, G.R18.NP and G.R19.NP has been made by the partners as part of a prudent license management process for the entire West of Sicily Thrust Belt area.

Northern has successfully submitted amendments to reshape application d25G.R-.NP to the extent to which it fell within the zone covered by the Decree, while the Ministry of Economic Development has slightly modified the shape of application d362C.R-.NP to exclude a small area that was intersecting the restricted zone. Application d21G.R-.NP is substantially affected by the restrictions introduced, but as of today no communications have been received from any Ministry regarding this block. The remaining application d26G.R-.NP remains totally unaffected.

Sicily Channel (permits and applications)

There remains no effect upon permit C.R146.NP and the adjacent application d351C.R-.NP, which contain the very large Vesta prospect.

Permit C.R147.NP, which is located north of Pantelleria Island and in close proximity to the recent ADX Energy Lambouka discovery, remains affected by areal extent, but four identified prospects are within areas of the license that remain unaffected and only two prospects fall within the restricted zone. However the interpretation of the Decree still remains unclear as far as awarded permits. No communications have been received from the Ministry of Economic Development or the Ministry of Environment regarding the C.R146.NP and C.R147.NP permits.

Permits C.R146.NP and C.R147.NP have also been successfully suspended at Northern's request as a prudent license management measure.

Closer to the coast of Sicily, the Company has four further applications.

Northern's previous interpretation of the impact on application d358C.R-.EL was that the area of greatest interest would not be materially affected. However the Operator of this application, a subsidiary of Petroceltic International ("Petroceltic"), has recently received a letter from the licensing authority (the Ministry of Economic Development) rejecting this application. Both Northern and Petroceltic disagree with the Ministry of Economic Development's interpretation of aspects of the Decree that have given rise to the rejection decision, and the Operator is considering an appeal against this decision, as is an applicant's statutory right.

Northern has successfully submitted amendments to reshape application d29G.R-.NP to the extent to which it fell within the zone covered by the Decree. Application d347C.R-.NP is substantially affected by the restrictions, but no communication from the Ministry of Economic Development or the Ministry of Environment has been received as of today, and therefore no action has been taken regarding this block. The remaining application d30G.R-.NP remains totally unaffected.

Ionian Sea (applications)

The greatest effect to Northern of the Decree remains in this area, as previously reported.

The new legislation excluded most of the area of two preliminary awards d59F.R-.NP and d64F.R-.NP, and following a period of consultation with the Ministry of Economic Development, Northern has now received notification rejecting these applications. Northern disagrees with the Ministry of Economic Development's interpretation of aspects of the Decree that have given rise to the rejection decision, and has immediately instructed its Italian legal counsel to appeal against these decisions, as is our statutory right.

Two further applications, d63F.R-.NP and d75F.R-.NP are also substantially affected by the restricted zone, but no communication from the Ministry of Economic Development or the Ministry of Environment has been received as yet, and therefore no action has been taken regarding these blocks. Application d77F.R-.NP is marginally affected by the restricted zone (less than 1% of the area of the application), and the area covered by application d78F.R-.NP is completely unaffected. As yet, no communication from the Ministry of Economic Development or the Ministry of Environment has been received. However both these applications are within the area where liquid hydrocarbons exploration has been banned and Northern has therefore submitted work program modifications aimed at refocusing the exploration on these blocks to gas only, in order to progress the application process.

Impact on Permit Awards

Given the lack of advance consultation by the Ministry of Environment with the licensing authority in advance of the initial announcement of this initiative, one of the immediate responses of the licensing authority was, in the absence of legislation, to place a moratorium of the award of new offshore permits. Northern's plans for a 2D seismic survey in Q4 of last year were as a consequence postponed. As of 30 June 2011, one year on, no new offshore permits have been issued since these proposals were first announced.

Derek Musgrove, Managing Director of Northern, commented, "I believe that, Northern has not been badly affected save in the Ionian Sea, which is not one of our most significant core areas. We have always conducted our offshore operations with due consideration to marine parks, sensitive coastal areas and the environment in general, and this will remain a priority.

"One 2D and two 3D seismic surveys are in planning for the second half of 2011 on our Southern Adriatic permits. This will allow not only for the progression of the Rovesti and Giove oil discoveries, which holda combined 53.2 million barrels of probable reserves, but also enable the de-risking of the significant exploration potential within these two permits.

"I am hopeful that further permit awards in the Southern Adriatic may soon be forthcoming. Should this be the case then Northern would expect to start planning additional seismic activity shortly thereafter.

"We continue to focus much of our human resources towards progressing the Southern Adriatic, the West of Sicily Thrust and Fold Belt where we are partnered with Shell, and the Sicily Channel and Ionian Sea areas. Our objective remains to enter into agreements to bring new partners into these areas."

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Coastal Confirms Net Pay at Buan Ban North B Field

- Coastal Confirms Net Pay at Buan Ban North B Field

Tuesday, June 28, 2011
Coastal Energy Co.

Coastal Energy announced the results of two wells drilled at the Bua Ban North B field, offshore Thailand.

The Bua Ban North B-08 well was drilled to a total depth of 5,900 feet TVD and encountered 92 feet of net pay with 28 percent porosity and 25 percent water saturation in the Miocene interval. The B-08 well was drilled on the easternmost fault block of the field and successfully appraised the discovery made by the B-03 well. As a result of the B-08 drilling, the lowest known oil was moved 140 feet lower in this fault block.

The B-07 well was drilled as a water injection well and to establish the oil water contact in the field. The B-07 encountered the oil water contact at 3,824 feet, which was in line with the prognosis based upon previous drilling results. Pressure and log data from the B-08 well indicate that the oil water contact may be deeper on the eastern side of the field.

Randy Bartley, Chief Executive Officer of Coastal Energy, commented, "The results of the B-07 and B-08 wells serve as further confirmation of the Miocene trend in the Songkhla basin. Updated mapping based on drilling results indicates that the structural closure at Bua Ban North B is approximately 2,800 acres in size. The positive appraisal of the eastern fault block has major implications for the extension of this field as it has significantly increased the prospectivity along the major eastern Miocene fault which extends over three kilometers between Bua Ban North A & B.

"The drilling rig is going to mobilize to the Songkhla H prospect next, which is a commitment well outside of the two established production areas on G5/43. We will proceed with the installation of the mobile offshore production unit to begin production at Bua Ban North B once the rig is off location."

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Coastal Hits 'Significant' Oil Pay at Bua Ban

- Coastal Hits 'Significant' Oil Pay at Bua Ban

Wednesday, June 15, 2011
Coastal Energy Co.

Coastal announced that the Bua Ban North B-06 well was drilled to a total depth of 6,800 feet TVD and encountered 69 feet of net pay with 28 percent porosity in the Miocene interval. MDT (Modular Dynamic Testing) pressure analysis confirms that the well is in communication with the B-02 and B-04 wells and oil samples recovered have an API gravity of 36 degrees.

The B-06 also encountered 17 feet of net pay with 22 percent porosity in the Eocene in the western upthrown fault block, which has also been referred to as the Bua Ban North Terrace. This is the highest porosity Eocene pay zone that has been encountered in the basin.

Randy Bartley, Chief Executive Officer of Coastal Energy, commented, "We are pleasantly surprised with the results of the B-06 well. The well was expected to encounter a wet section of the reservoir and be used for aquifer support; however, the fact that it encountered a significant oil pay zone in the Miocene which is connected to the other wells in the same fault block has several positive implications.

The lowest known oil in this fault block has been moved lower by 100 feet and has nearly tripled the extent of the structural closure to 425 acres. The oil water contact here is much deeper than originally anticipated. Following this discovery, we will drill an additional well (B-07), to confirm the MDT data which indicate an oil water contact at 3,825 feet. The B-07 well can be used for water injection. We then plan to drill a well (B-08) on the eastern side of the field and northeast of the B-03 well to further evaluate the full extent of this closure. If successful, this would materially increase the size of the productive field.

In addition, the high quality of the Eocene reservoir which was seen confirms our assessment that the Eocene is conventionally producible above 6,500 feet. The B-06 well supports further exploration to the north and west and reduces the risk of the Company's Eocene targets.

The mobile offshore production unit is on standby and will mobilize to Bua Ban North B to begin testing operations as soon as the drilling rig moves off location."

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Coastal Touts Success at Bua Ban North Appraisal

- Coastal Touts Success at Bua Ban North Appraisal

Monday, June 06, 2011
Coastal Energy Co.

Coastal Energy announced the successful results of the Bua Ban North B-04 appraisal well.

The Bua Ban North B-04 well was drilled to 6,000 feet TVD and encountered 64 feet of net pay in the Miocene objective with average porosity of 27%. The B-04 confirms the discovery made by the B-02 well, which encountered 62 feet of net pay in the Miocene with 26% porosity. The B-04 well is currently being cased and will then be suspended pending the arrival of production equipment. The Company plans to drill a water disposal well before mobilizing the rig to its next planned location.

Randy Bartley, Chief Executive Officer of Coastal Energy, commented, "We are pleased with the continued success in the Miocene trend at Bua Ban North B. Drilling is expected to be complete by mid-June and the Mobile Offshore Production Unit is scheduled to arrive in late June. A hydraulic unit will be used for completion operations and production testing is anticipated to begin in mid-July.

"The B-04 well further confirmed the Miocene trend at Bua Ban North B and the potential of the Miocene play across the Songkhla basin. Following Bua Ban North B, the rig will be mobilized to the Songkhla H prospect, which is in the middle of the basin between Songkhla A and Bua Ban. An exploration well will be drilled to test the Miocene and deeper zones at this location."

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Witnesses Say Gulf Drilling Ban Was A Harsh Blow

- Witnesses Say Gulf Drilling Ban Was A Harsh Blow

Friday, June 03, 2011
Houston Chronicle
by Jennifer A. Dlouhy

The Obama administration's reactions to last year's BP oil spill did more damage than the crude itself, Mississippi Gov. Haley Barbour and Gulf Coast employers told a House committee Thursday.

Barbour said little oil reached Mississippi's shores, but the administration's May 2010 decision to impose a five-month ban on most deep-water drilling has left a lasting impact.

The moratorium "not only cost jobs in all the Gulf states, it hurt the economy nationally by reducing domestic oil production," Barbour told the House Oversight and Government Reform Committee.

Barbour, a Republican who recently ruled out a presidential bid, added that the government is still moving too slowly in approving deep-water projects.

"This will have a lasting impact on an already out-of-balance oil trade deficit," Barbour said. "Great jobs are being lost."

But Obama's top offshore drilling regulator -- Michael Bromwich, head of the Interior Department's Bureau of Ocean Energy Management, Regulation and Enforcement -- testified that the post-spill priority was boosting the safety of oil and gas operations near U.S. coasts.

The ocean energy bureau has approved 55 permits for shallow-water wells since new safety rules were imposed last June.

The agency also has permitted 15 deep-water drilling projects for which applicants were required to prove they could contain oil if an underwater well blew out as BP's Macondo well did.

After the resulting explosion on April 20, 2010, killed 11 Deepwater Horizon drilling rig workers and unleashed a 5-million-barrel oil spill, the administration overhauled the government's oversight of offshore drilling to eliminate possible conflicts of interest.

Rep. Darrell Issa, R-Calif., said those bureaucratic changes and a subsequent slowdown in the permitting of offshore drilling projects exacerbated economic damage from the spill.

"Much of the suffering and loss from the spill was made worse by poor decisions of administration officials," said Issa, the panel chairman. "When the administration did act, its major accomplishment was a hasty bureaucratic reorganization" and an offshore drilling shutdown that has caused "a paralyzing loss of jobs."

Cory Kief, president of Larose, La.-based Offshore Towing, said his tugboat company -- once hired to tow dozens of shallow-water rigs monthly -- has been hit hard by the drilling decline.

"We understand that precious lives were lost, and that an environmental disaster that was some 60 years in the making should not be ignored," Kief said. "However, there was a governmental agency that had a hand to play in this along with the others."

But Bromwich, the ocean energy bureau director, said that even if it takes more time for oil companies to satisfy new safety rules and for regulators to verify their compliance, that's better than the alternative.

"Our new regulations to strengthen drilling safety and protect the environment have required operators to work to make sure they drill safely, and our drilling engineers have to work to ensure compliance with the expanded set of requirements," Bromwich said. "That takes more time than the process that existed previously, when the rules were inadequate and some of our reviews were insufficiently exacting."

"This may be frustrating to some in the industry, but the additional rules and heightened scrutiny are completely appropriate and in the best interest of the nation."

The presidential commission that investigated the Deepwater Horizon disaster found that oil companies lost control of Gulf wells 79 times from 1996 to 2009, Bromwich noted.

"That's 79 near-misses -- 79 almost-Deepwater Horizons," Bromwich said.

It's impossible to reduce risk to zero, he said, "but we have to work constructively to try to manage those risks in a balanced way so we don't impose inappropriately high costs on industry and yet we do raise the bar on safety."

Bromwich added that he "would not have been comfortable" relaunching deep-water drilling after the spill without first strengthening offshore safety rules.

But Barbour argued that the government overreacted -- especially given a history of more than 31,000 oil wells drilled in the Gulf without devastating spills.

Barbour likened the deep-water drilling ban and subsequent safety regulations to outlawing left turns "because they're a little more dangerous."

U.S. economic needs and the urgency of domestic energy production outweigh the risk, Barbour said.

"The risk of one in 31,000 is worth taking when you're talking about something that is so important to the economy of the United States of America," he said.

Copyright (c) 2011, Houston Chronicle

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Coastal Strikes Again at Bua Ban North

- Coastal Strikes Again at Bua Ban North

Wednesday, May 25, 2011
Coastal Energy Co.

Coastal announced the successful results of the Bua Ban North B-05 exploration well.

The Bua Ban North B-05 well was drilled to 7,600 feet TVD and encountered 178 feet of net pay in the Miocene objective with average porosity of 27%. The B-05 is currently being cased and will then be suspended pending the arrival of testing equipment. The Company then plans to spud the B-04 well to appraise the Miocene reservoir updip from the discovery in the B-01 well.

The Company's offshore production is currently averaging 8,500 bopd. Onshore production is averaging 2,000 boe/d, bringing total Company production to 10,500 boe/d.

Randy Bartley, Chief Executive Officer of Coastal Energy, commented, "The B-05 well was designed to encounter maximum net pay by drilling along the bounding fault plane within a single structural trap. The Bua Ban North A-03 well was drilled with a similar well design and had similar results. We plan to utilize this drilling technique in future wells to optimize pay zones.

"Given the exceptional results thus far at Bua Ban North B, we have decided to divert the MOPU from Bua Ban North A to begin testing Bua Ban North B first. We are in the process of procuring an additional MOPU for Bua Ban North A, which we expect to be on location during the third quarter.

"The results of the B-05 further validate the tremendous upside potential of the Miocene trend in the Songkhla basin. Based on recent drilling results, we believe the Miocene trend extends into the central part of the basin and becomes shallower as it moves east. Once appraisal work is completed at Bua Ban North B and testing has begun, we plan to move the rig to a new location further to the east to continue exploring the Miocene trend.

"Production at Songkhla A has fallen recently due to declining rates from the wells drilled in Q410 and Q111. These three wells discovered new reservoirs which are not in communication with the main Songkhla reservoir and consequently are not benefiting from existing water injection wells. We are planning to drill water injection wells on these reservoirs to restore aquifer support and production rates once EIA approval is received, which is expected within two months."

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Ahmadinejad to Run Oil Ministry Despite Legal Ban

- Ahmadinejad to Run Oil Ministry Despite Legal Ban

Monday, May 23, 2011
Knight Ridder/Tribune Business News
by Farshid Motahari, dpa, Berlin

Iranian President Mahmoud Ahmadinejad will run the Oil Ministry despite a legal ban, his legal deputy said Sunday.

Ahmadinejad last week dismissed oil minister Massoud Mirkazemi and took over the ministry himself, which would have also made him rotating chairman at June's OPEC meeting in Vienna.

But Iran's constitutional watchdog, the Guardian Council, rejected the plan as illegal and said that Ahmadinejad could not run the Oil Ministry as caretaker.

The president's legal deputy, Fatemeh Bodaghi, told ISNA news agency that the decision has already been made, as the Guardian Council could only decide on decisions to be made but not on those already been made. Therefore, Ahmadinejad would remain caretaker of the ministry, she said.

Ahmadinejad had argued that he planned to trim the cabinet, and one of his decisions was to abolish the Oil Ministry and merge it with the Energy Ministry. The plan led to wide-spread criticism in Parliament.

Ahmadinejad is involved in a row with Iran's clergy and conservative factions over his reform plans, which include reducing the cabinet from 21 to 17 ministries.

As caretaker of the Oil Ministry, Ahmadinejad would also chair the OPEC meeting next month in Vienna, where protests against the Iranian president are reportedly being planned.

Copyright (c) 2011, dpa, Berlin

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Drilling Impact Fee Won't Go To Those Who Ban It

- Drilling Impact Fee Won't Go To Those Who Ban It

Thursday, May 19, 2011
Knight Ridder/Tribune Business News
by Brad Bumsted, The Pittsburgh Tribune-Review

Local governments that want to share revenue from a proposed impact fee on natural gas drilling cannot adopt more stringent zoning regulations than a statewide "model ordinance" called for in a Senate bill.

The provision is aimed at Pittsburgh, which banned drilling, and any other municipalities that would do the same, said Andrew Crompton, chief counsel for Senate President Pro Tempore Joe Scarnati, R-Jefferson County, the bill's author.

"It's mainly to make sure the city of Pittsburgh and any others that have explicitly zoned out shale are not getting rewarded by getting a share of the (drilling) fee," Crompton said.

The way the bill is structured Pittsburgh wouldn't be eligible for the local share of the money, which goes to communities in or near drilling sites, but it would otherwise be eligible for statewide revenue the bill provides, Crompton said.

Ben Price, project director for the Community Environmental Legal Defense Fund, which drafted Pittsburgh's no-drilling ordinance, called the revenue "blood money" that requires municipalities to abrogate their authority to protect communities in order to get state revenue. He claimed the gas industry drafted the Scarnati bill, which Crompton denied.

The Public Utility Commission would develop the model zoning ordinance, which would permit drilling "by right" in all but residentially zoned areas.

Crompton said he suspects the commission would rely on a model zoning proposal used by the Pennsylvania State Association of Township Supervisors.

"We put a model ordinance out to members so they can properly plan for (drilling)," said Elam Herr, an official with the supervisors association. The group is still reviewing Scarnati's bill, Herr said, but has no problem with preventing revenue from going to municipalities that ban drilling.

Scarnati on Monday introduced the bill, which would impose a $10,000-per-well fee on deep gas sites, with potential revenue much higher depending on the price of gas and volume produced by the well.

The legislation would bring in $121.2 million in revenue by March 1, 2012. The first $7.5 million would go to conservation districts. The split after that would be 60 percent to counties and municipalities and 40 percent for statewide grants on projects such as roads, stormwater and sewer systems and protecting open space.

But the bill faces hurdles: Gov. Tom Corbett has said he would consider an impact fee, but the money must remain local and not come to Harrisburg. The Republican-controlled House has shown no appetite for a statewide fee or tax. There are six other tax or fee proposals on Marcellus shale drilling.

Copyright (c) 2011, The Pittsburgh Tribune-Review

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Bua Ban Delivers Additional Pay for Coastal Energy

Bua Ban Delivers Additional Pay for Coastal Energy

Monday, May 16, 2011
Coastal Energy Co.

Coastal Energy announced the successful results of the Bua Ban North B-03 exploration well.

The Bua Ban North B-03 well was drilled to 4,420 feet TVD and encountered 48 feet of net pay in the Miocene objective with average porosity and water saturations of 28% and 33%, respectively. The water saturations are the lowest seen thus far in the Miocene trend. The B-03 is currently being cased and will then be suspended pending the arrival of testing equipment. The Company then plans to spud the B-05 well to appraise the Lower Oligocene reservoir updip from the discovery in the B-01 well.

Randy Bartley, Chief Executive Officer of Coastal Energy, commented, "The B-03 discovery is significant as it proves that all Miocene fault block configurations along the western edge of the basin are capable of trapping hydrocarbons. This well also continues to highlight the high reservoir quality in the Lower Miocene and Upper Oligocene intervals on the western side of the basin. Based on this discovery we plan to begin evaluating any potential Miocene targets in the central part of the basin between Songkhla and Bua Ban.

"Our 2011 exploration program has been successful thus far with 6 of the 7 wells being successful and adding new reserves."

Randy Bartley, President and Chief Executive Officer of the Company and a member of the Society of Petroleum Engineering and Jerry Moon, Vice President, Technical & Business Development, a member of the American Association of Petroleum Geologists, a Licensed Professional Geoscientist and a Certified Petroleum Geologist in the state of Texas, have reviewed the contents of this announcement.

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Coastal Energy Hits Net Pay at Bua Ban North

Coastal Energy Hits Net Pay at Bua Ban North

Friday, April 29, 2011
Coastal Energy Co.

Coastal Energy announced the successful results of the Bua Ban North B-01 exploration well.

The Bua Ban North B-01 well was drilled to 7,960 feet TVD and encountered 28 feet of net pay in the Upper Oligocene with 23% average porosity and 29 feet of net pay in the Lower Oligocene with 16% average porosity. Net pay estimates are based on log analysis, shows and MDT analysis; the well has not been flow tested. The Company estimates that this fault block contains a total of 13 million barrels of oil in place across these two intervals.

The B-01 well also encountered good oil shows in three zones in the Miocene; however, this interval was not targeted in this well and the Miocene was not encountered in an optimal structural position. There was also an oil show in the Eocene interval.

The Company has spudded the Bua Ban North B-02 well, which will test two Miocene intervals in an optimal structural position. The B-02 well will also test Oligocene and Eocene targets. Although high gas readings were encountered throughout the Eocene and an oil show was observed, the top of the Eocene reservoir was penetrated at 7170 feet, below our interpreted threshold for development of reservoir quality sands.

Randy Bartley, Chief Executive Officer of Coastal Energy, commented, "The B-01 well delivered positive results for the Bua Ban North B prospect. We saw good oil shows throughout all of our targeted intervals which support further drilling to test the Miocene and Eocene intervals at this location. The shallow shows continue to support the potential for shallower Miocene and Upper Oligocene targets along the entire western margin of the Songkhla basin. The Eocene interval is predicted to be of reservoir quality at 6,500 feet and shallower; it was encountered in this well at 7,170 feet. We plan to test Eocene targets further up the terrace at shallower depths.

"The drilling results from Bua Ban North continue to be positive. We also remain on target to begin production testing of the multiple discoveries at Bua Ban North A in mid-May."

Randy Bartley, President and Chief Executive Officer of the Company and a member of the Society of Petroleum Engineering and Jerry Moon, Vice President, Technical & Business Development, a member of the American Association of Petroleum Geologists, a Licensed Professional Geoscientist and a Certified Petroleum Geologist in the state of Texas, have reviewed the contents of this announcement.

Coastal Strikes Oil Pay at Bua Ban North

Coastal Strikes Oil Pay at Bua Ban North

Monday, April 11, 2011
Coastal Energy Co.

Coastal announced the successful results of the Bua Ban North A-03 exploration well.

The Bua Ban North A-03 well was drilled to 5,346 feet TVD and made a discovery in the Miocene interval. The well encountered 125 feet of net pay with 28% average porosity. The A-03 tested a fault block which is south of and deeper than the Miocene discoveries in the A-01 and A-04 wells. The Company estimates that this fault block contains approximately 20 million barrels of oil in place.

The Company plans to suspend the well and then complete it with a workover rig once the MOPU arrives on location in mid-May to begin production testing.

Randy Bartley, Chief Executive Officer of Coastal Energy, commented, "The A-03 well not only significantly increases the oil in place at Bua Ban North A, but reinforces the prospectivity of this part of the basin. Coastal has now discovered an estimated 55 million barrels of oil in place with four wells in less than two months.

"We are moving the rig to Bua Ban North B while the MOPU is being mobilized to Bua Ban North A. Not only will we begin testing further Miocene targets, but we will also test the highly prospective Oligocene and Eocene targets in the northern part of the basin. During this time, we will also be able to fully evaluate the data from the first four Bua Ban North A wells and formulate a larger scale field development plan, including horizontal wells."