Gulf Weather System Nearly Certain To Become A Tropical Cyclone

- Gulf Weather System Nearly Certain To Become A Tropical Cyclone

Wednesday, July 27, 2011
Dow Jones Newswires
HOUSTON
by Isabel Ordonez & Ryan Dezember

U.S. forecasters said a weather system rumbling into the southwestern Gulf of Mexico will almost certainly become a tropical cyclone by Friday afternoon.

The National Hurricane Center said satellite imagery indicates a tropical depression or tropical storm could be forming 90 miles north of Cancun, Mexico. The system, passing through the channel between the Yucatan peninsula and Cuba's western tip, is moving west-northwest at 15 miles per hour, forecasters said.

The Hurricane Center has dispatched a Hurricane Hunter airplane to the area to investigate conditions. The storm has a "near 100%" chance of becoming a tropical cyclone by midday Friday, forecasters said.

The Gulf accounted for about 30% of all U.S. oil production last year, with more than 606 million barrels. Gulf wells also account for about 7.2% of U.S. natural gas production.

Shell, one of the largest producers in the Gulf of Mexico, said it has evacuated some non-essential personnel from its southwest operations due to the threat of a possible storm.

The company said it evacuated about 70 people and that production isn't affected. Evacuation started Tuesday and continued Wednesday, the company said.

"These personnel are not essential to core producing," the company said.

Shell said it began securing operations on the Perdido platform, which it operates in partnership with Chevron and BP. About 200 miles south of Galveston, Texas, in about 8,000 feet of water, the Perdido platform is the world's deepest drilling and production platform. Its peak production is the equivalent of about 100,000 barrels of oil per day.

Shell also said it is securing operations on the Noble Danny Adkins, a deep-water drill ship it is leasing from Noble which is working in the vicinity of the Perdido platform. Noble spokesman John Breed said the company isn't evacuating workers from the rig but is "securing operations" aboard the ship.

Other major Gulf of Mexico producers BP, Chevron and ConocoPhillips said Wednesday they are monitoring the weather and developing plans should it threaten their operations.

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

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Statoil Plans to Become US Shale Operator by Early 2013 -Exec

- Statoil Plans to Become US Shale Operator by Early 2013 -Exec

Friday, June 03, 2011
Dow Jones Newswires
by Angel Gonzalez

Statoil, which built its oil and gas expertise in Norway's offshore waters, is stretching its land legs in the U.S., where it seeks to partake of the shale bounty.

Like many international oil and gas companies, Norway's Statoil has poured billions into joint ventures with some of the North American independents that in the last decade figured out how to profitably unlock the oil and gas trapped in shale, bankrolling their drilling while hoping to learn some of their techniques. But peering over its partners' shoulders is not enough: Statoil plans to run its own U.S. shale operation in South Texas's Eagle Ford Shale by early 2013, said the company's executive vice president for North America, Bill Maloney.

"We have aspirations and definite plans to become an operator in the onshore ourselves," he told Dow Jones Newswires in a recent interview at Statoil's North American headquarters in Houston. The company last October struck a $1.3 billion joint venture deal with Talisman in the Eagle Ford, which allows it the option to become operator.

"We are working towards that," Maloney said.

Statoil has been in the shale business since 2008, when it acquired 32.5% of a joint venture with Chesapeake in the Marcellus Shale, a big natural gas-rich rock formation in the Northeastern U.S. for $3.4 billion. Maloney said he sees some expansion in the Marcellus, but added that Statoil is really interested in growing its presence in the Eagle Ford, which is richer in oil.

High oil prices have turned the Eagle Ford into one of the hottest drilling basins in the world. On Wednesday, Marathon said it bought $3.5 billion in acreage from a company partially owned by private equity firm Kohlberg Kravis Roberts & Co., in one of the largest deals seen in the region.

Statoil is also interested in investment opportunities in other shales around the U.S., Maloney said.

Statoil's shale forays underscore the newfound promise found in the U.S. oil patch, once thought tapped out of its energy riches. It is now seen by large international oil companies as a key area for growth, as high oil prices have enabled many developing oil-rich countries to erect barriers to foreign investment.

Statoil helped make Norway the third-largest energy exporter, after Russia and Saudi Arabia, but the company's investments now extend all over the planet, from Algeria to Canada to Venezuela.

Its expansion in North America was gradual; throughout the years company made several large acquisitions in Canada and the U.S., including sizable deepwater acreage in the U.S. Gulf of Mexico, a position in Albertan oil sands, and the 2008 Chesapeake deal. By the time Maloney assumed the helm of a newly created North America unit in January, Statoil's assets in the continent had reached a critical mass.

Statoil had no employees in Houston in 2003, Maloney said. Now the company occupies nine floors in a high-rise near Houston's energy corridor--three floors more than last year--where nearly 400 employees work.

"We saw opportunities; we went after them," Maloney said. "Then, lo and behold, we built something here of size that we needed to separate out."

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

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Mexico May Become Oil Importer by 2020 -Study

Mexico May Become Oil Importer by 2020 -Study

Friday, April 29, 201
Baker Institute

Without sufficient investments in upstream oil field activities utilizing new and advanced technologies, Mexico faces the prospect of becoming a net oil importer in 10 years, according to new research by Rice University's James A. Baker III Institute for Public Policy and Oxford University. The stakes of the current political stalemate over oil are quite high, the study concluded. Were Pemex, Mexico's national oil company, able to fully develop its oil in line with international standards and technology, Mexican citizens could earn $1,055 per capita per year by 2020, versus $546 if current trends continue.

The two-year study will be released April 29 at a roundtable in Mexico City, co-hosted by Mexican Council on Foreign Relations. The study consists of 14 specialized academic papers authored by scholars from Oxford University, Rice University, Centro de Investigación y Docencia Económicas, National Autonomous University, Instituto Technológico Autónomo de México, Instituto de Investigaciones, Instituto Mora and Monterrey Institute of Technology and Higher Education.

Mexican petroleum production has been falling -- more than 25 percent since its peak in 2004 of 3.9 million barrels per day. Mexico produced 2.98 million barrels per day in 2010. The giant Cantarell field, in particular, has seen a significant drop in production. Meanwhile, domestic demand for oil has grown from 500,000 barrels per day in 1971 to roughly 2.15 million barrels per day in 2010. At present, Mexico is a net oil exporter, with total net exports in 2009 running at just under 1 million barrels per day.

These two trends -- lower overall production and growing internal demand -- pose serious challenges for the Mexican government. The Baker Institute study examines three basic questions: What does Mexico want from its oil policies? What are the Mexican oil sector’s medium- to long-term prospects? And how can Mexico best manage the foreseeable obstacles to achieving its underlying goals for the future of oil in Mexico?

Mexico, the study found, has "three fundamental long-term objectives for its oil sector: to retain ownership and control of subsoil resources ('resource nationalism'); to protect the national economy from external shocks and predation ('energy security'); and to distribute any surpluses generated from this national patrimony to the benefit of the Mexican people as a whole." These goals could generate conflict, the study noted. But despite these goals, the study also concluded, a more equitable distribution of oil revenues could wipe out poverty in the country and thereby create more grassroots political backing for energy reforms. Instead, existing federal spending practices benefit the country's most wealthy citizens.

Mexican leaders are keenly aware of the potential problems caused by falling oil exports and rising public expectations. Pemex has taken steps to slow the declining production by increasing investment in two newer fields. However, the study warned, enhanced recovery techniques for both onshore and offshore oil take years to have an effect.

Moreover, the study questioned whether the Mexican leadership has the will and the ability to reach long-term energy goals. "Political decision-making in the Mexican energy sector, like in many democratic societies, can become highly captive of vested interests," the study said, "with outcomes that are less than optimum for the stakeholder, in this case, the Mexican people." The study argued that for many of those vested interests, the status quo is quite advantageous.

"The study's final determination is that the decline in Mexican oil revenues is likely to be gradual rather than rapid and reduce the chances that a sudden, deep crisis will create the political will to make hard choices or unpopular reforms. For instance, if Pemex is able to maintain production levels through new finds and better efficiency, it could postpone the export crisis for three decades. But even with this expanded time frame, it is not assured that Mexico will undertake an orderly adjustment. Rather, the study's authors concluded, "it can also generate incentives to postpone it or adjust to the fall in government revenues through the least-costly short-run solution, such as cutting public investment, which can, at the same time, generate the greatest adverse effects in the long run."