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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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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Chevron Strikes Oil in Deepwater GOM

- Chevron Strikes Oil in Deepwater GOM

Tuesday, September 06, 2011
Chevron Corp.

Chevron announced a new oil discovery at the Moccasin prospect in the deepwater U.S. Gulf of Mexico.

The Keathley Canyon Block 736 Well No. 1 encountered more than 380 feet of net pay in the Lower Tertiary Wilcox Sands. The well is located approximately 216 miles off the Louisiana coast in 6,759 feet of water and was drilled to a depth of 31,545 feet.

"The Moccasin discovery underscores the importance of the deepwater Gulf of Mexico as a source of domestic energy for the United States and as a focus area for Chevron's worldwide exploration portfolio," said George Kirkland, vice chairman, Chevron Corporation. "Moccasin is an important addition to our queue of high-quality opportunities around the globe."

Chevron began drilling the Moccasin well in March 2010. That activity was stopped in June 2010 when the U.S. government imposed a moratorium on deepwater drilling in the Gulf of Mexico. Drilling resumed in March 2011 after the U.S. Bureau of Ocean Energy Management, Regulation and Enforcement approved Chevron's revised drilling permit application.

The well results are still being evaluated, and additional work will be needed to determine the extent of the resource. Chevron, with a 43.75 percent working interest in the prospect, was the operator of the Moccasin discovery well. Other Moccasin owners are BP, with 43.75 percent, and Samson Offshore Company, with 12.5 percent.

Chevron is one of the largest leaseholders in the Gulf of Mexico and is currently developing the $7.5 billion Jack/St. Malo and the $4.1 billion Big Foot projects.

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BOEMRE: Additional Personnel Redeployed at GOM

- BOEMRE: Additional Personnel Redeployed at GOM

Tuesday, September 06, 2011
BOEMRE

Offshore oil and gas operators in the Gulf of Mexico are re-boarding platforms and rigs following Tropical Storm Lee. The Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE) Hurricane Response Team is monitoring the operators' activities. The team will continue to work with offshore operators and other state and federal agencies until operations return to normal.

Based on data from offshore operator reports submitted as of 11:30 a.m. CDT Tuesday, personnel have been evacuated from a total of 131 production platforms, equivalent to 21.2 percent of the 617 manned platforms in the Gulf of Mexico. Production platforms are the structures located offshore from which oil and natural gas are produced. Unlike drilling rigs, which typically move from location to location, production facilities remain in the same location throughout a project's duration.

Personnel have been evacuated from 12 rigs, equivalent to 17.1 percent of the 70 rigs currently operating in the Gulf. Rigs can include several types of self-contained offshore drilling facilities including jackup rigs, submersibles and semisubmersibles.

As part of the evacuation process, personnel activate the applicable shut-in procedure, which can frequently be accomplished from a remote location. This involves closing the sub-surface safety valves located below the surface of the ocean floor to prevent the release of oil or gas. During the recent hurricane seasons, the shut-in valves functioned 100 percent of the time, efficiently shutting in production from wells on the Outer Continental Shelf and protecting the marine and coastal environments. Shutting-in oil and gas production is a standard procedure conducted by industry for safety and environmental reasons.

From operator reports, it is estimated that approximately 60.5 percent of the current oil production in the Gulf of Mexico has been shut-in. It is also estimated that approximately 41.6 percent of the natural gas production in the Gulf of Mexico has been shut-in. The production percentages are calculated using information submitted by offshore operators in daily reports. Shut-in production information included in these reports is based on the amount of oil and gas the operator expected to produce that day. The shut-in production figures therefore are estimates, which BOEMRE compares to historical production reports to ensure the estimates follow a logical pattern.

After the storm has passed, facilities will be inspected. Once all standard checks have been completed, production from undamaged facilities will be brought back on line immediately. Facilities sustaining damage may take longer to bring back on line. BOEMRE will continue to update the evacuation and shut-in statistics at 1:00 p.m. CDT each day as appropriate.

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BOEMRE: Operators Evacuate Ops in GOM

- BOEMRE - Operators Evacuate Ops in GOM

Monday, September 05, 2011
BOEMRE

Offshore oil and gas operators in the Gulf of Mexico are evacuating platforms and rigs in the path of Tropical Storm Lee. The Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE) Hurricane Response Team is monitoring the operators' activities. The team will continue to work with offshore operators and other state and federal agencies until operations return to normal and the storm is no longer a threat to Gulf of Mexico oil and gas activities.

Based on data from offshore operator reports submitted as of 11:30 a.m. CDT Sunday, personnel have been evacuated from a total of 239 production platforms, equivalent to 38.7 percent of the 617 manned platforms in the Gulf of Mexico. Production platforms are the structures located offshore from which oil and natural gas are produced. Unlike drilling rigs, which typically move from location to location, production facilities remain in the same location throughout a project's duration

Personnel have been evacuated from 25 rigs, equivalent to 35.7 percent of the 70 rigs currently operating in the Gulf. Rigs can include several types of self-contained offshore drilling facilities including jackup rigs, submersibles and semisubmersibles.

As part of the evacuation process, personnel activate the applicable shut-in procedure, which can frequently be accomplished from a remote location. This involves closing the sub-surface safety valves located below the surface of the ocean floor to prevent the release of oil or gas. During the recent hurricane seasons, the shut-in valves functioned 100 percent of the time, efficiently shutting in production from wells on the Outer Continental Shelf and protecting the marine and coastal environments. Shutting-in oil and gas production is a standard procedure conducted by industry for safety and environmental reasons.

From operator reports, it is estimated that approximately 60.2 percent of the current oil production in the Gulf of Mexico has been shut-in. It is also estimated that approximately 44.3 percent of the natural gas production in the Gulf of Mexico has been shut-in. The production percentages are calculated using information submitted by offshore operators in daily reports. Shut-in production information included in these reports is based on the amount of oil and gas the operator expected to produce that day. The shut-in production figures therefore are estimates, which BOEMRE compares to historical production reports to ensure the estimates follow a logical pattern.

After the hurricane has passed, facilities will be inspected. Once all standard checks have been completed, production from undamaged facilities will be brought back on line immediately. Facilities sustaining damage may take longer to bring back on line. BOEMRE will continue to update the evacuation and shut-in statistics at 1:00 p.m. CDT each day as appropriate.

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Weather Watch: Tropical Depression Stalls Over GOM

- Weather Watch: Tropical Depression Stalls Over GOM

Friday, September 02, 2011
Rigzone Staff
by Karen Boman

Shell reported Friday that Tropical Depression #13, which has winds near 35 mph and is stalled over the Gulf of Mexico, is impairing its efforts to evacuate staff from its deepwater operations.

The company has evacuated 550 workers and is using all available resources to safely evacuate employees. The number of personnel evacuated Friday will depend on weather conditions, "and we will only transport personnel if safe to do so", the company said.

Shell has shut in the Auger, Enchilada, Brutus and the Europa subsea field. Shell's non-operated downstream infrastructure partners have proceeded in evacuating their facilities and their actions have resulted in some production shut-ins as well.

The National Hurricane Center (NHC) reports that Tropical Depression No. 13 has maximum sustained winds near 35 mph with higher gusts. NHC forecasts the depression to strengthen during the next 48 hours, with the depression possibly becoming a tropical storm later Friday.

NHC reports winds of tropical storm force are being reported on oil rigs north and east of the storm's center at elevations of a few hundred feet. The center of the cyclone is expected to approach the coast of southern Louisiana during the weekend. A tropical storm warning is in effect from Pascagoula, Miss., to Sabine Pass, Texas.

The storm system's greatest impact will be on production, as producers have moved to shut in oil and gas supply, but the tropical disturbance will not likely cause major damage to oil and gas infrastructure, said Dan Leonard, senior meteorologist at Weather Services International (WSI). The storm is expected to bring 30-40 mph winds to the Gulf production region east of the mouth of the Mississippi River, even after it makes landfall.

The tropical disturbance in the Gulf is unusual as most systems that go into the Gulf of Mexico usually develop in the Atlantic Ocean or the Caribbean Sea, said Leonard. The tropical depression, which will strengthen over the next 24 to 36 hours, will stall along the immediate Louisiana coast Sunday and Monday before moving up through Louisiana and Alabama at mid-week next week. "The system is significant in that you'll have a long duration wind event in one area for so long."

Tropical Storm Katia, which had previously strengthened to a Category 1 hurricane, is not expected to impact the Gulf of Mexico.

Enterprise Products Partners has shut in its Poseidon and Cameron Highway pipelines due to the storm in the Gulf. The two pipelines have combined actual throughput of 250,000 b/d, with a net impact of 100,000 b/d on Enterprise.

The company also has evacuated workers from its nine operated platforms at High Island Block 85, South Marsh Island 205, Garden Banks Block 72, East Cameron Block 373, Mustang Island Block A-103, Viosca Knoll Block 817, West Delta Block 68, High Island A264 and West Cameron Block 167.

The Cameron Highway Pipeline serves multiple refineries in the Texas City and Port Arthur, Texas areas; Poseidon serves refiners in the Houma, La., area. Both pipelines also connect to other pipeline systems onshore.

The company is monitoring the storm to determine when it's safe to resume operations, said company spokesperson Rick Rainey.

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ATP Brings Mirage Well Online in GOM

- ATP Brings Mirage Well Online in GOM

Wednesday, August 24, 2011
ATP O&G Corp.

ATP announced first oil production at its Mississippi Canyon (MC) Block 941 A-2 (#4) well in the deepwater Gulf of Mexico. The MC Block 941 A-2 well is located on the Mirage Field and is the third well brought on production at the Telemark Hub location utilizing the ATP Titan floating drilling and production platform. The well delivered on ATP's original expectations with an initial rate exceeding 7,000 Boe per day. When drilled, the A-2 well encountered four Miocene sands that are approximately 500 feet structurally higher than the same sands in the MC 941 A-1 well. The A-2 well is completed at a measured depth of 17,600 feet in the C and D sands. All permits to immediately begin drilling the fourth well, MC 942 #2, have been approved with production projected later this year. Company-wide production now exceeds 31,000 Boe per day.

"Bringing the third Telemark Hub well to first production again demonstrates ATP's technical expertise and safe operations in the deepwater Gulf of Mexico," said T. Paul Bulmahn, ATP Chairman and CEO. "We have finally realized the planned material production revenue of this well that has been much anticipated for 16 months. This well was already drilled to 12,000 feet and cased prior to the Macondo spill and became subject to the moratorium. The greater-than-a-billion-dollar investment at Telemark reflects ATP's continuing commitment to develop America's energy resources."

ATP operates the deepwater Telemark Hub in approximately 4,000 feet of water with a 100% working interest and holds a 100% ownership in ATP Titan LLC which owns the ATP Titan and associated pipelines and infrastructure.

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BOEMRE to Hold First GOM Lease Sale since Spill

- BOEMRE to Hold First GOM Lease Sale since Spill

Friday, August 19, 2011
BOEMRE

Secretary of the Interior Ken Salazar and Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) Director Michael R. Bromwich announced that BOEMRE will hold the first oil and natural gas lease sale in the Gulf of Mexico since the Deepwater Horizon explosion and oil spill. Consistent with steps President Obama announced in May 2011 to expand domestic oil and gas production safely and responsibly, the proposed Western Gulf of Mexico Lease Sale 218 is scheduled to be held in New Orleans on December 14, 2011. The sale will include all available unleased areas in the Western Gulf Planning Area offshore Texas.

"This sale is an important step toward a secure energy future that includes safe, environmentally-sound development of our domestic energy resources," Secretary Salazar said. "Since Deepwater Horizon, we have strengthened oversight at every stage of the oil and gas development process, including deepwater drilling safety, subsea blowout containment, and spill response capability. Exploration and development of our Western Gulf's vital energy resources will continue to help power our nation and drive our economy."

"BOEMRE has taken aggressive steps to renew our commitment to the responsible stewardship of the U.S. Outer Continental Shelf," said Director Bromwich. "The decision to hold this sale was made after careful analysis of the best scientific information available and consideration of all public comments received."

The proposed lease sale encompasses about 3,900 un-leased blocks covering approximately 20.6 million acres. The blocks are located from 9 to about 250 miles offshore, in water depths ranging from 16 to more than 10,975 feet (5 to 3,346 meters). BOEMRE estimates the proposed lease sale could result in the production of 222 to 423 million barrels of oil and 1.49 to 2.65 trillion cubic feet of natural gas.

As part of the Administration's commitment to provide incentives for diligent development, and to ensure receipt of fair market value for the lease rights sold, BOEMRE proposes to increase the minimum bid amount for blocks in water depths of 1,312 feet (400 meters) and greater to $100 per acre. The minimum bid for those water depths in previous sales was $37.50 per acre.

This change is based on a rigorous historical analysis of the last 15 years of lease sales in the Gulf of Mexico. The analysis, adjusted for energy prices at time of each sale, demonstrates that leases that received high bids of less than $100 per acre have experienced virtually no exploration and development activities. In light of this analysis, BOEMRE has concluded that the increase will have little to no adverse impact on the timing or magnitude of production from tracts offered in this sale. Raising the minimum bid will discourage companies from purchasing leases they are unlikely to explore in the near term.

"BOEMRE is proposing this increase in an effort to ensure that areas with the greatest resource potential are developed, and to decrease the amount of leased acreage that is warehoused and goes unexplored," Director Bromwich said. "The change in terms will better ensure that the nation's resources are being developed in a timely manner."

The minimum bid amount for leases in the much more heavily explored and produced shallower water depths will remain at $25 per acre.

The lease sale will include environmental stipulations requiring that operators protect biologically sensitive features, as well as marine mammals and sea turtles. These stipulations will require trained observers to ensure compliance and restrict operations when conditions warrant.

Lease Sale 218 is the last remaining Western Gulf Planning Area sale scheduled in the 2007 – 2012 Outer Continental Shelf Oil and Natural Gas Leasing Program. The terms and conditions outlined in the package are not final. Different terms and conditions may be employed in the Final Notice of Sale, which will be published at least 30 days before the sale.

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ExxonMobil Seeks to Retain Julia Leases in GOM

- ExxonMobil Seeks to Retain Julia Leases in GOM

Thursday, August 18, 2011
Rigzone Staff
by Karen Boman

ExxonMobil has filed a lawsuit against the U.S. Department of the Interior (DOI) to retain three federal offshore leases that are part of the Julia unit in the deepwater Gulf of Mexico.

The company filed the suit in the U.S. District Court in Lake Charles, La., stating that DOI has retroactively applied new legal standards in canceling the leases, departed from established agency practices, and singled out ExxonMobil for unprecedented adverse treatment. ExxonMobil also said the cancellation would prevent it from producing a reservoir believed to hold billions of barrels of oil.

ExxonMobil is operator of the Julia unit on Walker Ridge Block 627, which is comprised of Walker Ridge Blocks 584, 627, 628, 540 and 583; the first three are the original leases issued to ExxonMobil’s predecessor, Mobil Exploration and Production in 1998. The two additional leases were acquired by ExxonMobil and partner Statoil at the request of the U.S. Minerals Management Services (MMS) when it applied to develop the Julia discovery. ExxonMobil holds a 50 percent title interest in each of the leases within the Julia unit. Statoil holds the remaining 50 percent interest. ExxonMobil and Statoil announced the Julia discovery in the deepwater Gulf in January 2008.

The company contends that it is allowed under the law to suspend production in their fields in recognition of the time and planning needed to tie back subsea wells to deepwater host facilities. ExxonMobil had originally filed for a suspension of production (SOP) order for the three original Julia leases in 2008, saying it needed time to determine its drilling and development program for the Julia discovery, one of several pre-Tertiary deepwater discoveries made over the past decade.

MMS told ExxonMobil it needed to include Walker Ridge Blocks 540 and 583 to promote an expedite exploration and development. The company withdrew its original SOP request with the intent of submitted a new SOP for the entire Julia unit with the additional leases. ExxonMobil and Statoil acquired the two additional leases at a cost of over $60 million days before the end of the primary term of the original Julia leases. In the meantime, it continued drilling and development plans, investing $300 million dollars on the Julia discovery and drilling two producible wells. However, MMS denied the SOP request in 2009, saying it failed to show commitment to development the discovery.

ExxonMobil said MMS did not clearly specify what ExxonMobil needed to do to receive approval of the requested SOP and supplemented its original SOP request with numerous emails and letters demonstrating its commitment to produce the Julia discovery. ExxonMobil said it also made clear that if a plan to tie-back Julia to the Jack-St. Malo host facility was deemed insufficient that it would develop the Julia discovery as a standalone alternative.

The company said that MMS had granted more than 2,200 requests for SOPs for individual leases in the Gulf from 1994 through 2008 and denied only 33 such requests, and had often granted a series of sequential SOPs for a single lease or unit, resulting in delays in production commencement for periods of longer than five years after the initial SOP was granted. ExxonMobil noted that cancellation of the leases would give DOIG the opportunity to collect millions of dollars in bonuses and royalties that it would be entitled to collect if the original Julia leases are not canceled.

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McDermott Lands Fabrication Gig in GOM

- McDermott Lands Fabrication Gig in GOM

Thursday, August 04, 2011
McDermott International Inc.

McDermott announced that one of its subsidiaries has been awarded a fabrication contract by Shell Offshore Inc., for the West Delta 143 "C" deck, jacket, piles, and bridge located in 370 feet of water in the Gulf of Mexico. The contract will be included in McDermott's third quarter 2011 bookings.

"We are pleased to be able to offer a competitive solution for the development of the West Delta platform," said Stephen M. Johnson, McDermott's Chairman, President and Chief Executive Officer. "Shell's recognition of McDermott as a "Green Light" contractor for HSES performance, as well as their familiarity with our project management, ability to accelerate schedules and knowledge of our performance quality is where we added value with this contract."

McDermott's engineering group based in New Orleans will perform detailed construction engineering and load-out analysis for the 10,120-tons of structures. McDermott's Morgan City fabrication facility in Louisiana will perform all construction engineering, procurement, fabrication and onshore mechanical completion of the deck. McDermott will also assist in the commissioning of the platform.

First steel cut is scheduled to begin later this year, with expected sail away of the deck in the first quarter of 2013.

The WD 143 "C" fabrication is part of the Mars B Development, which consists of the Olympus Tension Leg Platform, West Boreas and South Deimos subsea development and the West Delta 143 "C" Jacket and Deck. The Olympus host will be located in Mississippi Canyon Block 807 in the Gulf of Mexico approximately 95 miles south of New Orleans, Louisiana, in a water depth of approximately 3,000 feet and its export pipelines will be tied back to the new WD 143 "C" platform.
More about McDermott's Morgan City Fabrication Facility and Working with Shell

McDermott's Morgan City fabrication facility covers more than 300 acres and has constructed some of the company's largest structures. It consistently delivers high-quality projects safely and on schedule, including large integrated platforms and subsea components. Located in Louisiana, the Morgan City yard has fabricated the previous Shell WD 143 "B" platform, as well as several TLP decks including Auger, Mars, Ram-Powell, Ursa, and Brutus.

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Cobalt to Abandon Angola Well, Updates GOM Ops

- Cobalt to Abandon Angola Well, Updates GOM Ops

Wednesday, July 27, 2011
Cobalt International Energy Inc.

Cobalt announced a net loss of $19.5 million, or $0.05 per basic and diluted share for the second quarter of 2011, compared to a net loss of $41.8 million, or $0.12 per basic and diluted share, for the second quarter of 2010.

Cash expenditures (excluding changes in working capital) for the quarter ended June 30, 2011 were approximately $22 million and about $33 million year-to-date. For the full year 2011, Cobalt expects to spend $325 to 400 million which includes the cash expenditures associated with Block 20 offshore Angola. The timing of expenditures in the second half depends primarily on when the Block 20 Production Sharing Agreement is signed and when Cobalt recommences Gulf of Mexico drilling activities.

Cash, cash equivalents and investments at the end of the second quarter were approximately $1.64 billion. This includes about $339 million designated for future operations held in escrow and collateralizing letters of credit, but excludes approximately $196 million in the TOTAL drilling fund for the Gulf of Mexico. Cobalt expects it is well-funded to execute on its planned exploration and appraisal program, including expenditures relating to Block 20 offshore Angola, through the end of 2013.

Operational Update

On April 15, 2011, Cobalt completed a registered underwritten offering of 35,650,000 shares of its common stock at a public offering price of $14.00 per share, resulting in proceeds of approximately $499 million before expenses.

On May 3, 2011, Cobalt announced that the national oil company of Angola, Sociedade Nacional de Combust•veis de Angola-Empresa Publica (Sonangol), had approved Cobalt's drilling plans for its two initial pre-salt exploratory wells, Bicuar #1 and Cameia #1, on Block 21 offshore Angola. Subsequent to the end of the second quarter, on July 19, 2011, Cobalt commenced its initial two well pre-salt exploratory drilling program on Block 21 offshore Angola by spudding the surface hole of the Bicuar #1 exploratory well. On July 20, 2011, after setting the 36" conductor casing and drilling approximately 210 meters of surface hole, Cobalt encountered an over pressured water sand resulting in a water flow with limited quantities of natural gas. No safety or environmental issues resulted from the incident. Cobalt is focused now on its abandonment procedures for the Bicuar #1 exploratory well surface location. Given the unique nature of encountering pressured water sands in Angolan waters, Cobalt has agreed with Sonangol that Cobalt will take its learnings from this incident and reexamine its shallow hazard analysis of proposed Cameia and Bicuar drilling locations before moving the drilling rig to Cameia or a different surface location on Bicuar.

With respect to Cobalt's U.S. Gulf of Mexico drilling program, Cobalt believes it has satisfied all of the remaining requirements of the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) related to its North Platte #1 and Ligurian #2 applications for permit to drill (APD's), except for the submission of the U.S. Coast Guard Certificate of Compliance for the Ensco 8503 drilling rig, which cannot be obtained until the rig returns to the U.S. Gulf of Mexico. Cobalt does not anticipate any issues related to obtaining this routine U.S. Coast Guard certification and it expects that after its submission the BOEMRE will promptly issue the APD's for both the North Platte #1 and Ligurian #2 exploratory wells. Cobalt expects that the Ensco 8503 drilling rig will be returned to Cobalt in the U.S. Gulf of Mexico late in the third quarter of 2011. Upon its return, the submission of the U.S. Coast Guard Certificate of Compliance, and the issuance of the APD's for the North Platte #1 and Ligurian #2 exploratory wells, Cobalt plans to drill the Ligurian #2 exploratory well. After drilling the Ligurian #2 exploratory well, Cobalt plans to move the rig to the North Platte #1 well location to drill that prospect. Cobalt anticipates that each of the Ligurian #2 and North Platte #1 exploratory wells will take approximately six months to drill.

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GOM Regulatory Regime Delays Cost Revenue, Jobs, Oil Supplies - Study

- GOM Regulatory Regime Delays Cost Revenue, Jobs, Oil Supplies - Study

Friday, July 22, 2011
Rigzone Staff
by Barbara Saunders

Bottlenecks in oil and gas plan and permit approval activity in the Gulf of Mexico (GOM) since 2010's Macondo well disaster are costing some $44 billion in U.S. gross domestic product and 230,000 jobs, according to a new IHS CERA/IHS Global Insight study.

The study, Restarting "the Engine" — Securing American Jobs, Investment and Energy Security, examined the "activity gap," or the difference between the investment capacity of oil and gas companies and the regulatory capacity to process and oversee this activity. Based on data from the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE), the study identified a growing backlog of exploration and development plan applications awaiting approval and a significant reduction in plan and drill permit approvals.

The costs of delays in the regulatory "new regime" are "economically significant and not just in Gulf states" such as Texas and Louisiana, said Daniel Yergin, chairman of IHS CERA and author of the Pulitzer prize-winning book on the oil industry, The Prize, during a press conference on the new study.

Daniel Yergin – Regulatory delays take "economically significant" toll outside Gulf States

The leading states outside of the GOM to benefit from oilfield supply, service and software jobs would be California, followed by New York, Florida, Illinois and Georgia, the study found. Other manufacturing-dependent economies such as Pennsylvania and Ohio also would receive significant benefits.

"There is a need to better align the new regulatory environment with industry capacity, as the current pace of plan and permit approval is congested," said Jim Burkhard, IHS CERA managing director for global oil. "With that alignment, then the country can realize the economic and energy security benefits of a restarted Gulf of Mexico."

Among the study's key findings, the lost opportunity from an inability to close the activity gap would amount to:

• 150 million barrels of oil next year, or 411,000 barrels of oil per day (bopd) from the deepwater Gulf of Mexico alone– five times the amount recently released from the U.S. Strategic Petroleum Reserve.
• $44 billion of U.S. gross domestic product growth in 2012
• 230,000 additional jobs in 2012
• $22 billion improvement in 2012 wages and compensation
• Realizing $19 billion in pent-up capital investment over a three-year period
• $18.6 billion more of federal, state and local, royalties, bonuses and rents tax payments over the next three years

The study also found that one billion barrels of oil reserves that the Gulf of Mexico in the form of new discoveries were not realized in the past 12 months. This could affect the future production outlook, IHS CERA noted.

Federal agencies that regulate energy exploration were restructured last year and the regulatory approval process has not returned to previous levels, IHS CERA reported. "Each month that passes without closing the gap reduces the potential economic benefits," the company said in a statement.

The study examined plan and permit activity levels in the six months since the lifting of the moratorium in the GOM in October, 2010. The analysis found:

• 86 percent decline in the pace of regulatory approvals for plans
• 38 percent increase in the time to reach each regulatory approval for plans
• 250 percent increase in the backlog of deepwater plans pending approval (from an average of 18 per year to a current pace of 67 per year)
• 60 percent decline in drill permits (combined shallow water and deepwater)

"An increase in oil and gas activity reverberates throughout the broader economy," said James Diffley, senior director of IHS Global Insight's U.S. Regional Economic Group. "Each new hire of a platform worker, machinist or other specialist to work in the Gulf's oil and gas industry results, on average, in more than three additional jobs in an array of industries around the country, whether it be in the Gulf region or a subsea power cable provider in Ohio, a steel manufacturer in Pittsburgh or a software firm in California's Silicon Valley."

The report also noted that the increased activity in the upstream oil and gas sector of the Gulf of Mexico will have substantial impact on income and would lead to increased consumer spending since oil and gas jobs are higher paying, on average, than wages paid to workers in many other sectors. In turn, more offshore development and the jobs it creates would lead to the enhancement of federal, state and local tax revenues by some $12 billion in 2012 and $20 billion through 2013, IHS CERA projected.

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Hornbeck Offshore, MSRC Join Forces in GOM Spill Response

- Hornbeck Offshore, MSRC Join Forces in GOM Spill Response

Friday, July 22, 2011
Hornbeck Offshore Services Inc.

Hornbeck Offshore and Marine Spill Response Corporation (MSRC) announced that they have entered into a long-term agreement for spill response services in the Gulf of Mexico. Two U.S.-flagged 370 class multi-purpose support vessels (MPSVs) owned by Hornbeck Offshore are being retained by MSRC and equipped with dedicated spill response capability.

The HOS Centerline and HOS Strongline are 370-ft. vessels with 24,000 bbls of recovered oil capacity (30,000 bbls of total liquid storage capacity) based out of Port Fourchon, LA. Each vessel is being outfitted with dedicated skimming systems, ocean boom and a support boat. The navigational systems on each vessel are also being enhanced with x-band and infrared oil spill detection systems that may increase the ability of the vessel crew to conduct skimming operations during times of adverse weather, low visibility and night operations.

This contract is a continuation of the relationship that MSRC has developed with HOS as a part of MSRC's "Deep Blue" expansion program to significantly enhance the response capability in the Gulf of Mexico. MSRC has also expanded its capability to include a manned equipment site in Port Fourchon, LA, at Hornbeck Offshore's primary shore base facility, HOS Port. This facility will also house a spill response school to enhance responder training.

HOS Chairman, President & CEO, Todd Hornbeck commented, "We are excited to be selected by MSRC and are confident that this additional response capability in the Gulf of Mexico contributes to the region's commitment to safe and environmentally sound exploration and production activities. We believe these vessels will be the largest spill response vessels in the U.S. fleet and among the largest in the world."

MSRC President & CEO, Steve Benz added, "We are pleased to have this working partnership with Hornbeck Offshore. HOS utilized a number of their resources during the Deepwater Horizon incident, and the knowledge and experience they gained will fit very nicely with MSRC's extensive capability in the Gulf Coast."

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Utilization Rebounding In GOM

- Utilization Rebounding In GOM

Friday, July 15, 2011
Rigzone Staff
by Trey Cowan

While on the mend, Gulf of Mexico offshore drilling activities, are below levels experienced prior to last year's blowout. Specifically, combined utilization for drillships, semisubs, and jackups is approximately 300 basis points off pace, averaging 57% in 2Q11 versus 60% for the region during 1Q10.

Of the three types of rigs, semisubs are faring the worst on a comparative basis to results prior to Macondo. We note that during the first quarter of 2010 semisub utilization was nearly 93%. Today, the average utilization for semisubs in the Gulf of Mexico is 71%.

In the most recent update by the BOEMRE, 12 of the 18 rigs currently active in the GOM deepwaters were semisubs. However, there are 25 semisubs in total in the region including five that are cold stacked and two ready stacked. Given the costs involved in bringing stacked rigs back to marketable conditions, the overall semisub utilization rates may continue to languish for a while.

Both drillships and jackups utilization rates are now better than pre-Macondo levels. Drillships averaged 91% during 2Q10, up 300 basis points from 88% in 1Q10. And while jackup utilization rates are higher, there are actually ten fewer rigs now working in the region compared to 2010 levels. So the jackup utilization rate of 48% in 2Q10, given its smaller base, is not an apples-to-apples comparison versus its 1Q10 rate of 46%.

Recent News from the Region

• Shell was approved by BOEMRE for a supplemental exploration plan to drill four appraisal wells at its Appomattox discovery at Mississippi Canyon 348. The Deepwater Nautilus is slated to drill the wells.
• Marine Well Containment Company (MWCC) recently selected Aker Solutions to provide design, procurement, and fabrication of the subsea containment and diverter assembly, needed to further expand its existing containment system.
• Cobalt expects permits for its Ligurian #2 and North Platte prospects in the US Gulf of Mexico. The ENSCO 8503 will drill both wells upon its return from French Guiana in the third quarter of 2011, assuming it passes a routine Coast Guard inspection upon returning to US waters.
• NEXEN recently sublet the Ocean Saratoga from Taylor Energy for a plug & abandonment project at its Green Canyon 50 #1 well. Also, NEXEN received a permit for its Kakuna prospect and will use the ENSCO 8502 to drill.
• BHP Billiton recently began drilling with the GSF Development Driller I at its Mad Dog North prospect in Green Canyon 738. This is the third recent permit approval that BHP has received that was not for a water injection well. The other two approvals were for development wells at Shenzi.

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BP Sets New Voluntary Standards in GOM Drilling

- BP Sets New Voluntary Standards in GOM Drilling

Friday, July 15, 2011
BP plc

BP Exploration & Production (BPXP) will implement a new set of deepwater oil and gas drilling standards for its operations in the US Gulf of Mexico, demonstrating the company's commitment to safe and reliable operations.

The announcement was made in a letter to the director of the U.S. Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE), Michael Bromwich.

The voluntary performance standards go beyond existing regulatory obligations and reflect the company's determination to apply lessons it learned from the Deepwater Horizon accident and subsequent oil spill.

"BP's commitment in the wake of the Deepwater Horizon incident is not only to restore the economic and environmental conditions among the affected areas of the Gulf Coast, but also to apply what we have learned to improve the way we operate," said BP group chief executive Bob Dudley. "We believe the commitments we have outlined today will promote greater levels of safety and preparedness in deepwater drilling."

The foundations for these new voluntary standards for BP's Gulf of Mexico deepwater drilling operations have been developed since the Deepwater Horizon incident and through the lessons learned. BP is now making these standards public and will begin to implement them into its operations in the Gulf of Mexico.

The new voluntary standards are:

• BPXP will use, and will require its contractors involved in drilling operations to use, subsea blowout preventers (BOPs) equipped with no fewer than two blind shear rams and a casing shear ram on all drilling rigs under contract to BPXP for deepwater service operating in dynamic position mode. With respect to moored drilling rigs under contract to BPXP for deepwater drilling service using subsea BOPs, the subsea BOP will be equipped with two shear rams, which will include at least one blind shear ram and either an additional blind shear ram or a casing shear ram.
• Each time a subsea BOP from a moored or dynamically-positioned drilling rig is brought to the surface and testing and maintenance on the BOP are conducted, BPXP will require that a third party verify that the testing and maintenance of the BOP were performed in accordance with manufacturer recommendations and industry recommended practice (API RP 53).
• BPXP will require that laboratory testing of cement slurries for primary cementing of casing and exposed hydrocarbon-bearing zones relating to drilling operations of deepwater wells be conducted or witnessed by a BPXP engineer competent to evaluate such laboratory testing, or a competent third party independent of the cement provider. BPXP will provide laboratory results to the applicable BOEMRE field office within a reasonable period of time.
• BPXP's Oil Spill Response Plan (OSRP) will include information about enhanced measures for responding to a spill in open water, near-shore response and shoreline spill response based on lessons learned from the Deepwater Horizon oil spill.

"BP is adopting these voluntary actions as part of its commitment to safe and reliable operations, and to help rebuild trust in the company following last year's accident and oil spill," said James Dupree, BP regional president, Gulf of Mexico. "BP is the largest lease holder in the deepwater Gulf of Mexico and we intend to be a significant business presence here for a long time to come. We look forward to implementing these best practices and sharing what we've learned."

In addition to these four voluntary performance standards, BP has also implemented several actions that demonstrate commitment to excellence within its operations. These include:

• Establishing a real-time drilling operations center in Houston.
• Assessing and increasing well control competencies.
• Collaboration with groups like Clean Gulf Associates and Marine Spill Response Corporation to augment and enhance industry response technology and capabilities.
• Support of the Marine Well Containment Company with containment knowledge, equipment and staff.
• Sharing the company's experience in simultaneous operations, which incorporated the unprecedented use of remotely operated vehicles and close quarters management of marine response vessels and activities.
• Collaboration with BOEMRE, the Ocean Energy Safety Advisory Committee, the Center for Offshore Safety and others in a joint technology program focusing on BOP systems.

BP is focused on implementing these new voluntary standards in the Gulf of Mexico and expects to share information on these standards with regulators and operators in other countries as part of its ongoing sharing of lessons learned.

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Eni Flows First Oil from GOM Appaloosa Field

- Eni Flows First Oil from GOM Appaloosa Field

Wednesday, July 06, 2011
Eni S.p.A.

Eni has started oil production from the Appaloosa field, located in the US Gulf of Mexico deepwater, 60 miles offshore the Louisiana coast southwest of New Orleans, in 2500 feet (approximately 760 meters) of water depth.

The producing well is located within the MC 459 Federal Unit (comprising blocks MC 459, 460 and portions of MC 503 and 504). Eni holds a 100% working interest in the field.

Appaloosa production commenced on June 21, 2011 through a subsea development and a twenty-mile long flow line tied back to the Corral Platform (operated by Eni). The well is presently flowing at a rate of approximately 7,000 barrels of oil equivalent per day. This is the second Eni field producing on the Corral Platform, which in aggregate is now processing 46,600 gross barrels of oil equivalent per day (33,000 net to Eni).

This development, the second start-up this year for Eni in the US following the Nikaitchuq field start up in Alaska, further strengthens Eni's role as an operator and enhances Eni's position as one of the top producers in the Gulf of Mexico.

In the US, Eni owns lease interests in 333 blocks in the Gulf of Mexico and in 411 leases in the Barnett gas shales onshore Texas, in partnership with Quicksilver. In addition, Eni owns interests in 140 leases in Alaska, between offshore and the North Slope, where it is currently operating the Nikaitchuq oil project.

Eni's total daily net production in the US is in excess of 100,000 barrels of oil equivalent (60% of which is operated).

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ProSep Scores Contracts in GOM, Canadian Oil Sands

- ProSep Scores Contracts in GOM, Canadian Oil Sands

Tuesday, July 05, 2011
ProSep Inc.

ProSep was awarded $1.8 million in new contracts to supply a produced water treatment system for installation on a deepwater Gulf of Mexico facility and crude dehydration equipment for two oil sands facilities located in Alberta, Canada.

"The Gulf of Mexico and the Canadian Oil Sands represent new and promising territories for ProSep. With sustained high crude prices, increasing production challenges and regulation, demand for our process equipment continues to grow," said Jacques L. Drouin, President & CEO.

The produced water treatment system to be supplied to a deepwater GOM facility consists of hydrocyclones and induced gas flotation (IGF) equipment, designed to treat 40,000 BPD of produced water to less than 20 ppm oil in water. The equipment is expected to be delivered early 2012.

The crude dehydration systems consist of engineering services and internals for one free-water knock-out (FWKO) vessel and two thermal electrostatic treaters designed to dehydrate 15 API crude to 0.5% basic sediment and water (BS&W) outlet oil specification. The equipment is expected to be delivered by early 2012 to two oil sands facilities located in Alberta, Canada. This contract was awarded through a commercial alliance with Edmonton-based engineering and manufacturing company Thermo Design (TDE).

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Cobalt to Spud GOM Well in 3Q

- Cobalt to Spud GOM Well in 3Q

Wednesday, June 29, 2011
Cobalt International Energy Inc.

Cobalt provided the following update on its U.S. Gulf of Mexico drilling program.

U.S. Gulf of Mexico Drilling Program

On June 8, 2011, Ensco Offshore Company entered into a settlement agreement with the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) among other federal defendants. As part of the settlement agreement, the BOEMRE agreed to "take action" with respect to a number of drilling permits, including Cobalt’s Application for Permit to Drill (APD) for its North Platte #1 exploratory well and its APD for its Ligurian #2 exploratory well, which means that the BOEMRE must initially either approve the APDs, deny the APDs or return the APDs to Cobalt with a statement specifically identifying all then-existing deficiencies within 30 days of the settlement agreement. If an APD is returned with deficiencies and is thereafter resubmitted by Cobalt, the BOEMRE must again take action within 30 days. As part of the agreement, the BOEMRE is not permitted to identify additional deficiencies during its review of the resubmission that existed during, but had not been identified in, the initial review.

North Platte #1. Cobalt formally submitted the North Platte #1 APD on June 3, 2011. Subsequent to the execution of the settlement agreement, Cobalt has been advised by the BOEMRE that Cobalt’s APD for its North Platte #1 exploratory well, Garden Banks 959 #1, is complete. The BOEMRE has identified two remaining deficiencies or further requirements that must be satisfied prior to it approving the APD. The first requirement is that the Ensco 8503 drilling rig obtain an American Bureau of Shipping (ABS) certification. This certification has been obtained. The second requirement is that Cobalt obtain a Coast Guard Certificate of Compliance for the Ensco 8503 drilling rig. The inspection required to obtain this certificate will take place upon the Ensco 8503’s return to the U.S. Gulf of
Mexico. Cobalt does not anticipate any issues related to obtaining this routine Coast Guard certification.

As previously announced, the Ensco 8503 drilling rig is currently drilling a well in French Guiana pursuant to a sublet agreement between an affiliate of Ensco Offshore Company and a subsidiary of Tullow Oil plc. Cobalt expects that the Ensco 8503 drilling rig will be released and returned to the U.S. Gulf of Mexico late in the third quarter of 2011. As noted previously, Cobalt believes that it will have satisfied all requirements stipulated by the BOEMRE for issuance of the APD. Based on information available today, Cobalt believes that it should be able to spud its North Platte well by the end of the third quarter depending on when the Ensco 8503 returns to the U.S. Gulf of Mexico.

Cobalt expects the North Platte #1 exploratory well to take approximately six months to drill. Cobalt is the operator of North Platte and has a 60% working interest in the prospect. TOTAL E&P USA, INC. owns the remaining 40% working interest.

Ligurian #2. Cobalt formally resubmitted the Ligurian #2 APD on June 9, 2011. Under the terms of the above-mentioned settlement agreement, Cobalt expects the BOEMRE to provide Cobalt with any remaining requirements with respect to the APD for its Ligurian #2 exploratory well, Green Canyon 814, on or before July 10, 2011. Cobalt expects that any such remaining requirements will be promptly addressed and resubmitted to the BOEMRE for it to take action on the Ligurian #2 APD within 30 days thereafter. If the BOEMRE approves the Ligurian #2 APD prior to the return of the Ensco 8503 drilling rig and spud of the North Platte #1 exploratory well, then Cobalt plans to drill the Ligurian #2 exploratory well prior to drilling the North Platte #1 exploratory well.

Cobalt expects the Ligurian #2 exploratory well to take approximately six months to drill. Cobalt is the operator of Ligurian and has a 45% working interest in this prospect. TOTAL E&P USA, INC. owns a 30% working interest and Sonangol Exploration and Production International, LTD. owns the remaining 25% working interest.

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Scana to Deliver MCCTLF for GOM Proj.

- Scana to Deliver MCCTLF for GOM Proj.

Thursday, June 23, 2011
Scana Industrier ASA

Scana has through its subsidiary Scana Offshore Systems Inc. in Houston, been awarded a contract to deliver a Motion Compensating Coil Tubing Lift Frame (MCCTLF) for a non-disclosed project in the Gulf of Mexico.

Contract value is approx 2.75 MUSD for patent pending system.

The concept of developing a MCCTLF is a result of the good cooperation between Scana Offshore Services and Stingray Offshore Solutions having designed the system (25% owned by Scana). The project awarded recognizes Scanas product development program and honors the presentation of new innovative product solutions to the market.

Project will start immediately and will be executed from the Scana facilities in Houston, Texas.

CEO in Scana Industrier ASA, Mr. Rolf Roverud, is most pleased with this breakthrough contract. "This contract introduce a new engineered product from Scana Offshore Services. This is a product which has future potentials in the increasing well intervention market."

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Parker EPD Unveils Subsea Metrology Systems in GOM

- Parker EPD Unveils Subsea Metrology Systems in GOM

Thursday, June 16, 2011
Parker Hannifin Corp.

Parker Energy Products Division (EPD), a division of Parker Hannifin Corporation, is introducing their subsea metrology and dimensional control services to the Gulf of Mexico oil and gas market.

EPD has demonstrated their success with photogrammetry, surveying and position monitoring services in Northern Europe and Asia Pacific. Recently the division has added technical staff in Houston, Texas to support the metrology service expansion to the Gulf of Mexico.

The first subsea metrology system Parker will utilize in this market is SICAMS®; a single camera metrology system used to obtain accurate subsea measurements (centerline distances, diameters, pitch and roll) of existing structures. With SICAMS®, data can be gathered simply, efficiently, and precisely. Unlike other metrology systems, SICAMS® is revolutionary because it does not require acoustics or a full survey crew. Achieving an accuracy of 1 part in 5,000 is routine with Parker's system, though higher accuracies have been measured. Its state-of-the-art processing capability promises quick calculation and deliverables on-site.

Kristoffer Amdal, Parker EPD's Maritime Business Unit Manager, said, "We are confident that the Gulf of Mexico market will benefit from our metrology services. Accurate dimensional information delivered this fast will definitely prove to be a valuable asset to whatever project our clients need measured, whether it be planning a tooling interface, designing a salvage lift, analyzing physical damage, or even designing retro-fit supports."

The metrology system operates by using multiple photos from many angles to produce an accurate 3D model of the object being measured. In addition, there is a reporting tool built into the processing software which allows for a clearer image to be produced and utilized, therefore providing a more reliable 3D model.

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