UK Govt, Oil Industry Attempt to Resolve North Sea Tax Issue

- UK Govt, Oil Industry Attempt to Resolve North Sea Tax Issue

Thursday, September 08, 2011
Dow Jones Newswires
ABERDEEN
by Alexis Flynn & Sarah Kent

The U.K. government and the North Sea oil and gas industry have set up a joint forum to discuss issues around the fiscal regime, although resolution on possible tax relief for the decommissioning of old fields and installations will likely take some time, Treasury Minister Justine Greening said Thursday.

North Sea oil and gas companies have been vocal in their criticism of Chancellor of the Exchequer George Osborne's decision to raise the top rate of tax on profits from offshore production in the last budget. They have argued that investment in what is a mature and declining basin risks being stymied by an unpredictable and onerous tax regime.

Greening, who was speaking at an industry conference here, said the new forum would include representatives from the Treasury, lobby group Oil and Gas UK and senior officials from the Department of Energy and Climate Change. By meeting on a regular basis, the forum would help the industry get more clarity on potential changes to the tax regime, and discuss possible future tax relief, such as decommissioning.

"What we will try to do is put some certainty in that. Now, obviously we can't always tie the hands of governments going forward, [but] I think what we can do is look to see to what extent we can find a way through this," said Greening.

Head of Oil and Gas UK Malcolm Webb said he was encouraged by the discussions.

"It was a very constructive meeting," said Webb.

However, Greening said it was impossible to say whether the issue around decommissioning would be resolved in time for the next budget

"I'm not going to put a timeline on it. What I can say is we've got a couple of working groups set up, one of them around decommissioning and we would like to very constructively work with the industry on that and we've been encouraged by the progress made. But let's be clear. If sorting out a long-term solution to decommissioning was easy it would have been sorted out a long time ago. We absolutely want to work on this as fast as we can. But what I think matters is getting the right long-term solution, one that stands on its own two feet," she said.

Webb said that although there was still lingering frustration over the unanticipated nature of the earlier tax increase, it was time for both industry and government to look to the future.

"There's some regret, but what the industry is determined to do is to turn the page to overcome the problems that the government has presented us with, and we really were encouraged [by the meeting] today."

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

Oil & Gas Post

Promote Your Page Too
LINK

UK Govt Reveals Device to Cap Underwater Oil Blowout

- UK Govt Reveals Device to Cap Underwater Oil Blowout

Tuesday, September 06, 2011
Dow Jones Newswires
LONDON

The U.K. government will later Tuesday reveal a device designed to cap an underwater oil well in the event of a major incident so as to minimize environmental damage, the Oil Spill Prevention and Response Advisory Group said.

The device was designed in response to BP PLC's (BP) oil spill in the Gulf of Mexico in April 2010. The cap works by shutting in and holding pressure on an uncontrolled well and uses a choke and a series of valves to stop the flow of oil into the water.

The device can be deployed in water as deep as 10,000 feet and was designed specifically for use in wells in the U.K. continental shelf.

"The successful completion and availability of this cap marks a significant step forward in industry preparedness and significantly bolsters our capability to deal with a major loss of well control," said James House, chair of the Oil Spill Prevention and Response Advisory Group.

The device allows a quick response and is essential for minimizing potential pollution in the water, even though the U.K hasn't had a major loss of well control in 20 years of offshore operations, House said.

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

Oil & Gas Post

Promote Your Page Too
LINK

BP Gets Govt OK for Kinnoull Field Development

- BP Gets Govt OK for Kinnoull Field Development

Tuesday, September 06, 2011
BP plc

On behalf of its co-venturers BP announced an agreement to invest up to £700 million to progress a project to develop the Kinnoull reservoir in the central North Sea.

Kinnoull is the largest of three reservoirs that are being developed as part of the Andrew Area developments project, and contains 45 million barrels of oil equivalent. The reservoir will be connected to BP's Andrew platform and enable production to be extended to 2020 and beyond.

Production from Kinnoull is forecast to peak at 45,000 barrels per day and be exported via the existing Forties pipeline system to Kinneil and the CATS pipeline system to Teesside.

Trevor Garlick, Regional President for BP's North Sea business said, "The Kinnoull project is a further demonstration of BP's vision to sustain a material and high quality business in the North Sea region. It is also a showcase for the outstanding subsea expertise that exists within the UK. At its peak the project will create employment for over 1,000 people in the UK."

Charles Hendry, Minister of state for Energy and Climate Change said, "I am pleased to see that BP is taking forward the development of the Kinnoull field. With around 90% of the development involving UK firms, this is a real big win for our domestic supply chain and shows that the thriving North Sea oil and gas sector continues to deliver economic benefit. I hope major global players continue to harness the expertise of UK companies as new developments come forward."

In order to access the new reservoir, the project will install a new subsea system and caisson onto the Andrew platform. The backbone of the subsea system will be 4 subsea bundles with a total length of 28 km - the longest bundle system in the world - which will carry the fluids to the Andrew platform for processing. The bundle system is being fabricated by Subsea 7 at its facility in Wick, Scotland.

To accept the new Kinnoull production fluids, and to facilitate the production from the Lower Cretaceous reservoir below the Andrew reservoir, the Andrew platform will undergo major modifications including the addition of a 750 ton process module. Construction will be completed over 2 years, with the flotel Borgholm Dolphin on location throughout. The Andrew platform is expected to be shut down for 18 months during this campaign during which time operational work will also be undertaken to maintain the efficiency and integrity of the existing Andrew platform facilities.

The new facilities are scheduled to commence production in 2013.

BP owns 77.06%, with other interests as follows: Eni (16.67%); Summit (6.27%)


Oil & Gas Post

Promote Your Page Too
LINK

Sound Oil Gets Govt Nod for Rapagnano Concession

- Sound Oil Gets Govt Nod for Rapagnano Concession

Wednesday, August 24, 2011
Sound Oil plc

Sound Oil announced that the Italian Ministry for Economic Development has awarded the Rapagnano Concession, located in the Marche Region of central Italy, to the Company's wholly-owned subsidiary Apennine Energy srl. The award is subject to the acceptance of any environmental impact assessment that may be required by the Marche regional authorities. In view of the previous production history at the site which is within an industrial area, the Company anticipates that this acceptance will be granted.

The Rapagnano gas field on the concession had previously produced 4.1 Bscf of gas into the national network until it was shut-in in 2001. A recent reservoir engineering study by consultants Senergy (GB) Ltd has estimated that an additional 2.45 Bscf of gas is potentially recoverable from the field. Apennine's objective will be to put the field back on stream at an approximate estimated cost of US $0.5 million with expected first revenue in 2Q of 2012.

Commenting on the news, Gerry Orbell, Sound Oil's Chairman and Chief Executive, said, "This is very encouraging news. The Italian Ministry has awarded the Rapagnano field to us at no cost with the expectation that we can put it back on stream quickly. We intend to produce to the national gas network through the connection which is on site and provide an early cash flow with minimal investment."

Oil & Gas Post

Promote Your Page Too
LINK

Reliance-BP Deal Gets OK from Indian Govt

- Reliance-BP Deal Gets OK from Indian Govt

Tuesday, August 09, 2011
Reliance Industries Ltd.

Reliance Industries Limited has received the Government of India approval for its transformational deal with BP. Reliance Industries is grateful to the Government of India for the approval, which will result in the largest foreign investment in the domestic hydrocarbon sector.

BP will take 30% stake in 21 oil & gas production sharing contracts that Reliance operates in India, including the producing KG D6 block. Following the approval, RIL and BP will work together to conclude the deal expeditiously.

Oil & Gas Post

Promote Your Page Too
LINK

RWE Dea Gets Govt Nod for Breagh Field Development

- RWE Dea Gets Govt Nod for Breagh Field Development

Monday, July 25, 2011
RWE Dea AG

RWE Dea UK announced that the field development plan for its operated Breagh gas field has received the unconditional approval of the Department of Energy and Climate Change (DECC) of the UK Government.

The FDP approval from DECC was formalized today by Charles Hendry MP, Minister of State for Energy at RWE Dea UK's London office, in a ceremony attended by senior management of RWE Dea and its Breagh license partner, Sterling Resources (UK).

"The FDP approval is a hugely significant achievement for our Breagh gas field development. It is an essential element for the realization of our strategic target to boost RWE Dea's annual gas and oil production to more than 70 million barrel of oil equivalents by 2016," said Ralf to Baben, Chief Operating Officer of RWE Dea AG.

René Pawel, RWE Dea UK's Managing Director, commented, "I am delighted with today's announcement by the UK Government. It means that RWE Dea UK remains on course to achieve production from the Breagh field less than three years after we acquired operatorship of the Breagh license."

The FDP approval marks yet another step in a busy summer for the Breagh development. Around 100 kilometers of 20" pipeline has been successfully installed offshore and the platform is due for installation in early September. The platform is being constructed by Heerema Vlissingen in the Netherlands and consists of a jacket approximately 85 meters tall with a total weight of some 4,000 tons and topsides of approximately 1,400 tons. The platform will be installed by Heerema Marine Contractors.

Energy Minister Charles Hendry said, "This is welcome news, Breagh is one of the largest natural gas discoveries in the Southern North Sea in recent years, and developments like this play a vital role in ensuring we have secure energy supplies throughout the UK. It is also encouraging to see the success of initiatives such as the Promote license, developed through PILOT, which originally allowed Sterling Resources to gain access to this acreage and bring the development forward under the partnership and operatorship of RWE Dea."

The Breagh field is located in UKCS blocks 42/12a and 42/13a of the southern North Sea in 62 meters water depth, approximately 100 kilometers east of Teesside. The field is being developed in two phases. Phase 1 entails gas to be exported via the 20" pipeline from the Breagh Alpha platform to Coatham Sands, Redcar on the UK mainland, and a 10 kilometers onshore pipeline for processing at the Teesside Gas Processing Plant (TGPP) at Seal Sands. The TGPP site is owned by Teesside Gas & Liquids Processing, and after processing at the TGPP, the gas will enter the UK National Transmission System. Phase 2, expected to receive FDP approval in early 2012, is expected to include additional wells in the east of the field drilled from a Breagh Bravo platform tied back to Alpha.

RWE Dea holds 70% interest in the Breagh gas field as operator (Sterling Resources UK 30%). The gas field is a conventional carboniferous reservoir and the expected reserves will make a significant contribution to the growth of RWE Dea's gas production. Further upside potential is expected in the surrounding exploration blocks.

Oil & Gas Post

Promote Your Page Too
LINK

RIL Asks Govt to Expedite Approvals for $7.2B BP Deal

- RIL Asks Govt to Expedite Approvals for $7.2B BP Deal

Tuesday, July 05, 2011
Knight Ridder/Tribune Business News
by Anupama Airy and Gaurav Choudhury, Hindustan Times

Amidst concerns raised by central intelligence agencies over the $7.2-billion (Rs 32,400-crore) Reliance Industries Ltd (RIL)-BP deal, RIL is pushing for speedy approvals to the deal and has cited BP's entry into India as a "major boost to the energy security of the country." Mukesh-Ambani led RIL had signed a deal to sell a 30% stake in 23 oil and gas fields to BP.

RIL's letter dated June 10, asking the petroleum ministry to "expedite approvals" for its deal with BP, comes within days of a June-1 note of the ministry of home affairs conveying concerns of intelligence agencies. The agencies had voiced concerns over the handling of a "natural resource" such as gas by a new player with BP's financial muscle, which would not only take away a large chunk of the gas marketing and transportation business of India's national gas carrier GAIL India Ltd, but will also raise the cost of oil and gas for user industries.

While conveying its "security no-objection certificate" to the RIL-BP deal, the home ministry has asked the petroleum ministry to "take into account" these observations while "considering the case."

However, RIL said that "BP's entry will add value to India's exploration and production (E&P) sector...BP's entry as an international oil and gas major with proven deep ater experience will be a major boost to the energy security of India."

RIL has rebutted the intelligence agencies' observation that it needs to be ascertained whether the New Exploration and Licensing Policy (NELP) contract has a provision of sale of assets and whether it allows BP to sell or transport gas outside the country.

The gas marketing joint venture "is not part of NELP and is governed by a different policy framework for which we will obtain necessary approvals from the authorities concerned," RIL has told the petroleum ministry.

A RIL spokesperson said the company does not want to comment on any inter-ministerial communication and the June 10 letter to the petroleum ministry was self-explanatory.

The deal marked one of the biggest foreign direct investments in a single year in India. Europe's second-biggest oil company bought a 30% stake in 23 oil and gas blocks owned by RIL by paying $7.2 billion or Rs 32,400 crore. RIL will get another $1.8 billion if it strikes more oil or gas. However, the petroleum ministry approval is a mandatory pre-requisite for the deal to go through.

Copyright (c) 2011, Hindustan Times, New Delhi

Oil & Gas Post

Promote Your Page Too
LINK

UK Govt Raises Field Allowance for N. Sea Investment

- UK Govt Raises Field Allowance for N. Sea Investment

Tuesday, July 05, 2011
HM Treasury

The Government announced that the annual rate of the Ring Fence Expenditure Supplement (RFES) for the North Sea fiscal regime will be increased from 6% to 10%, following discussions with industry initiated at the 2011 Budget. This provides extra support for investment in the North Sea, including in marginal fields that qualify for the current field allowance, and will also support the ongoing considerations on new categories of field allowance.

In the Budget, as part of a package of measures to help motorists cope with high petrol prices, the Government announced a Fair Fuel Stabilizer that would be funded by higher taxation of the profits from oil and gas companies when oil prices are high. The Government said at that time that it would consider with the oil and gas industry the case for a new category of field that would qualify for field allowance to support investment in marginal fields.

In the course of those discussions with industry, the Government has identified that the ability of a company to benefit fully from the field allowance is dependent on whether a company has sufficient current taxable income against which to off-set expenditure. This is addressed to some extent by the Ring Fence Expenditure Supplement, which currently allows companies with insufficient taxable income to uprate losses by 6% for six accounting periods.

The increase to 10% announced today will help ensure existing field allowances work more effectively and equitably to support investment in marginal fields. It also brings RFES in line with the discount rate typically used by the sector.

The Government will continue to engage with oil and gas companies on the case for new categories of field qualifying for field allowance.

Justine Greening, Economic Secretary to the Treasury, said, "The Government was clear at the Budget that it would engage with oil and gas companies, including to consider the case for further support for marginal projects. Today's change demonstrates our commitment to ensure current allowances work effectively and equitably, and lays the groundwork for further constructive discussions on field allowances."

Oil & Gas Post

Promote Your Page Too
LINK

N.C. Govt Vetoes Offshore Drilling Bill

- N.C. Govt Vetoes Offshore Drilling Bill

Friday, July 01, 2011
The Charlotte Observer, N.C.
by Bruce Henderson

Gov. Bev Perdue vetoed legislation on offshore drilling and environmental rule-making, delighting advocacy groups that had fought both.

Sen. Bob Rucho, R-Mecklenburg, was a primary sponsor of the Energy Jobs Act. It directed the governor to form an offshore-energy compact with South Carolina and Virginia and prescribed how to use oil and gas revenues the state might get.

The Obama administration has banned offshore drilling on the Eastern seaboard until at least 2018, although the president has hinted he might soften that position.

Perdue, in vetoing the energy bill, called it an unconstitutional infringement on the governor's powers.

"We applaud the governor's decision to keep North Carolina's coast open to beach balls but not tar balls," said Derb Carter of the Southern Environmental Law Center. The bill, he added, tied state energy policy to fossil fuels and away from renewable fuels.

Along with her veto, Perdue issued two executive orders on energy.

One creates a task force on offshore wind, which Rucho's bill had largely ignored. The shallow waters of the mid-Atlantic coast, including North Carolina, hold some of the nation's highest wind-energy potential, federal agencies have reported.

The task force is charged with assessing the costs and risks of growing a wind industry and is to report by next March.

A second executive order reauthorizes a science panel to examine land-based energy sources, including natural gas locked in underground shale formations. That panel is to report at the end of 2012. Rucho's bill had also called for study of the gas issue.

Drilling techniques called hydraulic fracturing, which breaks open shale to release gas, and horizontal drilling have boosted estimates of U.S. gas reserves by 40 percent. Those techniques are now illegal in North Carolina, but exploration companies have bought up leases in Lee and Chatham counties.

Perdue also vetoed a regulatory-reform measure that prohibits, in most cases, new state environmental rules that are stronger than federal standards. The bill gives administrative law judges, not state agencies, the final say when violators appeal state fines.

The governor cited the state attorney general saying such a change would violate the state constitution.

Copyright (c) 2011, The Charlotte Observer, N.C.

Oil & Gas Post

Promote Your Page Too
LINK

Inpex Gets AU Govt OK for Ichthys Project

- Inpex Gets AU Govt OK for Ichthys Project

Tuesday, June 28, 2011
Inpex Corp.

The Australian Government's decision to grant environmental approval to the Ichthys Project is a welcome step forward and helps pave the way for a final investment decision in the fourth quarter of 2011.

INPEX President Director Australia Seiya Ito said Federal environmental approval represents a significant milestone for the project following a rigorous three year assessment process, comprehensive environmental studies and extensive engagement with the community and other stakeholders.

"We are committed to developing and operating the Ichthys Project in an environmentally and socially responsible manner and will continue to work closely with the government and community as we progress the project," Mr. Ito said.

The decision today by the Minister for Sustainability, Environment, Water, Population and Communities, the Hon. Tony Burke, follows the Northern Territory Government's announcement in May that the environmental impacts of the planned Ichthys development in Darwin can be managed within acceptable limits.

"I would like to acknowledge both the Australian and Northern Territory governments for their thorough environmental assessment process," Mr. Ito said. "The input we received from government and the community during the process resulted in improved outcomes for all stakeholders."

The proposed Ichthys Project includes a subsea production system, semi-submersible central processing facility, a floating production, storage and offtake vessel located at the Ichthys Field in the Browse Basin, approximately 200 kilometers off the northwest coast of Western Australia, and onshore gas processing facilities at Blaydin Point, Darwin, Northern Territory. An 885km subsea gas pipeline will link the offshore and onshore facilities.

Oil & Gas Post

Promote Your Page Too

Colombia Oil Group Plans $80B Spend, Govt May Sell 10% -Executive

- Colombia Oil Group Plans $80B Spend, Govt May Sell 10% -Executive

Thursday, June 23, 2011
Dow Jones Newswires
LONDON
by Benoit Faucon

Colombia's Ecopetrol group of oil companies is planning to spend $80 billion through 2020 in a bid to produce 1.3 million barrels a day, a top Ecopetrol executive said Thursday.

Hernando Zerda, head of corporate strategy and business performance, said the government may also sell a 10% stake in Ecopetrol, the main shareholder in the group of oil companies mostly operating in the Latin American nation.

Speaking at the World National Oil Companies Congress here, Zerda said the companies of the Ecopetrol group are set for a total capital expenditure of $80 billion during 2011-2020.

The spending will help achieve a goal to produce 1.3 million barrels a day in the Ecopetrol companies--most of it in Colombia--in 2020, up from just above 700,000 barrels a day today, he said.

The majority of the financing will come from cash generation, but "sometime in the future, we will need to issue new shares" potentially representing 10% of the Ecopetrol capital "if prices are good," he said.

Separately, "the government is considering selling 10%" in Ecopetrol, the executive said.

But both considerations are "not confirmed," he said.

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

Oil & Gas Post

Promote Your Page Too

Govt Says Open to Review of Profit-Sharing Formula

- Govt Says Open to Review of Profit-Sharing Formula

Tuesday, June 21, 2011
Knight Ridder/Tribune Business News
by Utpal Bhaskar, Mint, New Delhi

In an attempt to deflect criticism by the country's apex auditor, petroleum minister S. Jaipal Reddy said the government was open to revisiting its profit-sharing formula for awarding hydrocarbon blocks and will strengthen the office of the oil regulator.

The Comptroller and Auditor General of India (CAG) had criticized Reddy's ministry and regulator Directorate General of Hydrocarbons (DGH) for allegedly allowing Reliance Industries Ltd (RIL) to inflate development costs on the D6 block in the Krishna-Godavari (KG) basin.

RIL has denied the charge.

Under India's new exploration licensing policy (Nelp), companies win exploration blocks in a competitive bidding process that involves revenue-sharing (or production-sharing) agreements with the government. According to this contract, the government's share from hydrocarbon blocks, known as profit petroleum, comes only after the companies recover all their costs.

"Today's formula of investment multiple was evolved in 1995. If (a) more foolproof formula is possible, why not look at that," said Reddy. "If there is an alternative formula which is less controversial and is fail-safe, then why not?"

Reliance Natural Resources Ltd (RNRL) had earlier alleged that RIL had "gold-plated" exploration costs in KG D6 by almost four times--from $2.47 billion in 2003 to $8.83 billion--to undermine its demand for cheaper gas.

RIL, an oil-to-yarn conglomerate, is controlled by Mukesh Ambani. RNRL is controlled by his brother Anil.

The accusations were made at a time when the brothers were at loggerheads, before patching up in May 2010.

The Communist Party of India (Marxist), or CPM, and the main opposition Bharatiya Janata Party have criticized the Congress-led United Progressive Alliance (UPA) government over the findings in the CAG's draft report. The CPM has demanded "immediate amendment of the present pricing formula in the production-sharing contract in consultation with CAG" and "immediate action" against the officials involved, including former director general of hydrocarbons V.K. Sibal.

It has also demanded that the price of gas be "delinked from international dollar price of crude" and the price of KG basin gas "be revised on the basis of actual cost of production and a cost-plus formula."

CAG's draft report also states that the British Gas Exploration and Production India Ltd-operated Panna/Mukta and Tapti fields, which have other partners such as RIL and state-owned Oil and Natural Gas Corp. Ltd (ONGC), too, increased development costs, and that Cairn India Ltd was allowed to carry out exploration in areas not covered under its RJ-ON-90/1 block in Rajasthan. "The institution of DGH is not capable of handling the technical and financial issues of this size," Reddy said.

The ministry of petroleum and natural gas has sought eight weeks to submit its response to CAG's draft report. "Our ministry will approach the subject with an open mind... we will not hesitate to correct ourselves," Reddy said.

Reddy declined to comment on whether CAG's draft report will affect approval for RIL's proposed move to offload a 30% stake in its hydrocarbon blocks to London-based BP Plc., only saying the deal "was under consideration."

In a separate development, Reddy said the cabinet committee on economic affairs (CCEA) may take up this week Vedanta Resources Plc.'s proposed acquisition of a majority stake in Cairn India Ltd.

A group of ministers (GoM) set up to vet the deal has recommended that CCEA approve the transaction but with riders to protect the interests of Cairn's partner, ONGC.

The state-owned company had made the resolution of a royalty payment dispute with its partner a precondition for approving the deal. The ministry had placed the issue before CCEA, which, in turn, recommended it to a GoM. An external spokesperson for RIL and a Cairn spokesperson declined comment.

Oil & Gas Post

Promote Your Page Too

Norwegian Govt Gives Go-Ahead to Statoil's $3.7B Valemon Plan

- Norwegian Govt Gives Go-Ahead to Statoil's $3.7B Valemon Plan

Friday, June 10, 2011
Statoil

The plan for development and operation of the Valemon gas and condensate field in the North Sea was approved by the Norwegian parliament on June 9. Production start-up is planned for 2014.

The Valemon field is one of Statoil's largest development projects on the Norwegian continental shelf (NCS) in the next few years.

The recoverable reserves are estimated at 206 million barrels of oil equivalents – including 26 billion cubic meters of gas, five million cubic meters of condensate and one million cubic meters of natural gas liquids (NGL).

The partners will invest almost NOK 20 billion in the platform, pipelines and production wells.

Development of Valemon involves a fixed platform with a steel jacket for the separation of gas, condensate and water. The normally unmanned platform will be remotely controlled from the Kvitebjørn platform when drilling operations are completed in 2016/17.

Gas from Valemon will be transported via the existing pipeline from Huldra to Heimdal, a hub which enables the gas to be exported to European markets.

The condensate will be piped to Kvitebjørn for stabilization and further transport to the Mongstad refinery in Hordaland.

At peak, Valemon is expected to produce approximately three billion cubic meters of gas annually.

"Production from Valemon will enable us to utilize spare capacity in the processing facilities on the Kvitebjørn and Heimdal platforms. Meanwhile, the platform and transport systems provide an excellent basis for the development of further oil and gas fields in the area," said Statoil senior vice president of NCS field development Ivar Aasheim.

The Valemon reservoir is complicated because it is fragmented, but also because of its high pressure and high temperature.

The contract for building the Valemon topsides was recently awarded to Samsung Heavy Industries, following broadly based international competition between pre-qualified suppliers. The contract is worth an estimated NOK 2.3 billion.

Design work will be carried out by the Grenland Group in Sandefjord, Norway and Technip in Malaysia. Grenland Group will also build the flare stack. Hertel Marine in the Netherlands will be responsible for the construction of the accommodation quarters.

The contract for steel jacket construction was previously awarded to Heerema Vlissingen B.V., while Heerema Marine Contractors Nederland B.V. landed the contract for transport and mating of jacket and topsides.

Saipem was awarded the contract for installation of the topside facilities. Pipeline design was awarded to IKM Ocean Design.

The Valemon field is located in the North Sea between Kvitebjørn and Gullfaks South, roughly 160 kilometers west of Bergen.

Licensees are Statoil (operator – 64.275%), Total (2.5%), Enterprise Oil Norge (3.225%) and Petoro (30%).

Oil & Gas Post

Promote Your Page Too

Total: Ekofisk South, Eldfisk II Get Govt Nod for Development

- Total: Ekofisk South, Eldfisk II Get Govt Nod for Development

Thursday, June 09, 2011
Total

Total announced the launch of the Ekofisk South and Eldfisk II projects offshore in the southern Norwegian North Sea on Production Licence (PL) 018. Total holds a 39.90% interest in the license.

The plan for development and operation for each project has been approved by the Norwegian authorities.

The Ekofisk South project will include a new platform (Ekofisk 2/4Z) and a new subsea facility (Ekofisk 2/4VB) at the Ekofisk complex. The platform will have a 40 years design life and a capacity of 70,000 barrels of oil equivalent (boe) per day. The new facilities will enable the drilling of 35 production and 8 water injection wells to further develop the Ekofisk field and increase oil recovery. Production start-up is expected early 2014.

The Eldfisk II project will include a new platform (Eldfisk 2/7S) at the Eldfisk complex and substantially upgrade the existing facilities on the Eldfisk field. The new platform will have 40 years design life and a capacity of 70,000 boe per day. It will provide accommodation, new process facilities, and will enable the drilling of 30 production and 9 water injection wells to further develop the Eldfisk field and increase oil recovery. Production start-up is expected in 2015.

These two projects will enable the development of around 450 million barrels of oil equivalent of reserves.

"These two projects represent major investments for Total and clearly demonstrate our long-term commitment to continued value creation in Norway," said Patrice de Viviès, Senior Vice President Exploration & Production Northern Europe, Total.

The Ekofisk and Eldfisk fields were discovered in 1969 and 1970. First production was achieved from the Ekofisk field in 1971 and Eldfisk came on stream in 1979. The two fields produced around 260,000 boe per day on average in 2010.

PL 018 partners are Total (39.90%), ConocoPhillips (35.11% and Operator), ENI (12.39%), Statoil (7.60%) and Petoro (5.00%).

Oil & Gas Post

Promote Your Page Too

EDITORIAL: Govt May Jeopardize Oil Production for Lizard

- EDITORIAL: Govt May Jeopardize Oil Production for Lizard

Thursday, June 02, 2011
The Gazette, Colorado Springs, Colo.
by Wayne Laugesen

It could be a tough summer -- unless one is a lizard.

Fears of a stalling economy sent the Dow on a 280-point plummet Wednesday. Housing values fell to their lowest in 10 years. Federal estimates of 180,000 new private-sector jobs in May fell short by 142,000.

Pain at the pump approaches $4 a gallon, which makes it difficult to prosper and create jobs.

In this time of economic burden, our federal government suddenly wants to protect the dunes sagebrush lizard. The tiny brown lizard lives among oak shrubs on Texas sand dunes, amid some of country's most productive oil wells.

The U.S. Fish And Wildlife Service, bolstered by activists, wants to list the lizard as endangered. In doing so, the government could shut down or hinder production of up to 1 million barrels of oil a day.

There is no proof that oil production threatens extinction of the lizards, and they are not confined to the dunes above Texas oil deposits. It appears as just another effort to exploit the cause of an obscure species at a tremendous risk to the fundamental welfare of humans. It is similar, though many times more serious, to the economic growth barriers erected in Colorado by an urgent need to save the Preble's meadow jumping mouse. The mice are plentiful in Colorado and Wyoming, but environmentalists and the federal government want to protect them only in Colorado -- where they come in useful for impeding economic growth.

"Bad science leads to bad policy," Texas land commissioner Jerry Patterson wrote in the Austin American-Statesman. "And that defines the current administration's domestic energy policy that seeks to close off more and more areas to oil and gas production. A policy which can be summed up as: 'Not here.'"

Our economy needs oil in order to create prosperity and jobs. Without economic growth, we can forget about maintaining federal entitlements and the quality of life enjoyed by all classes of Americans.

Let's be good to God's tiny creatures, taking reasonable measures to ensure their ability to survive. But let's not look for symbolic opportunities to strain to our economy by killing jobs, raising fuel costs and making Americans even more dependent on foreign oil. Let's save the humans, too.

Copyright (c) 2011, The Gazette, Colorado Springs, Colo.

Oil & Gas Post

Promote Your Page Too

Govt Regulators Sign Pact for Offshore Energy Development

- Govt Regulators Sign Pact for Offshore Energy Development

Tuesday, May 24, 2011
BOEMRE

As the International Oil Spill Conference kicks off in Portland, Ore. today, co-sponsors the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) and the National Oceanic and Atmospheric Administration (NOAA) announced that they have signed a landmark Memorandum of Understanding (MOU) to increase their coordination and collaboration to ensure the environmentally sound offshore energy development.

"BOEMRE and NOAA have enjoyed a long and productive relationship, but there is room for improvement. We can and will broaden and enhance the communication, cooperation and collaboration between our agencies," said BOEMRE Director Michael R. Bromwich. "This MOU creates new mechanisms to ensure the early and close coordination of BOEMRE and NOAA science and agency priorities to promote stronger environmental stewardship and stimulate greater efficiency in developing and implementing Outer Continental Shelf (OCS) energy policy and conservation."

"This agreement improves how we coordinate and collaborate to ensure energy resources are developed in an environmentally sound manner that protects marine life and ecosystems under our respective authorities," said Jane Lubchenco, Ph.D., under secretary of commerce for oceans and atmosphere and NOAA administrator. "We look forward to continuing to work with BOEMRE to ensure NOAA science informs offshore energy development and oil spill response."

This MOU, which is consistent with recommendations from the National Commission on the Deepwater Horizon Oil Spill and Offshore Drilling, specifies how BOEMRE and NOAA will cooperate and coordinate by:

• Defining specific processes to ensure effective and timely communication of agency priorities and upcoming activities;
• Identifying and undertaking critical environmental studies and analyses;
• Collaborating on scientific, environmental and technical issues related to the development and deployment of environmentally sound and sustainable offshore renewable energy technologies; and
• Increasing coordination and collaboration on decisions related to OCS activities, including with respect to research and scientific priorities.

Other key elements of the MOU include meeting regularly to develop potential ways to appropriately align regulatory and decision-making processes and identify the best available science to support future regulatory decisions; increased collaboration on oil spill exercises and response issues; and annually evaluating activities and progress related to National Ocean Policy objectives.

BOEMRE and NOAA have a history of nearly 40 years of successful scientific collaboration. These collaborative efforts encompass all OCS planning areas, from the highly successful Outer Continental Shelf Environmental Assessment Program in Alaska to ongoing joint funding of the environmental monitoring at the Flower Gardens National Marine Sanctuary in the Gulf of Mexico. These and other collaborations cover all technical disciplines from marine mammals and physical oceanography to the joint development of environmental documents in compliance with the National Environmental Policy Act.

BOEMRE and NOAA have had many significant and successful partnerships, including those conducted under the National Oceanographic Partnership Program. This has enabled both agencies to leverage their research capabilities to significantly increase the body of knowledge about our nation's marine environment.

Oil & Gas Post

Promote Your Page Too

Indonesian Govt to Hunt for More Oil in The East

- Indonesian Govt to Hunt for More Oil in The East

Friday, May 20, 2011
Knight Ridder/Tribune Business News
by Rangga D. Fadillah, The Jakarta Post, Indonesia

Unexplored oil and gas reserves in eastern Indonesia will play a vital role in securing the country's energy needs in the future, therefore more investment is necessary to develop the area, a minister said.

"As many oil and gas fields are maturing -- continuing their natural decline -- we're optimistic that frontier and deep water areas, which are mostly located in the eastern part of Indonesia, will contribute significantly to future production," Energy and Mineral Resources Minister Darwin Zahedy Saleh said in a speech at the opening ceremony of "The 35th Indonesian Petroleum Association (IPA) Annual Convention and Exhibition" at the Jakarta Convention Center.

The government has launched several initiatives to encourage investment in the area, such as increasing the number of offered working acreages for oil, gas, coal bed methane (CBM) and geothermal sources, he said.

"We are upbeat seeing the positive responses to new blocks offered in deep water and frontier areas such as Semai, Halmahera, West Aru, Southwest Timor and South Java," Darwin said.

Vice President Boediono, who officially opened the event, reaffirmed the government's commitment to promoting natural gas as the main energy source to fuel Indonesia's robust economic growth following the country's failure to boost oil production.

"Last year, I mentioned that gas was our future. That remains our basic policy. The government obviously has a strong interest in keeping them on track and will continue to closely monitor their progress," Boediono said.

He said the government would continue to facilitate "gradual moves toward economic pricing for domestic gas use" and direct negotiations between gas producers and consumers to tackle pricing problems.

"However, we know that the key issue is greater than this. The critical step is how to accelerate the development of gas infrastructure," Boediono said.

He promised that the government would speed up the completion of gas pipelines in Java and the construction of floating storage and re-gasification units in Sumatra and Java.

"One unit in the Jakarta area is expected to be ready as early as 2012," he said.

Commenting on declining oil production in the country, Boediono expressed his disappointment, saying that it was bad for the country's energy security and state revenues.

He personally requested upstream oil and gas regulator BPMigas and the Energy and Mineral Resources Ministry to work harder to solve the problems of unplanned shutdowns and to encourage oil companies to conduct enhanced oil recovery measures to increase production.

"I will be asking BPMigas and the Energy and Mineral Resources Ministry to pay more serious attention to these issues," he said.

IPA president Ron Aston, who is also the general manager of Australia-based oil and gas firm Talisman, supported the government's vision to prioritize natural gas as the main energy source in the future.

But, he said boosting gas production might be very challenging, particularly when sources were found in remote areas like the eastern part of the country.

"Industries fully support this idea, but it can only be achieved with the installation of much needed domestic infrastructure like transmission pipelines, liquefaction plants and receiving terminals," he said.

Aston also urged oil and gas companies operating in Indonesia to explore the country's extensive unconventional gas resources like CBM and shale gas.

"Around the world we see the growing importance of CBM and shale gas and they can play a vital role for Indonesia. But, the effort needs to be supported by appropriate regulations, incentives and partnerships to ensure that the necessary investment is forthcoming," he said.

Copyright (c) 2011, The Jakarta Post, Indonesia / Asia News Network

Oil & Gas Post

Promote Your Page Too

ADX: Tunisian Govt Agrees to Extend Chorbane Permit

ADX: Tunisian Govt Agrees to Extend Chorbane Permit

Wednesday, May 11, 2011
ADX Energy Limited

ADX Energy Limited on Wednesday announced that the Tunisian authorities (Comite Consultatif des Hydrocarbures) have agreed to the extension of the current exploration period for the Chorbane permit by one year to the 12th of July 2012.

The Chorbane exploration permit contains the Sidi Dhaher prospect. All site preparations to drill the Sidi Dhaher exploration well have been completed and a ready to drill status has been achieved.

The Tunisian authorities (Ministry of Industry and Technology) have informed the Company during recent meetings in Tunis that the drilling of the Sidi Dhaher well is a priority and the required level of government authority supervision to ensure safe mobilization and efficient drilling operations will be provided. ADX anticipates that the appropriate measures for road clearance, traffic control and road safety will be available shortly.

ADX will continue to prepare for the drilling of the Sidi Dhaher well and provide a further update when a scheduled mobilization date is determined.

The Sidi Dhaher prospect is located in the 2,428km2 large Chorbane Exploration Permit onshore central Tunisia near the port city of Sfax. It is surrounded by several producing oil fields and extensive oil and gas infrastructure.

Participant interests in the Sidi Dhaher -1 well will be as follows;

• ADX Energy Ltd 40% Operator
• Gulfsands Petroleum Plc 40%*
• XState Resources Ltd 10%*
• Verus Investments Limited 10%*

(*The respective participant interests in the Sidi Dhaher well and the Chorbane Permit are based on the completion of all farmin obligations.)

Oil & Gas Post

Promote Your Page Too

US Govt Asks for Legal Certainty in Indonesia's Oil Industry

US Govt Asks for Legal Certainty in Indonesia's Oil Industry

Tuesday, May 10, 2011
Knight Ridder/Tribune Business News
by Rangga D. Fadillah, The Jakarta Post, Indonesia

The US Department of Energy called on the Indonesian government to ensure the certainty of energy sector contracts and regulations to attract more investment from US companies.

Tom Cutler, the department's director for European and Asia Pacific affairs, said that following Indonesia's impressive economic growth over the past several years, the country needed more investment to develop its energy potential to cope with fast-growing domestic demand.

"The most important [thing to attract investment] is certainty. Once you have a contract with certain terms, companies want those terms to stay in place, because they make business calculations based on whatever the contract terms are," he told reporters on the sidelines of the US-Indonesia Energy Investment Roundtable in Jakarta.

Investment from US companies would help Indonesia boost its energy supply since they have been proven of being capable to provide capital and technology not only in the oil and gas sector but also in renewable energy, Cutler said.

US companies were interested in developing all of Indonesia's energy resources, including geothermal, bio-energy, hydro and wind, he added.

"We heard that Indonesia has 40 percent of the world's geothermal resources. We've some of the best companies in the world, like Chevron, which are interested in developing geothermal resources," he said.

Recently appointed US Ambassador to Indonesia Scott Marciel said US companies were interested in undiscovered oil and gas reserves offshore or in deep waters.

"According to our data, 90 percent of Indonesia's undiscovered oil and gas reserves are located in offshore and deep water areas," he said during his opening remarks.

Cutler said that to reverse the declining trend in oil production, Indonesia was in dire need of more investment to find more oil and gas reserves.

The nation's oil production is currently 916,000 barrels of oil per day (bpd), far below a government target of 970,000 bpd for 2011. Indonesia produced 954,000 bpd in 2010, below a target of 965,000 bpd.

Energy and Mineral Resources Minister Darwin Zahedy Saleh, who also attended the roundtable, said he would consider providing fiscal "incentives and more attractive production-sharing arrangements" to potential investors in the energy sector.

However, he did not elaborate in detail on the form of the incentives and more attractive production sharing arrangements.

"The government is also ready to consider fiscal incentives to encourage acceleration of resources development, as well as more attractive terms and conditions in production-sharing contracts," he said in his speech.

Darwin said he hoped that the bilateral roundtable would be soon followed by the participation of more US investors, not only in oil and gas, but also infrastructure development, new and renewable energy development and energy conservation.

Copyright (c) 2011, The Jakarta Post, Indonesia / Asia News Network. Distributed by McClatchy-Tribune Information Services.

Oil & Gas Post

Promote Your Page Too

RIL Holds Ground Amid Govt Scrutiny

RIL Holds Ground Amid Govt Scrutiny

Wednesday, May 04, 2011
Knight Ridder/Tribune Business News

Reliance Industries drew flak from the oil ministry and its regulatory arm for exploration activities, Directorate General of Hydrocarbons, for not doing enough to ramp up gas production to the level projected by the company from its Andhra offshore fields.

At a meeting to vet investments into the fields made in the nine months of 2010-11, the two sides differed on measures to increase production. The government side insisted Reliance drill two more wells and operationalize two others that it has drilled but not connected to the pumping grid.

Reliance countered by saying more wells would only drain the same reservoir and not solve the problem of falling pressure in the existing wells. The company has drilled 20 wells against 22 approved in the field's development plan. Two of the wells have not been put into operation.

Production from the fields has dropped to some 41 mcmd, forcing the government to curtail supplies to non-essential industries such as petrochemicals and refineries and ensure earmarked quantities of gas to priority sectors like power and fertilizer units.

Director general of hydrocarbons S K Srivastava said Reliance and its Canadian partner Niko Resources had in the FDP (field development plan) committed to drill 31 wells in D1 and D3 fields in the KG-D6 acreage by April 2012 to raise output to 80 mcmd (million cubic metres per day).

"We have suggested that they meet whatever commitment (they made) in the approved FDP," Srivastava said. "They will come back with a proposal (on drilling more wells)."

Another meeting will be held in 2-3 weeks, Srivastava said. Sources said that DGH at the meeting tried to push a proposal that Reliance be disallowed to recover part of its $9 billion investment proposed in the fields but it had to back off when it was pointed out that the contract with the government did not have such a provision.

Reliance had built production facilities to support 80 mcmd of production. So, DGH wanted cost-recovery of only two-third of the capital spent in building those facilities.

PSC allows operator to recover investment made in developing a field before sharing profits among the stakeholders, including the government. But any move to change cost recovery norm would be possible only through an amendment to the contract, which can be done only with the approval of Parliament.

Copyright (c) 2011, The Times of India. Distributed by McClatchy-Tribune Information Services.

Oil & Gas Post

Promote Your Page Too