All Evacuated Personnel nearly Returned - BOEMRE

- All Evacuated Personnel nearly Returned - BOEMRE

Wednesday, September 07, 2011
BOEMRE

Offshore oil and gas operators in the Gulf of Mexico are re-boarding platforms and rigs, and restoring production 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 Wednesday, personnel remain evacuated from a total of 21 production platforms, equivalent to 3.4 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 4 rigs, equivalent to 5.7 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 36.9 percent of the current oil production in the Gulf of Mexico has been shut-in. It is also estimated that approximately 18.1 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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Commodity Corner: Oil Falls Amid Softer Demand Outlook

- Commodity Corner: Oil Falls Amid Softer Demand Outlook

Friday, September 02, 2011
Rigzone Staff
by Matthew V. Veazey

Light sweet crude oil for October delivery lost nearly three percent Friday after the U.S. Department of Labor announced that the U.S. economy added zero jobs last month.

The WTI settled at $86.45 a barrel, a $2.48 day-on-day decline, after the Labor Department reported that the loss of 17,000 government jobs in August offset the addition of the same number of private-sector jobs during the period. According to media outlet MSNBC, the government last reported zero job growth 66 years ago. The Labor Department also announced that the unemployment rate held steady at 9.1 percent.

The unimpressive employment figures support the view that the U.S. economy is experiencing a double-dip recession, lowering expectations for oil demand.

Brent futures also ended the day lower, losing 1.7 percent to settle at $112.33 a barrel. The benchmark traded within a range from $111.57 to $113.51. The WTI peaked at $88.99 and bottomed out at $85.42.

By noon Friday, one-third of Gulf of Mexico natural gas production had been shut-in as Tropical Storm Lee ambled toward the Louisiana coastline. That was not enough to counter the aforementioned dismal economic prospects, however; October natural gas lost more than four percent Friday to settle at $3.87 per thousand cubic feet.

Front-month natural gas fluctuated from $3.85 to $4.065 during floor trading. Reformulated gasoline for October delivery lost a nickel to end the day at $2.84 a gallon after trading within a range from $2.795 to $2.90.

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Halliburton Sues BP In Texas - Alleges Misrepresentation

- Halliburton Files Lawsuit Against BP

Friday, September 02, 2011
Halliburton Co.

On September 1, 2011, Halliburton filed claims against BP in Texas state court for negligent misrepresentation, business disparagement and defamation related to the April 20, 2010, Macondo incident. Halliburton has also moved to amend its claims against BP in the multi-district litigation in New Orleans, Louisiana, to include fraud.

These allegations are based upon BP providing Halliburton with inaccurate information prior to performing cementing services on April 19, 2010, and BP's use of and omission of that information in subsequent public statements, filings and governmental investigations.

Halliburton has learned that BP provided Halliburton inaccurate information about the actual location of hydrocarbon zones in the Macondo well. The actual location of the hydrocarbon zones is critical information required prior to performing cementing services and is necessary to achieve desired cement placement.

Halliburton remains confident that all the work it performed with respect to the Macondo well was completed in accordance with BP's specifications for its well construction plan and instructions, and that Halliburton is fully indemnified under the contract.

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Halliburton Sues BP In Texas - Alleges Misrepresentation

Friday, September 02, 2011
Dow Jones Newswires
by Melodie Warner

Halliburton filed a negligent misrepresentation, business disparagement and defamation lawsuit against BP in Texas state court related to the April 2010 Macondo explosion and oil spill in the Gulf of Mexico.

Halliburton has also moved to amend its multi-district litigation in New Orleans to include fraud claims against BP.

The oilfield-services company alleges BP provided Halliburton with inaccurate information--such as the actual location of hydrocarbon zones in the Macondo well--before cementing services began on April 19, 2010. Halliburton also claims BP has used and omitted that information in subsequent public statements, filings and governmental investigations.

"This lawsuit is the latest attempt by Halliburton to divert attention from its role in the Deepwater Horizon incident and its failure to meet its responsibilities," BP said in a statement. The energy giant said it has accepted responsibility for responding to the spill and is accordingly paying costs and compensation. BP "expects other parties to accept their responsibilities and bear their share of the costs," the statement said.

Last fall, BP released a report that largely faulted Transocean, the owner of the Deepwater Horizon drilling rig, and Halliburton for last year's disastrous Gulf of Mexico oil spill. While government investigations have generally assigned blame to both BP and its contractors, Transocean disclosed an internal investigation in June that focused almost entirely on decisions made by BP.

Halliburton said Friday it remains confident that all the work it performed was completed in accordance with BP's specifications, and that Halliburton is fully indemnified under the contract.

Shares of Halliburton were trading 2.8% lower at $41.83 moments after the opening bell.

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


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Commodity Corner: Crude Up on Weather Threat

- Commodity Corner: Crude Up on Weather Threat

Thursday, September 01, 2011
Rigzone Staff
by Saaniya Bangee

Despite shaky equities and a rising dollar, crude futures inched modestly higher Thursday on weather reports of a storm brewing in the Gulf of Mexico.

October oil added 12 cents to its final price tag, settling at $88.93 a barrel on the New York Mercantile Exchange. Oil traded as low as $88.21 a barrel after an earlier intraday peak of $89.90.

The National Hurricane Center reported an 80 percent chance that a tropical wave in the Gulf of Mexico could develop into a tropical cyclone within the next 48 hours. Oil majors such as Shell, ExxonMobil, BP, Anadarko and BP have evacuated nine platforms in the Gulf of Mexico and shut in nearly 80,000 barrels of oil production, according to the Bureau of Ocean Energy Management, Regulation and Enforcement. In addition, 127 million cubic feet per day of natural gas was also shut in.

In other forecasts, initial unemployment claims fell by 12,000 to 409,000 last week. Data reported by the Labor Department helped boost optimism about the economy.

Brent crude, which is used to price many international oil varieties, lost 56 cents to settle lower at $114.29 barrel on fresh concerns over Greece's debt problems. The intraday range for Brent was $113.89 to $115.31 a barrel on the ICE future exchange.

Natural gas for October delivery remained unchanged at $4.05 per thousand cubic feet Thursday.

Gasoline gained 1.64 cents for the first trading session for the October contract. Reformulated gasoline settled at $2.89 a gallon. Some East Coast refineries remain shut down due to Hurricane Irene. Prices fluctuated between $2.85 and $2.92 Thursday.

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About to Buck The Trend

- About to Buck The Trend

Friday, August 05, 2011
Rigzone Staff
by Trey Cowan

Looking back to the second quarter, the jackup dayrate trend is down 2 percent to $106k/day versus 1Q11 rates. Floaters on the other hand did not experience any change in pricing from one quarter to the next, holding steady at $378k/day.

Commodity jackup dayrates suffered the most, down 5.6 percent to an average of $70k/day during 2Q. Standard jackup rates fell 2.2 percent to 96k/day and premium jackup rigs fell at the slowest pace of 1.6 percent to $135k/day, all on a quarter-over-quarter basis.

While the chart shows an ongoing downward trend, the future actually looks good for jackup rate improvement, based on recent activity. Jackup rates for July improved 1 percent to $107k/day, up $1,000 from June's average of $106k/day. When looking at capabilities and water depths served, premium jackups grew at a faster pace (3 percent to 139k/day) during the month. We continue to hear commentary pointing to a bifurcated marketplace with higher demand for premium rigs relative to standard 300' rigs or commodity rigs that serve in 250' waters or less.

Based on contracts already booked, dayrates for premium jackups are likely to improve 8 percent during the second half of 2011. This compares favorably to 4 percent overall growth in dayrates anticipated for jackups, which translates into an average increase of 5,000/day for jackups during the second half of 2011.

Looking solely at the rig counts, global offshore activity improved during the month of July when compared to June. There are now 543 rigs under contract around the world, up ten from last month (as both floaters and jackups added 5 rigs-a-piece to their respective rolls). The overall fleet size also grew during the month by a net five rigs (3 floaters and 2 jackups) to 756 rigs marketed globally.

Permitting in the Gulf of Mexico Year to Date

In water depths of less than 500 feet, there have been 41 "New Well" permits issued by the BOEMRE year-to-date. "Revised New Well" permits number 64 that have been issued since January 3rd 2011. The average pace for New Well and Revised New Well permit approvals appears to be 15 per month in shallow waters. In water depths of more than 500 feet there have been 12 New Well permits issued by the BOEMRE year-to-date. Since Jan. 3, 52 Revised New Well permits have been issued by the BOEMRE. Thus, the average pace for New Well and Revised New Well permit approvals for deepwater projects is 9 per month.

To put all this into perspective, combine the two averages together and you see that the BOEMRE is averaging 24 approvals per month. This is an anemic pace considering that the inspection staff of the BOEMRE is ~50 individuals and growing. That means at the current staff levels the BOEMRE's inspectors are approving either a "New Well" or "Revised New Well" at a pace of one every two months.

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Commodity Corner: Oil Jumps on Fear of Don

- Commodity Corner: Oil Jumps on Fear of Don

Thursday, July 28, 2011
Rigzone Staff
by Saaniya Bangee

Oil futures edged higher Thursday as Tropical Storm Don brewed in the Gulf of Mexico.

Oil trading remained choppy throughout the day Thursday with prices as high as $98.01 and as low as $96.51 a barrel. Front-month crude gained 4 cents to end the session at $97.44 a barrel.

The U.S. Labor Department said the number of claims for unemployment benefits fell to its lowest level in almost four months last week. According to the report, 398,000 people filed for unemployment benefits; this represents an increase in employment.

In its latest bulletin, the National Hurricane Center reported that Tropical Storm Don has strengthened and is headed toward the Texas coast. Oil majors ExxonMobil, Shell, BP and Anadarko have scaled back production and evacuated non-essential from several platforms in the Gulf of Mexico. Analysts predict output levels should return to normal by Saturday morning.

Traders played it safe Thursday over lingering uncertainty caused by the U.S. debt-ceiling dispute. With an Aug. 2 deadline looming, lawmakers remain deadlocked over a proposal to raise the debt limit.

The Brent benchmark fluctuated between $117.07 and $118.64 Thursday, before settling at $117.36 a barrel.

Natural gas for September delivery fell by 1.7 percent to $4.24 per thousand cubic feet Thursday, thanks to larger-than-expected stockpiles as reported by the Energy Information Administration. The EIA stated that natural gas supplies grew by 43 billion cubic feet for the week ended July 22. As of July 22, inventories were at 2.714 trillion cubic feet, down 2.3 percent from the five-year average.

The intraday range for natural gas was $4.20 to $4.34 per thousand cubic feet.

Reformulated gasoline lost 0.8 percent to settle at $3.12 a gallon. It peaked at $3.17 and bottomed out at $3.09 during Thursday's trading.

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Lawsuit Against BP Tossed

- Lawsuit Against BP Tossed

Monday, July 18, 2011
Houston Chronicle
by Tom Fowler

A federal judge has dismissed racketeering claims brought by Gulf Coast businesses and residents against BP for last year's massive oil spill.

The plaintiffs alleged that BP defrauded regulators in connection with the safety of its drilling operations and its response to the spill. They invoked the Racketeer Influenced and Corrupt Organizations Act, a law typically used against organized crime.

U.S. District Judge Carl Barbier dismissed the claims Friday. The decision does not affect other damage claims still pending from the same plaintiffs.

The judge also set aside a lawsuit filed against BP by Anadarko Petroleum Corp., one of its partners on the Macondo well. He ruled that the two companies' prior contractual agreements required them to try to settle such disputes through arbitration before suing.

Anadarko argued that BP had voided that requirement by, among other things, demanding that Anadarko produce evidence in the civil case.

"We respect today's decision, which does nothing to diminish our claims; it simply addresses the venue in which they may be resolved," Anadarko spokesman John Christiansen said in a statement.

Anadarko has not set aside funds explicitly for possible spill-related liabilities but has said during analyst meetings that it has up to $3.4 billion in cash on hand and a $5 billion credit line it acquired after the accident.

BP, which has set aside more than $40 billion in reserves, said in a prepared statement after the ruling that Anadarko shares liability under the federal Oil Pollution Act.

"Anadarko has blatantly disregarded its responsibilities to the residents of the Gulf Coast by failing to pay its fair share of the costs relating to the accident and resulting spill," it said. "BP remains focused on ensuring that Anadarko lives up to its obligations as a co-leasehold owner of the Macondo prospect and as a 'responsible party' under OPA."

Copyright (c) 2011, Houston Chronicle. Distributed by McClatchy-Tribune Information Services.

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Anadarko Announces Lucius Unitization

- Anadarko Announces Lucius Unitization

Monday, July 18, 2011                                               
Anadarko Petroleum Corp.

Anadarko Petroleum Corp. on Monday announced the finalization of a unitization agreement with Exxon Mobil Corp. and co-owners to develop the Lucius field.

The unitization includes portions of Keathley Canyon blocks 874, 875, 918 and 919 in the deepwater Gulf of Mexico. Anadarko will operate the unit with a 35-percent working interest. Following the unitization agreement, the Lucius interest owners entered into an agreement with the Hadrian South co-venturers whereby natural gas produced from the Hadrian South field will be processed through the Lucius facility in return for a production-handling fee and reimbursement for any required facility upgrades.

"As a result of these agreements, we expect Lucius to be among the most economically efficient projects in our portfolio, while providing important infrastructure in an emerging area of the Gulf of Mexico," said Al Walker, Anadarko President and Chief Operating Officer. "We've already placed orders for the long-lead items, including the truss spar floating production facility, which will have a capacity of more than 80,000 barrels of oil per day (BOPD) and 450 million cubic feet of natural gas per day. We look forward to working with our new co-owners and anticipate sanctioning the project later this year, with first production expected in 2014."

Anadarko and the co-owners also recently completed an extended well test at the Lucius discovery that provided assurance regarding the flow rates and excellent reservoir characteristics of the field. With equipment-constrained rates in excess of 15,000 BOPD of high-quality oil (29 degrees API gravity), the test provided additional confidence in Anadarko's previous resource estimates and indicated that Lucius can be developed with a minimal number of wells.

Co-owners in the Lucius unit include Plains Exploration & Production Co. with a 23.3-percent working interest; Exxon Mobil Corp. with a 15-percent working interest; Apache Deepwater LLC, a subsidiary of Apache Corp. with an 11.7-percent working interest; Petrobras with a 9.6-percent working interest; and Eni Petroleum with a 5.4-percent working interest.

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GOM Employment Could Increase if Admin. Allows -Study

- GOM Employment Could Increase if Admin. Allows -Study

Monday, July 11, 2011
American Petroleum Institute

Almost 190,000 new jobs could be created in 2013 if permitting in the Gulf of Mexico for offshore development returned to levels before the Obama administration's moratorium, a study by Quest Offshore Resources, Inc., says. The study, "United States Gulf of Mexico Oil and Natural Gas Industry Economic Impact Analysis," also projects a 71 percent increase in Gulf development spending to $41.4 billion and a 70 percent increase in economic activity related to Gulf development to $44.5 billion.

"The slow pace of Gulf development since the accident has cost jobs, revenue and energy production," said API President and CEO Jack Gerard. "The study shows what could be accomplished on jobs if project approvals and permits could get back to a normal pace. We've done the necessary work raising the bar on safety. We cannot continue to delay developing energy and hiring people in the Gulf. The disappointing unemployment numbers from the government last week make this more important than ever," Gerard added.

Quest Offshore conducted the study for API and the National Ocean Industries Association. Quest based its forecasts on actual project development data and historical benchmarks of spending for specific equipment and services.

"Total employment related to offshore Gulf of Mexico oil and natural gas industry operations could reach 430,000 jobs in 2013 if the permitting slowdown is reversed," Gerard said. "As large as the jobs numbers are, however, they are just a fraction of all the jobs our industry could create with more forward-looking development policies in all federal onshore and offshore areas. And along with the increased jobs and energy production could come hundreds of billions of dollars of desperately needed additional revenue to the government. Policymakers now debating tax increases on the industry should understand that producing at home more of the oil and natural gas our nation will need is a far better way to help fix our economy and pay down our debt," Gerard said.

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GE Unit Receives $45M Contract to supply TLP Tensioner System for Chevron

- GE Unit Receives $45M Contract to supply TLP Tensioner System for Chevron



Jul 6, 2011

GE (NYSE:GE) Oil & Gas' Drilling & Production business has been awarded a contract of approximately $45M to supply and service the industry's largest tension leg platform to Chevron (NYSE:CVX) for deployment in its Big Foot oil and gas field in the deepwater Gulf of Mexico. Installation of the TLP is scheduled to begin in November 2012 and first oil is expected in 2014.

Chevron has a potential upside of 17.1% based on a current price of $104.86 and an average consensus analyst price target of $122.75.

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S&P Lifts BP Outlook To Stable; Sees Less Downside Risk

- S&P Lifts BP Outlook To Stable; Sees Less Downside Risk

Wednesday, July 06, 2011
Dow Jones Newswires
by Melodie Warner

Standard & Poor's Ratings Services revised its credit outlook on BP to stable from negative, saying it sees less downside risk to the oil company's credit quality and little evidence of further erosion to its business standing.

The ratings company also affirmed BP's long-term corporate credit rating of A, which is five steps below the coveted AAA.

"The stable outlook reflects our view that BP is well positioned to meet potentially substantial additional fines and other payments related to the Gulf of Mexico disaster," the firm said. For its analysis, S&P assumes that all Gulf of Mexico-related payments will total less than $55 billion and will be spread over several years.

The ratings firm noted BP's first-quarter average realized oil price was 19.2% higher than the fourth quarter, and rose 31% from a year earlier. BP's refining margins also expanded in 2011, while its underlying downstream operating profit increased to $2.1 billion in the first quarter, from a quarterly average of $1.2 billion in 2010, despite a 6% decline in refining throughput, S&P said.

But, a sustained decline in oil prices below $70 a barrel alongside underlying operating cash flow of less than $25 billion could put downward pressure on the ratings, S&P said. Any upside rating potential is limited until there is more clarity on the penalties BP could face in the U.S. for the Gulf of Mexico oil spill.

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

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ABS, China Classification Society Meet on Deepwater China

- ABS, China Classification Society Meet on Deepwater China

Thursday, June 30, 2011
ABS

The growing importance of deepwater exploration and production developments offshore China led classification societies ABS and CCS (China Classification Society) to conduct a joint “Deepsea Developments in the China Offshore Industry” meeting on 17 June 2011. The meeting, which was held in Beijing, brought together leading offshore industry professionals to discuss a wide range of energy development issues.

More than 100 representatives from the Chinese government, shipbuilders, designers, research institutes, energy corporations and universities attended. Topics included a discussion of the global energy market outlook from research firm Infield Systems, the challenges and latest solutions proposed for deepwater development from offshore solutions technology leader Horton Wison and a look at risk-based operations and new approaches toward minimizing risk with deepwater exploration from global engineering, procurement and construction firm Worley Parsons.

ABS discussed the regulatory changes resulting from the Macondo incident in the Gulf of Mexico and the broader impact on regulatory schemes worldwide while CCS highlighted the impact of deepsea development on the technology standards for the region’s offshore industry.

“This industry meeting illustrates the cooperative spirit between ABS and CCS,” says ABS CEO and President Christopher J. Wiernicki. “Over the past decade, China has significantly grown in its importance to both the maritime and offshore industries. With our experience and leadership in setting standards for the offshore industry, ABS can bring valuable assistance to the region as it faces new exploration and production challenges.”

It is this experience that led to ABS’ and CCS’ joint involvement on the massive Liwan 3-1 gas field development in the South China Sea. The Liwan 3-1 development is China’s largest offshore natural gas discovery to date and will be the first deepwater development project.

It is widely known that China has begun to invest heavily in deepsea exploration as the country’s economic growth demands more energy resources. “We are helping to support our country’s efforts by providing the technical guidance necessary for safe and efficient exploration,” said Li Kejun, CCS Chairman and President. “This industry meeting shows our commitment to helping achieve deepsea technological advancements in the region.”

Also in attendance was President of the China Association of the National Shipbuilding Industry (CANSI) Guangqin Zhang. While China’s shipbuilding industry has been challenged by the global economic recession, the accomplishments of China’s shipbuilding industry are well known, as is its rapid diversification into the gas and offshore sectors. “Meetings such as these contribute to the intellectual discussion and allow for the introduction of new offshore technologies in our shipyards, new technologies that will position the region for successful deepsea exploration,” Zhang said.

Calling it a new era in deepwater development for China, Vice Chief Engineer for China National Offshore Oil Corporation (CNOOC) Hengyi Zeng concluded the meeting by saying “we appreciate both class societies and the years of support and cooperation they have provided to expand China’s offshore development.”

In November 2010, ABS and CCS strengthened their collaborative efforts, formally established in 1993, by entering into a new Cooperative Agreement with offshore as a key area of focus for the two classification societies.

As a further demonstration of ABS’ long-term commitment to the Greater China region, in May 2011, ABS established the ABS China Offshore Technology Center (COTC) in partnership with Shanghai Jiaotong University (SJTU). While the research efforts will support development activities in the Greater China region, applied research will also be conducted on a wide range of energy development issues. The COTC is ABS’ fourth offshore-focused research center, which are strategically positioned around the world to support clients’ activities.

The ABS Greater China Division has more than 500 employees operating from more than 30 offices across mainland China, Hong Kong and Taiwan.

Founded in 1862, ABS is a leading international classification society devoted to promoting the security of life, property and the marine environment through the development and verification of standards for the design, construction and operational maintenance of marine-related facilities.

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Transocean Briefs Investigation Report on Causes of Macondo Incident

- Transocean Briefs Investigation Report on Causes of Macondo Incident

Wednesday, June 22, 2011
Transocean Ltd.

Transocean announced the release of an internal investigation report on the causes of the April 20, 2010, Macondo well incident in the Gulf of Mexico.

Following the incident, Transocean commissioned an internal investigation team comprised of experts from relevant technical fields and specialists in accident investigation to gather, review, and analyze the facts and information surrounding the incident to determine its causes.

The report concludes that the Macondo incident was the result of a succession of interrelated well design, construction, and temporary abandonment decisions that compromised the integrity of the well and compounded the likelihood of its failure. The decisions, many made by the operator, BP, in the two weeks leading up to the incident, were driven by BP's knowledge that the geological window for safe drilling was becoming increasingly narrow. Specifically, BP was concerned that downhole pressure -- whether exerted by heavy drilling mud used to maintain well control or by pumping cement to seal the well -- would exceed the fracture gradient and result in fluid losses to the formation, thus costing money and jeopardizing future production of oil.

The Transocean investigation team traced the causes of the Macondo incident to four overarching issues:

• Risk Management and Communication: Evidence indicates that BP failed to properly assess, manage and communicate risk to its contractors. For example, it did not properly communicate to the drill crew the absence of adequate testing on the cement or the uncertainty surrounding critical tests and procedures used to confirm the integrity of the barriers intended to inhibit the flow of hydrocarbons into the well. It is the view of the investigation team that the actions of the drill crew on April 20, 2010, reflected the crew's understanding that the well had been properly cemented and successfully tested.
• Well Design and Construction: The precipitating cause of the Macondo incident was the failure of the downhole cement to isolate the reservoir, which allowed hydrocarbons to enter the wellbore. Without the failure of the cement barrier, hydrocarbons would not have entered the well or reached the rig. While drilling the Macondo well, BP experienced both lost circulation events and kicks and stopped short of the well's planned total depth because of an increasingly narrow window for safe drilling, specifically a limited margin between the pore pressure and fracture gradients. In the context of these delicate conditions, cementing a long-string casing would increase the risk of exceeding the margin for safe drilling. But rather than adjusting the production casing design to avoid this risk, BP adopted a technically complex nitrogen foam cement program that allowed it to retain its original casing design. The resulting cement program was of minimal quantity, left little margin for error, and was not tested adequately before or after the cementing operation. Further, the integrity of the cement may have been compromised by contamination, instability and an inadequate number of devices used to center the casing in the wellbore.
• Risk Assessment and Process Safety: Based on the evidence, the investigation team determined that BP failed to properly require or confirm critical cement tests or conduct adequate risk assessments during various operations at Macondo. Halliburton and BP did not adequately test the cement slurry program, despite the inherent complexity, difficulties and risks associated with the design and implementation of the program and some test data showing that the cement would not be stable. BP also failed to assess the risk of the temporary abandonment procedure used at Macondo, generating at least five different temporary abandonment plans for the Macondo well between April 12, 2010 and April 20, 2010. After this series of last-minute alterations, BP proceeded with a temporary abandonment plan that created unnecessary risk and did not have the required approval by the MMS. Most significantly, the final plan called for underbalancing the well before conducting a negative pressure test to verify the integrity of the downhole cement or setting a cement plug to act as an additional barrier to flow. It does not appear that BP used risk assessment procedures or prepared Management of Change documents for these decisions or otherwise addressed these risks and the potential adverse effects on personnel and process safety.

Operations

• Negative Pressure Test: The results of the critical negative pressure test were misinterpreted. Post-incident investigation determined that the negative test was inadequately set up because of displacement calculation errors, a lack of adequate fluid volume monitoring, and a lack of management of change discipline when the well monitoring arrangements were switched during the test. It is now apparent that the negative pressure test results should not have been approved, but no one involved in the negative pressure test recognized the errors. BP approved the negative pressure test results and decided to move forward with temporary abandonment. The well became underbalanced during the final displacement, and hydrocarbons began entering the wellbore through the faulty cement barrier and a float collar that likely failed to convert. None of the individuals monitoring the well, including the Transocean drill crew, initially detected the influx.
• Well Control: With the benefit of hindsight and a thorough analysis of the data available to the investigation team, several indications of an influx during final displacement operations can be identified. Given the death of the members of the drill crew and the loss of the rig and its monitoring systems, it is not known which information the drill crew was monitoring or why the drill crew did not detect a pressure anomaly until approximately 9:30 p.m. on April 20, 2010. At 9:30 p.m., the drill crew acted to evaluate an anomaly. Upon detecting an influx of hydrocarbon by use of the trip tank, the drill crew undertook well-control activities that were consistent with their training including the activation of various components of the BOP. By the time actions were taken, hydrocarbons had risen above the blowout preventer and into the riser, resulting in a massive release of gas and other fluids that overwhelmed the mud gas separator system and released high volumes of gas onto the aft deck of the rig. The resulting ignition of this gas cloud was inevitable.
• Blowout Preventer (BOP): Forensic evidence from independent post-incident testing by Det Norske Veritas (DNV) and evaluation by the Transocean investigation team confirm that the Deepwater Horizon BOP was properly maintained and operated. However, it was overcome by the extreme dynamic flow, the force of which pushed the drill pipe upward, washed or eroded the drill pipe and other rubber and metal elements, and forced the drill pipe to bow within the BOP. This prevented the BOP from completely shearing the drill pipe and sealing the well.
• Alarms, Muster, and Evacuation: In the explosions and fire, the general alarm was activated, and appropriate emergency actions were taken by the Deepwater Horizon marine crew. The 115 personnel who survived the initial blast mustered and evacuated the rig to the offshore supply vessel Damon B. Bankston.

The Transocean internal investigation team began its work in the days immediately following the incident. Through an extensive investigation, the team interviewed witnesses, reviewed available information regarding well design and execution, examined well monitoring data that had been transmitted real-time from the rig to BP, consulted industry and technical experts, and evaluated available physical evidence and third-party testing reports.

The loss of evidence with the rig and the unavailability of certain witnesses limited the investigation and analysis in some areas. The team used its cumulative years of experience but did not speculate in the absence of evidence. The report of the team does not represent the legal position of Transocean, nor does it attempt to assign legal responsibility or fault.

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BP, Weatherford In Settlement on Deepwater Horizon

- BP, Weatherford In Settlement on Deepwater Horizon

Monday, June 20, 2011
Dow Jones Newswires
by Drew FitzGerald

BP on Monday reached a settlement with Weatherford's U.S. subsidiary that indemnifies the oil-services company from future Deepwater Horizon-related disaster claims.

Under the deal, Weatherford agreed to pay BP $75 million to spend on its Gulf Coast recovery fund. The entire cost of the settlement is being funded by insurance policies Weatherford had in place when the disaster happened.

The deal ties up another end in a web of litigation for companies that worked on the drilling rig, which exploded last year and caused one of the largest oil spills in U.S. history. Weatherford provided BP with products and services for the Macondo oil well, along with rig-owner Transocean and contractor Halliburton.

Under the latest agreement, BP indemnified Weatherford from all current and future environmental, pollution, personal, business, property and economic loss claims arising from the accident.

Separately, Transocean said Friday that insurers of its sunken rig have asked a federal judge to decide if BP and other owners of the doomed Macondo well are entitled to any coverage for the accident.

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

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Production Resumed at Leni's Eugene Platform

- Production Resumed at Leni's Eugene Platform

Thursday, June 09, 2011
Leni Gas & Oil plc

Leni Gas & Oil announced resumption of production from the Eugene Island-184 ("EI-184") platform in the Gulf of Mexico.

Production operations were resumed safely on June 3, 2011 at the EI-184 facilities following the transfer of operatorship to Marlin Energy LLP ("Marlin") as previously announced in late May. All previously active wells (A1, A3, A4, A5 and A8) were returned to production and operational reporting to the Joint Venture partners has now been resumed.

During the initial five day ramp up period; gross physical production has averaged 1,199 mcfpd and 402 bopd (609 boepd). Once downtime is accounted for, this equates to an average daily rate of approximately 922 boepd. LGO holds a 7.25% working interest in the EI-184 field.

Early indications are that production has been re-established at higher than pre-shut down levels, however, stabilized rates are not yet available and some flush production after a 60 day shut-in period would be expected.

Neil Ritson, LGO's Chief Executive, commented, "We are pleased that production and revenue has been restored so quickly and that all the wells have come back on-line after the shut-down. We now look forward to working with the new operator to plan for sidetracking and recompleting wells in the field to increase production."

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Exxon Mobil announces three discoveries in deepwater Gulf of Mexico

- Exxon Mobil announces three discoveries in deepwater Gulf of Mexico



Jun 8, 2011

Exxon Mobil (NYSE:XOM) announced two major oil discoveries and a gas discovery in the deepwater Gulf of Mexico after drilling the company's first post-moratorium deepwater exploration well. Steve Greenlee, president of ExxonMobil Exploration Company said, "We estimate a recoverable resource of more than 700 million barrels of oil equivalent combined in our Keathley Canyon blocks. This is one of the largest discoveries in the Gulf of Mexico in the last decade. More than 85 percent of the resource is oil with additional upside potential."

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Blake Receives Contract in the Gulf of Mexico

- Blake Receives Contract in the Gulf of Mexico

Tuesday, June 07, 2011
Blake International USA Rigs

Blake International recently received a three-well contract for the rig Blake 1006, a 1000 horsepower self-erecting platform rig. W&T Offshore, Inc. is scheduled to commence mobilization to South Timbalier 316 in mid-July 2011. The rig is being made ready at Blake International's 44-acre yard and fabrication facility in Houma, Louisiana.

Blake International USA Rigs is a privately-held offshore drilling contractor with a fleet of nine platform rigs that work in both the Mexican and U.S. waters of the Gulf of Mexico.

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Witnesses Say Gulf Drilling Ban Was A Harsh Blow

- Witnesses Say Gulf Drilling Ban Was A Harsh Blow

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Copyright (c) 2011, Houston Chronicle

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Chevron Spins Bit in GOM

- Chevron Spins Bit in GOM

Tuesday, May 24, 2011
Maersk Oil

Maersk Oil is participating in a new deepwater well in the U.S. Gulf of Mexico after operator Chevron received a drilling permit from the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE).

The permit marks the restart of the drilling campaigns Maersk Oil has been a part of in the U.S. Gulf of Mexico after deepwater activities were suspended last year as a consequence of the Deepwater Horizon accident.

"We are very pleased that this permit has been issued as it will allow us to move forward with appraisal activities on the exciting Buckskin prospect," said Bruce Laws, President at Maersk Oil in the U.S.

"The U.S. Gulf of Mexico remains a world class region for exploration and production and we look forward to continuing our work there with our partners."

The Buckskin appraisal well is located in the Keathley Canyon in Block 785, offshore Louisiana, at water depth of 6,540 feet. It is being drilled 8 kilometers from the discovery well that encountered oil in 2008 with drillship Discoverer Deep Seas.

Drilling began on May 16, 2011 and the planned total depth is 29,400 feet. Drilling will last some 136 days.

Chevron is operator of Buckskin, holding a 55% interest with Maersk Oil (20%), Repsol (12.5%) and Samson (12.5%) as co-owners.

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