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.

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NY Official: Highly Unlikely to Issue Fracking Permits in 2011

- NY Official: Highly Unlikely to Issue Fracking Permits in 2011

Friday, July 01, 2011
Dow Jones Newswires
NEW YORK
by Matt Day & Angel Gonzalez

New York State environmental authorities have determined that hydraulic fracturing can be safe, but the first permits to apply the controversial drilling technique won't likely be issued this year, the state's top environmental official said Friday.

Joe Martens, commissioner for the state's Department of Environmental Conservation, said that with strict regulation, "we believe high-volume fracturing can be done safely in New York."

Hydraulic fracturing, also known as fracking, involves injecting high volumes of water mixed with chemicals into tight rock formations, in order to crack them and release the oil and gas trapped within.

Martens was presenting a study of the environmental impact for high-volume fracturing commissioned by the state government that recommends that fracking be allowed on private lands, but not near public aquifers nor the New York City and Syracuse watersheds.

DEC, however, won't issue permits until the report, unveiled Friday, goes through its comment period and is finalized. "It's impossible to predict" when first permits will be issued," Martens said. "It is highly unlikely that it would be this year." DEC will issue regulations codifying the recommendations of the report once the review process is over, Martens said.

New York state's embrace of fracking comes amid national controversy over the issue. Proponents say the technique, perfected in the last decade by independent U.S. oil companies, is an economic boon for state coffers and local populations, and has unleashed an unprecedented supply of natural gas. Opponents say fracking can pollute aquifers and surface waters, constituting a serious danger to public health, allegations the oil industry denies.

New York, which straddles the giant Marcellus Shale natural gas field, has huge gas potential, but fierce opposition to the practice and the uncertainty caused by the controversy has kept it off limits to oil producers. Opposition hasn't been limited to New York. The New Jersey legislature voted on Wednesday to ban fracking in its state, though it isn't a key drilling area. Even in places traditionally comfortable with the tradeoffs associated with energy production, such as Texas, oversight has increased. The U.S. Environmental Protection Agency is currently doing its own study, primarily on the potential effects of fracking on drinking water and groundwater.

Catskills Citizens For Safe Energy, an advocacy organization that opposes fracking, said in a statement on its website that "no one" can say with certainty that chemicals injected into the ground "won't present a threat to our drinking supplies in the years and decades to come." The state's recommendations will protect some drinking water supplies, but not others, the organization said.

With the recommendations issued by DEC, more than 80% of the Marcellus Shale resources present in the state will be within the reach of energy companies, Martens said.

Martens said after a close examination of contamination incidents in neighboring Pennsylvania, which also sits atop the Marcellus Shale, New York environmental authorities "have been able to isolate what the problems were."

New York state officials will require that oil companies put a long piece of pipe--known as "intermediate casing"--separating the drill pipe from the surrounding rock formation in order to keep shallow natural gas found during the drilling process from migrating into nearby aquifers or drinking wells. Authorities will also seek to ensure that wells are properly cemented, as poor cementing jobs were implicated in a number of cases where "people ended up with gas in their wells," Martens said.

The state will also require rigorous equipment tests and better storm-water controls, and will seek to have its staff conduct diligent oversight, Martens said.

Martens acknowledged, however, that the state has "limited staff right now" to enforce the strict regime it envisions. That could create a backlog in permitting. "We will only review those applications that we have the staff capacity to handle," he said.

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

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How to Make Money Off Drilling Becomes Issue in Pa. County Race

How to Make Money Off Drilling Becomes Issue in Pa. County Race

Thursday, May 05, 2011
Knight Ridder/Tribune Business News
by Timothy Puko, The Pittsburgh Tribune-Review

All four candidates for Allegheny County Executive want to drill for gas on county-owned land, but how to do it has become a matter of debate in the weeks before the May 17 primary.

Two candidates agree. Democrat Rich Fitzgerald of Squirrel Hill and Republican D. Raja of Mt. Lebanon want a traditional deal: The county should lease land to a gas driller for an up-front fee and a share of the gas royalties.

"Like anyone else, the county should seek the best deal possible as market prices allow," Raja spokesman Mark Harris said in an e-mail.

But taxpayers fall short in that kind of deal, said Mark Patrick Flaherty of Mt. Lebanon. Flaherty, a Democrat and county controller, advocates a joint venture with a drilling company on 9,200 acres at Pittsburgh International Airport and the county airport in West Mifflin. The county would have to borrow to help pay for the drilling, but would get a larger profit in the end, he said.

Both Fitzgerald and Republican candidate Chuck McCullough of Upper St. Clair opposed Flaherty's idea on Wednesday. The Fitzgerald campaign released a commercial on YouTube calling it a risky scheme that would be a big loss if the wells turn up dry.

McCullough called Flaherty's plan illegal. He contends state law prohibits municipalities from doing "any proprietary or private business."

Flaherty denied that.

"All you would do is be negotiating different terms of the lease," he said. "Instead of most of the lease proceeds going to the gas company, the residents would be getting more of a deal."

McCullough wants to sell and privatize the airports. The county should be able to get a larger sale price if the mineral rights are part of the deal, he said. It's safer, he added. "You're not supposed to be putting taxpayers' dollars at risk in business investments, and you're not supposed to be competing with them either," he said.

But selling an asset can be risky, too, Fitzgerald said. Leasing is the safest thing to do; that could bring up-front payments of $3,000 to $5,000 per acre and another 15 percent to 20 percent in royalties as the gas is extracted over several decades, he said. The county wouldn't face the liability that comes from explosions and blowouts at well sites, he added.

"I just don't think we should risk taxpayers' dollars," Fitzgerald said.

Copyright (c) 2011, The Pittsburgh Tribune-Review. Distributed by McClatchy-Tribune Information Services.

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Woodside Sets $700M US Bond Issue

Woodside Sets $700M US Bond Issue

Wednesday, May 04, 2011
Asia Pulse Pte Ltd

Woodside Petroleum Ltd says it has entered into an agreement to issue US$700 million in corporate bonds into the United States bond market.

They would be 10-year bonds with a rate of 4.6 percent, the oil and gas producer said in a statement on Wednesday.

The funds will be used for general corporate purposes including repayment of some of the company's existing debt that matures this year.

The bonds will be guaranteed by the parent entity and its wholly owned subsidiary Woodside Energy Ltd.

Shares in Woodside were down $1.12, or 2.44 percent, at $44.73 at 1337 AEST, against losses in the broader market of almost one percent.

(AAP) ry

(C) 2011 Asia Pulse Pte Ltd.

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