Weather Watch: Producers Evacuate Workers as Storms Threaten Gulf of Mexico

- Weather Watch: Producers Evacuate Workers as Storms Threaten Gulf of Mexico

Thursday, September 01, 2011
Rigzone Staff
by Karen Boman

Oil and gas exploration and production companies have begun evacuating workers from Gulf of Mexico operations and shutting in production due to the storm system that could turn into the 12th tropical cyclone of this year's hurricane season.

Shell reported it was moving forward with a plan to reduce the number of employees from most of its operations, but weather conditions are already impairing staff movement. "We are using all available resources to safely evacuate employees," said Shell. The number of evacuated personnel will depend on weather condition; personnel will only be moved if safe to do so.

Shell has taken steps to begin shutting in production, focusing on subsea fields that require specific treatments to ensure production can be restored after the storm passes. "The impacts are minimal at this point and we are monitoring Shell non-operated downstream infrastructure for further impacts to our production that may occur," Shell said.

ExxonMobil is evacuating approximately 140 employees and contractors from its Gulf Coast offshore platforms expected to be in the path of the storm. Gross production of approximately 11,000 b/d of liquids and 60 MMcf/d of natural gas has been shut in. "Our primary focus continues to be the safety of our workforce," ExxonMobil said.

BP has begun evacuations of all personnel from its operated assets in the Gulf of Mexico. On Wednesday, 500 non-essential workers had been evacuated. That activity will continue through Thursday and potentially into Friday.

BP operated assets included in this evacuation include Mad Dog, Holstein, Atlantis, Nakika, Pampano, and Thunder Horse. "We will continue monitoring weather conditions and will re-staff these facilities when it is deemed safe to do so," a BP spokesperson said.

Anadarko Petroleum Corp. reported Thursday that it had removed approximately 100 employees from and was shutting in production at all eight of its operated Gulf facilities, including Independence Hub, Constitution, Marco Polo, Red Hawk, Nansen, Boomvang, Gunnison and Neptune. "We will continue to monitor the path of the weather in the Gulf and will return our workers and restore production only when it is safe to do so," the company said in a statement.

Apache Corp. has begun moving some non-essential employees out of the Gulf ahead of the hurricane, a company spokesperson said. Chevron is closely monitoring the tropical disturbance in the Gulf of Mexico. Non-essential personnel are being evacuated and no production has been affected.

The Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) reported that personnel have been evacuated from nine production platforms as of 11:30 a.m. CDT Thursday, equivalent to 1.6 percent of the 617 manned platforms in the Gulf. None of the 62 rigs currently operating in the Gulf have been evacuated.

BOEMRE estimated that approximately 5.7 percent of current Gulf oil production, or 79,989 b/d, has been shut in, and approximately 2.4 percent of Gulf natural gas production, or 127 MMcf/d, has been shut in. BOEMRE's survey information is based on seven companies' reports as of 11:30 a.m. CDT Thursday.

The National Hurricane Center (NHC) is monitoring a broad area of low pressure in the central Gulf of Mexico 200 miles south of the Louisiana coast that is producing a large area of cloudiness, thunderstorms and gusty winds over the eastern and central Gulf. NHC forecasts upper-level winds to become more conducive for development, and the system could become a tropical depression during the next day or so.

NHC said the system has an 80 percent chance of becoming a tropical cyclone, which would be named Lee, according to the NHC website, as it moves slowly to the northwest. A National Oceanic and Atmospheric Administration hurricane hunter aircraft is scheduled to investigate the area later this afternoon. "Interests along the entire northern Gulf of Mexico coast should monitor the storm's progress," NHC said.

NHC also is tracking Hurricane Katia, which is churning across the Atlantic Ocean towards the U.S. Currently a Category 1 hurricane with maximum sustained winds or near 75 mph, Katia is expected to strengthen over the next 48 hours, and could become a major hurricane by the weekend.

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Mexico's Pemex Finds Light Crude in Shallow Gulf Waters

- Mexico's Pemex Finds Light Crude in Shallow Gulf Waters

Monday, August 22, 2011
Dow Jones Newswires
MEXICO CITY
by Laurence Iliff

Mexico's state-owned oil company Petroleos Mexicanos, or Pemex, said Monday that it successfully carried out production tests at new oil field in the southern Gulf of Mexico.

Pemex said the Kinbe-1 well reached an initial average production of 5,600 barrels of light crude per day. The well took more than a year to drill, and was finished Aug. 9. Kinbe-1 also has reached natural gas production of 9 million cubic feet per day on average, the oil monopoly said.

Pemex said "this new discovery increases the petroleum potential of the zone comprised by the fields Tsimin, Xux and Kab" as part of the company's light-crude marine project. Kinbe-1 was drilled in 22 meters of water.

After six years of steady declines in crude-oil production, Pemex is trying to ramp up output in order to break the slide, but has struggled due to declines at the Cantarell offshore fields that once accounted for more than half of the company's total production. Cantarell's decline has brought Pemex's overall production down to just under 2.6 million barrels a day currently from nearly 3.4 million barrels a day in 2004.

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

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Honda To Invest $800 Million In New Automobile Plant In Mexico

- Honda To Invest $800 Million In New Automobile Plant In Mexico



Aug 12, 2011

Honda de Mexico (NYSE:HMC), Honda's production and sales company in Mexico, announced that it will build an automobile plant for production of fuel-efficient subcompact vehicles for the Mexican and North American markets.

Honda will invest approximately $800 million to build the plant, which is scheduled to begin operation in 2014. The company is expected to hire 3,200 associates at its full annual capacity of 200,000 units; the plant will boost Honda's capital investment in its North American operations to nearly $21 billion.

Honda Motor (NYSE:HMC) has a potential upside of 37.5% based on a current price of $33.59 and an average consensus analyst price target of $46.2.

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U.S. Gas Exports to Mexico Could Grow in 2012

- U.S. Gas Exports to Mexico Could Grow in 2012

Monday, June 27, 2011
Rigzone Staff
by Karen Boman

Exports of U.S. natural gas into Mexico are expected to average 1.3 Bcf/d, a 450 MMcf/d increase from 2010, and the tightening of Mexican supply/demand balances should lead to further U.S. export growth in 2012, Barclays Capital reported last week.

Exports to Mexico grew sharply in the beginning of the past decade before stabilizing in the 850 MMcf/d range from 5001-2010; however, first quarter 2011 exports averaged the highest in the past 10 years.

U.S. gas exports to Mexico represent a relatively small part of U.S. gas balance, or one percent in 2010, and have not attracted much attention, but the exported BTUs are starting to add up, and more important, several factors suggest this trend could continue in the next few years. Barclays expects U.S. flows to Mexico to increase by another 200 MMcf/d in 2012, to an average of 1.5 Bcf/d.

While gas is primarily used for refining and petrochemicals production and reinjection for oil production, power generation has been driving gas demand growth, and plans for generation capacity additions suggest that Mexico's gas consumption should grow rapidly in the next few years.

Domestic production also is in decline, showing a growing need for imports. more than 60 percent of Mexico's gas output comes in association with oil production. While associated gas is growing slightly, non-associated production is steeply declining, with PEMEX reporting a decline of non-associated gas output of 13 percent year/year for the first four months of 2011. "While LNG imports could meet some of the incremental demand, they are disadvantaged in favor of cheaper U.S.- sourced gas," Barclays said in a June 21 report.

Shale gas development in Mexico is one bright spot for Mexican non-associated gas output. Earlier this year, PEMEX reported production of its first shale gas at an exploratory well in the Eagle Ford shale formation in the northeastern state of Coahuila. PEMEX plans to drill 10 additional wells, including in the La Pena and Glenrose formations, targeting gas and condensates.

"While the potential for Mexico shale gas production could be significant, its development is at an early stage, and there is considerable uncertainty about the scale and time-frame for shale production growth," Barclays said.

Mexico has technically recoverable shale gas resources of 681 Tcf, according to the U.S. Energy Information Administration's April report, World Shale Gas Resources: An Initial Assessment of 14 Regions Outside the United States. Mexico has five basins, including the Burgos, Sabinas, Tampico, Tuxpan and Veracruz, and eight gas shale formations.

Thick, organic-rich and thermally mature source rock shales of Jurassic and Cretaceous-age occur in northeast and east-central Mexico, along the country's onshore portion of the Gulf of Mexico Basin. These shales are time-correlative with gas productive shales in the U.S., including the Eagle Ford, Haynesville, Bossier and Pearsall shales.

However, compared with the shale belts of Texas and Louisiana, Mexico's coastal shale zone is narrower, less continuous and structurally much more complex.

Advanced Resources International estimates that the five Mexico onshore basins assessed in the EIA study contain approximately 2,366 Tcf of geologically risked shale gas-in-place. Structural complexity (faulting and folding), excessive depth of over 5,000 meters, and locally thin or absent shale on paleo highs constrain the resource assessment.

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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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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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Mexico May Become Oil Importer by 2020 -Study

Mexico May Become Oil Importer by 2020 -Study

Friday, April 29, 201
Baker Institute

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

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

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

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

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

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

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

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

Prosafe Snags Bareboat Contract in Mexico

Prosafe Snags Bareboat Contract in Mexico

Tuesday, April 26, 2011
Prosafe SE

Prosafe has been awarded a Letter of Intent by Interpetroleum Services Limited ("charterer") for a bareboat contract for the Safe Bristolia, and contract extensions for the Jasminia and Safe Hibernia. The three rigs are going to be used at Pemex' Cantarell field in Mexico.

The Safe Bristolia bareboat contract commences mid-May 2011 and ends around end-March 2013. Mobilization and demobilization costs to and from the North Sea are for charterer's account. The total value is about USD 45.3 million.

The Jasminia bareboat contract is extended by 572 days, through to end-December 2012. The value of the extension is about USD 25.7 million. The extension of the Safe Hibernia bareboat contract is 219 days, through to mid-December 2011, and has a value of about USD 11.6 million.

Deepwater Horizon Spurs Development of Spill Prevention Systems

Deepwater Horizon Spurs Development of Spill Prevention Systems

Wednesday, April 20, 2011

Rigzone Staff

The Deepwater Horizon oil spill disaster in April 2010 prompted the creation of oil spill response systems for use in the Gulf of Mexico and in the North Sea. Two oil spill prevention systems are now available for oil and gas producers in the Gulf of Mexico, and a well capping device is currently under construction in the UK that will be used as part of the UK oil and gas industry's oil spill response efforts.

Helix Well Containment Group

The Helix Well Containment Group (HWCG) plans to conduct a third tabletop exercise in late May to increase its members' coordination and preparedness for a subsea well containment incident. The group already has conducted two tabletop exercises this spring. The most recent exercise in late March brought together more than 225 technical professionals from the oil and gas industry.

HWCC has signed an agreement with Helix Energy Solutions Group, which will provide primary components of the well containment response system. The Helix Fast Response System (HFRS), which has been developed using Helix Energy Solutions Group assets that were deployed in the Deepwater Horizon incident, is expected to be fully operational for water depths of up to 10,000 feet by this summer.

Twenty-three deepwater Gulf operators comprise the HWCG consortium; these operators represent two-thirds of the deepwater operators in the Gulf of Mexico and approximately half of all deepwater oil and gas production in the Gulf. Members include Anadarko Petroleum Corp.; Apache Corp.; ATP Oil & Gas; BHP Billiton; Cobalt International Energy; Deep Gulf Energy; Eni; Energy Resource Technology GOM; Hess Corp.; LLOG Exploration Company; Marathon Oil Company; Marubeni Oil & Gas; Murphy Exploration & Production; Newfield Exploration Company; Nexen Petroleum; Noble Energy; Plains Exploration & Production; Repsol E&P USA; Statoil; Stone Energy; Walter Oil & Gas Corporation; Woodside Energy; and W&T Offshore.

Marine Well Containment Company

The Marine Well Containment Company (MWCC) in February launched its interim rapid response system to capture and contain oil from potential underwater well blowouts in the deepwater Gulf. The system can operate in up to 8,000 feet of water and process up to 60,000 b/d of fluid. Work is underway to expand the system to operate in up to 10,000 feet of water and process up to 100,000 b/d, with components to be delivered in 2012.

Capping Stack, Marine Well Containment Co.

ExxonMobil, ConocoPhillips and Chevron announced the plan to build and develop the system last July; since then, BP, Anadarko Petroleum Corp., Apache Corp., BHP Billiton, Shell, Hess Corp. and Statoil have joined MWCC. These 10 companies operated approximately 70 percent of deepwater wells drilled in the U.S. Gulf of Mexico between 2007 through 2009. The non-profit, stand-alone organization is open to all companies operating in the U.S. Gulf of Mexico.

Cooperation, Encouragement of Innovation Needed

The private sector worked hand in glove with the U.S. Coast Guard's research and development division and U.S. Navy research centers to assess technology, particularly for surface containment applications, said Owen Kratz, Helix president and chief executive officer, while testifying before Congress on April 4. "The NOAA also had tremendous value to bring to bear," said Kratz. "We certainly encourage those government agencies to work closely with industry organizations like the HWCG and Marine Well Containment Corporation established by some of the major integrated oil companies."

Helix used the lessons it learned from its participation in containing the Deepwater Horizon oil spill to its approach to containment efforts in the future. While coordinating and idea sharing is very important to making advances, Kratz noted that the U.S. government can assist the industry by minimizing the cost of capital by reinvigorating programs specifically designed to advance maritime industrial development. A familiar program of this type is the U.S. Maritime Administration (MARAD)'s loan guarantee program. Kratz said MARAD could help responsibly and within fiscal constraints, and has a "proven track record for bringing innovative vessel designs to market.

"As we have seen, the most innovative vessel designs will be the most useful going forward," Kratz said. The Q4000, built in Texas with MARAD financing, provides an excellent example, and was instrumental in bringing the Macondo blowout under control, Kratz said.

The Q4000 Drilling Platform

Having a diverse array of players in upstream oil and gas has allowed for technological innovation. "When the government fails to respond appropriately to permitting concerns or creates significant doubt which undermines business confidence, it saps potential investment capital necessary to innovate," Kratz said.

UK Well Capping Device

Energy industry association Oil & Gas UK in March confirmed that construction of a well capping device was underway at Cameron Ltd., in Leeds, UK. The capping device will become a key element of the UK offshore oil and gas industry's oil spill response contingency plans. Completion of the device is due this summer.

The cap is modular in design, with specifications that allow it to be deployed in the widest range of possible oil spill scenarios that could typically be encountered in the UK Continental shelf including west of Shetland.

The device has an overall working pressure rating of 15,000 psi, and is capable of capping a well flowing up to 75,000 b/d and in water depths of up to 5,500 feet. Capping should be achieved within 20-30 days of the incident, depending on weather and well site conditions.

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US, Mexico Work to Raise Bar in Gulf

US, Mexico Work to Raise Bar in Gulf

Tuesday, April 05, 2011
Houston Chronicle

by  Jennifer A. Dlouhy

 

Offshore drilling regulators from the U.S. and Mexico met Monday in a bid to strengthen standards governing oil and gas exploration throughout the Gulf.

U.S. Interior Secretary Ken Salazar said the goal was a single "gold standard" for all Gulf of Mexico drilling, whether in U.S. or Mexican territorial waters.

Salazar said the regulators were discussing how to share "best practices in the Gulf of Mexico" and "move forward in development of a single protocol between our two nations."

"We want to share the lessons learned from the Macondo Deepwater Horizon tragedy so we can move forward with the development of oil and gas," Salazar said in a conference call with reporters.

The initial talks were focused on what happens near the U.S. and Mexico, although Cuba has plans for drilling in its Gulf waters.

The co-chairmen of a presidential commission that investigated last year's oil spill and who took part in the meetings Monday said they are optimistic Cuba eventually will agree to baseline drilling standards adopted by the United States and Mexico.

"We would very much hope that they would ascribe to what is emerging as a globally accepted standard, much of it informed by the experience of the United States with the Macondo tragedy," said William Reilly, a panel co-chairman.

Concerns about Cuba

Bob Graham, the other co-chairman, a former Democratic senator and governor of Florida, said the Sunshine State is understandably worried about nearby drilling in Cuba's waters.

"There is concern about the prospect of drilling so close to our coast with a country that has not engaged in this previously," Graham said. He said he is optimistic that any pact with Mexico would "become truly a Gulf of Mexico agreement with any country in these waters being under the same standards."

Graham noted that the problem of setting common standards in areas where multiple nations are drilling is arising in many other places.

The meetings in Mexico City on Monday are a preview of an international summit with offshore drilling regulators and energy officials from more than a dozen countries scheduled for April 14 in Washington.

Separately Monday, Salazar took issue with Transocean's claim that 2010 was "the best year in safety performance" in its history, despite the explosion of its Deepwater Horizon rig in the Gulf of Mexico last April.

Transocean made the assertion in regulatory filings on Friday as partial justification for bonuses awarded top company executives.

Transocean owned the Deepwater Horizon drilling rig that was working on BP's Macondo well when it blew out last April, destroying the rig, killing 11 workers and triggering a massive oil spill.

"From what I have seen from various investigative reports," Transocean was "at some fault with respect to what happened at the Macondo well," Salazar said.

A Transocean executive apologized for the company's safety claim.

"We acknowledge that some of the wording in our 2010 proxy statement may have been insensitive in light of the incident that claimed the lives of 11 exceptional men last year, and we deeply regret any hurt that it may have caused," said Ihab Toma, the company's executive vice president. "Nothing in the proxy was intended to minimize this tragedy or diminish the impact it has had on those who lost loved ones."

Also Monday, House Democrats asked federal officials to investigate whether Transocean's decision to adopt three-week work shifts -- instead of the two-week schedule it had been using -- may have contributed to the spill.

Seven months before the disaster, Transocean switched its workers from a hitch schedule with 14 days on rigs followed by 14 days onshore to one with 21-day rotations.

"We believe Transocean's decision to move to the longer shift schedule should be closely examined," said Rep. Henry Waxman, D-Calif., and Rep. Diana DeGette, D-Colo. "Six of the 11 people who died aboard the Deepwater Horizon were on day 20 of their 21-day shift and a seventh was on day 19."

'Fatigue issues'

An assessment of workers on the Deepwater Horizon, conducted in March 2010 by Lloyd's Register and obtained by the lawmakers, found that employees were dealing with "fatigue issues" under the new 21-day cycles, especially during the final seven-day stretch.

According to the assessment, as quoted by Waxman and DeGette, one manager on the Deepwater Horizon said there was a "big difference in their attitudes on the third week," and another said the policy was "definitely increasing the risk of an incident."

BHP First To Resume Drilling GOM Deep-Water Well

BHP First To Resume Drilling GOM Deep-Water Well

Wednesday, March 30, 2011
Dow Jones Newswires

by  Ryan Dezember

BHP Billiton began late Monday drilling a deep-water well in the Gulf of Mexico, the first such work to take place since the U.S. government banned deep-water drilling in response to last year's oil spill, reported the head of the conglomerate's oil and gas business.

Speaking to investors during the Howard Weil Energy Conference here, J. Michael Yeager said that a rig had moved onto its Shenzi prospect and resumed drilling a well there.

"We're back there drilling and we're delighted to be doing that but we're a long way from the five rigs we had when the moratorium hit," Yeager said.

The U.S. government instituted a six-month ban on deep-water drilling after Transocean's Deepwater Horizon, which was being leased by BP, exploded, killing 11 and unleashing the largest offshore oil spill in U.S. history. Even after the government's official ban was lifted in October, no drilling permits were issued by regulators until Feb. 28.

BHP, the third largest producer in the Gulf, was given permission March 11 to resume drilling its well, work that was stalled by the moratorium. The Anglo-Australian conglomerate's permit is one of six U.S. regulators have issued in recent weeks.

Yeager said that the drilling ban stalled work on 11 Gulf of Mexico wells, trimming BHP's expected 2011 output of the equivalent of 165 million barrels of oil per day by 12 million barrels, Yeager said.

"It's been quite devastating but we're very glad to be out there," Yeager said.

Yeager also said that separate U.S. regulators on Tuesday approved BHP's $4.75 billion purchase of Chesapeake's Fayetteville Shale natural gas fields in Arkansas. The largest ever shale asset deal in U.S. history, encompassing 480,000 acres and pipelines, should close on Thursday, Yeager said.

BHP plans to spend between $800 million to $1 billion annually over the next decade to develop the Arkansas fields in an effort to triple production from the equivalent 65,000 barrels of oil per day seen now, Yeager said.

The move into North America, where the gas that is produced is sold domestically in the world's largest natural gas market, helps BHP expand its market, which is currently weighted toward selling to China, Yeager said.

"We have 60% of our assets in Australia sold to China," he said. "That's a risk that we'd like to diversify away from."

UK Govt: Deepwater Oil Drilling Safety Rules Fit for Purpose

Tuesday, March 22, 2011

Dow Jones Newswires

by  James Herron

 

The U.K. government gave its regulatory regime for deep water offshore oil and gas drilling a largely clean bill of health, saying that existing rules address most of the concerns raised by a parliamentary committee studying the impact of the Deepwater Horizon disaster in the Gulf of Mexico.

U.K. lawmakers on the Energy and Climate Change Committee had raised serious doubts in January about whether the oil industry is prepared to tackle a deep water blowout and oil spill should it occur in the North Sea, but the government's response to these concerns published Tuesday said existing rules are adequate.
"The U.K. government has already taken a number of actions (such as increasing the number of environmental inspectors and inspections to mobile rigs) to further bolster the already robust U.K. regulatory regime," the government report said.

One of the Committee's principal concerns--that the oil industry couldn't handle an oil spill in the rough seas west of the Shetland Islands--has already been dealt with, the government said. Chevron has developed a cap that can be used to seal a blowout in this area that will be available for anybody to use, the government said. Additional capping devices are also in development, it said.

The government did promise to assess in partnership with the oil industry whether oil rigs' blowout preventers--the crucial piece of equipment that failed aboard the Deepwater Horizon--should be upgraded to include extra failsafes, called blind shear rams. This assessment won't be concluded before summer, it said.

"We will also be considering the requirement of [compulsory] insurance as part of our review," it said.
Existing rules cover the other main concerns of the U.K. lawmakers--that companies spill response plans aren't adequate for the least likely but highest risk accidents; that existing financial provisions wouldn't cover the cost of a large spill; and that workers aboard offshore rigs fear reprisals if they raise safety concerns--the government said.

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Foster Wheeler Clinches Detail Design Contract in GOM

Tuesday, March 22, 2011

Foster Wheeler's Global Engineering and Construction Group has been awarded a detail design contract by Enbridge Offshore for the deepwater Walker Ridge Gathering System (WRGS) export gas pipelines and the deepwater Big Foot (BGF) export oil pipeline located in the Walker Ridge (WR) area of the Gulf of Mexico.

The contract value, which was not disclosed, will be included in the company's first-quarter 2011 bookings. Foster Wheeler's work on the design contract is expected to be completed during the second quarter of 2011.

"We are delighted that Enbridge Offshore Facilities, LLC has selected Foster Wheeler Upstream's Houston-based team for this project and we look forward to delivering a high quality service which fully satisfies our client," said Clive Vaughan, chief executive officer, Foster Wheeler Upstream. "We have performed the detail design of essentially all of the deepwater pipelines in the Gulf of Mexico. Upstream remains a top growth priority for Foster Wheeler, and the award of the three deepwater gas and oil pipelines contained in this WRGS and BGF project confirms our strategy and commitment to the upstream oil and gas market sector."

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W&T Offshore Responds to Report of Oil Sheen in Gulf of Mexico

Tuesday, 22 March 2011 06:15 PR Newswire

W&T Offshore, Inc. (NYSE: WTI) announced that it responded to reports of an oil sheen in the Gulf of Mexico that was said to be near a W&T...

HOUSTON, March 22, 2011 /PRNewswire/ -- W&T Offshore, Inc. (NYSE: WTI) announced that it responded to reports of an oil sheen in the Gulf of Mexico that was said to be near a W&T operated platform in Mississippi Canyon block 243 ("Matterhorn").  Following an onsite and aerial  investigation  by the Company,  it was determined that the source of a reported oil sheen was not the Matterhorn platform or any other nearby W&T operated facilities, as speculated in several media reports.  

About W&T Offshore

W&T Offshore is an independent oil and natural gas company focused primarily in the Gulf of Mexico, including exploration in the deepwater and deep shelf regions, where it has developed significant technical expertise. W&T has grown through acquisition, exploitation and exploration and holds working interests in approximately 67 fields in federal and state waters and a majority of its daily production is derived from wells it operates.  For more information on W&T Offshore, please visit its Web site at http://www.wtoffshore.com/.

Contacts:

Janet Yang, Finance Manager
investorrelations@wtoffshore.com
713-297-8024
Danny Gibbons, SVP & CFO
713-624-7326

SOURCE W&T Offshore, Inc.

 

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