GAO: More Action Needed to Secure Maritime Energy Supply

- GAO: More Action Needed to Secure Maritime Energy Supply

Friday, August 26, 2011
Rigzone Staff
by Karen Boman

The Coast Guard and the Federal Bureau of Investigation (FBI) have made progress implementing prior recommendations made by the U.S. General Accountability Office (GAO) to enhance energy tanker security, but further action is needed to secure maritime energy supply, GAO said in an Aug. 24 report.

GAO in 2007 made five recommendations to ensure effective response by federal agencies to protect tankers and implement response plans. Two recommendations have been implemented, including the development of protocols by the Coast Guard and U.S. Customs and Border Protection to facilitate the recovery and resumption of trade following a disruption to the maritime transportation system. The Coast and the FBI have participated in local port exercises that executed multiple response plans simultaneously.

The Coast Guard also has made progress on a third recommendation through work on a national strategy for the security of certain dangerous cargoes. The Coast Guard plans to develop a resource allocation plan, starting in April 2012, which may help address the need to balance security responsibilities.

"However, the Coast Guard and the FBI have not yet taken action on a fourth recommendation to develop an operational plan to integrate the national spill and terrorism response plans," GAO reported.

The Department of Homeland Security (DHS) plans to revise the National Response Framework, but no decision has been made regarding whether the separate response plans will be integrated. DHS also has not yet taken action on the final recommendation to develop explicit performance measures for emergency response capabilities and use them in risk-based analyses to set priorities for acquiring needed response resources. According to DHS, it is revising its emergency response grant programs, but does not have specific plans to develop performance measures as part of this effort.

While the Coast Guard has taken steps to assess the security risks to offshore infrastructure, including Outer Continental Shelf (OCS) facilities and deepwater ports, the agency faces complex and technical challenges in assessing risks. The Coast Guard has used its Maritime Security Risk Analysis Model (MSRAM) to examine security risks to offshore facilities, but does not have the data on the ability of an OCS facility to withstand an attack.

GAO has determined that as of May 2011, the Coast Guard had not assessed security risks for 12 of the 50 security-regulated OCS facilities that are to be subjected to such assessments. Coast Guard officials later added these facilities to MSRAM for assessment and have completed the required assessments. However, current Coast Guard policies and procedures do not call for Coast Guard officials to provide an annual updated list for regulated OCS facilities to MSRAM analysts.

"Given the continuing threat to such offshore facilities, revising its procedures could help ensure that the Coast Guard carries out its risk assessment requirements for security-regulated OCS facilities," GAO said.

Stephen L. Caldwell, director on Homeland Security and Justice Issues, testified before the House of Representatives in Houston on Aug. 24 that Al-Qa'ida and other groups with malevolent intent continue to target energy tankers and offshore energy infrastructure because of their important to the nation's economy and national security.

In May of this year, DHS reported that intelligence information showed that; throughout 2010, there was continuing interests by members of al-Qa'ida in targeting oil tankers and commercial oil infrastructure at sea. "While a terrorist attack on energy tankers or offshore energy infrastructure has not occurred in the United States, other countries have experienced such attacks."

While the Deepwater Horizon incident in April 2010 was not the result of an attack, it showed that the "consequences of an incident on offshore energy infrastructure could be significant."

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More Than 108.4 Bcf Produced from Shah Deniz Field

- More Than 108.4 Bcf Produced from Shah Deniz Field

Monday, August 22, 2011
Knight Ridder/Tribune Business News
by E.Ismayilov, Trend News Agency, Baku, Azerbaijan

During the first half of 2011, the Azerbaijani Shah Deniz field produced about 3.07 billion cubic meters (more than 108.4 billion cubic feet) of gas and 0.8 million tonnes (6.5 million barrels) of condensate or over 17 million cubic meters of gas per day (about 600 million standard cubic feet per day) and about 35,800 barrels of condensate per day, BP reported.

In 2010, the Shah Deniz field produced about 6.9 billion cubic meters of gas and 1.9 million tons (14.7 million barrels) of condensate. Then, the average daily production at the field was 19 million cubic meters of gas and 40,000 barrels of condensate.

For the full year, it is expected to spend $169.9 million in operating expenditure and $791.6 million in capital expenditure on Shah Deniz activities. In the first half of 2011 Shah Deniz spent $ 86.8 million in operating expenditure and $298.2 million in capital expenditure.

Since the start of Shah Deniz production in late 2006 till the end of the second quarter of 2011 about 56.3 million barrels (7.13 million tonnes) of Shah Deniz condensate was exported to world markets.

Peak production from the Shah Deniz project is forecasted at over 9 billion cubic meters of gas and 50,000 barrels of condensate per day.

According to forecasts, within the second phase of the field's development gas production may be increased to 25 billion cubic meters per year.

Shah Deniz reserves are estimated at an amount of 1.2 trillion cubic meters of gas.

The contract to develop the offshore Shah Deniz field was signed June 4, 1996. Participants to the agreement are: BP (operator) -- 25.5 percent, Statoil -- 25.5 percent, NICO -- 10 percent, Total -- 10 percent, LukAgip -- 10 percent, TPAO -- 9 percent, SOCAR-10 percent.


Copyright (c) 2011, Trend News Agency (Baku, Azerbaijan)

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Gas Boom Or Not, More Oil Rigs Now

- Gas Boom Or Not, More Oil Rigs Now

Thursday, August 18, 2011
Houston Chronicle
by Tom Fowler

Natural gas drilling has been the dominant energy story in the U.S. for the past few years, but oil is back with a vengeance.

For the first time in 18 years, the number of oil rigs working in the U.S. has exceeded the number of natural gas rigs, according to July rig data compiled by IHS-CERA, covering both land and offshore rigs.

By 2020 this surge in oil drilling could increase U.S. oil production by as much as 3 million barrels per day, Peter Stark, head of IHS-CERA's industry relations said Wednesday during a session launching the start of Summer NAPE, the semi-annual oil and gas prospects expo being held in Houston.

Two factors are spurring the surge in oil production.

The combination of horizontal drilling and hydraulic fracturing, which has unlocked previously inaccessible gas, also has opened up new possibilities for oil production.

Relatively low natural gas prices have prompted companies to focus exploration efforts on more valuable oil and natural gas liquids.

Oil actually may have returned to the top of the heap among U.S. drilling rigs earlier this year, according to another data set. Baker Hughes' rig count for onshore and offshore rigs has oil surpassing natural gas on April 21, (913 oil rigs vs. 878 gas rigs) for the first time since April 28, 1995 (343 oil rigs vs. 321 gas rigs).

And on June 24 the number of rigs drilling for oil surpassed the 1,000 mark for the first time since 1987.

IHS-CERA predicts oil production could directly and indirectly generate another 1.3 million U.S. jobs over the next decade and raise an additional $97 billion in federal taxes and royalty payments.

The oil boom is showing up in well-known U.S. oil fields, like Texas' Permian Basin, and in newer fields like North Dakota's Bakken shale and the Utica shale in Ohio.

The surge could slow if natural gas prices continue to rise and make gas projects more attractive -- which many analysts expect in the next year.

Benchmark crude rose 93 cents Wednesday to $87.58 per barrel in trading on the New York Mercantile Exchange. Natural gas rose a penny to $3.93 per million British thermal units.

But at least for now, producers have reasons beyond crude and gas prices for renewed interest in oil.

In some cases drilling for oil can cost less than for gas. Tom Ward, CEO of SandRidge Energy, said his company is spending as little as $760,000 per well in the Central Basin field in the Permian, compared to several million per well in most shale gas fields.

John Christmann, head of Apache Corp.'s Permian Basin operations, said his company has acquired acreage in the Empire ABO field in the Permian, a field where no new wells have been drilled since 1984.

"In some cases you have million-barrel wells that have never had an offset drilled near them," Christmann said, seeing strong potential for large quantities of oil.

Oil shales will be a big topic on the floor of NAPE this year, as attendees assess potential oil and gas drilling and production projects.

Started in 1993 as the North American Prospect Expo with 80 booths and about 800 attendees, NAPE is now held twice a year, and the winter 2011 gathering in Houston had 1,600 booths and drew 16,000 attendees.

This week's Summer NAPE is expected to draw about 5,600 attendees and 600 booths.

Scott Wilmoth, a vice president at Houston investment bank Simmons & Co., said NAPE gives big firms and small a chance to see a lot of different deals in one place.

"Deals get done across the board," Wilmoth said.

NAPE is also a networking opportunity, said Charles Cusack, Petrohawk's Vice President of Exploration.

"The main benefit has been the multitude of contacts made at NAPE that have indirectly led to deals," Cusack said. "The most significant NAPE transaction was my first meeting Dick Stoneburner (Petrohawk's chief operating officer) at NAPE in 2000 that led to my working with him for over a decade."

Wilmoth expects a lot of discussion at NAPE about tight oil plays, including the Utica, the Lower Smackover Brown Dense in Arkansas and Louisiana, the Tuscaloosa Marine Shale and horizontal Wolfcamp in the Permian basin, among others.

The shale gas plays will still get attention, however -- including the areas in the Eagle Ford that yield oil and natural gas liquids, and the Marcellus shale in the northeast U.S., Wilmoth said. Internationally, unconventional oil and gas opportunities in Argentina may be a big draw at NAPE as well.

While the business is famously cyclical, the recent oil boom surprised some in the industry.

During a recent meeting of the National Petroleum Council in The Woodlands, the group discussed an upcoming report on U.S. natural gas reserves. Not surprising, the group said, the study would report that North American natural gas resource potential was enormous.

"Secondly, and perhaps surprisingly to some of us and certainly to many Americans, our Canadian and American oil resource base is also very big news," said NPC member Susan Tierney.

Copyright (c) 2011, Houston Chronicle

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Pennsylvania Shale Gas Output to More Than Double This Year - Study

- Pennsylvania Shale Gas Output to More Than Double This Year - Study

Thursday, July 21, 2011
Dow Jones Newswires
HOUSTON
by Ryan Dezember

Natural gas production from Pennsylvania's Marcellus Shale should reach the equivalent of 3.5 billion cubic feet per day this year, more than double 2010's output, according to new research by a trio of Pennsylvania State University professors.

The study, released Wednesday, further estimates that production in the state from the deeply-buried rock formation will rise to the equivalent of 6.7 billion cubic feet per day in 2012 and 17.5 bcfe in 2020.

That level of production would make the Pennsylvania basin the largest supplier of natural gas in the U.S., able to meet about 25% of the country's demand, said Kathryn Klaber, who heads the Marcellus Shale Coalition, an oil and gas industry advocacy group.

The Marcellus Shale underlies parts of several Mid-Atlantic and Midwestern states but production is centered in Pennsylvania.

In 2010 1,405 wells were drilled there, yielding the equivalent of 1.3 billion cubic feet of gas per day, according to the study. The professors, who obtained data from producers through the advocacy group, said that 2,300 wells are planned to be drilled this year and forecast that the number will steadily rise to about 2,500 a year by 2020.

While producers have focused on Pennsylvania with some forays into Ohio and West Virginia, several are eying an expansion into New York.

Many initially believed that southwest Pennsylvania held the most productive fields. But a string of recently drilled wells in northern Pennsylvania have made exploration in New York -- where a ban on hydraulic fracturing, the controversial technique needed to crack open the energy-bearing rock, was recently lifted -- more attractive.

Twenty-four of Pennsylvania's 25 highest producing wells are in counties that border New York, according to the Pennsylvania Department of Environmental Protection.

In May, Houston-based Cabot Oil & Gas said two of its wells in that border area are producing nearly 30 million cubic feet of natural gas per day -- significantly more than any previous Pennsylvania wells.

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

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Infamous Oil Forecasts that Failed & What Makes a More Solid Forecast

- Infamous Oil Forecasts that Failed & What Makes a More Solid Forecast

Tuesday, July 19, 2011
Rigzone Staff
by Barbara Saunders

Even before Colonel Edwin Drake confirmed a way to drill for crude oil in 1859, pundits were already active in predicting the future of oil. Some called it "Drake's Folly" and forecast that drilling was not the way to reach oh well.

Skeptics called America's first drilled oil well "Drake's Folly" and insisted that drilling was no way to reach . . . Oh well.

But oil prices are what draw the primary predictions nowadays, even though $100 per barrel oil is really nothing new. During the Civil War, for instance, the price of oil soared to about $115 per barrel when adjusted for inflation in 2010 dollars. In fact, until an extended period after World War II through about 1970, oil prices were anything but stable and were often above levels seen in the 1980s and 1990's even without inflation taken into account.

In real terms, or adjusted for inflation, oil prices hit the equivalent of $100 per barrel or more in 1861 and again in 1980.

This underscores how poorly oil prices tracked inflation in modern history and the importance of technology in keeping pace with supply, regardless of price. In fact, according to the Society of Petroleum Engineers (SPE,) during the extended periods of low prices after the price crash of 1986, a number of technological advances occurred that lowered finding and lifting costs. These included the polycrystalline carbon drill bit and the expanded use of horizontal drilling.

In terms of price predictions, one of the biggest boners occurred only a few years ago, when forecasters during the summer of 2008 were predicting that oil prices would remain at levels of $150 or higher for the foreseeable future. Then came the global financial meltdown and took oil prices along with it, with an oil price plunge to the $30's by the following winter ooops!

A similar prediction occurred during the 1980's. Following the supply panics of the late 1970's, many were predicting that oil would reach $100 per barrel in nominal, or pre-inflation terms, by or before mid-decade. However, no such thing happened. Consumers, in part, had responded by purchasing much smaller cars than in the past and prices ultimately cratered by mid-decade, into the single digits for some crude grades.

"Beware all forecasts that do not have a strong basis in quantifiable supply/demand trends.

The problem with these particular forecasts was that some were predicated on wishful thinking, primarily by traders, not sound market fundamentals. Beware all forecasts that do not have a strong basis in quantifiable supply/demand trends. Just because renewed tensions have erupted in the Middle East, for instance, does not mean that oil prices are destined to fly up. Some of what is touted as "forecasts" in news bulletins is really the hype of traders hoping to make headlines that will push prices up on the commodity futures markets. Such hype may work briefly, but invariably, when there's nothing backing a prediction, prices will drop back in short order.

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Poll: More Domestic U.S. Gas, Oil Development Needed

- Poll: More Domestic U.S. Gas, Oil Development Needed

Thursday, June 30, 2011
Rasmussen Reports

Most voters continue to feel America needs to do more to develop domestic gas and oil resources. They also still give the edge to finding new sources of oil over reducing gas and oil consumption.

The latest Rasmussen Reports national telephone survey of Likely Voters shows that just 19% believe the United States does enough to develop its own gas and oil resources. Seventy-five percent (75%) do not think the country is doing enough in this area. These findings are virtually unchanged from late February.

Forty-nine percent (49%) of voters say, when given the choice, that increasing the supply of oil by finding new sources is a better energy policy than reducing demand by cutting gas and oil consumption. Forty-two percent (42%) believe reducing the demand for oil is the better energy policy.

The gap between the two was a bit wider in June 2008, when 39% said reducing demand was more important and 47% preferred increasing the supply. But a majority of voters for years have said finding new sources of energy is more important than reducing the amount of energy Americans consume. At the same time, most voters believe investment in renewable energy sources like solar wind is the best long-term solution the nation’s energy issue.

The survey of 1,000 Likely Voters U.S. Voters was conducted on June 26-27, 2011 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence. Field work for all Rasmussen Reports surveys is conducted by Pulse Opinion Research, LLC.

Republicans and voters not affiliated with either party believe more strongly than Democrats that America is not doing enough to develop its own gas and oil resources. But sizable majorities across all demographic categories share this belief.

Most Democrats (59%) favor reducing demand for oil over increasing the supply through development of new sources. Sixty-nine percent (69%) of Republicans think increasing the supply is the better policy to follow. Unaffiliated voters are evenly divided on this question. Fifty-three percent (53%) of Political Class voters say reducing the demand for oil is the better energy policy, while 52% of Mainstream prefer the opposite approach.

This past April, one year after the devastating Deepwater Horizon oil spill in the Gulf of Mexico, most voters (59%) were again supportive of deepwater drilling. Two-out-of-three voters (67%) support offshore drilling. Fifty-five percent (55%) oppose President Obama's seven-year ban on offshore oil and gas drilling in part of the Gulf of Mexico and along the East Coast.

One-in-two Americans are ready to drill for oil in the Arctic National Wildlife Refuge (ANWR) to lessen the country’s dependence on foreign oil. However, only 38% think the United States is even somewhat likely to reduce its dependence on foreign oil by the year 2025, a goal set by the president in an energy plan earlier this year.

Americans are no more enthusiastic than they were a year ago about buying a car that runs on alternative fuel.

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Saipem Secures More Than $1B in E&C Offshore Contracts

- Saipem Secures More Than $1B in E&C Offshore Contracts

Monday, June 13, 2011
Saipem SpA

Saipem has been awarded new E&C Offshore contracts in Egypt, in the North Sea and in Russia, worth in excess of $1 billion.

In Egypt, Burullus Gas Company awarded Saipem the EPIC contract for new subsea developments in the area of the West Delta Deep Marine Concession, located about 90 kilometers offshore the Northwest Nile delta, at water depths between 400 and 1,000 meters.

The development encompasses the engineering, procurement, construction and installation of a total of seven new subsea wellheads and relevant infrastructures, umbilicals and flowlines.

Saipem has already carried out two earlier phases of the West Delta Deep Marine Concession's subsea development. The work will be connected to existing infrastructure. The offshore activities will be carried out mainly by the highly-specialized vessel, Saipem FDS.

Saipem has also been awarded contracts to operate in the Norwegian and British sectors of the North Sea, mainly relevant to the deployment of the Saipem 7000 vessel for platform transportation and installation, and to the deployment of the Castoro 7 vessel for the installation of subsea pipeline and structures.

Among these contracts, some are EPIC and, in addition to the activities mentioned above, include engineering and procurement phases.

Offshore activities will be performed in different periods during summer 2012 and 2013.

In Russia, Caspian Pipeline Consortium (CPC) awarded Saipem the contract for the expansion of the structures relevant to the CPC marine export terminal, near Yuhznaya Ozereyevka on the Black Sea shores in the Krasnodar region of the Russian Federation.

The development includes the engineering, procurement and installation of a new offshore export pipeline for hydrocarbon transportation which will have a diameter of 42 inches and a length of about 5 kilometers and for the installation of a new offshore mooring system for hydrocarbon export. Offshore activities will be carried out during the second half of 2012 by the S355 vessel.

Furthermore, Saipem has agreed to increase the scope of its work on existing contracts in the Caspian sea and the Gulf of Mexico.

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Indonesia Official: BP to Invest $10B More over 10 Years

- Indonesia Official: BP to Invest $10B More over 10 Years

Friday, May 27, 2011
Dow Jones Newswires
by Joko Hariyanto

BP is committed to investing $10 billion more in Indonesia over the next 10 years, Gita Wirjawan, Indonesia's investment agency chief, said Friday.

"They will soon start exploration in Kalimantan and further develop the Tangguh project in Papua," Wirjawan told reporters.

BP Chief Executive Robert Dudley confirmed the commitment after a meeting with Indonesian President Susilo Bambang Yudhoyono.

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

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DMTI to Offer More Technical Support with New Integrity Management Division

- DMTI to Offer More Technical Support with New Integrity Management Division

Thursday, May 26, 2011
Delta Marine Technologies Inc.

Delta Marine Technologies (DMTI) has entered a new marketplace adding more technical support to the Oil & Gas Industry with its newly formed Integrity Management Division.

DMTI acquired the services of Mr. Les Colter to head-up its newly formed Integrity Management Division located in its corporate offices in Montgomery, TX.

Mr. Colter has more than thirty-five (35) years of hands-on experience examining and solving structure problems. Mr. Colter holds both a B.S. and a M.S. in Metallurgical Engineering from the University of Texas at El Paso. He also has been a member of the National Association of Corrosion Engineers (NACE) for more than twenty-five (25) years. Combining extensive field experience, strong practical or common sense, and a good academic background gave credence to his assignment as Director of Integrity Management in April, 2011.

In the coming months, DMTI will be completing the necessary equipment purchases and hiring staff, which will be trained and certified to meet current challenges being thrust upon facilities and pipeline operators in the United States. And, if the trend follows previous patterns, DMTI will be solving the same issues worldwide. The move from a "reactive" operator to a "proactive" operator is necessary to meet the proper risk management philosophy in which systems are required to have addressed all possible threats to the structure’s integrity, whether they be above grade facilities, buried or subsea pipelines.

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Indonesian Govt to Hunt for More Oil in The East

- Indonesian Govt to Hunt for More Oil in The East

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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IEA: Urgent Need for More Oil

- IEA: Urgent Need for More Oil

Thursday, May 19, 2011
International Energy Agency

The IEA Governing Board, at its regular quarterly meeting on May 18-19, examined oil market developments and their impact on the global economy. Despite a near-10% correction since May 5, oil prices remain at elevated levels driven by market fundamentals, geopolitical uncertainty and future expectations. The IEA Governing Board expressed serious concern that there are growing signs that the rise in oil prices since September is affecting the economic recovery by widening global imbalances, reducing household and business income, and placing upward pressure on inflation and interest rates. As global demand for oil increases seasonally from May to August, there is a clear, urgent need for additional supplies on a more competitive basis to be made available to refiners to prevent a further tightening of the market.

Additional increases in prices at this stage of the economic cycle risk derailing the global economic recovery and are neither in the interest of producing nor of consuming countries. Oil importing developing countries are most likely to be seriously affected by high oil prices, undermining their economic and social well-being. In these circumstances, enhancing consumer-producer dialogue is urgently important to reach both short- and long-term solutions. The Governing Board urges action from producers that will help avoid the negative global economic consequences which a further sharp market tightening could cause, and welcomes commitments to increase supply. We stand ready to work with producers as well as non-member consumers; in this constructive spirit, we are prepared to consider using all tools that are at the disposal of IEA member countries.

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PTTEP Discovers More Gas in Myanmar

- PTTEP Discovers More Gas in Myanmar

Thursday, May 19, 2011
PTT E&P Co. Ltd.

Recently, H.E. U Than Htay, the Minister of Energy of the Union of Myanmar (Center) and Mr. Kanok Intharawijitr, General Manager PTTEP International Ltd. a subsidiary of PTT Exploration and Production Plc. or PTTEP jointly opened the testing valve on the drilling rig of the exploration well Aung Sinkha-2 in Mataban Gulf, Union of Myanmar, to examine the natural gas and condensate flow rate of M3 Block which shown substantial gas flow. The flow tests were conducted on two zones with a natural gas maximum flow rate of approximately 25 million standard cubic feet per day (MMSCFD) with the condensate flow rate of approximately 150 barrels per day and calculated Absolute Open Flow (AOF) rate of approximately 53.5 million standard cubic feet per day. (MMSCFD)

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Study More Than Doubles B.C. Gas Resources Estimate

Study More Than Doubles B.C. Gas Resources Estimate

Monday, May 09, 2011
B.C. Ministry of Energy & Mines; NEB

A new joint report on the shale-gas potential of Northeastern B.C.'s Horn River Basin more than doubles a previous assessment of gas resources within the province.

The report released by the National Energy Board (NEB) and British Columbia Ministry of Energy and Mines (BC MEM) titled "Ultimate Potential for Unconventional Natural Gas in Northeastern British Columbia's Horn River Basin" is the first publicly released probability-based resource assessment of a Canadian shale basin.

The report says the ultimate potential for marketable unconventional shale gas in the Horn River Basin is 78 trillion cubic feet (Tcf), including three Tcf of discovered resources and 75 Tcf of undiscovered resources. The Horn River Basin is part of the larger Western Canada Sedimentary Basin.

"This innovative report on shale-gas resources provides Canadians with valuable information about our energy future, particularly as it relates to the Western Canada Sedimentary Basin," said Gaetan Caron, chair of the National Energy Board.

Energy and Mines Minister Rich Coleman said, "This report should provide residents of our province with a sense of optimism about the future. B.C. is recognized for its significant shale gas reservoirs as well as for having world-class regulations."

Placing the Horn River numbers in context, the NEB currently estimates that there is 197 Tcf of conventional and unconventional natural gas remaining in the WCSB -- although this number does not take into account known but as-yet-unassessed unconventional gas resources.

The estimate of total remaining conventional and unconventional natural gas in Northeast B.C available for future demand is 109 Tcf. That includes 78 Tcf of shale gas as well as 31 Tcf of remaining natural gas resources identified in a joint assessment of conventional natural gas resources in Northeast B.C. The conventional gas assessment was released by the NEB and B.C. Ministry of Energy and Mines in 2006.

According to the new report on unconventional gas resources, the medium-case estimate of 78 Tcf for Horn River shale gas is the most realistic scenario. However, the study produced a range of numbers for shale gas potential in the Horn River Basin with the low estimate being 61 Tcf and the high being 96 Tcf.

Remaining Ultimate Potential by Province (Tcf)

The NEB is an independent federal agency that regulates several parts of Canada's energy industry. Its purpose is to promote safety and security, environmental protection, and efficient energy infrastructure and markets in the Canadian public interest, within the mandate set by Parliament in the regulation of pipelines, energy development and trade.

The B.C. Ministry of Energy and Mines manages the responsible exploration and development of British Columbia's energy sector.

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TAG Reports More Taranaki Success

TAG Reports More Taranaki Success

Friday, May 06, 2011
TAG Oil Ltd.

TAG Oil Ltd. on Friday reported that the Sidewinder-4 exploration well, located in TAG Oil's 100%-controlled New Zealand Petroleum Exploration Permit 38748, has been confirmed as a light oil and gas discovery. Along with the three previous Sidewinder discoveries, it is TAG Oil's fifth exploration success in the Taranaki Basin in the past six months.

The results from the Sidewinder-4 well indicate that the targeted oil-and-gas-charged Mt. Messenger Formation sandstones extend significantly to the east of the Sidewinder-1 discovery well. As TAG Oil noted in an April 5, 2011, announcement, the Sidewinder-3 discovery well suggested that the Mt. Messenger Formation sandstones extend significantly south of the original Sidewinder-1 discovery as well.

The interpreted total hydrocarbon column at Sidewinder now exceeds 60 meters (196 feet) in thickness, with no water column evident in any of the Sidewinder wells. Together, the four Sidewinder wells drilled to date indicate that the size and scope of the Sidewinder discovery area is much larger than originally anticipated. Furthermore, the entire permit remains lightly explored and prospective for further oil and gas discoveries, with numerous drill-ready prospects.

The Sidewinder-4 well, which was sidetracked to a location down-dip of Sidewinder-3, targeted a fault-bounded 3-D anomaly, which intercepted a gross 29 meter-thick (95 feet) sandstone reservoir. The total depth of Sidewinder-4 is 1410 meters (4,626 feet), with 19 meters (62 feet) of net oil-and-gas-charged sandstones, with electric logs indicating hydrocarbon charge to the base of the sandstone. Free oil was observed over the shakers during the drilling operation from the target zone. And consistent with all of the Sidewinder wells drilled to date, the oil-and-gas-charged sandstones encountered in Sidewinder-4 have excellent porosity and permeability.

TAG is now preparing to commence the flow testing of the Sidewinder-2, Sidewinder-3 and Sidewinder-4 wells in a few weeks' time. All wells will be placed onto production through the Sidewinder Production Station, currently under construction with anticipated completion by mid-year 2011.

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House Panel Votes to Force More Oil Leases in U.S. Waters

House Panel Votes to Force More Oil Leases in U.S. Waters

Thursday, April 14, 2011
Dow Jones Newswires
by Ryan Tracy

A bill requiring the U.S. to open areas off the Virginia coast and in the Gulf of Mexico to oil and gas exploration cleared a key hurdle in the U.S. House Wednesday. The House Natural Resources Committee voted to approve the leasing measure, paving the way for a vote by the full House next month. Earlier Wednesday, the committee also voted to establish a 60-day maximum for the Interior Department to approve or deny offshore drilling permits. If Interior took longer, the permit would be deemed approved.

The bills are part of an effort by House Republicans to support domestic oil and gas production, which they have stepped up in recent months in the face of rising gasoline prices. Democrats have pushed back, saying that Congress should focus on providing incentives for non-traditional energy sources and reducing energy consumption.

All but two Democrats voted against the bills on offshore leasing. The bills' prospects are less certain in the Senate, where Democrats hold a majority.

One proposal approved Wednesday would override a decision last year from the Obama administration not to open the U.S. Atlantic Coast to offshore drilling. It directs the Interior Department to lease areas off the Virginia coast within one year after the bill becomes law.

The bills would also direct Interior to move forward with three new leases in the Gulf, declaring previous environmental reviews of those areas to be sufficient. The administration has delayed its Gulf leasing plans and is conducting new environmental reviews following the Deepwater Horizon disaster nearly one year ago.

"What we're attempting to do is provide some certainty to those who would give us American-made energy," said Rep. Doc Hastings (R., Wash.), chairman of the Natural Resources Committee, and a main sponsor of the bills.

During debate on the proposals, Rep. Rush Holt (D., N.J.) argued that Interior shouldn't move forward with new leases without a new environmental analysis based on lessons learned from the Deepwater Horizon. He said previous reviews had been "very clearly and woefully flawed." Rep. Doug Lamborn (R., Colo.) countered that further environmental reviews would take place as companies apply for permission to explore and drill new wells. Hastings noted that the legislation approved Wednesday requires Interior to conduct a safety review for each drilling permit. Still, Democrats criticized their counterparts for not taking up a bill that would implement recommendations of a presidential commission that studied last year's oil spill. Congress hasn't yet sent the president a bill in response to the disaster, which began with the explosion on a rig leased by BP on April 20.

A proposal to add safety regulations to the House bills, offered Wednesday by Rep. Ed Markey (D., Mass.), was voted down by the Republican majority. "This amendment would micromanage and dictate thorough safety standards" that should be established by the Interior Department, Lamborn said. The majority also rejected a host of proposals from lawmakers in coastal states designed to restrict exploration in the Pacific and Atlantic Oceans.

The legislation would also extend by one year leases impacted by the Obama administration's moratorium on drilling after the Deepwater Horizon disaster. The provision would apply to wells that weren't producing before April 30. It was added to the bill Wednesday in an amendment offered by Rep. Bill Flores (R., Texas).

Lawmakers briefly considered inserting a provision to require oil and natural gas facilities to use only equipment and materials produced in the U.S, but Rep. John Garamendi (D., Calif.) withdrew the amendment after other lawmakers said it was too inflexible. Some Republicans seemed open to the concept, however, and Garamendi said he might offer a different version at a later date.

Also Wednesday, the committee voted to require Interior to open up more resource-rich areas to exploration as part of its next five-year leasing plan. The full Republican-controlled House is expected vote on the bills next month.

Iran Aims to Produce More Than 35 Tcf of Gas from North Pars Field

Iran Aims to Produce More Than 35 Tcf of Gas from North Pars Field

Wednesday, April 06, 2011
Knight Ridder/Tribune Business News

by  A.Yusifzade, Trend News Agency, Baku, Azerbaijan

Iran aims to produce over 35 trillion cubic feet (TCF) of gas from North Pars field for 35 years, FNA reported the Managing-Director of the South Pars Special Energy Zone (SPSEZ) Organization Seyed Pirooz Mousavi as saying.

By completion of the designed projects in the North Pars region, recoverable capacity of gas from North Pars gas field would reach 35 Tcf, Mousavi added.

The giant gas field has a significant share in Iran's prosperity and the Iranian government is resolved to develop the field, Mousavi stressed.

According to Mousavi, North Pars gas field reserves holds an estimated 57.1 trillion cubic feet of gas (some 1.63 trillion cubic meters).

Mousavi said that Kangan and Upper Dalan gas-bearing formations hold 72 percent of the field reserves and another 28 percent belongs to the Dallan gas formation.

According to the Pars Oil and Gas Company, North Pars Gas Field is one of the biggest independent gas fields of Iran. This field which was discovered in 1967, is located approx. 120 kilometers south east of Bushehr in water depths of 2 to 30 meters in the Persian Gulf.

Exploration activities started in this field in 1963 and the first exploration well was completed in 1967.The total volume of the gas in place of this field is about 58.9 TCF and the recoverable volume of sour gas is approximately 47.2 TCF. 

More Gas Wells for Southwest Virginia?

More Gas Wells for Southwest Virginia?

Monday, March 28, 2011
Knight Ridder/Tribune Business News

by  Debra McCown, Bristol Herald Courier, Va.

 

Another county might soon be added to the list of those producing natural gas in Southwest Virginia: Washington. But only if the county will change its zoning ordinance to allow it.

The Virginia Gas and Oil Board has approved the creation of two drilling units and forced pooling orders for the first of four proposed gas wells in the Benhams area of Washington County.

Forced pooling is a process authorized by Virginia law that allows gas companies to drill even without leases from all affected property owners and that provides the uncooperative owners a default one-eighth royalty. The system is the subject of a set of class-action federal lawsuits in which coalfield landowners claim that gas companies benefit at the expense of citizens -- and that promised payouts are not always delivered.

Charlie Bartlett, a geological consultant who's long advocated for Washington County's gas potential, said he also has long advocated for landowners getting their rightful royalties when gas is produced from beneath their land, and he's making it a point to go about the project in Washington County the right way.

He also said that Washington County could ultimately have many more gas wells.

"If those [first ones] are successful, it will lead to a couple of dozen wells," Bartlett said. "So basically we're hoping for the establishment of a new gas field in Washington County."

Abingdon-based Southeast Land and Mineral wants to drill the proposed wells in an area about a mile north of Benhams, Bartlett said, about five miles north of Bristol and eight miles northwest of Abingdon. He also said the county has gas development potential in the area "between about the North Fork of the Holston and about Route 700."

Were Washington County to enact a severance tax, each well could generate thousands of dollars in revenue, Bartlett said, not to mention thousands in royalties for landowners and the creation of jobs.

"We're hoping that we can make them [Southeast Land and Mineral] some money, make the landowners some money, make the county some money and make the state some money, and everybody will be happy," Bartlett said.

Regarding the concerns raised by the federal lawsuits, Bartlett said he does not anticipate any effects on his project -- except the possible assurance that landowners would get fairer treatment under the law.

First, however, the project, financed by a coal investor from Kentucky, must hurdle the zoning ordinance that currently prohibits natural gas drilling in Washington County. And if the county agrees to change the ordinance to allow drilling, that would open the county for any gas company to operate.

"It would be sort of ridiculous for us to use gas from other places and not allow gas to be drilled here," Bartlett said.

Bartlett said he's run into some skepticism from county zoning officials. But Odell Owens, the county supervisor who represents the district where the wells are proposed, said it's an idea worth exploring.

"If we're sitting on natural gas that the landowners can benefit from extracting, and also if it can serve as a revenue source for the county, we have to look at it," Owens said, adding that experts likely will be asked to speak before the board.

While Owens said the county's groundwater resources are precious, he suggested that if drilling can be done safely -- protecting that natural resource -- he'd be supportive.

County Administrator Mark Reeter said he doesn't know why the county's zoning ordinance doesn't mention -- and therefore doesn't allow -- drilling, and county officials are just beginning to research what gas drilling is about.

At a Feb. 22 meeting of the Washington County Board of Supervisors -- more than six months after the county's Board of Zoning Appeals affirmed a decision denying permission to drill -- a man representing the company came to extol the virtues of gas production.

"We need to get all the energy we can from beneath the soils of the U.S. instead of being held hostage," Gus Sorensen of Bristol told the board members. "I hope that any sort of rules and regulations can be taken care of so we can extract this energy."

At a county board meeting last week, Damascus resident Judith McBride spoke in opposition to the zoning change that would allow drilling, citing potential risks to water supplies from wastewater disposal. Originally from Pennsylvania, McBride compared the impact of drilling on her family farm back home to the effects of strip mining.

In Abingdon, long an economic center for the coal and gas-producing region of Southwest Virginia and home to many who moved away from the environmental downside of life in coal country, it's not clear yet how residents will react to the proposal.

However, there is no coal -- only gas -- in Washington County.

And, Bartlett said, he has no intention of drilling near the town of Abingdon. Plus, he said, the county, through its zoning ordinance, could restrict drilling to certain areas.