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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Alberta Makes Concessions To Oil-Sands Producers In Parks Plan

- Alberta Makes Concessions To Oil-Sands Producers In Parks Plan

Tuesday, August 30, 2011
Dow Jones Newswires
CALGARY
by Edward Welsch

A final version of the Alberta government's land conservation plan for the oil-sands region released Monday made some concessions to oil companies after the original plan threatened to cancel parts of several oil-sands leases in order to preserve them for caribou habitat.

"What we think this plan achieves is a balance between the environment, development and the community aspect of living and working in Alberta," Sustainable Resource Development Minister Mel Knight said during a press conference.

Knight said there may still be parts of some oil-sands leases cancelled, but that the effect would be "very, very little," and the plan "is going to be quite satisfactory to most operators in the area."

The original parks plan released in April, which sets aside more than 7,000 square miles for recreational parks and wildlife including caribou, was panned by some of the oil-sands developers who were seeing parts of their leases cancelled.

However, most developers in the area, including Cenovus Energy Inc. (CVE) and Athabasca Oil Sands Corp. (ATH.T) said they had worked with the government to ensure that the parts of their leases that would be revoked were on plots that weren't economically viable.

Knight said the government worked with other companies to shift conservation land around for the final conservation plan, but he declined to provide any specific details.

Jennifer Grant, director of oil-sands research for the Canadian environmental think tank Pembina Institute, said it appeared that the government had shifted some lands around to accommodate oil-sands leases owned by Sunshine Oil Sands Ltd., a privately owned developer that was particularly hard hit under the draft plan.

Executives of Sunshine Oilsands, which is planning an initial public offering in Hong Kong later this year, weren't immediately available to comment because they were traveling in China.

"The government's efforts to accommodate industry interests are apparent in this version of the Lower Athabasca Regional Plan, with the adjustment of some protected areas," Grant said. She said more loopholes were introduced in the latest plan that allow companies to get exemptions to environmental standards.

Knight said though the plan had critics, it set aside a large portion of land for protection that wasn't there during the industry's last resource boom in the mid-2000s.
Copyright (c) 2011 Dow Jones & Company, Inc.

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Natural Gas Producers, Distributors to Promote NGVs, Infrastructure

Natural Gas Producers, Distributors to Promote NGVs, Infrastructure

Thursday, May 05, 2011
America's Natural Gas Alliance; American Gas Assoc

America's Natural Gas Alliance (ANGA) and the American Gas Association (AGA) are working collaboratively to advance the development and utilization of natural gas vehicles and fueling infrastructure in the North American marketplace.

More than 50 producers and distributors of natural gas will work together to enhance domestic energy security and advance clean air by promoting the development of natural gas vehicles and infrastructure.

"Advancing our country's energy independence is vital and we are pleased to work directly with AGA to develop and promote policies that will make an American natural gas transportation network a reality," said ANGA President and CEO Regina Hopper. "This will make it easier for businesses and consumers to embrace this clean, affordable and domestic transportation choice."

The ANGA-AGA joint initiative will encourage stakeholder dialogue to advance greater use of North American natural gas for transportation. Specifically, the collective effort will focus on infrastructure development, greater fleet usage, vehicle production, and marketing and education for natural gas transportation.

"Natural gas producers and distributors recognize that the private sector must play a leading role," said Kathryn Clay, Executive Director of the joint effort. "This joint work will continue important efforts to help manufacturers meet demands for vehicles that run on natural gas, and ensure that the infrastructure is in place to fill them up. Our message is simple from well to fuel dispenser, we will work to expand the use of these vehicles."

"Kathryn's deep roots in the automotive industry will be a great asset to the natural gas industry as it seeks to expand the role natural gas will play in our nation's transportation sector," said AGA President and CEO Dave McCurdy. "As an engineer and scientist, she understands the important role natural gas will play in enhancing national and energy security, improving air quality, and providing North America with a more affordable and secure transportation fuel."

America's Natural Gas Alliance (ANGA) represents 30 of the nation's leading independent natural gas exploration and production companies.

The American Gas Association, founded in 1918, represents 199 local energy companies that deliver clean natural gas throughout the United States. There are more than 70 million residential, commercial and industrial natural gas customers in the U.S., of which 91 percent — more than 64 million customers —receive their gas from AGA members. Today, natural gas meets almost one-fourth of the United States' energy needs.

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UK Oil Tax Hike to Benefit Smaller Acquisitive N. Sea Producers

UK Oil Tax Hike to Benefit Smaller Acquisitive N. Sea Producers

Friday, April 08, 2011
Dow Jones Newswires

by  Sarah Kent & Iain Packham

The U.K.'s new levies on oil production could benefit small North Sea producers eager to snap up aging fields from international energy giants looking to minimize their exposure to the tax increase.

The tax, which increases the charge on profits from U.K. oil and gas production to 32% from 20%, is likely to force oil majors to lower the sale price of aging offshore fields, providing bargains for the smaller companies already in the market to buy them.

This could speed up the shift in ownership of North Sea assets, from the large companies that dominated production in the region when output was at its peak to smaller companies specializing in recovering oil and gas from fields well into their decline.

"I do see a silver lining. Fewer companies will be coming into the [North Sea]," said EnQuest's Chief Executive Amjad Bseisu. "There will be fewer buyers and more sellers because of the deterioration and degradation in the tax situation."

The tax increase, which took the industry by surprise, narrows already-slim profit margins on many of the older North Sea fields, where declining reserves are becoming more expensive to extract.

Larger companies tend to invest only when they expect a higher returns, and they usually view the expense of breathing new life into a mostly-depleted field as not worth the small reward. Smaller companies, which tend to have fewer qualms about lower returns, are now finding they can snap up assets at a fraction of the price of as little as two weeks ago when the tax was introduced.

Among the large international oil companies active in the North Sea, Statoil, Total and BASF subsidiary Wintershall have all said they are reviewing investment plans. Meanwhile, smaller independent oil companies including Valiant Petroleum and EnQuest have said that the tax hike will benefit their ongoing strategy to buy more North Sea reserves.

"The tax increase will make assets more peripheral to major companies because they will decrease in value," said Peter Basset, an oil and gas analyst at Westhouse Securities. "After a period of reflection quite a lot of assets will come on to the market at a lower price."

North Sea investment has profound consequences for global oil prices. The Brent blend, used as a pricing benchmark for much of the crude bought and sold in Europe and Asia, is produced from North Sea fields. Declining output has caused Brent prices to fall out of step with the global market in the past, and could do so again without continued investment in older fields and exploration.

The bargain hunting has already begun. Earlier this week Ithaca announced its acquisition of Hess' interest in two North Sea fields for $74.6 million and Ithaca's 10% stake in three North Sea exploration blocks.

Cenkos Securities said this is the equivalent of paying $14.30 a barrel for the assets, compared with $17.50 a barrel paid last October by Faroe Petroleum for an 18% stake in the Blane field.

The deal works out especially favorably for Ithaca as it expects to be shielded from the rise in taxes, at least initially. It posted a loss of $215 million at the start of 2011, which it estimates will exempt it from cash taxes for the next five years. In the U.K. companies are able to offset losses against their profits when paying tax. Other small North Sea operators are in a similar position.

However, the window of opportunity for smaller oil producers could be closing. The oil industry is lobbying the U.K. government for more favorable tax terms, including extra incentives for natural gas production, lower taxes on marginal fields and a tax reduction if oil prices drop. Some companies may hold off from selling their assets until the tax issue is settled.

"Until there is absolute clarity from the government as to what the fiscal regime will be, I can't see many large deals getting done," said James Hosie, an analyst at RBC Capital Markets.

UK Oil Producers to Lobby Osborne Over North Sea Tax Hike

UK Oil Producers to Lobby Osborne Over North Sea Tax Hike

Thursday, March 31, 2011
Dow Jones Newswires

by  James Herron & Alexis Flynn 

Major U.K. oil and gas producers said Thursday they will directly lobby Chancellor of the Exchequer George Osborne to mitigate the effects of a large tax increase on the industry, after a meeting with the energy minister and other senior government officials failed to allay their concerns.

The move comes as several large companies said they were reconsidering billions of pounds of investments in oil and gas production after last week's shock tax increase, and as the government published figures showing that U.K. oil and gas import dependence grew significantly last year.

Earlier Thursday, industry group Oil & Gas U.K. met Energy Secretary Chris Huhne to raise its concerns about the country's new tax regime, which it argues will hinder investment and result in job losses. Chancellor of The Exchequer George Osborne last week announced a GBP2 billion tax increase on oil production in the government's latest annual budget.

Several producers have already voiced their concerns at the decision, with Norway's Statoil and France's Total both saying they would re-appraise their investment plans in light of the news.

Of particular concern to companies affected by the tax rise is whether the government will stand by its stated commitment to lower the tax on producers if the price of oil made a "sustained" drop to around $75 a barrel, said one person at a U.K. oil producer.

U.K. North Sea explorers and producers are "seeking a lot of clarity on this floor price of $75 and want assurances that this genuinely will be implemented," the person told Dow Jones Newswires Thursday.

"I don't think there's a great deal of confidence at the moment that that is written in stone," said the person, who asked not to be identified.

Oil and Gas UK said Wednesday the "sudden and destabilizing" nature of the tax increase meant it was likely more companies would follow Statoil's lead.

The strong industry reaction was partly due to the surprise nature of the announcement, the person said.

The oil and gas industry is a "long-term business that prides itself on risk management, on planning. It's not very good at dealing with surprises," he said. "At some point things will settle down, but it isn't going to happen soon."

Scottish lawmakers lambasted the government's failure to consult on the issue.
First Minister Alex Salmond, whose Gordon constituency includes Aberdeen, the capital of the U.K. oil and gas industry, said the government should have met with firms before the announcement.

"Furthermore, the tax changes announced by the chancellor are totally ill-thought through and run the risk of diverting investment away from the North Sea," Salmond said. "There is nothing wrong with making taxation responsive to profitability and high oil prices, however it has to be done in a planned fashion with appropriate incentives for marginal fields and infrastructure development in order to avoid the impact on Scottish jobs which the chancellor's spatchcock and desperate moves now put at risk."