Witnesses Say Gulf Drilling Ban Was A Harsh Blow

- Witnesses Say Gulf Drilling Ban Was A Harsh Blow

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Copyright (c) 2011, Houston Chronicle

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Chevron Strengthens Portfolio Offshore AU with Arrival of Semisub Osprey

- Chevron Strengthens Portfolio Offshore AU with Arrival of Semisub Osprey

Friday, June 03, 2011
Chevron Corp.

The Atwood Osprey, Chevron's newly contracted ultra-deepwater semisubmersible drilling rig, has arrived in the waters off northwest Australia. Constructed in the Jurong Shipyard in Singapore, the rig will commence operations drilling and complete a queue of development wells as part of the Gorgon Project. The development drilling program scheduled for 2011 and 2012 represents the most significant investments Chevron has made in development drilling offshore Western Australia.

Chevron Australia managing director Roy Krzywosinski said Western Australia is pivotal to the company's strategy of building an internationally competitive gas business in the Asia-Pacific region. He said the company expects the Atwood Osprey to play a key role in strengthening Chevron's growing exploration, appraisal and development portfolio for at least the next three years.

"Chevron continues to make significant investments in developing Australia's natural gas resources," Krzywosinski said. "The arrival of this newly contracted rig represents our ongoing long-term commitment to grow our natural gas business in Western Australia."
Safety First

To ensure a safe startup and a strong safety culture is in place, the Australasia business unit's (ABU) drilling and completions team held three engagements with the Atwood Osprey crew to ensure Atwood's safety management system and those of our business partners were fully aligned with Chevron's expectations for operational excellence.

ABU Drilling and Completions manager Kent Springer said that through these engagements he was confident that Atwood Oceanics and its crew would achieve their vision statement of "always exceeding your expectations" and continue their commitment to safety, personal health, environmental stewardship, efficiency and reliability.

"Both Chevron and Atwood have systems in place to make the rigs as safe as possible. However, these systems are ineffective without the commitment of all our personnel, both rig- and office-based, adhering to them," Springer said. "Therefore, having members of the ABU management team—including Roy Krzywosinski—come along and tell the crew that they have their personal backing to use stop-work authority if they see an unsafe risk or behavior is a powerful message."

The Atwood Osprey can accommodate as many as 200 people, is 426 feet (130 m) tall and 377 feet (115 m) long. When moored, it will be capable of drilling as far as 31,988 feet (9,753 m). With its own mooring equipment, it can operate in water as deep as 5,905 feet (1,800 m), or 8,202 feet (2,500 m) with pre-laid mooring.

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Sterling Reaches TD at Cladhan Appraisal Well

- Sterling Reaches TD at Cladhan Appraisal Well

Friday, June 03, 2011
Sterling Resources Ltd.
by SubseaIQ

Sterling announced the completion of drilling of the 210/30a-4X well on Block 210/30a in the United Kingdom North Sea. This is the fourth well (third side-track) drilled in the current four well campaign to further appraise the extent of the Cladhan reservoir.

The 210/30a-4X well was drilled in the most southern limit of the northern core area in a potentially separate channel, utilizing the Transocean Prospect rig. The objectives of the 210/30a-4X sidetrack well were to core the full reservoir section approximately one kilometer south and approximately 60 feet updip of the oil bearing 210/30a-4 well, and evaluate the southern fringe of the northern core area.

The 210/30a-4X well was drilled to a total measured depth (MD) of 10,614 feet encountering 171 feet gross, 105 feet net (vertical thickness) of high quality Upper Jurassic sands. Almost 180 feet of core was successfully recovered across the full reservoir section.

Petrophysical analysis of the interval showed five feet of oil-bearing sand at the top of the interval with an Oil-Down-To at 10,177 feet True Vertical Depth Subsea (TVDSS). An oil sample was obtained from the interval. A further 100 feet of water-bearing sand was encountered below thin shale which separates the top and bottom sands. A clear contact has not been observed although the top and bottom sands appear to be in pressure communication. The presence of a known Oil-Down-To bodes well for updip oil in other channels with the same pressure regime.

Generally, reservoir quality is very good with porosities up to 25 percent, substantiated by measurements obtained while taking fluid samples. These pressure measurements also confirm that the interval is over-pressured on trend with the 210/30a-4Y well, but some 900 psi lower than the discovery area. The implication of this information is that the southern fringe of the northern channel area is in communication with the central channel, being distinct from the main reservoir in the northern channel area. The well will be suspended for possible re-use as a future development well at this location or elsewhere after a sidetrack. With the completion of this four well drilling campaign, RPS Energy will start a review of the Cladhan resources with the intent of publishing an update report within a few weeks.

"Notwithstanding the presence of predominantly wet sands at this depth in this separate channel compartment, we are encouraged by the presence of oil in the top sand and by reservoir quality at this location. Further updip prospectivity is certainly promising," remarked John Rapach, Sterling's Chief Operating Officer. "We have proved that our current seismic model can adequately predict sand thickness but reservoir quality definition is now paramount for further appraisal and development drilling. Our next planned subsurface activity is to complete full reprocessing and interpretation of the existing seismic dataset incorporating all of the log, core, fluid and pressure results obtained during this current drilling campaign. Consequently, the next drilling campaign will probably commence in early 2012," noted Mr. Rapach.

"Our development planning is concentrating on either a subsea tie-back or FPSO development of the main northern core area with further definition of reserves and resources during our next drilling campaign. We are commencing pipeline route and environmental survey work within the next few weeks," added Mr. Rapach.

Mike Azancot, Sterling's Chief Executive Officer, commenting on these results noted, "The current exploration and appraisal drilling campaign on Cladhan has been successful in increasing the height of the oil column by 798 feet to 1228 feet in total. The extent of the development of the northern core area is now better defined with this increase in oil column. The fan area in the east of the field remains prospective as the results from the 210/30a-4Z well drilled in this campaign are not conclusive due to its proximity to a major fault. Our plan towards development with options for increased resource exploitation after further drilling is now underway with a target for first oil in 2014."

Sterling holds a 39.9% interest in license P1064 which contains Cladhan, and is the operator. The partners are Wintershall (UK North Sea) Ltd. with 33.5 percent, Encore Petroleum Ltd with 16.6 percent and Dyas UK Ltd with 10.0 percent.

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Jakarta Aims to Attract Energy Firms

- Jakarta Aims to Attract Energy Firms

Friday, June 03, 2011
Knight Ridder/Tribune Business News
by Lynn Lee, The Straits Times, Singapore / Asia News

As more people and more vehicles push up demand for energy in Indonesia, the government is under pressure to crank up the output of crude oil and gas.

But first it will have to win over investors -- including foreign firms with deep pockets -- to explore new sites.

These investors complain of a lack of reliable data on oil and gas reserves, frequent changes to laws, and conflicting legal interpretations between the central and local governments as barriers to investment.

All that makes their 15 percent share of the profit split with the government unattractive, they say.

Major players in Indonesia include Chevron from the United States and French oil giant Total. Indonesia's state-owned firm Pertamina accounts for around 15 percent of crude oil production, and owns the eight refineries supplying petrol to the domestic market.

Energy analyst Kuturbi, who like many Indonesians goes by one name, said current oil prices of around US $100 per barrel should be an incentive for companies to take part in oil exploration.

"But since there is low interest, this signals that something is wrong with how the government is managing investment in oil exploration," said Dr. Kuturbi, who is from the Centre for Petroleum and Energy Economics Studies in Jakarta.

Last year, only 21 exploration contracts between investors and the government were signed, compared to 34 in 2008. Two weeks ago, the government offered 20 oil and gas blocks in the first round of tenders this year, and said it would consider giving investors a bigger cut of profits and more favorable tax rates if they explored less accessible sites, such as those in eastern Indonesia.

The director-general of oil and gas at the Energy and Minerals Ministry, Ms Evita Legowo, said the ministry would try to find money for more detailed geological studies.

"We will try for this in the 2012 fiscal year. We haven't got the budget for it now... and some investors are waiting to see if we amend the oil and gas law before they decide whether or not to invest," she said earlier this week.

Mr. Kuturbi pointed out that around 70 percent of exploration contracts signed between 2002 and 2008 experienced delays in starting work, further depressing oil production. Oil and gas regulator BP Migas said these were due to problems with land acquisition to drill wells and poor project management.

Crude oil production -- at around 1.5 million barrels per day in the 1990s -- has in the past few years dropped to between 900,000 and 960,000 barrels per day, below the government's target of around 970,000 barrels. Gas production has been going up but Indonesia exports gas to countries such as Singapore, keeping only half of its output for domestic use by the state electricity company and industries.

The government also aims to raise renewable energy -- such as geothermal and biomass sources -- to 17 per cent of Indonesia's energy mix by 2025.

Energy analyst Pri Agung Rakhmanto, from the Jakarta-based Reforminer Institute, said the government would have to go back to the drawing board and ensure there was a decent investment climate for energy.

"It cannot just be business as usual," he said. "Otherwise, we will not be able to meet our own energy needs in future."

Copyright (c) 2011, The Straits Times, Singapore / Asia News Network

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