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IPAA supports oil price crisis resolution

The Oil Price Crisis Relief Resolution, developed at an Oil Price Crisis Summit hosted by Oklahoma Gov. Frank Keating (Republican), urges the federal government to respond to five recommendations relating to the domestic oil industry. More than 140 members of the IPAA endorsed the resolution at an IPAA regional meeting. Recommendations include: 1) Filling the SPR with crude oil purchased from domestic producers; 2) Reducing tax penalties on marginal wells and new investments; 3) Establishing a low-cost disaster loan program for producers; 4) Investigating allegations of improper trade practices within U.S. markets by foreign oil suppliers; and 5) Instituting regulatory reform. A positive government response to this resolution will help the industry "rebound from the brutal consequences of uncontrollable geopolitical forces," said IPAA Texas North Central Regional Governor Edward Blessing.

U.S. production outlook looks bleak

API’s monthly statistical report said that Lower-48 production in January was about 4.8 MMbopd, the lowest it has been in more than 50 years. It also represents a 6% decline from January 1998’s level. Alaskan production, which accounts for one-fifth of all U.S. output, dropped significantly by 15%, or 180,000 fewer bopd, compared to one year ago. The report also said that 11,500 people in the domestic E&P industry lost their jobs in January. Since the end of 1997, the industry has lost 42,000 jobs, a drop of more than 12%.

Exploration activity slows offshore Norway

After meeting with oil industry leaders, Norway’s Oil and Energy Minister Marit Arnstad expressed concerns about the decline in exploration activity on the Norwegian continental shelf. The meeting was organized to discuss fiscal policy and the political framework for offshore Norway, after complaints were made about industry’s high taxes at a time when prices are so low. Arnstad said the government would look into short-term solutions in the revised budget in May, to lessen the burden on the offshore industry. Long-term initiatives are to be presented to parliament in early 2000.

Mobil drills large producer offshore Canada

Mobil Corp. saw encouraging results from its Hebron D-94 appraisal well, located on the Canadian Grand Banks about 200 mi southeast of St. John’s, Newfoundland. The well was drilled to a 6,911-ft TD, and encountered 280 ft of net oil pay in a 300-ft interval. A flow test recovered 21° API oil at a rate of 3,500 bpd. This appraisal is an important step in determining the extent of the Hebron-Ben Nevis formation. Additional drilling will be done before moving to the next stage of development.

Kerr-McGee / Oryx merger leads to job cuts

After completing the $1.8-billion purchase of Oryx Energy, Kerr-McGee announced plans to cut 530 jobs, or about 40% of its upstream personnel. Following the cuts, upstream employment will be 770 to 800 people. There are no plans to cut jobs in the company’s chemical or central office operations. The acquisition is expected to result in about $100 million of pretax savings annually, and add to 1999 earnings.

BP objects to Alaskan taxes, cuts spending

BP Amoco Chief Executive Sir John Browne wants to see an end to Alaskan petroleum production taxes that he claims are harming the oil industry in a time of very low oil prices, by acting as a barrier to new activity. Areas like Alaska and the North Sea have a separate tax regime, above and beyond the standard corporation tax. The company plans on slashing its capital spending for Alaskan operations by nearly half, to about $400 million.

Old oil platforms crowd Indonesia’s waters

Dozens of aging and disused oil platforms sitting in Indonesia’s waters need to be removed. However, the country is unsure who will finance the costly task. According to an official at state oil company Pertamina, there are about 415 oil platforms in the Indonesian archipelago, mostly off the islands of Java, Borneo and Sumatra. Of these, 87 will be considered old by 2000. Meanwhile, the Indonesian government is looking to draft an oil and gas law that would repeal Pertamina’s monopoly in the oil sector. Currently, all foreign oil companies working in the country are required to work in partnership with the state oil firm.

Chevron’s deepwater GOM field onstream

First oil was achieved at Chevron’s Genesis project, a deepwater oil and gas facility in 2,600 ft of water, 150 mi south of New Orleans in the Gulf of Mexico. Output began at 30,000 bpd and more than 20 MMcfgd. By the year 2000, peak production capacity will reach 55,000 bopd and 72 MMcfgd. Genesis utilizes the first floating spar platform to accommodate both drilling and production facilities. Peter Robertson, president of Chevron U.S.A. Production Co. said bringing Genesis onstream "emphasizes the importance of deepwater operations in the Gulf of Mexico."

Exxon leverages GOM deepwater acreage

Exxon and Conoco agreed to exchange interests in 59 blocks in four deepwater areas of the Gulf of Mexico. Exxon acquired 50% of Conoco’s interest in 30 blocks, and Conoco acquired a 50% interest in 29 Exxon blocks. In the latter set, Exxon will retain a 50% interest, because it had been the sole lessee. With this agreement, plus added interests made last year to Exxon’s GOM deepwater portfolio, the company now has an interest in 370 GOM deepwater blocks, representing 2.1 million gross acres.

Copyright © 1999 World Oil
Copyright © 1999 Gulf Publishing Company