Oil country hot line

OPEC unchanged, Iraqi sanctions extended

At a special July meeting, OPEC decided to continue to hold production at the previously agreed level of 24.2 million bopd. OPEC says it will meet in September, to review market conditions at that time. However, analysts believe that the cartel will not increase output then, either. Meanwhile, the UN Security Council extended Iraq’s oil-for-food program by 150 days. Thus, Iraq has resumed producing after its month-long suspension of its oil shipments. The Iraqi exports were withheld in retaliation for a British-U.S. proposal to overhaul an 11-year old trade embargo. The overhaul has been postponed and a roll over of the oil-for-food program is currently in place. This decision was a direct result of Russia’s resistance.

U.S. House blocks Great Lakes drilling

The U.S. House approved a measure that bans drilling in the Great Lakes, putting a dent in the Bush administration’s plan to boost domestic production. Concerned about the long-term effects of potential oil spills and other related drilling accidents, the House voted 265 to 157, to prevent any agency from issuing permits or taking action to allow future drilling in any area of the Great Lakes. The ban was approved as an amendment to a $23.7-billion, fiscal 2002, energy-and-water development spending bill.

Nuevo responds to court ruling, MMS action

A federal judge in Oakland, California, ruled that MMS must verify with the California Coastal Commission (CCC) that the lease extensions granted by MMS are consistent with the state’s Coastal Management Plan. This decision is yet another governmental edict that has delayed Nuevo Energy’s plans to develop federal leases offshore California. The mandate not only affects Nuevo but all extensions for 36 federal leases (that contain more than 1 billion bbl of oil and more than 900 Bcf of gas) that were granted to various firms upon completion of the California Offshore Oil and Gas Energy Review in 1999. Last month, MMS issued new lease suspensions for an unspecified time period, while it works toward complying with the federal court order. Interim Nuevo President and CEO Phillip Gobe said the CCC agreed with the terms of the leases when they were issued between 1981 and 1985. The changing CCC rules that govern these leases, along with the actions of other governments, has delayed development of these offshore resources for almost 20 years.

Record attendance at Venezuelan show

The 13th Latin American Petroleum show in Maracaibo, Venezuela, saw a record 24,800 visitors. More than 800 firms exhibited on 300 stands. The firms generated more than $550 million worth of business. Venezuelan Celt Group President Waldo Garcia said, "The growth of international interest in Venezuela has made this show a must for every company that wants to sell its goods and services to Venezuelan companies." The success of this biennial show has prompted plans to hold the show every year. In fact, reservations for the 2002 show are already in place, said Garcia.

Rig blowout in GOM leaves man missing

A blowout on a Global Marine Drilling rig in the Gulf of Mexico forced an evacuation, in which the Coast Guard rescued 39 of 40 workers onboard the vessel. Supervisor Ben Joe Freeman, 60, from Louisiana, remained missing after the early morning blast that caused a well to leak uncontrollably. The cause of the incident is still unknown. Subsequently, a second rig was dispatched to drill a relief well for plugging operations that were set take up to three weeks. Global Marine also planned to mobilize a derrick barge to the well site in an attempt to cap the well at the surface. The rig was being leased by the firm’s subsidiary, Applied Drilling Technology Inc., to drill an exploratory well about 26 mi south of Freeport, Texas.

West African coast sees wave of new finds

Chevron has discovered its seventh significant oil find offshore West Africa. The Tombua field is the latest in a string of exploratory successes on Angola’s prolific deepwater Block 14. Tombua was drilled in 925 ft of water, to a depth of 10,535 ft. It tested at a combined flow rate of 10,022 bpd. Plans to appraise the field and assess potential reserves are in place. Chevron’s Southern Africa strategic business unit Managing Director John Gass said that the firm intends to bring all of Block 14’s discoveries to production as quickly as possible. Also, Triton Energy has made a third big oil discovery in Block G, offshore Equatorial Guinea. Oveng 1 encountered 443 ft of gross pay and 168 ft of net pay in two zones. Triton is preparing an appraisal program to confirm the Oveng and (previously discovered) Okume finds.

North Sea region sees added E&P activity

BG Group Plc has a new gas discovery in Block 47/15b of the southern North Sea. Rose R2, which lies in the Leman sandstone play, flowed at a maximum rate of 30 MMcfgd and 90 bcpd. Meanwhile, BP agreed to allocate a one-third share of its Faroe Islands exploration license to Royal Dutch / Shell. Shell will participate in drilling the first exploration well, Svinoy, which was scheduled to be spudded last month. The firms were recently awarded UK License 1023, located close to the Faroese acreage.

U.S., international rig counts rise

The number of rigs actively exploring for, or developing gas in the U.S. was up 18, to 1,293 in the week ending July 21. Of the rigs running nationwide, 1,068 were drilling for gas, 223 were drilling for oil and two were listed as miscellaneous, according to Baker Hughes. A year earlier, the U.S. count stood at 928 rigs. The count has nearly tripled since an all-time low of 488 on April 23, 1999. The international rig count rose to 760 in June from 752 in May, and 657 from June 2000. The worldwide rig count was up 5% in June from the previous month, and 28% from a year ago.