Oil country hot line

Second Kazakh well confirms giant find

Eyed as a hotspot that may eventually rival the world’s top producers, Kazakhstan, has done it again. The OKIOC consortium has successfully tested a second well in the northeastern Caspian Sea. Kashagan West 1, southeast of the coastal city of Atyrau and over 25 mi from the first well (Kashagan East 1), tested 3,300 bopd and 7.5 MMcfgd on a 32/64-in. choke. OKIOC will now return to Kashagan East to begin an appraisal program in that section of the giant field.

Two projects may improve Saudi’s capacity

The world’s largest oil producer, Saudi Arabia, plans two new field projects that should allow the kingdom to maintain a 1.5-million-bpd cushion or add modestly to excess capacity. The Khurais field project, a site where nothing exists now, would eventually pump 1 million bpd of Arab Medium crude. Additionally, the $1-billion Qatif field development is a fast- track project that is expected to ease the strain from the country’s aging Ghawar field. It is expected to yield about 500,000 bpd – 250,000 bpd of Arab Medium and 250,000 bpd of Arab Extra Light. Currently, calls for bids are ongoing, with contracts due in place by November 2001.

N.A. rigs far ahead of 2000 tallies

Rotary rig activity in the U.S. and Canada continues at a blistering pace, running far ahead of year-ago totals. The number of rigs drilling for oil and gas in the U.S. stood at 1,217 on May 4, up 46% from a year earlier. Baker Hughes reported that the number of rigs drilling for oil and gas in Canada was 210, up 23.5% from the same time last year. The number of rigs in the U.S. Gulf of Mexico increased to 165, up 21% from a year earlier.

Senators say U.S. on brink of energy crisis

If oil and gas supplies are not increased, Americans face a future of even more drastically high energy prices, according to a bipartisan report issued by Sen. Charles Schumer (Democrat-New York) and Sen. Susan Collins (Republican-Maine). The report predicts that U.S. energy demand will increase 21% over the next decade. This prediction, coupled with continuous price increases, could force consumers to pay up to $2,000 more per year for energy. By 2010, the Schumer-Collins analysis estimates that natural gas prices could spike 271%, to $19.75/Mcf from $5.33/Mcf. Oil prices could soar 125%, to $60.50/bbl from $27.08/bbl.

   Meanwhile, House Subcommittee on Energy and Natural Resources Chairman Barbara Cubin (Republican-Wyoming) said the government is partially to blame for any energy crisis. Cubin believes that additional drilling could provide short-term relief to consumers, and she calls for changes within the Bureau of Land Management. She accuses BLM of delaying the permitting process for drilling on federal lands, a situation exacerbated by outdated environmental land-use plans and lack of staff.

Bush vs. Bush in OCS Lease Sale 181 debate

President Bush’s efforts to increase U.S. energy supplies hit a snag as his brother Jeb, Florida’s governor, opposed exploratory drilling off the state’s coastline. As the MMS finalized Lease Sale 181, a 5.9-million-acre area in the northeastern Gulf of Mexico, Interior Secretary Gale Norton sought a compromise with the governor. Sale 181 meets the affected states’ criteria that leasing be at least 15 mi from Alabama’s coastline and 100 mi from Florida. However, Congress is considering legislation that would permanently ban drilling near any part of Florida’s coast, from the Gulf side to the Keys and up the Atlantic side to Georgia. Attempting a compromise with Gov. Bush, who seeks to stop Sale 181, Norton considered banning drilling strictly along the state’s more environmentally sensitive southern coast.

P-36 loss hurts Petrobrás’ quarterly earnings

After losing its biggest offshore floating production platform in March, Petrobrás said that it will suffer a $70-million loss on its first-quarter net income. In a statement sent to Brazil’s Bovespa stock exchange, Petrobrás claims the sinking of the P-36 FPU forced the firm to revise its output forecast for 2001, to 1.39 million bopd from 1.42 million bopd. According to U.S. accounting methods, the loss will have a more intense impact of $90 million. Please see our regional feature article on page 129 for more on Brazil’s E&P sector.

Accidents cause drilling curbs at Ekofisk

After several accidents at Phillips Petroleum’s Ekofisk complex in the North Sea, the Norwegian Petroleum Directorate is limiting drilling there, to improve the fields’ safety levels. NPD sent a letter to Phillips, stipulating that all work involving manual drilling equipment be halted. This action was initiated by a serious injury at Eldfisk Bravo field in April. Phillips spokesman Ingvar Solberg said the restrictions do not affect the area’s output, which is 361,000 bopd and about 39 MMcfgd. However, it does affect three drilling operations and one plugging project. Solberg said several safety concerns already had been addressed. NPD spokesman Jan Hagland said Phillips must comply with NPD’s safety requirements before resuming unrestricted drilling.

Williams bests Shell for Barrett

Ending the futile saga of Shell’s attempted hostile takeover of Barrett Resources, the Williams Cos. topped the Dutch / Anglo firm’s final bid of $60/share and will acquire the Rocky Mountains-based company for $2.8 billion. Additionally, Williams will assume a $300-million debt and begin a cash tender offer of $73/share for half of Barrett’s outstanding shares. This is to be followed by a fixed-ratio merger of 1.767 Williams common shares for each remaining Barrett common share. Shell’s defeat marks its second major takeover knockout within a brief timeframe. Previously, the Australian government rejected the firm’s $5.1-billion, unsolicited bid for Woodside Petroleum, citing "national interests."