Oil country hot line

Saipem gains majority stake in Bouygues

Saipem has completed the acquisition of Bouygues Construction’s 50.8% stake in Bouygues Offshore. It also has filed a standing offer for the remaining public shares with the French market authorities. The cash offer price was unanimously recommended by Bouygues Offshore’s board of directors. The offer price (Euro 60.08/share) represents about a 25% premium over Bouygues Offshore’s one-month average share price prior to Saipem’s announcement of the deal with Bouygues Construction. The transaction has received antitrust clearance from the European Commission, and it represents the largest cross-border acquisition in Europe’s oilfield services sector. The combined services of the merged firms create a new, worldwide group with superior competitive positioning in the provision of EPIC (engineering, procurement, installation and commissioning) services to the oil industry.

Kashagan find said to be world class

The companies in the North Caspian Sea Production Sharing Agreement declared the Kashagan discovery offshore Kazakhstan commercial. The field was discovered in 2000, and the two-year field analysis program suggests it could hold an estimated 38 billion bbl of oil, with about 7 billion to 9 billion bbl of recoverable oil. This analysis confirms that the discovery is one of the largest in 10 years. It is bigger than Alaska’s Prudhoe Bay and equivalent to one-third of the North Sea production. First production is not expected until 2008. However, given that Kazakhstan’s current infrastructure is old and used to pipe only modest amounts of oil, the debate about how the country plans to export the additional capacity is already underway.

Two GOM fields begin production

Noble Energy and Kerr McGee independently announced initial production from Gulf of Mexico deepwater fields. Noble Energy’s Lost Ark field commenced first production in June and flowed at a rate of 28 MMcfgd. The firm plans to boost output to 40 MMcfgd. Discovered in 2001, in 2,700 ft of water, the field was developed using subsea facilities and tied back via a 26-mi umbilical and flowline to a host production facility. Kerr McGee’s Boomvang field also achieved first production in June. One subsea well, the first of three, flowed at a rate of 50 MMcfgd. The second well was brought onstream shortly after the first, and field production is expected to ramp up, reaching a peak rate of 160 MMcfgd and 32,000 bopd by second-quarter 2003. Boomvang has estimated reserves of about 70 million to 100 million boe.

Former oil chief surrenders in scandal

Former Pemex director, Rogelio Montemayor appeared at the federal courthouse in Houston to surrender on charges surrounding one of Mexico’s biggest political corruption scandals. In a public statement, Montemayor said he was turning himself in to U.S. federal officials. The statement cited "[his] desire to demonstrate [his] innocence and that of [his] collaborators." By surrendering in the U.S., Montemayor forces Mexican prosecutors to extradite him. The former chief’s action will limit the Mexico’s ability to expand charges once he returns to the country. A Mexican federal arrest warrant accuses Montemayor and three former associates of embezzlement and misusing public funds by diverting money through the oil workers’ union to the presidential campaign of the then-ruling Institutional Revolutionary Party in 2000. Officials say about $170 million was channeled to the campaign of Francisco Labastido, the first PRI candidate to lose a presidential bid. Montemayor said all money transfers to the union were legal.

DCNR alters gas lease plans in state forest

Pennsylvania Department of Conservation and Natural Resources Secretary John C. Oliver announced that the agency has made several key modifications to its proposal to lease natural gas on state forest lands in North Central Pennsylvania. Modifications include reducing the available auction acreage by more than 50%, as well as other environmental safeguards, such as more specific protection for non-development areas (by revising the lease language to specifically indicate no surface activity), expansion of buffers of environmentally sensitive areas, and enhanced protection of dark sky areas. These modifications and others were made to address public concerns received by the agency.

Two firms have different Angolan experience

ExxonMobil started construction of the Xikomba deepwater development offshore West Africa. Located in Angola’s Block 15, the field has estimated recoverable reserves of about 100 million bbl of oil, with a target production of 80,000 bopd. The Xikomba find will be developed in 4,000 to 5,000 ft of water. It contains nine subsea wells tied back to an FPSO. The company is utilizing an Early Production System, and first production is scheduled for late 2003. Unlike ExxonMobil’s favorable experience, ChevronTexaco was fined $2 million by the Angola government for environmental damage allegedly caused by oil spills from the U.S. firm’s operations in the region. The Ministry for the Environment and Fisheries issued a statement that said a spill in early June from ChevronTexaco’s offshore platforms in northwestern Angola polluted beaches and forced fishermen to stop work. A government investigation revealed that the leaks were due to decayed pipes used to transport crude from the platforms. Company officials said they intended to replace inadequate pipes.

DMT wins Central Europe’s biggest contract

Essen-based DMT won what is currently the biggest exploration contract in central Europe from Vienna-based Rohoel-Aufsuchungs AG. DMT will explore an area of 530 sq km to the east of Vooklabruck, using 3-D vibroseismics to locate reserves. The contract will be completed within eight months. DMT Managing Director Dr. Reinhard Bassier said, "With this contract we are consolidating our position in the European exploration market." Last year, the firm’s same seismic team successfully explored two areas of more than 100 sq km to the north of Vienna under contract to OMV using DMT’s own 3D vibroseismic technique.