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Vol. 224 No. 7 |
| KURT S. ABRAHAM, MANAGING/INTERNATIONAL EDITOR |
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OPEC maintains output levels as oil prices gain
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Even as OPEC on June 11 inked its latest agreement to maintain production quota levels through July, oil futures prices reacted by jumping above $32/bbl for WTI crude. Oil ministers delayed any change in member countries’ quotas until their next meeting on July 31. Just the possibility that OPEC ministers might cut production in their next meeting was enough to push prices higher. Even while it decided to maintain a 25.4-million-bopd ceiling, OPEC urged members to quit exceeding their quotas. High prices in recent months tempted some countries to exceed their combined ceiling by 1.5 million bopd, in effect producing 26.9 million bopd. Qatari Oil Minister Abdullah bin Hamad al-Attiyah said the group would reassess the impact of Iraq’s eventual return to the post-war market at the July 31 meeting.
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Saudi Arabia junks last two mega gas deals
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Reports out of Riyadh indicate that Saudi Arabia has closed talks on the remaining two of three original mega-gas development deals after repeated failures to reach final agreements. Saudi Oil Minister Ali al-Naimi reportedly sent a letter to ExxonMobil and its fellow consortium members, telling them that he was ending negotiations on Core Venture 1 to develop gas reserves in the southern portion of the giant Ghawar oil field. Cancellation of the deal was said to be effective on June 15. Meanwhile, Naimi is said to have also terminated Core Venture 3, led by Shell. It would have been a $5-billion gas development project in the Shaybah field area. Saudi officials previously had canceled Core Venture 2, which ExxonMobil would have also led to develop gas reserves in northwestern Saudi Arabia, near the Red Sea.
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ExxonMobil exec reasserts importance of Middle East
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Even as Saudi Arabia was canceling Core Venture 2, ExxonMobil Executive Vice President Harry Longwell emphasized the Middle East’s importance to his firm. Speaking at the 13th Middle East Oil & Gas Show in Bahrain, he focused on the region’s importance in coming decades for meeting oil and gas demand growth, and easing the shift to more remote sources. “The Middle East will remain the largest, most important supplier of oil for decades to come,” said Longwell. “We expect that around 20% of our worldwide upstream capital expenditures will be in the Middle East through the end of this decade. This could be larger, with potential new openings.”
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Unocal will sell US upstream assets
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To lower so-called operating and DD&A (depreciation, depletion and amortization) costs, Unocal Corp. said it will sell certain US Lower 48 assets, primarily oil and gas fields in the Gulf of Mexico. “We anticipate selling our working interest in approximately 75 fields in the Gulf of Mexico area,” said Unocal chairman and CEO Charles Williamson. “These properties only represent a net average daily production of approximately 25,000 to 30,000 boed and proved reserves of 40 million to 50 million boe.”
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Petrovietnam placed within Ministry of Industry
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Vietnamese officials have put state oil firm Petrovietnam under the control of the Ministry of Industry “to improve governmental operations.” A decree was issued, which stated that the ministry would now “manage” the state company. The ministry will now handle some functions previously assigned to Petrovietnam, including nationwide strategies for oil and gas development. Meanwhile, Russian oil firm Zarubezhneft has pulled out of Vietnam’s Dai Hung offshore oil field, because the project is not viable. Petrovietnam will assume operatorship and go alone on the project.
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Iraq hands out first post-war oil tender
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A 10-million-bbl tender was awarded by state oil marketing company SOMO, representing the first crude to be released from storage since coalition forces occupied Iraq. Among the six winners were Spanish firms Repsol and Cepsa, Turkey’s Tupras, Italy’s ENI and France’s Total. The only US firm was ChevronTexaco. Of the 10 million bbl, 5.5 million bbl are destined for the European market, and 4 million bbl will go to the US.
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Industry wins one victory in US energy bill battle
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As the battle over US energy policy continued in Congress, the Senate, by a 54-44 margin, defeated an amendment that would have removed Section 105 from the comprehensive energy bill (S. 14). That section prescribes the conducting of a comprehensive scientific inventory of all oil and gas resources in US waters, even if they are under leasing moratoria. A similar version was stripped from the House version of the energy bill earlier this year. Successful defense of Section 105 was due in part to a coalition of natural gas end-users, energy producers, agricultural manufacturers and chambers of commerce led by the National Ocean Industries Association (NOIA). Although this vote represents a significant victory, NOIA noted that once the Senate finishes S. 14, it must still be reconciled in conference committee with the House-approved version.
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Denmark sets output record in 2002
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Figures supplied by the Danish Energy Authority show that production last year was 21.5 million m3, or about 367,000 bopd. This new record is about 2% greater than the previous high set in 2000. The mark can be attributed to major new investments made by operators offshore. Given their latest plans that have been approved by authorities, the outlook for 2003 envisions yet another new record.
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Irish minister touts his nation’s offshore appeal
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Irish Minister for Communications, Marine and Natural Resources Dermot Ahern told an industry gathering in Oslo that his country still offers good offshore prospects and exploration potential. Noting that the government has opened up the entire Porcupine basin off the western and southwestern coast for licensing, Ahern said officials want to send a strong message that they welcome all offshore oil and gas exploration and investment.
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California sees its first solar-powered output
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ChevronTexaco has installed California’s first solar photovoltaic facility that powers oil field operations. The 500-kW demonstration project is about 40 mi from Bakersfield in the San Joaquin Valley. The six-acre plant is comprised of 4,800 flexible solar panels. They produce current that powers oil well pumping units and processing plants at the firms’ Midway-Sunset field.
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Petroecuador’s president is told to take a hike
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Petroecuador’s board of directors dismissed President Guillermo Rosero, principally for disagreements with Energy Minister Carlos Arboleda. An employee representative on the board said that members acted on the request of Ecuadoran President Lucio Gutierrez, who was upset that Rosero had not complied with “current oil policy.” At press time, a successor to Rosero had not yet been named. 
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Opinion
As a general rule, US politicians are not very savvy on oil and gas issues. No, I’m not referring to the dedicated careerists in the Departments of Energy and Interior, who slave away in under-appreciated obscurity. The definition of politician refers to the relative handful of elected officials running things at the top, be they cabinet secretaries, senators, representatives, presidential advisors, etc. The same definition applies to many governors and attorneys general in the 50 state governments. As a group, they’re pretty lame on E&P issues.
Thus, it’s always a pleasant surprise to see politicians taking proactive steps that are positive. Such is the case in Louisiana, where state officials have the “America’s Wetland (AW): Campaign to Save Coastal Louisiana” underway. This intensive public awareness effort was launched last fall, directly from the office of Gov. Mike Foster, Jr. (Republican). Foster says he has a desperate message to convey: If the US does not do something soon to stop coastal erosion, then 40% of Louisiana’s wetlands will disappear into the Gulf of Mexico, oil prices will rise and Cajun swamps will exist only in folklore. He points to grim figures from scientists that show Louisiana is losing 24 sq mi of coast per year, and the pace has accelerated in recent years. Since 1932, the state has lost an incredible 1,900 sq mi of wetlands.
What is unique about the AW campaign is the link that it makes between the demise of wetlands and likely repercussions for oil and gas activity, and the national economy. Foster’s office estimates that it will take $14 billion (yes, BILLION) to stop the erosion process and repair some of the coastal damage. It is also no secret that the governor realizes he has a sympathetic ear in the Bush administration, and now may be as good a time as any to link these facts and pry some of the money needed out of federal hands. “The coast is really about money, aside from the ecological value of it,” said Foster in recent remarks. Indeed, campaign organizers believe that coastal erosion threatens the entire oil and gas infrastructure of southern Louisiana, from producing wells to pipelines and refineries. They argue that unabated erosion will cause oil prices to rise, some port areas will be lost, and fisheries will disappear. The threat that New Orleans will be flooded easier by a hurricane is also mentioned.
The AW campaign has brought together an interesting mix of sponsors, ranging from “world sponsor” Shell Oil to the New Orleans Hornets basketball team and the renowned McIlhenny Co., whose Tabasco brand hot sauce bottles now carry the campaign’s logo. Additional sponsors and cooperating groups include city and parish governments, restaurant and other business associations, environmental organizations and state agencies. To date, Shell has spent $3 million on the effort. A comprehensive plan to restore Louisiana’s wetlands is being drafted by the US Army Corp of Engineers, and it is due out in October. State legislators are also considering 44 new bills that address wetlands policy. Readers interested in further information are encouraged to visit the AW website at www.americaswetland.com.
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