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Vol. 225 No. 2 |
| KURT S. ABRAHAM, MANAGING/INTERNATIONAL EDITOR |
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Bush budget calls for drilling in Alaskan refuge
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The Bush administration said it will push Congress this year to open Alaska's Arctic National Wildlife Refuge (ANWR) to oil drilling. If this effort succeeds, officials hope to begin leasing tracts in the area to oil companies in 2006. Even though the Senate has voted several times against giving the industry access to ANWR, the White House included the drilling plan in its proposed 2005 governmental budget sent to Congress. The administration's budget notes that opening the refuge would raise an initial $2.4 billion in leasing fees. Half that amount would go toward increased funding for the Energy Department's renewable energy technology research programs over seven years. The refuge sprawls across 19 million acres, but only the area's 1.5-million-acre coastal plain would be opened to drilling under the White House plan. The Interior Department estimates that the refuge could hold between 5.7 billion and 16 billion bbls of recoverable oil. If ANWR was opened to drilling, it would take about eight years before the area reached full oil production.
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IEA expects no radical decision from OPEC meeting
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The International Energy Agency (IEA) said it was confident that OPEC would not take any “harsh decisions” at its February meeting in Algiers. Before the meeting, scheduled for Feb. 10, some OPEC ministers said they were likely to decide to keep official production limits unchanged, calming oil trader fears that the group might try to cut output to prepare for lower world demand in second- quarter 2004. On the other hand, OPEC President and Indonesian Energy Minister Purnomo Yusgiantoro said that there was no consensus among OPEC members on whether to maintain the group's current official output ceiling. IEA Executive Director Claude Mandil criticized OPEC, saying that the group should have tried to “ease the market” months ago, when there was strong demand. Now, demand will decrease in the second quarter, so he said that it would be more difficult for OPEC to make a good decision.
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Statoil says funding in place for BTC pipeline
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Consortium partner Statoil said that the final financing package for the $2.95-billion, Baku-Tbilisi-Ceyhan (BTC) oil pipeline was signed at an official ceremony on Feb. 3. Fifty percent of the work has been completed on the 1,760-km pipeline, which will carry Caspian crude from Azerbaijan via Georgia to the Mediterranean coast of Turkey. Capable of carrying 1 million bopd to the Turkish port of Ceyhan, the line should be ready for exporting in 2005. Staged in Baku, the ceremony marked the completion of agreements covering third-party financing for the BTC project. The deal was signed by representatives of the three host country governments and the BTC lender group. Comprising 208 documents, the finance package involves more than 17,000 signatures from 78 different parties. Construction is underway at 17 different locations in Azerbaijan, Georgia and Turkey, with more than 12,000 people involved.
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ExxonMobil confirms Valdez punitive damages award
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ExxonMobil said that a federal court in Anchorage revised punitive damages awarded in the 1989 Exxon Valdez accident to $4.5 billion from $4 billion, plus interest. “The Ninth Circuit Court of Appeals has twice vacated Judge Holland's decisions in this matter,” said ExxonMobil Vice President and General Counsel Charles Matthews. “This is exactly why ExxonMobil argued before the Ninth Circuit last year that the case should not be remanded to Judge Holland.” The Anchorage federal court last year reduced the punitive damages to $4 billion from $5 billion, after the appeals court vacated Holland's $5 billion award, calling it excessive. Both the plaintiffs and ExxonMobil appealed that action. So, the appeals court vacated the $4 billion award in light of a recent Supreme Court case and asked Holland to reconsider his second ruling. ExxonMobil said it will now have to appeal for a third time.
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Tauzin resigns chairmanship, may become lobbyist
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One of the US E&P industry's greatest congressional friends, Rep. Billy Tauzin (Republican–Louisiana) said he would step down as chairman of the House Energy and Commerce Committee and was considering an offer to become the top lobbyist for the pharmaceutical industry. Tauzin, who has spent nearly 24 years in Congress, informed House Speaker Dennis Hastert that he would give up his chairmanship, effective Feb. 16. He will not seek re-election in November and may leave Congress before then, said Ken Johnson, Tauzin's spokesman. However, Tauzin, 60, was widely expected to accept a job as head of the Washington lobbying operation of the Pharmaceutical Research and Manufacturers of America (PhRMA), which represents large drug manufacturers, such as Eli Lilly and Co. and Merck & Co. Congressman Joe Barton (Republican–Texas) met with Hastert to express his interest in the chairmanship. Barton is a former oil industry professional, who chairs the Commerce Energy and Air Quality Subcommittee. He was viewed as Tauzin's most likely successor.
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UKOOA applauds Treasury decision but calls for more
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The UK Offshore Operators' Association (UKOOA) welcomed details provided by the UK Treasury on how the Exploration Expenditure Supplement will be implemented in the North Sea. Furthermore, UKOOA said it was pleased that the central government recognized the urgency of the situation by backdating the measure to the beginning of 2004. “This measure is specifically targeted at new entrants, to encourage them to carry out exploration in the North Sea,” said UKOOA Acting Director General Steve Harris. “We hope it will have some impact, when exploration and appraisal activity on the UKCS has slumped significantly in recent years. It is a small step in the right direction and is to be welcomed. However, the government must not take its eyes off the bigger picture. There is a much larger prize to be won, with some 10-to-20 billion boe still to be explored, appraised and developed. More action is required.”
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Petrobrás ups reserves
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Brazil's Petrobrás said its proved reserves of oil and gas rose 14% last year. The firm said reserves totaled 12.6 billion boe, due to oil finds in several fields. About 84% of the total were oil and condensate, and 16% were gas. Petrobrás also said that combined oil and gas output was up 12.5%, at 2.04 million boed. However, output of just oil and condensate was down about 1,000 bpd, according to data the firm sent to World Oil.
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Vanco to begin drilling offshore Morocco
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Vanco (operator) signed a participation agreement with ENI to begin drilling its first deepwater well in the Ras Tafelney exploration permit offshore Morocco. ENI will contract the Saipem 10000 drillship to drill one of several prospects. The partnership will drill the Shark B prospect, 130 km off the coast of Morocco, in 2,120 m of water. The well's planned TD is about 4,162 m. The drillship should be in Moroccan waters in late April, and the well will be spudded shortly thereafter.
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Syrian output onstream
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Tanganyika Oil Co. successfully completed its initial well workover program at Oudeh field in Syria, triggering first incremental output above a base level of 1,064 bopd. Oudeh field is a large development block in northeastern Syria containing an estimated 2.4 billion bbls of oil in place. Three wells were cleaned up and worked over. As the field is fully developed over the next few years, total production levels should reach over 30,000 bopd.
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Argentine boost planned
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Pioneer Natural Resources expects to increase its Argentine oil and gas production by 12% to 17% and double its capital investment program in 2004. Pioneer plans to drill six wells in the country during 2004. The firm's production returned to the peak levels of 2000. Average oil production increased 8.8%, to 8,687 bpd, while NGL output production increased 89.4%, to 1,318 bpd. Pioneer's Argentine gas production rose 20.3%, to 94.1 MMcfd. 
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Opinion
As always, assembling our February forecast and review is a daunting task, a job that has become increasingly difficult over the last half-dozen years. Part of the problem lies with governments and oil companies that have cut back personnel, making it more difficult for them to provide data. Another complication concerns some nations that consider oil and gas to be strategic assets, therefore all data must be kept as secret as possible. Perhaps the greatest complication has to do with how federal and state governments, inside and outside the US, keep records and the lack of consistent measurement. For that matter, some oil companies are not much better.
To put it bluntly, the global E&P industry, and its regulators, do a lousy job of record-keeping. Given the billions of dollars invested every year, the haphazard manner in which activity is tracked is appalling and something that most other industries would never tolerate. For instance, in the US, the Energy Information Administration gathers and disseminates some E&P data nationally. However, EIA relies on data supplied by various state agencies, plus additional figures from entities like API. Some states track “completions,” while others track “new wells drilled.” Some states compile both. Then we have the problem of what constitutes an “active” producing well. Depending on the definition, the average number of active producing wells in one of the larger US states can vary by several thousand. Many states also have great variations in the amount of time that they allow operators to report wells drilled. And the conflicts between EIA and state figures on oil production are incredibly aggravating.
Problems are rife outside the US. In Canada, at least four non-governmental entities posture themselves as “official” sources of drilling data, including CAODC, PSAC, CAPP and the Daily Oil Bulletin (DOB). Yet, none of them agree on a grand total for Canadian wells drilled, even though CAODC and PSAC get much of their data from DOB. When one tries to break the total into categories (oil, gas, dry, service and suspended), the confusion multiplies. In other regions, many countries are very slow at compiling data, and the error rate is high. The definition of “suspended well” varies greatly from place to place. Some countries do not even track suspended wells, leaving them in limbo until the operators finally report them as completed or dry. In addition, some countries throw condensate directly into oil output figures, and some do not. Other nations throw NGLs into the condensate. What this industry needs is a concerted, cooperative effort between governments and such groups as API, SPE, IPAA, CAPP, IADC, etc., to establish ironclad definitions of data terms and prescribe standardized periods of measurement. Until this happens, confusion about true industry activity levels will continue.
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