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Vol. 226 No. 3 |
| KURT S. ABRAHAM, MANAGING/INTERNATIONAL EDITOR |
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IEA revises forecast higher for 2005 oil demand
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Analysts at the International Energy Agency (IEA) said higher US and Chinese growth prompted them to revise upward their final estimates of global oil demand in fourth-quarter 2004 by 200,000 bpd, to 84.4 million bpd.
This was due, in part, to stronger Chinese demand growth in December, of just over 10%, or 50,000 bpd, compared to November. Accordingly, IEA hiked Asian demand growth for 2005 by 90,000 bpd, compared to the agency’s previous report. Again, the reason was more robust outlook for Chinese demand, as well as Southeast Asia overall. Assuming normal weather patterns this year, IEA forecasts that for the fourth quarter, OECD Asian demand will be even higher than last year.
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China claims 25% boost to oil reserves during 2004
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Although the report sounds dubious, official news agency Xinhua reported that China increased its proven oil reserves 25% last year. Credit, said the agency, should go to intensified exploration activity that supposedly helped the two largest state oil companies find nearly 850 million metric t (6.2 billion bbl) of new oil. If true, this would mean that China’s total proven oil reserves surpassed 4 billion t (29.0 billion bbl) last year, rather than 3.2 billion t (23.4 billion bbl), as reported earlier. China National Petroleum Corp. said it found 520 million t (3.8 billon bbl), while Sinopec claimed a figure of 328 million t (2.4 billion bbl). The two companies, combined, also supposedly discovered 422 Bcm (14.9 Tcf) of new natural gas reserves.
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MMS issues final notices on two US GOM lease sales
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The Minerals Management Service has released final details on two Gulf of Mexico lease sales that will both take place on March 16, 2005. Lease Sale 194 concerns the central GOM and encompasses 4,063 unleased blocks covering about 21.4 million acres offshore Louisiana, Mississippi and Alabama. The blocks are situated anywhere from 3 to 210 miles offshore in water depths ranging from 4 to 3,400 m (13 to 11,150 ft). MMS estimates that development of these blocks could yield production of 276 million to 654 million bbl of oil, and between 1.59 and 3.3 Tcf of gas. In the eastern GOM, Lease Sale 197 covers 124 unleased blocks that total 714,240 acres. These blocks are 100 to 196 mi offshore Alabama, in water depths ranging from 1,600 to more than 3,425 m (5,250 to more than 11,235 ft). MMS estimates potential economical output of 65 million to 85 million bbl of oil, and 265 to 340 Bcf of gas.
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Industry groups urge Interior to expand offshore work
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Several key industry associations banded together to press the US Interior Department to consider loosening access to offshore oil and gas resources, including areas where new drilling has been banned, to date. This action by industry lobbyists follows similar prodding from several crucial members of Congress, including Sen. Pete Domenici (Republican-New Mexico), chairman of the Senate Energy and Natural Resources Committee. Seven trade associations sent a letter to Interior Secretary Gale Norton, asking her “to begin the request for comments solicitation by seeking information for all planning areas, as required by the Outer Continental Shelf Lands Act and National Environmental Policy Act.” The groups involved include NOIA, API, IPAA, IADC, the Natural Gas Supply Association, the US Oil and Gas Association, and the Domestic Petroleum Council. They acknowledge that convincing the Bush administration to go a step further on this matter, and risk a hostile reaction in Congress, will not be easy. An MMS spokesman confirmed previous statements by the agency that the Bush administration favors carrying existing moratoria in place until 2012.
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Russia gives conflicting signals on foreign participation
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Russian Natural Resources Minister Yuri Trutnev said that foreign oil firms would be welcome to help develop offshore oil and gas resources. “Without foreign investment, it will be difficult to develop the shelf,” said Trutnev to news agency Interfax. He went on to say that consortiums featuring Russian and foreign companies could develop deposits on the shelf. However, a week earlier, Trutnev had said that only entities in which Russian firms have a controlling interest would be allowed to participate in auctions of strategically important oil and gas resources. That statement seems to rule out onshore activity, and it could put a limit on offshore participation. Reaction from US officials off the record was predictably critical. They called the move disappointing and said it could hamper efforts to further develop US-Russian cooperation on energy projects.
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Gazprom reveals intent to form LNG consortium
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Russia’s natural gas giant, Gazprom, said it wants to create an international consortium by mid-2005 to supply LNG to the US market. Gas for the project would come from a $10-billion development of Shtokman field in the Barents Sea, offshore northern Russia. According to Gazprom Deputy CEO Alexander Ryazanov, the firm is eager to finalize details and get the project moving. Otherwise, Gazprom managers fear that they will miss their window of opportunity. The $10-billion first stage includes annual Shtokman output of 30 Bcm (2.9 Bcfd) of natural gas, of which 22 to 24 Bcm (2.1 to 2.3 Bcfd) would be converted to 15 million metric t of LNG. Eventually, Shtockman’s production could hit 100 Bcm (9.7 Bcfd). Shipments to the US would be targeted to begin by 2010 or 2011.
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Alaska clears firms of North Slope blowout allegations
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Allegations that BP and Nabors Alaska Drilling allowed two blowouts to occur in North Slope wells and then failed to properly report them were dismissed by the Alaska Oil and Gas Conservation Commission (AOGCC). Investigators found that neither incident could properly be called a blowout, said AOGCC Chairman John Norman. Furthermore, he said, BP and Nabors workers never lost well control, reported incidents when required and violated no regulations. In the first case, dating to July 2003, a Nabors rig encountered gas hydrates that suddenly expanded, and ejected gas and drilling mud out of the well. However, said Norman, the rig crew never lost control, and the incident was handled properly. In the second incident last December, a Nabors rig experienced wellbore breathing that BP personnel had anticipated. AOGCC investigators found that BP followed “good oilfield engineering practices,” and the crew never lost control. Norman said that the allegations had been lodged by Chuck Hamel of Alexandria, Virginia, a long-time industry critic, who had received so-called tips about blowouts from workers at Prudhoe Bay and adjoining fields, including blurry, questionable photos.
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Former UK official predicts post-election review of policies
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Former British Energy Minister Brian Wilson predicted that the government’s energy policies would be reviewed after the general election takes place, most likely in May. Speaking to the Coal Industry Society in Edinburgh, Scotland, Wilson noted that climate change continues to move up the political agenda. He advocated an “indigenous energy policy” that can include nuclear energy and coal, as well as renewables. However, no matter how strong a role these fuels play, Wilson predicted that they would “only reduce the projected dependence on imported gas.”
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UK/ Norway treaty ushers in new era of cooperation
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Norwegian Minister of Petroleum and Energy Thorhild Widvey and her counterpart, UK Energy Minister Mike O’Brien, met in Sanderstolen, Norway, to mark the successful conclusion of negotiations to produce a treaty that allows cross-border oil and gas projects in the North Sea to proceed freely. Assuming that the Framework Treaty is approved by both countries’ parliaments, it should allow certain cross-border projects to progress much faster. In the past, each time a cross-border field development or pipeline was proposed, a time-consuming process to negotiate a special treaty was required. Already, the dynamic approach taken by both governments to the situation is evidenced by the recent, speedy development of two small oil fields, Playfair in the UK and Boa in Norway. Industry does not have to wait for formal ratification to occur before bringing forth new projects.
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ONGC receives approval to develop deepwater field
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The Pollution Control Board of the Andhra Pradesh state government granted an Environmental Clearance to Indian state firm ONGC to develop the G-1 deepwater and GS-15 shallow water fields. The tracts are 28 km (17 mi) and 5 km (3 mi) offshore, respectively, in the Krishna Godavari basin. Five production wells will be drilled as part of the G-1 development, in water depths between 135 and 500 m (84 and 311 ft). Development of GS-15 will require three wells. At peak rate, the integrated development of these fields will produce about 9,400 bopd and about 40 MMcfgd. Target date for going onstream is April 2006.
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Industry members berate Alaska’s governor on tax changes
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At a rowdy meeting organized by the Alaska Support Industry Alliance, various North Slope companies savaged Gov. Frank Murkowski’s announcement of tax changes that they say could cost them about $150 million. Back during January, Murkowski said that oil from Prudhoe Bay satellite fields would no longer be taxed at lower rates under the Economic Limit Factor of the state tax code. That plank was designed to lower costs on newly developed or declining fields. However, under Murkowski’s plan, the entire Prudhoe Bay area would be taxed at a 15% rate. A ConocoPhillips spokesperson said the changes could cause cancellation of $500 million in project spending. For his part, Murkowski, who attended the meeting, told local media that he felt “a little like a pork chop being thrown around the wolf cage.”
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California output slides
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Norway boosts R&D fund
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E. Timor stays on track
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Venezuela okays plan
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Gullfaks satellite okayed
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Central Azeri is onstream
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Camisea lifts up Peru
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Permian basin producers to spend $500 million
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At the annual operators forum hosted in Midland, Texas, by the Permian basin chapter of American Association of Drilling Engineers, area producers said that they will spend about $500 million, combined, on new drilling this year. One firm, XTO Energy, bought $1.5 billion of regional assets last year and will boost its drilling by more than 300%. As quoted in the Odessa American newspaper, Chesapeake Energy will spend $200 million, up 111%. Other examples include OxyPermian with $100 million for 310 wells (up 28%) and Bass Enterprises at $47 million, about double last year’s amount.
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