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Vol. 227 No. 8 |
| KURT S. ABRAHAM, MANAGING/INTERNATIONAL EDITOR |
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Colombian output hits three-year high
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State oil firm Ecopetrol reported that the country’s production averaged 538,709 bopd in May, the highest level in nearly three years. Ecopetrol directly produced 156,963 bopd, while the remainder came from associations with private operators. May output was up 1.5% from a year earlier, and appeared to be the highest since 546,105 bopd in August 2003. Colombia’s record output was 846,484 bopd in January 1999.
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Lukoil begins Uzbek work
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Russia’s Lukoil has work underway on the 35-year Kandym-Khauzak-Shady-Kungrad PSA project in southwestern Uzbekistan. Present efforts cover development of Dengizkul gas field, along with seismic work. The PSA was signed in June 2004, and Lukoil has already completed a 3D seismic survey on the Khauzak block. The firm will drill at least 180 development wells, construct 1,500-plus km of pipelines, and build two compressor stations, along with power lines, a 40-km railway and various roads. Chinese contractor TUHA will handle the drilling chores.
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Survey slated for Eastern Canada
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The Canadian federal government has awarded a $2 million contract to Newfoundland-based Fugro Jacques Geosurveys Inc. to map the outer edge of the country’s continental shelf beyond the Grand Banks. The survey will look at the nose and tail of the large subsea plateau, as well as the Flemish Cap. Of concern to officials is Canada’s claim to the oil and gas resources that may lie underneath the seabed beyond the internationally recognized 200-mi limit. They say that this survey will establish beyond doubt where the continental shelf begins and ends.
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ANP sets Round 8 date
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Brazilian national hydrocarbon regulator ANP said it will hold the country’s eighth exploration licensing round on Nov. 28, 2006. In the meantime, ANP will prepare the tender and the areas to be offered. The round was postponed from the end of August, because the agency said it did not have enough time to properly follow legal steps for the auction. There are rumors that ANP intends to offer up to 400,000 sq km for exploration in this round.
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Middle Eastern violence pushes oil price to new record
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The Lebanese-Israeli conflict in its early stages pushed the oil futures price on the New York Mercantile Exchange (NYMEX) to a record high of $78.40/bbl on July 14, on fears that the fighting would spread through the region. However, as time wore on and days turned to weeks without the conflict spreading, NYMEX traders relaxed somewhat, and the price fell back into a range between $73 and $76/bbl. Concurrently, the International Energy Agency (IEA) said in its latest monthly oil market report that world oil supply rose 315,000 bopd in June 2006 and was 715,000 bopd higher than a year earlier. IEA said that global oil supplies should continue to recover into 2007. Also, IEA confirmed that up to 20 million bbl of Iranian crude is being stored in 10 vessels, much of it being heavy, sour Soroush/ Nowruz oil that is hard to market.
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US legislators proceed with offshore drilling bills
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The US House of Representatives approved a wide-ranging overhaul of offshore drilling regulation by a 232 – 187 vote, with 192 Republicans and 40 Democrats supporting the measure. It calls for lifting all leasing bans beyond 100 mi of state shorelines. Between 50 and 100 mi, leasing would be allowed, unless a state sought to block it. All leasing within 50 mi of state shorelines would remain under a ban. In addition, the House measure reduces the revenue share with states on current leases within 12 mi of the shoreline to 64% from 75%, and this would be phased in over 10 years. The 64% rate also applies to new leases within that distance, but the effect is immediate. Naturally, passage of the House bill prompted antagonistic lawmakers from Florida to work overtime to avoid a similar bill in the Senate. Indeed, Florida Senators Mel Martinze (Rep.) and Bill Nelson (Dem.) succeeded in convincing Senate Majority Leader Bill Frist (Rep. – Tenn.) to support a compromise hammered out behind closed doors. The Senate measure would limit new offshore development to the Gulf of Mexico (keeping a ban in the Atlantic Ocean), with a ban on activity within 235 mi of Florida’s coast along Tampa and Naples, and no closer than 125 mi off the Florida Panhandle. As this issue went to press, the Senate bill was nearing a vote on the floor. How the Senate and House versions could be reconciled was not clear.
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Louisiana sues to block offshore lease sale
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Last month, Louisiana Gov. Kathleen Blanco (Dem.) sued the US federal administration, seeking to temporarily block an Aug. 16 lease sale of 3,787 tracts in the western Gulf of Mexico. Blanco’s action is partially motivated by concerns that the MMS is disregarding environmental damage allegedly caused by drilling, along with accusations that the agency failed to get adequate information about additional damage done to the coastline last year by Hurricanes Katrina and Rita. Furthermore, the suit appears to be part of a larger goal to gain the state a greater share of federal royalties. Blanco believes that Louisiana deserves far more than the average 2% that it now receives.
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Mediation finally ends Norwegian oil service strike
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A five-week strike by workers in the oil service sector of the Norwegian offshore industry finally ended, when the national government ordered mandatory arbitration. The strike by 87 of 2,650 members of the Norwegian Oil and Petrochemical Workers Union (NOPEF) had been enough to reduce Norway’s output by 37,000 boed, and it also halted operations on two drilling rigs. Service companies affected by the strike included Baker Oil Tools, Halliburton, M-I Swaco, Oceaneering, Schlumberger and Weatherford. Representing these employers in the wage talks that had broken off before the strike was the Norwegian Oil Industry Association (OLF). Following the government’s intercession, NOPEF and OLF agreed to a pay deal that gives workers a raise of about 60,000 Norwegian kroner ($9,684 at current exchange rates), along with seniority and other "extras" during the 2006 – 2007 contract period. "We had to stretch ourselves quite some way to achieve a deal," OLF chief negotiator Jan Hodneland told a press briefing. "It was an expensive settlement for us."
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Browne intends to follow BP retirement plan
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Seeking to end speculation about his future, BP’s chief executive, Lord John Browne of Madingley, told a press briefing in London unequivocally that he will leave the company at the end of 2008 after reaching BP’s mandatory retirement age of 60. Lord Browne’s announcement came as BP reported a record second-quarter profit of $7.27 billion (£3.90 billion). Browne is widely credited with transforming BP from a lackluster performer into one of the world’s strongest oil companies during his 11-year tenure as chief executive. "I don’t believe in retirement," said Browne, who will look for new opportunities. "It is a concept invented by (German Chancellor Count Otto von) Bismarck (in 1889). The idea seems a touch out of date."
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Shell, Nigeria agree to $6 billion LNG project
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State firm Nigerian National Petroleum Corp. (NNPC) and Shell have signed a $6 billion deal for an LNG project that should go onstream in 2011. The four-train, 22-million-ton/ year complex will utilize gas produced by upstream affiliates of the sponsors. The sponsors of the Olokola LNG project include the Olokola Free Trade Zone Co. and Nigeria Export Processing Zones Authority. Project partners include NNPC (49.5%), Chevron (18.5%), Shell Gas & Power Developments (18.5%) and BG International (13.5%). The complex will also produce "substantial quantities" of NGLs as a by-product.
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Kuwait set to clarify oil reserve figures
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Upset by a January report in Petroleum Intelligence Weekly that Kuwait’s oil reserves are only 48 billion bbl instead of the claimed figure of 100 billion bbl, the emirate’s oil minister, Sheikh Ali Al Jarah Al Sabah, said he has "undertaken to clarify the truth and volume of Kuwaiti oil reserves." As this issue went to press, Sheikh Ali said the issue for lawmakers and ministers "is a very significant matter, and soon the volume and truth of oil reserves will be announced, based on clear, scientific studies, characterized by reality and credibility, and supported by international documents and certificates."
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Steam injection used in Neutral Zone
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Saudi Aramco and Chevron have successfully tested the use of steam injection to produce heavy oil in the Divided Neutral Zone between Saudi Arabia and Kuwait. According to Chevron spokesman Michael Barett, steam injection tests began on six wells this year in Wafra field, where some of the thick oil had previously been considered unrecoverable. Saudi Oil Minister Ali Naimi confirmed that high oil prices had made the experimental project more attractive financially, and it could eventually add "tens of billions of barrels" to the kingdom’s proved reserves. Barrett said that the six wells include one injector, four producers and one observation well. The project will expand to 16 injectors and 25 producers.
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Drilling near all-time high in West Virginia
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As reported by the Charleston Daily Mail, West Virginia’s producers and contractors are operating at full capacity to take advantage of high oil and gas prices. As of mid-July, the state’s Department of Environmental Protection had already issued 1,769 drilling permits, a pace that could break the record of 2,660 permits. "There are people in line to drill holes, waiting on a permit," said Al Blankenship, the state’s oil and gas regulatory compliance manager. With activity so high, workers are in short supply. "Someone told me the other day, they were fighting over bad employees," said Blankenship. "People with the rigs are calling the shots. They might say, ‘We’ll get you two months down the road.’"
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Woodside sees first oil at Enfield
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Production has begun from Woodside Petroleum’s Enfield oil project, offshore North West Cape, Australia. Hook-up, testing and commissioning of the Nganhurra FPSO was completed last month, and production has been increasing steadily since then. Nganhurra is 50 km northwest of Exmouth and has a maximum output rate of 100,000 bopd, with a storage capacity of 900,000 bbl of oil. Water depth is 390 m (1,280 ft).
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UK officials give sanction to Ettrick plan
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Minority partner Bow Valley Energy (12%) said that UK officials have approved the Nexen-operated (80%) Ettrick oil field development plan. Discovered in 1981, Ettrick was appraised by seven wells between 1982 and 1985. Situated in North Sea Blocks 20/2a and 20/3a, Ettrick will be developed on a phased basis. Phase one will include three producing wells and one water injector. The second phase will consist of one or two additional injectors, dependent on field performance. All wells will be tied back to an FPSO. First oil should be achieved by first-quarter 2008, and peak output will be 20,000 bopd. The other project partner is Atlantic Petroleum (8%). 
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