World of Oil and Gas

Kinder Morgan, Copano enter JV for Eagle Ford

Kinder Morgan and Copano entered into formal agreements for Eagle Ford Gathering, a 50-50 joint venture to provide gathering, transportation and processing services to natural gas producers in the Eagle Ford Shale resource play in South Texas. Kinder Morgan and Copano have each increased their committed capacity from 150,000 to 375,000 MMBtu per day for transportation on Kinder Morgan’s Laredo-to-Katy pipeline and processing at Copano’s Houston Central processing plant.

Tullow expands interest in offshore Suriname

Tullow Oil plc has signed a heads of agreement with Suriname’s state oil firm in relation to Block 47, a 915-sq-mi deepwater exploration license. Tullow plans to acquire seismic data during 2011 and anticipates that wells will be drilled as part of the group’s medium-term exploration program in the Equatorial Atlantic region of South America. Tullow will operate the license with a 100% interest. State oil company Staatsolie has the option to participate during the development and production phases with a 20% interest.

McDermott awarded $150M Gorgon contract

J. Ray McDermott has been awarded a contract, valued in excess of $150 million, by the Kellogg Joint Venture-Gorgon on behalf of Chevron Australia Pty. Ltd., operator of the Gorgon Project. More than 60 pre-assembled racks will be constructed at McDermott’s Batam Island fabrication facility in Indonesia, then installed as part of the LNG plant currently under construction on Barrow Island, on Australia’s North West Shelf. Work is expected to begin in fourth-quarter 2010 and be completed after two years.

BP makes first attempt to seal off GOM well

 After several attempts to contain the flow of oil leaking from the Macondo well in the Gulf of Mexico, engineers were performing a top kill operation as of May 28, where over 50 barrels of heavy drilling fluid are pumped into the sunken rig’s blowout preventer every minute. If the specially produced kill mud “outruns” the pressure of the well and halts the flow of oil, engineers will then pump cement into the well casing. This top kill procedure has not been carried out offshore in waters 5,000 ft deep before. To prepare for the operation, BP deployed multiple underwater ROVs that could withstand extremely high pressure, work with the stuck valves and take various measurements. BP has provided a live video feed from the seabed through the diagnostic testing and top kill. BP’s subsea efforts, carried out in conjunction with governmental authorities and other industry experts, continue to focus on progressing options to stop the flow of oil from the well through interventions via the blowout preventer, and to collect the flow of oil from the leak points. The Deepwater Horizon semisubmersible rig was drilling on Mississippi Canyon Block 252, more than 50 miles southeast of Venice off Louisiana’s coast, when an explosion occurred on April 20. Eleven rig workers died as a result of the incident. Since sinking into the deep waters days after the initial explosion, the well has been leaking thousands of barrels of oil a day into the Gulf of Mexico.  About 1,300 vessels are responding onsite, and more than 11 million gallons of oil-water mix have been recovered. Additionally, 17 staging areas have been set up to protect shorelines affected by the spill. As the operator of the block, BP is required to fund response and recovery costs.

Norway, Russia make Arctic border compromise

The leaders of Russia and Norway announced that they had agreed on a compromise Arctic border in the Barents Sea, ending a 40-year dispute over a region believed to contain vast oil and gas reserves. “This solution is about more than a border line under the ocean. It is about developing good neighbor relations,” Norwegian Prime Minister Jens Stoltenberg said at a joint press conference in Oslo with Russian President Dmitry Medvedev. Since 1970, Norway and the Soviet Union, and then Russia, have contested a 68,000-sq-mi maritime area straddling their economic zones. Canada, Denmark, Norway, Russia and the US are at odds over how to share the Arctic seabed, thought to hold 90 billion bbl of oil and 30% of the world’s undiscovered gas resources, according to the US Geological Survey. Rivalry over the Arctic riches has heated up as melting polar ice and new technologies have made the region more accessible. There are already several large projects underway to develop vast fields of oil and natural gas outside the area split by the agreement. The massive Shtokman gas field is being developed on the Russian side while, on the Norwegian side, the SnØhvit gas field is online and the Goliat oil field is being developed.

OGX estimates 1.4–2.6 billion bbl in Campos Basin

OGX Petróleo e Gás Participações has concluded the drilling of wells OGX-6 and OGX-8, both located in the BM-C-41 Block, in the shallow waters of the southern part of the Campos Basin. The OGX-6 well, Etna prospect, was drilled to a depth of 11,825 ft, resulting in evidence of hydrocarbons in the carbonate reservoirs in the Albian and Aptian sections. Well OGX-8, Fuji prospect, was drilled up to 13,480 ft and also encountered evidence of hydrocarbons in the carbonate reservoirs in the Albian and Aptian sections. Based on the final well information combined with 3D seismic data interpretation, OGX estimates recoverable oil volumes of between 1.4 and 2.6 billion bbl for the accumulation composed of the Pipeline and Etna prospects (OGX-2A and OGX-6). Estimates for the recoverable oil volume of potential structure composed by the Waimea and Fuji prospects (OGX-3 and OGX-8) are between 600 and 1,100 million bbl. OGX holds a 100% working interest in the block.

Qatar Petroleum, Shell, Petrochina sign new E&P deal

Qatar Petroleum, on behalf of the state of Qatar, has signed a new exploration and production sharing agreement (EPSA) with Shell and PetroChina for Qatar Block D. Under the agreement, the partners will jointly explore for natural gas in Block D, which covers an area of 3,123 sq mi onshore and offshore Qatar, and is located close to Ras Laffan. The Block D concession is for pre-Khuff geological intervals. The overlying Khuff horizon contains the super-giant North Field. The total term of this agreement is 30 years and starts with a five-year first exploration period. During the exploration period, Shell and PetroChina will implement a work program including exploration technical studies, 2D and 3D seismic acquisition, processing, re-processing and interpretation, and drilling of a number of exploration wells to the pre-Khuff formation. Shell, as operator, will hold a 75% equity share with PetroChina holding a 25% share.

No further delays on Shtokman gas field

Plans to develop the Shtokman natural gas field in the Barents Sea remain on track, with a final investment decision expected in 2011, Total announced. The consortium holding rights to the field, Total, Gazprom and StatoilHydro, has decided to split its development, with a final decision on the natural gas extraction in March 2011 and a decision on liquefying the gas by the end of 2011. Shtokman’s reserves are estimated at about 130 Tcf and 37 million tonnes of gas condensate. Total expects LNG from Shtokman to be produced from 2017.

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