World of Oil and Gas

Vol. 233 No. 7

WORLD OF OIL AND GAS

NELL LUKOSAVICH, SENIOR EDITOR

EXPLORATION

New Zealand opens 23 new blocks for permit tender

New Zealand’s Ministry of Economic Development announced that its annual tender process to attract gas and oil exploration interest is now underway. The 23 blocks have been chosen, based on current knowledge of the geology, and oil and gas prospectivity of the areas. The blocks cover 40,198 sq km of offshore seabed and 3,305 sq km of land in Waikato, Taranaki, Tasman, the West Coast and Southland.

TGS expands 3D survey in the Faroe Shetland basin

TGS has begun expansion of a 3D multi-client survey covering 2,000 sq km in the Faroe Shetland basin, spanning the UK Faroe median line. The acquisition is in partnership with PGS and is the completion of the previously announced FSB11 survey. The new 3D data will play a critical role in developing the Cambo and Tornado fields, and provides new data coverage across exploration blocks applied for in the recent UK 27th License Round.

ExxonMobil sees huge shale oil potential in Western Siberia

Exxon Mobil Corp. is starting work with Russia’s Rosneft in assessing what could be massive reserves of shale oil in Western Siberia, said Chairman, President and CEO Rex Tillerson. The exploration work will take years to establish, if the reserves are commercially viable, and are part of a strategic agreement that Exxon reached earlier this year with state-controlled Rosneft, Russia’s largest oil producer.

Eni to acquire exploration block offshore Vietnam

Eni has signed an agreement with Indian company Essar for the acquisition of 50% and the operatorship of exploration Block 114, offshore in Vietnam’s Song Hong basin. The exploration activities in the newly acquired block include the acquisition of a 3D seismic survey and the drilling of two wells. The block, which is approximately 5,900 sq km, is located in an area where there have recently been significant exploration successes in nearby blocks.

ExxonMobil to explore for oil in Afghanistan

ExxonMobil Corp. told Afghanistan’s Ministry of Mines that it is interested in bidding on the right to explore for oil and gas in the country. A spokesman for the company said that a unit of the company, Esso Exploration International Ltd., recently filed an “expression of interest” in the Afghan-Tajik basin. The filing “is part of our ongoing evaluation of oil and gas resources around the world,” ExxonMobil spokesman Alan Jeffers said. The filing will give ExxonMobil access to seismic and well log data in and around the area that is being offered for bids in northern Afghanistan, near the city of Mazari-Sharif.

UNCONVENTIONALS

Shell to expand Athabasca oil sands work

Royal Dutch Shell will expand its Athabasca oil sands project by a third, by the end of the decade, and Canada will make up a larger share of Shell’s energy production over that period, said Chief Executive Peter Voser. Shell plans to expand the Athabasca project by 80,000 to 90,000 bopd, by debottlenecking its operations in three stages. That would bring the project, in which Shell owns 60%, to at least 335,000 bopd. Shell finished a 100,000-bopd expansion of the project last year. Between 10% and 15% of Shell’s capital expenditures will go to Canada over the next several years, Voser said. That compares with 13.8% of Shell’s capital expenditures that went to exploration and production in Canada and Greenland last year. Shell has earmarked $32 billion for capital expenditures this year.

Korea Gas to invest $3 billion in Australian LNG

Korea Gas Corp. plans to invest an estimated $1 billion in Royal Dutch Shell’s Prelude LNG project and at least $2 billion in the Gladstone LNG project, both in Australia. Each project is expected to provide the company with around 3.5 million tons of LNG annually. Kogas has a 15% stake in the Gladstone project and has agreed to take a 10% stake in the Prelude project. Kogas, already one of the world’s biggest LNG importers, agreed in January to buy around 3.5 million tons of LNG annually from a subsidiary of U.S. company, Cheniere Energy Partners, for 20 years, starting in 2017.

RIL searches for additional shale gas assets

Reliance Industries, India’s second largest company by market value, is scouting for more shale gas assets in the U.S., Canada and Poland, said investment bankers working on the potential assets. “RIL is looking for large shale gas assets, which will need investments of anywhere between $500 million and $2 billion,” one of the bankers looking for assets said. The company has chosen not to appoint a specific investment bank, but has given indications to bankers to scout for such assets. RIL has raised $1.5 billion in long-term loans through its U.S. subsidiary Reliance Holdings USA. The company had invested in excess of $3.5 billion for three shale gas assets in the U.S. in the past few years, including Pioneer, Chevron and Carrizo-operated fields.

PRODUCTION

Chevron looking at mature oil fields off Mexico

Chevron Corp. is interested in developing mature oil fields off the coast of Mexico that are part of state-run oil firm Pemex’s second contract auction. Chevron’s interest in the Arenque Block is likely to be seen as a positive sign in Mexico’s efforts to bring major oil companies back to its oil fields after it introduced a new upstream contract last year. Some analysts have said that luring oil majors was likely to be a challenge, because contract terms for the blocks don’t allow companies to book oil and gas reserves. The auction is the second that the state company has held since introducing the new contract regime, which now allows private producers to develop Mexican oil fields for Pemex in exchange for a per-barrel fee. Pemex retains its constitutional ownership of all national oil and gas resources. The Arenque Block was discovered in 1968.

BP starts up Galapagos development in GOM

BP announced that on June 3, 2012, it began the initial start-up of the Galapagos development in the deepwater U.S. Gulf of Mexico, one of a series of new major upstream projects that the company expects to bring into production this year. The Galapagos development includes three deepwater fields and increases the capability of a key offshore production hub for BP. The fields—Isabela, Santiago and Santa Cruz—are being produced using subsea equipment on the floor of the Gulf. A new production flowline loop has been added to carry output to the nearby Na Kika host facility, a BP-operated platform roughly 140 mi southeast of New Orleans in 6,500 ft of water.

BUSINESS

National Oilwell Varco buys CE Franklin for $231 million

National Oilwell Varco (NOV) agreed to acquire CE Franklin Ltd. for $231 million, giving the manufacturer a supplier of similar products. CE Franklin provides pipes, valves, flanges, fittings and other products. A shareholder rights plan adopted by CE Franklin in April was terminated. Pete Miller, NOV’s Chairman, President and CEO, said, “The addition of CE Franklin to NOV’s Canadian distribution operations will broaden our product offering and customer base, while strengthening our combined abilities to serve all of our customers.”

Argentina’s YPF outlines $35-billion, five-year investment plan

Argentina’s state-run oil and gas producer, YPF SA, plans to invest about $7 billion per year between 2013 and 2017 to increase production, the company’s chief executive, Miguel Galuccio, said. YPF will fund its 2013-17 investment plan largely with its own cash flow and seek partners and investors to share development costs. If the company’s five-year plan works out properly, output is forecast to rise to 216 MMboe in 2017, from an estimated 159 MMboe this year. Argentina ranks third in the world, behind China and the U.S., in potentially recoverable shale gas reserves, with 774 Tcf, according to a study last year by the U.S. Energy Information Administration. Argentina is also thought to hold large quantities of shale oil.

OTC announces launch of OTC Asia in 2014

The Offshore Technology Conference (OTC) Board of Directors has announced the establishment of the Offshore Technology Conference Asia. The initial event will be held in Kuala Lumpur, Malaysia, on March 10-12, 2014. It will be a biennial event going forward, located in prominent cities throughout the region. The OTC Asia technical program will be developed with the 13 sponsoring organizations to include a full spectrum of offshore technology. The conference will focus on offshore resource development, with an emphasis on subsea and above-surface facility issues. A Malaysian Task Force has been created to work together to manage interests, to ensure that the event meets the industry’s needs. The task force comprises representatives from Malaysian national oil company PETRONAS; government agencies, the Malaysia Petroleum Resources Corporation (MPRC); and trade association, Malaysian Oil & Gas Services Council (MOGSC).

REGULATORY AFFAIRS

U.S. exempts seven countries from Iranian sanctions

The U.S. State Department will exempt seven more countries from financial sanctions after they agreed to cut their imports of Iranian oil, White House officials said. Under these actions, the following countries will be exempt from the sanctions for six months: India, Malaysia, South Korea, South Africa, Sri Lanka, Taiwan and Turkey. Without the exemptions, banks in these countries could have faced the threat of being cut off from the U.S. financial system, if they did business with Iran’s central bank, a conduit for the country’s oil sales. The sanctions were set to go into place on June 28.

BP spill fine may hit $25 billion

U.S. Federal regulators are seeking a settlement of $15 billion to $25 billion from BP for the 2010 oil spill in the Gulf of Mexico from the ruptured Macondo well, according to a report by the Financial Times. Analysts at Tudor Pickering Holt said the $25-billion figure is above what they have assumed BP’s liability would be under the Clean Water Act. “It is encouraging that a dialog with the U.S. government appears to be open/ongoing, and removal of the threat of criminal prosecution would be helpful to BP shares,” analysts said.

Iraq to hold new energy licensing auction in 2012-13

Iraq is planning to hold a fifth licensing auction for exploration blocks by the end of this year or at the beginning of 2013, after its last round failed to attract many companies, a top energy advisor to the Iraqi prime minister said. Thamir Ghadhban said the Iraqi oil ministry is expected to improve the contracting terms for the new bidding round. Only three exploration blocks were awarded out of 12 offered last month to international oil firms. Many of the companies, particularly the majors, didn’t take part in that bidding round because of the ministry’s tough terms.

DISCOVERIES

Tullow Oil discovers crude offshore Côte d’Ivoire

UK-based Tullow Oil struck crude last month, offshore Côte d’Ivoire (Ivory Coast) in its Paon-IX wildcat. Drilled by Ocean Rig’s Eirik Raude semisubmersible on the CI-103 license, the well found 41°API oil in 31 m of net pay. The Paon-IX was drilled to a 5,090-m (16,670-ft) TD in 2,193 m (7,195 ft) of water. Following completion of logging, the well was due to be suspended for possible future use in appraisal and development operations. Tullow (45%) operates the CI-103 license and is partnered by Anadarko Petroleum (40%) and state firm Petroci (15%).

Petrobras finds light oil in southern Sapinhoa field

Petrobras has found light crude oil at the 1-BRSA-1045-SPS well, in the southern portion of Sapinhoa field, offshore Brazil in the Santos basin. Drilled in a water depth of 7,222 ft (2,202 m), the discovery hit oil of around 27°API, as confirmed by the company’s cable tests. Under a rights transfer agreement, the company is entitled to produce 319 million bbl of oil equivalent in the area. At press time, Petrobras was drilling the well to a depth of 16,590 ft (5,058 m), to determine the reservoir’s lower limit. After drilling was completed, the company planned to conduct a formation test, to determine the oil reservoir’s productivity.

Iran claims Caspian Sea oil find

According to the state-controlled Fars News Agency, Iran has discovered oil offshore in its Caspian Sea jurisdiction for the first time in more than 100 years. The find was made by a National Iranian Oil Co. subsidiary in a water depth of about 8,000 ft while drilling a natural gas target. NIOC said the discovery may contain up to 10 billion bbl of oil, equivalent to about 7% of Iran’s claimed reserves. The extent and water depth of the find may be open to question, given Iran’s nearly non-existent experience with deepwater drilling. Up to now, all of Iran’s offshore fields have been found in the relatively shallow waters of the Persian Gulf. Even if details of the find prove to be accurate, the next question will be whether NIOC has the technology to develop the new field without outside assistance.

Anadarko makes another gas find offshore Mozambique

Anadarko Petroleum Corp.’s Atum exploration well has discovered another significant natural gas accumulation within Offshore Area 1 of the Rovuma basin, offshore Mozamique. The Atum discovery well found more than 300 net ft (92 m) of pay. Preliminary data indicate this latest discovery is connected to the recent Golfinho find, about 10 mi (16.5 km) to the northwest. “We estimate this new complex, which is located entirely within the Offshore Area 1 block, holds 10 to 30-plus Tcf of incremental recoverable natural gas resources,” said Sr. Vice President Bob Daniels.

Statoil strikes finds in Tanzania and North Sea

Statoil made a large gas discovery in the Block 2 license offshore Tanzania. Logging results from the Lavani well confirm a new high-impact discovery, with a preliminary resource estimate of 3 Tcf of gas in place. The Lavani well encountered 95 m (312 ft) of excellent-quality reservoir sandstone with high porosity and high permeability. Meanwhile, Statoil made a gas/condensate find in the King Lear prospect in the southern Norwegian North Sea. In licenses 146 and 333, exploration well 2/4-21 proved a 48-m gas/condensate column in the main bore and an additional 70-m column in sidetrack 2/4-21A. Total volumes in King Lear are between 70 and 200 MMbbl of recoverable oil equivalent. King Lear lies 20 km north of Ekofisk field.

Premier finds oil pay in North Sea Carnaby well

Britain’s Premier Oil said its Carnaby exploration well, 28/09-5A, reached a 4,695-ft TD and encountered 51 ft of net oil pay. Pressure data and sampling indicate that the oil is 24°API, and is of similar quality to that established at the nearby Catcher discoveries. The high-quality data acquisition from the well will now be used to determine what contribution the Carnaby discovery will make to the overall Catcher development. The well will be plugged and abandoned ahead of the rig moving to drill the high-risk Coaster prospect on Block 28/10a, immediately east of the Catcher acreage.

Comments? Write: editorial@worldoil.com

FROM THE ARCHIVE