World of Oil and Gas

Vol. 234 No. 10

UK regulators to review North Sea helicopter safety

The UK’s Civil Aviation Authority (CAA) has said it will undertake a review of North Sea helicopter operations to and from offshore rigs and platforms, following five accidents in the past four years. An August crash in the UK sector of the North Sea, of a Eurocopter Super Puma AS332 L2 helicopter, resulted in the deaths of four of the 18 people on board, and revved up a broader debate about transportation hazards faced by workers traveling to and from offshore oil and gas installations. It was the second fatal crash in the North Sea in the past four years. The British Airline Pilots’ Association said the CAA-led review was “too little, too late,” adding that it was “not credible” to expect the regulator to review itself following a series of accidents. The CAA’s review comes as Eurocopter, a European Aeronautic Defense & Space Co. N.V. unit, said that 75% of its global fleet of EC225 Super Puma helicopters had returned to service, following the lifting in July of an almost-10-month ban on the chopper flying over water. The UK and other regulators banned the EC225 from flying over water after two of the aircraft ditched in the North Sea last year because of gearbox problems. No one was injured in those flights. Photo courtesy of Eurocopter

Tribunal: Chevron subsidiary not liable for environmental claims in Ecuador

An international arbitration tribunal has issued a partial award in favor of Chevron and its subsidiary, Texaco Petroleum Company (TexPet). The Tribunal found that the settlement and release agreements that the government of Ecuador entered into with TexPet released the company, and its affiliates, of any liability for all public interest or collective environmental claims. The arbitration stems from the government of Ecuador’s interference in the ongoing environmental lawsuit against the company, and its courts’ failure to administer justice. Activity was convened under the authority of the U.S.-Ecuador Bilateral Investment Treaty, and administered by the Permanent Court of Arbitration at The Hague. This award comes after the Tribunal’s February 2013 finding that Ecuador is in breach of its obligation to “take all measures necessary to suspend or cause to be suspended the enforcement” of the Lago Agrio judgment. The next arbitration hearing regarding the collusion between the Ecuadorian courts, and the Lago Agrio plaintiffs and their lawyers, is scheduled for January 2014.

Tribunal: Venezuela expropriated ConocoPhillips’ investments

ConocoPhillips said that an international arbitration tribunal ruled that Venezuela unlawfully expropriated the firm’s significant oil investments in the Petrozuata and Hamaca heavy crude oil projects, and the Corocoro offshore development project.  According to an International Centre for Settlement of Investment Disputes (ICSID) Tribunal, Venezuela’s actions amounted to an unlawful expropriation. The arbitration process will continue for a period of time, to determine compensation owed for ConocoPhillips’ substantial investments. In the early 1990s, to induce foreign investments in its heavy oil projects in the Orinoco Belt, Venezuela created a new fiscal framework that applied specifically to these projects. Relying on these terms, ConocoPhillips helped Venezuela develop the Petrozuata, Hamaca and Corocoro projects.

Apache, Sinopec enter upstream
oil and gas partnership

Apache Corporation and Sinopec International Petroleum Exploration and Production Corporation have launched a global strategic partnership to pursue joint upstream oil and gas projects. As the first step in this partnership, Apache will receive $3.1 billion in cash, subject to customary closing adjustments, in exchange for Sinopec gaining a 33% minority participation in Apache’s Egyptian oil and gas business. Apache will continue to operate that business. Apache has been rebalancing its portfolio toward assets with predictable growth rates, and attractive rates of return. Pro forma for the partnership with Sinopec, and the sale of GOM shelf assets, the shares of Apache’s second-quarter 2013 production from North American onshore assets, and from Egypt, would have comprised approximately 55% and 15%, respectively. Photo courtesy of Apache Corporation.

National Oilwell Varco (NOV) will explore a plan to spin-off its distribution segment, a move that the oilfield service equipment manufacturer said would create two separate, publicly traded companies that are better-positioned to focus on their specific products and services. Chairman and CEO Pete Miller said the company’s distribution business has the market size and scale to operate as a standalone company, following last year’s acquisitions of Wilson Supply and C.E. Franklin. The distribution business would have more than 415 locations, and operations in 26 countries. The spin-off should be completed in first-half 2014.

Chevron Technology Ventures (CTV) has launched CTV Fund V, a $90-million venture capital fund to invest in early- to mid-stage companies, and in limited partnership funds. Investments from CTV Fund V will focus on companies developing emerging technologies that have the potential to improve Chevron’s oil and gas, base business performance, or create new opportunities for growth. CTV-managed strategic investments prior to Fund V have supported a wide range of companies and venture capital funds. Partner technologies are used across Chevron’s upstream and downstream business units, producing substantial earnings for the company. CTV screens more than 400 opportunities per year, selecting one to three companies in which to invest. CTV has a current portfolio of 37 companies and was formed in June 1999.

CNOOC has won a $2-billion production license in Uganda, the first to be approved by the African nation, as it seeks to tap reserves discovered seven years ago. CNOOC will develop the Kingfisher area in the Albertine region over four years, said Peter Lokeris, Uganda’s minister of state for mineral development. The area is estimated to hold 635 MMbbl of oil, of which 196 MMbbl are recoverable. Uganda, classified as one of the world’s poorest nations by the World Bank, is finally on the verge of oil development after crude was found in 2006. Kingfisher will pump 30,000 to 40,000 bopd, the minister said. He expects 40 development wells and a 50-km pipeline to the new refinery, due for completion by 2018. The plant will have an initial capacity of 30,000 bopd, which may double later. The Kingfisher area is jointly owned by CNOOC, Tullow Oil and Total. The Ugandan government will have a 15% interest in the Kingfisher area, as soon as production starts, the minister said.

Canadian Natural Resources (CNR) posted that first steam injection was achieved on Sept. 16, at its 100%-owned-and-operated Kirby South steam-assisted gravity drainage (SAGD) project. Kirby South was completed on budget, with a forecast addition of production at approximately $30,000 per flowing barrel. Kirby South is targeted to grow to 40,000 bopd by the end of 2014. It is the first step in a staged expansion plan for the greater Kirby area, targeted to increase production, over time, to 140,000 bopd.

During the week of Sept. 9, the North Caspian Operating Company, led by Eni, reported start-up of production from Kashagan, the largest oil field to be discovered in the past 35 years. Since the field’s discovery in the shallow, northeastern Caspian Sea, in June 2000, this consortium, including its four original members (Eni, Shell, Total and Exxon Mobil), has invested nearly $50 billion in the project. This makes Kashagan not only the largest oil field outside the Middle East, but also one of the world’s most expensive. The recent start of the first of 21 wells included in the first production phase comes eight years later than originally anticipated. This start was in advance of an October 2013 deadline, set in the terms of the consortium’s production-sharing agreement (PSA). Had this deadline not been met, the consortium would have had to forfeit compensation for expenditures. Eni forecasts output from the initial development to reach 200,000 bopd by the end of 2013, and then rise to the full phase-one target of 370,000 bopd in 2014. Kashagan has an estimated 13 billion bbl of oil in proved reserves.

GDF SUEZ has acquired a 20% stake in offshore deepwater exploration Block 2F in Malaysia, in partnership with JX Nippon Oil & Gas Exploration, which holds 40% and operates the block, and Petronas Carigali, which holds another 40%. This is the first GDF SUEZ E&P license in Malaysia. Block 2F is in the offshore Sarawak region, northwest of Borneo Island, about 300 to 400 km off the coast of Malaysia. The license covers an area of 5,500 sq km, in water depths ranging from 100 to 1,200 m, and lies in the Rajang Delta province. The deepwater exploration campaign will last four years, and will include different types of studies to prepare for the drilling of an exploration well.

LINN Energy acquires Permian basin
properties worth $525 million

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