Oil country hot line

MMS executes Bush’s orders to fill SPR

Fulfilling a mandate set forth by U.S. President George Bush to fill the country’s Strategic Petroleum Reserve to capacity, MMS will begin, next month, to procure about 60,000 bopd of royalty-in-kind oil for delivery to the Department of Energy. The oil will be acquired from federal offshore properties in the Gulf of Mexico. Acting MMS Director Lucy Querques Denett said that the MMS and DOE are working closely to accomplish this task. She said that once the oil is delivered to DOE, that agency will then exchange the RIK oil for crude of suitable quality, and deliver it to three SPR sites located in Texas and Louisiana. The U.S. Department of the Interior has posted on its commercial Website, www.temporarygomr.com, a solicitation for industry bids to assist in the endeavor.

A Kuwait Oil Company worker examines the charred remains of the gathering center at Rawdatian field.

Kuwaiti oil minister resigns after blast

Kuwait’s oil minister submitted his resignation to the country’s crown prince and Prime Minister, Sheik Saad Al Abdullah Al Sabah, after an explosion at Rawdatian field killed four people, injured 19 others and temporarily shut down production in northern Kuwait. The country’s Information Minister will fill his position until a replacement is appointed. The fire was sparked by a gas leak at one of the gas gathering stations and then apparently spread toward a transformer. Due to damage to an electrical substation and a gas booster station, electricity to Kuwait’s other northern fields was cut. The state-run oil sector was expected to face attacks in parliament, given that the Rawdatian incident marks the third deadly explosion in three years.

PDVSA begins three-year gas hunt

Venezuelan President Hugo Chavez has launched PDVSA’S three-year gas exploration program in the Deltana platform area, adjacent to Trinidad’s maritime border. This $375-million project is expected to discover about 38 Bcfg. The firm plans to invest $120 million in the project this year, and it intends to drill 10 to 14 exploratory wells in the area during the next two years. Another $4 billion is reserved for development and exporting of the gas found. PDVSA is in search of a strategic partner that specializes in offshore exploration to join the project. The country’s government has made exploring for natural gas a higher priority, spurred on by Trinidad’s huge gas discoveries recently. Therefore, this project is viewed as an opportunity for domestic and foreign investors to exploit the area.

Larut production comes onstream

Operator ExxonMobil said that oil production has begun from Larut field – the third new, offshore Malaysia platform to come onstream this year. This field’s output, along with that of the Satellite Fields Development and the Petronas-operated Angsi facilities, will help maintain the country’s ability to meet growing gas demand. Production from the three developments is expected to total more than 320 million bbl of oil and 1.5 Tcfg within 25 years. Larut is the first field to be developed on Block PM5, 125 mi offshore Terengganu, Malaysia, in the South China Sea. The field is expected to produce over 30,000 bopd and 35 MMcfgd. Production from all three developments is expected to peak at about 140,000 bopd and 535 MMcfgd.

Devon saw earnings decline, output rise

Representative of most U.S. oil firms, Devon Energy reported lower-than-expected fourth quarter earnings at the end of 2001. The decline was due primarily to slumping prices that created a non-cash, full-cost ceiling adjustment of $916 million, pre-tax, during the same period. At the end of fourth-quarter 2001, Devon reported net earnings, excluding special items, of $31 million or 23 cents per common share, compared to $309 million or $2.38 per common share in 2000. Nevertheless, the firm reported record sales of oil, gas and NGLs, totaling $3 billion in 2001, or up 10% from 2000’s level. The increase was due to greater output and higher gas prices, offset by lower oil and NGL prices.

Canadian firms see decline in energy profits

Canada’s energy companies are expected to report the weakest quarterly earnings in two years. Like many U.S. firms also suffering the same fate, the problem of decreased earnings is due to low prices. Talisman Energy and Suncor Energy led the anticipated weak reporting period. Suncor reported a drop in net earnings of as much as 75%, compared to third-quarter 2001. The weakened world economy meant sharp drops in commodity prices in the fourth quarter, as demand sagged. Canaccord Capital Corp. analyst Gord Currie said, "We’re forecasting almost everybody (all Canadian firms) in 2002 to have lower earnings and cash flow than in 2001, and then positive increments again in 2003."

New production starts off Cote d’Ivoire

Canadian Natural Resources announced that production began last month from Espoir field, offshore Cote d’Ivoire. The field’s production rate reached 8,500 bopd from the first producing well in the development program. Overall production from the field is expected to increase within the next several months. In fact, six more wells should be completed, and output of 30,000 bopd is possible by the end of third-quarter 2002. Production of associated natural gas is expected to increase to 30 MMcfgd.

Operator expands interest in Eq. Guinea

Ocean Energy has entered into a production-sharing contract with the government of Equatorial Guinea to exploit a 678,000-acre concession in the Rio Muni basin off the country’s coast. The agreement increases Ocean’s overall holdings in the country to more than 2 two million offshore acres. Corisco Bay Block North, Ocean’s new entity, is located south of Ceiba field and north of the Northern Gabon Salt basin. The firm has a 30% working interest in the block.