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Vol. 224 No. 6 |
| KURT S. ABRAHAM, MANAGING/INTERNATIONAL EDITOR |
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US makes initial moves to rebuild Iraqi oil sector
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Two Iraqis and one American were selected by the Office of Reconstruction and Humanitarian Assistance (ORHA) to lead the Iraqi Oil Ministry. Thamir Ghadban – who was in exile following service as the ministry’s general director of studies, planning and follow-up – returns to Baghdad as chief executive officer, said ORHA spokesman John Kincannon. In addition, former Iraqi oil executive Fadhil Othman will serve as Ghadban’s deputy, and retired Shell Oil CEO Philip J. Carroll will chair the ministry’s advisory board. Meanwhile, Halliburton may earn $490 million or more from an oilfield contract that it was awarded last autumn by the US Army Corps of Engineers. In a letter to Rep. Henry Waxman (Democrat-California), the Corps commander, Lt. Gen. Robert Flowers, said that Halliburton will assess damage, mobilize fire suppression, clean up oil spills and rebuild oil production, among other items. The firm will be paid for expenses, plus a profit of up to 7%. As of late April, Iraqi output was about 235,000 bopd from the southern oil fields, as well as Jambur field near the northern city of Kirkuk.
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OPEC toys with idea of further output cuts
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Despite what it advertised as a late-April production cut, OPEC acknowledged that it may have to trim output further. Oil ministers sent a confusing message to the global market, when they raised the official cartel ceiling to 25.4 million bopd from the previous 24.5 million bopd, yet said that the new limit was an effective cut of 2 million bopd from actual output of 27.4 million bopd. Nevertheless, to integrate restored Iraqi crude production into OPEC’s total output, a further cut may be necessary at a June 11 meeting, said OPEC President Abdullah al-Attiyah. “There is too much oil on the market and that is having a bad influence on price,” said Attiyah.
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US Senate committee passes draft energy bill
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In a 13 – 10 vote along nearly party lines, the Senate Energy and Natural Resources Committee approved draft energy legislation. All 12 Republicans voted for the bill, but Sen. Mary Landrieu (Louisiana) was the only Democrat lending support. The legislation includes federal loan guarantees to build a half-dozen nuclear power plants, support for constructing an Alaskan natural gas pipeline and royalty relief to boost natural gas development in the Gulf of Mexico. However, several contentious issues, including climate change, auto mileage standards and electricity transmission standardization, are not addressed. The Senate bill, if approved by the full body, will be less fossil fuel – focused than House legislation already passed that calls for drilling in Alaska’s Arctic National Wildlife Refuge. Eventually, the two chambers will have to reconcile their differences in a conference committee.
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Major oil firms chalk up large profits
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Higher oil and gas prices propelled major companies to lofty first-quarter earnings. ExxonMobil’s net income more than tripled to $7.04 billion, while ChevronTexaco also nearly tripled, to $1.9 billion. In London, BP said its earnings more than doubled, reaching $3.13 billion. Officials at Royal Dutch/Shell were giddy, reporting record quarterly profits of $3.914 billion. Excluded from that total was a $1.7-billion gain realized from the sale of German gas distributor Ruhrgas. Additionally, Total reported a 48% jump to $2.39 billion, and Canada’s Nexen earned $178 million, up 287%.
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Russian companies announce huge merger
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In what is billed as Russia’s largest industrial transaction ever, two of the country’s major oil producers – Yukos and Sibneft – have agreed to merge. Ranked second behind LUKoil, Yukos is paying $3 billion cash to fifth-ranked Sibneft as part of the merger. The new company, YukosSibneft Oil Co., will leap ahead of LUKoil as Russia’s largest oil firm and also reign as the world’s fourth largest private oil producer. Oil reserves and production for the combined entity will be 19.4 billion bbl and 2.3 million bpd, respectively. It will also hold 5.9 Tcf of natural gas reserves.
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Total gets nod for Angolan field project
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State oil firm Sonangol authorized Total to award key contracts for its Dalia oil field development offshore Angola. Dalia is 84 mi from the coast in water depths between 4,000 and 5,000 ft. The $3.4-billion project will include 34 production wells, 30 water injectors and three gas injectors. The field will feature an FPSO that can process up to 240,000 bopd and store 2 million bbl of oil. Onstream target date is second-half 2006.
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Saudi mega gas deals clear hurdle
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A major obstacle for signing final deals with Western oil companies for two mega gas projects has been cleared, said Saudi Arabian Foreign Minister Prince Saud al-Faisal. “The committee conducting the negotiations has completed its mission in reaching agreements on electricity, water and petrochemical plants,” he told media in Riyadh. “What remains now is technical issues which have been referred to the petroleum minister to conclude the negotiations.” The Core Venture 1 (ExxonMobil, operator) and Core Venture 3 (Shell, operator) projects will require investments of about $20 billion apiece.
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OTC tops 50,000 for the first time since 1985
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Last month’s Offshore Technology Conference hit an 18-year attendance high with 50,655 participants. The annual Houston event last topped 50,000 in 1985, when 56,438 people passed through the turnstiles. Exhibitors were generally optimistic, hoping that the higher attendance portends improved E&P activity in second-half 2003. “This year’s OTC was extremely successful in light of all the current world events,” said OTC Chairman Charlie Richards. “The event continues to prove its value in the industry.”
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TFE is now just Total
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In a move that surprised no one, French oil company TotalFinaElf shortened its name to Total during the firm’s general meeting in Paris. “The success of the merger enables us to change from TotalFinaElf, which was created to bring together the teams, to a simple and clear name that reflects the new group that Total is today,” said CEO Thierry Desmarest. He also reaffirmed Total’s commitment to further growth in its Middle Eastern operations.
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Oxy-Mitsui group signs Omani gas pact
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Omani officials signed an agreement with a consortium of Occidental and Mitsui to produce and sell natural gas from the Block 9 concession in the northern part of the country. By mid-2004, the group expects to produce up to 130 MMcfgd. The 1,570-sq-mi Block 9 already produces about 45,000 bopd. Oman’s national reserves are estimated at 5.6 billion bbl of oil and 30 Tcf of natural gas.
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Canadian firm reaches new Cuban heights
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Montreal-based Pebercan Inc. said that its final oil production figure in Cuba for 2002 was 5.22 million bbl, or about 14,300 bpd. This is a 114% increase over 2001’s output. The company expects further production gains this year, as it spends $32 million in Block 7 to drill six wells and conduct two geophysical surveys. 
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Opinion
Following last month’s topic about general news media that cannot use basic oil field terms properly, several industry friends have wondered aloud why the Hollywood types think that everyone is interested in their opinions on every issue under the sun. The recent military effort in Iraq was plagued by sniping from such scholarly giants as the Dixie Chicks, Sean Penn and Madonna. So after all that loopy, left-winged loquaciousness, it was refreshing to attend an Offshore Technology Conference press briefing that featured a proactive and constructive Hollywood member. Yes, actor Kevin Costner was at OTC to promote his own industry-related firm. Costner Industries Texas, LP (CIT) specializes in use of liquid-liquid centrifugal separation equipment, touting it as a simple, efficient method to handle oil/water separation. Applications outlined by the firm’s brochure include oil spill cleanups, well completion fluid recovery, acid flowback, produced water processing, crude oil dehydration, and lube oil and crude oil purification. A small footprint allows offshore usage as well, including FPSOs and fixed platforms.
“This company is the result of nine years and $15 million, most of that my own money,” said Costner, who owns more than half of the firm. “I’ve always been a solutions kind of person.” His motivation came from watching television coverage of numerous oil spill cleanups and wondering if there was not a better way to remove spilled oil and oil/water emulsion. So, in 1993, he began searching for new technologies that might be applicable. He stumbled into the development by DOE’s laboratories of a lightweight, compact centrifuge for nuclear metals applications. Costner acquired a license for the technology and formed an initial firm (Costner Industries Nevada Corp.). He also hired a few engineers and scientists, and asked them to apply the technology to oil/water separation.
As of mid-2002, Costner’s staff had brought the R&D effort far enough along that they were confident about the process and equipment, but they were having trouble achieving full commerciality and profitability. “Some of that was my fault,” said Costner. “The mistakes I made along the way probably kept us from being farther ahead.” So, he moved the firm to Houston, changed the name and brought in a new management team that includes venture capitalist Rod Lake as chairman, and industry veteran Joe Bradford as president and CEO. Costner and Lake have been friends since age 18, and have worked together on other ventures. Bradford spent a number of years at The Hanover Co., as did Mike Paris, who recently joined CIT as director of manufacturing, engineering and procurement. “We came in as partners last November, and we’re on target to be profitable in July,” said Bradford. CIT has a field test of upstream applications underway near Midland, Texas, and the firm is also participating in a Latin American river cleanup. Readers interested in more information on CIT can visit the firm’s website at www.cit-ind.com or phone them at +1 (713) 877-9488.
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