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Syria awards tract rights to Canadian firm

Calgary-based Loon Energy said that the Ministry of Petroleum and Mineral Resources of Syria has awarded the firm the rights to negotiate a PSA for 2.5-million-acre (3,900-sq-mi) Block 9. The tract is in northwestern Syria, on the northern edge of the hydrocarbon-rich Homs sub-basin. The area contains some of Syria’s major, light oil and gas fields, including Cherrife Da, Ash Shaer Da, Palmyra and Al Rasem. According to Loon, the block is under-explored and has only six wells, the most recent of which was drilled 10 years ago. Separately, Emerald Energy completed drilling its Souedieh North wildcat in Syria’s Block 26. Wireline logs indicated potential hydrocarbon zones, but no fluids were recovered. The firm is now studying seismic, drilling, wireline and sidewall core data, to see if a fracture stimulation program would be helpful. In the meantime, Emerald will begin drilling the Tigris 1 wildcat on Block 26.

Hardman hits in Uganda

Australia’s Hardman Resources said that its Mputa 2 exploration well has been cased and suspended as a potential, future oil producer. The well confirms results from the Mputa 1 and Waraga 1 discoveries. Hardman will use data from all three finds to define the field’s reserve estimates, commerciality and potential development scenarios. Plans are underway for additional exploration/ appraisal wells in the onshore area, and Hardman may also test a prospect just offshore. Additional 2D seismic will also be acquired.

UK firm gains approval for Indian developments

Britain’s Cairn Energy said that the Management Committee (India’s Directorate General, Hydrocarbons; Oil and Natural Gas Corporation (ONGC); and Cairn) has approved field development plans (FDPs) for Mangala, Aishwariya, Saraswati and Raageshwari fields in Block RJ-ON-90/1 of Rajasthan, Northwest India. This final approval follows an earlier agreement on the FDPs reached by the joint venture Operating Committee between Cain and ONGC. To finance its share of the Northern Fields development project, Cairn said it was in the process of finalizing a $1 billion banking facility, which it intended to sign by the end of last month.

Kuwaiti oil minister says stable price is $45 to $55/bbl

Kuwaiti Oil Minister Ahmad al-Fahd al-Sabah said that he considers $45-$55/bbl as a stable price for benchmark US light, sweet crude oil futures on the New York Mercantile Exchange. Speaking to reporters in India, al-Sabah said, “Any price between $45 and $55 would be good in my opinion.” He also said that NYMEX prices include an $8-$12/bbl “terror premium.” Al-Sabah also noted that OPEC was pumping at its maximum rate to stabilize oil prices. When asked whether OPEC would announce a new price band for its basket of crude oils, he said that it may eventually happen, but OPEC has been waiting for the market to stabilize. After rising to $72/bbl in late May and early June, the NYMEX futures price slid to below $69/bbl in late June, as traders sensed a slowdown in global economic growth.

Bush officials want operators to modify GOM deals

To address a so-called error that allowed dozens of operators to drill in the US Gulf of Mexico without paying fees to the government, a number of members of Congress want to force companies to rework their drilling contracts. The Bush administration also hopes that the contracts will be renegotiated, but is asking companies to volunteer. During the 1990s, Congress agreed to allow companies to drill in deep water with limited royalty reduction or suspension on production as a way to promote energy development. However, a provision requiring royalties to be paid if energy prices rose to a specific threshold was accidentally dropped from more than 1,000 leases issued by MMS in 1998 and 1999, said the Interior Department. Noting that oil companies are enjoying large profits while consumers are struggling, Energy Secretary Samuel Bodman said he hopes that operators will offer to change their lease deals. In a similar vein, MMS Director Johnnie Burton said that she hopes companies voluntarily renegotiate. An MMS spokesman clarified Burton’s comments, saying that the agency supports changing drilling terms in federal waters, only if companies come to MMS and ask for a renegotiation. In response, API spokeswoman Karen Matusic said, “We appreciate that the administration and Congress are willing to seek an equitable solution that does not mandate a reopening of the contracts. We rely upon the sanctity of contracts in this country.” However, Rep. Maurice Hinchey (Dem. – N.Y.) introduced language to require collection of royalty revenue from future deepwater production on existing leases when threshold prices exceed $34.71/bbl and $4.34/Mcf. Lamenting the passage of this language, IPAA President Barry Russell said, “This is an unfortunate act by Congress that threatens the credibility of federal contracts.

Venezuela claims largest output level in four years

Speaking to reporters in Caracas, Luis Vierma, Deputy E&P President of state firm PDVSA, said that Venezuelan production hit 3.38 million bopd early last month, its highest level since before the 2002-2003 oil workers’ strike. “Production is practically at the limits we planned for this date,” said Vierma. “These 3.38 million barrels per day include our own (PDVSA’s) efforts, the JVs and the Orinoco oil belt projects. Although he did not provide a full breakdown of production, Vierma did say that oil output in PDVSA’s western division in Zulia state is now 984,000 bpd. If so, this represents a major recovery in that output. Earlier this year, the International Energy Agency revised its estimate of 2005 Venezuelan production to 3.1 million bopd.

Anadarko buys Kerr-McGee, Western Gas for $23.3 billion

Anadarko Petroleum Corp. will pay $21.1 billion in cash and assume $2.2 billion in debt to buy Kerr-McGee Corp. and Western Gas Resources. This more than doubles its sales and creates the largest US independent producer. Anadarko will pay $70.50/share for Kerr-McGee and $61/share for Western Gas. At the time of announcement, these figures were 40% above Kerr-McGee’s close and 49% over the last price for Western Gas. “We are creating a combined company with industry-leading positions in the deepwater Gulf of Mexico and the Rockies, two of the fastest-growing oil and natural gas producing regions in North America,” said Anadarko Chairman, President and CEO, James Hackett.

Woodside’s Enfield project delayed by winch wire

A delay of at least a month in going onstream was experienced by Woodside Petroleum’s Enfield project, 50 km northwest of Exmouth, Western Australia. The Nganhurra FPSO had arrived at the field and was undergoing a series of connect, disconnect and reconnect tests, when a linear winch wire broke during reconnection on May 25. The vessel sailed to Singapore for repairs, and a Woodside spokesman said that investigations were underway to determine why the 5-1/2-in. steel cable broke. Woodside had hoped to put the field into production at either the end of June or end of September. The June possibility is now gone, but Woodside still believes that first oil is possible by the end of the third quarter.

MMS installs measures for hurricane season

MMS director Johnnie Burton said that her agency has implemented several improvements to its oversight system for dealing with hurricanes. One of these is extensive pre-season planning with the Dept. of Energy and the US Coast Guard to facilitate communications during storms. Another is coordination with the upstream industry to improve safety, specifically through Mobile Offshore Drilling Unit improvements, jackup site assessment guidelines, risk assessment tools and platform upgrades. Also, a Coast Guard representative has been invited to join the MMS Continuity of Operations Plan team. Finally, improvements have been made to the electronic hurricane reporting system to further improve communications.

CERA frets over gas storage inventories

The operational limits of some portions of the North American natural gas storage system may be reached in the fall of 2006, producing “real potential for an abrupt decrease in gas prices,” as some storage fields become unable to accommodate additional injections, says an analysis by Cambridge Energy Research Associates (CERA). Absent an unusually warm summer or significant gas supply disruptions by hurricanes, CERA expects the Oct. 31, 2006, North American gas storage inventory level to reach 4.2 Tcf, a more than 95% fill of expected working gas storage capability. “Insufficient storage working capacity to accommodate all gas available for injection is likely to lead to a sharp, swift drop in spot gas prices,” said CERA Director Ken Yeasting. “As gas prices fall toward $5/MMBtu, displacement of coal-fired generation by gas-fired generation will provide additional demand and thus support gas prices and rebalance the market.”

US senator looks to oil shale as an answer

As chairman of the Senate Energy and Natural Resources Committee, Sen. Pete Domenici (Rep. – N.M.) said that he believes that oil shale offers a real hope for decreased dependence on imported fuels, especially from what he calls “unstable sources,” such as the Middle East. His remarks came during a field hearing at Grand Junction, Colorado, city hall, where Domenici, Sen. Ken Salazar (Dem. – Colo.) and Sen. Orrin Hatch (Rep. – Utah) stressed that the US must develop its oil shale resources as part of an energy independence plan. Te senators noted that up to 1.8 trillion bbl of oil may be buried in the shale of the Green River formation in Colorado, Wyoming and Utah. An overflow crowd of 250 attended the hearing.

Iranian lawmaker questions role in OPEC

Kamal Daneshyar, chairman of the Iranian Parliament’s Energy Committee, said that Iran should reevaluate its membership in OPEC, given the group’s continuing demands for higher production that frequently ignore the long-term consequences for oil reservoirs. As reported by the official Islamic Republic News Agency, Daneshyar told an engineering conference that OPEC was originally established to protect oil wells in producing countries, as well as the prices of the oil that they produce. However, he said that OPEC is now acting contrary to those ideas by asking members to keep raising output to the detriment of individual wells. He said that this policy jeopardizes the overall yield of oil reservoirs in the long term. Furthermore, Daneshyar said that Iran has been unable to implement new technologies to help wells, due to Washington’s sanctions on equipment sales to Tehran.

Ecuador declares state of emergency

President Alfredo Palacio has declared a state of emergency on Ecuador’s Block 15 and other assets formerly operated by Occidental. The state of emergency allows state oil company Petroecuador to avoid paperwork normally required for public company operations, such as tenders, and focus on operating the block’s assets. Production remains at about the usual 100,000-bopd level. Brazil’s Petrobras, Chile’s Enap and China’s Sinopec have expressed interest in the block. Colombia’s Ecopetrol has said that it could provide technical assistance. Ecuador expropriated Oxy’s assets in May, alleging an illegal transfer of a 40% stake to EnCana in 2000. 

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