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Vol. 227 No. 6 |
| KURT S. ABRAHAM, MANAGING/INTERNATIONAL EDITOR |
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PDVSA buys Chinese rigs
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Venezuela’s state firm said that it will buy 28 drilling rigs from Chinese firm, China Petro Technology and Development Co. (CPTDC) over the next three years. CPTDC is part of China National Petroleum. CPTDC expects to assemble some of the rigs in Venezuela, said PDVSA Vice President for E&P, Luis Vierma. “By 2008, we are going to be assembling rigs in Venezuela,” said Vierma. “By 2010-2011, we are going to be able to build our own rigs.”
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CNOOC field onstream
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China National Offshore Oil Co. Ltd. (CNOOC) said that Phase II of its Dong Fang (DF) 1-1 gas field has gone onstream. As the firm’s largest independent gas field, DF1-1 produces 187 MMcfgd, including 35 MMcfgd from three wells in Phase II. DF 1-1 is in the Yinggehai basin of Bei Bu Gulf in the western South China Sea. CNOOC also reported that it has signed PSCs for six exploration blocks in Kenya.
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Croatia plans platforms
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The Inagip JV between Croatia’s INA and Italy’s Eni will build the Ivana-C production platform and Ivana-K processing platform in the Adriatic Sea, offshore Croatia. They will connect to onshore gas treatment and terminal facilities by the end of 2006. Ivana field already contributes 19% of Croatia’s daily gas output of 184.5 MMcfd.
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Vietnam field fast-tracked
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Hoang Long JOC (HLJOC) said that good appraisal well results have caused it to fast-track exploration and development of Block 16-1 offshore Vietnam. Once reserves are proved up by three additional wells being drilled, HLJOC expects to file a development plan for what will be called White Rhinoceros field. First oil may occur by the end of 2007, rather than in 2009.
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Nicaraguan deal signed
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Texas-based Infinity Energy Resources (IER) has signed six-year E&P contracts for the Tyra and Perlas Blocks in the Caribbean Sea, offshore Nicaragua. State regulator, INE, said that IER will spend up to $3 million in the first two years for various studies, plus acquisition of seismic data. This follows the awarding of the Tyra Bank and Isabel Bank offshore tracts to MKJ Xploration of Louisiana. Terms are similar to those for IER.
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Energy executives plan hefty hikes in upstream spending
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According to results from a survey conducted by KPMG LLP, many oil and gas executives say that they expect to “significantly” boost their upstream capital spending for the remainder of this year. Conducted in April, the survey polled 538 financial executives from oil and gas companies, many of whom are concerned about declining oil and gas reserves in a period of volatile prices. Indeed, 67% of those polled said that volatility in prices is bad for the industry, compared to 58% a year earlier. And 88% expressed concern about declining reserves, compared to 83% a year ago. Of those surveyed, 69% said they expect to boost E&P spending by more than 10% this year. Mergers and acquisitions continue to be a factor, with 21% of respondents expecting their firms to be involved in a transaction over the next 12 months. Also, 41% said that the “most significant challenge” they face is the ability to hire qualified employees.
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Offshore spending may approach $250 billion by 2010
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Analysts at British firm, Douglas-Westwood, believe that daily offshore oil and gas output will grow to 53 million boe in 2010, up from the current 43 million boe. They also predict that this gain will drive the offshore industry to hike spending to $248 billion during 2010, up from this year’s $193 billion. According to Energyfiles Director and lead report author, Dr. Michael R. Smith, “offshore spends are increasing rapidly, but there are considerable differences across the regions.” He said the main causes for disparities is an increasing shortage of lower-cost prospects in all areas, except the Persian Gulf. There is limited availability of deepwater sedimentary areas with oil and gas potential outside reservoirs already identified in Brazil, the Gulf of Mexico, West Africa and some other, less prominent regions.
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Oil prices flatten, but rig shortages threaten OPEC projects
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After a strong run-up in their levels during April, oil prices last month leveled off amid concerns that high prices were affecting global demand. WTI crude traded in a range between $69 and $71/bbl, as traders reassessed the short- and medium-term market. However, lingering worries over Iran’s intentions, Nigeria’s instability and the impending US hurricane season left plenty of opportunity for prices to go higher again, later this summer. And, as OPEC oil ministers prepared to meet at the beginning of this month, Qatar’s Second Deputy Premier and Minister of Energy and Industry, Abdullah bin Hamad al-Attiyah, said that drilling rig shortages could hamper OPEC members’ plans to expand oil output. “We see that there are big shortages in available rigs because of the huge demand, so these logistical problems are delaying some projects,” al-Attiyah told the media during a meeting of the Organization of Arab Petroleum Exporting Countries (OAPEC).
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MMS revises, updates hurricane damage numbers
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The US Minerals Management Service (MMS) has updated its assessment of damage to offshore upstream facilities caused by Hurricanes Katrina and Rita. “Today’s assessment of damage updates the (figures) that MMS released on Jan. 19, 2006,” said MMS Gulf of Mexico Regional Director Chris Oynes. “Based on additional industry assessments, investigations and reports, said Oynes, the number of GOM pipelines damaged has risen to 457 from 183. The number of larger-diameter pipelines (10 in. or greater) that were damaged has risen to 101 from 64.” MMS also revised the number of platforms destroyed from 115 to 113. Of these, four replacement platforms have been proposed by operators and approved by MMS to date.
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OTC attendance rises to highest point in 24 years
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Attendance at the 2006 Offshore Technology Conference in Houston hit its highest level since 1982, as 59,236 people came through the turnstiles. In addition, the OTC exhibition was larger and better than ever, as 2,214 companies representing 33 countries participated. Total exhibit space was 475,000 sq ft, equal to 12 football fields.
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OCS gas amendment clears one House hurdle, loses another
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The US House Appropriations Committee voted to strip a longstanding congressional ban against offshore natural gas exploration along some areas of the US coastline. By a 37-25 vote, the committee approved an amendment from Rep. John Peterson (Rep. – Pa.) that eliminated the ban in the fiscal 2007 Interior and Environment spending bill. Noting that “natural gas is the mother’s milk of industry left in our country,” Peterson said high gas prices made removing the language necessary. However, his amendment left the ban on oil exploration intact. Unfortunately, the full House voted 217 – 203 on May 18 to remove Peterson’s amendment from the spending bill. California and Florida lawmakers led the removal effort.
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Angola’s Sonangol reveals successful bidders
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State firm Sonangol announced the successful bidders for Blocks 1, 5, 6, 15 (relinquished portion) and 26. The winners were determined by an evaluation of tenders from international and domestic operators that were opened in April. The winning operators are Tullow Oil (Block 1, 50%), Vaalco Energy (Block 2, 40%), Petrobras (Block 3, 40%, and Block 26, 80%) and Eni (Block 15, 35%). Sonangol will hold a 15% to 20% interest in each of these blocks. Meanwhile, Sonangol has opened the tenders from 18 companies for offshore Blocks 17 and 18. Each block received a signature bonus of $1.1 billion. Sonangol has been evaluating the tenders and was slated to announce the winners in the first half of this month.
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It is just plain “Hess” now
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New York-based Amerada Hess Corp. received shareholder approval to change the firm’s name to “Hess Corporation.” The company’s stock symbol also became “HES” on May 9. “The Hess brand is firmly established in our marketing and refining operations, readily recognized by our customers and in the communities we operate, and increasingly identified with our global E&P activities,” said Chairman and CEO John B. Hess. “This corporate name change strengthens recognition of our brand across all of our activities.”
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BHI completes sale of Western Geco interest
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Baker Hughes Incorporated (BHI) completed the sale of its 30% minority interest in WesternGeco, the seismic venture created in November 2000 with Schlumberger Ltd., to Schlumberger for $2.4 billion in cash. BHI expected to achieve a pre-tax gain of about $1.74 billion (roughly $1.05 billion, net of tax). Cash proceeds, net of tax, were about $1.8 billion.
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CAPP releases Canadian oil forecast
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While releasing its annual Crude Oil Forecast, which significantly increases projections from last year, the Canadian Association of Petroleum Producers (CAPP) said that oil production is set to nearly double in Canada by 2020. The 2006 forecast extends out an additional five years from last year’s forecast and highlights growth in output from Alberta’s oil sands, due to newly announced projects and expansions of existing operations. Total Canadian oil production is projected to increase from 2.5 million bpd in 2005 to 4.6 million bpd in 2015, an increase of 750,000 bpd from CAPP’s 2005 forecast. Growth after 2015 will bring output to nearly 4.9 million bpd.
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Australia releases many new areas
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Australian federal officials have opened bidding for 36 new offshore exploration areas. These new areas include 20 off Western Australia, five off Northern Territory, five off Tasmania, four off Victoria and two areas near the Ashmore and Cartier Islands. Resource Minister Ian Macfarlane said that bids for 22 of the new areas close Nov. 9, with bids for the other 14 parcels to close on May 10, 2007. In addition, the Queensland state government has opened 12 areas in the Bowen, Surat, Cooper Eromanga and Eromanga basins to exploration tenders.
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Ecuador denies plan to nationalize oil
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Despite cancelling Occidental Petroleum’s (Oxy’s) contract and seizing its assets, Ecuadorean officials denied that this meant that they are nationalizing the country’s oil industry. Petroecuador President Fernando Gonzalez said it is simply a case of Oxy “failing to meet its contract and violating the laws.” The dispute stems from May 1999, when Oxy transferred 40% of its concession to EnCana Corp, a move that officials contend was a contract violation. At press time, the two sides were still working out a timetable for physical transfer of the 100,000-bopd field assets. Speaking to the Associated Press, Oxy V.P. of Communications and Public Affairs, Larry Meriage, said, “The government has appealed to us for cooperation and for an orderly transition, which is an interesting development in itself. They’re telling you they’re throwing you out, but they want you to help them.” Oxy has since filed an arbitration claim with the International Centre for Settlement of Investment Disputes in Washington, D.C. 
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