|
Vol. 227 No. 3 |
| KURT S. ABRAHAM, MANAGING/INTERNATIONAL EDITOR |
|
|
|
|
Pertamina’s head speaks his mind on Cepu
|
The head of Indonesian state company, Pertamina, has threatened to quit unless his firm is allowed to be operator of Cepu oil field, a development project shared with ExxonMobil. “Pertamina should become the operator of Cepu, period,” said President & CEO Widya Purnama at a parliamentary hearing in Jakarta. “We can jointly operate Cepu in many forms or rotate the operatorship later, but Pertamina should be the leader, or I would resign.” A dispute between ExxonMobil and Pertamina over the operatorship has halted development of the field for four years.
|
|
Nexen okays Ettrick
|
A plan to develop Ettrick oil field in the UK North Sea has been approved by the operator, Nexen Inc. The plan must still be approved by two partners and the UK government. Ettrick is 15.5 miles east of Buzzard oil field and holds between 25 million and 50 million bbl of oil. It is likely to be a subsea development tied back to Buzzard via a subsea pipeline. Three production wells are slated for drilling, and first output could be in early 2008.
|
|
Chevron re-enters its New Orleans office
|
Chevron has begun to reoccupy its downtown New Orleans office. “Today is a key milestone for Chevron in the aftermath of Hurricane Katrina,” said Melody Meyer, vice president of the firm’s Gulf of Mexico business unit. “There is a strong feeling of homecoming for the employees who have already returned.” Prior to Katrina, Chevron had about 750 employees in the downtown New Orleans building, where there had been flooding on the first floor and in the garage, with minor window damage. Chevron has repaired the building to the extent needed for occupancy and plans to finish re-staffing offices by late in first-quarter 2006.
|
|
Indian field goes online
|
ONGC’s D1 field has begun producing from the first of three wells in its initial development phase. Output averaged 3,000 bopd, and should reach 9,000 bopd, once all three wells are onstream. A second phase of three wells is planned for the field, which sits 200 km southwest of Mumbai.
|
|
Political unrest sends oil prices climbing again
|
Rebel attacks on key oil installations in Nigeria were the latest event that prompted crude prices to rise higher. In the country’s southern Niger Delta, rebels showed more organization than in previous attacks, blowing up a pipeline, the Forcados export terminal and a houseboat, among various facilities. Accordingly, Shell was forced to shut in 455,000 bopd, or about one-fifth of Nigeria’s output. In response, the IPE Brent Index in London rose $1.16/bbl and $1.56/bbl over two days, and, after a one-day delay for the US President’s Day holiday, West Texas Intermediate was up $2.94/bbl at $62.74/bbl on the New York Mercantile Exchange. Prices had already been on their way back up, due to inflammatory statements made by the Iranian government about nuclear intentions. The loss of the Nigerian oil is somewhat significant, as it is a low-sulfur crude and thus easier to refine and in higher demand. If the price rise is sustained, it might be harder for OPEC ministers to cut production at their next meeting on March 8, a more that they were rumored to be planning. Saudi Arabian officials said that the kingdom was prepared to step in and offset any sustained oil supply disruptions resulting from the unrest in Nigeria.
|
|
Europeans warned of impending energy security problem
|
European Union members in Western Europe were told by energy industry experts to begin thinking about how they can unify their energy and foreign policies, so that they are not held hostage to Russian or Middle Eastern supply whims. At an annual conference in Berlin that normally focuses on renewable energy issues, attendees were told by Luc Werring, principal advisor to the EU’s Commission for Energy and Transport, that “we need to integrate our energy policy with foreign policy. The danger of security of supplies, for the first time, is becoming an issue. There has been lots of rhetoric. We now need to implement and invest in energy security.” Some officials in Western Europe are concerned that Russia will use its oil and gas exports as a means to impose political pressure. As an example, they cite Gazprom’s recent cut-off of natural gas to Ukraine and Moldova in a disagreement over gas prices. The American director of NATO’s energy security forum, Kevin Rosner, also told the audience that he believes Russia has no qualms about “using energy as a political tool.”
|
|
US senators introduce offshore leasing and gas bill
|
Senator Mark Pryor (Dem. – Ark.), along with co-sponsors, Sens. John Warner (Rep. – Va.), George Allen (Rep. – Va.) and Jim Talent (Rep. – Mo.), have introduced Senate Bill 2290, the “Reliable and Affordable Natural Gas Energy Reform Act of 2006.” It would allow some states in the US to opt out of OCS leasing bans, while permitting others to obtain extensions of some E&P activity restrictions. The bill would allow state governors to petition the US Interior Department for waivers of current coastal leasing bans for development of natural gas. Such natural gas leases would also allow oil production, if the state involved agrees to the additional waiver. However, if other states want their bans to extend beyond 2012, this bill would allow them to seek extensions of up to 10 years for areas up to 12 miles from their shores. The bill blocks production from leases within 100 miles of Florida or California.
|
|
Officials have additional offshore related measures at work
|
In addition to Senate Bill 2290, Sen. Pete Domenici’s (Rep. – N.M.) Senate Bill 2253 would permit leasing in 3.6 million acres of the eastern Gulf of Mexico. This bill and a 2-million-acre plan proposed by the MMS of the Interior Dept. were the subject of recent hearings held by the Senate Committee on Energy and Natural Resources. Not surprisingly, the twin, eternal opponents of industry activity, Florida Sens. Mel Martinez (Rep.) and Bill Nelson (Dem.), were fighting these measures while introducing a bill of their own to limit leasing to 750,000 acres. Meanwhile, a Virginia state House subcommittee passed a bill supporting exploration off the state’s coast. In addition, MMS has proposed a $7-billion deepwater royalty relief extension to 2011.
|
|
Norway’s NPD expects output decline in 2006
|
In its annual report on the Norwegian Continental Shelf, Norway’s Petroleum Directorate said that 2005 was a record year for natural gas production, but oil output was lower than expected. An average 8.2 Bcfgd was marketed from the NCS, up 8% from 2004’s level. Crude production was off 7.5%, at 2.56 million bpd. This year, NPD expects another gas output increase, while oil production is forecast to drop about 9%, to 2.4 million bpd. In addition, 103,400 bpd of condensate will be produced. Norwegian exploration efforts yielded up to 100 million bbl of new oil reserves and 4.2 Tcf of gas reserves which, after subtracting last year’s production, resulted in a net increase to the country’s reserve base.
|
|
Iran encourages more domestic use of gas
|
Iranian officials are moving ahead with plans to monetize their enormous natural gas reserves. Part of the country’s effort will focus on replacing domestic oil usage with natural gas. In that regard, several gas-to-liquid (GTL) projects are on the table. At the 11th Middle East Gas Summit in Doha, Qatar, Dr. Narsi Ghobran, managing director of Narkangan GTL Company, told attendees that one or two small-to-medium-scale GTL projects are likely to be started in Iran by 2010. However, in the longer run, up to 10 GTL projects could be underway by 2015. Currently, the largest domestic use of gas within Iran is for oil injection schemes. The country holds the world’s second largest gas reserves, and it is the fifth largest consumer of gas, globally.
|
|
Alaska’s governor may seek 25% tax
|
As confirmed by his spokesman, Alaska Gov. Frank Murkowski (Rep.) is considering a new state production tax, which would tax oil companies’ net profits at a 25% rate. At press time, details were not completely final, and the spokesman said that the rate could still change. However, it was known that Murkowski’s proposal would also give oil companies a 20% tax credit for whatever profits they reinvest in Alaska. The governor’s primary oil and gas consultant, Pedro van Meurs, estimated that this net profits tax would bring an additional $1.5 billion into state coffers, above the amount yielded by the production tax system now in place. That estimate is based on a $60/bbl oil price. Alaska’s production taxes totaled $863 million last year, and total oil income was $2.85 billion.
|
|
Senators intervene in Chevron/ Ecuador suit
|
A letter was sent to US Trade Representative Robert Portman by Sens. Patrick Leahy (Dem – VT) and Barack Obama (Dem – Ill.), asking him to stop Chevron from lobbying to undermine an environmental lawsuit against the company in Ecuador’s rainforest. Chevron potentially faces a multi-billion liability in the class-action case related to clean-up of so-called contamination alleged to stem from the firm’s production sites in the Amazon region of Ecuador. The senators asked Portman to not allow negotiations over the Andean Free Trade Agreement to interfere with the Chevron case. Ecuadorian officials are upset by Chevron’s lobbying of the US Congress, because the firm reportedly agreed to abide by the jurisdiction and findings of the Ecuador court as a condition for getting the lawsuit transferred out of US federal court.
|
|
EnCana ramps up Barnett Shale activity
|
The fourth largest gas producer in the Barnett Shale field of northern Texas, EnCana Oil & Gas, said it will drill 100 to 120 more wells this year and increase output by about 20%. During a conference call to analysts and media, EnCana CEO Randy Eresman said that the firm has 12 rigs running, with production averaging 100 MMcfgd. This year’s drilling program is a sizeable increase from previous years’ levels. The company drilled 36 Barnett Shale wells in 2004 and 59 wells last year. About 80% of the firm’s 26 Bcf of gas produced in 2005 came from Denton and Tarrant Counties. This year, activity will expand south, into Johnson and Hill Counties. “We are among those who are very encouraged about the prospects for the outer area of the Barnett Shale,” said Eresman.
|
|
Saskatchewan premier meets with Cheney
|
Energy resources was the topic on schedule when Saskatchewan Premier Lorne Calvert met with US Vice President Dick Cheney last month. Nevertheless, Calvert said that Cheney was “very encouraging and professional” in that meeting, despite the recent hunting accident in which the Vice President mistakenly hit a friend with bird shot. Calvert told Cheney that Saskatchewan is eager to share the responsibility with fellow province, Alberta, in providing oil an gas export to the US. He noted that 300,000 bopd already go south, mostly through Minnesota. Yet, he believes that the province still has up to 30 billion bbl of oil in place, much of it heavy oil that is harder to extract. Calvert solicited Cheney to encourage US companies to invest in enhanced oil recovery in Saskatchewan. similar to schemes already proven in Wyoming’s Weyburn area. 
|
|
