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Chevron, partners reveal major test in deepwater GOM

On Sept. 5, a consortium of Chevron (operator, 50%), Devon Energy (25%) and Statoil (25%) announced a record-setting production test on the Jack 2 well in Walker Ridge Block 758 of the US Gulf of Mexico (GOM). Jack 2 was drilled to delineate the Jack 1 discovery that encountered 350 net ft of pay in September 2004. Jack 2 was drilled and tested in about 7,000 ft of water and more than 20,000 feet below the sea floor, with a TD of 28,175 ft (Jack 1’s TD was 29,000 ft). Tested during second-quarter 2006, Jack 2 flowed more than 6,000 bopd, and the test represented about 40% of the well’s total net pay. Although the partners officially referred to Jack’s test results as “encouraging,” analysts are already estimating preliminary reserves at 3 billion bbl of oil on the low side and 15 billion bbl on the high side. If the higher figure is proven, then the field would be the largest US find since Alaska’s Prudhoe Bay in 1968. Like many deepwater GOM finds, Jack is subsalt. Jack 2 represents a triumph of recent advances in exploration technology – much better seismic data and greatly improved modeling. Also, the well set more than a half-dozen records for test equipment pressure, depth and duration in deep water, said Chevron Executive Vice President George Kirkland. For example, the perforating guns were fired at world record depths and pressures. The test tree and other drill stem testing tools also set world records.

Anadarko to sell Canadian subsidiary to CNR

Anadarko Petroleum Corporation will sell its wholly owned subsidiary, Anadarko Canada Corporation (ACC), to Canadian Natural Resources Ltd. (CNR) for US$4.24 billion, including estimated working capital adjustments. Anadarko’s interests in the Mackenzie Delta and other Canadian arctic frontier properties are excluded from this sale. At the sale’s June 30, 2006, effective date, ACC produced about 340 MMcfd, equivalent, of which 85% was natural gas. At year-end 2005, ACC had proved reserves of roughly 262 million boe, of which about 75% were proved developed. “This divestiture is an important step in refocusing the portfolio and reducing debt following our acquisitions of Kerr-McGee and Western Gas Resources. We are pleased with the value and expediency of this preemptive transaction,” said Anadarko Chairman, President and CEO Jim Hackett. The transaction is expected to close by the end of October.

OPEC maintains status quo, oil prices dip

Oil prices dropped to nearly six-month lows at about $65/bbl last month, after OPEC agreed to hold its output steady and US stocks continued to rise. US stocks rose, as demand dropped with the end of the summer driving season. OPEC ministers left their collective output unchanged at 28 million bopd for fourth-quarter 2006. During closed-door internal meetings, Venezuela had pushed the group to cut output, to firm up prices, but that move was rebuffed by other members. Indeed, Acting OPEC Secretary General Mohammed Barkindo noted that global commercial inventories of oil were at their highest level since 1997, at 1.2 billion bbl.

Libyan chief outlines production expansion plans

In comments released on his firm’s website, the secretary of the People’s Committee of Libya’s National Oil Corporation, Dr. Shukri Ghanem, described some of the country’s oil and gas priorities, particularly production expansion. “We hope to increase our production capacity by the middle of next year to 2 million bpd,” said Ghanem. “Within five to seven years, our production capacity may reach 3 million bpd.” However, increasing the productive capacity does not necessarily mean a boost in actual output explained Ghanem, “because we are committed to certain rules in our dealings with OPEC. Therefore, we will coordinate our real production in accordance with what is agreed within OPEC...” He also said that exploration efforts will be broadened, to make meaningful additions to the country’s oil and gas reserves. “Libya’s reserves of oil are now estimated to be more than 37 billion bbl,” noted Ghanem.

Integrated operations enhance Statoil’s value creation

At the ONS conference in Stavanger, Statoil said that it will run its Norwegian facilities more efficiently and safely through integrated operations. This means specialists of various disciplines will work together in collaboration rooms and in real time, so that they can correct situations as they occur. “New technology means that we can bring the data to the experts, instead of bringing the experts to the data,” said Adolfo Henriquez, manager for integrated operations. Examples include Statfjord field, where sand production is monitored 24 hr/day, with engineers only a mobile phone call away. At Snorre field, monitoring of rotating equipment has allowed maintenance periods to increase to 4,000 hr from 750 hr. Snøhvit field will also be remotely controlled, when it goes onstream in the Barents Sea in 2007.

Colombia intends to sell 20% of Ecopetrol

Government officials sent a bill to Congress, requesting approval to sell 20% of state oil firm Ecopetrol’s shares. Revenue from the sale will go toward raising funds for investment in new E&P projects. “We hope that, once the decree is approved, we will be able to sell the shares of Ecopetrol on the stock exchange between August and September of next year,” said Mines and Energy Minister Hernan Martinez. First option for the sale must be given to company workers, cooperative associations, former workers and pension funds.

BP pushes back Thunder Horse to 2008

In an official announcement, BP said that it does not expect output from Thunder Horse oil and gas field in the deepwater Gulf of Mexico to begin before mid-2008. This news follows a four-month series of tests that revealed metallurgical failures in components of the field’s subsea system. The problem surfaced during pre-commissioning tests, when water was pumped through the system to establish system integrity. The components passed normal industry standard tests and regulatory requirements. However, when more prolonged and rigorous testing was conducted as a precaution, a failure occurred on a subsea weld. Consequently, BP retrieved the damaged seabed manifold and a second manifold for further examination and onshore testing. The second manifold also showed a similar failure during testing. BP will now retrieve and replace all subsea components at risk over the next year before commissioning can resume, and output can begin. Thunder Horse will feature the world’s largest drilling, production and quarters semisubmersible platform.

Russia revokes Sakhalin 2 permit

Russia’s Natural Resources Ministry last month revoked the environmental permit for Shell’s Sakhalin 2 development project. The ministry said that the revocation occurred in light of a protest filed against environmental approval by First Deputy Prosecutor Alexander Buksman. Prosecutors had complained that the state environmental study was based on insufficient documentation. Furthermore, the project lacked a risk evaluation for construction of isothermic reservoirs, and evaluation of seismic and tectonic dangers was “insufficient.” Until the permit is restored, work on the project is likely to be delayed.

Pebercan achieves Cuban success

Quebec-based Pebercan Inc. said it has boosted output from its Block 7 in northern Cuba by 42% to 21,000 bopd during the first three quarters of 2006, compared to the same period in 2005. Of that amount, 11,550 bpd are net to Pebercan, with the rest going to partner Sherritt International. Additionally, the firm has drilled the STC 302 well to 1,650 m (5,413 ft), TVD and 3,671 m (12,044 ft), MD. It tested 3,000 bopd on an 18-mm choke. This well, along with further drilling planned, should enable Pebercan to achieve its goal of a 15,000-bopd share of gross production by the end of 2006.

Petrobras sees oil self-sufficiency to 2015

Having achieved self-sufficiency in oil production and supply during second-quarter 2006, Brazil can maintain this energy independence through the year 2015, said Petrobras E&P Executive Manager Paulo Mendonca. “We are okay until 2015. The question is what happens after that,” Mendonca told attendees at the Rio Oil and Gas 2006 conference. Self-sufficiency at present translates to 1.9 million bopd, but output must rise about 7.5% annually to maintain independence, he said. This would equal 2.9 million boed in 2011 and 3.5 million boed in 2015. Petrobras expects to add new reserves totaling 10 billion boe in the next nine years to the existing figure of 13 billion boe. The firm’s 2007 – 2011 strategic plan calls for a large hike in exploration spending at about $1.5 billion per year, versus only about $500 million annually in the last few years. Another $8.4 billion per year will go toward field development and production enhancement projects.

Sakhalin 1 exports begin

ExxonMobil Corp. said that its subsidiary, Exxon Neftgas Ltd., commissioned the crude oil export system for the multi-phase Sakhalin 1 project offshore Russia. First oil began flowing into the export system on Aug. 29, and the first tanker began loading last month at the newly constructed DeKastri terminal. Oil production from the project should ramp up to a peak rate of about 250,000 bopd by the end of this year, following completion of the Onshore Processing Facility. The project includes a 24-in., 140-mi pipeline and a tanker loading facility for year-round oil transport. Sakhalin 1 is the eighth ExxonMobil-operated start-up brought online in the last 12 months.

Hydro adds Iranian block

Norwegian operator Hydro signed an exploration and development deal with National Iranian Oil Co. (NIOC) that covers the Khorramabad Block in Lurestan province in southwestern Iran. The 7,424-sq-km (2,866-sq-mi) block sits at a height of about 1,200 m (3,937 ft), roughly 500 km (311 mi) from Teheran. Hydro earlier submitted the winning bid in a tender held in May 2005. The initial four-year period calls for 600 km (373 mi) of 2D seismic and drilling three wells.

Petronas to pay Chad

Several newswires reported that a presidential spokesman confirmed that Petronas agreed to pay taxes that Chad says it owed. This news came a week after presidential advisors said that Chevron also agreed to pay additional taxes that the country claimed were owed. In late August, President Idriss Deby ordered both firms out of the country, saying that they owed combined back taxes of $450 million. Now, however, they will be allowed to stay in a consortium with ExxonMobil.

Argentine bill progresses

Argentina’s lower house, the Chamber of Deputies, passed a long-awaited exploration incentives package, 121-74, to revive E&P activity. The bill was sent to the Senate for additional approval. The measure provides value-added tax breaks for E&P expenses. However, it requires companies to form associations with state oil firm Enarsa. Some oil company executives have said that they would prefer a reduction in the country’s heavy oil export tax. 

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