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Vol. 227 No. 9 |
| KURT S. ABRAHAM, MANAGING/INTERNATIONAL EDITOR |
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Murkowski's loss throws Alaskan gas line into doubt |
Alaska Gov. Frank Murkowski's defeat in last month's Republican primary leaves the future of his proposed natural gas pipeline project with ExxonMobil, BP and ConocoPhillips in jeopardy. Murkowski used his re-election bid as a referendum on the proposed
contract. Public response was overwhelmingly negative – just under 19% of primary voters backed Murkowski and, symbolically, the proposed contract. Voters gave 51% of their support to Sarah Palin, a former small-town mayor who ran on an anti-politician platform. Palin faces former
two-term Democratic governor Tony Knowles in the November general election. Palin and Knowles have said that they want to see other proposals before deciding how to proceed with the gas line deal-making. Murkowski's contract would set the tax and other terms for North Slope natural gas
development and lead to construction of a $25-billion pipeline to Canada to deliver that gas into the US Midwest. Critics say the proposal heavily favors the oil companies at the state's expense. Murkowski has spent nearly two years negotiating with the operators but has been unable to
get the contract past the legislature. Murkowski remains in office until Dec. 4, and he may call a special session at the end of this month to try one more time to get contract approval. |
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Tillerson concerned about BP's North Slope problems |
BP's recent partial shutdown of Alaska's giant Prudhoe Bay field, due to pipeline corrosion problems, has hurt the industry's image as a whole, and is something that Exxon Mobil will discuss with the British operator, said ExxonMobil Chairman and CEO Rex
Tillerson. "I think anytime anyone in the industry has an unfortunate incident like we're dealing with up there, it's obviously not helpful to the industry as a whole,"Tillerson told a press briefing at the Offshore Northern Seas conference in Stavanger, Norway. "I'm not
going to comment on the (operator's) performance. I don't think it's appropriate for me to do that. We will certainly comment to them in private."BP shut down part of the field last month after inspections revealed significant corrosion in the pipeline network that went undetected
for up to several years. Although BP (26%) operates the field, ExxonMobil holds a larger equity stake at 36%. Tillerson said his firm is helping BP to put Prudhoe Bay back into full operation as quickly as possible. As of late August, output was about 217,000 bopd, a bit more than half
of normal capacity. Despite these problems, Tillerson said that the industry has a responsible upstream record that should encourage legislators to open Alaska's Arctic National Wildlife Refuge (ANWR) to exploration and drilling. |
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Saudi compensates for Prudhoe Bay |
Although it now looks like only half the amount will be necessary at any one time, Saudi Aramco said it would boost output by 400,000 to 500,000 bopd, to 9.5 million bopd or slightly beyond, to cover BP's Prudhoe Bay shortfall. A majority of the oil is
likely to be medium and heavy crudes. So other good news related to the North Slope was the start-up of production by ConocoPhillips and Anadarko Petroleum at the first satellite to Alpine oil field. Named Fjord field, it is 5 mi north of Alpine and will peak in 2008 at about 22,500
bopd. It was developed exclusively with horizontal well technology and will employ EOR at about 17 wells. |
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IEA reduces 2006 supply-growth forecast |
Due primarily to the Prudhoe Bay shutdown, the International Energy Agency (IEA) cut its updated 2006 non-OPEC supply forecast by 220,000 bopd, to 900,000 bopd (up 1.8%). However, several other ongoing, supply-side issues were cited. While some of these
are related to factors in the US Gulf of Mexico and the Middle East, the largest reason listed was that 750,000 bpd of Nigerian oil remained offline after a series of militant attacks were made on service company facilities and pipelines. In the longer term, the IEA's 2007 forecast for
non-OPEC supply growth remains unchanged at 1.9 million bopd (up 3.7%), but it, too, is subject to future revisions. |
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Ecuador will manage seized oil field with new firm |
Government officials in Quito plan to create a new state-owned firm to manage three oil fields seized earlier this year from Occidental Petroleum. In an interview with Dow Jones Newswire, Petroecuador President Galo Chiriboga said that a legal framework
had already been discussed, and a plan was moving forward for rapid formation of the firm. In addition, a special fund will receive all income from the Block 15 fields and be managed by the Ministry of Finance. Ecuador seized Block 15, plus the Eden-Yuturi and Limoncocha fields, on May
15, alleging that Oxy had broken terms of its operating contract. The US firm has vehemently denied the claim and is seeking arbitration of the matter. |
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Argentine governors want more say in new bill |
A proposal submitted by the governors of Argentine provinces Mendoza, Chubut, Jujuy and Rio Negro to President Nestor Kirchner would give those officials more autonomy in the oil and gas sector, per the new hydrocarbons bill. Interestingly, the largest
hydrocarbon-producing province, Neuquen, was not a party to the latest proposal. Neuquen produces 54% of Argentina's gas and 30% of its oil. Mendoza Gov. Julio Cobos said that the proposal's purpose is "to grant clarity and legal security to all parties directing tender processes
in the provinces corresponding to E&P in the energy sector." |
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WoodMac projects big growth in Rockies |
Over the next five years, operator spending in the Rocky Mountains of the US should total about $25 million, according to a Wood Mackenzie analyst. Speaking to the Colorado Oil and Gas Association's Rocky Mountain Gas Strategy Conference in Denver,
WoodMac's head of US upstream research, Andrew Strachan, said that this spending will occur as 43,000 new wells are drilled by the top 34 companies. He said that a very large amount of drilling will occur in the Uinta and Piceance basins, followed closely by activity in the Greater
Green River basin. A sharp increase in gas prices over the last five years has helped to bring activity to its current level. |
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New subsea facility destined for Norne |
Statoil has received Norwegian officials' consent to use a new subsea template on Norne oil field. Early on, the new template will accommodate two production wells that will increase field recovery. Norne's location is in the Norwegian Sea, about 50 mi
north of Heidrun field. Existing facilities include an FPSO, three production templates, one water injection template and a combined gas/ water injection template. Statoil said the new K template will accelerate production and increase Norne's recovery from 56% to 57%. |
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Alaskan legislators pass new oil tax bill |
While the fight continues over how to build a gas pipeline from the North Slope, Alaska's legislators have managed to pass the state's largest rewrite of oil and gas tax law in decades. Passed in special session when an ailing lawmaker was flow to Juneau
from Alaska to cast the deciding vote, the new law is intended to spur development of gas reserves. It will set a tax base of 22.5% of operators' and partners' profits from their Alaskan operations. Furthermore, the tax rate would rise 0.25% for every $1/bbl increase in the oil price
over $55/bbl. Thus, at existing prices, the tax would effectively be 28%. The tax should bring in $2.4 billion annually, when oil is $60/bbl, which would be $1.3 billion more than the old tax structure would generate. |
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PDVSA claims reserve growth |
Rafael Ramirez, Minister of Energy and Mines, and president of Venezuelan state firm PDVSA, told the El Universal newspaper that the country's proven oil reserves now total 81 billion bbl. Ramirez also claimed that PDVSA could swell this figure
to 316 billion bbl by 2008 through more drilling in the Orinoco oil belt. "We are sure that we will incorporate into our proven reserves, in our books, 235 billion bbl of oil that can be recovered from the Orinoco oil belt," Ramirez told the newspaper. As recently as July,
the company was claiming a figure of 75 billion bbl. |
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Angola's Sonangol reaches milestone |
Angolan state oil company Sonangol has reached an oil production figure of 100,000 bpd for the first time. This compares to only 7,000 bopd in 1976, when the firm was formed. Sonangol spokesman Jose Rosa Santos told reporters that such progress reflects
the hard work by Angolan technicians during the last 30 years, much of that while a civil war was underway. Santos credited some of the progress to investment in specialty training for Sonangol personnel. Through its subsidiary, Mstelcom, the firm is also investing in information
technology updates to further enhance operations. Last year, Angola's oil production, overall, climbed from 990,000 bopd to more than 1.2 million bopd. |
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Chinese finish reserve |
China last month completed its first strategic oil reserve, and the facility will begin operation next month. As reported by Xinhua News Agency, the reserve at Zhenhai in east China's Zhejang Province has 52 storage tanks. Twenty-eight are made of
high-strength steel plating. Project cost is $462.5 million, and storage capacity is 5.20 million cubic meters (32.71 million bbl). Construction had begun in 2004. |
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Malaysian field onstream |
Shell Malaysia said that its E8 field offshore Sarawak was online, and the firm has delivered its first gas to the Petronas onshore LNG complex via the E11 field complex. The E8 field is a key piece of the E11 Hub Integrated Gas project. As one of five
fields developed to supply the LNG facility, E8 has made the E11 complex the highest-volume, gas production facility in Sarawak waters. The other fields are E11, F6, F13 and F23. The F13 East and F13 West fields are due to come onstream in the next three years. |
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Pertamina puts new oil field online |
Indonesia's Pondok Tengah onshore oil field has gone onstream in Bekasi regency, West Java, said operator Pertamina. Initially, output will be 3,000 bopd, and that figure will rise to 16,000 bopd by 2008. Field life is estimated at 20 years. Indonesia has
been a net importer of oil for the last several years, due to declining output and growing consumption. The addition of Pondok Tengah will not do much to help the country's output rate, which was estimated to be only 895,000 bopd during July 2006. |
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Kerr-McGee is officially history |
Anadarko Petroleum has completed the $16.4-billion acquisition of Kerr-McGee Corp Last month, stockholders received $70.50 in cash for each share of Kerr-McGee stock held. Anadarko is also guaranteeing the $1.6 billion in publicly held indebtedness that
was held by Kerr-McGee. At the end of 2005, Kerr-McGee's proved reserves totaled 898 ,million boe, of which 62% were natural gas. Proved, undeveloped reserves comprised 30% of the total. Largest properties are in the Gulf of Mexico and the Rockies.  |
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