World of Oil

Deal opens the US Gulf of Mexico to China

Statoil has signed an agreement with China National Offshore Oil Corp. (CNOOC) for a number of stakes in its Gulf of Mexico leases. The deal allows a Chinese oil company to explore the US Gulf of Mexico for the first time. In the farm-down agreement with the Norwegian oil firm, CNOOC will secure equity stakes in four GOM fields in exchange for bearing some of the fields’ development costs. Statoil will retain operatorship of all four fields.

Medgaz pipeline to start commissioning in 2010

Medgaz is expected to start commissioning the gas pipeline linking Algeria to Spain in March 2010, with the commercial startup of the pipeline in June 2010, according to Pedro Miro, president of Medgaz. The pipeline is expected to transport 8 Bcm per year of natural gas initially, and will eventually reach 16 Bcm. The total cost of the project is $1.34 billion. The length of the onshore section of the pipeline is 547 km, while the offshore section spans 210 km.

Eni finds oil off Angola

Eni Angola announced its second oil discovery in the deepwater Block 15/06 off Angola. The well is around 350 km (219 mi) north of Luanda. The Norte-1 well was drilled from the seabed 500 m below the surface to a depth of 2,830 m. Initial tests yielded more than 6,500 bpd. Eni operates with partners SSI Fifteen, Sonangol, Total, Falcon Oil, Statoil and Petrobras.

Shell adds deepwater acreage offshore French Guiana

Shell has acquired a 33% interest in the Guyane Maritime Permit, approximately 150 km off the coast of French Guiana, from an affiliate of Tullow Oil plc. The permit area covers approximately 32,000 sq km situated in water 2,000 to 3,000 m deep. The acquisition requires the approval of French authorities. It includes an option to acquire an additional 12% stake at a later date.

OPEC: Global oil demand to grow to 106 million bpd in 2030

OPEC’s president, Jose Botelho de Vasconcelos, said the oil-exporting group expects global oil demand to grow to 106 million bpd in the period from  last year to 2030, up 20 million bpd. “Projections are based on present trends and expected patterns of behavior; the reality may turn out to be different in an uncertain world,” Reuters quoted de Vasconcelos as saying.  OPEC’s monthly report in November raised crude demand to 750,000 bpd compared with its projection of 700,000 bpd the previous month. The report also said that most signs pointed toward gradual growth in fuel consumption, but that there were risks to the downside. The group’s Angolan president also said $80 per barrel is not unreasonably high but rather is a good price for oil.

Blowout at gas well kills one, injures another

A natural gas well blowout in Louisiana on Nov. 18 had deadly consequences, with one man killed and another critically injured. The natural gas well, being drilled by Chesapeake Energy, blew near the DeSoto Parish village of Grand Cane. More minor injuries were reported, including among firefighters who suffered respiratory problems during a rescue. The fatality is the second this year for a Chesapeake Energy contractor and the third since exploration of the Haynesville Shale in northwest Louisiana began in earnest last year. At least a half-dozen other men have been seriously injured while working on rigs in the region. In May, more than 30 people were forced from their homes in Naborton for 48 hr when a Chesapeake Energy well began spewing natural gas into the air. The blowouts that happen during well completions are among risks of the Haynesville Shale’s highly pressurized wells, Chesapeake Energy geosciences manager John L. Sharp told Mansfield Rotary Club members during an unrelated meeting Nov. 18. The cause of the deadly blowout is currently under investigation.

Exxon explores gas trapped in German coal seams

ExxonMobil has acquired about 2 million acres of coalbed methane resources in Germany. The new acreage marks the first attempt of a US major oil company to unlock these methane resources in Europe, where demand for gas is expected to grow substantially as countries intensify their efforts to reduce their dependence on Russia as a supplier. “There is an attractive gas market in Europe,” said David Rosenthal, ExxonMobil’s vice president of investor relations. The company’s CBM interest in Germany complements its existing shale positions in the Lower Saxony Basin, as well as its tight-gas interest in Hungary and shale gas acreage in Poland. ExxonMobil, which said it plans to start drilling for CBM in Germany next year, is also hoping that Europe’s unique need for new local supplies will help its investments on the continent hold up better than in the US, where a boom in gas output has contributed to a glut that recently sent prices plunging. Coalbed methane already accounts for 10% of natural gas produced in the US, where independent producers have dominated its development.

$980 million Cameron-Natco deal approved by US Justice

The US Department of Justice has cleared Cameron International Corp.’s $980 million acquisition of Natco Group Inc., but required the company to sell certain desalting assets used in the oil refining industry. The asset sales were necessary to preserve competition in the market for refinery desalters, which are used to remove salt from crude oil, the department’s antitrust regulators said. Cameron will divest desalter assets it acquired from Howe Baker Engineers Ltd. in 2005 under terms of its settlement with the government. It will also divest a non-exclusive license to certain Natco technologies related to refinery desalters. Cameron said in a statement that the assets it is selling represent less than two-hundredths of 1% of the company’s 2008 revenue. Cameron also said it plans to close the deal “as soon as practicable” following approval by Natco’s shareholders.

Brazil’s House approves creation of subsalt holding firm

Brazil’s House of Representatives on Nov. 18 overwhelmingly approved a draft bill to create a new holding company to be called Petrosal. The new state-owned company will manage all of the oil and gas exploration and production agreements in the prolific offshore pre-salt area under the new shared production model. In an extraordinary session, the representatives voted the text’s highlights in blocks. Two highlights were voted separately and rejected. The first forbade the hiring of temporary servants by the new company, while the second included the requirement to hold hearings for all directors appointed to Petrosal in the text. Now that it has been approved, the bill will be forwarded to the Senate for analysis and voting. Unlike the House, the Senate’s statute requires the text to be analyzed by several permanent commissions, not by a single special one.

Hess ventures into Marcellus Shale

With more than 65,000 acres leased in Susquehanna and Wayne counties in Pennsylvania, Hess Corp. officials have announced intentions to start drilling for natural gas in the Marcellus Shale by mid-2010. Hess Senior Vice President of Global Exploration and New Ventures Bill Drennen said the company and its partner, Newfield Exploration Co., have begun to talk with regulators and plan to continue acquiring more land when possible. The agreement between Hess and Newfield covers upward of 140,000 gross acres in the region.  Hess, which also operates retail gas stations, has leased land through the Northern Wayne Property Owners Alliance. Hess, which has to secure approval for drilling and surface-water withdrawal from the state Department of Environmental Protection and the Delaware River Basin Commission, respectively, also expects to verify where natural gas resources are located through seismic testing.

Medvedev: Russia must not rely on commodities

Russian President Dmitry Medvedev renewed his demand for economic modernization and an end to his country’s “humiliating” dependence on commodities even as rising oil prices eased the steepest contraction on record. “We shouldn’t look for the guilty only outside the country,” Bloomberg quoted Medvedev as saying in his annual state-of-the-union address in the Kremlin. “We haven’t freed ourselves from the primitive structure of the economy. It’s a question of our country’s survival in the modern world.” Medvedev warned against complacency after the prices of Urals crude oil and natural gas, which account for about 30% of output and 70% of export revenue, rebounded from the start of the year. “The habit of living off exports is still hindering our innovative development,” he said. Medvedev and his predecessor, Prime Minister Vladimir Putin, are seeking alternative sources of growth after last year’s 54% slump in oil prices pushed the economy into a 10.9% contraction in the second quarter.

Shell calls for global cap-and-trade system

Royal Dutch Shell said regional mechanisms to reduce carbon dioxide output should be expanded into a global cap-and-trade system to ensure that more companies are forced to curb emissions. “We need cap-and-trade mechanisms to come up in more parts of the world; we need these mechanisms to be linked to each other,” Ranjit Prasad, global head of CO2 trading at Shell International Transport & Trading, said in a video posted on the company’s website. “We need project-based mechanisms for those parts of the world where we don’t have mandatory caps.” Under cap-and-trade programs, emitters are permitted to release a certain quantity of greenhouse gases and are allotted permits for that amount, which can be bought and sold as required. The European Trading Scheme, mandatory for heavy industry and power generators, is the world’s largest such system. There are also voluntary cap-and-trade programs such as the one operated by the Chicago Climate Exchange. Shell and BP are among companies supporting cap-and-trade. Industries that aren’t subject to obligatory emission limits must commit to curbing their carbon output, Prasad said. Almost 200 countries are due to gather in Copenhagen this month to hammer out the terms of a climate accord to replace the Kyoto Protocol, whose targets expire in 2012.

200 million-bbl oil discovery confirmed offshore Tunisia

Cooper Energy, following the conclusion of a conceptual field development plan, has confirmed over 200 million bbl of oil in place at  Hammamet West Field in the Gulf of Hammamet. The Tunisian field was discovered in 1967 by the Hammamet West-1 exploration well, which discovered 7 m of oil on rock in the Birsa sandstone formation.

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