World of Oil

Gulf Keystone discovers significant low-gravity oil reserves in Iraq

UK listed oil and gas explorer Gulf Keystone Petroleum has discovered a significant resource of low-gravity oil at its Shaikan-1 well in Iraq’s Kurdish region. The company said oil in-place for the Shaikan-1 well, which was tested to a depth of 2,055 m, was estimated to be a gross 1 billion to 5.3 billion bbl. The company said it continued to drill the well, which was independently evaluated by Dynamic Global Advisors, to a target depth of 3,200 to 3,500 m and it expected the resource estimates to increase.

Cameron wins $86 million contract to supply pumping systems for subsea Mexican job

US-based oil services company Cameron has won an $86 million contract to supply 16 multiphase pumping systems for three platforms on the Ku-Maloob-Zaap field off of Mexico. Cameron will provide design engineering and packaging for the systems which will include pumps, electric motors, piping, valves and control systems. “The multiphase pumps will be provided by Leistritz, a longtime partner in subsea applications with Cameron’s subsea systems group, and will be manufactured in Germany,” said the company in a statement. The systems are due to be installed in 2011.

ExxonMobil snaps up unconventional gas acreage in Poland

Exxon Mobil Corp. has recently acquired unconventional natural gas acreage in Poland. The company didn’t disclose the size of the acreage, but said it was acquired in December 2008 and that the company is exploring for unconventional natural gas resources. ExxonMobil is the second US oil major to announce in recent weeks that it is exploring for unconventional natural gas resources in Poland. ConocoPhillips, the third-largest US oil company by market value after ExxonMobil and Chevron, said in early September it has agreed to explore shale gas—hydrocarbon-rich rock formations—in the Baltic Basin in the northern part of the country.

Chevron squeezes new oil from one of world’s oldest fields

Chevron Corp. is employing new technologies in the hopes of extending the life of one of the world’s oldest and most prolific oil fields, a process that is being replicated elsewhere. The Kern River Field has produced more than 2 billion bbl in its 110-year history, but Chevron estimates it still holds another 1.5 billion bbl. Chevron is using Kern River Field as a real-world laboratory, testing enhanced recovery techniques and bringing in engineers from around the world to learn them. To get as many of those barrels as possible out of the ground—and do so cheaply enough to turn a profit—Chevron is deploying high-tech temperature sensors to monitor its production, using three-dimensional computer models to plan its wells and filtering waste water from the fields through walnut shells so it can be re-used. Chevron’s renewed focus on Kern River shows both the opportunities and the challenges facing the oil industry as the giant discoveries of the last century, from Alaska’s Prudhoe Bay to Mexico’s Cantarell, begin to dry up. Prudhoe Bay, for example, has suffered production declines even though more than half its 25 billion bbl remain in the ground. Chevron hasn’t reversed Kern River’s decline, but it has managed to slow it. Production is falling at a rate of about 2% per year, compared to an average of 7% per year from 1998 to 2005—which will mean millions of extra barrels of oil this year.

Keppel AmFELS launches first EXL Super 116E jackup rig

Keppel AmFELS has announced the launch of the Rowan EXL-1, the first of a fleet of four enhanced LeTourneau Super 116E jackup rigs built for Rowan Drilling Company. Rowan EXL-1 employs the technology to drill high-pressure/high-temperature and extended-reach wells in jackup markets. The rig is equipped with a hook-load capacity of 2 million lb, 70 ft of cantilever reach and a mud pumping horsepower to drill up to 35,000 ft. Additionally, Rowan EXL-1 features a new all water-based fire prevention system that provides immediate fire suppression and cooling of equipment. “This is a very exciting day,” stated Rowan Drilling Company president David Russell. “These are 50-year investments for us,” Russell said. “This rig is a little bigger and little stronger than most out there, so it’s a little more expensive. It will work in deeper water and can drill to greater depths. In some unique situations we’re closer to the beach, but these rigs are very environmentally-friendly.” Construction of Rowan EXL-4, the last rig in the fleet, was commenced on the day of EXL-1’s launch. Completion of EXL-4 is slated for spring of 2012.

Energy Minister: Russia to top 2009’s record-breaking oil output next year

Russia, which has now surpassed Saudi Arabia as the world’s largest oil producer, expects to top record 2009 output next year as a result of production from new oil fields, the deputy energy minister announced. Sergei Kudryashov predicted 2010 production would be more than 34.3 billion bbl, the official output forecast for 2009. With new fields in the Arctic and eastern Siberia, Russia’s oil output has shot past 2008’s yearly production of 34.2 billion bbl. The Russian government meanwhile relies on oil exports for about 40% of its budget. Only months ago, the Kremlin suggested it would coordinate output cuts with OPEC in a bid to bolster the global price of crude, which collapsed from its 2008 peak. As its oil producers hit trouble amid the financial crisis, Russia took an aggressively different tack by easing sector taxes and encouraging producers to snatch the gap in the market opened by OPEC’s cuts. Output hit record highs of almost 10 million bbl in August and 9.86 and 9.51 in July and June respectively. In comparison, Saudi Arabia produced about 8.1 million bbl per month over the same period, according to the Russian state statistics agency.

 Duo teams up to explore offshore Uruguay

Brazil’s state-run Petrobras and Argentina’s YPF have been awarded a contract to explore for gas and oil off Uruguay’s coast, state energy company ANCAP announced. Uruguay opened a tender for companies to drill 11 blocks of up to 8,000 km2, but the government only received offers for the two most promising blocks. “If the government approves the recommendation, the contracts will be signed in about a month,” ANCAP President German Riet told reporters, without putting a figure on how much each company would spend. Petrobras and YPF, the Argentine unit of Spain’s Repsol, presented their exploration proposal as a consortium, but each company will explore one block. If the drilling leads to the discovery of commercially viable reserves of oil or natural gas, the government will negotiate with the companies to secure a role for ANCAP in an eventual production operation. Preliminary exploration off the country’s Atlantic coast has raised hopes of energy independence in the small South American country, which imports 40,000 bpd.

GE Oil & Gas awarded $400 million contract for Gorgon

GE Oil & Gas has been awarded a $400 million competitive bid to deploy advanced liquefied natural gas (LNG) technology for the development of Gorgon, one of the world’s largest untapped natural gas fields, located 134 km offshore western Australia. The Gorgon area will feature the world’s largest ever carbon-dioxide (CO₂) sequestration project. GE will supply Chevron with equipment to fulfill Gorgon’s LNG production and CO2 sequestration. The demand for natral gas—the cleanest burning fossil fuel, which plays a vital role in balancing economic growth—is expected to grow by more than 67% by 2030. The Gorgon project’s estimated economic life is at least 40 years from the time of start-up. In addition to natural gas supply for domestic Australian use, Gorgon is critical to meeting Asia’s growing need for cleaner energy. To date, the Gorgon partners have signed sale and purchase agreements for LNG export into Japan and South Korea, the world’s two largest LNG import markets, as well as India and China. The project is estimated to cost approximately AUD$43 billion for the first phase of development, with first gas planned for 2014.

Chaparral Energy and United Refining Energy to merge in a $1.8 billion transaction

Chaparral Energy Inc. and United Refining Energy Corp. (URX) jointly announced that they have entered into an agreement through which Chaparral and URX will merge. The proposed transaction is expected to close no later than December 11, 2009. The combined company will be named Chaparral Energy, Inc. and will continue to trade on the NYSE Amex until approval of a planned application to transfer listing to the NYSE, where the symbol “CPR” has been reserved. The proposed transaction is valued at approximately $1.8 billion. Chaparral expects 2009 production to be approximately 7.6 million bbl equivalent and 2010 production to be approximately 9.9 million bbl equivalent, a 30% increase over 2009. The 2010 estimates were prepared on a well-specific basis and based on capital expenditures of approximately $410 million.

US blocks oil drilling at 60 sites in Utah

The Department of the Interior has frozen oil and gas development on 60 of 77 contested drilling sites in Utah, saying the process of leasing the land was rushed and badly flawed. The 77 government-owned parcels, covering some 100,000 acres in eastern and southern Utah, were leased in the last weeks of the Bush administration. The leases were immediately challenged by conservation groups, and in January a federal judge blocked drilling on the grounds that the Interior Department had failed to follow its own procedures for reviewing the appropriateness of lands designated for oil and gas extraction. An Interior Department review team then presented Secretary Ken Salazar with a recommendation that drilling be allowed to proceed on 17 of the 77 parcels. But it also said that the leases on eight parcels should be withdrawn and that 52 should be subjected to further study because of potential threats to wildlife and air and water quality.

Total to develop the Timimoun Gas Project in Algeria

Total, Sonatrach and Cepsa have announced that the Algerian National Oil and Gas Development Agency (ALNAFT) has approved the development plan for the Timimoun natural gas project, located between Timimoun and Adrar in southwestern Algeria. This project milestone is the outcome of an exploration and appraisal program begun in 2003, during which six wells were drilled. Development work should begin in the fourth quarter of the year, with first gas scheduled for 2013. Timimoun is expected to commercially produce around 1.6 billion m3 of gas per year (160 MMcfd) at plateau.

Petrobras sets monthly oil production record in Brazil

Petrobras’ average oil production in Brazil in September set a record at just over 2 million bpd, surpassing the previous mark set in March 2009 by 12,000 bbl. This mark was 5.6% higher than a year ago and 1.2% more than August 2009. The 24,000-bbl difference compared to August resulted from the resumption of activities on Platform FPSO Cidade de São Vicente in the Tupi area, and on platform P-19, in Marlim Field, Campos Basin.  Natural gas production abroad was 16.3 MMcfd, 9.9% more than in August. This result is the outcome of production normalization at the Austral Basin, in Argentina, after the end of the labor strike in August.

Chesapeake’s Barnett Shale production tops a billion

Chesapeake Energy Corp. announced that its gross operated daily production in the Barnett Shale recently exceeded 1 billion Bcfgd, including a “monster” well in Mansfield that peaked at 16.4 MMcfgd. Oklahoma City-based Chesapeake is the second-largest gas producer in the Barnett Shale, which underlies about 20 North Texas counties. The biggest production and heaviest drilling activity is in the Tarrant and Johnson counties. Chesapeake said the Mansfield well, “is expected to average more than 13 MMcfgd in its first month.” That would exceed “the previous monthly Barnett production record established by two Chesapeake-operated wells this [past] summer that averaged more than 9 MMcfgd,” the company said.

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