World of Oil and Gas

GCC production to increase in 2011

Gulf Cooperation Council member nations Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE will increase oil production in 2011 to 15.7 million bpd, according to the International Monetary Fund (IMF).  This represents a 4% increase over the projected 2010 output of 15.1 million bpd. The entire Middle East and North Africa region will continue a vigorous recovery, spurred by rising oil prices and production levels.

Rodinia Oil to drill offshore South Australia

A Rodinia Oil Corp. subsidiary, Officer Basin Energy Pty. Ltd., will carry out an initial six-well onshore drilling program in the Officer Basin in South Australia. Utilizing Ensign Australia’s Rig 16, the drilling program will initially test six separate structural targets. Drilling is expected to begin in February 2011, and will test prospects identified in Rodinia’s seismic programs acquired between 2007 and 2009.

Statoil, Talisman acquire Eagle Ford assets

Norway-based Statoil and the Canadian company Talisman Energy have acquired 97,000 acres of South Texas Eagle Ford Shale assets from Enduring Resources. The transaction was valued at $1.325 billion. Talisman will act as operator of the 50/50 joint venture, with Statoil taking over as operator for 50% of the assets within three years. Including Talisman’s existing holdings, the partners hold a net 134,000 acres of Eagle Ford assets.

Eni makes oil discovery offshore Angola

Italian major Eni, serving as operator, and partners have made a new deepwater oil discovery with the Mpungi-1 well, offshore Angola. The well, on Block 15/06 at a water depth of 3,440 ft, was drilled to a TD of 7,550 ft and encountered oil pay in both the Upper and the Middle Miocene sands. Production tests yielded 6,000 bpd of light oil. The exploration well is the eighth drilled in the block since 2006, the previous wells all having been commercial discoveries.

CNOOC buying $2.16 billion of Eagle Ford assets

In the largest US-Chinese oil deal in history, China’s state-owned energy company China National Offshore Oil Corp. will invest $2.16 billion in Chesapeake Energy to increase China’s stake in shale gas. CNOOC initially will pay $1.08 billion for a 33% stake in Chesapeake’s Eagle Ford Shale acreage in South Texas, and has agreed to fund 75% of Chesapeake’s share of drilling and completion costs until an additional $1.08 billion has been paid, which Chesapeake expects to occur by year-end 2012. As operator, Chesapeake will conduct all leasing, drilling, completion, operations and marketing for the project. Over the next several decades, the companies plan to develop net resource potential up to 4 billion boe. Chesapeake is currently using 10 operated rigs to develop its Eagle Ford leasehold and, with additional capital from CNOOC, expects to be running 12 rigs by year-end 2010, about 31 rigs by year-end 2011 and about 40 rigs by year-end 2012. China has 920 Tcf shale gas reserves that are largely unexplored.

DOI lifts deepwater drilling moratorium

The US Department of the Interior has permitted deepwater oil and gas drilling to resume, provided operators comply with all existing rules and requirements, including those that recently went into effect, such as demonstrating the availability of adequate blowout containment resources. Secretary of the Interior Ken Salazar reached the decision based on information gathered in recent months, including a report from Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) Director Michael Bromwich that shows significant progress in reforms to drilling and workplace safety regulations and standards, increased availability of oil spill response resources since the Macondo well was contained, and improved blowout containment capabilities. Bromwich said that before deepwater drilling resumes, BOEMRE will inspect each deepwater drilling operation for compliance, including the testing of blowout preventers.

GE to acquire Dresser for $3 billion

General Electric will acquire the global energy infrastructure technology and service provider Dresser Inc. The $3 billion deal is the latest in a series of energy-related acquisitions by GE over the last 10 years, including oilfield equipment supplier VetcoGray in 2007 and pressure control specialists Hydril in 2008. Headquartered in Addison, Texas, Dresser operates in more than 100 countries, providing compression, flow technology, measurement and distribution infrastructure and services. Dresser had revenues of $2 billion and earnings of $318 million in 2009. GE builds natural gas-fired turbines for power generation and provides services like water treatment and recycling for oil and gas drilling operations. The acquisition will help GE capitalize on the recent natural gas boom in the US and overseas by expanding the company’s portfolio of gas infrastructure equipment.

BP sells upstream interests to raise cash

As part of a plan to make divestments of up to $30 billion by the end of 2011, BP announced it has reached agreements to sell its upstream businesses and associated interests in Venezuela and Vietnam to TNK-BP for a total of $1.8 billion. TNK-BP, Russia’s third largest oil company, is owned equally by BP and the AAR Consortium (composed of Alfa Group, Access Industries and Renova). The agreement includes BP’s interests in the Petroperijá, Boquerón and PetroMonagas joint ventures in Venezuela and, in Vietnam, BP’s 35% operating interest in the Lan Tay and Lan Do gas fields and associated pipeline and power generation interests. BP has also agreed to sell its interest in four producing fields in the deepwater Gulf of Mexico to Marubeni, a Japanese trading firm, for $650 million. BP had acquired the assets in a much larger $7 billion purchase from Devon Energy in early 2010.

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