World of Oil and Gas
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Eni produces first oil offshore Alaska |
Eni began oil production at Nikaitchuq Field, located offshore the North Slope of Alaska at an average water depth of 3 m. The field, which is Eni’s first operated Arctic project, has recoverable reserves estimated at 220 million bbl of oil. Nikaitchuq is expected to produce for over 30 years with peak production of 28,000 bopd. Nikaitchuq’s full development will be through 52 wells. |
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Petrobras makes ultra-deepwater discovery |
Petrobras has made an oil discovery in the pre-salt reservoirs of Block BM-S-9 in the ultra-deep waters of the Santos Basin. The discovery was made in Well 3-BRSA-861-SPS, called Carioca Nordeste, which lies in a water depth of 7,057 ft about 171 miles off the state of Sao Paolo. Petrobras is operator with 45% interest; BG Group owns 30% and Repsol has 25%. |
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ONGC re-enters northeast India |
India’s national oil major, Oil & Natural Gas Corporation (ONGC), spudded a well in Mizoram in northeast India after a hiatus of 20 years. The prospective location is part of NELP Block AA-ONN-2001/2, which stretches over an area of 4,000 sq km in North Mizoram. Dr. B. S. Josyulu (group general manager), who oversees the Assam and Assam Arakan Basins, believes that the location is part of a proven hydrocarbon belt since commercial quantities of oil and gas have been discovered in the surrounding areas of Tripura, Cachar, Bangladesh and Myanmar. |
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Tesco sets Oman casing drilling records |
Tesco Corp. has set two world records for drilling with 133/8-in. casing, for the longest section ever drilled—4,336 ft—and for the deepest section—5,008 ft. The wells were drilled in Oman, where the highly reactive Fiqa Formation causes problems when drilling with conventional drill pipe and oil-based mud. Casing drilling allowed the wells to be drilled with water-based fluids, saving an average five days per well. |
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Ensco to acquire Pride in merger of major drillers |
Ensco plc and Pride International Inc. have entered into a definitive merger agreement under which Ensco will combine with Pride in a cash and stock transaction. The transaction will create the second largest offshore driller in the world, with 74 rigs spanning the globe. The combined company will have 21 deepwater and ultra-deepwater rigs, forming the second largest and the youngest fleet able to drill in water depths of 4,500 ft or greater. In addition, the combined company will have more active jackup rigs than any other driller. Mid-water rigs will represent 8% of the combined fleet. The estimated enterprise value of the combined company is $16 billion. The total estimated revenue backlog for the combined company is about $10 billion. Pride has strong relationships with customers in Brazil and West Africa, two of the fastest-growing deepwater markets. Ensco is a major provider of jackups and ultra-deepwater semisubmersible rigs, with a strong presence in the North Sea, Southeast Asia, North America and the Middle East. |
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Oil demand spurs increasing E&P activity in Texas |
The Texas Petro Index (TPI), a composite measure of several economic indicators in the Texas upstream petroleum industry, indicates that the oil and gas business in the state grew at a steady pace in 2010. The TPI, produced by the Texas Alliance of Energy Partners, showed a 12-month increase of 22.1%, indicating that the energy industry is the No. 1 factor driving job creation in the Lone Star state. This was due primarily to strong oil prices, which averaged $75.96/bbl in 2010, 30.3% higher than in 2009. Natural gas prices were up, too, averaging $4.32/Mcf last year, a 19% increase over 2009. But abundant supplies overwhelmed the modest demand growth, and acted as a drag on gas prices. After starting off 2010 above $5/Mcf, Texas gas prices sagged to a December average of $4.19/Mcf. In all, the upstream petroleum industry accounted for about 8.5% of the state’s economy. |
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ExxonMobil and Rosneft to explore for Black Sea oil |
ExxonMobil and the Russian state oil company Rosneft have entered into an agreement for joint development of oil and gas resources in the Black Sea, which includes an initial focus on oil exploration and production in the Tuapse Trough in the Russian Black Sea Basin. The Tuapse Trough is an 11,200-sq-km (4,300-sq-mi) deepwater area along the Black Sea coast of the Krasnodar region of Russia. The agreement allows Rosneft and ExxonMobil to pursue additional opportunities to expand Black Sea energy sector cooperation in areas such as additional exploration and production, crude oil sales to Rosneft’s Tuapse refinery and other Black Sea markets, development of regional transportation infrastructure, and deepwater offshore technology research and development. |
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Heritage Oil discovers major gas field in Iraq’s Kurdistan |
Heritage Oil Plc, an independent E&P company, announced a major gas discovery in the Kurdistan region of Iraq. Following completion of the deepening and testing of the Miran West-2 well, the company estimates that the Miran West structure has in-place volumes of gas of between 6.8 Tcf and 9.1 Tcf with 42–71 million bbl of condensate and 53–75 million bbl of oil. The Miran West-2 well was initially designed as an appraisal well for the Cretaceous section and was subsequently modified to assess the exploration potential of the deeper formations, eventually being drilled to a total depth of 4,426 m (14,521 ft). The well results have confirmed three additional pay zones within Lower Cretaceous and Jurassic formations, in addition to the pay zone identified in the Upper Cretaceous in the Miran West-1 well. Additionally, well results have established that the field contains two hydrocarbon systems, with oil in the shallower Upper Cretaceous section and wet gas/condensate within the deeper Lower Cretaceous and Jurassic formations. |
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| New Mexico governor halts environmental regulation | As one of her first acts in office, New Mexico’s new governor, Susana Martinez, dismissed all seven members of the state’s Environmental Improvement Board. The board had created a rule in late December that required sources of greenhouse gases, such as power plants, to reduce their emissions by 3% per year. The rule was passed at the request of outgoing Democratic Gov. Bill Richardson. Martinez, a Republican, described the greenhouse gas rule as a “cap-and-tax” system and halted the proposed rule pending appointment of new EIB members. The board had created the rule after the New Mexico legislature declined to pass a cap-and-trade law. The EIB had narrowly passed the regulation on a 4-3 vote. The New Mexico Environmental Law Center has petitioned the state Supreme Court to overturn the governor’s decision. | ||||
| UK government rejects shale moratorium | The UK Department of Energy and Climate Change (DECC) has rejected a proposed moratorium on shale gas development. The department was responding to a report by the Tyndall Centre for Climate Change Research, based at the University of Manchester and the University of East Anglia, which argued that shale gas exploration should be delayed until the US Environmental Protection Agency releases the initial results of a research program on fracing. This is not expected to be released until the second half of 2012. A DECC spokesman said, “We support industry’s endeavors in pursuing such energy sources, provided that tapping of such resources proves to be economically, commercially and environmentally viable. All onshore oil and gas projects, including shale gas exploration and development, are subject to a series of checks, including local planning permission, before they are able to move ahead with drilling activities.” | ||||
| Mexico orders deepwater drilling freeze | Mexico’s National Hydrocarbons Commission (CNH) has issued new guidelines that will keep state oil firm Pemex and others from drilling in deep waters until 2012 at the earliest. The new rules are designed to prevent a Macondo-type disaster in the Mexican part of the Gulf of Mexico. CNH had ordered Pemex to suspend its deepwater drilling until regulators could peform a complete review. The CNH is requiring Pemex to provide full reports of all its past drilling activities in water depths greater than 500 m (about 1,600 ft), and to submit detailed plans for future deepwater drilling. Pemex must also create new internal controls and safety measures and present a financial plan to prove it can meet the cost of a major deepwater accident. CNH said that this information must be provided over the next eight months. | ||||
| Sakhalin-1 project drills longest extended-reach well | ExxonMobil has drilled the world’s longest extended-reach well at Odoptu Field, offshore far east Russia. Subsidiary Exxon Neftegas is the operator of the Sakhalin-1 project on behalf of an international consortium that includes affiliates of the Russian state company Rosneft and Sakhalinmorneftegas-Shelf, the Japanese corporation Sodeco and the Indian state oil company ONGC Videsh Ltd. The Odoptu OP-11 well reached a total measured depth of 40,502 ft (7.67 miles) to set a world record for extended-reach drilling. Odoptu OP-11 also set a world record with a horizontal reach of 37,648 ft (7.13 miles). The company completed the well in 60 days. Odoptu, one of three Sakhalin-1 project fields, is located 5–7 miles offshore northeast Sakhalin Island. Since the first Sakhalin-1 well was drilled in 2003, six of the world’s 10 record-setting extended-reach wells have been drilled at the project. The specially designed Yastreb rig was used throughout. Since startup, the Sakhalin-1 project has produced about 300 million bbl of oil and 235 Bcf of associated natural gas. | ||||
| PetroChina to acquire 50% interest in Canadian assets | PetroChina and EnCana have signed a cooperation agreement for the Chinese company to acquire a 50% interest in EnCana’s Cutbank Ridge assets in British Columbia and Alberta, Canada, for C$5.4 billion. The assets cover 1.3 million acres of land, approximately 700 MMcfd of processing capacity, 3,400 km of pipelines and underground gas storage facilities. Separately, the two companies will invest 50% each in a joint venture to increase natural gas production. EnCana will continue to operate the joint venture’s assets and market all the production initially. The joint venture will be operated under the direction of a joint management committee. A PetroChina spokesman said the Chinese company expects the joint venture to provide a platform for entering this major North American market. The deal will be reviewed by Canada’s Industry Ministry within the next three months. | ||||
| IEA raises oil demand projections for 2011 | The International Energy Agency (IEA) has made a large upward revision to its 2011 world oil demand estimate. This was due mainly to stronger-than-expected world economic growth. The agency also warned that rising oil prices could undermine the recovery. The IEA now expects world oil demand to average 89.13 million bpd in 2011, some 360,000 bpd higher than originally estimated. The new estimate reflects an expected rise in oil demand of 1.41 million bpd in 2011, down from 2010’s 2.75 million bpd but higher than the previously estimated 1.32 million bpd. The higher demand will come from both OECD and non-OECD countries in Asia, the Middle East and the Former Soviet Union, the agency said. China, the world’s second-largest oil consumer, will see its demand increase 5% to 9.79 million bpd in 2011, up from 9.34 million bpd in 2010. In late 2010, Chinese demand exceeded 10 million bpd for the first time ever. | ||||
| Angola initiates presalt oil exploration | Angola’s state oil firm Sonangol has awarded 11 presalt exploration blocks to eight foreign companies in the deep and ultra-deep waters of the Kwanza and Benguela Basins as part of a limited tender. This will allow international oil companies to access Angola’s underexplored presalt zone, which is located in a similar geological formation to that found offshore Brazil in the South Atlantic. A government spokesman said, “Exploration of presalt oil involves greater technological complexity. It requires financial and human resources of a dimension that we have never had before in Angola. The comparison should be to the Tupi presalt in Brazil.” The blocks lie in water depths between 5,000 ft and 6,500 ft. BP was awarded Block 19 in the Kwanza Basin and Block 24 in the Benguela Basin, with a 50% stake, and will serve as operator. Cobalt International, Spain’s Repsol, Norway’s Statoil, France’s Total, Italy’s Eni, and international majors ExxonMobil and ConocoPhillips also won stakes in various blocks. | ||||
| Venezuela resumes shipments of gasoline to Iran | Venezuela has restarted shipments of gasoline to its ally Iran after a hiatus of more than two years. State oil firm PDVSA reportedly will send two 30,000-ton gasoline shipments per month. The gasoline shipments stem from a promise made by Venezuelan President Hugo Chavez during a visit to Tehran last fall. In 2009, Venezuela signed an agreement with Iran to supply the country with 20,000 bpd of gasoline, but the shipments were never made. In 2010, the Venezuela National Assembly approved a contract worth $1.5 billion for Iranian oil company Petropars to develop the Dobokubi oil field in eastern Venezuela, along with PDVSA. US sanctions have sharply curtailed gasoline availability in Iran, which imports some 150,000–200,000 tons of gasoline every month, mostly from China and from Sharjah in the UAE. Analysts believe the shipments from Venezuela are not profitable for the South American nation, given the freight costs. | ||||
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