GOVERNMENTAL/REGULATORY

Perry, Zinke confirmed as Energy, Interior secretaries; GOM lease sale announced

Former Texas Gov. Rick Perry was confirmed 62-37 by the U.S. Senate as Energy Secretary on March 2. Ten Democrats voted for Perry, including coal advocate, Sen. Joe Manchin (W. Va.). Commented Sen. John Cornyn (R–Texas), “…thanks to [Perry’s] commonsense approach to regulation and support for thoughtful innovation, Texas became a state where all energy producers could thrive. Under Secretary Perry’s guidance, I have no doubt the [DOE] will pursue an all-of-the-above strategy that will lead to the next great era of American energy.” Meanwhile, the U.S. Senate confirmed Ryan Zinke, 68–31, as Interior Secretary. The Interior Department correspondingly has expressed plans to prioritize U.S. energy development. The Interior Department has already begun undoing rules that restricted leasing and exploration activity in more than 100 million acres of the U.S. Arctic, as well as potential resources in the Atlantic Ocean. IPAA President Barry Russell said, “While often pitted against each other over the last eight years, these efforts to support the economy and protect our environment work hand-in-hand every day across the country.” Zinke said the department will offer 73 million acres offshore Texas, Louisiana, Mississippi, Alabama and Florida, for exploration and development. The proposed lease sale is for Aug. 16, 2017, and will reportedly include all available unleased areas in the federal Gulf of Mexico.

Attorney General Scott Pruitt confirmed as EPA administrator

With a 52–46 vote, Oklahoma Attorney General Scott Pruitt won Senate confirmation to head the Environmental Protection Agency (EPA) last month. After being officially sworn in, Pruitt addressed EPA personnel, stating, “We as an agency, and we as a nation, can be pro-energy and jobs, and we can be pro-environment, and we don’t have to choose between the two.” The Trump administration has reportedly instructed Pruitt to begin the process of undoing several rules put in place by former President Obama, including those restricting oil and gas operations. Barry Russell, president and CEO of the Independent Petroleum Association of America (IPAA), released a statement congratulating Pruitt. Russell explained that “having a clear and fair regulatory framework” is essential for producers working to “safely produce the energy we all rely upon to power our everyday lives.”

Texas legislators file resolutions to dismantle federal energy regulations

The chairmen of the Texas House and Senate energy committees have filed two resolutions requesting that the federal government work with Texas in taking down overreaching regulations—which largely have impacted the oil and gas industry—that have been implemented over the past eight years. Senator Craig Estes (R-Witchita Falls) filed Senate Concurrent Resolution 26, and Representative Drew Darby (R-San Angelo) filed House Concurrent Resolution 84—both of which advise the Trump administration to subject numerous federal energy regulations to further review, and determine if the rules should be revised or repealed. Conversely, the rules also could be handed back to be imposed at the state-level.

No plans for oil tax incentive in Norway

The Norwegian government has determined that it will not propose tax incentives for oil companies in the region, in an effort to advance recovery at aging fields and marginal offshore discoveries prior to parliamentary elections, scheduled to take place later this year. During an interview in early March, Petroleum and Energy Minister Terje Soviknes said, “There are no planned initiatives related to this. My experience is that the market, for the time being, seeks stability first of all. It’s been a very demanding three-year period.” Presently, Norway expects to see further decline in spending during 2017, as the region continues to climb out of the industry slump.

EXPLORATION/DISCOVERIES

TGS, Schlumberger to pilot multi-client re-imaging program in GOM

TGS-NOPEC Geophysical Co. (TGS) and Schlumberger have announced a new multi- and wide-azimuth (M-WAZ) multi-client re-imaging program in the Gulf of Mexico. The Fusion M-WAZ re-imaging program will include data covering more than 1,000 OCS blocks from 3D WAZ programs previously acquired by the companies. The program will process data from the Mississippi Canyon, Atwater Valley and Ewing Bank areas, improving data quality for upcoming GOM licensing rounds. The re-imaging program is supported by industry funding, and final results are expected in early 2018. Data reportedly will be available this year for lease round bid evaluation. Maurice Nessim, president of WesternGeco, Schlumberger, said, “This re-imaging collaboration combines the use of the latest re-imaging technology with high quality Q-Marine measurements, and extensive geophysical and geological knowledge of this prolific area. Customers have shown great interest and we are confident that this project will afford them a competitive advantage in the upcoming lease rounds and ahead of the large block turnover.” 

Lundin strikes oil discovery in Filicudi prospect of southern Barents Sea, offshore Norway

Lundin Petroleum has reported an oil and gas discovery in the Filicudi prospect’s main well. Subsequently, the company is drilling a sidetrack in PL533, approximately 40 km southwest of Johan Castberg and 30 km northwest of the Alta Gohta discoveries on the Loppa high, in the southern Barents Sea. Lundin reported that the well encountered 129 m of gross hydrocarbon column, with high-quality sandstone reservoir characteristics. Additionally, data acquisition and sampling have been carried out, including coring, logging and oil and gas sampled from the wireline tools. According to Lundin, the gross resources estimate for the Filicudi discovery is between 35 and 100 MMboe. Furthermore, the well results showed signs of significant upside potential, which will require further appraisal drilling. There also have been numerous other prospects identified in the Filicudi trend, and a total gross prospective resource potential of up to 700 MMboe has been estimated.

Rosneft drills exploration wells in Brazil, Iraq

Rosneft Brasil, a Rosneft subsidiary, has begun drilling the first exploration well in the Solimoes basin, situated in the Amazon region of Brazil. The company plans to commence the next phase of the exploration program as operator. Drilling, well testing and evaluation are expected to be performed during second-quarter 2017. The drilling campaign will consist of at least four wells, as well as obtaining geological data that will determine the basin’s hydrocarbon resource potential. Congruently, Rosneft has begun drilling its first exploration well in Iraq. The Salman-1 well, in Block 12, will be drilled to a depth of 13,927 ft. Subsequent to drilling the well, further testing of five prospective targets will be carried out by the Russian firm.

BUSINESS, MERGERS AND ACQUISITIONS

BHP Billiton partners with Mexico’s Pemex in development of Trion discovery

BHP Billiton has increased its interest in Gulf of Mexico E&P through an agreement with Pemex, which includes work at Mexico’s Trion discovery. Trion reportedly has the potential to be among the top 10 fields discovered in the GOM within the last decade. BHP submitted a successful bid on the resource in December 2016. A signing ceremony was held in Mexico City in early March, which was attended by Mexican President Enrique Peña Nieto, BHP Billiton CEO Andrew Mackenzie, and Pemex Director General José Antonio González Anaya. According to BHP Billiton, the Trion agreement is consistent with the company’s focused approach to conventional oil exploration and development of favorable deepwater oil prospects. Mackenzie explained that this is the first time that a foreign company is partnering with Mexico in the development of its petroleum resources for mutual benefit. President Peña Nieto said, “I want to thank BHP Billiton for being Mexico’s partner in this journey that, I am certain, will yield greater development for our country.”

MOL Group acquires licenses in Hungary and Norway

MOL Group has acquired six new licenses in Hungary’s fourth bidding round. The acquired licenses have doubled the company’s exploration acreage in the country. Moreover, MOL Norge acquired four licenses on the Norwegian Continental Shelf—one of which includes operatorship in the Mandal High area, one of the company’s principal areas in Norway—during the latest APA licensing round. With the Hungarian licenses, the company can begin hydrocarbon exploration on nearly 4,200 km2 in the Bázakerettye, Bucsa, Jászárokszállás, Mezőtúr, Okány-West and Zala-West areas, as well as a nearly 4,200-km2 area covered by mining authorities and concessions already acquired. MOL reportedly plans to target proven exploration plays in Hungary, as well as new plays that have resulted from the company’s Trans-Pannonian basin study. According to the company, MOL Group has E&P assets in 13 countries, eight of which are actively producing. Hungary, particularly, has been a focal area for the company, as it has conducted exploration, development and EOR/IOR projects to ease the degeneration of the country’s mature fields. Dr. Bernislav Gašo, Group Upstream Executive V.P., commented, “We are very happy that we have successfully competed in the latest bid rounds in two of our core countries, doubling our footprint in Hungary, and adding exciting prospects in Norway...”

Sanchez Energy closes on acquisition of Eagle Ford acreage

Sanchez Energy Corp. has closed on its previously announced acquisition of working interest in the western Eagle Ford. The acreage—which was acquired from Anadarko Petroleum Corp. through a 50/50 partnership that concerned company subsidiaries, as well as Blackstone Energy Partners—included approximately 318,000 gross operated acres. To close the transaction, which included proved reserves of about 300 MMboe (approximately 150 MMboe net to Sanchez Energy), the partnership paid approximately $2.1 billion ($1.05 billion net to Sanchez Energy). According to the CEO of Sanchez, Tony Sanchez, III, the company now operates about 585,000 gross acres (335,000 net to Sanchez Energy) in the Eagle Ford shale. Sanchez said, “Our initial focus for the asset will be on completing the 132 gross DUC wells on the acreage, which we believe will allow for immediate and rapid production growth over the next 12 months.”