Daily Archives: April 26, 2011
The contract with BG Group has a firm duration of 365 days with 3×6 months options and a contract value of approximately 175 million USD including mobilization and net taxes, excluding options.
CEO of Odfjell Drilling Mr. Simen Lieungh says:
“We are delighted that Deepsea Metro I has been chosen by the BG Group for this drilling campaign in Tanzania. We believe that the award of the contract to Deepsea Metro I by BG Group is a validation of Odfjell Drilling’s proven deepwater capabilities and ability to take a new build from yard straight into operations.”
On behalf of Deepsea Metro Ltd, Odfjell Drilling will be manager and operate Deepsea Metro I.
Deepsea Metro I is scheduled for delivery from Hyundai Heavy Industries (HHI) early June 2011. The first well is assigned to Woodside Energy for one well in South Korea prior to start of operations in Tanzania.
Deepsea Metro I is the first of two ultra deepwater drillships. Deepsea Metro II will be delivered from HHI in November 2011.
By Kevin Mooney
Louisiana’s strategic importance to the U.S. a major theme of LOGA luncheon
NEW ORLEANS, La – Top Obama Administration officials who visit the state should not expect an audience with Don Briggs, president of the Louisiana Oil and Gas Association (LOGA).
In his keynote address at Thursday’s LOGA’s “State of the Industry” luncheon in New Orleans, Briggs was particularly critical of Interior Secretary Ken Salazar and Michael Bromwich, the director of the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE). Although both federal officials have expressed support for increased production in the Gulf Coast, these statements do not square with their actions, Briggs told audience members.
“They talk about wanting to help [the domestic oil and gas industry], but it’s like watching a magician who is doing one thing with his hands but the action is really somewhere else.”
When Salazar and Bromwich last visited Louisiana, members of the state’s congressional delegation invited Briggs to meet with them. But, he declined. “Been there done that,” said Briggs.
“They tell you one thing and they do another. We give them too much attention and way too much credit because they do not want us to go back to work.”
LOGA’s luncheon, with approximately 40 attendees, coincided with the one-year anniversary of the British Petroleum explosion in the Gulf that resulted in the death of 11 workers and spilled an estimated five million barrels of crude oil. While BP clearly made costly mistakes, there is a large body of evidence that shows the industry as a whole is very responsible and innovative, Briggs said. There are about 40,000 wells in the Gulf, and deepwater drilling has taken place safely and effectively in 1298 wells, he pointed out.
Industry workers on rigs who use joysticks to control robots in the deep water are performing a task that is the equivalent of “going to the moon every day.” Even so, he argued, a change in administration is needed before the region can fully recover economically.
Looking ahead over the long-term, oil and natural gas are not going away and this reality puts the state in a strong strategic position, especially if the right mix of polices are in place, he continued.
“Louisiana is the Aorta of America,” Briggs said. “When we shut down our refineries this means 60 to 70 percent of the fuel that runs this country gets shut down… We will become even more important to this country’s national security and infrastructure over time.”
Unfortunately, for the moment, investors are reluctant to re-enter the Gulf, Briggs lamented. Prior to the BP spill, there were 61 rigs in the entire Gulf and now there are only 26. Where there used to be almost six new deep water permit applications per month, there is now only one, he added. Shallow water permits are also down from about seven to under five, he said.
“You have to understand one thing,” Briggs continued. “If [the administration officials] wanted us to drill in the Gulf of Mexico, we would be drilling.”
The Obama Administration’s actions have created an “unprecedented uncertainty” in the Gulf of Mexico both for small independent companies and for major oil companies, Briggs observed.
He also said that policymakers should carefully consider the real value of renewable efforts, which tend to be very expensive. While it may be fine to have some solar and wind, “they are not going to be the driving fuel of the future,” Briggs said. “Ethanol is the joke of jokes.”
The Offshore Marine Services Association is calling on the Obama Administration to end its de facto moratorium on oil drilling in the Gulf of Mexico. Watch this video to learn how the President and Interior Secretary Ken Salazar are defying the courts, sidelining Gulf oil workers and harming the American economy.
KBR today announced that it has been awarded a contract by Chevron U.S.A. Inc. to execute detailed design engineering for the Jack & St. Malo floating production unit (FPU) located in the Lower Tertiary trend in the deepwater Gulf of Mexico.
The Jack and St. Malo fields are located within 25 miles (40 km) of one another approximately 280 miles (450 km) south of New Orleans, Louisiana, in water depths of 7,000 feet (2,100 m).
KBR will provide design and engineering support through fabrication for the deep draft semi-submersible (semi) including: hull, deck box, accommodations, appurtenances, equipment foundations; mooring system design; and anchor suction piles. The semi will be designed to minimize vessel motion and allow acceptable fatigue lives of the moorings, risers and umbilicals.
“Following the announcement of the detailed design contract for Big Foot in January 2011, KBR is overwhelmingly proud to accept the award for Jack & St. Malo FPU,” said Dennis Calton, President, KBR Oil & Gas. “As a company, we’ve worked strategically to re-enter the Gulf of Mexico. The opportunity to execute another project for Chevron in the Gulf positions KBR at the forefront of deep water field development.”
KBR subsidiaries Granherne and GVA consultants will collaborate on the execution of this phase of the project. The award of this contract follows the successful completion of conceptual engineering and design, pre-FEED and FEED by KBR for the Jack & St. Malo FPU project.
KBR is a global engineering, construction and services company supporting the energy, hydrocarbon, government services, minerals, civil infrastructure, power and industrial markets.
W&T Offshore has struck a $366 million deal to acquire acreage in the Permian basin of west Texas to help the Gulf of Mexico-focused player revive lagging liquids production from its mature asset portfolio.
The company, which saw its net income more than halved in the first quarter, has been looking to make fresh acquisitions after stating last month that most of its producing properties had reached saturation point, hitting its share price.
Its production profile has been further dented by a third-party pipeline outage at its key Main Pass 108 field in the Gulf of Mexico, which only came back online at the end of the last quarter having been shut in since June 2010.
The properties are currently producing at 2800 barrels of oil equivalent per day, and W&T expects ongoing drilling activities to deliver further output increases this year.
Analysts had earlier reacted negatively to W&T’s acquisition of some of Shell’s assets in November, which had comprised mainly gas while most companies were switiching to liquids-rich plays. This had given the company few drilling opportunities to lift output, they said.
Oil prices have soared beyond $110 a barrel while NGLs, which can be stripped of components such as ethane, sell at a premium to dry gas.
W&T said the Permian basin purchase has “significant upside potential… with hundreds of proved undeveloped and probable well locations”.
The company raised its production forecast for 2011 on the back of the deal to 87 billion to 101.1 billion cubic feet equivalent, up from the previous prognosis of 83.2 to 96.7 Bcfe.
The company is targeting capital expenditure of $35 million to $40 million this year on development work on the newly acquired acreage. Closure of the acquisition is expected in the second quarter.
“We believe that there are many more attractive acquisition opportunities for us both onshore and offshore,” said chief executive Tracy Krohn.
The company saw its net income including special items fall in the first quarter to $18.6 million, or $0.25 per common share, down from $42.3 million, or $0.57 per common share, a year ago. Revenues, however, were up 24% year-on-year at $210.9 million.
The weaker quarterly result was attributed by W&T to to a derivative loss of $23.8 million in the first quarter as well as a higher effective tax rate on profits.
Krohn said higher production volumes as a result of deep-water asset acquisitions from Shell and Total, as well as high oil prices, helped to offset the net income decline.
Total sales volume increased 14% to 22.7 Bcfe from 20 Bcfe in the first quarter of 2010.
“Our oil and natural gas liquids production, which represented 48% of our total production on a thousand cubic feet equivalent basis in the quarter, continues to contribute substantially to our revenues in this higher price environment,” Krohn said.
The Main Pass 108 field is currently producing 46 million cubic feet equivalent per day of gas after coming back online, with the company expecting output to rise by another 8 to 10 MMcfe when the Main Pass 108 E-3 well starts producing.
Shares in W&T on the New York Stock Exchange were up 81 cents to $23.57 after the Permian basin deal was announced.
In a recent interview, Sen. Bernard Sanders (I-VT) alleged that while America’s oil and natural gas companies make “huge profits,” they “pay nothing in taxes.” Nothing could be further from the truth.
A recent 60 Minutes segment and other commentary have examined how U.S. industries use the tax code to export jobs and hold profits overseas. They point to the low effective income tax rates incurred by these companies as proof. While some industries may engage in this behavior, America’s oil and natural gas industry is not one of them.
Make no mistake, U.S. oil and gas companies are large, complex organizations — they have to be in order to succeed in global energy markets, where their competition can be state-controlled energy companies. Their earnings are matched by their significant investments.
Their earnings, however, are in line with those of other major U.S. manufacturing industries, as measured against their sales. The latest available data for 2010 earnings shows the oil and natural gas industry earned 5.7 cents for every dollar of sales. This is below the earnings of all U.S. manufacturing, which earned an average of 8.5 cents for every dollar of sales. Many would not expect an industry as large as the U.S. oil and natural gas industry, which supports 9.2 million U.S. jobs and contributes to 7.5 percent of gross domestic product (GDP), to have lower earnings per dollar of sales than the average manufacturing industry, but that’s the reality.
Further, U.S. oil and natural gas companies pay considerably more in taxes than the average manufacturing company. According to data found in the Standard & Poor’s Compustat North American Database, the industry’s 2009 net income tax expenses — essentially their effective marginal income tax rate — averaged 41 percent, compared to 26 percent for the S&P Industrial companies. The Energy Information Administration (EIA) concludes that, as an additional part of their tax obligation, the major energy-producing companies paid or incurred over $280 billion of income tax expenses between 2006 and 2008.
The U.S. oil and natural gas industry also pays the federal government significant rents, royalties and lease payments for production access — totaling more than $100 billion since 2000. In fact, U.S. oil and natural gas companies pay more than $86 million to the federal government in both income taxes and production fees every single day. In addition, since 2000, the industry has invested almost $1.7 trillion in U.S. capital projects to advance all forms of energy, including alternatives, while reducing the industry’s environmental footprint.
Oil and natural gas companies must constantly find new opportunities to produce more oil and natural gas. Given administration policies limiting new domestic opportunities, these resource-driven companies are forced to explore abroad. However, unlike other industries that may look to open factories in low-tax countries, oil and natural gas companies must invest where the resources are. For example, while it would be great to produce in Ireland and enjoy a 12 percent corporate income tax rate, Ireland holds very small oil or gas reserves. Resource-rich countries understand this and often impose higher income taxes on oil and gas operations.
Despite their international presence, U.S. oil and natural gas companies still directly employ millions of U.S. workers, invest heavily in the United States and pay valuable dividends. Therefore, substantial foreign earnings are constantly returned to this country and put back into the economy. This revenue flow is dependent upon the United States recognizing that, because the income has already been taxed abroad, it should not be taxed again upon repatriation. However, the administration and some in Congress have proposed raising taxes on U.S. companies’ foreign earnings, further undermining U.S. competitiveness abroad and potentially limiting the availability of future reserves.
U.S. oil and natural gas operations are intricate and complex, but the facts are simple: America’s oil and natural gas industry supports 9.2 million jobs throughout the economy and 7.5 percent of our GDP. Its companies provide higher-than-average wages — approximately $98,000 a year for an upstream job — and help ensure our nation’s energy security. In the process, they generate tax revenues from operations and sales of products that contribute billions every year to federal, state and local governments.
Contrary to what some political pundits may say, major energy producers are paying their fair share.
Brian Johnson is the senior tax advisor for the American Petroleum Institute — a trade association representing over 470 oil and natural gas companies. Visit www.api.org for more information. This is the first of a two-part series.
Posted April 25, 2011 Author: Jeffrey Hubbard
Oil price keep climbing, and sadly the administration keeps denying Americans access to our domestic energy resources. Shell Oil Company has been trying to develop the estimated 27 billion barrels of oil in the Artic, but has been unsuccessful because Environmental Protection Agency retroactively withdrew the last permit Shell needed.
Given the nature of the Arctic, there is a small window of opportunity to work and it closed back in February. Now that gas prices average $3.88 a gallon, Americans are starting to wonder why the Obama Administration is actively shutting down domestic oil production.
Our response: it’s all part of the plan.
The Obama Administration has been unusually candid about their desire to increase the cost of energy. In fact, President Obama argued that under his plan, energy prices would necessarily skyrocket, but his cabinet members have been equally frank in the energy debate.
But don’t take my word for it. Energy Secretary Chu argued that, “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.” Not to be outdone, Secretary Salazar said he would object to new oil drilling if the price of gasoline reached $10 a gallon.
It’s time to end the war on affordable and reliable energy by giving American companies and workers the permits necessary to get back to work. Mr. President, let’s power our economic recovery with American energy.
- Corruption And Election Tricks Are Adding To The U.S.’ Energy Troubles (mb50.wordpress.com)
- Green Energy Policies Hurt the Middle Class (roarkmj.wordpress.com)
- Obama Doesn’t Care About Creating Jobs (mb50.wordpress.com)
- Obama Policies Endanger World, Could Propel Mideast War, Gaffney Tells Newsmax (mb50.wordpress.com)
- Iraq signs gas deal with Shell, Mitsubishi (sfgate.com)
Dolphin Drilling Ltd, a subsidiary of Fred. Olsen Energy ASA , has entered into a Letter of Intent for the provision of the semi-submersible Blackford Dolphin for drilling of one well offshore Brazil.
Commencement is scheduled late in the fourth quarter 2011, with an estimated duration of total 135 days of which some 118 days will be in continuation of the existing Reliance contract. Total contract value is approximately USD 47 million. The contract remains subject to final contract agreement, partner and management approval which are anticipated to be closed within end May.