Daily Archives: May 6, 2011

Two energy firms plan Tuscaloosa Marine Shale play

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By TED GRIGGS
Advocate business writer
Published: May 6, 2011

Two energy companies announced plans this week to drill or complete four horizontal wells in the Tuscaloosa Marine Shale, an oil-rich formation that straddles the middle of Louisiana.

A third independent, Amelia Resources LLC of The Woodlands, Texas, has signed a deal with an unnamed partner to help develop the more than 110,000 acres Amelia has under lease.

Devon Energy officials said Wednesday the Oklahoma City-based company has leased around 250,000 acres in the shale. Devon plans to drill two wells in the formation this year, the first of them this quarter.

On Thursday, Dallas-based Denbury Resources announced a joint venture with an unnamed partner that will complete one well and drill another at no cost to Denbury. In late 2009, Denbury acquired Encore Acquisition Co., which had drilled some wells in the shale.

In a news release, Denbury Chief Executive Officer Phil Rykhoek said the company will retain a small interest in future activities in the shale.

“We continue on our oil-focused program and expect many good things in the near future,” he said.

LSU researchers have estimated the Tuscaloosa Marine Shale holds 7 billion barrels of oil.

During Wednesday’s conference call with stock analysts and investors, Devon Executive Vice President of Exploration and Production David Hager said the formation lies 11,000 to 14,000 feet underground and is 200 feet to 400 feet thick.

Hager said Devon believes it can use fracturing technology — pumping in water, sand and chemicals to crack the shale — to increase production in the formation.

The state plans to hold a hearing, possibly by next month, on whether to approve Devon’s request to use hydraulic fracturing for a well near Ethel in East Feliciana Parish. “Fracking” has drawn criticism from environmentalists who say the process contaminates the water supply and places a heavy burden on the resource. The oil and gas industry says those claims are inaccurate.

Hager said vertical wells drilled in the formation had initial production rates of 300 barrels per day.

The three or four horizontal wells drilled in the shale three years ago, which were shorter than Devon plans to drill, tested at rates of up to 500 barrels per day, Hager said.

Those are all reasons for encouragement, Hager said. But Devon needs to get more information on the oil play, including whether the formation can be fractured, and there are risks associated with Devon’s investment.

Still, the company has spent less than $50 million on its leases, and if Devon is successful the company “can create an awful lot of value,” he said.

Kirk Barrel, president of Amelia Resources, said drilling a longer horizontal segment, or lateral, exposes the wellbore to as much rock as possible, and that means the well can produce more oil.

Barrel, author of a blog on the Tuscaloosa Marine Shale, said one of Encore’s wells was drilled horizontally out to 4,100 feet; a typical horizontal section is 4,000 to 5,000 feet long.

However, in the two wells it fractured, Encore only did three stages, Barrel said. Devon’s plans show the company plans to do 13- to 15-stage fracks, which in theory should substantially increase production.

In the south Texas Eagle Ford Shale, “a distant cousin” geologically of the Tuscaloosa Marine Shale, some drilling companies have done 20-stage fracks, Barrel said. In North Dakota’s Baaken Shale, some wells have had 40-stage fracks.

Matt Ross, a spokesman for the Louisiana Oil and Gas Association, said in multistage fracturing, the initial fracturing is done around the point where a well levels out horizontally.

The subsequent fracks are spaced throughout the rest of the horizontal section, Ross said. The spacing depends on the drilling company’s preference.

Meanwhile, Barrel said his firm has placed a significant amount of acreage with an unnamed partner.

Barrel said he could not disclose how much acreage Amelia now has under lease; in February that was more than 110,000 acres.

Amelia is still in the process of adding to its acreage, Barrel said, and he did not know when the partnership might begin drilling.

Original Article

Total Strikes Oil in Deepwater Angola Block 17/06

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Total announces that its subsidiary, TEPA (Block 17/06) Limited, and Sociedade Nacional de Combustíveis de Angola (Sonangol E.P.), have discovered hydrocarbons in the north-eastern area of the deep offshore block 17/06.

Drilled in a water depth of 445 meters, the Canna-1 well discovered hydrocarbons in reservoir of Miocene age and produced more than 5,000 barrels per day of high quality oil (33° API) during a production test.

Sociedade Nacional de Combustíveis de Angola (Sonangol) is the concessionaire of the Block 17/06. TEPA (Block 17/06) Limited is the operator of the Block 17/06 with a 30% stake. Total’s partners in the block are Sonangol Pesquisa e Produção S.A. (30%), Sonangol Sinopec International (SSI) Seventeen Limited (27.5%), ACREP Bloco 17 S.A. (5%), Falcon Oil Holding Angola S.A. (5%) and PARTEX Oil and Gas (Holdings) Corporation (2.5%).

Total Exploration & Production in Angola

Total is present in Angola since 1953. In Angola, Total operated 460,000 barrels oil equivalent per day (boe/d) in 2010, and its SEC* equity production amounted approximately 163,000 boe/d. This production comes essentially from Blocks 17,0 and 14.

Deep offshore Block 17, operated by Total with a 40% interest, is Total’s principal asset in Angola. It is composed of four major zones: Girassol-Rosa and Dalia, which are currently producing; Pazflor, a project under development for a production start in the second half of 2011; and CLOV (based on the Cravo, Lirio, Orquidea and Violeta discoveries), for which the development was recently launched.

Total is also the operator with a 30% stake in the ultra deep offshore Block 32, on which 12 discoveries were made, confirming the oil potential of the block. Pre-development studies for a first production zone in the central south eastern portion of the block are underway.

In addition, the Angola LNG project for the construction of a liquefaction plant near Soyo is designed to bring the country’s natural gas reserves to market. This project, on which Total holds a 13.6% stake, will be supplied by the associated gas from the fields on Blocks 0, 14, 15, 17 and 18. The project is underway with production expected to begin in 2012.

In Angola, as in all countries where Total operates, the Group is committed to developing the Angolan oil industry while recruiting and providing professional training to local workers. Through its ambitious “Angolanisation” and technology transfer plans, Total has strengthened the local economy and made of Hygiene, Safety and Environment awareness a top priority. Total E&P Angola has developed a transparent and solid corporate social responsibility policy around three main axes: health, education (opening of four high schools in the provinces in 2009) and economic community development.

Original Article

Sikuliaq Research Vessel Replaces Alpha Helix in Subsea Explorations of Alaska Region

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Guido Perla & Associates (GPA) has announced that the keel laying recently took place at Marinette Marine Corporation (MMC) for the Alaska Region research vessel (ARRV) Sikuliaq, for which GPA provided design validation.

The Sikuliaq, a cold-climate, oceanographic research ship, will replace the 40-plus-year-old and now retired Alpha Helix. The Sikuliaq, owned by the National Science Foundation, with its initial science mission in 2014, is said to be one of the most advanced university research vessels, and will go into operation after delivery to the University of Alaska, Fairbanks (UAF). The vessel will be home ported in Seward, Alaska, at UAF’s Seward Marine Center. Length oa is 261.5ft, maximum beam 52.0ft and design waterline draught is 19.5ft. Displacement at the design waterline is 4,065 long tons. Sikuliaq is designed to reach 14 knots in calm waters.

The vessel was designed to leave the smallest environmental footprint possible, taking into consideration underwater radiated noise for marine mammals and fisheries. Up to 26 scientists and students, including those with disabilities, can be accommodated onboard. Operated by the UAF, and part of the US academic research fleet, the vessel has mild ice breaking capabilities for ice of up to 2.5ft thick. Thus, the vessel is capable of safely bringing scientists to the ice-choked waters of Alaska and the polar regions and of operating for longer periods of time than previously possible in the North Pacific Ocean, Gulf of Alaska, and the Bering, Chukchi, and Beaufort Seas.

Sikuliaq

Sikuliaq will be employed on research missions such as collecting sediment samples from the seafloor, hosting remotely operated vehicles, using a flexible suite of winches for handling of scientific equipment and conducting surveys throughout the water column and sea bottom with the use of extensive research instrumentation. It will be capable of transmitting real-time information ashore.

GPA says it was selected by MMC to assist with the design verification phase of the contract with UAF. GPA reviewed the design for compliance with the rules of ABS, USCG, SOLAS, stability requirements, the owner specifications, and various other criteria pertaining to good marine construction practices and shipyard building techniques. The final goal of the Design Verification was to turn over responsibility for the vessel design to MMC. Additionally, MMC had GPA develop several other functional design drawings for the shipyard, as well as detailed design for major foundations and key systems.

The Sikuliaq bears the class notations ABS XA1 Oceanographic Vessel, XAMS, XACCU, XDPS-1, unrestricted service.

Original Article

Let’s blame speculators

May 5, 2011
Laurel Leader-Call

LAUREL — Here’s a non-rocket science question: If you expect a reduced harvest of wheat, corn, rice or any other commodity some time in the future, what would be the wise thing to do about your consumption today? I bet that the average person would answer: Consume less now so that more will be available in the future.

But how in the world can people be encouraged to consume less now? Enter the futures market, which consists of a worldwide group of millions upon millions of traders, often called speculators. Speculators, betting on a future shortage, buy up wheat, corn and rice today in the hopes of making money selling it for a higher price when the bad harvest hits. As speculators buy more and more wheat, corn and rice, they drive up today’s prices. As today’s price gets higher, people consume less, but more importantly, people do the intelligent thing without bureaucratic edicts. The vital role of the futures trader, or speculator, is to allocate goods over different time periods. And, it’s not just wheat, corn and rice that must be allocated over time but all commodities including oil.

There’s no guarantee that speculators will make money. They might guess wrongly. For example, they might buy wheat now at $8 per bushel, expecting to make a killing in November at $12. Weather predictions might have been wrong and instead of a reduced harvest, there’s a bumper crop driving November wheat prices down to $4 per bushel. That would make the speculator’s $8 investment worth $4.

If we don’t like commodity speculation, we could easily outlaw it. That way, for example, even though there might be every indication of a reduced fall wheat harvest, today’s price of wheat wouldn’t rise. We could consume wheat today and not fret about fall.

President Obama has asked the U.S. Department of Justice to investigate whether Wall Street speculators could be manipulating oil markets. If Obama could convince other nations to put an end to worldwide oil speculation, we might be able enjoy $2 per gallon gas and ignore Middle East conflicts that might impact heavily on future oil supplies.

White House and congressional attacks on oil speculation do not alter the oil market’s fundamental demand-and-supply reality. What would lower the long-term price of oil is for Congress to permit exploration for the estimated billions upon billions of barrels of oil off our Atlantic and Pacific Ocean shores, the Gulf of Mexico and Alaska, not to mention the estimated billions, possibly trillions, of barrels of shale oil in Wyoming, Colorado, Utah and North Dakota.

Some politicians pooh-pooh calls for drilling, saying it would take five or 10 years to recover the oil and won’t solve today’s problems. Nonsense! I guarantee you that if permits were granted to all of our oil sources, we would see a reduction in today’s prices.

Why? Put yourself in the place of an OPEC member knowing there’s going to be a greater supply of U.S. oil in five or 10 years, which might drive oil prices to a permanent $20 or $30 per barrel. What will you want to do now while oil is $120 per barrel? You would want to sell.

OPEC’s collective efforts to sell more would put downward pressures on current oil prices. The White House, U.S. Congress and environmental wackos, by keeping our oil in the ground, are OPEC’s staunchest ally. I wouldn’t be surprised at all if we discovered OPEC reciprocity in the forms of political contributions to congressmen and charitable donations to environmental groups.

In the wake of higher gasoline prices, the only intelligent thing that Obama has called for is an end to $4 billion in annual taxpayer subsidies to oil companies. To get that done, he has an uphill bipartisan fight on his hands. Oil companies buy off both Republicans and Democrats in order to receive government handouts and special treatment.

Walter E. Williams is a professor of economics at George Mason University.

Original Article

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