Daily Archives: January 11, 2012

Jubilant Energy to Invest $80 million in Myanmar Oil, Gas Block

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Jubilant Energy plans to invest about to $80 million on an onshore oil and gas block in Myanmar, media reports said Tuesday.

Myanmar recently awarded 10 onshore oil and gas blocks.

“We had bid for two blocks. They have offered us one, but we are keen for both. We are still negotiating,” Chief Financial Officer Vipul Agarwal told Reuters.

The production sharing contract for the block will likely be signed in two to three weeks, he said.

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An emerging player

LMOGA News

Louisiana could see additional jobs, new market prospects and increased tax revenue as a result of export opportunities.

When it comes to natural gas, the United States has been largely an importer. But export is the new game, and Louisiana is emerging as the biggest player.

Cheniere Energy, which owns the Sabine Pass Terminal in Cameron Parish, received the go-ahead in May from the U.S. Department of Energy to export liquefied natural gas to any company not prohibited by law.

That made Sabine Pass, which opened in 2008 as a terminal to take in shipments from overseas, the first bidirectional LNG facility in the country, capable of importing and exporting the super-chilled liquid.

Cheniere announced last fall that it would invest $6.5 billion in the Sabine Pass terminal—located less than four miles from the Gulf of Mexico on the widest point on the Sabine River navigation channel—marking one of the largest capital investments in Louisiana. Construction on the new facility will begin this year, with new, permanent employees being hired in 2014.

The company will open the liquefaction facility in 2015, and the second phase of the project is expected to be completed by the end of 2018. It has already signed three long-term contracts for those future exports.

A few months after that announcement came word that Lake Charles Exports, a subsidiary of Houston-based Southern Union Co. and BG Group, received approval to ship exports from its Trunkline terminal. Trunkline was authorized to import LNG in the late 1970s and opened in 1981.

BG Group is one of the top 10 natural gas marketers in the country, with major interests in the Haynesville and Marcellus shale plays, as well as other production in Louisiana. Southern Union’s preliminary cost estimate to modify its terminal to liquefy about 2 billion cubic feet of natural gas per day is estimated at $2 billion to $3 billion.

Louisiana Mid-Continent Oil and Gas Association President Chris John says it wasn’t too long ago when companies were investing billions of dollars building massive facilities to import natural gas into the state. The business model now is reversed, and companies are remaking their capabilities.

“The need and demand for natural gas in the United States was projected to grow, and we didn’t have enough of it,” he says. “Boy, has that all taken a 180-degree turn. The needle on the natural gas industry has gone from ‘we don’t have enough of it’ to now ‘we’re awash in it.’”

Louisiana Economic Development Secretary Stephen Moret says the state expects to see even more massive capital investment projects associated with the Haynesville Shale announced over the next few years.

“The economic benefits of historically low, stable natural gas prices in Louisiana have only begun to be realized,” he says.

Driving forces

The expanded harvesting of shale formations in Louisiana and elsewhere in the country has led to an oversupply of natural gas, making exports more attractive. Six LNG export proposals around the country currently are awaiting approval from regulators as producers look for ways to move their low-cost gas overseas.

In 2010, the latest year for which statistics are available, marketed production of natural gas reached 22.7 million cubic feet, the highest recorded total since 1973. Storage inventories reached a record 3,847 billion cubic feet. And the average natural gas rig count rose 18% over the previous year, from 799 to 942, according to the Energy Information Administration‘s Natural Gas Annual.

Technological advances in drilling and well-completion techniques continue to push the break-even point of production down, making it economical despite low prices. Even as the focus has shifted away from drilling solely for natural gas, increased interest in drilling the shale plays for oil still results in natural gas as a byproduct, continuing to add to the glut in the market.

Not surprisingly, imports have reached a 16-year low, accounting for just 11% of the nation’s natural gas consumption. At the same time, LNG exports—mostly to Canada—doubled in 2010.

“The main reason for the shift itself has been this big supply growth that is not being met adequately, at least domestically, with a corresponding increase in demand for natural gas,” says David Dismukes, associate director and professor at the LSU Center for Energy Studies. “Right now, we’re at record supply production levels, and the conventional wisdom, at least in the near term, is that those levels aren’t going down. Export becomes the next-best alternative.”

Big player

If planned liquefied natural gas conversion projects happen, U.S. exports could have significant impact on world energy politics, with Louisiana likely the biggest player, at least early on.

“It’s good for us,” John says. “The more that we become exporters of natural gas, the more the demand is going to increase, which obviously the price follows. And once the price follows, you’ll see increased activity amongst all of these shale plays. It’s very good for our industry that we are finding different markets, and it’s an incredible turnaround for the United States to be an energy exporter in the field of natural gas.”

The nation could end up exporting as much as one-fifth of its gas, roughly 12 billion cubic feet of gas per day—equivalent to almost 90% of European sales from Russia, the world’s largest exporter, according to the World Fact Book.

Demand for America’s natural gas exports is expected to be high. Japanese imports to replace nuclear power after the Fukushima Daiichi disaster are already at record levels, and the country’s acceptance of new plants is expected to wane. There’s also been a 27% jump in China’s first-half purchases. Western Europe and India continue to rely heavily on imports, particularly from Russia and the former Soviet republics.

At the same time, the world’s spare production capacity shrank about 50% this year as consumption grew, and is projected to continue declining through 2014.

Dismukes says the fact that many entities have been willing to sign long-term contracts years before the export facilities are even operating indicates “there’s a genuine and bona fide interest in this and people are willing to put their money where their mouth is on it.”

What it means for Louisiana is, of course, additional jobs, new market opportunities for in-state producers and additional tax revenue for communities where the export facilities are located, among other benefits.

There also are all those pipelines needed to move the natural gas to the export terminals. John says the industry is already seeing an enormous amount of projects on the book of networking a lot of the plays into major pipelines that are already in existence.

“From a standpoint of surveyors, welders and all of the workforce that is needed to lay pipelines, that is frankly exploding right now across Louisiana and from there, connecting all over the country,” he says. “You are seeing a lot of preparations in anticipation of the growth of all this natural gas. The future is very bright for Louisiana.”

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Naked Oil

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Posted by Gail the Actuary on January 11, 2012 – 12:03pm

This is a guest post by Chris Cook, former compliance and market supervision director of the International Petroleum Exchange.

All is not as it appears in the global oil markets, which in my view have become entirely dysfunctional and no longer fit for its purpose. I believe that the market price is about to collapse as it did in 2008 and that this will mark the end of an era in which the market has been run by and on behalf of trading and financial intermediaries.

In this post I forecast the imminent death of the crude oil market, and I identify the killers; the re-birth of the global market in crude oil in new form will be the subject of another post.

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Nigeria: Fuel protests turn violent

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Nigerian union members and demonstrators march in Lagos to protest the removal of petroleum subsidies by the government on January 3, 2012. Nigerian police fired tear gas to disperse a small crowd burning tires in Lagos and arrested demonstrators in the northern city of Kano on Tuesday as protests continued over soaring fuel prices. (Pius Utomi Ekpei /AFP/Getty Images)

Over the weekend, Nigerian President Goodluck Johnathan said the violence that has erupted from Islamist militant group Boko Haram, is the gravest threat since the civil war in 1967 to 1970 that left as many as 3 million people dead, and nearly ripped the country apart, according to Agence France Presse.

“During the civil war we knew and we could even predict where the enemy was coming from. But the challenge we have today is more complicated,” Jonathan said, according to The Guardian. The president said some Boko Haram supporters even work for the government.

As the Nigerian government attempts to counter this threat, however, the country appears to be descending into chaos. On the first of this year, the president announced an end to government-sponsored fuel subsidies, doubling and tripling the price of gas in a matter of days.

The reaction of the people was swift, as people took to the streets in opposition to the move almost immediately. Yesterday, schools, banks and stores were shuttered, as protests and a general strike swept the nation after an emergency court banned the demonstrations on Sunday, according to Bloomberg News.

The BBC reports at least three people were killed and more than 30 injured in the protests, that drew tens of thousands of people, and are scheduled to continue indefinitely.

CNN reports a higher death toll, citing at least five reported deaths. Hadiza Halliru, an Abuja protester told the broadcaster that soaring fuel prices have caused an increase in the costs of everything from food to school fees. In Nigeria, more than 90 percent of the people live on less than $2 a day.

“The fuel hike, which has doubled and even tripled in some states, would affect not only transportation but the price of foodstuff, clothing, any form of direct labor, construction costs,” he told CNN. “But salaries still remain the same, which means everyone who directly pays bills will be affected, especially the middle class and the poor.”

In a photo on the Voice of America website, one man carries a placard that reads: “One day the poor will have nothing to eat but the rich.”

The fuel subsidy cost the government $8 billion in 2011, and some argue it never really helped the average Nigerian person get ahead. Critics of the subsidy say it filtered large amounts of money into the hands of the few, leaving the country with very little in the way of infrastructure development.

As the debate over the subsidy raged last fall, a Nigerian Tribune editorial hailed local leaders for standing up to the people profiting from the subsidy. The author, Joshua Ocheja, writes:

“We can’t sit and watch while an infinitesimal percentage of the population milk us dry in the name of fuel subsidy … It is high time we called a spade a spade in this country. Our elected officials must account for their actions and inactions as it concerns the populace.

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USA: Alliance Engineering to Design Topsides for Tubular Bells Field Spar Platform

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Alliance Engineering, a subsidiary of Wood Group, has been awarded the detailed engineering and design of the topside facilities and deck for Williams Partners’ Gulfstar FPS™ spar production platform. This wet-tree platform will be installed in block 768 of the Gulf of Mexico’s Mississippi Canyon area to produce oil and gas from the Tubular Bells field, which is owned by Hess Corporation​ (Operator) and Chevron U.S.A. Inc.

The Gulfstar spar platform will be located in 4,300 feet of water and designed to process 60,000 barrels of oil per day and 200 MMscf of gas per day. The single-lift topsides will have three deck levels and include processing equipment, seawater injection equipment, utilities, an accommodation building with helideck, and pumping and compression equipment to export the treated oil and gas through departing pipelines. The completed deck will weigh approximately 7,000 short tons. Initial production is scheduled to commence in 2014.

“Alliance has been working with Williams Partners to develop their standard Gulfstar floating production system concept (FPS),” said Edmund Lunde, president of Alliance. “With concept development and FEED completed, we are pleased to continue working with Williams Partners on the detailed design of their first Gulfstar FPS. We are confident Williams, Hess and Chevron will benefit from our focus, skill, and experience in developing the Tubular Bells topsides.”

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U.S. making nice with the Muslim Brotherhood?

The highest-level meeting between a U.S. diplomat and Muslim Brotherhood officials will take place today in Cairo, Egypt.

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U.S. deputy secretary of state, William Burns, will meet officials of the Muslim Brotherhood’s political wing in the highest-level meeting yet between the two sides. (Chip Somodevilla/AFP/Getty Images)

The U.S. has long shunned Egypt‘s Muslim Brotherhood, accusing it of links to terrorists. Looks like that is about to change.

The State Department‘s number two diplomat, William Burns, will meet with leaders of the Brotherhood’s Freedom and Justice Party (FJP), which just won roughly 40 percent of the seats in parliament, AFP reports. (Final results of Egypt’s recent legislative elections have not yet been released).

The meeting marks part of a shift towards rapprochment from a decades-old U.S. policy of hostility toward the Brotherhood, who many in the U.S still fear will pose a threat to Israel and boost support for more extreme Islamists.

Still, the rise of Islamists, moderate and extreme, is a new reality in post-Mubarak Egypt. See Middle East highlights in the Foreign Operations Appropriations Bills from Jul. 2012, when the House Foreign Affairs Committee approved an amendment to limit the Secretary of State from using funds to support the Muslim Brotherhood.

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Major Oil And Gas Finds In northern Europe

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Written by: EurActiv
January 10, 2012

Norway’s Statoil has made a second big oil discovery in the Barents Sea in less than a year and predicted more discoveries to come in the region.

The new oil find, called Havis, may hold between 200 million and 300 million barrels of oil equivalent (boe). The new find combined with the previous and nearby discovery, Skrugard, could provide between 400 million and 600 million boe, Statoil said yesterday (9 January).

“This is extremely positive,” said John Olaisen, an analyst at the Carnegie investment banking firm in Oslo. “This is an important strategic asset in a new oil region, so this is very good … One could expect more oil finds in the region after this.”

A Shell and ExxonMobil joint venture, Nam, has also announced what it says is the largest on-shore gas field discovery in the Netherlands since 1995, near Ee, in Friesland.

Production at the South Metslawier site, which is estimated to hold 4 billion cubic metres of reserves, is expected to begin in the summer, and last until 2015.

The Norwegian find in the Barents Sea, followed a carve-up of the territory in 2010 between Norway and Russia.

The Arctic region holds 25% of the world’s hydrocarbons, according to the US Geological Survey.

Norway is the world’s eighth-largest oil exporter and the second-largest for gas, which has seen declining oil output since 2001, following a string of offshore discoveries made over the past year.

Finding oil in the Norwegian part of the Barents Sea had until recently proven to be very difficult.

Over the past 30 years oil companies have drilled 92 exploration wells but only a handful have proven to be hits – Skrugard, Statoil’s Snoehvit gas field, Eni’s Goliat oilfield and Total’s Norvarg discovery.

Statoil now expects to strike more oil in the region around Havis.”We believe we now understand (the geology) and have cracked the code in this area,” the company’s chief executive Helge Lund said.

“We think we will be able to make additional finds in this licence in the future,” he said.

Production at Havis is expected to begin before the end of the decade.

The partners in the latest oil find are Statoil (50%), Italy’s Eni (30%) and Norwegian state-owned firm Petoro (20%).

Original article

USA: FMC Technologies Provides Subsea Systems for Anadarko’s Lucius Field

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FMC Technologies, Inc.  announced today that it has signed an agreement with Anadarko Petroleum Corporation to provide subsea systems and life-of-field services for its Lucius project.

The Lucius field is located approximately 275 miles southeast of Galveston in Keathley Canyon Block 875, in water depths of approximately 7,100 feet (2,160 meters). FMC’s scope of supply includes five subsea production trees and two manifolds. The equipment will be supplied from the Company’s operation in Houston and deliveries are expected to begin in the fourth quarter of 2012.

“Anadarko is the largest independent operator in the deepwater Gulf of Mexico,” said John Gremp, FMC’s Chairman, President and Chief Executive Officer. “We are pleased to continue supporting their projects as their preferred subsea systems supplier.”

Truss spar

Lucius will be developed with a truss spar floating production facility with the capacity to produce in excess of 80,000 barrels of oil per day and 450 million cubic feet of natural gas per day. The spar is currently under construction at Technip’s facility in Pori, Finland and will be the largest of Anadarko’s operated spars — a deepwater production solution pioneered by the company in 1997.

The Lucius unit includes portions of Keathley Canyon blocks 874, 875, 918 and 919. Anadarko operates the unit with a 35-percent working interest.

Co-venturers in the Lucius unit include Plains Exploration & Production Company with a 23.3-percent working interest; Exxon Mobil Corporation​​ with a 15-percent working interest; Apache Deepwater LLC, a subsidiary of Apache Corporation with an 11.7-percent working interest; Petrobras with a 9.6-percent working interest; and Eni with a 5.4-percent working interest.

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