Daily Archives: January 27, 2012

China gets jump on U.S. for Brazil’s oil

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Two export pacts a coup for Beijing

By Kelly Hearn – Special to The Washington Times

BUENOS AIRES — Off the coast of Rio de Janeiro — below a mile of water and two miles of shifting rock, sand and salt — is an ultradeep sea of oil that could turn Brazil into the world’s fourth-largest oil producer, behind Russia, Saudi Arabia and the United States.

The country’s state-controlled oil company, Petrobras, expects to pump 4.9 million barrels a day from the country’s oil fields by 2020, with 40 percent of that coming from the seabed. One and a half million barrels will be bound for export markets.

The United States wants it, but China is getting it.

Less than a month after President Obama visited Brazil in March to make a pitch for oil, Brazilian President Dilma Rousseff was off to Beijing to sign oil contracts with two huge state-owned Chinese companies.

The deals are part of a growing oil relationship between the two countries that, thanks to a series of billion-dollar agreements, is giving China greater influence over Brazil’s oil frontier.

Chinese oil companies are pushing to meet mandatory expansion targets by inking deals across Africa and Latin America, but they are especially interested in Brazil.

“With the Lula and Carioca discoveries alone, Brazil added a possible 38 billion barrels of estimated recoverable oil,” said Luis Giusti, a former president of Venezuela’s state oil company, PDVSA, referring to the new Brazilian oil fields.

“That immediately changed the picture,” he said, adding that Brazil is on track to become “an oil giant.”

During Mrs. Rousseff’s visit to China, Brazil’s Petrobras signed a technology cooperation deal with the China Petroleum & Chemical Corp., or Sinopec.

Petrobras also signed a memorandum of understanding with Sinochem, a massive state-owned company with interests in energy, real estate and agrichemicals.

The Sinochem deal aims to identify and build “business opportunities in the fields of exploration and production, oil commercialization and mature oil-field recovery,” according to Petrobras.

The relationship with China goes back to at least two years before Mr. Obama came to Brazil to applaud the oil discovery and tell Mrs. Rouseff:

“We want to work with you. We want to help with technology and support to develop these oil reserves safely, and, when you’re ready to start selling, we want to be one of your best customers.”

China rescued Petrobras in 2009, when the oil company was looking at tight credit markets to finance a record-setting $224 billion investment plan. China’s national development bank offered a $10 billion loan on the condition that Petrobras ship oil to China for 10 years.

A chunk of Brazil’s oil real estate appeared on China’s portfolio in 2010, when Sinopec agreed to pay $7.1 billion for 40 percent of Repsol-YPF of Brazil, which has stakes in the now internationally famous Santos Basin, and the Sapinhoa field, which has an estimated recoverable volume of 2.1 billion barrels. Statoil of Norway also agreed that year to sell 40 percent of the offshore Peregrino field to Sinochem.

Last year, Sinopec announced it would buy 30 percent of GALP of Brazil, a Portuguese company, for $3.5 billion. GALP has interests in the Santos Basin and a 10 percent stake in the massive Lula field.

“The $5.2 billion cash-in we will get from Sinopec is paramount for our strategy in Brazil,” GALP CEO Manuel Ferreira de Oliveira told Bloomberg News.

“It will give us a rock-solid capital base as we enter a decisive investment period at the Santos Basin. This operation values our existing Brazilian assets at $12.5 billion and is really a landmark for the company and for our shareholders.”

News reports in December said Sinopec is the current favorite to buy stakes in Brazilian oil owned by Britain’s BG Group, which also has interests in the massive fields of Carioca, Guara, Lula and Lara.

On Jan 8., the French company Perenco announced it was selling Sinochem a 10 percent stake in five offshore blocks located in the Espirito Santos Basin. Some of the transactions still await approval by Brazil’s government.

In December, Venezuelan Oil Minister Rafael Ramirez publicly reiterated his government’s commitment to an oil refinery joint venture with Petrobras.

That project reportedly is set to be funded by China’s national development bank. Some news reports have quoted the head of China’s development bank saying that new deals with Brazil are under consideration.

James Williams, an energy economist with the U.S. consulting group WTRG Economics, said the Chinese are taking on big risks with ultra-deep-water investments.

“But for them, the benefits are greater, as they become partners with companies that have better technology and expertise,” he said.

This article is based in part on wire service reports.

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No energy industry backing for the word ‘fracking’

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Associated Press

NEW YORK — A different kind of F-word is stirring a linguistic and political debate as controversial as what it defines.

The word is “fracking” — as in hydraulic fracturing, a technique long used by the oil and gas industry to free oil and gas from rock.

It’s not in the dictionary, the industry hates it, and President Barack Obama didn’t use it in his State of the Union speech — even as he praised federal subsidies for it.

The word sounds nasty, and environmental advocates have been able to use it to generate opposition — and revulsion — to what they say is a nasty process that threatens water supplies.

“It obviously calls to mind other less socially polite terms, and folks have been able to take advantage of that,” said Kate Sinding, a senior attorney at the Natural Resources Defense Council who works on drilling issues.

One of the chants at an anti-drilling rally in Albany earlier this month was “No fracking way!”

Industry executives argue that the word is deliberately misspelled by environmental activists and that it has become a slur that should not be used by media outlets that strive for objectivity.

“It’s a co-opted word and a co-opted spelling used to make it look as offensive as people can try to make it look,” said Michael Kehs, vice president for Strategic Affairs at Chesapeake Energy, the nation’s second-largest natural gas producer.

To the surviving humans of the sci-fi TV series “Battlestar Galactica,” it has nothing to do with oil and gas. It is used as a substitute for the very down-to-Earth curse word.

Michael Weiss, a professor of linguistics at Cornell University, says the word originated as simple industry jargon, but has taken on a negative meaning over time — much like the word “silly” once meant “holy.”

But “frack” also happens to sound like “smack” and “whack,” with more violent connotations.

“When you hear the word ‘fracking,’ what lights up your brain is the profanity,” says Deborah Mitchell, who teaches marketing at the University of Wisconsin’s School of Business. “Negative things come to mind.”

Obama did not use the word in his State of the Union address Tuesday night, when he said his administration will help ensure natural gas will be developed safely, suggesting it would support 600,000 jobs by the end of the decade.

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In hydraulic fracturing, millions of gallons of water, sand and chemicals are pumped into wells to break up underground rock formations and create escape routes for the oil and gas. In recent years, the industry has learned to combine the practice with the ability to drill horizontally into beds of shale, layers of fine-grained rock that in some cases have trapped ancient organic matter that has cooked into oil and gas.

By doing so, drillers have unlocked natural gas deposits across the East, South and Midwest that are large enough to supply the U.S. for decades. Natural gas prices have dipped to decade-low levels, reducing customer bills and prompting manufacturers who depend on the fuel to expand operations in the U.S.

Environmentalists worry that the fluid could leak into water supplies from cracked casings in wells. They are also concerned that wastewater from the process could contaminate water supplies if not properly treated or disposed of. And they worry the method allows too much methane, the main component of natural gas and an extraordinarily potent greenhouse gas, to escape.

Some want to ban the practice altogether, while others want tighter regulations.

The Environmental Protection Agency is studying the issue and may propose federal regulations. The industry prefers that states regulate the process.

Some states have banned it. A New York proposal to lift its ban drew about 40,000 public comments — an unprecedented total — inspired in part by slogans such as “Don’t Frack With New York.”

The drilling industry has generally spelled the word without a “K,” using terms like “frac job” or “frac fluid.”

Energy historian Daniel Yergin spells it “fraccing” in his book, “The Quest: Energy, Security and the Remaking of the Modern World.” The glossary maintained by the oilfield services company Schlumberger includes only “frac” and “hydraulic fracturing.”

The spelling of “fracking” began appearing in the media and in oil and gas company materials long before the process became controversial. It first was used in an Associated Press story in 1981. That same year, an oil and gas company called Velvet Exploration, based in British Columbia, issued a press release that detailed its plans to complete “fracking” a well.

The word was used in trade journals throughout the 1980s. In 1990, Commerce Secretary Robert Mosbacher announced U.S. oil engineers would travel to the Soviet Union to share drilling technology, including fracking.

The word does not appear in The Associated Press Stylebook, a guide for news organizations. David Minthorn, deputy standards editor at the AP, says there are tentative plans to include an entry in the 2012 edition.

He said the current standard is to avoid using the word except in direct quotes, and to instead use “hydraulic fracturing.”

That won’t stop activists — sometimes called “fracktivists” — from repeating the word as often as possible.

“It was created by the industry, and the industry is going to have to live with it,” says the NRDC’s Sinding.

Dave McCurdy, CEO of the American Gas Association, agrees, much to his dismay: “It’s Madison Avenue hell,” he says.

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Jonathan Fahey can be reached at http://twitter.com/JonathanFahey.

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Iran could ban EU oil exports next week

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By Hashem Kalantari

TEHRAN | Fri Jan 27, 2012 8:36am EST

(Reuters) – A law to be debated in Iran’s parliament on Sunday could halt exports of oil to the European Union as early as next week, the semi-official Fars news agency quoted a lawmaker as saying on Friday.

“On Sunday, parliament will have to approve a ‘double emergency’ bill calling for a halt in the export of Iranian oil to Europe starting next week,” Hossein Ibrahimi, vice-chairman of parliament’s national security and foreign policy committee, was quoted as saying.

Parliament is pushing for the export ban to deny the EU a 6-month phase-in of the embargo on Iranian oil that the bloc agreed on Monday as part of a raft of tough new Western sanctions aimed at forcing Iran to curb its nuclear program.

The EU accounted for 18 percent of Iranian crude oil sales in the first half of 2011, according to the U.S. Energy Information Administration (EIA), making it Iran’s second biggest customer after China.

“If the deputies arrive at the conclusion that the Iranian oil exports to Europe must be halted, the parliament will not delay a moment (in passing the bill),” Fars quoted Moayed Hosseini-Sadr, a member of parliament’s energy committee, as saying.

“If Iran’s oil exports to Europe, which is about 18 percent (of Iran’s oil exports) is halted the Europeans will surely be taken by surprise, and will understand the power of Iran and will realize that the Islamic establishment will not succumb to the Europeans’ policies,” he said.

Reflecting how seriously Tehran was taking the idea, Iran’s OPEC governor Mohammad Ali Khatibi told the ILNA news agency the country might choose to raise the issue at the next OPEC meeting.

Iran’s conservative-dominated parliament has previously shown it is ready to force the government to take action against what it sees as hostility from the West.

In November it voted to expel the British ambassador after London announced new sanctions ahead of other EU countries.

The day after that vote, radical Iranians stormed the British embassy, causing London to withdraw all staff and close the mission.

(Writing by Robin Pomeroy; editing by James Jukwey)

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Obama loves oil — Not!

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Peter Foster Jan 27, 2012 – 8:00 AM ET

Nothing more clearly indicates U.S. President Barack Obama’s economic muddledom and ideological stubbornness than the dog’s breakfast of energy policies revealed in Tuesday’s State of the Union address. The good news is that hydrocarbons are back (as long as you forget Keystone XL). The bad news is that “clean” energy isn’t going away. Instead it’s “all of the above.”

Without his nose growing visibly, the President claimed the government was behind the technological advances that led to the current shale gas boom, and even suggested that he might take credit for the rise in domestic oil production. In fact, Mr. Obama’s administration has hampered and castigated oil companies at every turn. In the light of the hysterical grandstanding over the BP Gulf spill (whose impact proved to be greatly exaggerated), it was ironic indeed to hear the President now declare a great opening up of offshore exploration.

The industry has responded to attacks by becoming more innovative and productive. According to the U.S. Energy Information Administration, between 2007 and 2010, U.S. oil production grew from 5.1 million barrels a day (mbd) to 5.5 mbd. The agency predicts domestic production will hit 6.7 mbd by 2020, helping take imports down to 36% of domestic usage in 2035 from 60% in 2005. So much for peak oil. Meanwhile, the EIA also predicts that by 2016, thanks to the shale boom, the U.S. will be a natural gas exporter.

This reluctant acknowledgment of the success of private innovation was accompanied on Tuesday by the usual cheap shots. The oil industry has been subsidized (a dubious claim) for too long. Its profits are too fat. The administration will demand that oil companies release details of fracking chemicals – as if they might wilfully poison Americans without public oversight.

These political sideswipes are unlikely to appease the environmental lobby. If the President thinks he won any Greenie Points by kicking the Keystone XL pipeline down the road, he certainly lost them all – and probably then some – with his support for fracking and offshore drilling. Radical environmentalists don’t want to hear about energy security, objective risks, or practical safety measures: they want to close down hydrocarbons as the work of the climate devil.

Over in the dodgy logic section, Mr. Obama suggested that shale gas success demonstrated that it took time for energy research to pay off, thus he was right to stick with promoting alternatives. However, the cases are entirely different. U.S. government research laboratories may indeed have been involved in technologies such as fracking and directional drilling, but these technologies were first developed in the private sector. Government presence should be attributed more to jumping on winners than skill in picking them. Plus, there is the private sector’s incurable penchant for grabbing government funds. When it comes to alternatives, however, while rent seekers are as thick on the ground as subsidized solar panels, the government has no winners on which to jump.

The President suggested government-stoked success in battery technology, but this is predicated on the success of electric cars, of which the President wants – Soviet target-style – to see a million on the road by 2015. Government support for “clean” energy isn’t an investment in the future: It is money down the drain. Naturally, the half-billion-dollar Solyndra debacle received as little reference as Keystone XL.

Critics have suggested TransCanada’s projection of 20,000 jobs in construction and manufacturing from the Keystone XL line, with many more spin-offs, is exaggerated. Strange how interventionists love the Keynesian multiplier when it refers to government expenditure but deplore the idea when it comes to creating real jobs. More important, job creation in subsidized wind and solar is entirely fictitious. One widely quoted Spanish study suggests that every alternative job costs two jobs elsewhere.

Mr. Obama, now presumably to his embarrassment, has referred to oil as a dwindling “19th-century” resource. If we are talking of being out of date, William Watson noted here yesterday that President Obama’s grasp of economics hasn’t yet absorbed the 18th-century wisdom of Adam Smith. Mr. Owe’s predilection for misconceived trade-is-war “mercantilist” policies was clear from his promise in the State of the Union not to “cede the wind or solar or battery industry to China or Germany because we refuse to make the same commitment here.”

If they put in big destructive subsidies that threaten real trade war, then so will we. Anything they can do, we can do stupider.

One wonders if the President has the slightest clue about the flagging state of the wind and solar industries in Germany, or that what is boosting China’s alternatives industry is government subsidies … from other countries.

The President announced a plan to devote huge swathes of public land to the development of clean energy to power “three million homes.” He also apparently committed the Navy to buying a chunk of this power, as if it weren’t expensive enough to guard the Strait of Hormuz.

Mercantilist alternative energy strategies represent – as Jimmy Carter famously suggested – the “moral equivalent of war.” The problem is that it is war on one’s own economy. At least, with his partial ceasefire against the oil industry, President Obama is now only shooting himself in one policy foot rather than both.

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Is President Barack Obama responsible for U.S. oil production rise?

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Posted on January 27, 2012 at 6:40 am by Dan X. McGraw

President Barack Obama has gotten an earful from Republicans and energy industry officials for claiming his administration has helped to spur a rise in oil and natural gas production.

So who’s right?

Robert Rapier at the ConsumerEnergyReport.com broke down oil production under the presidential tenures of George Bush and Obama. Here is what he came up with:

For industry folks, it isn’t exactly what you imagine, but Rapier says the graph doesn’t paint the clearest picture of who is responsible for driving production of oil and natural gas.

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“The reason that oil production has risen under President Obama is due to events that happened years earlier. In this case, it wasn’t some grand initiative that President Bush passed, rather it was years of steadily increasing oil prices that caused oil companies to approve a number of new projects that had marginal economics at lower oil prices. But these projects take some years to build, and as in the case of the Alaska Pipeline, decisions that were made (four to six) years earlier benefited President Obama with increased domestic oil production.”

Rapier dives into a similar situation between former presidents Jimmy Carter and Richard Nixon.

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If Obama Loses, It Will Be Because Of This One Chart

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James Pethokoukis, American Enterprise Institute

In his State of the Union response the other night, Indiana Gov. Mitch Daniels neatly summed up Mitt Romney’s (who has a roughly 90 percent chance of being the GOP nominee according to Intrade) economic case against President Barack Obama: “The president did not cause the economic and fiscal crises that continue in America tonight, but he was elected on a promise to fix them, and he cannot claim that the last three years have made things anything but worse.”

In other words, the Obama Recovery stinks. Even if today’s GDP report — for the fourth quarter of 2011 — shows 3 percent growth or better, it would be just the fourth time that has happened since the economy began turning up in June 2009: 3.8 percent in the fourth quarter of 2009, 3.9 percent in the first quarter of 2010, and 3.8 percent in the second quarter of 2010. But no 3 percent-plus quarters since then.

The first nine quarters of the Reagan Recovery, by contrast, looked like this:  5.1 percent, 9.3 percent, 8.1 percent, 8.5 percent, 8.0 percent,  7.1 percent, 3.9 percent, 3.3 percent, 3.8, percent, 3.4 percent. In fact, the Reagan Boom went from the first quarter of 1983 until the second quarter of 1986 without notching a sub-3 percent GDP quarter.

So while the Reagan Recovery quickly made up for lost years of growth, not so much for the Obama Recovery, as this chart in today’s Wall Street Journal makes clear:

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And few economists are expecting the Obama Recovery to take off anytime soon. The IMF predicts just 1.8 percent growth for 2012 (and that’s assuming no EU sovereign debt meltdown). And the Federal Reserve sees growth in the 2.2 percent to 2.7 percent range with unemployment around 8.2 percent to 8.5 percent. Ugh!

The WSJ offers two explanations for the anemic rebound:

Economists say the nature of the recession helps explain the slow recovery. Aftershocks from the financial crisis have left banks reluctant to lend, making it hard for companies, and especially start-ups, to get access to capital. The housing market, which has historically helped lead the economy out of recession, remains deeply depressed.

Many business leaders say they are also being held back by policy-related uncertainty, everything from the threat of new regulations and higher taxes to the fear that political gridlock could hamper the government’s ability to respond to a new crisis. Recent economic research has given some weight to those complaints. A study by a trio of academic economists found that policy uncertainty has risen in recent years, and that periods of uncertainty have in the past corresponded with rising unemployment and slowing growth.

Whichever explanation holds more weight with voters may go a long way toward deciding who’ll be America’s next president.

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Recap: Worldwide Field Development News (Jan 20 – Jan 26, 2012)

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This week the SubseaIQ team added 10 new projects and updated 31 projects. You can see all the updates made over any time period via the Project Update History search. The latest offshore field develoment news and activities are listed below for your convenience.

Europe – North Sea
Duart Field Shut-In
Jan 26, 2012 – Bridge Energy stated that the Duart field is currently shut-in with production expected to restart in mid-March. The satellite field is located on UK Block 14/20 in the North Sea about 116 miles (186 kilometers) northeast of Aberdeen, Scotland.
Det norske to Drill Geite Prospect 2Q 2012
Jan 26, 2012 – Det norske announced plans to commence exploratory drilling in licenses PL 497/497B, in the Norwegian sector of the North Sea. Geite, located in a water depth of 262 feet (80 meters), is considered a large 4-way fault dependent closure. The operator plans to drill the prospect in 2Q12.
Project Details: Geite
Valiant, Antrim to Develop Fionn Field
Jan 25, 2012 – Antrim Energy and Valiant Petroleum have signed an agreement to proceed with early installation of subsea facilities for the development of the Fionn field in the UK sector of the North Sea. Fionn, located in Block 211/22a, was formerly called Central Causeway fault block. In December 2011, the UK Department of Energy and Climate Change assigned separate field designations to the Fionn field and the Causeway field, the latter containing the two fault blocks previously referred to as the East Causeway and Far East Causeway fault blocks. A Field Development Plan for the Causeway field was approved by DECC, with first oil expected in mid-2012. Under the terms of the Fionn Agreement, various subsea facilities will be installed during the first half of 2012 in conjunction with the installation of facilities for the Causeway field as a pre-investment for the future tie-in of Fionn to minimize development costs. Valiant will finance Antrim’s share of these costs. For three months following first oil from Causeway, Antrim has the option either to either withdraw from the Fionn project, or confirm its participation by paying its 35.1 percent share of the pre-investment outlay. Operator Valiant Causeway will likely submit a development plan for Fionn to DECC during the current quarter. It is planned that Fionn production will be combined with Causeway production, transported for processing to the Cormorant North platform, and exported to the Sullom Voe terminal for sale. First oil from Fionn is anticipated in mid-2013.
Project Details: Causeway
Total Submits Hild PDO to Norwegian Authorities
Jan 25, 2012 – Total has submitted a Plan for Development and Operation to the Norwegian Petroleum Directorate for the Hild field in the Norwegian sector of the North Sea. The field has estimated recoverable reserves of 1 Bboe. The development calls for an integrated wellhead, living quarters and production facility with a life expectancy of 30 years. The facility will be designed for remote control from an onshore base in Stavanger via an undersea cable from Kollsnes. It will also receive power from land. Oil will be sent by pipeline to a contracted storage vessel for processing before loaded onto shuttle tankers. The ship, which is planned to receive power from the production facility, can store up to 620,000 barrels of oil. Production is slated to commence in 2016. Hild is located in a water depth of 328 to 394 feet (100 to 120 meters).
Project Details: Hild
Nautical Divests 25% Stake in Kraken to EnQuest
Jan 24, 2012 – Nautical Petroleum will divest a 25 percent stake in the Kraken discovery (Petroleum License P1077) to EnQuest. Subject to the approval of the joint venture partners and the Department of Energy and Climate Change (DECC), EnQuest will become the operator of blocks 9/2b & 9/2c. The deal will involve Nautical receiving a carry on in its future expenditure on the Kraken field of up to $240 million, consisting of $150 million firm carry and a contingent carry of up to $90 million. The value of the contingent carry will be calculated by reference to a determination of the gross 2P reserves in blocks 9/2b and 9/2c. The reserve determination will take place during the development drilling phase. In addition to the disposal of a 25 percent interest in Kraken, Nautical will also divest interests in exploration blocks in the Greater Kraken area. EnQuest will receive a 10 percent interest in the P1575 license (Blocks 9/6a and 9/7b) and a 15 percent interest in the P1573 and P1574 licenses (Blocks 3/22a and 3/26). Krakan spans Blocks 9/2b and 9/1a in the UK sector of the North Sea.
Project Details: Kraken
E.ON Comes Up Dry at PL 350
Jan 23, 2012 – E.ON Ruhrgas has completed the drilling of wildcat well 6507/6-4 S and is in the process of completing the drilling of wildcat well 6507/6-4 A. Both wells are dry. The objective of wells 6507/6-4 S and 6507/6-4 A was to prove petroleum in Upper Triassic and Permian reservoir rocks, respectively. Well 6507/6-4 S encountered Upper Triassic reservoir rocks with reservoir quality as expected, while well 6507/6-4 A did not encounter the expected reservoir rocks. Extensive data acquisition has taken place at both wells and sampling was carried out. This is the first time drilling has occurred in PL 350. The wells will now be permanently plugged and abandoned.
Staoil Gets Govt Nod for Skuld Fast-Track Development
Jan 20, 2012 – The Ministry of Petroleum and Energy has greenlighted the plan for development and operation of Skuld, a fast-track development tied-in to the Norne field in the Norwegian sector of the North Sea. The field will be developed by three subsea templates with six production wells and three water injectors connecting to the Norne FPSO through a 14-inch-diameter production flowline and umbilical. The field is scheduled to come online by late 2012. Recoverable reserves in Skuld are estimated at 90 MMboe, primarily oil.
Project Details: The Greater Norne Area
Asia – SouthEast
AWE Acquires Acreage in Natuna Sea
Jan 26, 2012 – AWE Limited has executed a sale and purchase agreement with a Genting Berhad subsidiary to acquire a 100-percent interest and operatorship in two production sharing contracts offshore Indonesia for $39 million. Under the terms of the agreement, a wholly owned subsidiary of AWE will acquire assets that include an undeveloped oil field with an estimated 76 MMbbl of recoverable oil. The two PSCs, the North West Natuna PSC and the Anambas PSC, are located in the Natuna Sea in 230 to 295 feet (70 to 90 meters) of water. The NWN PSC contains the undeveloped Ande Lumut oil field, which is estimated to contain 76 MMbbl of recoverable heavy oil, and three exploration and appraisal wells. The Anambas PSC contains the Anambas gas field, discovered in 2006, together with a number of additional exploration prospects within an offshore area containing significant gas development and pipeline infrastructure. The transaction is effective from Jan. 1, 2012 and is anticipated to be complete by February 2012. The purchase will be funded by cash reserves and proceeds from part of AWE’s stake sale in the BassGas Project.
Nido to Acquire 2D Data over Service Contract 58
Jan 25, 2012 – Searcher Seismic, on behalf of the Service Contract 58 Joint Venture, is acquiring 621 miles (1,000 kilometers) of new 2D seismic data over the greater Bikuda ??? Bulador prospect area in the northern sector of the area. The prospects were high-graded by subsurface work performed in 2011. The survey will help to mature these prospects to drillable status, so they can be considered as candidates to meet the sub-phase 3 commitment well due before January 2014. The survey is expected to commence in the near future. Service Contract 58, operated by Nido with a 50 percent stake, is a large deepwater block covering approximately 3.3 million acres (13,440 square kilometers) that lies immediately outboard of the giant Malampaya gas field. No wells have been drilled in the block to date. Water depths are in excess of 3,281 feet (1,000 meters) over most of the block.
MEO Australia Creating POD for Seruway PSC
Jan 24, 2012 – MEO Australia says it is working on a variety of activities aimed at maturing a Plan of Development (POD) for the Gurame gas discovery within the Seruway PSC offshore Indonesia. This POD maturation, coupled with the Kuala Langsa discovery and the improved definition of the Ibu Horst exploration prospects will underpin its future plans to attract a farm-in partner for the Seruway block. MEO has committed to acquiring 172,974 acres (700 square kilometers) of 3D seismic and to drill a well by the end of 2012. The Seruway PSC covers an area of 898,228 acres (3,635 square kilometers) and contains two gas discoveries – Gurame and Kuala Langsa – including several exploration opportunities.
Asia – Far East
ConocoPhillips Reaches Settlement Agreement Related to Peng Lai Oil Spill
Jan 25, 2012 – ConocoPhillips and the China National Offshore Oil Corp. have reached an agreement with China’s Ministry of Agriculture to resolve issues related to the June 2011 incidents at the Peng Lai 19-3 field in Bohai Bay. The company will make a compensation payment of $160 million to settle public and private claims of potentially affected fishermen and bay communities from the oil spill. ConocoPhillips will also designate a portion of its $16 million environmental fund to improve fishery resources. Peng Lai is located on the Bozhong Block 11/05 in approximately 75 feet (23 meters) of water.
Project Details: Peng Lai
N. America – US GOM
Marlin Primes Eugene Bit
Jan 26, 2012 – Marlin Energy is preparing to spud the A-2DST01 well, a sidetrack of the existing A-2 well, targeting reserves in the Tex X2 sandstones. The operator is using the Ocean Columbia (250′ ILC) jackup to drill the well at the Eugene Island Field in the GOM. Two sidetrack wells are planned to access new reserves, said partner Leni. Potential pay zones have been identified in the Tex-X2 and X3 reservoirs, and if completed successfully, will lead to an immediate increase in production. The A#2 sidetrack is targeting a downthrown fault block which Marlin considers to have good seismic amplitude. The fault block has an estimated mean recoverable reserve of 0.5 million barrels of oil within the primary, Tex-X2, target level at a depth of approximately 13,000 feet (396 meters) subsea. The slightly deeper Tex-X3 reservoir will also be tested by the well.
Pyrenees Slated for Production in 1Q12
Jan 24, 2012 – The Pyrenees field is in its final stages of flowline and umbilical installation. Liquids-rich gas and condensate production is expected by February 2012 at a gross rate of 60 MMcf/d. Pyrenees is located on Garden Banks 293 in 2,100 feet (640 meters) of water.
Project Details: Pyrenees Discovery
Stone Acquires Stake in Wideberth Development in GOM
Jan 24, 2012 – Stone Energy has acquired a 25 percent non-operated working interest in the deepwater Wideberth development project. The company says that first production from this gas satellite tie-back is expected in 2Q12. Wideberth is located in 3,700 feet (1,132 meters) of water on Green Canyon Block 490.
Project Details: Wideberth
Shell to Appraise Vito in GOM
Jan 20, 2012 – Shell is on location at Mississippi Canyon Block 940 to drill the No. 2 appraisal well on the Vito prospect. The operator is using the Noble Danny Adkins (UDW semisub) to drill the well. Drilling should take about 145 days. The discovery is located in 4,206 feet (1,282 meters) of water.
Project Details: Vito
Australia
Chevron Hands Technip Wheatstone Contract
Jan 26, 2012 – Technip Oceania, an Australian subsidiary of France’s Technip Group, has received a contract by Daewoo Shipbuilding and Marine Engineering for the detailed design of Chevron’s Wheatstone offshore gas-processing platform. The offshore portion of the project compromises the development of gas fields in the WA-17-R and WA-253-P petroleum titles located on the northwest shelf offshore Western Australia in water depths of 230 to 655 feet (70 to 200 meters). Subsea gas gathering systems will transport production to the processing platform where the gas and condensate will be treated. It will then export to the onshore gas plant at Ashburton North. Work is scheduled for completion in the second half of 2012. The Chevron-operated Wheatstone project compromises the Wheatstone and Iago gas fields, located in water depths between 330 and 850 feet (100 to 260 meters).
Project Details: Wheatstone
McDermott Makes Big Splash with Ichthys Surf Contract
Jan 25, 2012 – Inpex has granted McDermott International a letter of award for the Ichthys gas/condensate field offshore Australia. The surf contract, with a value of $2 billion, is the largest subsea contract McDermott has received to-date. This project includes engineering, procurement, construction, installation and pre-commissioning of production flowline systems, a MEG injection system, plus start-up condensate transfer and fuel gas transfer flowline systems, control systems, as well as other associated SURF elements in water depths of up to 902 feet (275 meters). McDermott will also install mooring systems for the FPSO and central processing facility, as well as, installation engineering for future flowlines, risers and umbilicals. Engineering work has commenced with fabrication slated for 2013. Gas from the Ichthys field, in the Browse Basin approximately 124 miles (200 kilometers) offshore Western Australia, will undergo preliminary processing offshore to remove water and extract condensate. The gas will then be exported to onshore processing facilities in Darwin via a 552-mile-long (889-kilometer-long) subsea pipeline.
Project Details: Ichthys
ConocoPhillips to Drill Boreas in February
Jan 24, 2012 – ConocoPhillips is gearing up to commence a drilling program in the Browse Basin Australia. The first well, Boreas-1 in WA-315-P, is located 2.7 miles (4.2 kilometers) east of the Poseidon discovery. The well will be drilled in a crestal position on a previously untested fault block with significant gas potential. ConocoPhillips is funding 80 percent of Boreas-1 to fulfill its farm-in commitments. The operator will use the Transocean Legend (mid-water semisub) to drill the well in February 2012.
MEO to Acquire 3D Data over Permit WA-454-P
Jan 24, 2012 – MEO Australia has performed a technical evaluation of the Marina-1 gas and liquids discovery in permit WA-454-P in the Bonaparte Gulf. MEO says that the evaluation has provided sufficient encouragement to warrant an early investment in 3D seismic, as well as information on the nearby Breakwater prospect. Design of and tendering for the Floyd 3D seismic survey targeting Marina, Breakwater and two other leads were completed during the quarter. The contract for acquisition of the Floyd 3D seismic survey was awarded in early January. Acquisition is expected to commence in February and to be completed in March.
Eni to Drill Heron Appraisal Well 3Q12
Jan 24, 2012 – Eni will use the jackup ESNCO 109 (350′ ILC) to drill the Heron-3 appraisal well. The vessel is expected to arrive late in second quarter 2012 with drilling to occur during the third quarter. Heron is located in NT/P68 permit in the Bonaparte Basin offshore Australia.
Project Details: Heron
MEO Commences 3D Seismic Survey in AC/P 50 and AC/P 51
Jan 20, 2012 – MEO Australia Limited has commenced acquisition of a 125,282 acre (507 square kilometer) Zeppelin 3D seismic survey in AC/P 50 and AC/P 51 in the Ashmore Cartier region of the Timor Sea. The survey is scheduled to take about 23 days to record. The permits are in permit year three of the primary exploration term. The Zeppelin 3D seismic acquisition will fulfill the current year work obligation subject to receipt of regulatory approvals for a work program variation for AC/P51.
Other
Statoil Acquires Acreage Offshore Greenland
Jan 23, 2012 – Statoil has acquired a 30.625 percent working interest at the Pitu license in Baffin Bay. The license was awarded to Cairn Energy during the first Baffin Bay licensing round in December 2010. Cairn will continue as operator and will retain a 56.875 percent working interest while partner Nunaoil will retain its carried interest of 12.5 percent. The work program includes the interpretation of recently acquired seismic data. The partnership will evaluate the seismic data prior to making a decision on drilling an exploration well. Cairn will retain operatorship at this stage, while Statoil will operate any future development.
N. America – Mexico
Pemex Confirms Veracruz Hydrocarbon Find
Jan 24, 2012 – Pemex says exploratory well Puskon-1 has proved the existence of an active petroleum system off the coast of Tuxpan, Verazruz, recording a series of hydrocarbon demonstrations. The well, drilled in a water depth of 2,122 feet (647 meters), was designed to evaluate the potential of a possible formation of the Mesozoic, which extends over an area of about 4.9 million acres (20,000 square kilometers). Pemex says the well was set to reach a total depth of 26,657 feet (8,125 meters) but confirmed the presence of wet gas at 23,622 feet (7,200 meters).Recorded temperatures and pressures were higher than predicted at 25,039 feet (7,632 meters). It also updated the geological-geophysical interpretations in order to propose a new future exploration location to assess the potential of this oil objective.
Africa – Other
Afren Plans to Spud Orpheus Prospect in 2012
Jan 24, 2012 – Afren plans to drill the Orpheus prospect in 2012 from an offshore location, and is in the process of securing a jackup drilling rig capable of undertaking this work. During Q4 2011 over 559 miles (900 kilometers) of deepwater 2D seismic was acquired, which is currently being processed. Final results are expected at the end of the 1Q 2012. The Orpheus prospect is situated in the Tanga block mainly offshore northeast Tanzania in coastal to shallow marine waters.
Project Details: Orpheus
Anadarko to Conduct Extensive Testing Program at Barquentine
Jan 20, 2012 – Anadarko is preparing to spud the Barquentine-3 well offshore Mozambique. The Deepwater Millennium (UDW drillship) is currently on location where it will commence an “extensive” testing program, reported Rigzone’s RigLogix Database. The operator plans to install observation gauges and conduct several flow tests. The discovery lies offshore Area 1 of Mozambique’s Rovuma Basin.
Project Details: Barquentine
Africa – West
Afren Plans to Drill Additional Development Well at Okoro
Jan 26, 2012 – Production at the Okoro field has averaged at 15,800 bopd on a gross basis during the period, reported Afren. In the first quarter of 2011, two infill wells were brought onstream, and debottlenecking work was also undertaken in order to increase the production handling capacity of the Okoro FPSO. Afren expects to drill a development well from the existing unmanned wellhead platform at the Okoro field. The Okoro field is located in OML 112 in shallow water offshore Nigeria.
Afren Mulling Okwok Development Plans
Jan 26, 2012 – Afren completed an Ocean Bottom Cable 3D seismic survey over the whole Ebok/Okwok/OML 115 area in 3Q11. The operator is currently processing the new data, which is slated for completion by 2Q12. One of the primary purposes of the new data is to assist in development planning for the Okwok field, and to pinpoint an additional appraisal well that the consortium will drill in the second half of the year, ahead of formal submission of a FDP to the Nigerian authorities. Afren is leaning towards a development plan that incorporates a separate dedicated production processing platform tied-back to the existing Ebok FSO, located about 8 miles (13 kilometers) to the west. The Okwok field is situated on OML Block 67 in 131 feet (40 meters) of water offshore Nigeria.
Project Details: Greater Ebok-Okwok Complex
Oriental Ramps Up Ebok Production
Jan 26, 2012 – Oriental Oil reported that initial phases of the Ebok development have been completed, following the commissioning and ramping of all 14 production wells. Reservoir performance and well deliverability recorded at the field to date are in-line with prognosis, with production processing and regular crude oil offtake operations running smoothly. The Transocean High Island VII (250′ ILC) jackup remains on location at the west fault block area of the field. The consortium plans to drill up to four horizontal production wells from the west fault block location targeting oil-bearing reservoir zones that were not drilled during the initial phases of field development work. The field partners also plan to drill an exploratory well on the Ebok north fault block during the first half of the year. Ebok is located on Block OML 67 offshore Nigeria in a water depth of 135 feet (41 meters).
Project Details: Greater Ebok-Okwok Complex
CAMAC Energy Enters Gambia
Jan 23, 2012 – CAMAC Energy has entered into an agreement with the Gambian Ministry of Petroleum on the provisional award of two offshore exploration blocks, A2 and A5, in water depths ranging in 1,969 to 3,281 feet (600 to 1,000 meters). CAMAC Energy will operate the blocks with an 85 percent interest, which cover a total surface area of 658,783 acres (2,666 square kilometers). Gambia National Petroleum Company will be carried at 15 percent through first oil. The two exploration blocks are located in the highly prospective West African Transform Margin, home to several recent major discoveries in Ghana (Jubilee, Odum) and Sierra Leone (Venus, Mercury). Additionally, in 1979 Chevron drilled the Jammah-1 well on the basis of sparse 2D data in Block A2. The well had gas shows, thereby establishing the presence of hydrocarbons in the area. Extensive 3D seismic shot on the two Gambian blocks A1 and A4, immediately west of the blocks A2 and A5, has revealed a number of material prospects and leads according to the operator African Petroleum Corporation Limited. One of the identified prospects, Alhamdulilah, has potential mean unrisked resources of approximately 500 million barrels.
Hyperdynamics Suspends Sabu-1
Jan 23, 2012 – After encountering equipment problems, Hyperdynamics has suspended drilling operations on the Sabu-1 exploratory well offshore Republic of Guinea. Repairs will be made and the delay is estimated to take about a week. The well reached a total subsea depth of 7,297 feet (2,224 meters), putting the well near the top of Cretaceous age sediments, and the next string of 13-3/8 inch casing was successfully set. Following retesting of the blowout preventer, the well reached a depth of 7,559 feet (2,304 meters). The operator expects to test prospective upper Cretaceous sandstone reservoirs while it drills the Sabu-1 well to a total subsea depth of about 11,811 feet (3,600 meters).
Project Details: Sabu

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USA: Sub Sea Research Locates Port Nicholson Shipwreck

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Sub Sea Research LLC, a Portland Maine based company located the worlds richest shipwreck, a WWII British Freighter carrying a secret cargo of 71 tons of Platinum sunk by a German U-Boat off the coast of Cape Cod.

Sub Sea Research (SSR) spent months searching for the elusive ship, the Port Nicholson, torpedoed by German U-boat U87, June 1942. It took two torpedoes and about 7 hours to sink her. U-87 also fired at the troop ship the “Cherokee,” quickly sinking her with a heavy loss of lives.

The Port Nicholson is a steel-hulled, 481 ft. merchant ship, coal fired freighter built in 1918 at the Tynes & Wear shipyard. She was carrying two special envoy USSR agents overseeing the delivery of a very important Lend-Lease payment from the USSR to USA. She along with 4 other commercial vessels were being escorted by an unusually high number of military ships. The normal ratio at the time was near 1:10 or less but this convoy ratio was 6:5. Maybe it was the fact they were delivering 1,707,000 oz. troy, in 400 oz. bars of platinum. Strangely the two USSR special envoy individuals quickly disappeared after being rescued and brought to American shores. They were not de-briefed like all the other survivors were.

SSR first discovered the Port Nicholson in 600-800 feet of water off Cape Cod in 2008. In 2009 SSR obtained legal recognition from the US Courts as the legal owner and salvager of the ship.

SSR researchers corresponded with individuals manning the ships and even spoke with another U-boat captain who was in the same area. They have talked with survivors and relatives of the men of the Port Nicholson and the Cherokee. One Yarmouth, MA author has written a book and is waiting for “the last chapter” of raising the valuable cargo of the Port Nicholson. These researchers also found declassified documents verifying the cargo as well as the debriefing of the sinking.

According to SSR research, the Port Nicholson and four other ships were being escorted by six military ships in a convoy from Halifax to New York. The Port Nicholson is documented to be carrying ~1,707,000 troy ounces of platinum. It may also contain $165M of copper, zinc and war stores. Greg Brooks, one of two SSR founders, said his team has already recovered several identifying and critical artifacts. He has verified that “it is without a doubt the Port Nicholson”.

Late in the summer of 2011, after 100’s of hours of ROV video, they have seen what appear to be bullion boxes containing 4 bars, each being 400 troy ounces of precious metal. “We have seen boxes indicative of those used to store and ship this type of bullion in 1942. Our video clearly shows the box and our inspection class remotely operated vehicles (ROV) could not lift it due to its weight of about 130 lbs.”

A similar discovery occurred in 1981 when the HMS Edinburgh was discovered in the Barents Sea. It too carried a USSR Lend-lease payment. This wreck, in 800 feet of water, took almost three years to salvage in 1981 (Salvage of the Century) and contained $100M of gold (1981 prices). Richard Wharton, one of the original salvagers, provided SSR with photos and dimensions of the wooden boxes from the HMS Edinburg containing the gold bullion bars. These wooden bullion boxes were the same type shipped within six weeks of the Port Nicholson. According to Brooks, “We used our manipulator arm to scale our box dimensions. They appear close and almost exactly match the boxes salvaged in 1981. Mr. Wharton’s photos are almost identical to the boxes we have seen on our wreck. We nudged and pushed the boxes with maximum thrust from our ROV. We have verified these boxes have unusually high mass as one would expect for bullion. What is different from the Edinburgh boxes and unique to ours is that ours are very well preserved and do not easily come apart. Things are very well preserved. We even flipped the pages in a book and the pages remained intact. That was amazing to see.”

“We have been working and planning the site since 2009. Our current equipment is just not enough to handle the 2-5 knot currents, mostly zero visibility and the excessive ocean conditions at the site. It takes us 10 hours from Boston Harbor to get to the site. And, conditions such as these leave few and very small windows of onsite time each year in which we can safely work on the site. We certainly underestimated the conditions and maybe over estimated our capacity even with the 214 ft. M/S Sea Hunter and a 95 ft. ship M/S Son Worshipper fully equipped with a sub, ROVs, 125 ton crane, claw and sonar gear.

Photos taken from the HMCS Nanaimo at the time of the sinking show the Port Nicholson bow straight up in the air. She went down straight and slammed to the bottom vertically, stern first at about 30 mph and is now lying on her starboard side. This position, along with the numerous metal, wires, pipes, booms, debris as well as 70 years accumulation of fishing net snags makes access extremely difficult from the deck side. “The holds are not upright and we certainly are not simply going down into the holds with a lift and pulling up the cargo. We may have to cut into the hull to gain access and that is complicated and requires a different tool set. The ship carried war stores thus requiring even greater caution and safety procedures.”

“There is nothing more frustrating for each of our crew, as well as our financial supporters, to see, touch and feel the bullion box and not be able to quickly and simply retrieve it. There is nobody on this earth who wants to bring up that box more than me. We’ve been at it a while now.”

While the ship, M/S Sea Hunter is capable of remaining on-site in almost any weather, SSR has exhausted the capability of the ROV and support equipment. SSR is now entertaining private support from special technical and financial organizations. The operation needs to re-capitalize so that SSR can order or retain a heavy duty state of the art work class ROV, fully outfitted with the tool set to complete the salvage and bring a bar on deck. This specialized equipment costs about $2.5M, requires well trained support crews and is capable of lifting heavy loads and has a long build/lease lead time of up to 20 weeks.

“Many marine technology firms are very interested in helping and being part of such an exciting treasure salvage project right in Boston’s back yard. They want to share in this once in life time adventure. And, it has a rich local and national history with a high degree of intrigue.”

“We have spoken with some interesting individuals and some family investment groups who are bored with traditional opportunities. They are certainly tired of the significant swings and losses occurring in the market today. They are most intrigued with the unique sense of history and adventure the Port Nicholson treasure simply from the excitement factor.

“Who wouldn’t want to be a treasure hunter, have a real piece of history (1942 platinum) and be able to say ‘I am a real treasure hunter’. It is every kid’s dream to be a treasure hunter and some adults dream of it too!”

“All we have left to do is get the right equipment to bring up the bars we have seen. 2012 is our year to make this all come to fruition!”

Sub Sea Research LLC (SSR), a Maine company founded in 1994, maintains a fleet of ships and scientific exploration equipment to engage in research, conservation, development and exploration activities around the world aimed at finding, recovering or preserving underwater shipwrecks of special historical and cultural significance.

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