Daily Archives: February 8, 2012

Repsol YPF ups Argentine shale potential

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Posted on February 8, 2012 at 6:08 pm by Associated Press

SANTIAGO, ChileRepsol YPF on Wednesday raised the estimate for potentially recoverable oil and gas in its part of Argentina’s “Vaca Muerta” (Dead Cow) basin to the equivalent of nearly 23 billion barrels, indicating a total shale deposit big enough to enable Argentina to challenge the United States in non-conventional petroleum production.

But it cautioned that exploiting the formation would need a huge expansion in Argentina’s oil and gas industry, requiring thousands of wells, hundreds of drilling rigs and a national push to attract the necessary talent, equipment and investment at a time when other countries are competing to increase energy resources.

The company’s shares traded on the Buenos Aires stock exchange jumped 8 percent after the announcement.

Repsol YPF SA, a majority-Spanish-owned company, issued the statement from Madrid shortly after its president, Antonio Brufau, returned from a series of closed-door meetings in Argentina with government officials who have been pressuring the company to increase exploration and development.

The pro-government newspaper Pagina12 in Buenos Aires said Repsol YPF has been paying out more in dividends than it has made in profits in Argentina, and suggested President Cristina Fernandez might consider nationalizing the company’s Argentine operations so the money could instead be used to increase Argentina’s energy capacity.

Juliette Kerr, a Latin America energy analyst at IHS in London, discounted the possibility of nationalization, saying Argentina can’t afford a buyout. The idea was never openly endorsed by Fernandez or her Cabinet ministers.

Company spokesmen and government officials declined to comment on the talks this week.
But Wednesday’s statement, made as a filing to Spain’s securities regulator, provided a stark analysis of Repsol YPF’s commitment to Argentina and how much would have to change for the country to realize its energy dreams.

“If exploration proves successful in the Vaca Muerta formation and immediate intensive development began in the area, in 10 years its capacity could double Argentina’s existing gas and oil production. This would require a vast investing effort that would reach $25 billion per year in order to develop all the existing prospective resources,” it said.

Repsol YPF said in November that it had discovered 927 million barrels of recoverable oil and natural gas in the shale deposit. But even 23 billion barrels ranks below Brazil’s recent deep-sea oil discoveries, which experts estimated at up to 55 billion barrels, or the 296 billion barrels of proven crude reserves that Venezuela claims.

Argentina currently has only 80 drilling rigs and would need at least 100 more, along with upgrades in all sectors of its oil and gas industry, to capitalize on the potential of the deposit in western Neuquen province, the company said.

Repsol YPF currently is the leader in exploring in this area, having invested $300 million in exploration, mapping and initial development, but has claims on less than half of the formation, which stretches over 7.4 million acres. Many other companies would need to make substantial investments for the area to achieve its potential, it said.

So far, only a tiny fraction of the Vaca Muerta foundation has been developed, producing 700,000 barrels as of December, and the statement suggested that Brufau didn’t give in to the pressure for huge new investments right away.

“The company aims to drill 20 wells in 2012, solely and jointly with several partners, to continue investigating prospective resources,” it said.

The statement suggested international investors may be holding back until they have confidence that Argentina will guarantee government policies and labor unrest won’t get in the way of eventual profits. Instead, Argentina has been withdrawing energy exploration subsidies, dealing with a punishing oil workers strike and making it more difficult for multinational companies to move their gains out of the country.

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Middle East Crumbles Around Obama’s Foreign Policy

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Mike Brownfield

Thousands are dead in Syria, with more blood spilled each day. Iran is within arm’s reach of a nuclear weapon, threatening Israel’s very existence. And in Egypt, 19 Americans are banned from leaving the country, making them veritable hostages in an unfriendly land. All indications are that the Middle East is crumbling, and President Barack Obama’s foreign policy is collapsing right along with it.

First look toward Homs, Syria — ground zero in the 11-month-old uprising against the brutal government of Bashar al-Assad, which is unleashing death upon its people minute by minute and hour by hour. The United Nations estimates that Assad’s regime has killed more than 5,000 anti-government protesters in the last 11 months, with 200 killed on Friday night alone. The Arab League has stationed observers in country, whose mission was to oversee compliance with a peace plan. That failed.

The Obama Administration rushed to the United Nations Security Council and attempted to pass a resolution calling for Assad to step aside. Predictably, China and Russia laid down a veto. On Monday, the United States finally closed the doors to its embassy in Damascus and withdrew the diplomatic staff over continuing security concerns. Meanwhile, intelligence experts are examining the risk of terrorists gaining control of Syria’s weapons stockpiles should the Assad regime fall.

To the east in Iran, the regime’s full-steam-ahead pursuit of nuclear weapons is reaching a crescendo, with Defense Secretary Leon Panetta recently remarking that the country could build a bomb within one year and have the means for delivering it one or two years later.

Finally, in Egypt, officials there published a list of 43 people, including 19 Americans, accused of interfering in Egypt’s internal politics. They are not allowed to leave the country and could soon be brought to trial on claims that they illegally funded political groups in Egypt’s parliamentary elections. Heritage’s James Phillips explains that “they have become hostages in a much larger struggle: the struggle for freedom in Egypt against an unholy alliance between Egypt’s transitional military government and the Islamist political parties who will soon assume power.”

President Obama and members of his Cabinet tried to reach Egyptian leaders on the matter, but in the words of Lorne Craner, head of the pro-democracy organization IRI, “things are getting worse . . . We are all scratching our heads over here. I did two tours at State and one at the [National Security Council]. If the president called someone, something gets worked out.” But as was the case under President Jimmy Carter, the White House appears helpless while Americans are held captive.

None of these crises occurs in a vacuum — except for the vacuum of a cogent U.S. strategy for dealing with these ever-worsening conditions. Since President Obama took office, he has pursued a diplomatic strategy of charm and restraint: attempting to broker peace between Israel and Palestine, engaging with Syria and Iran, and withdrawing from Iraq. Now we are seeing the results.

The international rogue that is Iran continues to rise, along with its threat to the world. Thousands are dead in Syria under a brutal dictator while the international community is serving up effete condemnations. America’s ally Israel appears ready to take matters into its own hands in order to ensure its survival, while prospects for peace with Palestine remain dim. U.S. citizens are trapped in Egypt as anti-Western Islamists seek to consolidate their power. And Iraq’s once-peaceful prospects have been marred by one terrorist attack after another after America’s military forces departed.  Obama has failed at every turn to safeguard U.S. interests in the region or take effective proactive initiatives to deal with threat of rising extremism and spiraling violence that could lead to regional conflict.

There are actions the United States can and should take. Phillips explains that in Syria,  “the best assistance that the United States can give to ease the suffering of Syrians is to help speed the fall of the Assad regime.” And it can do it by working with European allies, Turkey, and Arab states to escalate sanctions, provide humanitarian relief to refugees, and provide diplomatic and economic support for the Syrian opposition — while holding back from military intervention.

To address Israel and Iran, Phillips and James Carafano advise that the United States must have a clear and unambiguous policy that it will protect itself and its interests.

As for Egypt, Phillips writes that America should “freeze U.S. foreign aid to Cairo and give Egypt’s new leaders an ultimatum: free the American hostages or permanently lose U.S. foreign aid and any American help in refinancing Egypt’s burdensome national debt.”

More broadly, President Obama must fundamentally change course toward the Middle East. His policy of engagement has not worked, and the world is seeing the results. The Middle East is crumbling, and an ineffectual and inert Obama Administration is leading from behind with a foreign policy that has entirely failed to cope with the rapidly devolving conditions along the Mediterranean’s southeastern shores and beyond, with consequences reaching around the world.

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USA: Sierra Club Opposes Cove Point LNG Export Plans

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The Sierra Club filed Monday the first formal objection with the U.S. Department of Energy against the export of domestic gas produced from fracking.

This is the third LNG export facility the organization has opposed.

Facilities in Coos Bay, OR, Sabine Pass, LA and Cove Point, MD are the first three challenged by the Sierra Club.

The filing challenges the export of Marcellus shale gas and others from Cove Point, MD facility, citing that exports would raise gas and electricity prices nationally and expand natural gas fracking.

The filing also called for a full Environmental Impact Statement on the effects of increased Marcellus fracking that would be brought on by this export proposal.

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Atwood Beacon to Drill Offshore Israel

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Atwood Oceanics, an international offshore drilling contractor engaged in the drilling and completion of exploratory and developmental oil and gas wells, has been awarded a drilling services contract by Shemen Oil and Gas Resources Ltd., an Israel-based oil and gas company, for the Atwood Beacon independent leg cantilever Jack up rig.

The day rate for work offshore Israel will be $151,000, with contract commencement expected in September 2012 in direct continuation of the current contract. The costs for the mobilization will be covered by provisions in the current rig sharing group contract. The award has a firm duration of 180 days.

With the award of this contract, the firm contractual commitments for the Atwood Beacon are expected to extend through February 2013.

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