Daily Archives: March 1, 2012
Chevron pulling plug on oil shale research on Colorado’s Western Slope
Chevron is giving up its experimental oil shale lease in western Colorado.
The company is one of only three that holds a federal lease to research oil shale energy development on the Western Slope, but officials say they would rather pursue other projects.
“Chevron has notified the Bureau of Land Management (BLM) and the Department of Reclamation, Mining and Safety (DRMS) that it intends to divest its oil shale research, development and demonstration lease in the Piceance Basin in Colorado,” the company announced Tuesday. “While our research was productive, this change assures that critical resources — people and capital — will be available to the company for other priorities and projects in North America and around the globe. We will work with the BLM and DRMS to determine the best path forward, timing and other issues.” Despite nearly 100 years of failed attempts to make oil shale commercially viable, House Speaker John Boehner, R-Ohio, has said the energy source will help fund his $260 billion transit package and U.S. Rep. Doug Lamborn, R-Colorado, is pushing the Pioneers Act, which would revive a 2008 plan put together during the Bush administration to open 2 million acres of public lands in Utah, Wyoming and western Colorado to oil shale drilling. The House passed Lamborn’s bill this month.
The Congressional Budget Office issued a report, however, which projected that Boehner’s bill would, over 10 years, leave the highway trust fund $78 billion in the red, and the Interior Department is looking at slashing the amount of land available for oil shale research to 462,000 acres.
“Chevron’s research hardly got started and they quickly concluded that they were throwing money down a rabbit hole. It’s indicative of the fact that oil and gas companies see much more profitable, and realistic, opportunities elsewhere,” said Colorado energy expert Randy Udall.
Squeezing energy out of oil shale requires immense quantities of water. Industrial-scale oil shale development could require as much as 150 percent of the amount of water the Denver Metro Area consumes annually, according to Bureau of Land Management estimates.
As early as 1921, oil companies have been trying to tap northwest Colorado for oil shale. The expense required to develop the energy source, however, has outweighed potential profits. About a dozen different projects have come and gone during that time — none remembered more than “Black Sunday” when ExxonMobil pulled the plug on a huge oil shale operation in western Colorado in 1982 that left the region in economic shambles.
Chevron and its subsidiaries started amassing acreage in Colorado for oil shale research back in the 1930s.
“Oil companies have been trying to pull the sword from the stone for nearly a century. Oil shale has no King Arthur,” said Matt Garrington of the Checks & Balances Project. “Chevron’s decision to pull out of oil shale is yet another reason why [U.S. Rep. Scott] Tipton [R-Colorado] and Lamborn should quit saying that melting rocks into oil will somehow fund critical repairs to our roads and bridges.”
Royal Dutch Shell and AMSO are the other two companies that hold oil shale leases in Colorado.
Chevron pulling plug on oil shale research on Colorado’s Western Slope.
Related articles
- Chevron gives up Colo. shale lease as Obama moves to shrink shale activity (junkscience.com)
- USA: Chevron to Splash USD 32.7 Billion in 2012 (mb50.wordpress.com)
UAE: FPSO BW Athena Leaves DryDocks World Dubai
Ithaca Energy Inc. revealed that the ‘BW Athena’ Floating Production, Storage and Offloading Vessel (“FPSO”) has departed Dubai Dry Docks World to be met by a dedicated guard vessel.
All FPSO production critical equipment was run and fully tested prior to vessel departure thus minimizing the period between arrival in the field and first production of oil.
Upon arrival in the field the BW Athena will be hooked up to the pre-installed production system. Hook-up will mark completion of the development phase and the Company anticipates that the production phase will commence in early Q2 2012. Production is anticipated to reach approximately 22,000 (1) barrels of oil per day (“bopd”), approx. 5,000 bopd (net to Ithaca).
Shipbuilding Tribune – UAE: FPSO BW Athena Leaves DryDocks World Dubai.
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- Recap: Worldwide Field Development Jan 6 – Jan 12, 2012 (mb50.wordpress.com)
- BG Group Secures $1.8B for Brazilian FPSO Program (mb50.wordpress.com)
- Israel: DSME Signs Tamar Deal (mb50.wordpress.com)
- Petrobras: $10 Billion in Offshore Production Facilities Aimed for Santos Basin [REPORT] (gcaptain.com)
Australia: Tap Taps into Tallaganda
Tap Oil Limited (Tap) advises that at 0900 hours (AWST) today the Atwood Eagle semi-submersible drilling rig commenced drilling the Tallaganda-1 exploration well in the WA-351-P permit.
The Tallaganda-1 prospect straddles both the WA-351-P and WA-335-P permits in the Carnarvon Basin, offshore Western Australia. The well will target 0.8 to 1.3 Tcf (mean to P10) of gas within WA-351-P (Tap estimate).
The prospect will test the gas potential of sandstones in the prolific Triassic age, Mungaroo Formation, in a well defined horst block as imaged by high quality modern 3D seismic data. This is the primary play type of the North West Shelf.
The well will be drilled as a vertical well in a water depth of 1,141 m and is expected to take 37 days (trouble free) to drill with a projected total depth of 4,250 m. Weekly updates will be provided on Wednesdays during drilling operations.
Tap’s cost for the well will be carried up to a cap of $10 million following Tap’s farmout of 25% of its participating interest in the permit to BHP Billiton Petroleum (North West Shelf) Pty Ltd in 2011.
Tap’s Managing Director/CEO, Mr Troy Hayden, said:
“We are pleased to have commenced the Tallaganda-1 well which has the potential to deliver a resource multiple times larger than Tap’s current 2P reserves. Success at Tallaganda-1 will also give greater certainty as to the prospectivity of the Triassic potential on the permit.”
Background
The Operator completed a detailed assessment of the plays, prospects and leads in the permit in 2010 including the 3D seismic acquired in 2008. Further leads and prospects have been defined in the Triassic Mungaroo Formation which Tap has assessed as a 2-3 Tcf combined speculative resource on block.
Additional leads have been identified in WA-351-P in the Jurassic and Early Cretaceous, both of which are productive elsewhere in the Carnarvon Basin. Current indications are that this shallower potential is larger, but higher risk, than the Triassic in this permit. Further work will be done on these objectives.
WA-351-P Joint Venture Participants
BHP Billiton Petroleum Pty Ltd (Operator)
BHP Billiton Petroleum (Northwest Shelf) Pty Ltd 55%
Apache Northwest Pty Ltd 25%
Tap (Shelfal) Pty Ltd 20%
Australia: Tap Taps into Tallaganda| Offshore Energy Today.
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BG Group Secures $1.8B for Brazilian FPSO Program
BG Group announced Thursday that it has received initial approval from the Brazilian Development Bank (BNDES) for up to $1.8 billion of long-term finance to fund part of the company’s interests in the pre-salt Santos Basin, offshore Brazil.
Subject to further approvals and the completion of a final agreement, the funding facility will be allocated to BG Group’s share of local procurement and construction costs for the eight floating production, storage and offload (FPSO) facilities that will be owned by BG Group and its Santos Basin partners.
The 150,000 barrels of oil per day capacity vessels are part of the wider first phase, fast-track development program in the Santos Basin that will deliver 2.3 million barrels of oil equivalent per day of capacity by 2017.
By the second quarter of 2012, BG Group expects to agree terms with BNDES on finance with a 14-year term.
“We are delighted to have received this initial approval from BNDES for long-term financing of up to $1.8 billion which will add to the diverse funding options already in place as we progress our global growth programme,” said BG Group Chief Financial Officer Fabio Barbosa.
“In particular, the funds will help underpin BG Group’s investments for the successful development of our world-class pre-salt Santos Basin interests. Finally, it also represents the support of one of the key players in the Brazilian government to our partnership with Petrobras and the country.”
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Japan refiners want force majeure to cover Iran oil shipping ban
Tokyo (Platts)–1Mar2012/501 am EST/1001 GMT
Japanese refiners have stepped up efforts to get an additional force majeure clause included in Iranian crude oil contracts that could be invoked if tankers cannot call on Iran‘s ports to lift barrels because of the loss of insurance cover, sources close to the matter told Platts Thursday.
The latest move comes as Japanese refiners are trying to conclude term contracts with the National Iranian Oil Company starting in April.
Negotiations have already been delayed and nominations for April supplies are now due to be submitted by March 5, sources said.
Japanese buyers, which normally conclude their Iranian crude contracts in February, have not been able to complete their term contracts as they wait for what the sources said are guidelines from the government on the outcome of talks between the government and the US.
Japan is seeking an exemption from US sanctions that would exclude any company or country dealing with Iran’s central bank from the US financial system by agreeing to reduce its imports of Iranian crude oil.
The EU sanctions not only forbid the import and transportation of Iranian oil, but also ban insurance cover for vessels carrying Iranian cargoes. And because of pooling arrangements for reinsurance between the various Protection and Indemnity clubs around the world, the sanctions will have an impact on non-EU shipping.
Reports so far about the talks under way with Washington suggest that Tokyo may agree to cut its oil imports from Iran by 10-20% from a 2011 level of 310,000 b/d to ensure that Japanese banks are not excluded from the US financial system. Iran was the fourth-largest supplier of crude to Japan last year.
Japanese refiners, the main buyers of Iranian oil in Japan, are now also concerned with the possibility that they may be unable to lift Iranian crude oil if shipowners cannot get insurance cover for voyages to Iran when EU sanctions come into effect on July 1, the sources said.
Japanese shipping sources said the EU sanctions on insurance provision for tankers carrying Iranian crude oil have become a matter of concern for both oil companies and shipowners.
A chartering source at a Japanese oil company said that “every oil company” in Japan that wants to renew its term contract with Iran in April “wanted a force majeure clause” inserted to cover the shipping ban.
“They have sent this to NIOC but there has been no reply [so far],” the source said, referring to the National Iranian Oil Company.
The chartering source said the Japanese companies want to insert a clause stating that “if shipowners cannot call” on Iranian ports and “the cargo cannot be lifted,” then force majeure can be invoked.
The sources said that at least one Japanese buyer of Iranian oil may not submit a nomination for April supplies because of uncertainty about the impact of the EU insurance ban and the negotiations with Washington.
–Takeo Kumagai, takeo_kumagai@platts.com –Pradeep Rajan, pradeep_rajan@platts.comRelated articles
- Iran stops oil sales to British, French companies (mb50.wordpress.com)
- EU firms renew Iran oil deals to win sanction reprieve (mb50.wordpress.com)
- Iranian Sanctions to Limit Japanese Insurance Club’s Coverage on Oil Tankers (gcaptain.com)
- India ships will lose insurance due to Iran sanctions, may look to China – Reuters (reuters.com)
- Sanctions on Iran disrupting global oil supplies – US Department of Energy (rt.com)
- Iran ‘to accept gold for its oil’ (bbc.co.uk)
Cuba drills for oil, but U.S. unprepared for spill
By William Booth, Published: March 1
As energy companies from Spain, Russia and Malaysia line up to drill for oil in Cuban waters 60 miles from the Florida Keys, U.S. agencies are struggling to cobble together emergency plans to protect fragile reefs, sandy beaches and a multibillion-dollar tourism industry in the event of a spill.
Drawing up contingency plans to confront a possible spill is much more difficult because of the economic embargo against Cuba. U.S. law bars most American companies — including oil services and spill containment contractors — from conducting business with the communist island. The embargo, now entering its 50th year, also limits direct government-to-government talks.
“We need to figure out what we can do to inflict maximum pain, maximum punishment, to bleed Repsol of whatever resources they may have if there’s a potential for a spill that would affect the U.S. coast,” Rep. David Rivera (R-Fla.) told in January a congressional subcommittee that oversees the U.S. Coast Guard.
An unusual coalition of U.S. environmentalists and oil industry executives have joined forces to push the White House to treat the threat of a spill seriously, while tamping down the anti-Castro rhetoric.
“There is no point in opposing drilling in Cuba. They are drilling. And so now we should be working together to prevent disaster,” said Daniel Whittle, Cuba program director of the Environmental Defense Fund, who has been brokering meetings between Cuban and U.S. officials.
Environmentalists applauded the announcement last week of an agreement between the United States and Mexico to allow for joint inspection of rigs operating in the Gulf of Mexico and the establishment of a common set of safety protocols between the two countries.
Nothing approaching this exists with the Cubans.
Because of the embargo, the talks between Cubans, Repsol and the Coast Guard are taking place in the Bahamas and Curacao — not Havana or Miami — under the auspices of the U.N. International Maritime Organization, paid for by charitable donations from environmental groups and oil industry associations.
A single Florida company is licensed to deliver oil dispersants to Havana. But there are no U.S. aircraft with contracts or permission to fly over Cuban waters. The current plan is to retrofit and deploy aging crop dusters from Cuban farms to dump the dispersants.
Obstacles to a cleanup
Repsol operates leases in U.S. waters in the Gulf of Mexico and has a staff of 300 based in Houston. But because of the embargo, none of the Houston staff is permitted to have anything to do with the Repsol operation in Cuba. Any assistance would have to come from Madrid.
Because of the embargo, and to protect Repsol from economic sanctions, no more than 10 percent of the components on the Scarabeo 9 drilling rig may be manufactured in the United States.
One of those components is the blowout preventer, a vital piece of safety equipment manufactured by National Oilwell Varco in Houston — whose employees cannot service the equipment while it is in Cuban waters.
If a blowout occurred, Repsol would have to await delivery of a capping stack, which would have to travel from Scotland to Cuba and then out to the rig. Experts predict it would take a week at minimum.
Cleanup crews arriving from the United States would be allowed to skim oil from the water and collect surplus oil gushing from the rig, but they’d have to take it someplace. The question is where? The U.S. tankers can’t enter Cuban territorial waters, and if they do, they are prohibited from returning to the United States for six months. The recovered oil would belong to Cuba, and so it can’t travel to the United States.
Modeling of ocean currents by the USGS suggests a spill at the Repsol exploratory well site probably would not affect the Florida Keys but would be swept north by the powerful flow of the Gulf Stream and then begin to deposit oil on beaches from Miami to North Carolina.
“If anything went really wrong out there, I believe there would be a quick political response,” said William K. Reilly, co-chairman of the national commission on the Deepwater spill and head of the Environmental Protection Agency under President George H.W. Bush.
But a lot can happen in a couple of days, Reilly said. “It’s time to face reality. It is, completely, in the interest of the United States that we get this right.”
“This is a disaster waiting to happen, and the Obama administration has abdicated its role in protecting our environment and national security by allowing this plan to move forward,” said Rep. Ileana Ros-Lehtinen (R-Fla.), chairman of the House Foreign Affairs Committee.
Ros-Lehtinen and her colleagues sponsored legislation to deny visas to anyone who helps the Cubans advance their oil drilling plans. They have also sought to punish Repsol.
“We need to figure out what we can do to inflict maximum pain, maximum punishment, to bleed Repsol of whatever resources they may have if there’s a potential for a spill that would affect the U.S. coast,” Rep. David Rivera (R-Fla.) told in January a congressional subcommittee that oversees the U.S. Coast Guard.
An unusual coalition of U.S. environmentalists and oil industry executives have joined forces to push the White House to treat the threat of a spill seriously, while tamping down the anti-Castro rhetoric.
“There is no point in opposing drilling in Cuba. They are drilling. And so now we should be working together to prevent disaster,” said Daniel Whittle, Cuba program director of the Environmental Defense Fund, who has been brokering meetings between Cuban and U.S. officials.
Environmentalists applauded the announcement last week of an agreement between the United States and Mexico to allow for joint inspection of rigs operating in the Gulf of Mexico and the establishment of a common set of safety protocols between the two countries.
Nothing approaching this exists with the Cubans.
Because of the embargo, the talks between Cubans, Repsol and the Coast Guard are taking place in the Bahamas and Curacao — not Havana or Miami — under the auspices of the U.N. International Maritime Organization, paid for by charitable donations from environmental groups and oil industry associations.
A single Florida company is licensed to deliver oil dispersants to Havana. But there are no U.S. aircraft with contracts or permission to fly over Cuban waters. The current plan is to retrofit and deploy aging crop dusters from Cuban farms to dump the dispersants.
Obstacles to a cleanup
Repsol operates leases in U.S. waters in the Gulf of Mexico and has a staff of 300 based in Houston. But because of the embargo, none of the Houston staff is permitted to have anything to do with the Repsol operation in Cuba. Any assistance would have to come from Madrid.
Because of the embargo, and to protect Repsol from economic sanctions, no more than 10 percent of the components on the Scarabeo 9 drilling rig may be manufactured in the United States.
One of those components is the blowout preventer, a vital piece of safety equipment manufactured by National Oilwell Varco in Houston — whose employees cannot service the equipment while it is in Cuban waters.
If a blowout occurred, Repsol would have to await delivery of a capping stack, which would have to travel from Scotland to Cuba and then out to the rig. Experts predict it would take a week at minimum.
Cleanup crews arriving from the United States would be allowed to skim oil from the water and collect surplus oil gushing from the rig, but they’d have to take it someplace. The question is where? The U.S. tankers can’t enter Cuban territorial waters, and if they do, they are prohibited from returning to the United States for six months. The recovered oil would belong to Cuba, and so it can’t travel to the United States.
Modeling of ocean currents by the USGS suggests a spill at the Repsol exploratory well site probably would not affect the Florida Keys but would be swept north by the powerful flow of the Gulf Stream and then begin to deposit oil on beaches from Miami to North Carolina.
“If anything went really wrong out there, I believe there would be a quick political response,” said William K. Reilly, co-chairman of the national commission on the Deepwater spill and head of the Environmental Protection Agency under President George H.W. Bush.
But a lot can happen in a couple of days, Reilly said. “It’s time to face reality. It is, completely, in the interest of the United States that we get this right.”
Related articles
- Rig Hired by Spain’s Repsol Arrives off Cuba (mb50.wordpress.com)
- What if… Is The US Prepared For Cuban Oil Rigs? (mb50.wordpress.com)