Pioneer Bets On West Texas Shale Oil To Rival Bakken

Two wells drilled by Pioneer Natural Resources have already exceeded expectations. The company has 900,000 acres under lease.

By MARILYN ALVA, INVESTOR’S BUSINESS DAILY Posted 01:41 PM ET

U.S. oil production is enjoying a renaissance, thanks to new technology that has made oil recovery possible in tight shale rock.

The busy Bakken formation in North Dakota and Montana is the largest and best-known oil shale play.

The Eagle Ford in South Texas and the Barnett “combo play” (gas and oil) in North Texas are also fairly famous unconventional plays.

But the Wolfcamp Shale?

“Over the next two or three years, everybody is going to be making a beeline to the Wolfcamp,” said Scott Sheffield, chief executive of Pioneer Natural Resources (PXD).

Spanning numerous counties across West Texas, the Wolfcamp formation is located below the long-plied Spraberry field, which helped make Midland, Texas, oil-central starting in the early 1950s.

Its location in the Midland Basin is within the larger Permian Basin.

Sheffield and other oil experts say the Wolfcamp is probably the thickest of any onshore U.S. oil shale play, with up to 1,000 feet of potential payout across hundreds of thousands of acres.

Biggest And Thickest

“It will be the biggest, and it is already the thickest,” Sheffield said. “So it’s got the most pay zones of any oil shale play in the U.S. I call it the third or fourth coming of the boom in West Texas.”

If Wolfcamp does turn out to be the next big oil shale play, Pioneer is on the ground floor. With 900,000 acres under lease in the Spraberry, it has the largest land position.

Pioneer believes that more than 400,000 of those acres are ripe for horizontal drilling.

Its game plan: drill 10,000 feet down through the Spraberry to the Wolfcamp and then out 7,000 feet horizontally.

For now, it’s targeting 200,000 acres in the southern portion of the Spraberry field.

Pioneer’s two completed wells in the Wolfcamp have already exceeded expectations, each producing 800 to 1,000 barrels of oil a day, and they’re still early in production.

EOG Resources (EOG) started drilling in the Wolfcamp earlier and is now seeing higher output from its 35 or so wells.

But Sheffield says Pioneer will be a bigger operator in the Wolfcamp in the sense that it has 400,000 prospect-worthy acres to EOG’s 100,000.

“We are going to drill 80 wells in 2012 and 2013,” he said.

EOG’s wells in the Wolfcamp are producing 2,000 barrels a day, says Dan Morrison, analyst with Global Hunter Securities.

“Even if Pioneer’s don’t get to 2,000 barrels a day, at 800 barrels a day the play is incredibly economic,” Morrison said.

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Chevron: Oil, gas output from Jack/St Malo could double

13 Mar 2012, 7.06 pm GMT

New York, 13 March (Argus) — Chevron said its efforts to boost recoveries in the Lower Tertiary trend of the US Gulf of Mexico may double the amount of crude and natural gas extracted from its $7.5bn Jack/St Malo development.

The October 2010 decision to go forward with Jack/St Malo was predicated on recovering less than 10pc of the crude and gas in place, or about 500mn barrels of oil equivalent (boe) over the life of the deepwater development. Technological advances may drive recoveries to more than 20pc, or 1bn boe, Chevron North American upstream president Gary Luquette said today.

“We have effectively added a half billion barrels to Jack/St Malo, and we’re looking to apply what we’ve learned here to other Lower Tertiary developments,” Luquette said.

Deepwater projects will be key in Chevron’s plan to boost upstream production by 20pc, to 3.3mn boe/d, by 2017. The company aims to increase its global deepwater output to 470,000 boe/d from 375,000 boe/d. The Jack/St Malo platform, which will have a tieback to at least one other field, will have capacity to handle 170,000 b/d of oil and 42.5mn cubic feet/day of gas.

Lessons learned from early struggles with the Shell-operated Perdido development, which began production in March 2010, will help with other Lower Tertiary projects in the Gulf, Luquette said. Perdido was slower to ramp up than planned, but now is at more than 90,000 boe/d.

Chevron intervened to make design changes to the Hess-operated Tubular Bells project, also in the Lower Tertiary trend, increasing the major’s confidence that the development will be done on budget and on plan, Luquette said.

Jack/St Malo and Tubular Bells are both scheduled to commence production in 2014, as is the Chevron-operated Big Foot project in the Lower Tertiary.

Lower Tertiary oil deposits are beneath a thick salt canopy, making exploration more difficult, and are characterized by high pressure, high temperature and low porosity.

Send comments to feedback@argusmedia.com
tc/ljc 2.5

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Scarce Oil? U.S. Has 60 Times More Than Obama Claims

By JOHN MERLINE, INVESTOR’S BUSINESS DAILY
Posted 03/14/2012 01:03 PM ET

When he was running for the Oval Office four years ago amid $4-a-gallon gasoline prices, then-Sen. Barack Obama dismissed the idea of expanded oil production as a way to relieve the pain at the pump.

“Even if you opened up every square inch of our land and our coasts to drilling,” he said. “America still has only 3% of the world’s oil reserves.” Which meant, he said, that the U.S. couldn’t affect global oil prices.

It’s the same rhetoric President Obama is using now, as gas prices hit $4 again, except now he puts the figure at 2%.

“With only 2% of the world’s oil reserves, we can’t just drill our way to lower gas prices,” he said. “Not when we consume 20% of the world’s oil.”

The claim makes it appear as though the U.S. is an oil-barren nation, perpetually dependent on foreign oil and high prices unless we can cut our own use and develop alternative energy sources like algae.

U.S. Awash In Oil

But the figure Obama uses — proved oil reserves — vastly undercounts how much oil the U.S. actually contains. In fact, far from being oil-poor, the country is awash in vast quantities — enough to meet all the country’s oil needs for hundreds of years.

The U.S. has 22.3 billion barrels of proved reserves, a little less than 2% of the entire world’s proved reserves, according to the Energy Information Administration. But as the EIA explains, proved reserves “are a small subset of recoverable resources,” because they only count oil that companies are currently drilling for in existing fields.

When you look at the whole picture, it turns out that there are vast supplies of oil in the U.S., according to various government reports. Among them:

At least 86 billion barrels of oil in the Outer Continental Shelf yet to be discovered, according to the government’s Bureau of Ocean Energy Management.

About 24 billion barrels in shale deposits in the lower 48 states, according to EIA.

Up to 2 billion barrels of oil in shale deposits in Alaska’s North Slope, says the U.S. Geological Survey.

Up to 12 billion barrels in ANWR, according to the USGS.

As much as 19 billion barrels in the Utah tar sands, according to the Bureau of Land Management.

Then, there’s the massive Green River Formation in Wyoming, which according to the USGS contains a stunning 1.4 trillion barrels of oil shale — a type of oil released from sedimentary rock after it’s heated.

A separate Rand Corp. study found that about 800 billion barrels of oil shale in Wyoming and neighboring states is “technically recoverable,” which means it could be extracted using existing technology. That’s more than triple the known reserves in Saudi Arabia.

All told, the U.S. has access to 400 billion barrels of crude that could be recovered using existing drilling technologies, according to a 2006 Energy Department report.

When you include oil shale, the U.S. has 1.4 trillion barrels of technically recoverable oil, according to the Institute for Energy Research, enough to meet all U.S. oil needs for about the next 200 years, without any imports.

And even this number could be low, since such estimates tend to go up over time.

Back in 1995, for example, the USGS figured there were 151 million barrels of oil in North Dakota’s Bakken formation. In 2008, it upped that estimate to 3 billion barrels to 4.3 billion barrels — a 25-fold increase. Now, some oil analysts say there could be as much as 20 billion barrels there.

And USGS in 2002 quadrupled its oil estimate in Alaska’s National Petroleum Reserve.

To be sure, energy companies couldn’t profitably recover all this oil — even at today’s prices — and what they could wouldn’t make it to market for years. But from the industry’s perspective, the real problem with domestic oil is that the government has roped off most of these supplies.

The Alaska National Interest Lands Conservation Act of 1980, for example, put a huge swatch of land off-limits to drilling. And in 1982, Congress blocked access to most of the oil in the Outer Continental Shelf. Much of the oil on federal lands is also off-limits.

Obama and others say the industry’s claim about lack of access isn’t true, since they aren’t even using many of the offshore leases they already have. The industry counters that this is misleading, since a company needs the lease before it can determine if any oil exists there — a potentially time-consuming process.

In any case, any attempt to get at these vast new oil supplies is sure to face fierce opposition from environmental groups worried about oil production’s direct impact on the environment, as well as global warming worries.

But given today’s prices, most of the public is willing to expand drilling offshore, in ANWR, and in shale oil reserves, according to the latest IBD/TIPP poll.

“This is not a geological problem — it’s a political problem,” said Dan Kish, senior vice president for policy at the Institute for Energy Research. “We’ve embargoed our own supplies.”

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EIA: U.S. Surpassed Russia in Dry Gas Production in 2009 and 2010

EIA estimates of annual dry natural gas production indicate that the United States surpassed Russia as the world’s leading producer of dry natural gas beginning in 2009 when Russian production dropped in conjunction with the economic downturn and reduced demand.

Both countries produced more than 20 trillion cubic feet (Tcf) of dry natural gas in 2010. Definitive comparisons of natural gas production trends in the two countries are imprecise due to differences in terminology and reporting methodologies.

Dry natural gas production in the United States rose 18% between 2005 and 2010—mainly due to growth in shale gas production. Increased use of horizontal drilling in conjunction with hydraulic fracturing spurred natural gas supply gains.

Other factors contributed to gains in natural gas production: improved site planning and field optimization, multi-well drilling from a single pad, rising associated natural gas production from oil plays, and improved drill-bit technology. According to Lippman Consulting, annual shale natural gas production in key shale plays grew from 1.6 Tcf to 7.2 Tcf between 2007 and 2011.

Since 1996, Russia’s dry natural gas production record has been mixed. It was relatively unchanged between 1996 and 2001, grew to almost 22 Tcf in 2006, and then remained relatively stable before declining in 2009.

Two factors leading to this decline were a slow-down in domestic natural gas consumption in Russia and Russian suppliers’ cutbacks to match reduced gas needs in Europe. Russian dry natural gas production rebounded somewhat in 2010, although the best available data indicate it remained about 2% lower than U.S. production of natural gas that year.

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Aker Solutions to Design World’s Largest Spar Platform for Statoil

Aker Solutions has been awarded a FEED (front-end engineering and design) contract from Statoil to design the world’s largest Spar platform for the Aasta Hansteen field development in the Norwegian Sea.

With a total hull length of 193 meters and a draught of 170 meters, the Aasta Hansteen (formerly named Luva) Spar platform will be the largest of its kind. A Spar platform is a cylinder shaped floating offshore installation. Aasta Hansteen will be the first Spar platform on the Norwegian continental shelf (NCS), and also the world’s first Spar platform with condensate storage capacity – a so called Belly-Spar.

The Belly-Spar concept is an exclusive Aker Solutions design. The ‘belly’ refers to the increased diameter on part of the circular shaped hull, where the condensate storage tanks are located. This gives the Aker Solutions’ Belly-Spar its characteristic shape.

Henning Østvig, head of Front-End & Technology in Aker Solutions says: “The Aasta Hansteen Spar will be the first production platform on the NCS with steel catenary risers. With a water depth of 1300 meters, this is probably the only riser technology that can meet the challenges on the Aasta Hansteen field”.

The steel catenary risers are made of self-supporting steel pipes in a bow shape between the platform and the seabed. The shape helps the risers compensate for the motions on the floating facility.

Innovation

“The Belly-Spar concept is a result of the innovative spirit and culture among our engineers, who have come up with the right solutions for the challenging conditions on the Aasta Hansteen field,” says Valborg Lundegaard, head of Engineering business area in Aker Solutions.

The mooring system for Aasta Hansteen Spar platform consists of a set of polyester lines. “There are currently no installations on the NCS with polyester mooring. Aasta Hansteen may be the first, and it will definitely be operating in the deepest water,” says Henning Østvig.

The FEED study will be completed in the third quarter of 2012. The contract value is undisclosed.

Aasta Hansteen

The field was discovered in 1997 and lies 300km offshore in the Vøring area. The licence partners are Statoil (75 per cent), ExxonMobil (15 per cent) and ConocoPhillips (10 per cent).

Aker Solutions’ contract party is Aker Engineering & Technology AS.

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Germany: Siemens to Convert Wind Energy into Gas

Siemens AG (SIE) has revealed its intention to introduce technology in 2015 that will enable conversion of wind-turbine electricity into gas, providing wind farms with an alternative revenue stream when the grid is fully charged.

Michael Weinhold, Chief Technology Officer of Siemens’ Energy Businesses, says the electrolyser, a soccer-field sized plant that converts power into storable hydrogen, is in the testing phase, reports Bloomberg. It offers a promising capacity necessary for overcoming the challenge of how to harness fluctuating electricity output from wind farms, especially at night when demand is the lowest.

Munich-based Siemens allocates 1 billion euros ($1.3 billion) on annual bases to devising new technology for the energy industry. Wind farms have faced hardship in commercial terms because power cannot be stored on a large scale, however the converted hydrogen can be stored by feeding it into the gas grid.

“The main problem today is the mismatch of renewable power generation and demand,” Weinhold said in an interview. “If we can offer solutions to solve that, we have a business case.”

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Nassim Taleb: The Next Black Swan

Posted on March 13, 2012

In case you missed Nassim Taleb’s interview on CNBC this morning.

He endorsed Ron Paul and is a bit cryptic in his four points, one of which,  that a sovereign debt crisis is coming to the United States.   Rather than doing the necessary “root canal” to deal with the economy’s structural problems,  the government is giving Novocain in the form of large budget deficits,

You have to start with government budget that is in control.  You start with that.   It’s unconditional.  You don’t gamble with future generations’ money and you don’t gamble with hyperinflation.  You want the government first, like we’re doing with the Greeks. We’re doing it to the Greeks.  We should do it to ourselves.  You start with that.  That’s 90% of the problem.

Click here for full interview.

or (copy and paste) link below.

http://plus.cnbc.com/rssvideosearch/action/player/id/3000078341/code/cnbcplayershare

Nassim Taleb: The Next Black Swan

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Definition of ‘Black Swan’
An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult to predict. This term was popularized by Nassim Nicholas Taleb, a finance professor and former Wall Street trader.

Baker Hughes Bringing High-End Well Stimulation Vessel to North Sea

Baker Hughes Incorporated, announced that its subsidiary has chartered a new state-of-the-art pressure pumping vessel that will provide offshore stimulation services to Maersk Oil in the North Sea. Upon completion, scheduled for late 2013, the Blue Orca(TM) will become the eighth vessel in the Baker Hughes fleet.

“We are pleased to be working with Maersk Oil as we expand our current fleet into the North Sea,” said Art Soucy, Baker Hughes’ President of Global Products & Services. “Our full cadre of world-class stimulation vessels offers customers the capacity, performance and redundancy for round-the-clock operations that are needed in today’s offshore plays. We are committed to operating safely and efficiently while continuing to build on our pressure pumping market leadership and the challenging offshore environments where operators need us to be.”

The Blue Orca will be rated to 15,000 psi and will offer among the largest fluid and proppant carrying capacities in the world. It will provide 15,000 hydraulic horsepower pumping capacity and the ability to pump at rates well in excess of 60 bpm. Engineering work on the marine and stimulation systems has already begun.

“Stimulation of long horizontal wells is one of Maersk Oil’s key technologies and vital for economic development of our tight chalk reservoirs,” said Mary Van Domelen, Maersk Oil’s Stimulation Team Leader. “We appreciate the opportunity to work with Baker Hughes to deliver a new state-of-the-art stimulation vessel and look forward to welcoming the Blue Orca to the North Sea.”

The Blue Orca will join Baker Hughes’ other stimulation vessels – including the company’s newest additions to the Gulf of Mexico: Blue Tarpon and the Blue Dolphin. The vessels support offshore completion operations and will be equipped to support high-rate and high-volume multi-zone fracturing operations.

“Our pressure pumping vessels offer enhanced safety systems with redundant back-up blending and pumping capabilities,” said Lindsay Link, Baker Hughes’ President of Pressure Pumping. “When it comes to performing multi-zone, high-rate, high-pressure completions, our vessels are reliable, efficient and minimize delays in high-cost offshore environments, where time is of the essence for the operators on behalf of whom we are working.”

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