Monthly Archives: June 2012
Republican Freshmen Protect Big Government
The Community Development Block Grant program is a perfect example of the blurring of responsibility between the federal government and the states. The program’s roots go back to the Great Society and the wishful belief that the problems of urban Americans could be solved with handouts from Washington. Instead, the program “has degenerated into a federal slush fund for pet projects of local politicians and politically connected businesses.”
That quote comes from Rep. Tom McClintock (R-CA) who introduced an amendment this week to terminate CDBGs. As McClintock explained to his House colleagues, it is not the federal government’s responsibility to fund purely parochial activities:
Even in the best of circumstances, these are all projects that exclusively benefit local communities or private interests and ought to be paid for exclusively by those local communities or private interests. They are of such questionable merit that no city council is willing to face its constituents and say, this is how we’ve spent your local taxes. But they are more than happy to spend somebody else’s federal taxes.
Unfortunately, McClintock’s words fell upon deaf ears as his amendment was voted down 80 to 342. Not a single Democrat supported the amendment. But it was the 156 Republicans who voted against the amendment that doomed it. Among those Republicans voting “no” was House Budget Committee chairman Paul Ryan (R-WI). Worse, only 33 percent of the GOP “Tea Party Freshmen” voted to terminate a program that is completely at odds with the principles of limited government.
As I noted back in May, many of the GOP freshmen have switched from tea to Beltway Kool-Aid. Take, for example, tea party favorite Allen West of Florida. On West’s congressional website, he states that “As your Congressman, I will curb out of control Government spending.” He also says that “we need to challenge the status quo in Washington and stop the floodgates of government spending” and that he will “carry the torch of conservative, small government principles with me to Washington.” West, however, voted to save the CDBG program and he also voted back in May to save the Economic Development Administration, which is another parochial slush fund. In April, he accused Democrats of being communists. That’s pretty rich given that he proceeded to vote to protect programs that engage in central planning.
- Freshman Republicans Switch from Tea to Kool-Aid (cato-at-liberty.org)
- Republicans Join Democrats to Save Corporate Welfare (Again) (cato-at-liberty.org)
Connect The Dots: Bailouts, Bankruptcy And Gold
June 29, 2012
Tel Aviv, Israel
This week may very well go down as ‘connect the dots’ week. Things have been moving so quickly, so let’s step back briefly and review the big picture from the week’s events:
1) After weeks… months… even years of posturing and denial, Spain and Cyprus became the fourth and fifth countries to formally request aid from Europe’s bailout funds on Monday.
In doing so, these governments have officially confessed to their own insolvency and the insolvency of their respective banking systems.
Meanwhile, Slovenia’s prime minister said that his country may soon ask for a bailout. (Humorously, Slovenia’s Finance Minister denied any such plans.)
Spain’s 10-year bond yield jumped to over 7% again in response, and many Spanish banks were downgraded to junk status by Moodys.
2) Over in the US, the city of Stockton, California filed for bankruptcy this week… the largest so far, but certainly a mere drop in the proverbial bucket.
3) JP Morgan, considered to be among the few ‘good’ banks remaining in the US, conceded that the $2 billion loss they announced several weeks ago might actually be more like $9 billion.
4) The Federal Reserve reported yesterday that foreigners are reducing their holdings of US Treasuries.
5) Countries from Ukraine to Kazakhstan to Turkey announced that they have purchased gold in recent months to bolster their growing reserves.
6) Chile has joined a growing list of countries that has agreed to bypass the US dollar and settle all of its trade with China in renminbi.
7) China has further announced plans to create a special zone in Shenzhen, one of its wealthiest cities, to allow full exchange and convertibility of the renminbi.
8) World banking regulators from the Bank of International Settlements to the FDIC are proposing that gold bullion be treated as a risk-free cash equivalent by commercial banks.
So… what we can see from this week’s events is:
– European governments are insolvent
– European banks are insolvent
– US governments are heading in that direction
– Even the best US banks are not as strong as believed
– Foreigners are abandoning the US dollar and seeking alternatives
– Gold is money
These events are all connected, and the trend is becoming so clear that even the most casual observers are starting to wake up.
When you connect the dots, the next steps lead to what may soon be regarded as an obvious conclusion: the system, as it exists right now, is crumbling.
No amount of self-delusion can make this go away.
Rational thinking and measured action, on the other hand, can make the consequences go away… turning people from victims into spectators of the greatest bubble burst in modern times.
- It’s time to connect the dots (sovereignman.com)
- 17 Reasons To Be EXTREMELY Concerned About The Second Half Of 2012 (blacklistednews.com)
Recap: Worldwide Field Development News (Jun 22 – Jun 28, 2012)
This week the SubseaIQ team added 4 new projects and updated 29 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
Jun 27, 2012 – BP is selling its interests in the Alba and Britannia fields in the UK sector of the North Sea to Mitsui & Co. for $280 million. Net BP production from the two fields averages some 7,000 barrels of oil per day. The sale comprises BP’s 13.3-percent stake in Alba and 8.97-percent stake in Britannia. Completion of the deal is anticipated by the end of 3Q 2012, subject to regulatory and other licensee approvals.
Project Details: Alba
Statoil Explores Brugdan Prospect
Jun 27, 2012 – Statoil has commenced exploratory drilling at its Brugdan prospect in License 006, Block 6104/21, in the Faroe Islands. The operator is using the COSLPioneer (mid-water semisub) to drill the well. Statoil expects drilling operations to take four to five months.
Project Details: Brugdan
Agora O&G Farms-In to Geite Prospect
Jun 27, 2012 – Bridge Energy has executed an agreement with Agora Oil & Gas for the farm-down of a 15-percent working interest in Production Licenses 497 and 497B. After the transaction Bridge Energy will hold a 15-percent working interest in the two licenses. Cairn will, as a consideration for the transaction, carry a substantial share of Bridge Energy’s well cost. Geite, the main prospect in the licenses is scheduled for drilling in 3Q 2012.
Project Details: Geite
Noreco Increases its Interest in Maja License
Jun 27, 2012 – Noreco has increased its interest in the Maja License (9/95) on the Danish Continental Shelf from 12 to 16.4 percent, and the license period has been extended for two years. The license contains part of the Gita discovery which was made in 2009. A new exploration well is now being planned in the license. The increase in ownership takes place at no charge, following a partner’s withdrawal from the license. Operator for the Maja license is Maersk Oil with 42.6 percent interest. Other partners are DONG Energy with 27.3 percent interest and Danoil with 13.7 percent interest.
Project Details: Gita
Aker Solutions Awarded Frame Agreement Contract for Norwegian Fields
Jun 27, 2012 – ExxonMobil awarded Aker Solutions a frame agreement for fields located on the Norwegian Continental Shelf. The frame agreement covers engineering, procurement, construction and installation of several fields, including Balder, Jotun A, Jotun B and Ringhorne. The fixed contract duration is five years from 2012 to 2017, with options for two additional five year periods. The frame agreement will be managed from Stavanger.
Project Details: Jette (Jetta)
Technip to Install Subsea Equipment for Alma/Galia Development
Jun 25, 2012 – EnQuest Britain awarded Technip a contract for the development of the Alma and Galia fields in the UK sector of the North Sea. The scope of work includes installation of two 10-inch production flexible flowlines, one 8-inch water injection flexible flowline and one further 8-inch production flexible flowline; installation of three 8-inch flexible risers; installation of two production control umbilicals/risers; installation of four power cables and associated dynamic risers; procurement, fabrication and installation of a 175-ton manifold structure; and associated trenching operations, tie-ins, testing and commissioning. The fields will be tied-back to the EnQuest Producer FPSO, which are located in a water depth of about 262 feet (80 meters).
Project Details: Alma/Galia
Premier to P&A Coaster Prospect
Jun 25, 2012 – Premier Oil will plug and abandon the Coaster exploration well at UK Block 28/10 as a dry hole. The operator commenced exploratory drilling in the beginning of June.
Project Details: Coaster
PA Resources Wins Contract Extension
Jun 25, 2012 – The Danish Energy Agency has extended PA Resources Licenses 12/06 and 9/06 by two years. License 12/06 is operated by the company with a 64% interest; and license 9/06 is operated by Maersk, wherein the company has a 26.8% stake. The 12/06 permit contains last year’s Broder Tuck gas/condensate and Lille John oil discoveries. PAR plans to drill an appraisal well at Lille John and is negotiating a drilling management contract. In 2009, the Gita 1X-well in license 9/06 encountered indications of hydrocarbons in the Middle Jurassic high-pressure/high-temperature (HP/HT) secondary target, but with low permeability. Subsequent studies have not lowered the producibility risk. There is no well commitment but a decision regarding drilling must be made by October 2013. In the meantime, further subsurface studies will be performed to evaluate prospectivity at Upper Jurassic and shallower Cretaceous and Tertiary levels.
Project Details: Lille John
Apache Reports Tryfan is Sub-Commercial
Jun 25, 2012 – Valiant Petroleum has completed drilling at the Tryfan prospect in UK Block 3/17. The well encountered both Frigg and Dornoch sandstones on prognosis with a small gas column present at the top of the Frigg formation interpreted to be sub-commercial. The well will now be plugged and abandoned.
Project Details: Tryfan
Hertel Offshore Signs EPC Contract for Draugen Platform
Jun 22, 2012 – Hertel Offshore has signed a contract for the EPC delivery of the Shell Draugen Additional Living Quarter, which will accommodate 44 people and will be designed according to the Norsok standards. Work has commenced and delivery of the module is scheduled for May 2013. Construction will be done at the Hertel Offshore premises in Rotterdam, The Netherlands.
Project Details: Draugen
S. America – Brazil
InterMoor Completes Conductor Fabrication, Installation Proj. for Shell
Jun 27, 2012 – InterMoor has completed the installation of the electrical submersible pump conductors for the artificial lift manifold as part of the Shell BC-10 phase two project. InterMoor was responsible for the fabrication and installation of four conductors in addition to one spare conductor for the project. Weighing in at more than 70 metric tons, the conductors measured 48 inches in diameter and 197 feet (60 meters) long with a 1.5-inch wall. The conductors were installed in water depths up to 5,600 feet (1,707 meters) off the coast of Brazil in the northern Campos Basin.
Project Details: Parque das Conchas (BC-10)
BHP Billiton Encounters Water at Banambu Deep Prospect
Jun 28, 2012 – BHP Billiton will plug and abandon the Banambu Deep-1 well as wire-line logs show that the well is water-bearing. The well, located in permit WA-389-P, lies in waters 1,050 feet (320 meters) deep. The well was drilled to 15,470 feet (4,696 meters) measured depth (mMD) on June 26, 2012, within the Mungaroo Formation.
Project Details: Banambu Deep
ConocoPhillips Set to Spud Boreas-1
Jun 28, 2012 – ConocoPhillips is moving forward with drilling of the Boreas-1 exploratory well in WA-314-P following the final function testing of the blowout preventers for the semisub Transocean Legend (mid-water semisub). The BOPs and marine riser were run to the sea floor, and after function testing, were pulled from the hole for further repair and maintenance. After passing all checks on the surface, they have been re-run to the seafloor for final subsea function testing. The company will drill the second well in the program, Zephyros-1, in permit WA-398-P approximately 4.9 miles (8 kilometers) southwest of the Kronos-1 discovery location. The third well, Proteus-1, will be drilled in WA-398-P approximately 8.6 miles (14 kilometers) southeast of the Poseidon-1 discovery location.
Project Details: Boreas
Apache Ready to Drill Balnaves Deep-2 Prospect
Jun 27, 2012 – Apache is ready to spud its Balnaves Deep-2 prospect offshore Australia, but is waiting on approval from the Australian government to move forward. The operator will use the Atwood Falcon (DW semisub) for drilling operations.
Project Details: Balnaves
Technip Pens Ichthys FPSO Services Contract
Jun 22, 2012 – Technip received a contract to provide services to the Ichthys FPSO, which will be located in the Browse Basin, Western Australia, at a water depth of 820 feet (250 meters). Under the agreement, Technip will provide engineering and procurement assistance for the topside facilities of the 1.2 million barrels storage capacity FPSO to South Korea’s Daewoo Shipbuilding & Marine Engineering. The Ichthys LNG project is expected to produce 8.4 million tonnes of LNG, 1.6 million tonnes of liquefied petroleum gas and 100,000 barrels of condensate.
Project Details: Ichthys
Nexus Energy Eradicating Longtom Producton Problem
Jun 22, 2012 – Nexus Energy Limited announced that the vessel to inspect and potentially rectify the electrical fault that caused the suspension of production on the Longtom field has arrived. Initial inspections have identified the fault to be contained within a specific section of the offshore system, which has enabled an engineering solution to be developed with implementation and associated production expected by month end. Given the mobilization of the specialized vessel, the opportunity is being taken to expand the inspection program to include additional sections of the offshore system, stated the company.
Project Details: Longtom
S. America – Other & Carib.
Edison Farms-In to Falkland Acreage
Jun 27, 2012 – Falkland Oil and Gas has executed a farm-out agreement with Edison International in relation to its licenses in the Falkland Islands. Edison will farm-in and earn a 25 percent interest in FOGL’s northern area license, which contains the Loligo prospect, in return for which it will contribute a pro-rate share of the costs of the 2012 drilling program – comprising two exploration wells. Edison will also farm-in and earn a 12.5 percent interest in FOGL’s southern area license, containing the Undine prospect, and will contribute to the 2012 work program. Meanwhile, Edison has agreed to pay its pro-rate share of certain historical costs incurred by FOGL during 2011 related to the 2012 drilling program. Edison’s share of these costs is expected to be around $50 million. FOGL expects to receive the Leiv Eiriksson (UDW semisub) in July to commence the drilling program.
Eni Turns on Taps at Seth Field
Jun 28, 2012 – Eni has commenced gas production from the Seth field off the coast of Egypt. The field is expected to produce about 4.8 MMcm/d. The Seth project consists of a platform placed at a water depth of 262 feet (80 meters), two production wells and a pipeline of 6.8 miles (11 kilometers). The pipeline links the platform to the onshore processing facility in El Gamil.
Noa North Comes Online
Jun 27, 2012 – Noble Energy has begun gas flow from the Noa North field in the Mediterranean. The field was completed as a subsea tie-back to the Mari-B platform. Mari-B is the first offshore natural gas production facility in the State of Israel. Noble Energy is the operator of the project with a 47.059 percent working interest.
KBR to Execute Pre-FEED Study for Tamar Field
Jun 27, 2012 – KBR will execute a pre-FEED study for a project located off the coast of Israel. KBR will provide the pre-FEED study for the King liquefied natural gas-floating production storage and offloading (LNG-FPSO) facility currently being evaluated for Noble Energy’s Tamar gas field off the coast of Israel.
Project Details: Tamar
Africa – West
Rialto Awards FEED Contract to Petrofrac
Jun 27, 2012 – Rialto Energy has awarded Petrofrac a Front End Engineering Design (FEED) contract for Block CI-202, containing the Gazelle field, offshore Cote d’Ivoire. Work is scheduled for completion in October. Rialto is working to fast track first hydrocarbons. It expects to award further contracts before the end of this year. The field development plan and gas agreement has been approved by the Cote d’Ivoire authorities and the production facilities will consist of a fixed production platform at the Gazelle field with separate oil and gas pipelines from the platform to shore.
Project Details: Gazelle
BP Gets Govt Nod to Namibia Farm-In
Jun 25, 2012 – Namibia’s Minister of Mines and Energy has approved BP’s farm-in of 30 percent to Serica Energy’s offshore Luderitz basin license 0047. The agreement was first announced in March. BP will cover the entire cost of a 3D seismic survey over an area of up to 1.025 million acres (4,150 square kilometers) across the concession. Participants in the block are now Serica Energy (55%); BP (30%); National Petroleum Corp. of Namibia (10%); and Indigenous Energy (5%).
Asia – SouthEast
Otto Granted Extension to Explore Offshore Philippines Block
Jun 27, 2012 – Otto Energy reported that the Philippines Department of Energy has granted a nine-month extension to the third exploration sub-phase of Service Contract 69 in the offshore Visayan Basin. The extension will give the consortium additional time to evaluate three potential targets on the block – Lampos, Lampos South and Managau East. Otto said it will use the extension period to start planning for an exploration well.
Salamander to Conduct DST on Far East Prospect
Jun 27, 2012 – Salamander Energy reported that the Far East prospect on the Bualuang field in License B8/38 in the Gulf of Thailand has reached a total vertical depth of 4,580 feet (1,396 meters) and is currently being prepared for a Drill Stem test. The well encountered an 82 foot (25 meter) section of excellent quality T5 Miocene sandstones, the primary target on depth prognosis. However, following the acquisition of a full suite of wireline logs, these sandstones are interpreted to be water-wet, with no evidence of hydrocarbon saturation. The well was then deepened to test the secondary objective. The well penetrated a conglomeratic section overlying the Ratburi carbonates from 4,423 feet (1,348 meters) TVDSS to current total depth (“TD”). Oil shows were observed at 4,482 feet (1,366 meters) TVDSS and severe mud losses were experienced from 4,495 feet (1,370 meters) TVDSS. Interpretation of logging while drilling data shows zones of potential oil pay in highly porous section from 4,478 feet (1,365 meters) to current TD.
Project Details: Bualuang
- Recap: Worldwide Field Development News (Jun 15 – Jun 21, 2012) (mb50.wordpress.com)
- Recap: Worldwide Field Development News (Jun 8 – Jun 14, 2012) (mb50.wordpress.com)
- Recap: Worldwide Field Development News (Jun 1 – Jun 7, 2012) (mb50.wordpress.com)
- Recap: Worldwide Field Development News (May 11 – May 17, 2012) (mb50.wordpress.com)
Shale Gas Boom: Hydraulic Fracturing and Potential Legal Claims
Joshua W. Mermis Friday, June 22, 2012
A “gas rush” is revitalizing the domestic petroleum exploration industry, and the legal ramifications could be felt for decades. Through hydraulic fracturing (fracking), petroleum companies access once cost prohibitive shale gas formations by creating fractures in underground rock formations, thereby facilitating oil or gas production by providing pathways for oil or gas to flow to the well. These pathways are commonly referred to as the “fractures.” The legal consequences of fracking could impact more than half of the Lower 48 states.
Background of Hydraulic Fracturing
The basic technique of fracking is not new. In fact, fracking has been used in wells since the late 1940s. The first commercial fracking job took place in 1949 in Velma, Oklahoma, however, sequestered layers of shale gas were inaccessible until 1985, when pioneers such as Mitchell Energy and Development Corporation combined fracking with a newer technology called directional, or horizontal drilling in the Austin Chalk. Directional drilling gave producers access to the shale gas because it allowed them to turn a downward- plodding drill bit as much as 90 degrees and continue drilling within the layer for thousands of additional feet. The positive results were soon transferred to the Barnett Shale in North Texas. To date, more than one million wells have been fractured.
The “hottest” shale plays are as follows:
- Bakken (Montana, South Dakota and North Dakota)
- Barnett Shale (Texas)
- Eagle Ford (Texas)
- Haynesville (Arkansas, Louisiana, and Texas)
- Marcellus Shale (New York, Ohio, Pennsylvania, and West Virginia)
- Utica (Kentucky, Maryland, New York, Ohio, Pennsylvania, Tennessee, West Virginia and Virginia)
Confirmed and/or prospective shale plays are also found in Alabama, California, Colorado, Illinois, Indiana, Kansas, Michigan, Mississippi, Missouri, Nebraska, Utah and Wyoming. Shale plays have been confirmed in countries around the world, but the US is the leader in shale gas exploration.
More Money, More Problems
The new application of an old technology made it possible to profitably produce oil and gas from shale formations. Domestic and international companies quickly rushed to capitalize on the large reservoirs of shale gas. But unlike the preceding decades, where new oil and gas exploration had occurred offshore and in deepwater, oil and gas drilling started to occur in areas that were not accustomed to oil and gas activity. Overnight ranchers became millionaires as landmen leased large swaths of property to drill. The media started reporting about enormous domestic supplies of oil and gas that could be profitably produced from shale formations and politicians touted energy independence that could alleviate the country’s demand for foreign reserves. But with the increased attention came increased scrutiny.
Environmental groups have criticized the industry for fracking. The chief concern is that fracking will contamination of drinking water. Movies such as “Gasland” and “Gasland 2” fueled the public’s concerns that the drilling caused polluted water wells and flammable kitchen faucets. Additionally, the industry received criticism for the engineering process that involved high-rate, high-pressure injections of large volumes of water and some chemicals into a well to facilitate the fracking. The EPA and state regulatory bodies have become involved in the discussion and new regulations are likely to follow. In the meantime, some lawsuits have already been filed.
Pending Hydraulic Fracturing Litigation
Plaintiffs have filed approximately forty shale-related lawsuits across the country. These lawsuits include: (1) tort lawsuits; (2) environmental lawsuits; or (3) industry lawsuits. As the shale boom accelerates more suits are anticipated.
1. Tort Lawsuits
Tort lawsuits have been brought by individuals and as class actions. Typically the claimants assert claims for trespass, nuisance, negligence and strict liability. Their complaints involve excessive noise, increased seismic activity, environmental contamination (air, soil and groundwater), diminution in property value, death of livestock/animals, mental anguish and emotional distress. The plaintiffs seek actual damages and, in some instances, injunctive relief. A few parties have even sought the establishment of a medical monitoring fund. The majority of these lawsuits have been filed in Texas, Pennsylvania and Louisiana. The first wave of lawsuits has established new law in the respective jurisdictions as the appellate courts weigh in with published opinions on issues that range from oil and gas lease forfeiture, consequences of forged contracts and contract formation.
2. Environmental Lawsuits
Environmental organizations and some citizen groups are seeking to enforce environmental laws and regulations in an effort to protect the environment and the public from what the litigants perceive to be negative consequences of fracking. In some instances they are even seeking to restrict the use of hydraulic fracking until it is proven to be environmentally safe. A popular target among these litigants is federal and state regulatory bodies, such as the EPA, and federal statutes, such as the Clean Air Act.
3. Industry Lawsuits
The final category of lawsuits includes those brought by the industry against the government. Claimants have sought to challenge federal, state and local government actions that have impeded the industry’s ability to drill.
Fracking Lawsuits 2.0 – Transportation, Construction, Personal Injury and Beyond
The survey of current fracking lawsuits does not take into account the claims that will spin out of the new shale plays. In fact, the engineering and logistical side of the fracking process – not fracking itself – will lead to many more attendant claims.
- Transportation: The survey of current fracking lawsuits does not take into account the claims that will spin out of the new shale plays. In fact, the engineering and logistical side of the fracking process – not fracking itself – will lead to many more attendant claims.
- Commercial: Lessor involved in mineral disputes will lead to commercial claims. Many lessors will feel they were shorted, or want a better deal as those now positioned to lease their rights sign a more lucrative mineral-rights lease. Company-to-company disputes will also rise as the price of natural gas fluctuates.
- Construction: The contractors and design professionals building the midstream facilities, among others, will lead to construction-defect and delay claims. Many states have recently adopted anti-indemnity statutes that will impact claims that arise during construction of midstream facilities, pipelines and other infrastructure-related construction projects.
- Insurance: Coverage issues will arise as parties file first- and third-party claims for myriad reasons. Issues including comparative indemnity agreements, flow-through indemnity and additional insured endorsements, among others, will need to be analyzed.
- Personal Injury: Additional workers drilling and working the wells will lead to an increase in personal injury and work-place accident claims. Many of the shale plays are located in what have traditionally been considered “plaintiff friendly” venues. A claim in Pennsylvania will have a different value than one located in Webb County, Texas.
- Product Liability: The products and chemicals used to drill and extract the oil and gas will lead to product liability claims involving both personal and property damage. The BP Deep Water Horizon well-blowout in the Gulf of Mexico will not be lost on those involved in domestic oil and gas exploration.
How To Reduce Future Fracking Litigation Risk?
Parties can act now to discourage litigation or better position themselves in the event they are named in a suit.
1. Institute electronic records protocol
The proliferation of email and increased retention and archival capabilities means that emails never die. A potential defendant would be well served with a protocol in place that outlines to its employees what are acceptable electronic communications.
2. Strictly comply with fracking fluid disclosures
For those parties who could be exposed to claims regarding the fluids used during drilling, it is important that they minimize the public’s suspicion that they are withholding information about the fluids. The best way to neutralize that misconception is to strictly comply with the state-mandated disclosure rules where applicable. It may even behoove them to voluntarily disclose the fluids’ contents through the
3. Be prepared for a fire-drill
A party must be ready to quickly assert its position when a claim is brought. The best way to do so is to track current litigation. Following the cases will provide the company a preview as to what claims it may be subject to, and it also allows them to evaluate defenses. It may also enable the company to insulate itself from suit by avoiding certain actions. Along those same lines, knowing the facts, documents, emails, fact witnesses and expert witnesses will work to a party’s advantage. Some industry leaders have proactively retained experts even though they have not been sued.
4. Know your neighbors
Parties should view their neighbors as allies and potential jurors. To that end, it makes sense to open a dialogue about fracking with the regulators on a local, state and federal level. It would also benefit the parties to engage the community and publicize information about the benefits associated with fracking, e.g., jobs, lower energy prices, cleaner energy, energy independence, etc. Certain midstream players have rolled out a public education campaigns aimed at that very goal.
Articles on shale gas and fracking adorn the front pages of the Wall Street Journal and New York Times. 60 Minutes runs stories on shale-gas drilling and the faux pundit Stephen Colbert discusses fracking’s impact on his tongue-and-cheek news show. The promise of profits, domestic jobs and energy independence has the country talking about the gas shale plays that dot the landscape. Fracking and all that it encompasses will serve as the backdrop for a variety of legal issues during the foreseeable future.
Joshua W. Mermis is a partner at Johnson, Trent, West & Taylor in Houston, Texas, where he primarily practices in construction and energy litigation. He received his B.A. from the University of Kansas and J.D. from the University of Texas School of Law. This article previously appeared in the Spring/Summer 2012 issue of USLAW magazine.
Chevron Spends USD 1 Billion on Pacific Sharav Drillship Contract (USA)
Pacific Drilling S.A. announced today that its ultra-deepwater drillship the Pacific Sharav has been awarded a five-year contract by Chevron U.S.A. Inc. for operations in the United States Gulf of Mexico.
Estimated maximum contract revenue, including mobilization and client requested modifications, is expected to be approximately $1,076 million, bringing Pacific Drilling’s total contract backlog as of June 22, 2012, to approximately $3.2 billion.
“We are proud to announce the expansion of our relationship with Chevron to include a third drillship. This contract exemplifies our strategic commitment to building strong customer relationships and allows us to leverage the operations support infrastructure which we have already developed in the region.”
Pacific Drilling CEO Chris Beckett stated, “We are proud to announce the expansion of our relationship with Chevron to include a third drillship. This contract exemplifies our strategic commitment to building strong customer relationships and allows us to leverage the operations support infrastructure which we have already developed in the region.”
Pacific Sharav is scheduled for delivery by Samsung Heavy Industries in Korea in the fourth quarter of 2013, upon completion of construction and client requested modifications. The drillship will be capable of operating in water depths of up to 12,000 feet and drilling wells up to 40,000 feet deep.
- Pacific Drilling – Operations (video) (mb50.wordpress.com)
- Pacific Santa Ana Drillship Arrives in U.S. Gulf of Mexico to Work for Chevron (mb50.wordpress.com)
- USA: AGR Signs Two Agreements with Chevron (mb50.wordpress.com)
- Strong Demand for UDW Drillships Spurs Seadrill to Order One More from SHI (South Korea) (mb50.wordpress.com)
USA: Imperial Presidency
The United States was born when rebellious colonists declared their independence from an imperial ruler who had vastly overstepped his bounds. “The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States,” they wrote in their Declaration of Independence.
Today’s presidency lacks the regal air of George III. But imperialism is back, in a big way.
Last week, the Obama Administration’s Department of Homeland Security issued a memorandum instructing U.S. immigration officials to use their “prosecutorial discretion” to create a policy scheme contrary to existing law, designed to implement legislation that Congress hasn’t passed.
The President himself has admitted he doesn’t have the authority to do this. “The idea of doing things on my own is very tempting, I promise you, not just on immigration reform. But that’s not how our system works,” he told Hispanic activists last year. “That’s not how our democracy functions.”
We can now see before us a persistent pattern of disregard for the powers of the legislative branch in favor of administrative decision-making without—and often in spite of—congressional action. This violates the spirit—and potentially the letter—of the Constitution’s separation of the legislative and executive powers of Congress and the President.
- Even though the Democrat-controlled Senate rejected the President’s cap-and-trade plan, his Environmental Protection Agency classified carbon dioxide, the compound that sustains vegetative life, as a pollutant so that it could regulate it under the Clean Air Act.
- After the Employee Free Choice Act—designed to bolster labor unions’ dwindling membership rolls—was defeated by Congress, the National Labor Relations Board announced a rule that would implement “snap elections” for union representation, limiting employers’ abilities to make their case to workers and virtually guaranteeing a higher rate of unionization at the expense of workplace democracy.
- After an Internet regulation proposal failed to make it through Congress, the Federal Communications Commission announced that it would regulate the Web anyway, even despite a federal court’s ruling that it had no authority to do so.
- Although Congress consistently has barred the Department of Education from getting involved in curriculum matters, the Administration has offered waivers for the No Child Left Behind law in exchange for states adopting national education standards, all without congressional authorization.
Likewise, the Administration has often simply refused to enforce laws duly enacted by Congress:
- Since it objects to existing federal immigration laws, the Administration has decided to apply those laws selectively and actively prevent the state (like Arizona) from enforcing those laws themselves.
- Rather than push Congress to repeal federal laws against marijuana use, the Department of Justice (DOJ) simply decided it would no longer enforce those laws.
- DOJ also has announced that it would stop enforcing the Defense of Marriage Act or defending it from legal challenge rather than seeking legislative recourse.
On Tuesday, the President invoked executive privilege to avoid handing over some 1,300 documents in an ongoing Congressional investigation. The Supreme Court has held that executive privilege cannot be invoked to shield wrongdoing. Is that what’s happening in this case? “Congress needs to get to the bottom of that question to prevent an illegal invocation of executive privilege and further abuses of power. That will require an index of the withheld documents and an explanation of why each of them is covered by executive privilege—and more,” Heritage legal scholar Todd Gaziano writes.
Earlier this year the President crossed the threshold of constitutionality when he gave “recess appointments” to four officials who were subject to Senate confirmation, even though the Senate wasn’t in recess. Gaziano wrote at the time that such appointments “would render the Senate’s advice and consent role to normal appointments almost meaningless. It is a grave constitutional wrong.”
There is no telling where such disregard may go next, but the trend is clear, and it leads further and further away from the constitutional rule of law.
The President has unique and powerful responsibilities in our constitutional system as chief executive officer, head of state, and commander in chief. Those powers do not include the authority to make laws or to decide which laws to enforce and which to ignore. The President – like judges or Members of Congress – takes an oath to uphold the Constitution in carrying out the responsibilities of his office.
Indeed, the President takes a unique oath, pledging he “shall faithfully execute the Office of President of the United States” and “preserve, protect and defend the Constitution of the United States.” We don’t need a new Declaration of Independence, but we do need a President who will defend and vigorously exert his or her legitimate powers, recognizing that those powers are not arbitrary or unlimited.
Dr. Matthew Spalding is the Vice President for American Studies and Director of the B. Kenneth Simon Center for Principles and Politics at The Heritage Foundation. He is also the author of We Still Hold These Truths.
- Fast And Furious: Executive Privilege Is Illegitimate to Shield Wrongdoing (heritage.org)
- NAPOLITANO: Can Obama rewrite federal law? – Washington Times (gds44.wordpress.com)
- Cagle Post ” It’s Nice to be Emperor (mbcalyn.com)
- Obama’s policy strategy: Ignore laws (givemeliberty01.wordpress.com)
- Obama’s Assertion Of Executive Privilege And The Law (outsidethebeltway.com)
- Fast and Furious: Covering up the Death of a U.S. Agent (papundits.wordpress.com)
- King Barack (lewrockwell.com)
Recap: Worldwide Field Development News (Jun 15 – Jun 21, 2012)
This week the SubseaIQ team added 3 new projects and updated 30 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.
Africa – West
Rialto Recovers Oil, Gas in Gazelle-P3 Well
Jun 21, 2012 – Rialto Energy reported that it has encountered high gas readings and recovered oil and gas samples from the sidetrack of its Gazelle-P3 well. Wireline logs have been taken while further logging with vertical seismic profile and sidewall coring are continuing with completion expected in the next three days. Rialto said the oil and gas samples were recovered from the Upper Cenomanian sands as expected while the gas readings were noted in the Lower Cenomanian. The samples will also be used to assist in the design of the Gazelle field development processing facilities.
Project Details: Gazelle
S. America – Other & Carib.
Chevron Enters Suriname Acreage
Jun 20, 2012 – Kosmos Energy has entered into an agreement with Chevron under which Kosmos will assign half of its interest in Blocks 42 and 45, offshore Suriname, to Chevron. Under the agreement, Kosmos will have a 50 percent working interest and remain operator of both blocks until the end of the exploration phase. Chevron will assume the remaining 50 percent working interest and will become development operator of any commercial discoveries. Blocks 42 and 45 cover an area of about 2.8 million gross acres in water depths ranging between 650 to 8,500 feet (200 and 2,600 meters). First drilling is targeted for 2014.
Asia – SouthEast
Salamander Spuds Bualuang Far East-1 Well
Jun 18, 2012 – Salamander Energy has spud the Bualuang Far East-1 exploration well in Block B8/38, Gulf of Thailand. The Bualuang Far East prospect is located approximately four miles (six kilometers) to the northeast of the Bualuang oil field. The Far East-1 well will be drilled to a total vertical depth of 4,765 feet (1,452 meters) subsea. The primary target is the T5 Miocene sandstones with secondary targets comprising an underlying Permian-age Ratburi carbonate and a T4 Miocene sandstone stratigraphic trap. The main T5 objective has potential mean recoverable resources of 20 million barrels of oil. The well will be drilled by the ENSCO 53 (300??? ILC) jackup and is expected to take about 20 days to complete.
Project Details: Bualuang
Chevron Sells Interest in Wheatstone to Pan Pacific Energy
Jun 19, 2012 – Chevron has agreed to sell 10-percent participating interest of its Wheatstone field licenses and 8-percent participating interest of its Wheatstone natural gas processing facilities to Japan’s Pan Pacific Energy. Chevron added that Japan’s Tokyo Electric Power Company (Tepco), one of the stakeholders in Japan’s Pan Pacific Energy K.K, has agreed to purchase an additional 0.4 million tons per annum (MTPA) of liquefied natural gas from the Wheatstone Project for up to 20 years. This new agreement brings Tepco’s total LNG offtake to 4.2 MTPA.
Project Details: Wheatstone
Noble Suspends Pinnacles Gas Flow
Jun 18, 2012 – Noble Energy has suspended gas flow from the Pinnacles No. 1 well offshore Israel. According to partner Delek Group, this is due to an indication of a gas composition that does not match the specification for flow. The operator plans to examine alternative options including gas treatment to allow the resumption of gas flow.
N. America – US GOM
Cobalt Comes Up Dry iat Ligurian
Jun 15, 2012 – The Ligurian No. 2 well has failed to encounter commercial hydrocarbons and will now be plugged and abandoned after reaching a final depth of more than 30,000 feet (9,144 meters). The ENSCO 8503 (UDW semisub) drilled the well to a total depth of 31,800 feet (9,693 meters).
Project Details: Ligurian
Anadarko Gets Nod to Drill in GOM
Jun 15, 2012 – The BOEM recently approved Anadarko’s permit to drill at its Shenandoah prospect in Walker Ridge Block 51. The permit lists the ENSCO 8505 (UDW semisub) as the rig that will perform drilling operations. The Shenandoah well has a proposed depth of 32,000 feet (9,754 meters) and is located in approximately 5,800 feet (1,768 meters) of water.
Project Details: Shenandoah
Europe – North Sea
Ocean Installer Completes Survey, Intervention Work at Balder
Jun 21, 2012 – Ocean Installer has completed a survey and intervention work at the Balder field. The conducted work encompassed inspection and maintenance of the subsea control system at the field. Balder is located on Blocks 25/10 and 25/11 in the Norwegian sector of the North Sea about 118 miles (190 kilometers) west of Stavanger, Norway at a water depth of 410 feet (125 meters).
Project Details: Balder
Providence Pleased with Barryroe’s Core Analysis
Jun 21, 2012 – Providence Resources has completed the core analysis of the reservoir at its Barryroe discovery. The firm said that permeabilities in the basal oil-bearing reservoir interval have exceeded expectations, while good permeabilities have also been confirmed in secondary logged hydrocarbon-bearing sand. The permeabilities in the basal oil-bearing interval confirm the high-productivity nature of this reservoir as observed during well-testing operations, said Providence. The company will provide a revised resource update for Barryroe later this summer.
Project Details: Barryroe
Technip to Construct Subsea System for Boyla Development
Jun 20, 2012 – Technip won a contract for the development of the Boyla field in the Norwegian sector of the North Sea. The $381 million deal with Marathon covers all activities necessary to complete the construction of the subsea system for the field development and connect it to the existing Alvheim subsea facilities. Offshore construction will take place in 2014. The field is to be developed as a subsea tie-back to the Alvheim FPSO, with two production wells and a water injection well. The Boyla field is estimated to hold reserves of 23 million barrels of oil equivalent.
Project Details: Alvheim
Valemon Jacket Delivered and Installed
Jun 19, 2012 – Statoil reported that the Valemon jacket was successfully delivered and installed on the field, which lies in the Norwegian sector of the North Sea. The 9,000-ton steel jacket was carried out as planned and the project remains on schedule. The jacket, which was built by Heerema Fabrication Group in Vlissingen in the Netherlands, was transported from the shipyard and out to the field by the crane barge Thialf. Development of Valemon involves a fixed platform with a steel jacket for the separation of gas, condensate and water. The rich gas will be transported via a new pipeline to the existing pipeline from Huldra to Heimdal for further processing. The condensate will be piped to the Kvitebj??rn platform for stabilization and further transport via the Troll oil pipeline to the Mongstad refinery. At peak production, Valemon is expected to deliver roughly 86,000 barrels of oil equivalent per day. The field is expected to come on stream in the fourth quarter of 2014 and has a life expectancy of 11 years.
Project Details: Valemon
North Sea Buzzard Oil Field to Shut Down for 4 Weeks
Jun 15, 2012 – Nexen reported that the Buzzard oil field will have an extended four-week shutdown in the third quarter for the field’s five-year regulatory inspection. The company did not specify when the shut-down will likely occur. Buzzard produces about 200,000 bopd and is the largest oil field that contributes to Forties crude.
Project Details: Buzzard
Statoil Submits PDO for Svalin
Jun 15, 2012 – Statoil has submitted a plan for development and operation for the Svalin field to the Norwegian government and reported it expects to bring the field online in 2013. Recoverable reserves at the field are estimated at around 75 million barrels of oil equivalent, with two structures Svalin C and Svalin M containing similar quantities. The Svalin C and Svalin M discoveries will be developed through a ‘fast-track’ method that uses a standard solution involving processing by existing infrastructure. The Svalin development will be tied-back to the Grane platform. Svalin M will be produced by a well drilled from the Grane platform, while Svalin C will be a subsea development connected via a four-mile long flowline to the Grane platform. The hydrocarbons will utilize shared processing and export facilities. The gas compression facility at the Grane platform will be modified to handle gas from Svalin. Oil from the Svalin development will be transported, along with production from the Grane field, through the existing pipelines for storage and shipment from the oil terminal at Sture.
Project Details: Svalin
Shell Contracts FPSO for Fram Field
Jun 15, 2012 – Shell sent SBM Offshore a letter of interim award (LOIA) for the supply, lease and operation of a FPSO for the Fram field in the UK sector of the North Sea. The LOIA allows SBM Offshore to commence engineering and procurement of long lead items to ensure timely completion of the planned Fram FPSO project, which is subject to a Final Investment Decision. In March 2012, Shell and SBM Offshore signed an Enterprise Framework Agreement (EFA) covering a term of five years, with an option to extend for another five years. The Fram FPSO, subject to a Final Investment Decision, will be the first project to be developed under the terms of the EFA. The hull of the FPSO will be based on a converted Aframax tanker and will incorporate an internal turret permanent mooring system. The crude will be offloaded to shuttle tankers and the gas exported via the existing Fulmar pipeline.
Project Details: Troll Area
N. America – Canadian Atlantic
Statoil Confirms Mizzen Discovery Holds Large Amounts of Oil
Jun 21, 2012 – Statoil has confirmed that it has found between 100 and 200 million barrels of recoverable oil at its Mizzen deepwater prospect offshore Newfoundland. The company stated it is now assessing the discovery to determine how and when it can be economically developed. Statoil discovered oil in 2009 while drilling Mizzen O-16 and appraised the find in late 2011. Statoil plans to drill two new wildcat wells in the area by the end of next year, and potentially additional wells in 2014 and beyond. Mizzen is situated roughly 311 miles (500 kilometers) east of St. John’s in 3,609 feet (1,100 meters) of water.
Project Details: Mizzen
- Recap: Worldwide Field Development News (Jun 8 – Jun 14, 2012) (mb50.wordpress.com)
- Recap: Worldwide Field Development News (Jun 1 – Jun 7, 2012) (mb50.wordpress.com)
- Recap: Worldwide Field Development News (May 18 – May 24, 2012) (mb50.wordpress.com)
- Atwood Osprey Rig Stays with Chevron in Australia Until 2017 (mb50.wordpress.com)
- Chevron Acquires Offshore Suriname Acreage (mb50.wordpress.com)