Daily Archives: June 7, 2012

Recap: Worldwide Field Development News (Jun 1 – Jun 7, 2012)


This week the SubseaIQ team added 3 new projects and updated 28 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.

Asia – Far East
CNOOC Receives Formal EIA Approval for Lishui Development
Jun 6, 2012 – CNOOC and Primeline Energy have received formal approval on the environmental impact assessment report for the development of the Lishui gas field from the State Oceanic Administration. The SOA had previously approved the routing of pipeline for the development. Primeline Energy, a partner on the field, reported that the EIA approval paves the way for the final regulatory approval required for the development, namely approval of the overall development program. Primeline expects that CNOOC will submit the ODP for confirmation by the National Reform and Development Committee shortly. Thus far, major construction contracts have been signed for the development to progress with fabrication of the platform and work on the pipeline are proceeding on schedule. The development is currently on time for first production, which is expected to be around 3Q 2013. The Lishui gas field is located on Block 25/34 offshore China and reportedly holds 4.9 billion cubic meters of proven gas reserves.
Project Details: Lishui
Peng Lai Field Leaks Small Amount of Oil
Jun 5, 2012 – CNOOC Limited reported that a small amount of oil is leaking from the Penglai 19-3 oil field in the Bohai Bay. A small amount of oil leaked into the sea from the Penglai 19-3 field when a safety device on a hose coupling parted due to an abnormality during an oil transfer operation on June 3. The leak was secured immediately when automatic isolation valves closed. Roughly 0.6 tonnes of oil was released into the sea, said CNOOC.
Project Details: Peng Lai
Europe – East
Gazprom Seeking New Partners for Shtokman Project
Jun 6, 2012 – Gazprom has been seeking to develop Shtokman, one of the world’s largest natural gas fields, since the early 1990s, and after several attempts has put together a consortium comprising Statoil, Total and itself. But technological challenges and precipitously low gas prices, as well as the emergence of the U.S. as a gas exporter, have called its financial viability into question. The final investment decision for project hasn’t been announced.
Project Details: Shtokman
N. America – Mexico
Fluor to Build Ku-Maloob-Zaap Production Platform
Jun 7, 2012 – ICA Fluor and Fluor Corporation have signed a contract with Pemex for the construction of an offshore production platform at the Ku-Maloob-Zaap field in the Gulf of Mexico. The contract has a value of $95 million. ICA Fluor and its subsidiary Industria del Hierro will be responsible for the procurement, construction, testing, and load-out of the Ayatsil-C platform. Weighing 11,832 tons and reaching 433 feet (132 meters) deep, Ayatsil-C is the first structure of this size to be installed by Pemex. The project is expected to be completed by the end of 2013.
Project Details: Ku-Maloob-Zaap
Europe – North Sea
Athena Field Performs as Expected
Jun 7, 2012 – Ithaca Energy reported that the Athena field has reached initial peak gross oil production rates of 22,000 bopd, and oil export operations have commenced. The flow from each of the four oil production wells is being supported by electrical submersible pumps with water injection being used to support the reservoir pressure of the field and thereby maintaining and sustaining production rates. An initial cargo has already been offloaded from the BW Athena to the shuttle tanker Betty Knutsen.
Project Details: Athena
Premier Hits Oil in Carnaby
Jun 6, 2012 – Premier has reached a total depth of 4,695 feet (1,431 meters) at the Carnaby exploration well and has encountered oil. Initial analysis indicates that the well encountered 51 feet (15 meters) of net oil in the main Tay sandstone within an estimated 86 feet (26 meters) oil column. A core was taken and confirmed oil in excellent quality sandstones. Pressure data and sampling indicates that the API of the oil is 24 degrees and is of similar quality to that established at the nearby Catcher discoveries. The oil water contact was at the shallower end of expectation; driven by the more complex geology associated with this type of footwall prospect. The well also encountered 51 feet (15 meters) of Cromarty sands but these were shown to be water wet on the logs. The high quality data acquisition from the well will now be used to determine what contribution the Carnaby discovery will make to the overall Catcher development. The well will be plugged and abandoned ahead of the rig moving to drill the high risk Coaster prospect on Block 28/10a, immediately east of the Catcher acreage.
Project Details: Carnaby
MPX Terminates Rig Contract
Jun 6, 2012 – MPX Energy and partners have terminated the drilling contract with Awilco Drilling as a consequence of technical downtime. The semisub was conducting exploratory drilling at the Timon exploration well in the UK sector of the North Sea. As previously reported, the well has been suspended for reentry and the license partners are currently investigating alternative rig options to complete drilling of the Timon prospect.
Project Details: Timon
ConocoPhillips Delays Jasmine Production until 2013
Jun 5, 2012 – ConocoPhillips has delayed production start-up of its Jasmine field in the central North Sea until 2013. It had been hoped that the high-pressure, high-temperature field, described as one of the UK’s largest finds in the last 10 years, could come online in the fourth quarter of 2012. Thus far, the operator has drilled two of eight development wells and plans to spend about $400 million on the project. Jasmine was discovered in 2006 and has been estimated to hold recoverable reserves of more than 100 million barrels oil equivalent. The development, 5.5 miles (8 kilometers) west of the Judy platform, will comprise a Jasmine wellhead platform (WHP) and a bridge-linked accommodation and utility platform, a Judy riser and separation platform (JRP) with additional Judy well slots bridge-linked to the existing Judy platform and a multiphase pipeline from the WHP to the JRP.
Project Details: Jasmine
Marathon Submits Boyla PDO to Norwegian Authorities
Jun 4, 2012 – Marathon and partners have submitted a plan for development and operation (PDO) of the Boyla field (formerly Marihone) to the Norwegian Ministry of Petroleum and Energy. The Boyla development is expected to begin production during the fourth quarter of 2014. The field will be developed as a subsea tie-back to the Alvheim floating production, storage and offloading vessel (FPSO) with two production wells and a water injection well being drilled. The total investment is estimated to be $867 million with reserves estimated at 23 million barrels of oil equivalents. Boyla crude oil will be commingled with the Alvheim blend and exported via shuttle tankers. Associated gas will be exported via Alvheim to the SAGE pipeline.
Project Details: Alvheim
Aker Grabs Early Phase Studies for Several Discoveries
Jun 4, 2012 – Statoil has awarded Aker Solutions early phase studies for several major discoveries on the Norwegian Continental Shelf including Skrugard, Havis and Johan Sverdrup. Aker Solutions will perform a concept study for the Skrugard and Havis fields, as one of several vendors. The two fields, which are located only 4 miles (7 kilometers) apart, will be developed as a joint solution. The work on the Johan Sverdrup field development is a feasibility and screening study. The concept study for the Skrugard and Havis development will be executed by Aker Solutions in Oslo, with participation from its new engineering office in Tromso. As a part of the concept study for the Skrugard and Havis fields, Aker Solutions will on behalf of Statoil perform a screening of potential scope to be performed by local suppliers in the northern regions for the developments ahead. The screening will be led by the Tromso office.
Project Details: Skrugard
Africa – West
Rialto Energy Sidetracks Gazelle-P3 well
Jun 5, 2012 – Rialto Energy has commenced drilling of the Gazelle-P3 ST2 well to optimize the recently drilled Gazelle-P3 ST well in order to underpin the oil and gas development of the Gazelle field. Following planned testing in the Upper Cenomanian-1 reservoir (UC-1), the Gazelle-P3 ST2 well is intended to be suspended as a future producer. The sidetrack operation is expected to take about 12 to 15 days.
Project Details: Gazelle
First Subsea Completes Block 31 FPSO Mooring
Jun 4, 2012 – First Subsea has completed the mooring of the PSVM (Plutao, Saturno, Venus and Marte) FPSO in Block 31 offshore Angola. The double-hulled PSVM FPSO, moored in 6,562 feet (2,000 meters) of water, is a hub field development that will produce oil from the Plutao, Saturno, Venus and Marte fields. Comprising the northeast sector of the license about 400 kilometers (249 miles) from Luanda, PSVM is the first of four planned development projects on Block 31.
Project Details: PSVM
N. America – US GOM
ATP Resumes Completion Ops at Mirage Field
Jun 4, 2012 – ATP has resumed recompletion operations at the Mississippi Canyon Block 941 A-2 well at the Telemark Hub. The recompletion was suspended while the company recovered a piece of tubing that was stuck in the casing. The MC 941 A-2 recompletion operations to perforate and frac-pack the B upper and lower sands are expected to conclude during second quarter 2012. MC 941 is located in the Mirage field at the Telemark Hub location utilizing the ATP Titan floating drilling and production platform.
Project Details: Telemark
N. America – US Alaska
Shell Still Optimistic about Alaska Drilling
Jun 5, 2012 – Dow Jones Newswires reported that Shell hopes to drill for oil offshore Alaska in July 2012. “We are very encouraged with the progress in the Beaufort and Chukchi seas. All the permits are coming into place and we are looking forward to drilling, most probably in July and then later on in August and the early part of September,” Chief Executive Peter Voser told Dow Jones Newswires.
Project Details: Burger, SW Shoebill, Cracker Jack
ConocoPhillips Progresses Caldita/Barossa Discoveries
Jun 7, 2012 – Santos Limited has entered into an agreement with ConocoPhillips and SK E&S to progress with the development of the Caldita and Barossa gas discoveries located in the Timor Sea. Prior to the agreement, Santos held a 40% interest in both discoveries, with operator ConocoPhillips holding the remaining 60%. Under the terms of the agreement, SK will earn a 37.5% interest in Caldita and Barossa through a proportionate reduction by Santos and ConocoPhillips. ConocoPhillips will remain operator of both permits. SK will fund the first $260 million of a three-well appraisal program, expected to begin in 2013. Following completion of the appraisal program, SK will have the option to increase its interest to 49.5% in exchange for a further payment of $60 million to Santos and ConocoPhillips, shared according to their original interests in the permits. SK will fund up to $90 million of pre-front end engineering and design (pre-FEED) and FEED activities, expected to begin in 2014. SK will make FID and first LNG cargo payments of up to $110 million to Santos and ConocoPhillips upon meeting certain milestones.
Asia – SouthEast
AWE Spuds Atlas
Jun 4, 2012 – AWE Limited has commenced exploratory drilling at the Atlas-1 well. The well is an exploration well designed to test the gas potential of a carbonate reservoir sequence that, together with the nearby Lengo gas discovery, could contain up to 1 trillion cubic feet of recoverable sales gas. The well is planned to be drilled to a total measured depth of about 2,526 feet (770 meters). The water depth of the site is 230 feet (70 meters).
Project Details: Atlas

Petronas, PDVSA Searching for Oil Offshore Cuba

Cuba’s state oil company, Cubapetróleo (Cupet) sent a statement to the country’s media saying that a company from Malaysia, a subsidiary of Petronas, had started drilling operations at the Catoche 1X well offshore Cuba.

The Malaysian company is using the Scarabeo 9, a 6th generation semi submersible drilling rig, for the operation. The Catoche 1X well was spudded on May 24. The rig had been under a contract with the Spanish oil major Repsol, who, following the disappointing results of its recent well, decided to scrap plans for further drilling off the Caribean country’s coast.

Cupet has said that Repsol’s failure to find oil doesn’t mean that the oil isn’t there and has added that the area has “a high potential for discovery of new hydrocarbon reserves, according to geological studies performed.”

Cuba estimates that its offshore fields hold approximately 20 billion barrels of oil, which could, once unlocked provide a major boost to the communist country’s economy.

Furthermore, the Cupet’s announcement says that once the drilling of Catoche 1X is completed the Scarabeo 9 will move to the Cabo de San Antonio 1x well, operated by Venezuela’s PDVSA.

Scarabeo 9, capable of operating in water depths of up to 3,600 meters, was built by Singapore’s Keppel specifically for drilling operations in Cuban waters.

Due to the United States trading embargo against Cuba, Repsol had to come up with a rig with almost no U.S. made parts in it, and according to Reuters, the only U.S. manufactured part on the Scarabeo 9 rig is a blowout preventer, a part that malfunctioned and caused the Deepwater Horizon disaster in the U.S. Gulf of Mexico in 2010.


Pennsylvania County’s Dreams of Wealth Didn’t Work Out

By Roben Farzad on June 07, 2012

Four years ago, as the economy was entering a devastating recession, swaths of rural Pennsylvania were booming.

Energy companies were using hydraulic fracturing, better known as fracking, to tap the vast natural gas reserves of the Marcellus Shale underlying much of the Keystone State. In Wayne County, these corporations offered struggling farmers lucrative leases for mineral rights.

“Land here became a whole different asset class,” says Tim Meagher, a real-estate broker whose family settled in the area in the 1840s.

Today there is no drilling in Wayne County, Bloomberg Businessweek reports in its June 11 issue. The Delaware River Basin Commission, a regional regulatory agency, has declared a moratorium while it studies the environmental impact. Gas companies have invoked force majeure clauses to put their contracts with property owners on hold.

Investors who bought farmland are stuck, and farmers who expected to retire on gas royalties are back to eking out a living from agriculture.

Meanwhile, fracking opponents are brandishing the example of Wayne County as they fight shale energy exploration across the country.

The number of drilling permits issued in Pennsylvania soared from 122 in 2007 to 3,337 in 2011, according to the Marcellus Center for Outreach and Research at Penn State University. Much of the activity was concentrated in the western and central parts of the state, which have a history of energy exploration and geology conducive to gas production.

Fresh Land

As the price of gas climbed, drillers looking for fresh land started eyeing the verdant, rolling pastures of Wayne County in (26452MF) the northeastern part of the state.

Companies such as Hess, Chesapeake Energy (CHK) (CHK), and Cabot Oil & Gas (COG) (COG) dispatched “land men” to go door to door to persuade homeowners to sign mineral leases. Farmers were getting $250 to more than $3,000 an acre to allow drilling on their property, says Meagher. Land that sold for $2,000 to $3,000 an acre in 2004 was going for as much as $10,000 an acre by 2009. Meagher says he often got calls from prospective investors in Manhattan, Boston, and beyond. To encourage more, he put property ads in the New York Post, New York Times, and the Wall Street Journal.

“I wanted to get my clients here the highest possible bid,” he says.

By the summer of 2009, a joint venture of Hess and Newfield Exploration (NFX) (NFX) had secured leases for 80,000 acres with the Northern Wayne Property Owners Alliance, a group of 1,500 landowners formed to negotiate with the gas companies.

’People Here Struggle’

“It’s the biggest thing ever happened around here, in my lifetime at least,” says Alliance member Bob Rutledge, a dairy and beef farmer whose family has been in Wayne for 170 years. “People here struggle. The economy here sucks when it’s good. The farms are dying.” Spokesmen for Hess, Chesapeake, Cabot, and Newfield declined to comment.

Honesdale, the county seat, last saw a boom like this in the 1820s, when it was the starting point for the new Delaware & Hudson Canal. In March 2009, Leonard Schwartz, recently retired as chief executive officer of chemical company Aceto, reopened Honesdale’s 182-year-old Hotel Wayne. He gutted and redecorated its rooms and upgraded its restaurant and bar to accommodate out-of-town speculators and energy company officials with expense accounts.

“The gas companies were giving out money,” says Schwartz. “People were buying tractors, eating out. You felt it.”

Opposition Builds

As fracking fever spread, opposition to gas exploitation was building. In the spring of 2008, a gas company offered Josh Fox’s family almost $100,000 to drill on its Wayne County property, inspiring Fox, a filmmaker, to make the anti-fracking documentary “Gasland.”

The Oscar-nominated film, which shows water from a faucet catching fire, was shown on HBO and helped foment broader opposition to fracking. Fox and an alliance of conservation groups called on the Delaware River Basin Commission to ban the practice in Wayne County. They argued that the drilling technology, which involves injecting high-pressure jets of water and chemicals into underground rock formations, would pollute the river’s 14,000-square-mile basin, a source of drinking water for 15 million people.

Permits Ordered

In May 2009 the commission, which includes the governors of Pennsylvania, New Jersey, Delaware, and New York as well as a representative from the U.S. Army Corps of Engineers, declared that gas companies wanting to drill in Wayne County would need a permit from the DRBC as well as from the state of Pennsylvania.

Land men started pulling out of Wayne, according to local townspeople. A year later the commission announced that it would not issue permits and would study the impact of fracking.

The decision caught farmers and investors off guard.

“I had never even heard of this out-of-state commission,” says Jim Stracka, a contractor from Scranton, Pennsylvania, who joined with two New Jersey businessmen to form a company called Gasaholics to invest in Wayne County.

In 2008, Gasaholics paid $900,000 in cash for a 96-acre farm in northeastern Wayne. Stracka says he expected to lease his mineral rights for at least $3,000 an acre and hoped a producing well might generate as much as $50,000 a day in royalties.

“We went on that premise,” he says. “Then, the moratorium comes out of left field and the leases stop. Now we’re just sitting on it.”

The property remains vacant. A local farmer stops by on occasion to cut the land’s overgrowth for hay.

No Royalties

Rutledge fared better. Hess-Newbridge paid him $300,000 for the right to drill on his farm. Even so, he’s bitter at the prospect of not receiving royalties. He says his farm can’t compete with corporate operations, and that he’s been selling timber from his land, as well as portions of a century-old stone wall.

“The DRBC,” he says, “isn’t writing me a check. They’re just basically saying ‘screw you.’”

Drilling is not officially dead in Wayne County. In February 2011 the DRBC held 18 hours of public hearings at three locations to take testimony on draft regulations and received 69,000 submissions during a two-month public comment period, according to spokesmen Clarke Rupert and Kate O’Hara.

The commission scheduled a hearing for Nov. 21, 2011. Fox showed up with 2,000 protesters, but the meeting was canceled and has yet to be rescheduled.

‘Technical’ Meetings

A statement on the commission’s website says that as of May the commissioners are “convening meetings with their respective technical staff” as they consider rules for drilling.

As fracking continues in most of Pennsylvania, Wayne County residents are recognizing that public-works improvements tied to a gas boom aren’t going to happen.

“We expected better roads,” says Myron Uretsky, a retired New York University professor who owns a house in the town of Damascus, Pennsylvania. “We have no fire hydrants -— the gas companies were going to put them in.”

While many residents blame Fox for their troubles, he says they were naive to think drilling would ever be allowed in such an environmentally critical area. He faults the gas companies for dangling money in front of farmers without warning them of the potential problems.

“It was all sweetness and light,” he says. “‘You’ll make so much money.’ That’s exploitation, not prosperity. This was a bubble.”

To contact the reporter on this story: Roben Farzad in New York at rfarzad@bloomberg.net

To contact the editor responsible for this story: Josh Tyrangiel at jtyrangiel@bloomberg.net


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