Category Archives: Regulation
BSEE: HWCG Capping Stack Successfully Tested
The U.S. Department of the Interior’s Bureau of Safety and Environmental Enforcement (BSEE), Noble Energy, Inc. and the Helix Well Containment Group (HWCG) announced Tuesday the successful completion of a full-scale deployment of critical well control equipment to assess Noble Energy’s ability to respond to a potential subsea blowout in the deepwater Gulf of Mexico.
BSEE Director James Watson confirmed that the HWCG capping stack deployed for the exercise met the pressurization requirements of the drill scenario, marking successful completion of the exercise.
The unannounced deployment drill, undertaken at the direction of BSEE, began April 30 to test the HWCG capping stack system – a 20-feet tall, 146,000-pound piece of equipment similar to the one that stopped the flow of oil from the Macondo well following the Deepwater Horizon explosion and oil spill in 2010. During this exercise, the capping stack was deployed in more than 5,000 feet of water in the Gulf of Mexico. Once on site, the system was lowered to a simulated well head (a pre-set parking pile) on the ocean floor, connected to the well head, and pressurized to 8,400 pounds per square inch.
“Deployment drill exercises like this one are essential to supporting President Obama’s commitment to the safe and responsible development of offshore resources,” said Director Watson. “BSEE continually works to ensure that the oil and natural gas industry is prepared and ready to respond with the most effective equipment and response systems.”
BSEE engineers, inspectors and oil spill response specialists are evaluating the deployment operations and identifying lessons learned as the bureau continues efforts to improve safety and environmental protection across the offshore oil and natural gas industry.
“The quick and effective response to a deepwater well containment incident, demonstrated during the drill, was enabled by collaborative communication and planning between the industry and regulatory agencies with a focus on solutions-based outcomes,” said John Lewis, senior vice president of Noble Energy. “BSEE, the U.S. Coast Guard, Louisiana Offshore Coordinator’s Office and Noble Energy brought unique perspectives together in a Unified Command structure to achieve a shared goal. Through excellent coordination within the Incident Command System structure that included elevating the Source Control Chief to report directly to Unified Command, the dedication of hundreds of people and activation of the HWCG rapid response system, all objectives were met.”
“HWCG’s ability to quickly and effectively respond to a call from Noble Energy and every operator in our consortium is made possible by a combination of the mutual aid agreement committed to by each consortium member and the contracts we have in place for equipment that is staffed and working in the Gulf each day,” said Roger Scheuermann, HWCG Commercial Director. “Mutual aid enables members to draw upon the collective technical expertise, assets and resources of the group in the event of an incident. Utilizing staffed and working vessels, drilling and production equipment helps ensure there is no down time for staffing or testing equipment readiness in a crisis situation.”
In accordance with the plan, all 15 member companies were activated for this incident through the HWCG notification system.
For the safety of personnel and equipment, a Unified Command comprised of BSEE, the US Coast Guard, Louisiana Oil Spill Coordinators Office and Noble Energy decided to temporarily hold operations May 2 and 3 due to rough weather over the Gulf of Mexico. The safety of personnel remained a top priority throughout the exercise.
Since the Deepwater Horizon tragedy in 2010, BSEE has worked to implement the most aggressive and comprehensive offshore oil and gas regulatory reforms in the nation’s history. This deepwater containment drill tested one critical component of enhanced drilling safety requirements.
Press Release, May 8, 2013: Source
The EPA Snake Pit
By Alan Caruba
Under President Obama, two women have been the director of the Environmental Protection Agency (EPA), Carol Browner, who served in the Clinton administration and was one of the “czars” Obama appointed; her acolyte Lisa Jackson, and up for the post is Gina McCarthy. Browner and Jackson went out of their way to conceal their internal communications from Congress and McCarthy lied to the committee considering her nomination.
How bad is the EPA? The Society of Environmental Journalists, on the occasion of the April 11 hearing on McCarthy’s nomination, released a statement that said, “The Obama administration has been anything but transparent in its dealings with reporters seeking information, interviews and clarification on a host of environmental, health and public lands issues.” The SEJ accused the EPA of being “one of the most closed, opaque agencies to the press.”
Apparently, the primary consideration for the job of EPA Director is an intense desire to destroy the use of hydrocarbons, oil, coal and natural gas, for transportation and all other forms of energy on which our economy depends. Obama, when campaigning in 2008, made it clear he wanted end the use of coal to generate electricity. At the time, fifty percent of all electricity was produced by coal and now that figure is in decline as coal-fired plants are being forced to close thanks to EPA regulations.
If Ms. McCarthy has her way, the cost of driving cars and trucks will go up in the name of protecting the health of Americans. As Paul Driessen, a senior policy advisor for the Committee For a Constructive Tomorrow, recently noted, “Since 1970, America’s cars have eliminated 99% of pollutants that once came out of tailpipes.” Joel Schwartz, co-author of “Air Quality in America”, points out, “Today’s cars are essentially zero-emission vehicles, compared to 1970 models.” The EPA’s latest attack on drivers is the implementation of “Tier 3 rules” intended to reduce sulfur levels to achieve zero air quality or health benefits.
Suffice to say that the air and water in America is clean, very clean. Whatever health hazards existed in the 1970s no longer exist. Like all bureaucracies, the EPA now exists to expand its budget and its control over our lives. The Heritage Foundation has calculated that Obama’s EPA’s twenty “major” regulations—those that cost $100 million or more annually—could cost the U.S. more than $36 billion per year. Obama’s EPA has generated 1,920 new regulations.
Don’t think of the EPA as a government agency. It is a weapon of economic destruction.
This has not gone unnoticed. A recent Wall Street Journal opinion by John Barrasso, a Republican Senator from Wyoming, noted that “During President Obama’s first term, EPA policies discouraged energy exploration, buried job creators under red tape, and deliberately hid information from the public.”
“Many EPA regulations,” said Sen. Barrasso, “chased microscopic benefits at maximum cost,” noting for example that “The EPA has proposed dropping the acceptable amount of ozone in the air from the 75 parts per billion allowed today to 60 or 70 parts per billion. The agency concedes that the rule would have a minimal effect on American’s health, but says it would cost as much as $90 billion a year. A study by the Manufacturers Alliance for Productivity and Innovation estimated it would eliminate up to 7.3 million jobs in a wide variety of industries, including refining.”
The other sector in the EPA’s bull’s eye is agriculture. Not content with laying siege to auto manufacturers, oil refineries, coal-fired plants, and all other energy users that might generate carbon dioxide and other so-called greenhouse gases, Barrasso noted that the EPA “has gathered personal information about tens of thousands of livestock farmers and the locations of their operations” which it then shared with environmental groups.
Writing in The Daily Caller, Henry Miller, a physician and molecular biologist and currently the Robert Wesson Fellow in Scientific Philosophy and Public Policy at Stanford University’s Hoover Institution, characterized the EPA as “a miasma populated by the most radical, disaffected and anti-industry discards from other agencies,” adding that there was “entrenched institutional paranoia and an oppositional world view.”
“Unscientific policies and regulatory grandiosity and excess,” wrote Dr. Miller, “are not EPA’s only failings; neglecting to weigh costs and benefits is shockingly common, noting that “The EPA’s repeated failures should not come as a surprise because the agency has long been a haven for scientifically insupportable policies perpetrated by anti-technology ideologues.”
Marlo Lewis, a senior fellow at the Competitive Enterprise Institute, writing in Forbes magazine, pointed out Gina McCarthy, the nominee to direct the EPA, “has a history of misleading Congress and the public about her agency’s greenhouse gas regulations. “At a hearing of the House Oversight and Government Reform Committee in October 2011, McCarthy denied motor vehicle greenhouse gas emission standards are “related to” fuel economy standards. In doing so,” said Lewis, “she denied plain facts she must know to be true. She did so under oath.”
“The EPA has no statutory authority to regulate fuel economy. More importantly, the federal Energy Policy and Conservation Act prohibits states from adopting laws or regulations ‘related to’ fuel economy.”
The point of this exercise is demonstrate that the EPA is the very definition of a “rogue agency” for which neither laws, nor science, are of any consequence as it pursues policies that do incalculable harm at a time when the nation is deep in debt and in need of economic growth, not regulatory strangulation.
© Alan Caruba, 2013
Worldwide Field Development News Nov 3 – Nov 9, 2012
This week the SubseaIQ team added 0 new projects and updated 14 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 – SouthEast
Maleo MOPU Recevies TLC
Nov 8, 2012 – SOV Windermere (subsea operations vessel) has been contracted to provide offshore support services in the Maleo field in East Java’s Madura offshore PSC. Hall Marine, the vessel’s owner, indicated the operation is centered around the Windermere’s integral 15-man saturation diving facility. The crew of the vessel will be engaged in facility inspections as well as repair and maintenance operations. Maleo is produced via a six-wellhead platform and a jackup converted to a Mobile Offshore Production Unit.
Thailand Partners Provide Concession Update
Nov 6, 2012 – Thailand’s Department of Mineral Fuels, Ministry of Energy has formally approved the transfer of 50% participating interest in the G2/48 concession from Pearl Oil to Rayong Offshore Exploration Ltd. The concession lies in proximity to the Jasmine and Manora oil fields and also contains the Rayong Basin which possesses similar characteristics to nearby basins with known oil accumulations. An exploration drilling program is in the advanced stages of planning with the Anchan-1 and Sainampueng-1 wells scheduled to spud 4Q 2012. These wells will satisfy the 5- and 6-year concession commitments respectively.
Project Details: Sainampueng
Sterling Gets Mixed Results From Ioana
Nov 7, 2012 – TD has been reached in the Ioana-1 well in the Romanian sector of the Black Sea. Gas shows were encountered in the Sterling Resources-operated well from 1,640 feet to the total depth of 6,397 feet. The main objective identified by 2D seismic was encountered as prognosed but was found to be made up of thinly bedded sands within low permeability siltstones. Shallower gas bearing sands were intersected but formation details won’t be known until cased-hole logs are thoroughly reviewed. Sterling indicated that it might seek to acquire 3D seismic data over the area to gain a better understanding of the complex formations encountered while drilling Ioana.
Project Details: Ioana
N. America – Mexico
Pemex Awards Akal Contract to Sea Trucks
Nov 9, 2012 – Pemex awarded an EPCI contract to Sea Trucks for work to be done in the Akal field offshore Mexico. The project calls for the extension of topsides of four platforms including processing equipment with associated piping and fire, gas, electrical and control systems. Field infrastructure will also be upgraded by the addition of subsea pipelines, pig launchers/receivers, spools and risers. No definite timeline has been released but the company says the work will take place in the first half of 2013.
Project Details: Cantarell
Asia – Far East
Roc Continues Success in Beibu Gulf
Nov 6, 2012 – Roc Oil, operator of the WZ6-12 development area in the Beibu Gulf, successfully drilled its second exploration well to a total depth of 8,720 feet. Well WZ6-12-A6 intersected almost 200 feet of net oil pay through multiple hydrocarbon bearing zones in the Weizhou formation and will be completed as a producer. Results of the well have confirmed the extent of the WZ6-12 South field. The third well in the three well exploration program, WZ6-12-A7, is underway and will survey the Sliver and Liushagang prospects to the north of the field.
Project Details: Beibu Gulf
N. America – US GOM
Technip Wins Cardamom Contract
Nov 9, 2012 – Shell awarded another Gulf of Mexico development contract to Technip for the development of infrastructure for the Cardamom field in Garden Banks block 427. The project consists of a subsea tieback to the Auger TLP at a water depth of 2,720 feet. Under the contract, Technip will provide project management, engineering, fabrication and installation of 8 miles of pipe-in-pipe flowlines with associated line terminations and steel catenary risers. Offshore installation is planned for the second half of 2013. The company has not disclosed the value of the contract.
Project Details: Auger
MidEast – Persian Gulf
South Pars 17 and 18 Nearing Completion
Nov 6, 2012 – Iranian Offshore Engineering and Construction Company successfully built and installed the 2,320-ton production deck for South Pars A17 platform. From engineering to installation, the entire project took just over 4 years to complete. Production will begin in about 3 months when final commissioning is complete. The unit has the capacity to produce 500 million cubic feet of gas per day. Construction of the production deck for the A18 platform is 90% complete. Completion of the two platforms will be a milestone for phases 17 and 18 in the South Pars development.
Project Details: South Pars
Cosmos Concession Sees Reserve Estimates Rise
Nov 5, 2012 – New Zealand Oil & Gas announced 2P reserve estimates for the Cosmos Concession, offshore Tunisia, have increased from 6.3 to 8.8 million barrels of recoverable hydrocarbons. The 40% increase is attributed to a resource evaluation completed by InSite Petroleum Consultants Ltd. Two other independent assessments have garnered similar results. A final investment decision from the Cosmos partners is expected in early 2013. Storm Ventures International operates the license with a 40% stake. NZOG and state-owned oil company ETAP hold 40% and 20% stakes respectively.
Project Details: Cosmos South
Europe – North Sea
Europa Eyes Irish Atlantic Margin Prospects
Nov 9, 2012 – Europa Oil and Gas has identified two previously unknown prospects, Mullen and Kiernan, in the South Porcupine Basin in the Irish Atlantic Margin. Both prospects are located in the company’s 100% owned Licensing Options 11/7 and 11/8. First pass seismic data has been reprocessed over Mullen while reprocessing is on-going over Kiernan. Resource estimates at Mullen range from 66 mmbo (P90) to 1092 mmbo (P10). Both prospects are characterized by Early Cretaceous turbidite reservoirs which, although proven in the North Porcupine Basin, are untested in the south. Results from the upcoming ExxonMobile Dunquin well may help to de-risk the area. Europa is currently looking for a joint venture partner to assist with maturing the prospects to drillable status.
Subsea 7 Grabs Subsea Compression Gig
Nov 9, 2012 – Subsea 7 is the winner of a subsea compression contract for the Statoil-operated Gullfaks C production facility. At almost $70 million the contract provides for the engineering, installation and commissioning of a 9.5 mile integrated power umbilical, a protection structure, a subsea compressor station, pipeline spools and tie-ins. Work will begin immediately at Subsea 7’s Stavanger office with offshore operations scheduled to begin in 2015.
Project Details: Greater Gullfaks Area
Proserv Awarded Cygnus Controls Contract
Nov 8, 2012 – GDF SUEZ, through its design contractor AMEC, awarded a $1.9 million contract to Proserv to design, engineer and build wellhead control panels for the Alpha and Bravo platforms at the Cygnus project in the UK North Sea. Proserv will also provide an umbilical termination unit that is integral to the control of the isolation valve fitted to the subsea export pipeline. Six of the ten development wells associated with the platforms will be controlled through the initial panel design. Work is already underway on the project and equipment is scheduled for delivery in 2013 and 2014.
Project Details: Cygnus
Chevron Takes The Helm in West of Shetland Probe
Nov 7, 2012 – Chevron has been given consent by the UK Department of Energy and Climate Change (DECC) to drill the West of Sheland Cambo-5 well on behalf of Hess Limited, the operator of block 204/5a. Cambo-5 will be drilled by a drillship in 3,576 feet of water but the vessel chosen for the drilling program has yet to be named. As part of the approval process, the DECC has thoroughly reviewed Chevron’s management systems and emergency response plans and inspected the drillship that is to be used for the well.
Northeastern Johan Sverdrup Reservoir Qualtity Confirmed
Nov 7, 2012 – Diamond Offshore’s Ocean Vanguard (mid-water semisub) drilled another successful well in the Johan Sverdrup discovery area. Well 16/2-14 was drilled almost 4 miles northwest of Johan Sverdrup discovery well 16/2-6. The main objective was to collect data from the stratigraphic sequence above the reservoir to serve as the basis for field development decisions. A 98-foot oil column was encountered in Upper Jurassic reservoir rocks that exhibited good reservoir quality. The Hegre and Shetland Groups were encountered but reservoir quality was poor in both. The well was drilled to a total depth of 6,430 feet and will be permanently plugged and abandoned.
Project Details: Johan Sverdrup
Premier and Partners Come Up Dry at Spaniards East
Nov 6, 2012 – Exploration well 15/21a-60 in the UK North Sea was drilled to a depth of 10,694 feet and plugged and abandoned as a dry hole. The Premier-operated well was designed to test the easterly extent of the Spaniards discovery and encountered 75 feet of Jurassic sands. However, logging revealed the sands to be water wet. A full analysis of the drilling data is required before a final decision on the commerciality of the Spaniards discovery can be made.
Africa – West
Alen Development Remains On Schedule
Nov 7, 2012 – PA Resources announced work on the Alen field development in Blocks O and I, offshore Equatorial Guinea, is progressing on schedule. The goal remains to achieve first production in the second half of 2013. Fabrication of platform facilities is in advanced stages and installation of flowlines and umbilicals is expected in 4Q 2012. The development will be comprised of a wellhead platform connected by a bridge to a central processing platform. Once on-line, Alen should produce 33,000 barrels of oil per day via three production wells.
Project Details: Aseng
S. America – Other & Carib.
Mapale-1 Yields Gas Offshore Columbia
Nov 8, 2012 – Equion Energia and its partners announced the discovery of gas in the Mapale-1 exploration well in block RC-5 offshore Columbia. The well was spud in August using the West Mischief (350′ ILC). Gas shows during drilling confirmed the presence of a hydrocarbon system and fluid tests and logging results confirmed the presence of dry natural gas. The company will now begin the technical evaluation process in order to determine the potential of the discovery. A second well was scheduled to be drilled but was postponed until after the harsh weather season, which lasts from November through April, passed. Equion serves as operator with 40.56% interest followed by Ecopetrol with 32% and Petrobras with the remaining 27.44%.
- Sea Trucks Secures Subsea Installation Contract in Mexico (mb50.wordpress.com)
- Worldwide Field Development News Oct 27 – Nov 2, 2012 (mb50.wordpress.com)
- Gulf of Mexico: Quest Offshore Sees Bright Future for Deepwater GoM (USA) (mb50.wordpress.com)
- UK: PEMEX E&P and BP to Share Technology, Expertise for Deepwater Well Cap (mb50.wordpress.com)
- USA: FMC Technologies, Edison Chouest Offshore Team Up (mb50.wordpress.com)
Gulf of Mexico: Quest Offshore Sees Bright Future for Deepwater GoM (USA)
The Gulf of Mexico, more than any other major deepwater region in the world, has experienced massive changes in the last five years with long-term implications for the future of the region and the GoM’s supply & demand effects on the global deepwater oil and gas market, Quest Offshore says in its report.
The worldwide financial crisis and subsequent recession, shale gas’ implications on U.S. natural gas prices and the aftermath of the Macondo incident have led to significant changes in the outlook for the region. Despite those overwhelming obstacles, the U.S. GoM’s future is bright with a pronounced recovery expected in all major market segments from drilling to subsea, floating production and marine construction.
Overall spending in the region is expected to increase significantly starting in 2013 up nearly 30 percent to $40 billion. Total expenditures are expected to reach a significant $167 billion in the 2013 to 2016 period. For the first time, 2012 is expected to represent an investment shift with deepwater CAPEX and OPEX spending surpassing that in shallow water. In the under developed ultra-deepwater frontier areas of the region, challenging technical and reservoir conditions will result in increased spending across the board, a trend expected to continue through the foreseeable future.
Five years ago the region was a mix of major and independent oil companies executing both oil and gas standalone and subsea tieback projects. In 2013 and beyond, Quest sees more oil dominance with offshore gas waning. Large international oil companies will play a larger role with the execution of standalone (hub) projects with niche-focused independents looking to infrastructure-led drilling around existing hubs and mega-independents continuing to grow their strategic portfolios in select basins.
In Quest Offshore’s latest market report, Quest Deepwater Review: Gulf of Mexico 2013 and Beyond, the reader will gain a comprehensive understanding of current trends and expectations from one of the leading deepwater basins, the U.S. Gulf of Mexico.
Leasing Activity Positive for Deep and Ultra-deepwater
Leasing activity is rightly seen as the furthest leading indicator for prospective oil and gas activity not only in the Gulf but throughout the world. Due to the relatively long lead times between leasing, drilling and production, leasing trends can be expected to provide insight on future activity for years to come. With one-third of active deepwater leases, oil majors and national oil companies are expected to continue to be the driving force for pushing the boundaries of the Gulf of Mexico’s development. Excluding Anadarko and Conoco, all recent frontier projects have been undertaken through operatorship’s of one of the majors or national oil companies (BP, Chevron, Exxon, Shell, Total, Statoil, Petrobras), and we expect this theme to persist moving forward.
Drilling Permitting on an Upward Trend
Drilling permit approvals are showing noticeable increases over the past six months with total counts back to pre-Macondo levels. As of the end of September there have been 78 new exploration drilling permits and 36 new development drilling permits approved over the year.
While raw permit counts are showing positive movement this year, the comparison in permits issued per project highlights the underlying cause for such steep increases in the first half of 2012. Multi-well projects (defined as five or more wells) have seen a record permitting pace since late 2011; examples of this trend include Chevron’s Jack/St. Malo Project, Shell’s Mars B Project, Hess’s Tubular Bells project, Chevron’s Big Foot and most recently the BP’s Atlantis North development, while true wildcat exploration permit numbers are still well below levels seen prior to the drilling moratorium.
Drilling Market Accelerating
Notable discoveries of ultra-deepwater fields in the Lower Tertiary continue to increase the reserve and production expectations for the region. The shift in the Gulf is most apparent in the floating rig market with four operators now possessing 50 percent of the contracted rig fleet. Ninety percent of rigs operating are high-spec and rated for ultra-deepwater.
Robust Outlook for Deepwater Development
Since 2008, the U.S. Gulf of Mexico has undergone a shift in project development mix from heavy in small, independent-operated subsea tiebacks to one that is grounded in fewer, larger subsea tiebacks and high-investment standalone developments developed by international oil companies and mega-independents.
This shift towards fewer, larger subsea tiebacks as well as increased FPS units will have profound effects on the future of the subsea sector as the hardware installed evolves as a direct result of fewer gas developments and deeper, more challenging fields. Subsea equipment manufacturers will experience fewer, but larger scope, award opportunities through the forecast period. As these developments move into more challenging areas, the value of these subsea production packages are expected to increase significantly as HP/HT trees and subsea processing become an enabler for these complex, capital-intensive projects.
This next wave of FPS developments is, for the most part, in ultra-deepwater and in more remote areas not currently connected to shallow water or onshore infrastructure. These developments will materially impact the pipeline and marine construction markets (SURF) as these production hubs are connected to existing export infrastructure through 2016 and beyond. The subsea tieback potential for these hubs is most likely to be seen in the latter half of this decade and into the following, with these latest hubs laying the foundation for the next generation of deepwater developments in the region.
Quest Offshore Sees Bright Future for Deepwater GoM (USA)| Offshore Energy Today.
- Gulf of Mexico poised for resurgence in 2013 (fuelfix.com)
Worldwide Field Development News Sep 8 – Sep 14, 2012
This week the SubseaIQ team added 3 new projects and updated 17 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 – SouthEast
Torquing the Bit for Gurame Appraisal
Sep 13, 2012 – The Gurame SE-1X well is expected to spud towards the end of September, according to MEO Australia. Success of the appraisal well could lead to early development of the Gurame oil and gas field situated offshore northern Sumatra in the Seruway PSC. The well was identified via 3D seismic as the lowest risk drill-ready candidate with the highest potential for commercial development. Drilling will be undertaken by the Hercules 208 (200′ MLC). Two attractive targets in the well, the Baong and Belumai reservoirs, are expected to be naturally fractured and gas bearing. These attributes should improve the possibility of achieving commercial flow rates. MOE maintains a 100% interest in Seruway.
Project Details: Gurame
Lundin Announces Third Gas Discovery
Sep 12, 2012 – The Berangan-1 well has proved to be Lundin Petroleum‘s third gas discovery in block SB303 offshore Malaysia. The well was drilled in 229 feet of water to a total depth of 5,607 feet by the West Courageous (350’ ILC). Data acquired from the well indicates a 541 foot gross continuous gas column in mid-Miocene sands. While Berangan-1 is the third gas discovery in SB303, it is the fourth in the contract area. Each of the 4 gas discovery lies within a 6 mile radius.
Project Details: Berangan
Sep 11, 2012 – Otto Energy has approved the Final Investment Decision for Phase II of the Galoc field. Total project cost will be $188 million. Based on its working interest in the project, Otto will be funding 33 percent of the cost, or $62 million. The scope of work for Phase II includes drilling two subsea wells, tying back the wells to the existing FPSO and installing a second production riser and control umbilical. Both wells are expected to commence production during the second half of 2013. The two new Phase II wells will increase field production rates to 12,000 bopd from the current rate of 5,600 bopd.
Project Details: Galoc
Europe – North Sea
Sep 13, 2012 – BP has announced it reached an agreement to sell its 18.36% stake in Draugen Field in the Norwegian Sea to Norske Shell for $240 million. The deal, subject to regulatory approval, should be completed by the end of the year. BP’s net production from the Shell-operated Draugen field averages 6,000 barrels per day. Since 2010, BP has entered into agreements to sell assets valued at $33 billion. In an effort to focus more on growth opportunities and its core business strengths BP expects to divest $38 billion in assets between 2010 and 2013.
Project Details: Draugen
Providence Resources Confirms Plans for Dunquin Prospect
Sep 13, 2012 – Providence Resources has been informed by ExxonMobil that a letter of intent has been signed for the use of Ocean Rig’s Eirik Raude (UDW semisub). The rig will be used to drill the Dunquin prospect located in Frontier Exploration Licence 3/04 offshore Ireland. Program duration is expected to take up to 6 months and will commence in the first quarter of 2013, pending corporate and co-venture contract approvals. Partners in the exploration license include operator ExxonMobile (27.5%), Eni (27.5%), Repsol (25%), Providence Resources (16%) and Sosina Exploration (4%).
Project Details: Dunquin Project
Exploration Well Spuds at Geite
Sep 12, 2012 – JV partner Bridge Energy has announced the start of operations at exploration well 7/11-13 on the Norwegian continental shelf. The well is targeting the Triassic reservoir Geite prospect which is located 19 miles (30 kilometers) west of the Ula field. The Maersk Guardian (350′ ILC) is drilling the well and is expected to be on location for a minimum of 80 days.
Project Details: Geite
N. America – US Alaska
Shell Starts Drilling in Chukchi Sea
Sep 12, 2012 – Shell’s much anticipated Chukchi Sea drilling campaign is underway marking the first attempt in 20 years to explore offshore U.S. Arctic petroleum resources. Currently, the Noble Discoverer (mid-water drillship) is being used to drill the mud line cellar and top-hole sections of the first well. This is expected to take two weeks, after which the Discoverer will either continue drilling the Burger prospect or will move to another location to drill the top-hole section. Part of that decision will rest on whether or not the company is able to obtain a permit to drill past the surface sections into the oil bearing portion of the well. Shell has plans to drill three wells in the Chukchi Sea and two wells in the Beaufort Sea if the weather cooperates.
Project Details: Burger, SW Shoebill, Cracker Jack
Africa – Other
Sep 11, 2012 – Africa-focused Tullow Oil reported Monday that the Mbawa-1 exploration well, currently being drilled by Apache Corporation offshore Kenya, has encountered gas in its shallowest objective. Mbawa-1, located in the L8 license, has so far been drilled to a depth of 8,375 feet and it has encountered approximately 170 feet of net gas pay in porous Cretaceous sandstones. The Deepsea Metro I (UDW Drillship) is now drilling the well to a total depth of 10,745 feet. Apache is the operator of Block L8 with a 50-percent interest. Tullow holds a 15-percent interest.
Project Details: Mbawa
Beach Gains 30% of Est Cobalcescu
Sep 12, 2012 – Melrose Resources has agreed to farm-out 30% of its equity in the Est Cobalcescu exploration concession in the Black Sea to Beach Petroleum. Once the transaction is completed, Melrose will retain operatorship of the concession. Terms dictate that Beach will pay its proportionate share of past costs and cover Melrose’s share of the recently completed seismic survey.
Africa – West
Partners Reprocessing Seismic Data for Aje
Sep 13, 2012 – The joint venture partners for Aje, led by YFP, are reprocessing seismic data related to the Aje discovery with a focus on the Cenomanian reservoir. The joint venture is mulling the potential for early oil development as the technical review could lead to an increase in Cenomanian oil volumes. An appraisal well may be drilled in 2013 targeting the reservoir.
Project Details: Aje
N. America – US GOM
Petrobras Turns on the Taps at Chinook
Sep 13, 2012 – Petrobras has started production at its Chinook field in the U.S. Gulf of Mexico. The Chinook #4 well was drilled and completed in Lower Tertiary reservoirs. Production from Chinook is processed by the BW Pioneer – the first FPSO to operate in U.S. waters.
Project Details: The Greater Chinook Area
Plains Buys Shell’s Stake in Holstein
Sep 12, 2012 – It has been announced that Plains Exploration & Production has agreed to buy Shell’s 50% working interest in the Holstein Field for approximately $560 million. The transaction is effective October 2012 and should close by the end of the year. Holstein, located in the U.S. Gulf of Mexico, began producing in December 2004 and is facilitated by a spar platform anchored in 4,400 feet of water. Average net production at the field is 7,400 boepd. The remaining 50% interest in the field is held by BP.
Project Details: Holstein
S. America – Brazil
Canario Spud Expected in Next Few Weeks
Sep 13, 2012 – Vanco is preparing to move the GSF Arctic I (mid-water semisub) to drill its Canario prospect on BM-S-63. This is the second well in their three-well program offshore Brazil. Drilling is expected to commence in approximately two weeks.
Project Details: Canario
Sep 13, 2012 – Vanco Energy’s Sabia well reached a depth of 13,779 feet when a decision was made to stop drilling short of the proposed depth of 14,717 feet. Based on current well data, the discovered volumes are at the low end of the pre-drill range estimate. While the well encountered an active petroleum system, the commerciality of the discovery cannot be firmly made at this time. The information obtained from the well is likely to have a positive impact on the next two prospects to be drilled – Canario and Jandaia.
Project Details: Sabia
First Production at Baleia Azul
Sep 12, 2012 – Petrobras has announced the start of oil production at the Baleia Azul presalt field in the offshore Camps Basin. First oil from the field is being pumped aboard the Cidade de Anchieta FPSO. The Cidade de Anchieta is one of two new production systems that Petrobras will put into operation in 2012. Initial production at Baleia Azul is a good sign for Petrobras whose oil production has taken a hit this year due to maintenance and unexpected shutdowns. The company has also announced plans to bring Bauna and Piracaba fields online in October. Petrobras holds a 100% stake in the fields.
Project Details: Espadarte
- Shell Starts Drilling Offshore Alaska (247wallst.com)
- BP Divests a Number of GoM Assets for $5.55 Bln (mb50.wordpress.com)
Worldwide Field Development News Aug 17 – Aug 23, 2012
This week the SubseaIQ team added 1 new projects and updated 14 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 – Caspian
Seismic Survey Completed on RWE Dea’s Block 23 Offshore Turkmenistan
Aug 20, 2012 – RWE Dea has completed its 3D seismic survey offshore Turkmenistan in under four months. Approximately 154 square miles (400 square kilometers) was acquired in RWE Dea’s Block 23, which was awarded as part of a production sharing contract (PSC) in 2009.
According to RWE Dea, it will take several months for geologists and geophysicists to interpret the processed data collected from the Miocene and Pilocene rock strata at depths of 9,842 to 21,325 feet (3,000 to 6,500 meters). This 3D seismic survey transitioned from onshore to shallow water and was the first of its kind conducted on the coast of Turkmenistan. An additional 2D program was included in the seismic measurements in order to further assess the exploration potential of the area.
Asia – SouthEast
Majority Interest in Philippines Block SC56 Acquired by Total
Aug 23, 2012 – Total E&P Philippines B.V. announced it has agreed to a farm-out with Mitra Energy to take 75% interest in offshore Block SC56. The block is located in the Sulu Sea, covers a total area of 1,660 square miles (4,300 square kilometers) and has water depths ranging from 656 to 984 feet (200 to 3,000 meters). Mitra retains 25% interest in SC56.
A new exploration phase begins September 2012 with Mitra operating the re-processing of existing data and the acquisition of an additional 193 square miles (500 square kilometers) of 3D seismic. Operatorship will transfer to Total for drilling operations. Approval of this agreement by the authorities of the Republic of Philippines is pending.
Premier Upgrades Anoa Facility
Aug 23, 2012 – Premier Oil reported that the Anoa facility has been undergoing a series of upgrades via engineering projects collectively known as Phase 4. The first phase commenced began in July with pre-fabricated compression models being installed on the platform. The second phase of construction will continue during Summer 2013. The overall project will be completed during the second half of 2013 and will result in the development of around 200 billion cubic feet of undeveloped proven reserves on Natuna Sea Block A and increase the Anoa facility’s capacity to 200 BBtud.
Bualuang Bravo Platform to be Installed mid-October
Aug 23, 2012 – Construction on the Bualuang Bravo Platform is scheduled to be finished by the end of August and approvals have been received for the environmental impact assessment. The K1 HLV will begin load-out and installation of the platform by mid-October and by the end of October the platform will be ready for development drilling activities.
Project Details: Bualuang
Premier Reaches TD on Chim Sao NW Appraisal Well
Aug 17, 2012 – Premier Oil reported that the Chim Sao North West appraisal well, CS-3X, has reached a total depth of 13,894 feet (4,235 meters). The well has been plugged and abandoned after encountering oil shows in the Middle Dua sands. The appraisal well was drilled to determine whether the Chim Sao North West discovery extended into a separate fault segment to the north. The well targeted the Upper and Middle Dua sands. While 443 feet (135 meters) of sandstone reservoir were penetrated in the Upper Dua interval there was no indication of hydrocarbons. In the Middle Dua interval 541 feet (165 meters) of sands were drilled, but only oil shows were encountered. The CS-N17XP well, which was completed immediately prior to the appraisal well, was drilled to produce from the North West extension to the Chim Sao Field. That well was brought on-stream earlier this month with initial extended production test rates averaging 4,000 barrels of oil per day from four Upper Dua reservoirs.
Project Details: Chim Sao
Europe – North Sea
DECC Approves Fionn Field Development Plan
Aug 23, 2012 – UK’s Department of Energy and Climate Change has approved the Field Development Plan for the Fionn Field. Previously drilled and suspended, 211/22a-6, will be completed with dual electrical submersible pumps. First oil is anticipated in mid-2013 at an initial rate of 4,500 bopd. The well, which was originally drilled in 2007, tested oil from the Ness and Etive formations at a combined flow rate of approximately 5,500 bopd. Production from Fionn will be combined with production from Causeway and transported for processing to the Cormorant North platform.
Project Details: Causeway
Statoil Aims to Improve Recovery at Gullfaks South
Aug 23, 2012 – Statoil, along with its partner Petoro, has announced plans for further development of the Gullfaks South field located on the Norwegian continental shelf. Production in the field has fallen sharply in recent years. With a planned investment of $1.4 billion, Statoil will apply its “fast-track” concept which will make use of existing infrastructure as well as two new subsea structures and six additional development wells. The partners believe that their investment will allow recovery in the field to be increased by 65 million barrels of oil equivalent.
Project Details: Greater Gullfaks Area
Total to Spin Bit at Spinnaker
Aug 23, 2012 – Upon completion of operations at Tomintoul, Total will move the West Phoenix (UDW semisub) to its Spinnaker prospect. Spinnaker is located West of Shetlands on Block 206/04a.
Project Details: Spinnaker
Total to Spin Bit at Spinnaker
Aug 21, 2012 – Upon completion of operations at Tomintoul, Total will move the West Phoenix (UDW semisub) to its Spinnaker prospect. Spinnaker is located West of Shetlands on Block 206/04a.
Project Details: Spinnaker
Statoil Encounters Oil in Geitungen Prospect
Aug 17, 2012 – Statoil has made an oil discovery at the Geitungen prospect, reported Det norske, a partner in Production License 265. Oil was encountered and a core sample was recovered. Drilling operations are ongoing and the final results from the well are not yet available, Det norske said in a statement. The Ocean Vanguard (mid-water semisub) is drilling exploratory well 16/2-12 to a total depth of 6,759 feet (2,060 meters) to prove the presence of oil-bearing Jurassic sandstones similar to the Johan Sverdrup discovery. Statoil operates the field with a 40 percent stake; while Lundin holds 10 percent; Petoro holds 30 percent; and Det norske holds the remaining 20 percent.
Project Details: Geitungen
Aug 17, 2012 – Talisman Energy stated that the Duart field, which was shut-in on July 26 due to a process shutdown on the host Tartan platform, remains shut-in to date. During the shut-in period, additional technical issues have come to light which are preventing the restart of gas processing on the Tartan platform. The gas process is required to support Duart production. The operator will continue to close the field until these problems are resolved. Talisman indicates that the earliest restart date is December 2012.
Project Details: The Greater Tartan Area
S. America – Other & Carib.
Results Are In for Darwin Fluid Sample Analysis
Aug 23, 2012 – Borders & Southern received positive results from the fluid analysis performed on samples from Well 61/17-1 located offshore the Falkland Islands. The initial condensate yield from the Darwin gas samples, as measured in a laboratory separator test, varies from 123 to 140 stb/MMscf. The API gravity of the condensate is 46 to 49 degrees. Based on the condensate yield and ongoing reservoir modeling, the Company estimates the recoverable volume of condensate to be 130 to 250 million barrels with a mid-case of 190 million barrels. The company will now move forward with the acquisition of additional 3D seismic data in 2013 and explore the best way to fund an exploration and appraisal campaign.
Project Details: Darwin East
Africa – West
Ophir Energy Successfully Appraises Fortuna Discovery
Aug 23, 2012 – Ophir Energy has successfully drilled the Fortuna East-1 appraisal well in Block R offshore Equatorial Guinea. Fortuna East-1 is located approximately 4 miles (7 kilometers) east southeast of Fortuna-1. The well encountered natural gas in the eastern lobe of the Fortuna Complex as well as in a deeper exploration target Viscata. The recoverable mean resource from the eastern lobe is now estimated at 426 Bcf. A 180-foot (55-meter) gas bearing column containing a total of 131 feet (40 meters) of net pay in the primary target Late Miocene sands of the eastern lobe of the Fortuna Complex was encountered. Pressure measurements indicate communication between Fortuna-1 and Fortuna East-1.
Browse LNG Project Loses Chevron in Swap with Shell
Aug 20, 2012 – Interests in two major natural gas projects in Australia have changed hands between Royal Dutch Shell and Chevron Corporation. Shell has agreed to swap its interest 33.3-percent interest in two gas fields associated with its Wheatstone project located in Western Australia and pay $450 million in cash to Chevron. In return, Shell will receive a combined interest of 36.7-percent interest in the Browse LNG project.
Shell will now hold a 35-percent ownership in West Browse and 25-percent in East Browse. International Director for Shell Upstream, Andy Brown believes this deal with simplify the ownership of the Browse gas fields.
Project Details: Browse LNG
ConocoPhillips, Karoon Gas Resume Drilling Boreas-1 After Solving Rig Woes
Aug 17, 2012 – Karoon Gas has completed repair work on a blowout preventer after more than two months, and the contracted semisub rig, Transocean Legend (mid-water semisub), can resume drilling in the Greater Poseidon area in the Browse Basin offshore Western Australia. The operator is planning to drill at the Boreas-1 well, the first of a minimum five exploration wells the consortium will drill in the Greater Poseidon area, will begin on Aug. 17. All of the five exploration wells will be drilled by the Transocean Legend, and lie in the WA-314-P, WA-315-P and WA-398-P Browse Basin permits containing the previously announced Poseidon and Kronos gas discoveries. Karoon Gas holds a 40 percent stake in WA-315-P and WA-398-P, and a 90 percent stake in WA-314-P. ConocoPhillips holds the remaining stakes in the three permits.
Project Details: Boreas
- Worldwide Field Development News Aug 10 – Aug 16, 2012 (mb50.wordpress.com)
- Worldwide Field Development News Aug 3 – Aug 9, 2012 (mb50.wordpress.com)
- Mitt Romney pushes offshore oil drilling in mid-Atlantic (newsday.com)
- Romney Energy Plan Would Expand Oil Drilling Offshore (nytimes.com)
As ATP Oil Files For Bankruptcy, CEO Blames Obama For Company’s Collapse
Christopher Helman, Forbes Staff
I’m based in Houston, Texas, energy capital of the world.
Paul Buhlman swears the president’s ban on deepwater drilling killed his oil company. The whole story is a bit more complex.
(This story will appear in the Sept. 11, 2012 issue of Forbes Magazine)
When I get Paul Bulmahn on the phone rumors are swirling that he’s just days from putting his company, ATP Oil & Gas, into Chapter 11. He can’t confirm it yet, but he wants to make one thing perfectly clear: If it does come to bankruptcy (which it did on August 17) it isn’t his fault. The founder and chairman of publicly traded ATP (Nasdaq:ATPG), Bulmahn wants the world to know that the Obama Administration—and its illegal ban on deepwater drilling in the wake of the BP disaster—is to blame for the implosion of his company. Not him.
“It is all directly attributable to what the government did to us,” he rails. “This Administration has gone out of its way to create problems for my company, the company that I formed from scratch.” He’s more than angry. Bulmahn, 68, has already brought suit against the U.S. government seeking damages ($68 million to start with) for the 2010 moratorium that shut down deepwater operations in the Gulf of Mexico for the better part of a year. In an earlier case brought by ATP and rig company Ensco, Federal District Judge Martin Feldman ruled in May 2011 that the feds “acted unlawfully by unreasonably delaying action” on drilling permit applications. Still, ATP has a long, winding road to any hope of recovering damages from the government (which says it’s protected from claims by sovereign immunity).
That’s proving disastrous for Bulmahn. While hundreds of companies with operations in the gulf were affected by the government’s decision, perhaps no other was as hard hit as ATP—or as vulnerable. In 2010 the company had completed work on its $800 million deepwater production platform Titan and floated it out to the deepwater Telemark field 160 miles south of New Orleans. Bulmahn planned for Titan to complete drilling the final feet of four wells, hook them up, and let the oil—and the cash—start rolling in.
On April 19, 2010 ATP refinanced and rolled up $1.5 billion in debt into a new bond issue “and celebrated with champagne.” He says that at the time ATP stood a good chance of doubling its oil and gas volumes to 50,000 barrels per day within a year.
But the Deepwater Horizon exploded April 20. “We didn’t foresee an impact. The Titan is 80 miles farther south, and the spill is going to drift to the north,” says Bulmahn. Underwriter JPMorgan agreed, and it closed on the bond offering.
Soon ATP was informed by regulators that it would not be allowed to complete those Telemark wells, even though Titan was already outfitted with all the safety redun- dancies subsequently required for deepwater work. “They closed our spigot on revenues, but didn’t stop our expenses” for interest payments, rig contracts and the like. Bulmahn scrambled to spin off Titan as a subsidiary and borrowed $350 million more against it. ATP posted a net loss of $349 million in 2010.
It hasn’t gotten much better since. Overleveraged, ATP was balanced on a knife edge. The final Telemark wells didn’t get hooked up until earlier this year. Meanwhile, ATP has been burning through cash on what appears to be an ill-advised exploratory drilling campaign off Israel. In the past year ATP has lost $250 million on $600 million in revenues and now heads into bankruptcy, crushed by $2.7 billion in long-term debt and obligations and $300 million in annual interest payments. Bulmahn’s shares used to be worth $400 million; now they’re worthless.
But, say those who know ATP, you can only blame the Obama Administration for so much of the drama. “The moratorium had an effect on a lot of companies, but this is the only one blaming the moratorium two years later,” says an oil executive with direct knowledge of ATP.
Ravi Kamath, high-yield analyst with Global Hunter Securities, has been bearish on ATP for years and had a sell rating on ATP debt since early 2011, when it was trading at 104 cents on the dollar. It’s fallen to 29 cents now. Kamath says ATP’s problems reach far beyond the moratorium. He keeps a spreadsheet with 105 instances from the past decade where he says ATP has overpromised and then underdelivered. “Bulmahn has said lots of stuff that never happened,” says Kamath. “They have 11 years of bad forecasts.”
The first Telemark well was hooked up to Titan before the BP blowout, “but the project was already a year behind schedule and over budget.” Multiyear delays were normal at other ATP fields, too. What’s more, in August 2011 ATP said the third Telemark well was going to deliver 7,000 barrels per day. One month later the well was doing only 3,500. “With their cost of capital it’s just crazy to invest hundreds of millions to build a platform from scratch,” says Kamath. “They live in fantasyland.”
Yet instead of slashing costs and circling wagons, Bulmahn in late 2010 chose to take ATP on an international adventure. “I felt the need to find a way to keep our technically expert people occupied,” he says. That meant forging a deal with Isramco to drill an exploratory well offshore of Israel, near an area that has seen some massive natural gas discoveries. One well was finished in June; drilled to a depth of 14,000 feet it tapped as much as 800 billion cubic feet of gas. Sounds good, but it will be years before the infrastructure can be put in place to harvest it. Meanwhile ATP has $40 million in costs sunk off the coast of Israel.
Bulmahn says he’d like to retire; he owns a horse farm in Florida and has cashed out $100 million in ATP stock over the years (though, he insists, he’s eschewed $7 million in bonuses granted him since 2009). Earlier in 2012 he hired Matt McCarroll as ATP’s new CEO. McCarroll had expanded deepwater operator Dynamic Offshore Resources and sold it to SandRidge Energy for $1.3 billion. Yet after a week at ATP McCarroll left and rescinded his agreement to buy 1 million shares. The belief is that McCarroll was scared off by Bulmahn’s unwillingness to back a complete overhaul of ATP. Trying to salvage the status quo wasn’t an option. “He wasn’t the right fit,” says Bulmahn. McCarroll declined comment.
So what happens to ATP from here? They have already secured $600 million in debtor-in-possession financing, but after first-lien holders like Michael Dell’s MSD Capital are paid off, that won’t get it very far. Analysts say investors holding common shares, preferreds, convertible bonds and unsecured debt will get wiped out. Buyout bids are welcome.
So at this point, legal claims might be the most valuable asset ATP has left. In addition to the case pending against the U.S. government, ATP is pursuing claims against deep-pocketed BP. Who knows? With luck and lawyers, Bulmahn could still strike something.
More from the archives:
Texas Oilman Tired Of Being Victimized By Obama Drilling Ban
ATP Oil To Explore Near New Israeli Mega-Discoveries
Will ATP Have Better Luck In Israel Than The Gulf Of Mexico?
Obama Re-Bans Drilling Off Florida
- ATP Oil And Gas Files For Bankruptcy, CEO Blames Obama (zerohedge.com)
- Drilling Moratorium Leads ATP to Chapter 11 (gcaptain.com)