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Enbridge to Build Crude Oil Pipeline in US GoM

Enbridge Inc., announced that it will build, own and operate a crude oil pipeline in the Gulf of Mexico to connect the proposed Heidelberg development, operated by Anadarko Petroleum Corporation, to an existing third-party pipeline system.

The lateral pipeline is expected to be operational by 2016. Construction of the pipeline is subject to finalization of definitive agreements and sanction of the development by Anadarko and its project co-owners.

The Heidelberg lateral will originate in Green Canyon Block 860, approximately 200 miles southwest of New Orleans and in 5300 feet of water. The pipeline will be 20 inches in diameter and approximately 34 miles in length.

“We are pleased to be working with Anadarko and the Heidelberg producers,” said Leon Zupan, President, Gas Pipelines. “The Heidelberg lateral pipeline is an attractive investment opportunity for Enbridge. It also furthers our objective of diversifying our offshore business to include facilities that support the substantial crude oil discoveries in the deepwater of the US Gulf Coast.”

Enbridge’s offshore pipelines transport approximately 40 per cent of the natural gas produced in the deepwater Gulf of Mexico. The company’s offshore assets include interests in 13 natural gas gathering and transmission pipelines and one crude oil pipeline in five major pipeline corridors off the coasts of Louisiana and Mississippi.

Subsea World News – Enbridge to Build Crude Oil Pipeline in US GoM.

Ecopetrol Updates on US GoM Parmer Propect

Ecopetrol S.A., through its affiliate Ecopetrol America Inc., provided the results of the Parmer Prospect, deepwater Gulf of Mexico.

The Parmer prospect #1 is located on Green Canyon 867, at a depth of 18,900 ft (5,760 meters), which allowed for several pressure readings and the collection of several fluid samples from Miocene sands. The data indicate a column of approximately 240 ft (73 meters) of net condensate-rich gas pay, as prospect as one of 40 ft (12 meters) of net oil pay. In the coming months, Ecopetrol and its partners will reprocess 3-D seismic data and determine a comprehensive delimitation and development plan according to these results.

The two Parmer leases (GC 823 and GC 867) are located within the Green Canyon protraction area, at a depth of approximately 4,200 ft (1,280 meters) underwater. Each covers an area of 5,760 acres (23.3 square kilometers) and is located approximately 143 miles (230 km) from Louisiana.

Ecopetrol America has a 30% interest in the Parmer Prospect. Its partners are Stone Energy, and Apache that is the prospect’s operator.

The Parmer discovery is Ecopetrol’s second deepwater discovery in the Gulf of Mexico, one of the regions with the highest oil hydrocarbon potential in the world.

The results are expected to assist in Ecopetrol S.A.’s strategy to attain a production level of 1.0 million clean barrels of oil equivalent a day by 2015, and 1.3 million clean barrels by 2020.

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USA: Nexen’s Kakuna Well Fails to Impress

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Nexen Inc. today reported that drilling operations are complete on the Kakuna sub-salt exploration well on Green Canyon block 504 located approximately 180 miles southwest of New Orleans in deepwater Gulf of Mexico.

The well did not encounter commercial hydrocarbons, and is now in the process of being plugged and abandoned. Kakuna was drilled to a depth of 30,300 feet at a total cost of approximately $120 million, net to Nexen ($80 million after-tax).

Nexen is the operator of Kakuna with 72.5 %, while Statoil owns the remaining 27,5 %. Norway’s oil giant Statoil farmed into the Kakuna prospect in June 2011.

Nexen owns a broad inventory of exploration prospects in the Gulf of Mexico, including the sub-salt Miocene play in the central Gulf of Mexico and the Norphlet play surrounding our Appomattox discoveries.

The company’s 2012 exploration program includes approximately 15 offshore exploration and appraisal wells in the UK North Sea, West Africa and the Gulf of Mexico.

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USA: BP Awards Mad Dog Topsides FEED to AMEC

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AMEC, the international engineering and project management company, has been awarded a contract from BP Exploration & Production Inc. (BP) to provide Front End Engineering Design services (FEED) for the topsides facilities for the second phase of the Mad Dog field development. The new facility will be of one of the largest floating production systems to be installed in the Gulf of Mexico.

The contract value has not been disclosed.

“This award is the latest in our on-going global engineering and project management services agreement with BP and continues our long-term collaboration with the largest oil producer in the Gulf of Mexico,” said Simon Naylor, President of AMEC’s Natural Resources Americas business. “The contract further strengthens AMEC’s track record in the development of global deepwater facilities, building on current offshore projects in Brazil and Angola.”

The new facility will produce oil and gas from the Phase 2 development area within the existing Mad Dog field in the Green Canyon region of the Gulf of Mexico, about 200 miles (320 kilometres) south of New Orleans, Louisiana.

Deepwater projects are increasingly important in helping to meet rising demand for oil and gas around the world.

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First oil from the Caesar Tonga field in the Gulf of Mexico

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The Constitution spar floating production facility. (Photo: Anadarko)

Statoil’s operations in North America got another boost when operator Anadarko Petroleum and co-owners Shell and Chevron today, 12 March, announced the beginning of first production from the Caesar Tonga deep-water project in the Gulf of Mexico.

Caesar Tonga, in which Statoil Gulf of Mexico LLC has a 23.55% working interest, began flowing high-quality oil on 7 March.

Production from the project’s first three wells is expected to ramp up to approximately 45,000 barrels of oil equivalent (BOE) per day.

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Jason Nye, senior vice president, U.S. Offshore, Development and Production North America.

A fourth development well is expected to be drilled and completed later this year as part of the planned phase one development. Caesar Tonga has an estimated resource base of 200 to 400 million BOE.

“Caesar Tonga fits well with our strategy to significantly grow Gulf of Mexico production over the next several years,” says Statoil’s Jason Nye, senior vice president, U.S. Offshore, Development and Production North America.

“And it’s a great example of using existing infrastructure in the deep-water Gulf to achieve cost savings. The project teams worked well together on this.”

Caesar Tonga is developed as a subsea tieback to Anadarko Petroleum’s Constitution spar floating production facility in about 5,000 feet of water in Green Canyon Block 680 as a host.
In 2009, Anadarko began making modifications to the Constitution’s topsides to accommodate production from Caesar Tonga, about 10 miles to the east.

Caesar Tonga also included the first application of steel lazy wave riser technology in the Gulf of Mexico.

Get an overview of Statoil's active leases in the Gulf of Mexico,

Co-owners in the project are:  Anadarko, with 33.75 percent working interest; Shell Offshore Inc., 22.45 percent; and Chevron U.S.A. Inc., 20.25 percent.

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First Oil Flows at Caesar/Tonga Field in U.S. GoM

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Anadarko Petroleum Corporation , as operator, today announced first production at the Caesar/Tonga development in the Green Canyon area of the deepwater Gulf of Mexico.

Production from Caesar/Tonga, with an estimated resource base of 200 to 400 million barrels of oil equivalent (BOE), is expected to ramp up to approximately 45,000 BOE per day from the first three subsea wells. A fourth development well is expected to be drilled and completed later this year, as part of the planned Phase I development.

“We are excited to announce we began producing high-quality oil from the Caesar/Tonga development on March 7, 2012; an outstanding accomplishment by our project team consisting of co-owners, our employees and contractors,” said President and Chief Operating Officer Al Walker. “Our ability to safely achieve cost savings of almost $1 billion by leveraging our existing, operated infrastructure in the deepwater Gulf of Mexico continues to demonstrate the value of our hub-and-spoke approach to exploration and development. Caesar/Tonga is yet another capital-efficient, deepwater project in our Gulf of Mexico portfolio that we have successfully developed. This development and the Gulf of Mexico are an important part of Anadarko’s liquids growth and our domestically produced energy.”

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USA: Anadarko Allocates USD 6.9 Bln for 2012 Investments

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Anadarko Petroleum Corporation  today announced its 2012 capital program and guidance, and the highlights of its Investor Conference to be held on March 13, 2012.

“Anadarko is off to a great start in 2012 as it continues to build upon the strong operational results of 2011, while positioning the company for value-focused growth into the next decade,” Anadarko Chairman and CEO Jim Hackett said.

2012 Capital Program and Expectations Total 2012 capital expenditures are expected to be between $6.6 and $6.9 billion. This amount does not include expenditures by Western Gas Partners, LP (WES), a separate, publicly traded entity controlled by Anadarko and consolidated in its financial statements.

“Anadarko’s deep portfolio provides the flexibility to allocate more than 90 percent of our 2012 E&P (exploration and production) capital toward oil and liquids-rich assets, while dialing back U.S. onshore dry gas activity in the currently over-supplied North American natural gas market environment. We expect this capital program to deliver full-year sales volumes in the range of 256 to 260 million BOE (barrels of oil equivalent), which takes into account both the effect of anticipated asset monetizations and reduced natural gas activity. We expect liquids sales volumes to comprise about 45 percent of total sales volumes in 2012, equating to an increase of approximately 25,000 barrels per day over the previous year. Additionally, the capital program reflects our continued commitment to our worldwide exploration program, which has delivered industry-leading results for several years, while discovering many new asset platforms for future growth.”

An approximate breakout of the 2012 capital program is included below:

2012 Capital Expenditures by Area

$6.6 – $6.9 Billion

U.S. Onshore 55%

International 25%

Gulf of Mexico 10%

Midstream/Other 10%

U.S. Onshore

Approximately 55 percent of Anadarko’s 2012 capital budget is allocated to its shorter-cycle U.S. onshore activities, with a focus on liquids-rich opportunities in the Wattenberg field, Eagleford Shale, Permian Basin and emerging liquids-rich East Texas area.

In the Wattenberg field of northeastern Colorado, where the company has identified net resources of between 500 million and 1.5 billion BOE in its Wattenberg HZ program, Anadarko plans to accelerate value realization by increasing the number of operated rigs, from six horizontal rigs currently to eight by the middle of 2012.

In the Eagleford Shale in South Texas, Anadarko doubled the number of identified drill sites to about 4,000, thereby increasing its estimated net resources in the field to more than 600 million BOE. The company plans to run ten operated rigs in the Eagleford and expand its midstream infrastructure during the year to align with anticipated production growth.

In East Texas, Anadarko announced that with horizontal-drilling technology it has unlocked a new liquids-rich play in the Carthage area. In this East Texas HZ opportunity, the company has identified more than 450 drill sites with strong economics and an estimated 300 million BOE of net resources. In 2012, Anadarko plans to operate six to eight rigs and drill approximately 75 wells in the East Texas HZ play.

In the Marcellus Shale in north-central Pennsylvania, Anadarko has increased average well recoveries to approximately 8 billion cubic feet (Bcf) of natural gas per well, and has continued to improve efficiencies, resulting in a 30-percent reduction in drilling cycle times over 2010. Given the current market conditions for natural gas, the company expects the number of rigs (operated and non-operated) in the play to decrease from 21 to 13 over the course of the year.

International

Anadarko has allocated approximately 25 percent of its 2012 capital budget to its growing international portfolio, with a significant focus on Africa.

Offshore Mozambique, where Anadarko has made one of the most significant natural gas discoveries of the last decade, its partnership will continue to work toward achieving reserve certification in 2012 and a final investment decision (FID) in late 2013. As announced this morning, the partnership conducted a successful drillstem test at the Barquentine-2 well that flowed at an equipment-constrained rate of 90 to 100 million cubic feet of natural gas per day (MMcf/d), which supports a well-design capability of 100 to 200 MMcf/d. Additionally, Anadarko is increasing the estimated recoverable resource range of the Offshore Area 1 discovery area by another 2 trillion cubic feet (Tcf). Anadarko’s discovery area in the deepwater Rovuma Basin is now estimated to hold 17 to 30-plus Tcf of recoverable natural gas.

In Algeria, the El Merk mega project is approximately 90-percent complete and expected to begin to produce significant volumes by the end of the year. In West Africa, the Jubilee Unit is expected to average between 70,000 and 90,000 barrels of oil per day in 2012, while the partnership continues remedial work on several existing producing wells and initiates the Phase 1A drilling program. The company and its partners also recently completed a successful drillstem test in the TEN (Tweneboa, Enyenra and Ntomme) complex offshore Ghana that flowed at equipment-constrained rates of more than 20,000 barrels of high-quality oil per day. The partnership expects to submit a Plan of Development for the TEN complex later this year.

Gulf of Mexico

About 10 percent of Anadarko’s 2012 capital program is directed to its deepwater Gulf of Mexico activities. As announced today, Anadarko and the project’s co-owners safely achieved first production at the Caesar/Tonga mega project. Caesar/Tonga production is currently increasing and is expected to reach approximately 45,000 BOE per day from three subsea wells, which are being produced through the company’s Constitution spar on Green Canyon block 680.

Also in the Gulf, Anadarko continues to make progress on the Lucius development, which is located in the Keathley Canyon area. Fabrication of the 80,000 barrel-per-day, 450 MMcf/d truss spar is under way, and first production is expected in 2014.

The company also expects to initiate front-end engineering and design work for the development of its Heidelberg discovery in anticipation of project sanctioning later this year. The Heidelberg-2 appraisal well, announced in February, encountered more than 250 net feet of oil pay and supported the company’s net resource estimate of more than 200 million BOE for the field.

Exploration The company’s exploration program delivered more than 730 million BOE of net discovered resources in 2011. In 2012, Anadarko expects to continue an active program, investing approximately 20 percent of its capital budget in exploration, with plans to drill approximately 25 high-impact, deepwater exploration/appraisal wells worldwide. The most active areas of exploration and appraisal drilling this year are expected to be in East Africa, with seven to 10 planned wells offshore Mozambique; in West Africa, also with seven to 10 planned wells in the Ivorian and Sierra Leone/Liberia basins; and in the deepwater Gulf of Mexico, where Anadarko plans to return to pre-moratorium levels of drilling with six to eight planned wells.

“The strong results of 2011 and the list of significant achievements in just over two months in 2012 demonstrate our strategy is working,” said Al Walker, Anadarko President and Chief Operating Officer. “The announced 2012 capital program is aligned with estimated cash flow for the year, and would generate significant free cash flow at current strip prices. As an added measure to protect cash flows, we’ve locked in additional tactical hedges for oil volumes in 2012. We believe our announced 2012 capital program represents the appropriate level of investment to maintain financial discipline, while accelerating the value of our near-term oil and liquids-rich opportunities in the U.S. onshore, funding current mega-project developments, and continuing to build for the future with an active worldwide exploration program.”

Anadarko Petroleum Corporation’s mission is to deliver a competitive and sustainable rate of return to shareholders by exploring for, acquiring and developing oil and natural gas resources vital to the world’s health and welfare. As of year-end 2011, the company had 2.54 billion barrels-equivalent of proved reserves, making it one of the world’s largest independent exploration and production companies.

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USA: Successfull Heidelberg Appraisal for Anadarko

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Anadarko Petroleum Corporation yesterday reported the successful results of the Heidelberg-2 appraisal well, situated in Green Canyon block 903 in the deepwater Gulf of Mexico, which encountered approximately 250 net feet of oil pay in high-quality Miocene sands.

The appraisal well was drilled to a total depth of 31,030 feet in approximately 5,000 feet of water, about 1.5 miles south and 550 feet structurally updip from the Heidelberg discovery well. Log and pressure data from the appraisal and discovery wells indicate excellent quality, continuous and pressure-connected reservoirs with the same high-quality oil. The initial Heidelberg discovery well was drilled in 2009 and encountered more than 200 net feet of oil pay.

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“We’ve been looking forward to drilling an appraisal to our Heidelberg discovery for some time, and we could not be more pleased with the results,” said Bob Daniels, Anadarko Sr. Vice President, Worldwide Exploration. “The successful penetration of high-quality, oil-bearing sands confirmed the continuity of the reservoir, and validated our geologic model, and initial resource estimate of more than 200 million barrels of oil. We plan to immediately sidetrack the well to evaluate the down-dip extent of the field, and plan to initiate pre-FEED (front-end engineering and design) activities to prepare for sanctioning a development project.”

Anadarko operates the block with a 44.25-percent working interest. Co-owners in the block include Apache Deepwater LLC, a subsidiary of Apache Corporation (12.5-percent working interest), Eni (12.5-percent working interest), Statoil (12-percent working interest), ExxonMobil (9.375-percent working interest) and Cobalt International Energy, L.P. (9.375-percent working interest).

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