By Linda Hutchinson-Jafar
PORT OF SPAIN, Feb 6 (Reuters) – Upstream companies operating in Trinidad and Tobago will invest $3 billion in oil and gas exploration activities this year, Energy Minister Kevin Ramnarine said on Monday.
“2012 exploration drilling will spring to life after low to moderate activity,” he said at the opening session of the Trinidad and Tobago Energy conference.
Five drilling rigs are currently operating in the country while six seismic programs were continuing or starting in 2012.
Trinidad and Tobago is highly dependent on the energy sector, which contributes close to 40 percent of GDP, 40 percent of revenues and is the largest source of foreign direct investment.
Updating the status of negotiations for deep water blocks in the Atlantic, Ramnarine said discussions have concluded with BP Trinidad and Tobago and he expects sign-off soon, while talks were continuing with BG Trinidad and Tobago and BHP Billiton for deep water acreage.
Ramnarine said the country’s continuing decline in oil production was a “most worrying aspect of the energy sector.”
Oil production, which averaged 92,000 barrels per day in 2011, was hampered by a plant shutdown at the state-owned oil company Petrotrin and by maintenance activity by other small oil producers.
“Any gains in government revenue that could be realized as a result of increased oil prices were negated by falling oil production. It’s hurting the national economy and the country at a time when we should be benefitting from high oil prices,” he told the energy conference.
Oil production has declined to 100,000 barrels of oil per day (bpd) from 145,000 bpd over the last 10 years.
Ramnarine said his ministry is preparing for a road show at the end of the month in Houston to meet with representatives from 200 oil and gas companies that have expressed interest in Trinidad and Tobago.
The ministry will also promote the next deep water bid round, which will be launched next month, he said.
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Oil and gas exploration and production in the Gulf of Mexico will some day return to pre-BP spill levels, the president of Chevron North America Exploration and Production Company, Gary Luquette said Thursday.
But the rigorous permitting, safety and verification requirements imposed after the April 2010 BP disaster are here to stay, Gary Luquette said during an interview with The Daily Advertiser before the Greater Lafayette Chamber of Commerce annual banquet, where he was keynote speaker.
“It’s a new normal,” Luquette said.
The industry hasn’t found its stride since the Deepwater Horizon platform operated by BP off the coast of Louisiana exploded and sunk, creating the largest oil spill in U.S. history.
That disaster, which killed 11 workers, led the federal government to impose a six-month moratorium on deepwater drilling that was followed by more stringent permitting and safety regulations.
“I think activity levels can and will return to pre-Macondo (spill) levels,” he said. “The effort and rigor in getting permits approved won’t return.”
Luquette said that’s a good thing for Louisiana and the industry. The BP disaster tainted the entire industry.
Tighter permitting, regulations and oversight will help the industry rebuild public trust, he said.
The “new normal” may be too costly for some of the small independent companies to survive, Luquette said.
“In the end,” he said, “the standards are going up. It’s your responsibility to enact them.”
The Gulf of Mexico is still a major source of oil and natural gas and Chevron maintains a presence there, in deepwater and shallow water, said Luquette, a 1978 civil engineering graduate of UL Lafayette.
More than half of the company’s 2012 budget is allocated to Gulf of Mexico activity. Today, Chevron has 10 rigs operating in shallow water, he said.
Lafayette plays an important role in the industry with numerous supply and service companies operating here.
Chevron alone has 300 workers in its Lafayette office and another 300 or so working offshore out of the Lafayette office, Luquette said.
President Obama said last week in his State of the Union address that he wants to end “subsidies” to the oil and gas industry which makes billions of dollars in profits. Luquette said the energy industry creates jobs and creates wealth for the federal government.
In 2011, the oil and gas industry paid $86 million a day to the federal government in royalties, rents and tax revenue, he said. The industry also employs more than nine million either directly or indirectly.
The industry doesn’t need bailouts and such, just a level-playing field, the same so-called subsidies and breaks the federal government provides other U.S. industries and those from foreign nations, Luquette said.
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The initial contract period is for three years, with two additional one-year options (3+1+1). Aker Solutions estimates that the agreement will generate annual revenues of approximately USD 4 million.
Under the agreement Aker Solutions will provide slickline and coiled tubing equipment and services, which are conducted with the objective of maximising production of oil and gas. Aker Solutions has delivered well services to Tullow’s Jubilee field since 2008.
“Tullow is the largest independent oil and gas exploration and production company operating offshore West Africa. We are pleased to be able to support their ambitious growth plans through providing our technologies and services to increase oil recovery ratios,” says Wolfgang Puennel, head of well intervention services in Aker Solutions.
“Ghana is an up-and-coming oil nation. This new and extended contract with Tullow provides us with a solid long term outlook for our operations there. We will utilise this to set up a more permanent presence in Ghana, which will also drive the need for a larger local workforce. This will put us in a better position to secure further oil service work in the country,” adds Puennel.
Aker Solutions’ contract party is Aker Qserv Ltd.
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The Frontier Discoverer drilling rig in Dutch Harbor, Alaska. (AP Photo/Shell Exploration & Production)
Energy companies are planning to spend a record $598 billion on finding and producing oil and natural gas worldwide in 2012, a 10 percent increase over this year, Barclays Capital analysts said in a report Monday.
In a survey of about 350 energy companies, the investment bank found that oil and gas exploration and production will continue to expand rapidly in 2012. At nearly $600 billion, the energy industry’s global E&P spending is about equal to the annual gross domestic product of crude oil powerhouse Saudi Arabia.
Exxon Mobil Corp. remains the biggest spender at more than $30 billion, expanding 5 percent for 2012, according to Barclays.
The industry has been raising E&P expenditures annually, but the rate of growth will slow next year, especially in North America, the report noted.
After a surge in activity fueled by a rush to shale-derived natural gas, the availability of rigs and oil field equipment is slowing that expansion, analysts said.
E&P spending in North America grew 31 percent in 2011, but will rise just 8 percent in 2012, Barclays reported.
Internationally, E&P expenditures grew 20 percent this year and are slated to grow 11 percent next year.
Latin American companies will boost expenditures significantly, growing 21 percent in 2012, according to the report.
Both Mexico’s state-owned oil company, Pemex, and Brazil’s national corporation, Petrobras, are rapidly expanding offshore drilling.
Barclay’s noted that spending could be even higher than forecast, because energy companies are basing budgets on conservative oil prices and fears about the world economy’s health.
Surveyed companies assumed West Texas Intermediate-priced crude will average $87 per barrel and Brent-priced crude will average $98. Both prices are currently above $100.
About 60 percent of surveyed companies said they would increase spending if the average WTI price in 2012 rises above $100 per barrel. If the average falls below $70, more than two-thirds said they would cut spending.
Faster federal approval of offshore drilling permits, which slowed after last year’s oil spill in the Gulf of Mexico, could also increase domestic spending, the report said.
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