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China: GMC and Horton Wison Deepwater Develop Buoyant Towers for Shallow Water Fields

GMC and Horton Wison Deepwater confirmed their Joint Venture established to design and supply innovative Buoyant Towers for shallow water fields.

Kevin Chell, CEO of the joint venture, stated “The Buoyant Tower concept draws on the proven technology of the cellspar and the design provides multiple benefits for fields where other concepts would be problematic requiring high capital costs and expensive crane barges for installation. The buoyant tower can operate in water depths up to 600 feet and can be relocated allowing small marginal plays to be exploited in a cost effective manner. The design allows for hydrocarbon storage if needed, can eliminate separate shallow water drilling units and provides a high level of flexibility for the operator.”

First Project

The benefits of the design were recognized and adopted by BPZ Energy for their new platform at the Corvina field offshore Peru. The tower is composed of four cylindrical cells and is connected to the seabed by a single suction pile which is integral to the hull structure. The tower and decks with the production equipment will be transported from the fabrication yard to Corvina on a submersible heavy lift ship. After upending, fixed and variable ballast will be pumped into the hull to provide stability for the platform.

The CX-15 shallow water tower is well on track for a summer 2012 installation and will be the first application of this design. The platform is designed for 12,200 barrels of oil per day, gas compression capacity of 12.8 million standard cubic feet per day and produced water handling and injection capacity of 3,500 barrels per day. A total of 24 drill slots will be available, some of which will be used for gas and water reinjection wells. The CX-15 platform will be located about one mile from the existing CX-11 Corvina platform, with both platforms interconnected via a series of subsea pipelines.

The JV completed the FEED scope in 2011 which led to detailed design for the buoyant tower. Fabrication is underway at Wison Offshore and Marine’s yard in Nantong, China. GMC are also providing project management and installation services for the CX-15 platform.

Jim Maher, COO of the JV, commented “We are pleased to be working with BPZ Energy on this important project which draws upon deepwater technology and applies it in the shallow water arena.”


Saudi Aramco Ready to Spud its First Deepwater Well in Red Sea


Saudi Arabia’s state run oil giant, Saudi Aramco, has decided that the company is ready for deepwater exploration in the Red Sea.


At the Ceraweek 2012 conference in Houston, Amin H. Nasser, Senior vice president, Upstream Operations in Saudi Aramco, unveiled the company’s plans to start the Red Sea deepwater drilling operations by the end of 2012.

“We are optimistic about the potential for significant discoveries. We expect to start drilling in the deepwater by the end of this year,” Dow Jones quotes Nasser as saying.

Nasser, who joined the company in 1982, said that Saudi Aramco was working to increase its oil recovery levels from 50% to 70% in the years to come. He also highlighted the importance of deepwater and shallow water drilling in the company’s long-term plan to unlock “at least 100 million barrels of energy resources within the Saudi Arabian kingdom in the next several decades,” Dow Jones reports.


Shallow-water drilling companies warn of job losses


by Gabe Gutierrez

HOUSTON – Shallow-water drilling companies are blasting the Obama administration for not extending their oil and gas drilling leases and they claim thousands of Houston jobs could be lost or delayed.

Last week, the federal government officially extended almost 1,400 deep-water drilling leases for a year to make up for the lost production during last year’s drilling moratorium following the BP oil spill in the Gulf of Mexico.

“Once again, the shallow-water operators are left out in the cold,” said Jim Noe, a spokesperson for Hercules Offshore who also leads a coalition of shallow-water companies. “It doesn’t make any sense. You can be for or against offshore drilling. I think most people — particularly in today’s environment — are for jobs.”

Noe estimates that thousands of Houston jobs would be in jeopardy if the leases were allowed to expire because many shallow-water companies have essentially lost a year’s worth of production and would be reluctant to rebid for leases in such an uncertain regulatory climate.

Almost 350 shallow-water leases are set to expire by the end of 2011, Noe said.

The federal government has told the shallow-water companies they don’t need the extension since they weren’t shut down during the drilling moratorium. But Noe said delays in the permitting process during that time effectively idled many of their workers.

Tim Caws moved to Houston from Australia six years ago to work for an energy industry contractor. He now worries his job making pipes for offshore companies could be in jeopardy.

“I think (the industry) does get a bad rap,” he said. “We rely on the oil industry so heavily. It’s such an important part of our lifestyle.”

Still, other Houstonians have a tough time sympathizing with the oil companies.

“It’s very hard to feel sorry for anybody that’s making the excessive profits,” said Keith Bolden.

“I think they should be investing time and money into alternative energy, so that way I don’t have to spend $70 to fill up my gas tank,” said Ryan Cabiya.


How to produce energy and jobs without all the waste


Simply issue drilling permits, and Gulf oil rigs will do the rest.

By Jim Noe
The Washington Times

As news continues to break about the bankruptcy of the government-backed solar- panel manufacturer Solyndra LLC, much commentary has focused on who said what inside the ad- ministration prior to the company’s collapse. But the implosion of a company once touted as a symbol of the booming job creation that would accompany America’s energy future brings larger lessons about our country’s energy and economic needs.

Our country’s energy future hinges in large part on how we manage the gradual transition to a blended energy supply portfolio based in part on next-generation, sustainable energy sources such as solar, geothermal, wind and others that have yet to emerge. The question we need to ask ourselves as we undertake this long-term process is: What do Americans need now, and where can we find it?

Unfortunately, the administration seems inclined to duck that question, favoring poster-ready solutions like Solyndra over more pragmatic discussions about how best to use our country’s existing resources. Its reluctance is a shame, as it comes at the cost of unrealized energy production and forsaken American jobs – particularly in the Gulf of Mexico region.

How have administration energy policies – so friendly to unproven prospects like the solar-powered Solyndra – treated the proven assets we have in the Gulf of Mexico? Not quite as sunnily, to say the least. A host of new permitting requirements have been developed in the past 1 1/2 years for exploration and development of offshore resources in the Gulf. While meant to promote the safest and most environmentally friendly operations possible – goals heartily shared by industry, whose long-term viability depends on sustainable production – the process by which companies secure permits for exploration and production has become unpredictable and opaque.

While there is robust demand for drilling in the Gulf, the pace of issuing permits for new wells (5.2 per month) has slowed to a trickle not seen since energy demand nearly evaporated during the recessionary days of 2009. What this means in real-world terms is that it can take an operator three months to secure a permit for a new well – a time frame that is insufficient to satisfy demand. On top of that, the backlog of permits awaiting decisions within the Department of the Interior just reached its highest level since the Gulf spill 1 1/2 years ago.

According to the administration’s own Energy Information Administration (EIA), U.S. energy output is slated to decrease by 250,000 barrels per day per year under domestic energy production policies. EIA forecasts show Gulf production declining 14 percent both this year and next, a drop of approximately one-third of 2010 amounts by the end of 2012.

By the same token, our current energy policies have allowed a historic loss of drilling rigs to occur, jeopardizing our ability to produce our natural resources. Since 2001, 78 jack-up drilling rigs have left the Gulf, leaving 42 currently available. Thirteen rigs have left the Gulf since April 2010 alone. The departure of these high-technology, capital-intensive rigs means our country’s capacity to ramp up production likely has been curtailed for years to come.

The job losses associated with the administration’s reluctance to support offshore production are also severe. According to a study by IHS Global Insight, run by renowned energy analyst Daniel Yergin, “In 2012, the [Gulf oil and gas] industry could create 230,000 American jobs, generate more than $44 billion of U.S. [gross domestic product], contribute $12 billion in tax and royalty revenues, produce 150 million barrels of domestic oil, and reduce by $15 billion the amount the U.S. sends to foreign governments for imported oil.” The study also cites benefits outside of the Gulf, with one-third of new jobs generated in California, Florida, Illinois, Georgia and Pennsylvania.

There is one final lesson to be noted here. While the Solyndra collapse likely will end up costing the American taxpayers who helped fund the company’s expansion, production of our natural resources in the Gulf adds money to the U.S. Treasury – something you don’t see a lot these days. In 2008, the offshore industry paid $8.3 billion in royalties and $9.4 billion in bids on new leases. In 2010, the numbers fell sharply because of the spill and the drilling moratorium, with payments falling to $4 billion in royalties and just $979 million in lease bids. The outlook for 2011 revenues under the current pace of permitting is more on track with 2010 than 2008.

The future of U.S. energy supplies will no doubt hinge on developing resources that are only now emerging onto the scene. Today’s needs call for more tangible action. To boost jobs, energy supplies and U.S. Treasury revenue, the administration should prioritize improvement in the Gulf permitting regime rather than let energy policy be guided by politics.

Jim Noe is senior vice president, general counsel and chief compliance officer of Hercules Offshore Inc., the largest shallow-water drilling company in the Gulf of Mexico. He also is executive director of the Shallow Water Energy Security Coalition.

Original Article

Raising oil spill liability limits is hot topic at House hearing

By Jonathan Tilove, The Times-Picayune

The thorny issue of raising oil spill liability limits rose at two congressional hearings Wednesday, with Rep. Jeff Landry, R-New Iberia, predicting that higher caps would “destroy the shallow-water drilling industry,” and an economist who studied the issue for the Oil Spill Commission testifying that the lower limit encouraged the industry to “underinvest in safety.”


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Rusty Costanza, The Times-Picayune The Helix Producer 1 was photographed in February in the Gulf of Mexico 112 miles south of Houma.

Helix Energy Solutions is part of an effort by 20 companies to have a system ready to deal with a crisis such as the BP oil spill in the Gulf of Mexico.

The Oil Pollution Act caps liability for damages from an offshore spill at $75 million per incident, a limit that BP waived in the aftermath of its Deepwater Horizon disaster last year. It’s not yet clear how much the deep-pocketed oil giant will end up paying for the massive spill.

The National Oil Spill Commission recommended that Congress significantly raise the liability cap, and Rep. Edward Markey, D-Mass., the top Democrat on the House Natural Resources Committee, who has authored legislation to implement many of the commission’s recommendations, goes even further in his bill, which would remove the cap altogether.

Otherwise, he said, the taxpayers are on the hook to make up the difference.

At a committee hearing on Republican bills to speed the pace of permitting and open new offshore areas to drilling, Markey pressed the liability issue in his questioning of Hank Danos, president of Danos and Curole Marine Contractors, an oilfield service company based in Larose, who had been called to testify about how the slowdown in drilling had led him to lay off 200 workers.

“Do you believe that a $75 million penalty for the kind of spill we saw is high enough, or should it be higher?” asked Markey, demanding an answer as Danos struggled to say that anything that increased costs wasn’t helpful.

When it came his turn to ask questions, Landry revisited the liability issue with Danos.

“Mr. Danos, you do a lot of work for shallow-water drilling contractors. Could you tell me if they remove the liability cap on the (Outer Continental) Shelf, the impact for those oil and gas contractors?” asked Landry, noting that most of those shallow-water companies are relatively small.

“My understanding is that if the liability cap was removed, that there would be more wells shut in and shut down, and less production in the Gulf of Mexico,” Danos said.

“So it would destroy the shallow water drilling industry,” Landry said. “Is that what it would do?”

“It could,” Danos said.

But at an afternoon hearing of the House Science Committee’s subcommittee on Energy and the Environment, Molly Macauley, research director for Resources for the Future, an independent research center, suggested that “limited liability and sometimes-ineffective regulatory oversight can lead people to naturally under invest in safety.”

Macauley studied that issue as part of her research for the Spill Commission into the industry’s development, or lack of development, of spill containment technology.

In the aftermath of the disaster, two groups — the Helix Well Containment Group and the Marine Well Containment Co. — have just completed development of new deepwater containment response systems that could respond in the event of loss of well control, and that have enabled the federal government to begin approving permits for new deepwater drilling.

Owen Kratz, president and CEO of Helix Energy Solutions Group, who also testified before the Science subcommittee, said he doesn’t agree with Macauley’s conclusion that the liability cap worked to discourage investment in the kind of expensive system his group had created.

He said the oil industry’s self-interest in avoiding a disaster like the Deepwater Horizon is so deep and plain, that “these companies don’t even think about the liability cap in keeping a spill from happening.”

On the contrary, Kratz said, “I can definitely see a high cap being a disincentive to innovation,” by simply driving business out of the Gulf of Mexico.

( Original Article )

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