Exxon Mobil Corporation is commencing development of the Julia oil field in the Gulf of Mexico, the oil giant announced yesterday in a press release.
Capital cost for the project, which is expected to begin oil production in 2016, is estimated to be more than $4 billion. The field was discovered in 2007 and is estimated to have nearly six billion barrels of resource in place.
“The development of Julia will provide a new source of domestic energy and well-paying jobs over the next several years,” said Neil W. Duffin, president of ExxonMobil Development Company. “Access to resources such as Julia will contribute to U.S. energy security for many years to come.”
The initial development phase is being designed for daily production of 34,000 barrels of oil and includes six wells with subsea tie-backs to the Jack & St. Malo production facility operated by Chevron U.S.A. Inc. Julia project front end engineering design has been completed and the engineering, procurement and construction contracts have been placed.
“Julia is one of the first large oil discoveries in the ultra-deepwater frontier of the Gulf of Mexico,” said Duffin. “This resource is located more than 30,000 feet below the ocean’s surface. Enhanced technologies will be deployed to ensure the safe and environmentally responsible development of this important energy resource.”
The Julia field comprises five leases in the ultra-deepwater Walker Ridge area of the Gulf of Mexico, 265 miles southwest of New Orleans. The blocks are WR-584, WR-627, WR-628, WR-540 and WR-583.
ExxonMobil, the operator, and Statoil Gulf of Mexico LLC each hold a 50 percent interest in the Julia unit.
Over the past decade, ExxonMobil has drilled 36 deepwater wells in the Gulf of Mexico in water ranging from 4,000 feet to 8,700 feet.
The ultra-deepwater drillship, Titanium Explorer, started its drilling contract with Brazil’s Petrobras in the U.S. Gulf of Mexico, on Friday, December 7.
The Titanium Explorer, formerly known as the Dragonquest, owned by Vantage Drilling, is contracted for eight years.
Under the contract, Brazilian-state controlled oil company Petrobras has the right to re-locate and utilize the Titanium Explorer on a worldwide basis. Expected revenues over the eight-year contract term, excluding revenues for mobilization of the rig and costs escalations, are approximately $1.6 billion.
The drillship is a self-propelled, dynamically positioned vessel suited for drilling in remote locations because of its mobility and large load carrying capacity. It is currently equipped for drilling in water depths up to 10,000 feet, and is designed to drill in water depths up to 12,000 feet.
EIA issued its Annual Energy Outlook 2013 (AEO2013) Reference case, which highlights a growth in total U.S. energy production that exceeds growth in total U.S. energy consumption through 2040.
“EIA’s updated Reference case shows how evolving consumer preferences, improved technology, and economic changes are pushing the nation toward more domestic energy production, greater vehicle efficiency, greater use of clean energy, and reduced energy imports,” said EIA Administrator Adam Sieminski.
“This combination has markedly reduced projected energy-related carbon dioxide emissions,” said Mr. Sieminski.
AEO2013 offers a number of key findings, including:
Crude oil production, especially from tight oil plays, rises sharply over the next decade. Domestic oil production will rise to 7.5 million barrels per day (bpd) in 2019, up from less than 6 million bpd in 2011.
Motor gasoline consumption will be less than previously estimated. Compared with the last AEO, the AEO2013 shows lower gasoline use, reflecting the introduction of more stringent corporate average fuel economy (CAFE) standards. Growth in diesel fuel consumption will be moderated by the increased use of natural gas in heavy-duty vehicles.
The United States becomes a net exporter of natural gas earlier than estimated a year ago. Because quickly rising natural gas production outpaces domestic consumption, the United States will become a net exporter of liquefied natural gas (LNG) in 2016 and a net exporter of total natural gas (including via pipelines) in 2020.
Renewable fuel use grows at a much faster rate than fossil fuel use. The share of electricity generation from renewables grows to 16 percent in 2040 from 13 percent in 2011.
Net imports of energy decline. The decline reflects increased domestic production of both petroleum and natural gas, increased use of biofuels, and lower demand resulting from the adoption of new vehicle fuel efficiency standards and rising energy prices. The net import share of total U.S. energy consumption falls to 9 percent in 2040 from 19 percent in 2011.
The AEO2013 Reference case focuses on the drivers that shape U.S. energy markets under the assumption that current laws and regulations remain generally unchanged throughout the projection period. The complete AEO2013, to be released in early 2013, will include many alternative cases in recognition of the uncertainty inherent in making projections about energy markets, which in part arises from assumptions about policies and other market drivers such as trends in prices and economic growth.
- Key updates made for the AEO2013 Reference case include the following:
- Extension of the projection period through 2040, an additional 5 years beyond AEO2012.
- A revised outlook for industrial production to reflect the impacts of increased shale gas production and lower natural gas prices, which result in faster growth for industrial production and energy consumption. The industries affected include, in particular, bulk chemicals and primary metals.
- Adoption of final model year 2017 to 2025 greenhouse gas emissions and CAFE standards for light-duty vehicles (LDVs), which increases the projected combined fuel economy of new LDVs to 47.3 mpg in 2025.
- Updated modeling of LNG export potential.
- Updated power generation unit costs that capture recent cost declines for some renewable technologies, which tend to lead to greater use of renewable generation, particularly solar technologies.
- The Future Of US Energy In 4 Charts (businessinsider.com)
- EIA: Here’s What Oil Prices Will Do For The Next 30 Years (businessinsider.com)
- US Energy Mix to 2040 per EIA (simplerna.com)
BP was quick to react after the US Environmental Protection Agency (EPA) today issued a press release in which it said that the British oil giant would be temporary banned from making new arrangements with the federal government.
In a statement issued on its website BP highlighted that the temporary suspension relates only to future potential contracts with the U.S. government and won’t affect any existing contracts the company has with the US government, including those relating to current and ongoing drilling and production operations in the Gulf of Mexico.
To remind, EPA explained the move as a necessary action“due to BP’s lack of business integrity as demonstrated by the company’s conduct with regard to the Deepwater Horizon blowout, explosion, oil spill, and response.”
The suspension will remain in force until BP can provide sufficient evidence to EPA demonstrating that it meets Federal business standards, EPA explained in its press release.
One year suspension?
In its response BP, headquartered in London, said it has already provided EPA with a statement of more than 100 pages and supplemental answers to the EPA’s questions based on that submission, to prove itself a responsible company able to do business with the government.
BP, which two weeks ago pleaded guilty for its conduct relating to the Deepwater Horizon blowout, explosion, oil spill and response, said it was notified by EPA that the suspension could be lifted soon. Some sources, such as Forbes and Federal Times claim that the ban could last for one year, while The Washington Post predicts the suspension could be in force until the end of legal proceedings related to the oil spill disaster.
BP added the company has made significant enhancements since the accident, saying that immediately after the Deepwater Horizon accident, the company launched an internal investigation, publicly released the results, made changes to the management, and has been implementing all 26 of the investigation’s recommendations.
“In the two and a half years since the Deepwater Horizon accident, the US government has granted BP more than 50 new leases in the Gulf of Mexico, where the company has been drilling safely since the government moratorium was lifted,” BP said.
Markey: Righteous Punishment
Representative Edward J. Markey today, on his blog, praised the Obama administration move: “…suspending BP’s access to contracts with our government is the right thing to do…When someone recklessly crashes a car, their license and keys are taken away. The wreckage of BP’s recklessness is still sitting at the bottom of the ocean and this kind of time out is an appropriate element of the suite of criminal, civil and economic punishments that BP should pay for their disaster.”
No BP bids
The U.S. Bureau of Ocean Energy Management today held Western Gulf of Mexico Lease Sale 229, which offered over 20 millions acres and attracted more that $133 million in high bids for the acreage in the U.S. Outer Continental Shelf (OCS) offshore Texas. Thirteen companies submitted the bids, and BP was not one of them, The Washington Post reports, citing sources close to the UK-based oil giant.
Noble Energy, Inc. today announced a discovery at the Big Bend exploration prospect in the deepwater Gulf of Mexico. The well, located in 7,200 feet of water on Mississippi Canyon Block 698, was drilled to a total depth of 15,989 feet. Open-hole logging identified approximately 150 feet of net oil pay in two high-quality Miocene reservoirs.
Charles D. Davidson, Noble Energy’s Chairman and CEO, said, “The discovery at Big Bend is an exciting follow-up to our recent success at Galapagos. The well results appear at least as good as our pre-drill mean resource expectations and de-risked our offset prospect Troubadour. The combination of excellent reservoir properties, fluid characteristics and our high working interest in this project will contribute significant production and cash flow for our business.”
Noble Energy operates with a 54 percent working interest in Big Bend. Other interest owners are W&T Energy VI, LLC (a wholly owned subsidiary of W&T Offshore Inc.) with 20 percent, Red Willow Offshore, LLC with 15.4 percent and Houston Energy Deepwater Ventures V, LLC with 10.6 percent.
Golden Pass Products said it has received authorization from the United States Department of Energy to export domestically produced natural gas as liquefied natural gas from the Golden Pass LNG terminal in Sabine Pass, Texas, to nations that have existing Free Trade Agreements (FTA) with the U.S.
The proposed project involves construction of natural gas liquefaction and export capabilities at the existing Golden Pass LNG facility. If developed, the project would represent approximately $10 billion of investment on the U.S. Gulf Coast, generating billions of dollars of economic growth at local, state and national levels and millions of dollars in taxes to local, state and federal governments. The project would generate approximately 9,000 construction jobs over five years with peak construction employment reaching about 3,000 jobs.
The proposed project would have the capacity to send out approximately 15.6 million tons of LNG per year. New infrastructure required to export will be located on the existing property, which contains two berths for LNG tankers, five storage tanks and access to the Golden Pass pipeline. The expanded facility would then have the capability and flexibility to both import and export natural gas.
As noted in the FTA application, Golden Pass also plans to submit an application to export LNG to non-FTA nations. A final investment decision will be made following government and regulatory approvals and will be based on a range of factors.
(Reuters) – The rise of the Muslim Brotherhood and its ideological affiliates in the Arab Spring uprisings has stoked fears among Gulf Arab governments that the United States may one day abandon its traditional allies as it warms up to Islamists.
While the ruling families in the Gulf are currently vital U.S. allies who buy large amounts of American military hardware and facilitate a significant U.S. military presence, some are apprehensive Washington may apply pressure on them to accommodate Islamists who could end up challenging their exclusive rule.
In a number of colorful online outbursts, Dubai’s outspoken police chief Dhahi Khalfan has warned of an “international plot” to overthrow Gulf systems of government with Western complicity. The Brotherhood, manipulated by the United States, is working to take over the Gulf by 2016, he said.
“Today the Americans are mobilizing the Muslim Brotherhood in the Arab nation, for the benefit of America, not the Arabs,” he wrote on his Twitter account on Sunday. “There is an American plan that has been drawn up for the region.”
Though Khalfan insists his tweets are his personal views, analysts and diplomats say they reflect largely unspoken concerns among the United Arab Emirates’ ruling elite about the regional popularity of the Islamists and the possibility that the West will sympathize with them as political underdogs.
They also reflect fears among the region’s Sunni Muslim rulers that, despite being Sunni itself, the Brotherhood is soft on their arch enemy Shi’ite Iran. Egypt’s Islamist President Mohammed Mursi tried to dissipate such fears at a Tehran conference last week by condemning Iran’s ally Syria and urging attendees to back rebels trying to overthrow President Bashar al-Assad.
Despite pockets of Western-style liberalism in cities like Dubai, most Gulf ruling elites seek to project an image of Islamic conservatism.
So the threat they see is not religious or social but political: the Brotherhood advocates playing by the rules of parliamentary politics as a path to government, threatening inherited rights to rule and state-backed clerical establishments.
An opposition movement that gains ground in Gulf states could perhaps find the U.S. administration newly disposed to speak out in its favor.
Such an opposition has already emerged in the UAE, where more than 50 Islamists linked to Brotherhood thinking have been arrested since late last year. So far Washington has kept mum.
“While the U.S. security umbrella protects the UAE against threats from Iran, Washington would be much more reluctant to support a widespread crackdown against a local opposition movement,” said analyst Ayham Kamel of the Eurasia Group.
“This is making the political leadership in the UAE much more nervous about domestic threats,” he said.
The Brotherhood also has potential to draw support from Gulf Arabs who may see their countries’ foreign policies as overly pro-Western and are concerned about the social influence of their large Asian and Western expatriate communities.
SEEKING U.S. REASSURANCE
Washington was initially hesitant to openly support the uprisings that toppled Tunisia’s Zine al-Abidine Ben Ali and Egypt’s Hosni Mubarak, partly because of concerns they could bring Islamists to power.
President Barack Obama’s administration has since overcome its reluctance, and has made extensive efforts to engage Egypt’s Brotherhood over the past year.
Analysts say Washington is simply pursuing realpolitik given the new power centers in the region.
“I don’t think the West is keen on having a bunch of Islamists coming to power in the Gulf anytime soon,” said Michael Stephens, researcher at the Royal United Services Institute based in Doha. “It’s more the case that Washington is working with who they can work with, because Islamists are in power and they have to be dealt with.”
U.S. officials said privately that they addressed the Gulf’s concerns last year after Mubarak fell and that subsequent conversations have not focused on the issue. They declined to go into specifics.
“Gulf governments realize both the United States and Iran will want to have relations with the new regimes,” said Ghanem Nuseibeh, senior analyst with Cornerstone Global. They just needed to be reassured that those regimes’ gain was not their loss, he said.
Diplomats said they were confident that building good ties with the Brotherhood was unlikely to strain the long-term strategic relationship between the U.S. and Gulf states.
“They (the Gulf states) need the Americans to protect them against Iran. Iran is the biggest worry for them in the whole region right now,” one Gulf-based Western diplomat said, asking not to be named due to the sensitivity of the issue.
YES, BUT …
Still, rumblings persist.
Saudi Arabia, which has long seen itself as insulated from political Islam because of its promotion of more conservative Salafi Islam, is feeling less secure these days, said Abdulaziz Alkhamis, a London-based Saudi analyst.
“After the Arab Spring they (the Islamists) are rising again. They start to use Islamist political rhetoric to gain publicity in the Gulf, especially Saudi Arabia,” he said.
Prominent clerics such as Awadh al-Garni and Salman al-Odah, viewed as sympathetic to the Brotherhood, have become more outspoken, cheering Islamist gains in social media.
Brotherhood-linked Islamists are well-established in Kuwait, where parliamentary politics is most advanced in the Gulf. And in Bahrain the government has drawn closer to the Minbar party, another group inspired by the Brotherhood, as it shores itself up against a protest movement dominated by Shi’ite Islamists.
The angst over what the United States plans for the region is at its most public and visceral in Bahrain, whose government Obama has urged to enter dialogue with leading Shi’ite opposition group Wefaq, citing the group by name.
Sunni clerics and commentators in official media regularly raise the fear that Washington, currently at odds with Tehran over its nuclear program, is plotting to create a Wefaq-led government in a regional reordering of power that would open a new page of cozy ties with Iran.
TV presenter Sawsan al-Shaer denounced a “Satanic alliance” between Tehran and Washington in an article in the al-Watan daily last month, claiming Wefaq was a “Trojan horse, used by the U.S. administration and Iranian regime to redraw the region.”
The wild card in the region is Qatar. It has actively promoted the Brotherhood and its affiliates, giving them coverage widely seen as positive on its satellite broadcaster Al Jazeera.
At an early stage in the uprisings Doha stuck its neck out much further than other Gulf states in its support for protests in Egypt and Tunisia, and then rebel movements in Libya and Syria, supporting those among them close the Brotherhood.
Earlier this year the Dubai police chief railed against Sheikh Yousef al-Qaradawi, a popular Brotherhood-linked Egyptian cleric based in Doha who criticized UAE policy towards Islamists on Al Jazeera. Khalfan threatened to arrest the cleric if he ever entered the country.
Alkhamis said opinion in Saudi Arabia was split over whether Qatar’s close links to the Islamists was a smart move to keep a close eye on a rising movement whose historical time has come, or a ruse to sow discord for its neighbor and sometime rival.
“The Qataris say that if we don’t have the Brotherhood (operating) openly then they will go underground and that it’s not against Saudi Arabia, but the Saudis are not happy with this,” Alkhamis said pointing to Qatar-backed Islamist seminars. “Some think the Qataris are not an honest friend, but have an agenda.”
(Additional reporting by Andrew Quinn in Washington and Raissa Kasolowsky in Abu Dhabi; Editing by Sami Aboudi and Sonya Hepinstall)
- Dubai police chief warns of Muslim Brotherhood threat (dailystar.com.lb)
- Egypt’s Outreach to China and Iran Is Troublesome for U.S. Policy Makers (jafrianews.com)
- ‘Brotherhood’ threatens Gulf (arabtimesonline.com)
Yesterday, the Department of the Interior took the latest step as part of President Obama’s all-of-the-above energy strategy to expand safe and responsible domestic energy production, holding a 39 million acre lease sale in the Gulf of Mexico.
Secretary of the Interior Ken Salazar announced that the Central Gulf of Mexico oil and gas lease sale attracted $1,704,500,995 in high bids for tracts on the U.S. outer continental shelf offshore Louisiana, Mississippi and Alabama. A total of 56 offshore energy companies submitted 593 bids on 454 tracts covering more than 2,402,918 acres. The sum of all bids received totaled $2,602,563,726.
The lease sale builds on a series of actions taken by the Obama administration, including additional lease sales for both onshore and offshore areas for oil and gas development, to meet the President’s direction to continue to expand safe and responsible production of America’s important domestic resources.
“This sale, part of the President’s all-of-the-above energy strategy, is good news for American jobs, good news for the Gulf economy, and will bring additional domestic resources to market,” said Salazar, who opened the sale. “When it comes to domestic production, the President has made clear he is committed to expanding oil and natural gas production safely and responsibly, and today’s sale is just the latest example of his administration delivering on that commitment. The numbers speak for themselves: every year the President has been in office, domestic oil and gas production has increased, foreign imports of oil have decreased, and we are currently producing more oil than any time in the past eight years.”
The Central Gulf of Mexico Lease Sale 216/222, conducted by the Bureau of Ocean Energy Management (BOEM), offered more than 39 million acres for oil and gas development on the U.S. Outer Continental Shelf. The acreage included 7,434 tracts from three to more than 230 miles off the coast, in depths ranging from 10 to more than 11,200 feet (3 to 3,400 meters). BOEM estimates the economically recoverable hydrocarbons that could be produced as a result of the acreage offered ranges from 0.8 to 1.6 billion barrels of oil and 3.3 to 6.6 trillion cubic feet of natural gas.
The sale builds on the successful Western Gulf of Mexico lease sale held by BOEM in December 2011 that made available more than 21 million acres – equal to an area the size of South Carolina – and attracted more than $337 million in high bids and included 20 companies submitting 241 bids on 191 tracts comprising over a million acres offshore Texas. In 2010, DOI offered nearly 37 million offshore acres to industry for oil and gas leasing.
“Before moving forward with Sale 216/222, we conducted a rigorous analysis of the environmental effects of the Deepwater Horizon oil spill on the Central Gulf of Mexico,” said BOEM Director Tommy P. Beaudreau. “We have also continued a number of lease terms designed to ensure fair return to the American people and provide innovative incentives to promote diligent development of our nation’s offshore oil and gas resources.”
Yesterday’s highest bid on a tract was $157,111,000 submitted by Statoil Gulf of Mexico LLC for Mississippi Canyon, Block 718. Shell submitted the highest total amount in bonus bids, $406,594,560 on 24 tracts.
Lease terms for both sales included escalating rental rates to encourage faster exploration and development of leases as well as shorter lease terms for shallower water in order to encourage timely development. BOEM has increased its minimum bid requirement in deepwater to $100 per acre, up from $37.50 in previous Central lease sales. Rigorous historical analysis showed that leases that received high bids of less than $100 per acre have experienced virtually no exploration and development activities.
Lessees will have to comply with a series of important environmental stipulations, including requirements to protect biologically sensitive features, as well as marine mammals and sea turtles, and employ trained observers to ensure compliance and restrict operations when conditions warrant. These terms will help ensure an appropriate balance of responsible resource development with protection of the human, marine and coastal environments.
Each high bid on a tract will now go through a strict evaluation process within BOEM to ensure the public receives fair market value before a lease is awarded. This is the final Gulf Lease Sale scheduled in the current Outer Continental Shelf Oil and Gas Leasing Program: 2007-2012.
- USA: API Upstream Director Calls for Expanded Five-Year Offshore Plan (mb50.wordpress.com)