World of Oil and Gas

Dong Energy has sold 15% of the Svane and Solsort licenses (4/98 and 3/09) in the Danish sector of the North Sea to VNG Danmark. Dong retains a 35% interest and operatorship of the licenses.

	Vol. 231 No. 9
NELL LUKOSAVICH, ASSOCIATE EDITOR

Dong Energy reduces stake in North Sea licenses

Dong Energy has sold 15% of the Svane and Solsort licenses (4/98 and 3/09) in the Danish sector of the North Sea to VNG Danmark. Dong retains a 35% interest and operatorship of the licenses. Appraisal drilling of Svane Field in 2001 by then-operator ConocoPhillips indicated the possible presence of a large gas reservoir, but technical problems raised uncertainty about the findings. The detailed planning of follow-up appraisal drilling will take place this year, as will initial exploration drilling of Solsort Field.

Colombian oil routed through Ecuador after blast

Ecopetrol is diverting an average 15,000 bpd of crude oil to market via Ecuador because of the shutdown of the Colombian state company’s Transandino Pipeline after a bombing Aug. 20. Security conditions have impeded Ecopetrol’s ability to repair the 190-mi pipeline. No group has been singled out for the blast, but the Revolutionary Armed Force of Colombia (FARC) has been blamed for past attacks on the line.

Repsol makes 1-Tcf gas discovery in Bolivia

Spanish oil firm Repsol made a new gas discovery in southeastern Bolivia while completing a project to deepen existing wells for improved production. The company estimated the gas resource discovered at 1 Tcf and said initial production tests flowed 6 MMcfd and 160 bpd of condensate. The well is located in the Rio Grande contract area, which has been in production since 1968.

Poland’s shale gas sees first hydraulic frac job

Halliburton recently performed the first-ever shale hydraulic fracturing operation in Poland for PGNiG, the state-owned Polish oil and gas company. PGNiG contracted Halliburton to fracture the Markowola-1 exploration well near Kozienice, Lublin province, to determine if the site contained commercial gas deposits. Production results have yet to be released.

US Interior tightens offshore permitting during review

Operators on the US Outer Continental Shelf (OCS) will find it more difficult to obtain permits for exploration and drilling activities without environmental assessments while the US Department of the Interior reviews its permitting process under the National Environmental Protection Act (NEPA) of 1969. Specifically, the agency is conducting a comprehensive review of its process for issuing categorical exclusions, which the agency grants if it determines a proposed offshore activity to be routine and to carry insignificant environmental risk. A company granted a categorical exclusion can conduct the proposed activity without the requirement of an environmental assessment or environmental impact statement. Interior Secretary Ken Salazar and Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) Director Michael R. Bromwich announced that the Interior Department will limit its use of categorical exclusions while the review is underway, in effect subjecting more decisions to environmental assessments. When the review is completed, BOEMRE will announce a new approach to NEPA compliance that takes into account the joint recommendations included in US Council on Environmental Quality’s report, statutory and/or regulatory constraints, and other appropriate factors.

Uganda tax dispute escalates with field repossession

Uganda’s government has withdrawn Tullow Oil’s license for Block 3a in the Albertine Graben, which includes the Kingfisher oil field, following the expiration of the block’s exploration license. Uganda’s oil minister Hillary Onek attributed the repossession to Tullow and former joint-venture partner Heritage Oil’s failure to apply for a production license following the expiration of the earlier exploration license. However, analysts have said the government’s action is in retribution for Heritage’s refusal to pay a 30% capitals gains tax assessed on the sale of its 50% stake in Blocks 1 and 3a to Tullow in July. The sale, for up to $1.45 billion, has not been endorsed by the Ugandan government.

Resolute, Marathon to develop N. Dakota Bakken acreage

Resolute Energy and Marathon Oil have agreed to develop about 19,000 gross acres in McKenzie County, North Dakota. Under the terms of the agreement, Resolute will earn interests in the acreage by drilling and completing two earning wells in the Bakken trend. Resolute expects that both of these wells will be drilled early in the fourth quarter of 2010. Marathon will serve as contract operator of the two wells and as operator of the contract lands. Resolute first entered the trend in March 2010 through a joint venture with GeoResources. The first well in the GeoResources joint venture is scheduled to spud in September 2010, and two additional wells are expected to be drilled before year-end.

Total launches CLOV development offshore Angola

Total announced the launch of development of the CLOV project offshore Angola and the awards of the principal contracts. The project is the fourth development pole in Angola’s deep offshore Block 17, after Girassol, Dalia and Pazflor. It will develop four fields—Cravo, Lirio, Orquidea and Violeta—with proved and probable reserves estimated at about 500 million bbl of oil. Drilling is scheduled to commence in 2012, and first oil is expected in 2014. Located about 87 mi from Luanda and 25 mi northwest of Dalia in water depths ranging from 3,600 to 4,600 ft, the CLOV development will use technologies that have already proven effective on Girassol, Dalia and Pazflor. A total of 34 subsea wells will be tied back to the CLOV FPSO, which will have a processing capacity of 160,000 bopd and a storage capacity of about 1.8 million bbl. Total operates Block 17 and holds a 40% interest, with partners Statoil (23.33%), ExxonMobil subsidiary Esso Exploration Angola (20%) and BP Exploration Angola (16.67%).

Internal report faults BP’s data interpretation aboard rig

BP’s soon-to-be released report on its investigation of the Deepwater Horizon accident acknowledges fault for mistakes made in misinterpreting data when completing the Macondo well in the Gulf of Mexico, according to sources close to the internal review of the incident. According to Bloomberg, The Wall Street Journal and several other news services, these sources say the BP report details false assessments made by BP managers regarding the pressure data aboard the rig, which indicated unusually high pressure levels sufficient to cause a blowout. Lighter drilling fluids were pumped into the well instead of the heavier drilling muds typically used in completing a high-pressure well, and on April 20 a methane gas pocket perforated the lighter drilling fluid and caused the rig to explode and sink. Aside from internal investigations being conducted by BP and Halliburton, a federal investigative panel consisting of US Coast Guard officers and Interior Department regulators is also reviewing the incident and focusing on warning signs that employees aboard the rig may have failed to address.

Baker Hughes acquires Canadian artificial lift company

Baker Hughes is increasing its Canadian presence through the acquisition, announced Aug. 17, of oilfield equipment and service supplier Tanroc, based in Lloyd-minster, Alberta. Tanroc primarily supplies progressing cavity pumping (PCP) systems and surface production equipment, including variable-frequency drives for downhole pumping systems and wellhead drives. Since 2006, Tanroc has provided service, repair and distribution for PCP systems in Canada from its primary facility in Lloydminster and smaller service centers in Bonnyville and Wabasca, Alberta. Prior to its acquisition, Tanroc served as the Canadian distributor for Baker Hughes’ Lifteq PCP systems.

Lebanon approves law to open waters for E&P

Lebanon’s Parliament has approved a law that will allow for oil and gas exploration in the country’s offshore areas for the first time. For the past decade, Lebanese politicians have been unable to agree on how to exploit the country’s hydrocarbon resources. But the law was given impetus by two large gas discoveries offshore Israel by US-based Noble Energy and Israeli companies in the past 18 months, at Tamar and Leviathan Fields in the Eastern Mediterranean. Leviathan, estimated to hold 16 Tcf of gas, may also contain up to 4.2 billion bbl of oil, according to recent tests. After its discovery, Nabih Berri, the speaker of Lebanon’s Parliament, and Hashem Safieddine, executive council chief of the Islamic movement Hezbollah, told international media that the area belongs to Lebanon and not Israel. But Israeli government authorities denied this claim, saying Israel has the right to the maritime area where the field is located, and Israel’s Minister of National Infrastructures Uzi Landau said June 23 that his government was willing to use force to protect its undersea gas finds.

Kosmos terminates ExxonMobil’s $4 billion Ghana deal

US oil explorer Kosmos terminated its agreement to sell its stake in the Jubilee oilfield project to ExxonMobil, ending a months-long standoff with the Ghanaian government, which opposed the sale. Kosmos entered into the sale and purchase agreement with ExxonMobil in June before seeking the government’s ratification. But the government declined on the grounds that Kosmos Energy should have given the Ghana National Petroleum Corporation (GNPC) the first option to purchase the company’s shares. The government also accused the oil company of disclosing data on the oil fields to more than 17 potential buyers contrary to the terms of its agreement with the government. Oil production from the Jubilee Field Phase 1 development is on schedule to begin in the late fourth quarter of 2010 and is expected to increase to a production plateau of 120,000 bopd during the first half of 2011. The Jubilee FPSO is now in Ghana with final installation, hookup and commissioning underway.

Apache completes acquisition of BP Permian Basin assets

Apache Corp. has completed the acquisition of BP’s oil and gas operations, acreage and infrastructure in the Permian Basin of West Texas and New Mexico. Apache acquired 10 Permian field areas with estimated proved reserves of 141 million boe (65% liquids), first-half 2010 net production of 15,110 bpd of liquids and 81 MMcfd of gas, and two operated gas processing plants. The transaction also included 1.7 million gross acres—including 405,000 net mineral and fee acres—in prospective areas of the basin with substantial opportunities for new drilling. Apache paid $3.1 billion for the Permian properties, including a $1.5 billion deposit paid July 30 and the balance paid on closing. Some of the properties are subject to certain preferential rights. BP will continue to operate the properties on Apache’s behalf through Nov. 30. The Permian transaction is one element of Apache’s agreement to acquire all of BP’s oil and gas operations, acreage and infrastructure in the Permian Basin and Egypt’s Western Desert and substantially all of BP’s upstream gas business in western Alberta and British Columbia in Canada. Net production from the properties in the first half of 2010 was about 28,000 bpd of liquid hydrocarbons and 331 MMcfd, or a total of about 83,000 boepd.

Noble gets green light to develop Israel’s Tamar gas field

Noble Energy announced that it has received government approval for the development of the 2009 Tamar gas discovery in the Mediterranean Sea offshore Israel. The development plan, called Tamar South, will make use of existing infrastructure for the Mari-B gas development to supply natural gas to Israel by 2012. Tamar gas will be piped to a new offshore platform to be constructed next to the existing Mari-B platform, and then redelivered to the existing pipeline that connects Mari-B to the onshore terminal at Ashdod. Until recently, Noble Energy and its partners planned to develop Tamar using an option called Tamar North that would flow gas from the deepwater field to a new onshore receiving terminal to be constructed in the northern half of the country. However, the selection and approval of the site for the onshore terminal had been significantly delayed. The Tamar North development option was designed to deliver gas to Israeli markets in 2012. Mari-B Field, located offshore Ashkelon, which is currently the country’s only source of domestic gas, has been reliably meeting gas needs since 2004, but its production is expected to begin declining sharply in late 2013.

New OGX discovery could double Brazil’s gas reserves

Privately owned Brazilian company OGX’s onshore gas discovery in the country’s northeastern state of Maranhao could double Brazil’s gas reserves, the company’s chairman and controlling shareholder said. During an earnings call, Eike Batista estimated that gas reserves could reach 10–15 Tcf at the discovery, which is in Maranhao’s Parnaiba Basin. According to statistics from the National Petroleum Agency, Brazil had 12.9 Tcf of proven natural gas reserves at the end of 2007, the majority of which was in the offshore Campos and Santos Basins. OGX said the gas was found at a depth of 5,400 ft only about 10 months after Brazilian companies started exploration work. The drilling of the well will continue until it reaches a depth of 11,320 ft. The well is located in a block owned by OGX Maranhao and Petra Energia. OGX Maranhao, a joint venture between OGX and MPX Energia, has a 70% stake in the business and is the operator, while Petra Energia holds the remaining 30% interest.

Chevron makes another gas find offshore Australia

Chevron Corp. made its ninth and largest discovery offshore Western Australia of the last 12 months with its Acme-1 exploration well in the Carnarvon Basin. The Acme discovery came one week after the company found gas in the basin’s Exmouth Plateau area. Acme-1 is located in the WA-205-P permit area, about 93 mi offshore. Drilled in 2,880 ft of water to a depth of 15,469 ft, the well encountered about 896 ft of net gas pay. Chevron’s Australian subsidiary operates and holds a 67% interest in the permit area, while Shell Development Australia holds the remaining interest.

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