Iran Sanctions May Force BP To Shut UK Gas Field Earlier Than Planned

LONDON - BP PLC (BP.LN) may decide to shut down the Bruce natural gas field in the U.K. North Sea earlier than planned unless a way is found to restart production at the adjoining Rhum field, which is shutdown because of sanctions against Iran.

Without the inclusion of gas from Rhum, which could more than double the combined output of the fields, BP said it does not make commercial sense to keep running the older Bruce field, a BP spokesman said Tuesday. BP shut down production at Rhum in November 2010 due to Western sanctions that prohibit financial transactions with one of the field's joint owners, which is a unit of the National Iranian Oil Company.

Early decommissioning of any North Sea field would be a blow to the U.K. government, which has recently implemented a raft of tax breaks in an effort to bolster the country's energy security by keeping aging offshore oil and gas facilities operating. BP's warning comes just days after U.K. gas prices surged due to unseasonably cold weather, and unexpected production and pipeline outages.

A spokesman for the U.K. Department of Energy and Climate Change declined to comment on whether the government was doing anything to resolve the sanctions issue.

Referring to the possibility that BP and its partners may decide to bring forward decommissioning of Bruce, the spokesman said: "That's a commercial matter for BP and those involved."

The U.K.'s Foreign and Commonwealth Office declined to comment.

"The long-term future of the Bruce facilities is very closely tied to the ability to produce from Rhum. Given the uncertainties, we are considering what a decommissioning project would entail and how long it would take to execute," a BP spokesman said, without giving any further details.

Bruce, which started producing in 1993, is currently scheduled for decommissioning in the early 2020s, BP said. It produces 20,000 barrels of oil equivalent a day, two-thirds of which is gas.

Production started in 2005 at Rhum, which is connected to the Bruce platform via a sub-sea pipeline. Rhum was producing around 30,000 barrels of oil equivalent a day of natural gas when it was shuttered, BP said.

Finding a solution to the sanctions problem would not be without precedent. Last year, U.K. and European Union officials convinced some U.S. lawmakers to ensure that any new sanctions against Iran should exempt the $20 billion BP-led natural gas project, Shah Deniz, in the Caspian Sea off the coast of Azerbaijan. Another unit of the National Iranian Oil Company has a 10% stake in the project.

Europe sees Shah Deniz as vital to diversifying gas supplies so the region is not too dependent on Russian imports.

France's Total SA (TOT), Australia's BHP Billiton Ltd. (BHP) and Japanese trading house Marubeni are also shareholders in Bruce. Bruce is located about 340 kilometers northeast of Aberdeen.

Copyright (c) 2012 Dow Jones & Company, Inc.

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Aker Solutions Pens Frame Agreement with Petrobras

Aker Solutions has entered a frame agreement with Petrobras to provide subsea equipment for the oil company's deepwater pre-salt field developments in Brazil. The contract value is approximately $800 million (NOK 4.6 billion).

The scope of work is for 60 well-sets with vertical subsea trees, subsea control systems, tools and spares within the 2014-2018 period.

"Aker Solutions is honoured to work with one of the world's leading deepwater operators. This long-term agreement confirms our partnership with Petrobras and reflects our dedication to the Brazilian market," said Øyvind Eriksen, executive chairman of Aker Solutions.

Petrobras will deploy the 60 well-sets in the pre-salt field developments located 186 miles (300 kilometers) off the São Paulo coast in the Santos Basin.

"We are committed to developing the subsea industry in Brazil by growing our Brazilian expertise supported by our international competence network," said Luis Araujo, president and country manager of Aker Solutions in Brazil.

Aker Solutions has decided to further invest and expand in Brazil due to the $800 million-frame agreement with Petrobras and market forecasts for the Brazilian oil and gas industry.

A new subsea manufacturing facility will be established in Curitiba in the state of Parana, 497 miles (800 kilometers) south of Rio de Janeiro. This new technology center will replace the current plant by 2015 and will employ approximately 1,100 people.

Only the first few well-sets within the new frame agreement will be manufactured at the existing plant, while the remaining well-sets will be assembled and tested at the new facility.

"We are continuing our efforts to establish large scale manufacturing capabilities based on the technologies developed for Petrobras during our first pre-salt projects. Our proven pre-salt technology gives Aker Solutions a strong position in this market, and this will be used to further enhance local content, such as subsea control systems. Aker Solutions has continuously invested in developing the know-how and expertise of its employees in Brazil," said Araujo.

Aker Solutions is also investing within other parts of the Brazilian offshore industry. Last year, the company announced that it will build a new multi-purpose service site for its drilling equipment business in Macaé, 112 miles (180 kilometers) northeast of Rio de Janeiro, significantly expanding its capacity to serve the country's fast-growing drilling market. This site will be Aker Solutions' fourth facility in Brazil, in addition to sites in Rio das Ostras, Curitiba and Rio de Janeiro.

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First Oil in Sight at Huntington

The Huntington oil and gas field, located on Block 22/14b in the UK sector of the North Sea, is on track to commence production by the end of the month.

Sevan Marine reported that all risers are connected to the FPSO Voyageur Spirit as well as the entire Huntington system, from the wells to the FPSO. The final preparations for first oil and pre-commissioning are expected to take place shortly, Sevan Marine said in a released statement.

The transfer of title to the unit will commence upon first oil, which is dependent upon weather conditions and completion of certain final technical work.

Huntington's production facilities will have a capacity of 30,000 barrels of oil per day. Produced oil will be stored in the vessel's integrated tanks before it is shipped to the market with shuttle tankers, while natural gas will be exported via pipeline.

E.ON Ruhrgas UK E&P is the operator of the oil field, owning a 25 percent interest in the license. Other partners in the license include Altinex Oil Limited (20%), Premier (40%), and Carrizo Oil & Gas, Inc. (15%).

With more than 10 years of journalism experience, Robin Dupre specializes in the offshore sector of the oil and gas industry. Email Robin at rdupre@rigzone.com.

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Crude Oil Futures Squeeze Out Gain to Five-Week High

Oil futures eked out a gain Wednesday, setting another five-week high, as traders shrugged off a bigger-than-expected rise in crude-oil inventories.

Light, sweet crude for May delivery settled 24 cents, or 0.3%, higher at $96.58 a barrel on the New York Mercantile Exchange, the highest settlement since Feb. 19. Brent crude on ICE Futures Europe settled 33 cents, or 0.3%, higher at $109.69 a barrel.

Crude oil spent most of the day in negative territory after the Energy Information Administration said U.S. oil stockpiles rose 3.3 million barrels last week, above the 700,000-barrel gain projected by analysts in a Dow Jones Newswires survey.

Meanwhile, stockpiles at the key U.S. hub of Cushing, Okla., rose 500,000 barrels, reversing recent declines that had signaled to traders that a supply glut there was drifting.

Still, the gains were muted by a drop in gasoline and distillate stockpiles and an increase in refinery activity, suggesting higher demand from refineries to produce to fuel. Prices scrapped their losses through the afternoon to notch a fourth straight session of gains.

"We've had a couple big days to the upside," said Peter Donovan, vice president at Vantage Trading in New York. "Today's sell-off was pretty meager and maybe guys read into it that this isn't ready to give anything back."

Gasoline stocks fell by 1.6 million barrels last week. Stocks of distillates, including heating oil and diesel, tumbled by 4.5 million barrels. Refinery utilization rose 2.2 percentage points to 85.7% of capacity.

Analysts had expected gasoline stocks to fall just 900,000 barrels and distillate inventories to give up 600,000 barrels. Refinery runs were seen rising a modest 0.3 points.

With Wednesday's gain, Nymex crude prices are up 6.5% so far in March, helped by expectations that a supply glut in the central U.S. had begun to ease and bring U.S. prices back in line with global benchmarks like Brent.

The gap between the two crudes has shrunk to around $13 a barrel, down from more than $23 in February. But Wednesday's reported inventory increase at Cushing--the Nymex delivery point--has undermined expectations that the supply glut was resolved.

"The Brent-[WTI] move continues to be a powerful factor in the market," said Andy Lebow, senior vice president of energy futures at Jefferies Bache.

Front-month April reformulated gasoline blendstock, or RBOB, settled 0.49 cent, or 0.2%, higher at $3.1155 a gallon. April heating oil settled 3.41 cents, or 1.2%, higher at $3.1155 a gallon.

Copyright (c) 2012 Dow Jones & Company, Inc.

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Petrofac Training Services Unveils O&G eLearning Course

Fresh on the heels of its recent acquisition of eLearning specialist Oilennium, Petrofac Training Services (PTS) has announced the launch of "Introduction to Oil and Gas," a new eLearning course.

Developed by Oilennium, the course offers an engaging, interactive overview of the oil and gas industry that can be used to enhance a trainee's in-class training experience, and made available to thousands of employees around the world.

The Introduction to Oil and Gas course, which can be accessed any time online, offers a concise summary of how the industry works, from exploration and production upstream to processing and transmission downstream. This user-friendly course, which features full voiceover guidance and colourful 3D animations technology throughout, is completely interactive. When a module is successfully completed, a certificate is issued to reward the user's efforts, fuelling the learning process. Upon completing the 12-module course, the user will have a good understanding of how hydrocarbon fields are found and developed, industry terminology, and technical know-how.

Effective, Quality Training

At a time when unemployment is rising and major businesses are closing, the oil and gas industry continues to buck the trend. Not only is it thriving, the industry is actively recruiting and searching for ways to effectively train new employees, while simultaneously reducing training costs. According to Oilennium, this is where eLearning courses like "Introduction to Oil & Gas" come in.

"For years, operators and services companies have been struggling to offer standardised, quality training that complements the traditional classroom approach by reinforcing key points long after the trainee leaves the classroom," said Kevin Keable, managing director of Oilennium. "Not only is 'Introduction to Oil & Gas' cost-effective, it's the perfect starting point for employees new to the industry. It's an excellent method of training non-technical staff so that they can work more effectively with their engineering and technical counterparts. On the flip side, it's useful for technical staff. Even today a drilling engineer may have little understanding of how a process system operates and vice-versa. This course is ideal for anyone who needs to understand the industry as a whole," he added.

The accessibility offered by eLearning addresses another common challenge faced by training managers in the oil and gas industry: how to train technical staff working on rotation or offshore. Traditional classroom training demands that they be physically present. Because eLearning courses can be accessed from any device with internet access, this is no longer the case, saving thousands in employee expenses.

Engaging 3D Animation

Already, "Introduction to Oil & Gas" has been purchased by oil and gas companies of all sizes, individuals and many others. Why is it so popular? Oilennium began developing these courses, just as 3D animation technology improved dramatically. This made it possible to offer much more visual content, making them more attractive and compelling. The result: improved knowledge transfer and better knowledge retention. If Oilennium were to use only 2D animations, the courses could become slow and expensive to develop. However, by using its unique blend of techniques, Oilennium has kept costs down and quality up.

Charlie Mattocks, who recently landed a highly sought after apprenticeship in the UK with a major oil and gas operator following completion of the course, feels that taking it helped boost his prospects, especially during the interview. "I found the course easy to follow and liked being able to work at my own pace. The 'Rigs and Installations,' 'Drilling' and 'Offshore' modules were especially useful," said Mattocks.

"During my interview, I produced the certificates to show I had completed the course, in addition to my A levels and GCSEs. I believe they demonstrated my commitment, initiative, and willingness to learn, which helped me stand out from the other candidates," he added.

To mark the launch of 'Introduction to Oil & Gas,' PTS is offering the course at a reduced rate, either as a standalone or bundled with its best-selling training courses "Basic Offshore Safety Induction and Emergency Training" (BOSIET), Universal BOSIET and "Minimum Industry Safety Training" (MIST). These courses provide safety and emergency training for the oil and gas industry, and are essential for those about to begin working offshore or are pursuing a career in this specialist environment.

Petrofac Training Services (PTS) is a division of the Petrofac Group, the international oil and gas facilities service provider. Founded in 1983, PTS is a leading provider of onshore and offshore safety, survival and emergency response training. It is based in Aberdeen, Scotland.

Oilennium is a division of Petrofac Training Services. Oilennium provides a broad range of learning programmes to numerous corporate clients, including Weatherford International, Perenco, EnerMech, Halliburton, AMEC SES, ECITB, Hydratight, Noble Drilling, Pacific Drilling, Marathon, Dolphin Geophysical, Seajacks and Tervita.

Copyright 2013 Oil & Gas News - Hilal Publishing and Marketing Group. All Rights Reserved.

(This article was originally published on March 25.)

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Eagle Ford Impact on South Texas to Keep Growing

Eagle Ford shale play activity in 2012 had an economic impact of $46 billion and supported over 86,000 jobs in the 14-county area in South Texas where Eagle Ford activity is more active, counties in South Texas, according to a report from UTSA's Center for Community and Business Research (CCBR).

The new study includes a 2012 update of direct, indirect and induced economic impacts by county in the 14-county and 20-county regions of the Eagle Ford shale. The report also provides a more comprehensive analysis of the economic impact in the Eagle Ford in regards to construction projects completed in 2012, crude oil transportation infrastructure, impacts on Texas Gulf Coast, impacts on Texas high education, innovations and advancements in natural gas applications, increases in county sales taxes, and pipeline construction costs.

The Eagle Ford shale's economic impact on South Texas in 2022 is estimated to grow to over $61 billion and support 89,000 jobs, according to the CCBR's latest study. The latest study released by CCBR focuses specifically on the impacts of 14 counties that are most active in the Eagle Ford play. These include Atascosa, Bee, DeWitt, Dimmit, Frio Gonzales, Karnes, La Salle, Live Oak, Maverick, McMullen, Webb, Wilson and Zavala.

Other impacts of Eagle Ford activity on the 14-county region include:

Roughly $3.3 billion in salaries and benefits paid to workersOver $800 million in local government revenuesState revenues including severance taxes are estimated at around $374 millionOver $22 billion in gross regional product (value added) impacts

However, significant activity beyond Eagle Ford exploration and drilling is occurring in six adjacent counties and are included in the analysis: Bexar, Jim Wells, Nueces, San Patricio, Uvalde and Victoria. In the larger 20-county area, Eagle Ford activity created over $61 billion in economic impact and supported 116,000 jobs last year. In 2022, the Eagle Ford's economic impact is estimated to grow to over $89 billion and support 127,000 jobs.

The Eagle Ford's impacts on the larger 20-county region in South Texas include:

$3.69 billion in payroll$28.43 billion in gross regional product (value added)$1.01 billion in total local revenues$1.24 billion estimated state revenue

Out of the top 10 industries within the Eagle Ford play in 2022, oil and gas extraction, support activities for oil and gas operations and drilling oil and gas wells will rank among the top three industries. The oil and gas extraction industry will have a total output of approximately $32 billion in 2022.

The CCBR in May 2012 released a study of the economic impact of the Eagle Ford which focused on production, drilling and related activities. In October 2012, the "Eagle Ford Shale Impact for Counties with Active Drilling" report provided a detailed image of challenges and opportunities emerging from drilling and production activities in South Texas.

CCBR also released in October of last year the report, "Workforce Analysis of the Eagle Ford Shale", which analyzed the impact of the Eagle Ford shale on the workforce of 20 South Texas counties and focused on occupational and workforce impacts including short term and long term effects on the region's workforce.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

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First Production Achieved at Beibu Gulf

Roc Oil (China) Company, a wholly owned subsidiary of ROC, has advised that following the successful installation, hook - up and commissioning of offshore facilities for the Beibu Gulf project, first production has been achieved from two development wells, A5H and A2, on the WZ 6 - 12 wellhead platform.

Both onshore and offshore construction and drilling activities have been undertaken safely to date together with exemplary environmental stewardship . The project has expended approximately 3 .76 million man hours worked without a Lost Time Injury (LTI) or environmental incident.

The trial production period will continue until the next batch of three production wells, as envisaged within the scope of the original Overall Development Plan (ODP), are completed and brought on line in the next few weeks. On completion of the ongoing completions campaign, the HYSY 93 1 jackup drilling rig will drill three additional development wells (A8, A9 and A10) designed to maximize returns from recent exploration success. The successful A6 and A7 wells drilled late 2012 will also be equipped for production. A number of completion activities relating to hook - up and commissioning are still in progress. The WZ 6 - 12 operations will be constrained by simultaneous activities for a numbers of weeks whilst both drilling and commissioning works are finalized. On completion, 10 wells will have been drilled from the WZ 6 - 12 platforms and connected to the production system, five more well's than originally contemplated in the ODP.

The drilling rig is expected to move to WZ12 - 8 West wellhead platforms for the final phase of development drilling during the third quarter. Production from the Beibu fields will progressively ramp up through the year as batches of development wells are drilled, completed and brought on line.

Copyright 2013 Dion Global Solutions Limited. All Rights Reserved.

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The team of oil & gas lobbyists behind Gov. Hickenlooper’s agenda

It should come as no surprise that in the 2013 legislative session alone, the oil and gas industry spent $1.06 million defending Gov. Hickenlooper’s pro-Big Oil agenda.

As a Chesapeake lobbyist wrote in a January 2013 memo that the lobby firm accidentally emailed to state legislators, “[Gov. Hickenlooper’s] relationship to the oil & gas industry is strong and he has been a national leader speaking out against the anti-fracturing forces that have invaded Colorado.”

Gov. Hickenlooper has had a team of oil and gas lobbyists supporting his administration’s work to gut or kill legislation at the state capitol. In fact, a Colorado Ethics Watch report released this week found that oil and gas lobbyists outnumbered oil and gas inspectors by a 28-to-17 margin during Fiscal Year 2012-2013.

That investment has paid off big for Gov. Hickenlooper and the oil and gas industry during the 2013 legislative session.

Gov. Hickenlooper gutted a bill that would have set mandatory minimum fines for oil and gas companies that pollute rivers and water. After the bill died, his administration announced it would not fine Williams Company for polluting Parachute Creek, a tributary of the Colorado River, with cancer-causing benzene so long as it adhered to a consent order.

His administration actually opposed an effort to add more oil and gas inspectors out in the field and opposed a bill which would have brought more balance to the commission that oversees oil and gas drilling and fracking operations in the state.

With huge sums of lobbying cash behind him, it is no wonder that Gov. Hickenlooper has been able to keep Colorado weak on polluter crime when it comes to oil and gas.

The report released this week by Colorado Ethics Watch found that the oil and gas industry has spent a whopping $4.7 million on lobbyists from Fiscal Years 2008-09 through 2011-12 – more than any other industry in Colorado except the health care industry.

For those tracking Chesapeake closely, the company spent $130k on lobbying efforts over the last four years. Other top oil and gas lobbying spenders since 2009 include Pioneer Natural Resources at $640k, Shell at $571k, Encana at $415k, Bill Barrett Corporation at $376k, Marathon at $293k, Williams Energy at $285k, ExxonMobil at $272k, Anadarko at $260k, Black Hills at $224k, and, of course, the Colorado Oil and Gas Association at $402k.

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Pemex Awards Engineering Contract to Cal Dive

Pemex Exploracion y Producion (PEMEX) awarded Cal Dive International, Inc. an engineering, procurement, installation and commissioning contract for the Abkatun-Pol-Chuc project in the Bay of Campeche. The contract has an estimated value of $63 million and will utilize the company's vessels.

The scope of work consists of engineering, procuring, installing and commissioning 7.5 miles (12 kilometers) of eight-inch subsea pipeline and associated tie-ins to four existing platforms.

The Abkatun, Pol and Chuc reservoir complex, which has been producing light grade oil since the 90s, is located to the southwest in the Bay of Campeche. These three fields account for the largest light oil reserve in the area, producing roughly 305,400 barrels of oil per day in 2009. However, production has decreased by about 50 percent since 1996.

Pemex is looking to increase production by further delineating the field.

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Schlumberger Launches Downhole Reservoir Testing System

Schlumberger announced Tuesday the launch of the Quartet-HT high-performance downhole reservoir testing system. This latest addition to the Schlumberger portfolio of reservoir characterization services delivers high-quality measurements and reservoir-representative fluid samples with increased safety and efficiency in ultrahigh-temperature reservoirs to 410 degrees Fahrenheit (210 degress Celsius).

"This complete downhole testing system can isolate, control, measure and sample all in a single run," said Sameh Hanna, president, Testing Services, Schlumberger. "In addition, the new ultrahigh-temperature technology allows us to position our test tools deeper and closer to the reservoir for the best possible test results and help our customers more accurately characterize their reservoirs."

The Quartet-HT system offers significant advantages over conventional drillstem test string designs, including lower operating pressure, fewer seals and connections, multicycle flexibility, single-trip efficiency, and high-resolution quartz measurements. The new system combines four leading downhole technologies engineered specifically for high-performance ultrahigh-temperature reservoir testing: CERTIS high-integrity reservoir test isolation system, IRDV intelligent remote dual valve, Signature quartz gauges and SCAR inline independent reservoir fluid sampling.

Rigorous qualification testing, which includes shock, vibration, temperature and pressure, was performed at test facilities located in France, the United Kingdom and the United States. The quartz gauge electronics used in the Quartet-HT system underwent 3,000 hours of qualification testing above the maximum operating temperature limit. The quartz gauges have been used for more than 20,000 cumulative hours of reservoir testing operations including operations in Asia, Australia and the Middle East where the tool has successfully recorded entire jobs at temperatures exceeding 400 degrees Fahrenheit (204 degrees Celsius).

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State Department Inspector General Probing Keystone XL Contractor’s Conflicts of Interest

In yet another investigation into the Obama Administration’s activities, the State Department Inspector General is probing the conflicts of interest surrounding the contractor that performed the Keystone XL review,.

The American public was supposed to get an honest look at the impacts of the Keystone XL pipeline. Instead, Environmental Resources Management (ERM), a fossil fuel contractor, hid its ties from the State Department so they could green light the project on behalf of its oil company clients.

Hiring an oil company contractor to review an oil pipeline that its clients have a financial interest in should be illegal – and it is. The Federal Government has strict laws to avoid conflicts of interest and prevent the hiring of contractors who cannot provide unbiased services.

Unredacted documents from the contractor’s proposal (revealed by Mother Jones) show that the company had worked for TransCanada, ExxonMobil and other fossil fuel companies that have a stake in the Canadian Tar Sands.

But, ERM misled the State Department at least twice in its proposal (see C&BP’s original post on ERM’s conflicts of interest)– which may have led to its selection by the State Department to review the Keystone XL pipeline.

First, ERM answered “No” to the question “Within the past three years, have you (or your organization) had a direct or indirect relationship (financial, organizational, contractual or otherwise) with any business entity that could be affected in any way by the proposed work?“ ERM appears to have added to the Yes/No questionnaire that, “ERM has no existing contract or working relationship with TransCanada.” Regardless of the addendum, the oil company contractor misled the State Department by checking “No” to the specific question above. Despite the fact that unredacted documents show that ERM worked for TransCanada and other fossil fuel companies with a stake in Keystone XL pipeline in the three years prior to its proposal.

Second, ERM claimed it was not an energy interest. The State Department question defines an energy interest in part as any company or person engaged in research related to energy development. Yet, ERM has worked for all of the top five oil companies and dozens of other fossil fuel companies. In other words, ERM is clearly an energy interest.

How can we trust ERM to perform an honest review of the Keystone XL pipeline, if it can’t answer a yes/no question honestly?

These misleading statements should have been flagged by the State Department and the contractor should not have been able to perform the review because of these seeming conflicts of interest.

Because of the issues above, Checks & Balances Project (C&BP) and 11 environmental, faith-based and public interest organizations sent a letter  [.PDF] on April 8, 2013, calling on Secretary of State John Kerry and the State Department Deputy Inspector General Harold Geisel to investigate two things: first, whether ERM hid conflicts of interest which might have excluded it from performing the Keystone XL environmental assessment and second, how State Department officials failed to flag inconsistencies in ERM’s proposal.

A few weeks later, C&BP received a voicemail from a Special Agent at the State Department’s Office of Inspector General (OIG):

Hello Mr. Elsner, my name is Special Agent Pedro Colon from the State Department’s Office of Inspector General.  I’m calling to inform you that we have received your request and are reviewing the matter.  If you have any questions please contact me at 703-284-2688.

On May 7, 2013, I called Special Agent Colon but he was unable to speak at the time. I followed up the next day and spoke with the Special Agent via phone regarding the request for an investigation. I asked a few basic questions about the status of the complaint and asked specifically if C&BP would be informed should the complaint be fully investigated by the Office of Inspector General (OIG). Special Agent Colon informed me that he could not speak to any of the questions and referred us to other staff in the OIG.

On May 9, 2013, I received an email from the OIG General Counsel saying, “that the complaint was being processed per the OIG hotline procedures and is under review.” (See the entire email correspondence here [.PDF])

I then asked the OIG General Counsel the same question he asked Mr. Colon:

If the hotline is moved out of the review process and onto the next step (an investigation?), will I be notified?

The OIG  replied via email saying that the OIG Office of Investigations will not comment if it is engaged in an investigation.

The correspondence between C&BP and the OIG indicates that there is a probe into the Keystone XL review conflicts of interest.

The public was supposed to get an honest look at the impacts of the Keystone XL pipeline. Instead, ERM, an oil company contractor, misled the State Department, in what appears to be an attempt to green light the project on behalf of oil industry clients.

The American Public needs a full investigation into the conflicts of interest and misleading statements of the Keystone XL review contractor, Environmental Resources Management.

Secretary Kerry needs to stop the Keystone XL process until the Inspector General completes a full investigation of these conflicts of interest and the State Department has an unbiased review of Keystone XL’s impact.

Filed under KeystoneXL Tagged with Big Oil, Checks and Balances Project, Energy, Energy Production, Environment, ExxonMobil, John Kerry, Keystone, Keystone XL, politics, Secretary Kerry, State Department, Tar Sands, TransCanada, US State Department

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FMC Technologies Bags Petrobras Subsea Work

FMC Technologies, Inc. announced it has received an order from Petrobras for the supply of the first subsea manifold systems for its pre-salt fields, located offshore Brazil. The value of the contract is approximately $130 million in revenue.

This initial award includes three manifolds, tools, spare parts and system integration with subsea controls. The manifolds will be designed with retrievable injection modules to allow water alternated gas injection for up to four wells and will be installed in water depths up to 8,200 feet (2,500 meters). The equipment will be manufactured in Brazil and the development engineering and system integration testing will be conducted at FMC Technologies' Technology Center in Rio de Janeiro. Deliveries are scheduled to commence in 2015.

"The pre-salt fields require customized solutions and we are proud to have been selected by Petrobras to develop and deliver these manifolds," said Tore Halvorsen, FMC Technologies' senior vice president of Subsea Technologies. "We have made significant investments in our Brazilian operations to enable large-scale product manufacturing and the development of new technologies that comply with local content requirements."

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Aker Solutions Pens Frame Agreement with Petrobras

Aker Solutions has entered a frame agreement with Petrobras to provide subsea equipment for the oil company's deepwater pre-salt field developments in Brazil. The contract value is approximately $800 million (NOK 4.6 billion).

The scope of work is for 60 well-sets with vertical subsea trees, subsea control systems, tools and spares within the 2014-2018 period.

"Aker Solutions is honoured to work with one of the world's leading deepwater operators. This long-term agreement confirms our partnership with Petrobras and reflects our dedication to the Brazilian market," said Øyvind Eriksen, executive chairman of Aker Solutions.

Petrobras will deploy the 60 well-sets in the pre-salt field developments located 186 miles (300 kilometers) off the São Paulo coast in the Santos Basin.

"We are committed to developing the subsea industry in Brazil by growing our Brazilian expertise supported by our international competence network," said Luis Araujo, president and country manager of Aker Solutions in Brazil.

Aker Solutions has decided to further invest and expand in Brazil due to the $800 million-frame agreement with Petrobras and market forecasts for the Brazilian oil and gas industry.

A new subsea manufacturing facility will be established in Curitiba in the state of Parana, 497 miles (800 kilometers) south of Rio de Janeiro. This new technology center will replace the current plant by 2015 and will employ approximately 1,100 people.

Only the first few well-sets within the new frame agreement will be manufactured at the existing plant, while the remaining well-sets will be assembled and tested at the new facility.

"We are continuing our efforts to establish large scale manufacturing capabilities based on the technologies developed for Petrobras during our first pre-salt projects. Our proven pre-salt technology gives Aker Solutions a strong position in this market, and this will be used to further enhance local content, such as subsea control systems. Aker Solutions has continuously invested in developing the know-how and expertise of its employees in Brazil," said Araujo.

Aker Solutions is also investing within other parts of the Brazilian offshore industry. Last year, the company announced that it will build a new multi-purpose service site for its drilling equipment business in Macaé, 112 miles (180 kilometers) northeast of Rio de Janeiro, significantly expanding its capacity to serve the country's fast-growing drilling market. This site will be Aker Solutions' fourth facility in Brazil, in addition to sites in Rio das Ostras, Curitiba and Rio de Janeiro.

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LEWCO 3000HP DC DRAWWORKS – USED

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Perupetro Plans Auction for Offshore Concessions

LIMA, Peru - Peru's state agency for hydrocarbon exploration, Perupetro, said Monday it plans to auction off nine concessions in the fourth quarter of this year.

Perupetro President Luis Ortigas said all of the nine concessions are offshore. He said the concessions should attract investments of $450 million.

Mr. Ortigas said Perupetro will start a roadshow in the coming weeks to promote the auction.

He said investments in offshore concessions totaled about $2 billion in recent years, and he expects these investments to double in the next five years.

Perupetro had previously said it planned to auction off more than 30 concessions this year, with most of those concessions located in Peru's Amazon region. However, that plan has been delayed several times as the agency awaits information needed to carry out prior consultation for indigenous groups living in the Amazon.

Copyright (c) 2012 Dow Jones & Company, Inc.

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CEA Offers Remarks Ahead of Lease Sale Hearings

This week, Consumer Energy Alliance (CEA) will participate at public hearings in Tallahassee and Panama City Beach hosted by the federal Bureau of Ocean Energy Management (BOEM), which is a division within the U.S. Department of the Interior. BOEM has completed a draft environmental impact statement for two proposed oil and gas lease sales in the Gulf of Mexico's Eastern Planning Area and is seeking public comment on the document.

Lease Sales 225 and 226, scheduled for 2014 and 2016, are part of the Outer Continental Shelf Oil and Gas Leasing Program:2012-2017 (Five Year Program). The Five Year Program makes all areas with the highest-known resource potential available for oil and gas leasing in order to further reduce America's dependence on overseas oil.

BOEM is holding public hearings to solicit comments on the environmental impact statement from interested citizens and organizations. Comments will be used to prepare the final environmental impact statement for these proposed Eastern Planning Area oil and gas lease sales. Three hearings will be held: on Tuesday, March 26, in Tallahassee at 1:00 p.m. EST at the Hilton Garden Inn, 1330 Blairstone Road; and on Wednesday, March 27, in Panama City Beach at 1:00 p.m. CST and again at 6:00 p.m. CST at the Wyndham Bay Point Resort, 4114 Jan Cooley Drive.

Consumer Energy Alliance-Florida Executive Director Kevin Doyle prepared the following comments for the Tallahassee and Panama City Beach public hearings:

"As an advocate for consumers, CEA supports offshore energy exploration and production in the eastern planning areas of the Gulf of Mexico. While CEA encourages the development of renewable energy resources, we believe that continued and expanded oil and gas exploration and production is vital to maintaining a reliable energy supply for consumers, reducing our dependence on oil imports, and growing the economy. Utilizing all available domestic oil and gas resources will bring energy prices down for all American consumers and businesses – allowing them to save money, grow their businesses, and create jobs. "

In addition to creating jobs, offshore oil and gas development provides substantial government revenue through an expanded tax base and royalty payments. In 2009, offshore oil and gas activity in the Gulf of Mexico generated almost $70 billion of economic value and nearly 400,000 jobs. That same year, the industry provided about $20 billion in revenues to federal, state and local governments through royalties, bonuses and tax collections. According to Wood Mackenzie, oil and natural gas development in the Eastern Gulf of Mexico could create 100,000 new jobs in Florida alone.

In 2012, the United States consumed 18.5 million barrels of petroleum products a day, making the U.S. one of the world’s largest petroleum consumers. The United States consumes more energy from petroleum than from any other energy source. Future Eastern Gulf of Mexico energy exploration and production could add significant domestic supplies to help offset the need for overseas imports. It is important that we allow access now because it will years to explore and develop the energy before it can be delivered to consumers.

The Environmental Impact Statement concludes that any environmental impact from offshore oil and gas development in these proposed areas would be minimal if all existing regulatory requirements are met. In the draft EIS, the BOEM examines the potential impact to water quality, air quality, wetlands, marine life, and coastal barriers, among other areas, and each time concludes that given the type and level of activity anticipated, the local environment will not be adversely affected. The draft EIS notes that myriad advancements in technology, practice and regulation following the 2010 Deepwater Horizon spill will further minimize the potential impact of offshore oil and gas development.

Consumer Energy Alliance encourages the Bureau of Ocean Energy Management to proceed in a way that allows for the greatest economic benefit to American energy consumers. This means significant access to the eastern planning areas of the Gulf of Mexico for safe and responsible energy exploration and production. Thank you again for allowing us to be here today.

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CB&I Selected for Ichthys Gig

CB&I announced it has been awarded a contract valued in excess of $80 million by JKC Australia LNG Pty Ltd. The scope of work includes the engineering, procurement, construction and pre-commissioning for non-cryogenic storage tanks for the Ichthys project LNG facilities in Darwin, Northern Territory, Australia.

"We are pleased to continue our relationship with JKC on this project," said Luke Scorsone, executive vice president and Group president of Fabrication Services. "This award builds on CB&I's involvement in many of the major LNG and other oil and gas projects in this region, and we are well positioned to support the infrastructure development needs of these important projects."

Project completion is scheduled for 2015.

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Statoil Spuds New Johan Sverdrup Appraisal Well

Sweden's Lundin Petroleum reported Tuesday the spud of appraisal well 16/2-17S on the Statoil-operated production license 265 on the Johan Sverdrup discovery in the Norwegian North Sea.

The well is located close to the western-bounding fault of the Johan Sverdrup discovery and its main objective is to investigate the Jurassic reservoir thickness, quality and distribution close to the fault – approximately a mile southwest of appraisal well 16/2-8 and 1.5 miles west of appraisal well 16/2-11.

The planned total depth is approximately 6,750 feet below mean sea level. The well will be drilled by the Ocean Vanguard (DW semisub) rig in an operation expected to take around 55 days.

Statoil's partners in the well include Petoro, with a 30-percent stake, Det norske oljeselskap, with 20 percent, and Lundin Norway, which has a 10-percent interest.

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Centrica Inks Agreement for Sabine Pass LNG

Centrica plc has entered into an agreement with Cheniere Energy Partners, L.P, to purchase 91,250,000 mmbtu (89 billion cubic feet) of annual liquefied natural gas (LNG) volumes for export from the Sabine Pass liquefaction plant in Louisiana in the United States. This amounts to approximately 1.75 million metric tonnes per annum (mmtpa), and is the equivalent of the annual gas demand of around 1.8 million UK homes. The contract is for an initial 20 year period, with the option for a 10 year extension, and the target date for first commercial delivery is September 2018.

Under the terms of the agreement, Centrica will purchase LNG on a ‘Free on Board’ (FOB) basis, giving it destination rights for the cargoes, for a purchase price indexed to the Henry Hub natural gas price plus a fixed component. Centrica will export gas from the fifth LNG train at Sabine Pass, on which preliminary engineering work has already begun. The contract is subject to a number of conditions precedent, including Cheniere receiving the necessary regulatory approvals, securing finance, making a final investment decision and issuing a notice to proceed with the fifth LNG train.

Sam Laidlaw, chief executive of Centrica, said, "In an increasingly global gas market, this landmark agreement represents a significant step forward in our strategy, enabling Centrica to strengthen its position along the gas value chain and helping to ensure the UK’s future energy security. We are therefore very pleased to have signed this agreement and look forward to working with Cheniere."

UK Prime Minister David Cameron said, "I warmly welcome this commercial agreement between Centrica and Cheniere. Future gas supplies from the US will help diversify our energy mix and provide British consumers with a new long-term, secure and affordable source of fuel."

UK Secretary of State for Energy and Climate Change Ed Davey said, "Security of UK energy supply lies in diversity so I am pleased that Centrica has announced today that it has secured a long-term North American liquefied natural gas export contract with Cheniere Energy Partners. The UK already receives gas from a range of countries and we can now add the US to Norway, the Netherlands and Qatar as sources of supply."

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Statoil Starts Up Production at Stjerne

Norway's Statoil reported Monday that it has started up production on the Stjerne field, around eight miles southwest of the Oseberg South platform in the Norwegian North Sea.

Stjerne is the fifth of Statoil's fast-track projects to come onto production, and the news comes just a week after the firm began production at another fast-track development: the Skuld field in the Norwegian Sea. Statoil's fast-track portfolio of projects employ standardized solutions using existing infrastructure rather than building all required infrastructure from scratch.

Statoil said Monday that its ambition is to cut the time it takes to bring new fast-track projects on stream to an average of just 30 months.

Halfdan Knudsen, heads of the fast-track development portfolio for Statoil Development & Production Norway, commented in a statement:

"This is a good example of how to make smaller discoveries profitable. The project has run according to plan, despite the delayed drilling start due to a rig change.

"We switched to Songa Delta [mid-water semisub] and this meant that drilling and completion could be implemented faster than originally planned. In fast-track we are always looking for opportunities."

Stjerne was discovered in 2009. The field has a four-slot seabed template. Statoil said two wells will produce oil and gas, while the other two will inject water into the reservoir for pressure support. So far one of the wells has been drilled.

Recoverable reserves are now estimated to be 49.2 million barrels of oil equivalent, with oil accounting for 20.7 million barrels of that total. Statoil also said the project has been brought into development some $85 million below budget.

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

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Total Reports Unplanned Outage at Scottish Gas Terminal

Total E&P UK tweeted early Tuesday that it has suffered an unplanned outage at its St Fergus gas terminal north of Aberdeen, Scotland. The firm's Twitter account reported that the outage means that it is losing the equivalent of five million cubic meters (177 million cubic feet) of gas per day.

The St Fergus gas terminal is a set of four gas processing plants that receive approximately 20 percent of the UK's gas from several gas fields in the North Sea.

The news comes just two weeks after Total restarted production at its Elgin/Franklin platform after it had been out of action for almost a year following a major gas leak there on March 25, 2012.

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

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LiqTech, FMC Enter Exclusive Agreement

LiqTech International, Inc. a clean technology company that manufactures and markets highly specialized filtration technologies, announced it has entered into an agreement with a global leader in oilfield equipment and services, FMC Technologies, Inc., for the use of its state-of-the-art disruptive silicon carbide membrane technology for oil and gas applications. The exclusive agreement will bring LiqTech International's silicon carbide membrane technology into the highly attractive unconventional shale oil and gas sector and will allow for the development of new water treatment systems. The agreement includes a multi-year, multi-million dollar commitment towards LiqTech technology in order for FMC Technologies to maintain exclusivity.

The use of horizontal drilling and hydraulic fracturing technology is one of the most significant advancements in hydrocarbon recovery in decades, driving a resurgence of onshore oil and gas activity in North America. The hydraulic fracturing process involves injecting large amounts of water and sand into a well to increase the cracks in dense formations, thereby enhancing flow characteristics. Following the process, a significant amount of water returns to the surface and must be treated or injected into deep underground disposal wells. LiqTech's silicon carbide membrane, and its greatly enhanced filtration capabilities, is a potential enabling technology for the treatment and reuse of this produced water.

Lasse Andreassen, LiqTech's CEO, stated:

"This agreement is a major breakthrough for LiqTech and is the validation of our technology that we have been working on for the last six years. We have more than one hundred customers that use our membranes, but FMC Technologies will bring LiqTech a very important platform in the attractive unconventional shale oil and gas area. We have granted FMC Technologies exclusive use of our membranes in the unconventional shale oil and gas industry, because of its commitment to our technology and the resources it commits to bringing our membranes into systems that we believe will grow our business significantly."

"FMC Technologies has studied and tested LiqTech's Silicon Carbide Membrane Technology and found it well suited for the further development of our product and service offerings in unconventional shale oil and gas," said Johan Pfeiffer, FMC Technologies' vice president of Surface Technologies. "We chose LiqTech as our partner because its product has great promise and its organization can meet the high quality standards that FMC Technologies requires. We look forward to developing new products together and see great prospects in this partnership."

"This agreement is a great accomplishment for LiqTech and our talented staff and will strengthen our business potential in the very important unconventional shale oil and gas area," LiqTech's Chairman Aldo Petersen concluded.

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Lebanese Geology Promises Offshore Oil Bonanza

The Levant Basin in the Eastern Mediterranean has already been proven as a hydrocarbon system thanks to major gas discoveries in both Cypriot and Israeli waters. Now the Republic of Lebanon is getting in on the act by opening up its offshore waters to oil and gas explorers.

Lebanon's deepwater area off its coast in the Eastern Mediterranean covers more than 7,600 square miles and offers a variety of unexplored hydrocarbon plays. However, while gas appears to be predominant in the southern part of the Levant Basin, offshore Israel, there is evidence to support the view that there might be plenty of oil resources in the waters of Israel's northern neighbor.

Recently, the Petroleum Administration of the Republic of Lebanon held a seminar to promote pre-qualification for the first ever Lebanese offshore licensing round. Held on March 7 in London, and attended by Rigzone, this was the only formal event planned by the Petroleum Administration ahead of the March 28 deadline for pre-qualification.

Delegates from a variety of oil and gas companies – including majors such as Chevron Corp. and Repsol S.A. – were treated to an exposition on the geology of the region, and got further details from the Petroleum Administration itself on the forthcoming licensing round.

According to one of the presenters, Dr. Neil Hodgson, an exploration geology specialist at seismic imaging firm Spectrum ASA, offshore Lebanon represents an enticing frontier exploration zone.

"It's not many times in your career that you come across a basin that is completely untouched and yet is incredibly prospective," Hodgson said.

"One of the exciting things about this particular basin is that the acreage offshore has never been licensed before. And this is the first chance that the industry has got to discover the wealth and the hydrocarbon promises that lie offshore."

Hodgson pointed out that oil and gas companies who get involved in offshore Lebanon will also benefit from a lot of 3D seismic data that has already been acquired.

"It's very rare that you have 70 percent of a basin covered by 3D seismic before there's even a single license block. That's something very clever that the Lebanese authorities have arranged so that the industry will have 3D seismic when they acquire blocks. So, instead of acquiring seismic before they drill, they can move very, very rapidly into a drilling phase," he said.

One of the key factors that make offshore Lebanon enticing for explorers is that its geology is different to that found elsewhere in the Levant Basin.

While Cyprus and Israel saw giant gas discoveries such as the Aphrodite field (estimated to hold up to nine trillion cubic feet of gas) and Tamar (eight trillion cubic feet), offshore Lebanon promises large oil fields as well as gas.

"The wells that were discovered in the southern Levant Basin discovered dry gas and they discovered dry gas in the early Miocene. But as you come offshore to the north and you go into the Lebanese acreage in the northern Levant Basin the basin gets deeper, the source rocks become more mature and it becomes an oil-prone basin as well as a gas-prone basin," explained Hodgson.

The early Miocene sands in the Levant Basin come from Nile Delta, according to Hodgson. Sands from the early Miocene period were transported long distances to the basement floor and dumped along what is known as the Levant Ramp – a steep change of dip on the basement floor. Channel systems, like gutters, run along the southern Levant Basin, which means the sands have distributed into large fans in the northern Levant Basin.

"And so the mass of sands is in the northern Levant Basin offshore Lebanon, rather than the southern Levant Basin, where the gas discoveries were made. It's quite unusual … but all of these discoveries here [in the southern Levant basin] – Tamar, Leviathan and Aphrodite – have relatively thin reservoirs. They have several hundred meters of reservoirs, which is pretty good, but it's not as good as you are going to find when you go into the northern Levant Basin offshore Lebanon because the reservoir there will be a thousand meters thick. At least three times as thick as you find with the reservoir to the south," Hodgson said.

The source rock offshore Lebanon is mature and buried deep enough for oil generation, Hodgson explained.

"In Tamar, we have biogenic gas – gas produced by biogenic action, not thermally produced … That's because this source rock is not buried deep enough, whereas in the northern Levant Basin it is buried deep enough and there's so many studies now that come together to demonstrate that," Hodgson said.

"From the study that we did, we could see that the source rock under Tamar/Leviathan was not mature, whereas the source rock here in the northern Levant Basin offshore Lebanon is mature and it is mature for the production of oil."

Meanwhile, more evidence for oil plays offshore Lebanon exist in the form of oil seeps that can be seen all the way along the coast of Lebanon. The reason for these seeps running up the coats is a kilometer-thick sequence of salt that no oil can get through.

The oil "migrates up and hits the base of the salt and then wriggles along the base of the salt until it can find a way out. And it finds a way out at the edge of the salt, which is all the way up the coast," Hodgson explained.

One 769-square mile (2,000-square kilometer) area that Spectrum has acquired 2D seismic data over suggests a number of structures that hold up to 20 trillion cubic feet of gas (or their oil equivalent), according an example presented by Hodgson.

After some political infighting within Lebanon, which delayed the original pre-qualification process for international companies that want to get involved in the country's first offshore licensing round, Lebanon has now set a March 28 deadline for pre-qualification. However, that could still be extended by a couple of weeks according to Wissam Zahabi, the head of Lebanese Petroleum Administration's economic and finance department, who also presented at the London seminar.

Three weeks will be taken to assess the license applications before the licensing round officially begins May 2. The round will last six months and close Nov. 4.

The Lebanese government is to opt for a royalty charge rather than have the state itself take part in the licensing round, Zahabi explained.

"There's an option in the law, but we will not have this state participation. We don't have the entity to manage this," Zahabi said. "So there will be no state participation, we will have royalty on gas, which is flat, and royalty on oil which is progressive and related to production. I will not give the figures now."

Meanwhile, Zahabi said that the various license blocks that Lebanon will put up for auction will be revealed soon.

"We have already prepared them," he said. "How many blocks we shall award we don't know. We are still working on our licensing strategy."

Zahabi outlined a few of the terms of the licenses:

The licenses will include an exploration phase of up to 10 years and a production phase that will last up to 30 years.Each exploration block must have at least three companies participating in the license. Firms participating should be joint stock companies.Operators of a license should have total assets of $10 billion and should previously have had operatorship of at least one petroleum development in water depths in excess of 500 meters (1,640 feet).Non-operating participants should have already established petroleum production elsewhere and have at least $500 million of total assets, although joint ventures of companies that have combined assets of more than $500 million will also be acceptable.

Dozens of companies have already expressed interest in Lebanon's first offshore licensing round. The next couple of months will see how many are in the mix for when the country comes to award the licenses in February 2014.

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

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Faroe Still on Target to Drill 5 Wells in 2013

Faroe Petroleum remains on target to drill five fully-funded exploration wells during the remainder of this year, the company said as it released its annual results Tuesday.

Faroe said its capital expenditure plans for 2013 "will be significant" with it earmarking some GBP 170 million ($258 million) to be spent during the year. GBP 120 million ($182 million) of this will be spent on exploration, with the remainder spent on producing fields.

Four wells are planned in Norway (Darwin, Snilehorn, Novus and Butch East) while one appraisal well is planned in the UK (Perth).

In its results for 2012, Faroe said that its 2P (proved and probable) reserves stood at 20.1 million barrels of oil equivalent at the end of December. 95 percent of this is associated with fields currently on production.

2012 total average production was approximately 6,900 barrels of oil equivalent per day (boepd), compared with 2,500 boepd in 2011.

Faroe noted that the Hyme field came on stream in February this year, with net production from the well during 2013 expected to be approximately 1,200 boepd. In addition, several infill wells are planned for 2013 on the Njord, Brage, Ringhorne East and Schooner fields.

In total, 2013 production is expected to be between 7,000 and 9,000 boepd.

Oil sector analysts at London-based investment bank Peel Hunt commented in a statement:

"Success at the drill bit has been modest with two key discoveries, namely Butch and Rodriguez (post year-end). However, Faroe's growth initiatives have remained robust with its successful participation in the UK (seven awards) and the Norwegian (eight awards) licencing rounds and its entry into Iceland."

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

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Uganda Govt: Investment in Oil Exploration Hits $1.7B

KAMPALA, Uganda - Investment in oil exploration activities in Uganda's Lake Albertine Rift basin has reached at least $1.7 billion as oil companies continue efforts to determine the exact size of the East African nation's crude reserves, Uganda's energy and minerals ministry said Monday.

In a report, the ministry said that by the end of January 2013, a total of 88 oil exploration and appraisal wells had been drilled in the country, with 76 of them encountering oil. The discoveries represent an impressive success rate of 85% with less than 40% of the oil region explored so far, as Uganda steps up efforts to join the ranks of top oil producers such as Nigeria, Angola and Sudan in Sub-Saharan Africa.

"Cumulative investments made in petroleum exploration in the country since 1998 are estimated to be $1.7 billion... this is expected to increase as the country enters the development and subsequently the production and refining phase of the petroleum value chain," said Kalisa Kabagambe, permanent secretary at the energy and minerals ministry.

Increased discoveries have upgraded the country's crude reserve estimates to 3.5 billion barrels from 2.5 billion barrels last year. However, government and oil companies are still split over the oil development plan and refining options, which continue to push back the planned start of production.

More than a year since Uganda approved U.K.-based Tullow Oil PLC's long-delayed $2.9 billion agreement to split its oil licenses with Total SA and CNOOC Ltd., an oil development plan is yet to be agreed for the basin.

Tullow, Total and CNOOC want to sell crude on the open market and are considering $5 billion of investment in crude pipelines to the East African coast. But Uganda insists that most of the oil should be refined locally, initially for domestic consumption and then for regional export. The three companies are planning to invest at least $12 billion to develop the oil fields.

Copyright (c) 2012 Dow Jones & Company, Inc.

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Wu to Head China's National Energy Administration

BEIJING - China has appointed Wu Xinxiong to lead the National Energy Administration, a listing of management officers at the country's top energy regulator on its website showed Tuesday.

Mr. Wu, the former chairman of the State Electricity Regulatory Commission, replaced Liu Tienan as head of the agency. The website didn't say when Mr. Wu's appointment took effect.

Beijing said earlier this month that it will establish a new energy bureau, and merge the current National Energy Administration and the State Electricity Regulatory Commission as part of a government agency shake-up proposal. The merger is still in process.

Copyright (c) 2012 Dow Jones & Company, Inc.

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STATS Group in BP Pipeline Isolation Operation

Scottish oilfield services firm STATS Group reported Monday on a pipeline isolation operation it has completed for BP in the North Sea.

The firm said it has isolated a 24-inch oil export line on BP's Marnock ETAP spur line in the central North Sea in order to allow the replacement of a 16-inch valve.

STATS said that it deployed its 24-inch Remote Tecno Plug to isolate a pressure of 60 Bar, providing safe working conditions to allow valve replacement activities.

Steven Byers, STATS Group's isolation services managers, commented in a statement:

"The project was a success and enabled BP to complete maintenance works which were reliant on the plug providing an isolation. The client was happy with our flexible approach and willingness to interact to achieve the best outcome possible during a time critical window."

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Wu to Head China's National Energy Administration

BEIJING - China has appointed Wu Xinxiong to lead the National Energy Administration, a listing of management officers at the country's top energy regulator on its website showed Tuesday.

Mr. Wu, the former chairman of the State Electricity Regulatory Commission, replaced Liu Tienan as head of the agency. The website didn't say when Mr. Wu's appointment took effect.

Beijing said earlier this month that it will establish a new energy bureau, and merge the current National Energy Administration and the State Electricity Regulatory Commission as part of a government agency shake-up proposal. The merger is still in process.

Copyright (c) 2012 Dow Jones & Company, Inc.

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CEA Offers Remarks Ahead of Lease Sale Hearings

This week, Consumer Energy Alliance (CEA) will participate at public hearings in Tallahassee and Panama City Beach hosted by the federal Bureau of Ocean Energy Management (BOEM), which is a division within the U.S. Department of the Interior. BOEM has completed a draft environmental impact statement for two proposed oil and gas lease sales in the Gulf of Mexico's Eastern Planning Area and is seeking public comment on the document.

Lease Sales 225 and 226, scheduled for 2014 and 2016, are part of the Outer Continental Shelf Oil and Gas Leasing Program:2012-2017 (Five Year Program). The Five Year Program makes all areas with the highest-known resource potential available for oil and gas leasing in order to further reduce America's dependence on overseas oil.

BOEM is holding public hearings to solicit comments on the environmental impact statement from interested citizens and organizations. Comments will be used to prepare the final environmental impact statement for these proposed Eastern Planning Area oil and gas lease sales. Three hearings will be held: on Tuesday, March 26, in Tallahassee at 1:00 p.m. EST at the Hilton Garden Inn, 1330 Blairstone Road; and on Wednesday, March 27, in Panama City Beach at 1:00 p.m. CST and again at 6:00 p.m. CST at the Wyndham Bay Point Resort, 4114 Jan Cooley Drive.

Consumer Energy Alliance-Florida Executive Director Kevin Doyle prepared the following comments for the Tallahassee and Panama City Beach public hearings:

"As an advocate for consumers, CEA supports offshore energy exploration and production in the eastern planning areas of the Gulf of Mexico. While CEA encourages the development of renewable energy resources, we believe that continued and expanded oil and gas exploration and production is vital to maintaining a reliable energy supply for consumers, reducing our dependence on oil imports, and growing the economy. Utilizing all available domestic oil and gas resources will bring energy prices down for all American consumers and businesses – allowing them to save money, grow their businesses, and create jobs. "

In addition to creating jobs, offshore oil and gas development provides substantial government revenue through an expanded tax base and royalty payments. In 2009, offshore oil and gas activity in the Gulf of Mexico generated almost $70 billion of economic value and nearly 400,000 jobs. That same year, the industry provided about $20 billion in revenues to federal, state and local governments through royalties, bonuses and tax collections. According to Wood Mackenzie, oil and natural gas development in the Eastern Gulf of Mexico could create 100,000 new jobs in Florida alone.

In 2012, the United States consumed 18.5 million barrels of petroleum products a day, making the U.S. one of the world’s largest petroleum consumers. The United States consumes more energy from petroleum than from any other energy source. Future Eastern Gulf of Mexico energy exploration and production could add significant domestic supplies to help offset the need for overseas imports. It is important that we allow access now because it will years to explore and develop the energy before it can be delivered to consumers.

The Environmental Impact Statement concludes that any environmental impact from offshore oil and gas development in these proposed areas would be minimal if all existing regulatory requirements are met. In the draft EIS, the BOEM examines the potential impact to water quality, air quality, wetlands, marine life, and coastal barriers, among other areas, and each time concludes that given the type and level of activity anticipated, the local environment will not be adversely affected. The draft EIS notes that myriad advancements in technology, practice and regulation following the 2010 Deepwater Horizon spill will further minimize the potential impact of offshore oil and gas development.

Consumer Energy Alliance encourages the Bureau of Ocean Energy Management to proceed in a way that allows for the greatest economic benefit to American energy consumers. This means significant access to the eastern planning areas of the Gulf of Mexico for safe and responsible energy exploration and production. Thank you again for allowing us to be here today.

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C&BP Calls for State Dept. Investigation into Keystone XL Consultant’s Conflicts of Interest

Letter to Secretary of State John Kerry and State Dept. Deputy Inspector General Harold Geisel

Originally posted on April 9, 2013. 

Yesterday, Checks & Balances Project and 11 environmental, faith-based and public interest organizations called on Secretary of State John Kerry and the State Department Deputy Inspector General Harold Geisel to investigate whether Environmental Resources Management (ERM) hid conflicts of interest which might have excluded it from performing the Keystone XL environmental assessment and how State Department officials failed to flag inconsistencies in ERM’s proposal. Tom Zeller, Senior Writer at The Huffington Post, wrote an article highlighting the letter callings for an investigation.

Early last month, the State Department released a 2,000 page environmental impact study for the Keystone XL pipeline claiming that the pipeline would not have major impact on the environment. But, Environmental Resources Management (ERM), the consulting firm hired to perform the “draft supplemental environmental impact statement (SEIS),” has ties to fossil fuel companies with major stakes in the Alberta Tar Sands. This conflict of interest was not accurately disclosed  in ERM’s answers on a State Department questionnaire. Checks & Balances Project considers ERM’s responses in its proposal to be intentionally misleading statements.

Unredacted Documents Uncover Conflicts of Interest
Last week, Mother Jones released unredacted versions of the ERM proposal, showing that three experts “had done consulting work for TransCanada and other oil companies with a stake in the Keystone’s approval.”

The unredacted biographies show that ERM’s employees have an existing relationship with ExxonMobil and worked for TransCanada within the last three years among other companies involved in the Canadian tar sands.

Here’s more from Mother Jones’ Andy Kroll:

“ERM’s second-in-command on the Keystone report, Andrew Bielakowski, had worked on three previous pipeline projects for TransCanada over seven years as an outside consultant. He also consulted on projects for ExxonMobil, BP, and ConocoPhillips, three of the Big Five oil companies that could benefit from the Keystone XL project and increased extraction of heavy crude oil taken from the Canadian tar sands.

Another ERM employee who contributed to State’s Keystone report — and whose prior work history was also redacted — previously worked for Shell Oil; a third worked as a consultant for Koch Gateway Pipeline Company, a subsidiary of Koch Industries. Shell and Koch have a significant financial interest in the construction of the Keystone XL pipeline. ERM itself has worked for Chevron, which has invested in Canadian tar-sands extraction, according to its website.”

When asked about who at the State Department decided to redact ERM’s biographies, a State Department spokesperson said “ERM proposed redactions of some information in the administrative documents that they considered business confidential.” Disclosing past clients may be business confidential information, but from what the biographies show, ERM may have recommended the redactions to hide conflicts of interest from public disclosure.

Problem with ERM Answers on Conflict of Interest Questionnaire 

ERM’s Proposal to the State Department

The biographies on ERM’s proposal show that the company has had direct relationships with multiple business entities that could be affected by the proposed work in the past three years.

In the “Organizational Conflict of Interest Questionnaire,” the State Department asks (page 42), “Within the past three years, have you (or your organization) had a direct or indirect relationship (financial, organizational, contractual or otherwise) with any business entity that could be affected in any way by the proposed work?“ ERM’s Project Manager, Steve Koster, checked “No” but appears to have added to the Yes/No questionnaire that, “ERM has no existing contract or working relationship with TransCanada.”

Regardless of the addendum Koster added, he still submitted an incomplete statement when checking “No” to the specific question above. Simply put, the information provided by Mr. Koster was an incomplete statement if one simply reviews the biographies of ERM’s employees for the project.

The State Department Contracting Officer should have flagged this inconsistency when reviewing the staff biographies.  ERM’s answers did not properly reveal in the Yes/No questionnaire that ERM did have a current “direct relationship” with a business enetity that could be affected by the proposed work and a relationship in the past three years with TransCanada, the company building the pipeline.

Koster’s incomplete statement on direct business relationships is not the only odd statement in ERM’s proposal. ERM also answered “No” to the question, “Are you (or your organization) an ‘energy concern?’” which the State Department defines (in part) as: “Any person — (1) significantly engaged in the business of conducting research…related to an activity described in paragraphs (i) through (v).” Paragraph (i) states: “Any person significantly engaged in the business of developing, extracting, producing, refining, transporting by pipeline, converting into synthetic fuel, distributing, or selling minerals for use as an energy source…” ERM as a research firm working for fossil fuel companies is, unequivocally, an energy interest.

So the question must be asked: If ERM is unable to accurately fill out a simple questionnaire regarding conflicts of interest, how can we trust the company to perform an unbiased environmental assessment of a 1,179 mile-long pipeline cutting through the American heartland? And, why did the State Department’s Contracting Officer not flag the inconsistencies in ERM’s Conflict of Interest Questionnaire when reviewing the proposals?

Intentions of State Department and ERM in Question

The Federal Government has strict ethics rules to prevent Organizational Conflicts of Interest (OCIs) from impacting the impartiality of government contracts and to prevent hiring contractors who cannot provide independent and unbiased services to the government.

According to a white paper from the Congressional Research Service, before the State Department could choose ERM as the contractor, the “Contracting Officer” had to make an “affirmative determination of responsibility.” All government contractors (including ERM) must be deemed responsible, in part by meeting strict ethics guidelines, known as “collateral requirements.”

According to current collateral requirements, contractors must be found “nonresponsible” when there are unavoidable and unmitigated OCIs. Checks & Balances Project believes that the Contracting Officer should have deemed ERM “nonresponsible” because the company serves as a contractor for major fossil fuel companies that have a stake in the Keystone XL pipeline. If ERM were “nonresponsible”, the company would have been ineligible to perform the environmental impact review of the Keystone XL pipeline.

These potential material incomplete statements on a Federal Government proposal calls into question the integrity of ERM and threatens millions in government contracts.

If ERM were determined to be “nonresponsible” or “excluded” because of these incomplete statements, it could jeopardize ERM’s ability to perform any work for the Federal Government. Again, according to the Congressional Research Service:

“Decisions to exclude are made by agency heads or their designees (above the contracting officer’s level) based upon evidence that contractors have committed certain integrity offenses, including any “offenses indicating a lack of business integrity or honesty that seriously affect the present responsibility of a contractor.””

Certainly these incomplete statements call into question both the independence of ERM and the judgement of the Contracting Officer in making the “affirmative determination of responsibility.” This proposal process should be investigated by the State Department Inspector General to determine if ERM’s statements are cause for exclusion.

Groups Calling for Inspector General Investigation

We believe ERM used multiple material incomplete statements and had clear conflicts of interest as shown in the unredacted documents. So, why was ERM hired by the State Department?

Checks & Balances Project asked a State Department spokesperson about the conflicts of interest and the spokesperson said: “Based on a thorough consideration of all of the information presented, including the work histories of team members, the Department concluded that ERM has no financial or other interest in the outcome of the project that would constitute a conflict of interest.” Perhaps the State Department’s Contracting Offier made the decision to hire ERM because of the company’s incomplete statements on the conflict of interest questionnaire.

Harold Geisel, Deputy Inspector General, U.S. State Department

Checks & Balances Project along with 11 other groups (Better Future Project, Center for Biological Diversity, Chesapeake Climate Action Network, DeSmogBlog, Forecast the Facts, Friends of the Earth, Greenpeace, NC WARN, Oil Change International, Public Citizen’s Energy Program and Unitarian Universalist Ministry for Earth) sent a letter to Secretary of State John Kerry and the State Department Deputy Inspector General Harold Geisel calling for an investigation into the matter. These incomplete statements and the determination by the Contracting Officer that ERM did not have any conflicts of interest, despite clear evidence to the contrary, are grounds for further investigation.

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Perupetro Plans Auction for Offshore Concessions

LIMA, Peru - Peru's state agency for hydrocarbon exploration, Perupetro, said Monday it plans to auction off nine concessions in the fourth quarter of this year.

Perupetro President Luis Ortigas said all of the nine concessions are offshore. He said the concessions should attract investments of $450 million.

Mr. Ortigas said Perupetro will start a roadshow in the coming weeks to promote the auction.

He said investments in offshore concessions totaled about $2 billion in recent years, and he expects these investments to double in the next five years.

Perupetro had previously said it planned to auction off more than 30 concessions this year, with most of those concessions located in Peru's Amazon region. However, that plan has been delayed several times as the agency awaits information needed to carry out prior consultation for indigenous groups living in the Amazon.

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Aker Awarded Moho Nord Contract Offshore Congo

Norwegian oilfield services firm Aker Solutions has won an $850 million contract from Total to deliver a subsea production system for the Moho Nord project in the Republic of Congo, the company reported Monday.

The Moho Nord project, which is located approximately 47 miles off the coast of Congo, consists of two developments: Moho Nord and Moho Bilondo 1bis. Aker and Total will run both developments as a single, integrated project.

Aker said the scope of the work included the delivery of 28 vertical subsea trees, including wellhead systems, two installation and workover control systems, seven manifold structures, subsea control and tie-in systems. The project will use Aker's new vertical tree technology, the firm added.

Management, engineering and procurement will mainly be performed at Aker's headquarters in Fornebu, Norway. The subsea trees and worker systems will be manufactured at the Tranby manufacturing center outside Oslo, while the production of manifolds will be carried out at the firm's facility in Egersund, Norway, and Aker's Aberdeen facility will deliver the control systems and the wellheads.

Alan Brunnen, head of Aker's subsea business area, commented in a statement:

"This is a major contract award for Aker Solutions. We are investing and growing internationally and Aker Solutions is committed to developing the oil and gas industry in the Republic of the Congo through knowledge sharing and local content."

Moho Nord and Moho Bilondo 1bis are part of the Moho-Bilondo oil field which was commissioned in April 2008 for commercial production. It is the first deepwater offshore field of the Republic of the Congo at water depths ranging between 1,970 and 3,445 feet.

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Kuwait Minister: US Shale Oil Bonanza is No Threat

DUBAI - Growing production from U.S. shale deposits is not a threat to Kuwait due to its higher costs, the country's oil minister Hani Hussein said in remarks published late Monday.

"There is no effect on Gulf crudes from shale oil in the United States as it will take a long time for this crude to have an impact because of its high cost," Mr. Hussein said, according to the official Kuwait News Agency, or KUNA.

"Gulf countries have huge reserves that can be produced at simple costs," he added.

Analysts have previously said that producing oil from U.S. shale is estimated to cost around $50-75 a barrel, while in the Gulf production costs are often less than $20.

Earlier this month, Sami al-Rushaid, the chairman and managing director of state-owned Kuwait Oil Co., said that shale production may lead to a fall in crude oil prices as it cuts into demand, but that prices are likely to stay at about $100 a barrel.

Kuwait, an Organization of the Petroleum Exporting Countries member, has previously said it has begun a study to assess its shale-oil deposits.

In November, the International Energy Agency, which represents key oil consumers, predicted the U.S. would overtake Saudi Arabia as the world's largest oil producer by 2020 thanks to shale output, a forecast which the OPEC secretary general said could undermine its members' spending plans.

OPEC said Tuesday that demand for its members' oil in 2013 will be 100,000 barrels a day lower than previously forecast, as growing output from non-member countries, particularly North American shale oil, eats into its market share.

If the scaled-back forecast proves correct, OPEC could be on track to have its lowest share of the global oil market in more than 10 years. OPEC's move comes as industry experts question whether the producers' group, which has had a decisive influence on the oil market since the 1970s, can maintain its position amid a boom in U.S. oil production resulting from shale-rock drilling technology.

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