Keppel O&M to Deliver First Jackup for 2013 Ahead of Schedule

Keppel Offshore & Marine (Keppel O&M) is aiming to deliver its first jackup for 2013 - Dynamic Vision (300' ILC jackup) - to Vision Drilling by the end of January, two months ahead of schedule, a company spokesperson confirmed with Rigzone Monday.

Under the original contract inked, Keppel FELS – the shipyard allocated to build the jackup – was required to deliver the unit by March 2013. The shipyard's ability to deliver ahead of schedule garners Keppel O&M an early delivery bonus of $1 million.

Dynamic Vision will be chartered to India's Oil and Natural Gas Corporation (ONGC) for five years, the spokesperson added.

Built and optimized to meet the unique requirements of India, Dynamic Vision – a KFELS B Class jackup – is capable of operating in water depths of 350 feet and drilling down to 30,000 feet. Keppel O&M’s fully-automated high capacity rack and pinion elevating system, and self-positioning fixation system have been incorporated into the jackup’s design.

Commenting on the company's performance, Keppel O&M's Managing Director, Wong Kok Seng said in a statement released on Saturday: "We are pleased to be able to deliver our first rig of 2013 two months ahead of schedule. It augurs well for the rest of the 19 rigs that we are expected to deliver this year."

Keppel FELS is slated to deliver 20 offshore rigs this year, a record number for any shipyard worldwide. 

Quintella has reported on the upstream and downstream oil and petrochemicals markets from 2004. Email Quintella at quintella.koh@rigzone.com.

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Crude Tops $97/Bbl as Economic Data Boost Demand Hopes

NEW YORK--U.S. crude futures rose 1.2% Tuesday, pushing above $97 a barrel for the first time in more than four months as investors wager that signs of an improving economy will translate into higher fuel demand.

Oil has rallied 9.7% since early December, gaining momentum in recent days on a stream of data that pointed to improving economic conditions in the U.S., the world's largest oil consumer.

On Tuesday, Standard & Poor's Case-Shiller home-price index showed a 5.5% increase from last year. Last week, applications for unemployment benefits fell to a five-year low. Stock markets, used by oil traders to gauge economic sentiment, have also rallied to start the year. The Standard & Poor's 500 is up 5.7% in 2013.

Vikas Dwivedi, global oil and gas economist at Macquarie, forecast oil demand will rise by 875,000 barrels a day in 2013. But a speedier recovery of the global economy, due in part to the U.S., will mean a sharper rise in fuel use, he said.

"If in 2013 the various big economies of the world hit their stride, we could be well over a million barrels a day of demand growth. Then you have a pretty interesting market," Mr. Dwivedi said.

Light, sweet crude for March delivery settled $1.13 higher at $97.57 a barrel on the New York Mercantile Exchange, the highest since Sept. 14. Brent crude on the ICE futures exchange settled up 88 cents, or 0.8%, at $114.22 a barrel.

After a pipeline issue in the U.S. crimped oil's gains last week, analysts and traders said the focus has shifted back to the global economy. The outlook looks rosier--compared to last year when Europe's debt crisis and concerns about tax hikes and spending cuts in the U.S. made investors wary of betting big on economic growth.

"We're over the fiscal cliff and that kind of stuff, so the market is starting to go up on this economic optimism," said Phil Flynn, an analyst at Price Futures Group in Chicago.

Investors have piled into bullish bets over the past two months, according to data from the Commodity Futures Trading Commission. Money managers' net-long position in oil futures and options is at the highest level since March.

Of course, some traders believe the market has rallied too quickly amid a still-tepid recovery, particularly as U.S. prices move back toward the key $100 a barrel level.

"We might see $100, but I don't think we'll hold above $100 in the short term," said Mark Waggoner, head of Excel Futures. "Demand just isn't there. There has got to be a stopping point."

Meanwhile, in the U.S. new pipelines are helping to bring oil stuck in the middle of the country to refineries on the coast, which is beginning to relieve a supply glut that has depressed U.S. crude prices compared to Europe's Brent crude.

The premium for Brent crude futures fell under $17 Tuesday.

Investors will be looking ahead to weekly data on U.S. oil and fuel stockpiles from the U.S. Energy Information Administration, due Wednesday at 10:30 a.m. EST, for further signs of oil demand.

Oil stockpiles are expected to rise by 2.7 million barrels, according to a Dow Jones Newswires survey of analysts. Gasoline stockpiles are seen rising by 200,000 barrels, while stocks of distillate, which include heating oil and diesel, are seen falling by 900,000 barrels.

The American Petroleum Institute, an industry group, is due to report its own stockpiles data at 4:30 p.m. EST Tuesday.

Front-month February reformulated gasoline blendstock, or RBOB, settled 3.86 cents higher at $2.9734 a gallon. February heating oil settled 4.76 cents higher at $3.1092 a gallon.

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

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Heavy Storms Disrupts Pertamina's, Hess's Operations Offshore Java

Newly formed task force SKSP Migas confirmed Wednesday that Pertamina Hulu Energi (PHE) West Madura Offshore (WMO) is still experiencing production problems at the Production Sharing Contract (PSC) sited offshore East Java, due to storms which have been plaguing the region in the recent weeks.

"Over the last week, there has been a variety of operating problems due to bad weather. Waves in the Java Sea reached six to seven feet high, causing the storage anchor rope in the offshore field to rupture. As a result of this incident, PHE WMO could only produce lessthan 2,000 barrels of oil per day (bopd)," SKSP Migas said in its disclosure. PHE WMO's production target is 25,000 bopd.

At present, repair works on the ruptured hose are ongoing, and production levels at PHEWMO's PSC are at around 6,000 to 7,000 bopd.

Pertamina's Director of Upstream Operations, Muhamad Husen, confirmed with Rigzone over several telephone interviews on Jan.17 that despite extreme wet weather conditions, the WMO PSC was still producing and processing oil.

Last week, operations at the Pangkah PSC, located off the northeast coast of Java, were also adversely affected. Hess, the operator of the Pangkah PSC, was forced to remove the rig drilling at the offshore site, as well as shut down its liquefied petroleum gas (LPG) production plant near its offshore facilities.

SKSP Migas disclosed in its statement that oil production at the Pangkah PSC has resumed this week, with a production capacity of 5,000 bopd achieved on Monday. The Pangkah PSC has a production target of 14,000 bopd. SKSP Migas also said that the LPG plant will start operations.

Indonesia is at present battling with an annual monsoon season. The rainy season, which has started since early January, caused frequent landslides and flash floods throughout Indonesia and has displaced hundreds of people living in Java.

Quintella has reported on the upstream and downstream oil and petrochemicals markets from 2004. Email Quintella at quintella.koh@rigzone.com.

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Forum Gets More Time to Drill on Disputed License Offshore Philippines

Forum Energy disclosed late Friday in a statement that it has secured a two-year extension from the Philippine Department of Energy (DOE) to drill two appraisal wells in an offshore petroleum license, Service Contract 72 (SC72), located in territory claimed by China in the South China Sea.

SC72, sited west of the Palawan Island in the South China Sea, spans 3,398 square miles (8,800 square kilometers). Forum revealed in its 2011 earnings report that results from a 96 square kilometer (248 square mile) 3D seismic survey of the license indicated a mean volume of 3.4 trillion cubic feet of gas-in-place with significant upside.

The company has been planning to start on its second sub-phase work program, which involves the drilling of two appraisal wells, but it has been unable to send rigs to the license area due to interference from Chinese naval ships.

"The DOE can extend the license of SC72 should the project proponents find it difficult to implement their program … amid the territorial dispute involving China and Taiwan," the DOE said in a statement in May of last year.

Under the extended contract, Forum will need to complete drilling two appraisal wells by Aug.14, 2015. The original contract states that Forum was to complete drilling the wells by mid-2013.

The Philippines has moved to challenge China's claim to most of the South China Sea/West Philippine Sea at a United Nations tribunal. On Jan. 22, Manila told Beijing's ambassador about its decision to take China to arbitration under the 1982 United Nations Convention on the Law of the Sea.

Quintella has reported on the upstream and downstream oil and petrochemicals markets from 2004. Email Quintella at quintella.koh@rigzone.com.

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Russia to Receive up to $5B from Offshore Licenses in 2013

MOSCOW – Russia's budget will receive as much as 150 billion Russian rubles ($5 billion) this year from the sale of licenses to explore hydrocarbon deposits on its Arctic shelf, Deputy Prime Minister Arkady Dvorkovich was quoted as saying Monday by Interfax news agency.

Exploration of Russia's shelf – a potentially huge but as yet largely untapped source of oil and gas – is limited to state-controlled companies OAO Rosneft and OAO Gazprom.

Rosneft, the country's largest oil producer, will receive licenses for 12 offshore blocks in the coming days, Mr. Dvorkovich said.

The deputy prime minister also said Russia, the world's largest energy producer, would maintain its current levels of oil and gas production by developing new deposits. Russian oil output reached a post-Soviet high last year, but it is having to develop new, more remote fields as output at Soviet-era deposits declines. Gas production slipped 2.3% last year.

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

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Tui JV to Drill Two Wells in Newly Mapped Area Offshore New Zealand

Partners in the offshore Taranaki Tui oil field disclosed Tuesday that they have approved plans to drill the Pateke-4H infill development well and the Oi exploration well on the offshore PMP 38158 permit, after having successfully negotiated for the use of the semisubmersible, Kan Tan IV.

Pateke-4H targets a newly mapped northern extension of the Pateke North field that is not being accessed by the current producing well, Parteke-3. Pan Pacific Petroleum (PPP), one of the partners in the joint venture, estimated that Pateke-4H has the potential to recover an additional two to four million barrels of oil from the Pateke field.

Commenting on the JV’s plans for Pateke-4H, PPP said in a statement on Tuesday: "Drilling of Pateke-4H is planned for late-2013 to early-2014, subject to rig timing, with subsea tie-in to the Tui field floating production storage and offloading (FPSO) and first oil expected around end-2014 to early-2015."

Pateke-4H will be drilled to a total depth of 22,638 feet (6,900 meters) and will include a 8,202-foot (2,500-meter) horizontal section.
PPP also noted that the Oi prospect is a 4-way dip closure created by drape over an underlying basement high, similar to the structures at the Tui, Amokura and Pateke fields. The Oi exploration well, like Pateke-4H, will also target the same producing reservoir level.

PPP stated that the Oi structure could contain a mean recoverable resource of up to 15 million barrels of oil. As Oi is sited only eight miles to the northeast of the Tui field FPSO, the well can be immediately tied-in and move into the production phase in the event of a commercial discovery. Oi, to be sited 394 feet (120 meters) below waters, will be drilled to 10,499 feet (3,200 meters).

New Zealand's first stand-alone offshore oil development is the Tui Area Oil Project, consisting of three fields, Tui, Amokura and Pateke, connected to the Umuroa FPSO. 

The partners of PMP 38158 are: New Zealand Oil & Gas (12.5 percent), AWE (42.5 percent), Mitsui (35 percent) and PPP (10 percent). AWE is the operator of the permit.

Quintella has reported on the upstream and downstream oil and petrochemicals markets from 2004. Email Quintella at quintella.koh@rigzone.com.

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Court Accepts BP Plea Resolving All Macondo Criminal Claims

The U.S. District Court for the Eastern District of Louisiana has accepted BP's plea resolving all federal criminal charges against the company stemming from the Deepwater Horizon accident, oil spill and response.

Under the plea agreement that BP reached with the U.S. Department of Justice (DOJ) last November, BP will pay $4 billion over a five-year period and will serve five years' probation. The court also ordered certain equitable relief, including additional actions related to BP's risk management processes as well as several initiatives with academia and regulators to develop new technologies related to deepwater drilling safety.

Additionally, the company will appoint a process safety monitor and an ethics monitor, both with a term of four years, and an independent auditor will report annually on BP's compliance with the remedial terms of probation.

"Our guilty plea makes clear, BP understands and acknowledges it role in that tragedy, and we apologize – BP apologizes – to all those injured and especially to the families of the lost loved ones," said Luke Keller, vice president of BP America, during the court hearing Tuesday in New Orleans.

BP faced charges that included 11 felony counts of manslaughter for each of the workers killed in the incident, one misdemeanor count of violating the Clean Water Act (CWA), one misdemeanor count of violating the Migratory Bird Treaty Act and one felony count of obstruction of a congressional investigation. If BP had rejected the agreement, the court would have had to allow the company to withdraw its agreement to plead guilty.

Since the Deepwater Horizon incident in April 2010, BP has made significant changes to enhance safety throughout its global operations, the company said in a statement. These changes include launching an internal investigation immediately after the accident and implementing the investigation's 26 recommendations.

"The company also made key leadership changes, reorganized its upstream business, created a centralized Safety and Operational Risk organization, and adopted voluntary deepwater drilling standards in the Gulf that exceed current regulatory requirements," BP said in a statement.

The misdemeanor count under the CWA triggered a mandatory debarment following the sentencing. Mandatory debarment prevents a company from entering into new contracts or new leases with the U.S. government that would be performed at the facility where the Clean Water Act violation occurred. Existing contracts between BP and the government would not be impacted.

In November 2012, the U.S. Environmental Protection Agency (EPA) announced a temporary suspension of numerous BP entities after BP entered into a plea agreement with DOJ, which prevents BP from entering into new government contracts, grants or other transactions.

Following the court's acceptance of the plea, the suspension may be maintained or converted into a proposed discretionary debarment of these entities. In additional to mandatory debarment of the violating facility itself, that continues the ineligibility of those entities while negotiations with the EPA continue. The process for resolving both mandatory and discretionary debarments is essentially the same as for resolving the temporary suspension.

"While BP's discussions with the EPA have been taking place in parallel to the court proceedings on the criminal plea, the company's work toward reaching an administrative agreement with the EPA is a separate process, and it may take some time to resolve issues relating to such an agreement," BP said in a statement.

BP reported it is the largest investor and deepwater leaseholder in the Gulf of Mexico, with more than 700 gross blocks and seven rigs currently operating in the region. The U.S. government has awarded BP more than 50 federal leases since the Deepwater Horizon incident and since the government moratorium that followed Deepwater Horizon was lifted.

The Deepwater Horizon semisubmersible had been drilling BP's Macondo well. On the evening of April 20, 2010, control of the well was lost. The natural gas that blew with oil and mud from the well at tremendous pressure ignited on board the rig, killing the 11 workers -- all subcontractors assisting in the drilling for BP.

Earlier this month, drilling contractor Transocean and DOJ settled outstanding civil and potential criminal claims related to the April 2010 Deepwater Horizon incident. That settlement concluded DOJ's criminal investigation of Transocean's role in the largest offshore oil spill in U.S. history.

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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Olympus Hull Arrives in Gulf of Mexico

Shell Offshore's Olympus hull completed its 18,272 mile journey on Saturday, Jan. 26, arriving safely in Ingleside, Texas. The hull departed South Korea on Nov. 28 on the Blue Marlin with 26 crew members on board.

The Olympus hull will comprise the second tension leg (TLP) platform at the Mars field and the sixth of its type for Shell in the Gulf of Mexico.

Shell discovered the Mars field, located on Mississippi Canyon Blocks 762, 763, 850, and 851, in 1989. Production began in 1996. At the time of the discovery, Shell estimated the field to hold nearly 700 million barrels of oil equivalent (BOE) of resources. Between that time and the end of 2011, Mars produced 770 million (BOE), more than the original estimate. By the end of 2011, Shell reported it still saw around 1.1 billion boe in the field that remained to be produced.

After initially developing the field using the Mars A 24 well TLP, Shell decided to proceed with the commercial agreements and development plans for the Mars B project in September 2010.

"Given the field's sizeable resources, we assessed the need for additional infrastructure to boost the continued development of the field," Shell said in a statement on its website.

The Olympus TLP will have 24 well slots and a self-contained drilling rig, the West Boreas subsea system, and an oil and gas export system, including a WD-143C shallow water platform.

The lift and set of the Olympus TLP topsides modules will begin in February and last several weeks. Once installation of the topsides has been completed, the platform will prepare to sail to its final location on the Mars field in the Gulf, Shell said in a statement.

The project will extend the life of the Mars field to at least 2050, according to Shell. The company plans to start production around 2015. The facility will be capable of handling 100,000 boe/d once fully ramped up, a Shell spokesperson confirmed to Rigzone.

Mars is located in 3,000 feet (914 meters) of water.

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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Linde to Supply LNG to Utica, Marcellus Operations

Linde North America announced Monday that CONSOL Energy has contracted with Linde to supply LNG and related equipment and services for all of its operations in the Marcellus and Utica basins. This new agreement follows successful completion of a trial conducted by the two companies using Linde’s LNG to replace some of the diesel fuel used to power the diesel engines (gensets) that drive drilling rigs. Under the new agreement, Linde’s LNG solution will be used to power gas drilling for CONSOL and may also be expanded to applications such as hydraulic fracturing, mining and marine operations. The LNG-diesel dual-fuel solution lowers the cost of producing on-site power at gas and oil operations and burns more cleanly than diesel fuel alone.

Linde North America is a member of The Linde Group, a gases and engineering company. CONSOL Energy is a publicly owned Pittsburgh-based producer of coal and natural gas with active exploration and production operations in the Marcellus and Utica shales. It is the leading diversified energy producer in the Appalachian basin.

Jeff Boggs, vice president of drilling for CONSOL Energy, said, "The success of our initial collaboration with Linde to power our drilling operations with a hybrid fuel incorporating LNG gave us the confidence to expand our use of this economical, cleaner-burning fuel. Linde has been a great partner, working with CONSOL to safely and reliably implement the use of LNG in our drilling operations. We look forward to working with Linde as we expand our use of LNG to achieve the operational and environmental benefits of natural gas fueling throughout our operations."

"The successful test of our dual LNG-diesel fuel solution in partnership with CONSOL Energy is another demonstration of the safety, feasibility, and efficiency of making the transition to LNG as a primary power source,” said Earl Lawson, head of Energy Solutions for Linde North America. "We are very pleased that innovator CONSOL Energy has chosen Linde to supply LNG and related equipment and services for all of its operations."

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