Thursday, February 14, 2013

New World Comes Up Dry at Blue Creek

New World Oil & Gas announced Friday that its Blue Creek No.2A side track well in the Petén Basin in northwest Belize has come up dry after the firm drilled to a measured depth of 11,650 feet Jan. 27.

The firm said that, after careful analysis, it was determined that insufficient commercial quantities of hydrocarbons were present to merit running casing and well-testing operations. As a result, New World has decided to plug and abandon the well.

New World pointed out that data has shown that a live hydrocarbon system does exist in the area and that live oil shows were seen in formations during the drill. Technical data garnered from both the No. 2A side track and the Blue Creek No. 2 wells will now be used during the drilling of the company's next well: the Rio Bravo Well No.1 in the West Gallon Jug.

The drilling of the Rio Bravo No. 1 well is expected to begin during the first quarter of this year.

"Analysis of the data gathered from the Blue Creek #2A and Blue Creek 2A ST wells points to the migration of huge quantities of oil through this area. Combined with the presence of a reservoir ideal for oil production, and a large, extensive anhydrite seal, we remain highly confident that the elements required for a working hydrocarbon system are in place in North West Belize," New World CEO Bill Kelleher commented in a statement.

"As highlighted by B Crest, trap remains the key outstanding element required for success in this area and, with multiple prospects already identified, we believe it is only a matter of time before we locate a trap of significant size and in the process make a commercial hydrocarbon discovery. With this in mind, we look forward to commencing drilling operations in the West Gallon Jug Crest prospect later this quarter for which we are fully funded and where the geologic trap mechanism remains independent of B Crest."

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Plexus Brings New Engineering Approach to Wellhead Technology

Plexus Brings New Engineering Approach to Wellhead Technology

UK-based Plexus Ocean Systems Ltd., a division of Plexus Holdings plc, is utilizing a patented technology that the company believes will improve wellhead design to prevent or minimize the impact of blowouts such as the April 2010 Macondo incident in the Gulf of Mexico and the 2009 Montara blowout offshore Australia.

The company's POS-GRIP technology, invented by the company's CEO and founder Ben Van Bilderbeek employs a method of elastically deflecting an outer wellhead body onto an inner casing or tubing hanger and locking them in place to support tubular weight and activate seals. In surface wellhead applications, the system is powered by reusable hydraulic devices, which are fitted temporarily to flanges on the outside of the wellhead.

Plexus Brings New Engineering Approach to Wellhead TechnologyAn example of a POS-GRIP Rotary Surface Wellhead

Van Bilderbeek said he sees friction-grip technology as the best available and safest (BAST) method of engineering for wellheads for all applications, including:

Exploration wellheadsProduction wellheadsTie-back wellheadsDeepwater dry tree wellheadsSurface blowout preventer (BOP) wellhead systemsWorkover wellheadsGeothermal wellheadsFracking technologyCO2 storage wellheads

POS-GRIP technology has been used for 12 years in the North Sea, particularly for high-pressure, high-temperature (HP/HT) wells, Van Bilderbeek told Rigzone.

The technology was initially introduced in the North Sea through an adjustable rental wellhead system for jackup drilling operations; later, POS-GRIP technology was developed for use in specialized HP/HT wellhead systems.

Plexus hopes to replicate the success of its HP/HT technology in the larger international production wellhead and subsea arenas as company officials see many applications in unconventional fields.

The company has had discussions with a number of companies to license POS-GRIP technology, and would like to enter the U.S. market with a partner, or potentially sell certain applications that don't fit perfectly with Plexus' business strategy.

"We ourselves are not interested in operating in the U.S. due to the risk factors that apply in U.S. waters," said Van Bilderbeek. There are lots of targets around the world with less risk."

POS-GRIP technology presents a number of advantages over existing spool-type and mandrel hanger wellhead technologies, depending on the application, including:

Installation of hangers through the BOPShorter time for installationRigid assemblyMultiple metal seals over a large contact areas, for a corrosion resistant designIntegral seal design to minimize the number of leak pathsSingle component hangers

The technology also offers superior reliability, reduced life cycle cost and is tolerant to a contaminated environment.

The company's roster of customers includes: Apache Corp., BHP Billiton Ltd., BP Plc, ConocoPhillips Company, Maersk Oil, Lundin Petroleum AB, Newfield Exploration Company, Talisman Energy Inc., Statoil, Royal Dutch Shell Plc, Total S.A. and Wintershall Holding GmbH.

"Recent well control incidents around the world have highlighted the need for robust, high performance, subsea wellheads in oil and gas operations, particularly in extreme and hostile environments," said Van Bilderbeek in a June 19, 2012 statement.

"Specific functionality is required such as instant casing hanger lockdown, the ability to monitor sustained casing pressure and then enable remedial action and bleed off capability."

Plexus Brings New Engineering Approach to Wellhead TechnologyAn example of how the POS-GRIP mechanism works

The company has designed wellheads to be the strong link in the well system, Van Bilderbeek noted in a presentation for U.S. government officials in December 2012, and is pursuing a policy of preventing blowouts "by design". Achieving the goal of wellheads as the strong link includes matching wellhead standards to those for casing and tubing couplings, Van Bilderbeek noted.

To prevent blowouts, the company argues that the industry needs to eliminate the practice of lifting BOPs from the wellhead to set casing. Wellheads must be designed to be permanent safe platforms for well control devices, while maintaining dual barriers across the well bore and annular spaces adhered to at all times.

Additionally wellhead designs where possible should rely on rigid metal sealing for integrity beyond field life, and such standards should apply to all applications, rather than just for HP/HT wells.

Van Bilderbeek pointed out that current wellhead qualification test procedures are component based, whereas emerging standards require specific qualification tests treating seals as part of a system. Currently, standards for casing and tubing couplings are far more stringent than for wellheads.

Most blowouts occur when the BOPs are away from the wellhead, as American Petroleum Institute (API) spool type systems require removal of the BOPs to set casing.

One justification for continuing the century old habit of lifting BOPs is that this method eliminates to need to space out casing, avoiding the extra work of measuring pipe into ground.

"Further excuses include the need to tension casing, which is negated by the fact that this can be done with through BOP technology," Van Bilderbeek noted.

There is no longer any justification for ever designing wellheads that require the lifting of BOPs to be set casing, as without a BOP in place a well is left under the sole protection of single barriers for an extended period of time.

The Montara Commission of Inquiry Report links the design of pressure containing corrosion caps to the Montara incident, adding that removing abandonment caps from the well before a riser with a well control device on top is re-established clearly breaks the dual barrier rule, Van Bilderbeek noted.

The United States' forerunner agency to the Bureau of Ocean Energy Management and Bureau of Safety and Environmental Enforcement (BSEE), the U.S. Minerals Management Services had recognized the risk of lifting BOPs; they proposed a solution to improve cementing techniques, as seen in an incident that occurred in April 1997 at East Cameron Block 328. On that day, a serious blowout and fire occurred on Platform A. The U.S. Department of the Interior (DOI) concluded the probable cause of the incident was formation gas migrating through the cement between the 9-5/8-inch casing and the 13-3/8-inch casing.

DOI officials also concluded there was not enough wait-on-cement time prior to nippling down the BOP. A possible contributing cause was that, since the well had been drilled horizontal, the casing may not have been properly centralized, resulting in a non-uniform cement job.

Plexus' solution would be to require that the BOPs be left in place by using thru-BOP wellhead technology, which is available from all major suppliers. This allows an operator to control a well-kick during casing installation procedures.

Van Bilderbeek believes the industry would benefit from a wider acceptance of the simple and obvious BAST rule -- never lift BOPs unless absolutely necessary.

When a POS-GRIP wellhead is activated, multiple metal seals interact over a long interface between the wellhead bore and casing hanger. Conventional annular seal are no longer required, and movement between parts is eliminated for integrity beyond field life. Qualification has taken place under simulated and extended field life testing conditions, Plexus officials noted.

In subsea wellhead applications, the technical solutions available to lock and seal casing and tubing annuli have been problematic. As a direct consequence, the industry has adopted a procedure of installing lock-down sleeves to fix casing hangers in the well bore at the end of the drilling program.

These devices, which are time consuming and can cost between an estimated $2 million and $5 million to install, are used because of the problems associated with using remotely activated lock-ring devices in the contaminated environment of a subsea well.

To be functional, a lockdown sleeve needs to be set with downward load on the casing hangers. The length of the weight string of pipe hanging from below a lockdown sleeve can dictate the setting depth for the cement plug, depending on the chosen installation sequence, van Bilderbeek noted.

If mud is replaced with seawater prior to setting of the cement plug, its setting depth can contribute to under-balancing of the well, which suggests that the use of a lockdown sleeve to secure casing hangers in a subsea wellhead, because conventional lockdown devices are problematic, can lead to well control incidents.

"Conversely, on surface wellhead applications, all casing hangers are individually locked down as soon as casing is cemented, and this is done for good reason," Van Bilderbeek noted, and the same logic and safety disciplines should apply subsea for the protection of personnel and the environment.

Van Bilderbeek noted that DOI's May 2010 report advising that all casing hangers should be instantly locked down following cementing is correct.

Van Bilderbeek, who met with U.S. government officials in early December 2012 as part of a teaching mission on technology available for wellhead design, and to highlight the conflict which comes into play when a technology is both BAST and proprietary, notes that no justification exists for ever leaving casing hangers unlocked in a subsea wellhead at any time during drilling or production.

Van Bilderbeek commented that Shell has issued revised qualification guidelines which require that the lockdown capacity for subsea casing hangers during drilling is proven to a level equivalent to the requirement for production casing hangers in the field, Van Bilderbeek noted.

Plexus Brings New Engineering Approach to Wellhead TechnologyA POS-GRIP HG Platform Wellhead System

In October 2010, a joint industry project (JIP) was formed by Plexus to focus on development of a new class of subsea wellhead system, the POS-GRIP HGSS subsea wellhead, with particular focus on addressing systemic deficiencies of current technology. The JIP's primary target is to design a wellhead system in which all casing hangers can achieve rigid lockdown following cementing, while remaining releasable if it becomes necessary to recover casing.

The JIP's member rosters now include ENI, Oil States Industries, Maersk Oil subsidiary Maersk Oil North Sea UK, Shell Plc subsidiary Shell International Exploration and Production, Wintershall Holdings GmbH subsidiary Wintershall Noordzee, Total S.A., and Tullow Oil Plc. The project is expected to take between 18 and 24 months from the February 2012 launch date at a cost of approximately $2.3 million to $3.1 million (GBP 1.5 million to GBP 2 million). Any intellectual property created through the JIP will be owned by Plexus.

Key features that Plexus hopes to incorporate into its new POS-GRIP HGSS subsea wellhead design include:

18-3/4-inch full bore system, rated to 15,000 per square inch (psi) and 350 degrees FahrenheitAbility to upgrade to 20,000 psi, 450 degrees Fahrenheit4 million pounds of "instant" casing hanger lockdown capacityAvoidance of acknowledged problems associated with using lock down ringsAnnulus monitoring and bleed-off capability to address sustained casing pressure situations, with diagnostic and remedial capabilityAbility to open and reseal the casing annulus to enable remedial cement job proceduresRigid metal annular seal technology qualified to match the standards for premium casing couplingsMeeting the API 17/D/ISO 13628-4 requirements, recently provided operator requirements, and Plexus Life Cycle Testing

The wellhead standards utilized by the Plexus JIP will be more stringent than those proposed by API for similar technology, Van Bilderbeek commented.

The Plexus wellhead standard will be pitched to match the standards required of premium casing and tubing couplings. Van Bilderbeek noted that this is not the approach that API currently takes by allowing a single sample test, and unlimited number of attempts.

The Plexus JIP also requires make and break testing, test to failure, simulate field conditions, and test under loading, Van Bilderbeek noted.

BSEE has identified the need for development work on 20,000 psi extreme HP/HT subsea drilling equipment and well design. However, Van Bilderbeek pointed out that a recent BSEE report fails to address systemic shortcomings of conventional 15,000 psi and below applications, focusing only on work to be done in the 20,000 psi and above category.

The BSEE has reported that additional developments and qualified work will be required before 20,000 psi systems are commercially available for subsea applications. For 20,000 psi drilling equipment, the current direction is the development of custom products. Wellhead systems with working pressures in excess of 15,000 psi are under development and not expected to be ready for use for a number of years.

Van Bilderbeek reported that the HGSS wellhead technology design work is underway, based on qualified hanger designs used on 20,000 psi surface drilling operations in the North Sea.

Testing on the HGSS JIP to adapt POS-GRIP technology for subsea applications is well advanced, and a POS-GRIP HP/HT tie-back connector designed to allow operators to pre-drill HP/HT production wells is now available.

Plexus believes POS-GRIP's potential in its HP/HT tieback application is one of the most far reaching developments in many years. According to Plexus, HP/HT and ultra high-pressure/high-temperature (XHP/XHT) wells could be safely tied back at a future date, negating the disposable nature of these wells.

Potential savings for the operator is the entire cost of the well, which Plexus estimates is between $75 million to $450 million per HP/HT well, and the well can begin to generate revenues at a much earlier date. HP/HT wells in a proven field could be pre-drilled and abandoned ready for completion while the platform was being designed and construction.

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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Seadrill Orders Two Jackups from Dalian Shipbuilding

Deepwater drilling specialist Seadrill announced Friday that it has ordered two jackups for delivery in the first half of 2015 from Chinese firm Dalian Shipbuilding Industry Offshore.

The two units, which will cost $230 million per rig, will be based on the F&G JU2000E design, with water depth capacity of 400 feet and drilling depth of up to 30,000 feet. Seadrill has also arranged option agreements with Dalian to construct an additional two rigs for delivery in the third and fourth quarters of 2015, said the firm.

Seadrill Chairman John Fredriksen commented in a statement:

"These newbuilds position us for additional growth in a strengthening jackup market, providing further earnings upside for Seadrill. The premium jackup market continues to demonstrate strength as evidenced by increasing day rates and utilizations. Customers continue show preference for newer units from drilling contractors with proven track records of safe and efficient operations.

"Currently 312 jackups, or 65 percent of the total fleet of 483 jackups are older than 25 years. These two new firm orders increases our fleet of modern jackups to 25 rigs with an average age of three years, and further strengthens our position as the leading operator of premium modern, high-quality drilling units."

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Rosneft Expects 2013 Output to Increase by 1%-2%

MOSCOW - OAO Rosneft expects to increase its output by between 1% and 2% in 2013 mainly due to production growth at its giant Vankor field in Siberia, the company said Friday as it reported its 2102 full year earnings.

In a conference call Dmitry Avdeev, the vice president for finance and economics, said he expects crude oil production from Vankor to reach between 430,000 barrels and 440,000 barrels per day, although he neither confirmed nor denied that oil production at the company's other main fields could decline.

Vankor was the main contributor to Rosneft's oil output growth of 2.5% to 2,43 million barrels a day in 2012 amid declining output at the company's other main fields.

Higher output and higher oil prices led to a 13% rise in revenue for the year to 3.08 trillion rubles ($102 billion) and a 7.2% rise in net profit to RUB342 billion.

However, the profit figure fell well below market expectations. "Reasons for such results are not exactly clear. There is an item called 'other expenditures' which unfortunately the company does not disclose," said Alexander Kornilov, an analyst with Alfa Bank, who called the results "disappointing".

The market is also worried by a sharp drop in free cash flow, which dropped to RUB45 billion for the full year from RUB99 billion a year before, partly due to increased investment and lower income from operations. Shares in the company closed down 2.1% RUB261.5 in Moscow, underperforming the wider index which was flat on the day.

Rosneft is buying competitor TNK-BP from BP PLC and its partners in a deal worth $50 billion that will create the world's largest traded oil producer. BP will increase its stake in Rosneft to 19.8% as part of the deal.

Mr. Avdeev said antitrust bodies in Russia and Ukraine have already approved the deal, and that the purchase, which is fully funded, is going ahead as planned.

To finance the purchase of the stake from BP, Rosneft has agreed to borrow $16.7 billion from international banks, the company said in its earnings report.

Mr. Avdeev added that the oil giant may also place a Eurobond later this year, as last year's debut issue showed "a very strong demand". He added that the company would hit the international bond market after considering the attraction of this instrument compared to domestic bonds, direct loans, or contracts with trading companies.

The company's net debt stood at RUB581 billion at the end of the fourth quarter compared to RUB542 billion at the end of the previous quarter, as Rosneft is yet to draw the agreed loans.

However, the acquisition of TNK-BP dented Rosneft's Earnings before interest, taxation, depreciation and amortization, or Ebitda, due to an increase in spending on audit and consulting services.

The company's Ebitda margin, the measure used to judge a company's profitability, dropped to 19.8% in 2012 from 24.4% in the previous year.

Mr. Avdeev said the company is aiming at paying dividend at 25% of its full-year profit, as announced before.

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

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TAG Oil, Apache Conclude Farmout Agreement for NZ Permits

TAG Oil Ltd. announced that the Company's 100-percent owned New Zealand subsidiaries have concluded an agreement with Apache New Zealand Corporation LDC, which results in an early termination of the Farmout Agreement dated Sept. 1, 2011. This agreement relates to exploration in Petroleum Exploration Permits 38348, 38349 and 50940 located in the East Coast Basin of New Zealand.

Main Highlights of the Agreement:

Apache has paid TAG Oil a lump sum payment to satisfy its obligations related to funding Phase 1 operations under the Farmout Agreement.TAG Oil will retain all assets developed under the Agreement, including all seismic and technical work completed by the Joint Venture.TAG retains its 100% interest in the subject East Coast Basin permits, including the Waitangi Hill shallow oil discovery.

TAG Oil CEO Garth Johnson commented, "Although we are disappointed that Apache's shift in corporate strategy resulted in a refocusing of their international holdings, we do understand that tough decisions sometimes need to be made. TAG remains highly enthusiastic about the future of these prospects: All the work completed to date as a result of our JV Phase 1 activities strengthens our beliefs in the potential of TAG Oil's East Coast Basin holdings. We're also pleased to have full control back over the project with funding in place."

TAG intends to utilize the lump sum payment received by Apache to fund the drilling of up to four East Coast Basin wells as planned in the Apache-agreed Phase 1 work program. These wells will test several high-impact play objectives including the Waipawa and Whangai source rocks that have independently been confirmed to be generating 50 degree API oil. Additionally, these naturally fractured, high-quality source rocks are believed to be widespread across TAG's acreage. Independent assessments have concluded that there are approximately 14 billion barrels of undiscovered original oil in place potential, within less than a fifth of TAG's total land holdings on the East Coast.

Drilling of the first East Coast wells is expected to commence in late March/ April 2013, subject to receipt of the necessary consents from regional government. TAG will utilize conventional vertical drilling techniques similar to those used by TAG Oil over many years in its successful Taranaki Basin operations.

Mr. Johnson concluded: "It was a pleasure to have had the opportunity to work closely with Apache. Our work together provided important geotechnical and operational related work, which has confirmed our belief in the major potential of this project, and advanced it to drill-ready status. Furthermore, TAG's cash flow and assets have grown dramatically since we first signed the agreement with Apache. So the Company can now fund further drilling operations and exploration activities from a place of strength and greater flexibility."

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Canary Soars to Shale Stardom

Canary Soars to Shale Stardom

There seems to be a common theme with companies servicing the oil and gas industry – growth and job recruitment. How can an institution grow as a top-notch company while recruiting for the best in the industry?

Canary, LLC, formerly Frontier Energy Group, seems to be leading by example and appears to be on the fast-track to stardom by expanding its domestic presence with its latest acquisition, Canary Wellhead. This eighth acquisition in four years elevates the company to a national level – one that takes its roots beyond Bakken and into all major shale oil plays.

"It's been a lot of hard work," said Dan Eberhart, CEO of the company, reflecting on his success in a Rigzone exclusive interview. "We have built a phenomenal team that has helped us with our growth, specifically at integrating companies."

"I'm confident that the gains made over the last year are setting us up for an even better playing field – specifically the exposure we now have to the Utica and Mississippi Lime," he added. "We want to be a part of that and we will be focusing on that for the next five years."

Prior to becoming Canary, LLC, Frontier Energy Group experienced rapid growth in a short amount of time. The oilfield services company acquired Canary Wellhead Equipment Services, Inc. (2013); Spicer Wireline Inc. (2012); Luft Machine & Supply Co. (2011); Hanson Hot Oil (2010); Western Wellhead Grand Junction (2010); Cable, Incorporated (2010); Kodiak Stack Testing Company (2009); and Frontier Wellhead & Supply Co. (2009).

This latest acquisition allows for the company to expand the company's footprint and service offerings in the oilfield drilling and production services.

"With all of the M&A [merger and acquisitions], the medium-size companies are gone," said Eberhart. "There are no independent, medium-size companies left. We really want to emerge and fill that role and I feel that this latest multi-million dollar agreement will allow us to do just that."

This acquirement brings together two long-standing companies with more than 50 years of experience and advances Canary into the largest independent wellhead service provider in the United States with combined revenue of up to $100 million. With more than 26 locations across the United States and around 300 employees, the company is now servicing customers in every major shale oil and gas region, including North Dakota's Bakken, Colorado's Niobrara, Oklahoma's Woodford and Ohio's Utica.

"We are a relatively fun company to watch," stated Jacob Eberhart, the company's communications and marketing manager. "We are a growing group and we are aggressive. We have done an excellent job of integrating quickly. Where other companies have struggled with that in the past, we have a team that focuses specifically on integration while the rest of the team focuses on what's presently on hand."

The company is set to expand its distribution business in Oklahoma City by building a centralized center in 2013. Canary is looking to expand its growth by 15 percent throughout the year and is looking to hire laborers, engineers and a sales team in Oklahoma City. Canary will also come south and open a Houston executive sales center that will serve the greater Houston area.

"It will be a migration of growth and we expect to have these two areas completed within this year," said Mark Tassin, sr. vice president of operations. "We incorporate, we merge and we grow."

But such rapid growth brings challenges. Job recruitment and job retention appear to be two categories in which Canary is looking to overcome by culling through available candidates to find who best fits the overall picture of the company.

"North Dakota, the Bakken area, has been a tough recruiting area due to the high cost of living and weather issues," said Tassin. "We are recruiting out of the northern states to find individuals that are used to that type of environment, but what we have noticed is that a lot of these people do not have much industry experience. We will invest in our employees that are interested in a long-term commitment. Our basic recruiting process is we will work with you, get you started, get you trained, and pay accordingly."

"We are basically looking for someone that wants to make a career out of it and that will help our company grow," he added.
"Canary really prefers when our employees can recommend someone," added Jacob. "We know that we can count on what our own people say and recommend."

Canary is now the number one inventory company in North Dakota, which is also the number one oil producing state. In November 2012, North Dakota reached its highest output, yet. With more than 4,910 wells online, the state produced 20,072,728 barrels of oil.

"The Bakken is really our core competency and has been our focus until recently. We always have what the customer wants – that is how we grew in that area," said Tassin. "We are always forecasting, looking at markets, looking at our customers and forecasting with them. We stay one step ahead in order to meet our customer needs."

"We are not finished – we have only started," he stated.

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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Rodriguez Well Makes 'Significant' Gas Condensate Discovery

Faroe Petroleum and the Norwegian Petroleum Directorate reported Thursday that it a significant gas condensate discovery has been confirmed at the secondary target of the Rodriguez exploration well in the Norwegian Sea. Faroe reported that the operator's preliminary volumetric estimates of the size of the discovery are between 19 and 126 million barrels of recoverable oil equivalent.

The 6407/1-6S exploration well, which is on the PL475 license operated by Wintershall Norge, was drilled around 2.5 miles northeast of the Tyrihans field and about five miles southeast of the 6406/3-8 oil/gas discovery, the NPD said.

Faroe said that the 6407/1-6S well is the first exploration well to be drilled on the Rodriguez license and that further appraisal will be required to establish the lateral extent and size of the discovery.

"We are very pleased to announce this gas condensate discovery on the secondary target of this Norwegian Sea exploration well. This significant discovery gives the partnership a good indication of further upside potential on the rest of the licence block with at least two further matured and partially de-risked prospects and we look forward to its further appraisal," Faroe Petroleum Chief Executive Graham Stewart commented in a company statement.

"We have an active 2013 exploration drilling programme which includes several high impact exploration wells including Darwin (Barents Sea), Novus (Norwegian Sea) and two Butch wells (Norwegian North Sea)."

The well was drilled by the Transocean Arctic (mid-water semisub) rig, which the NPD said will now proceed to production license 418 in the northern part of the North Sea to drill appraisal well 35/9-8.

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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U.S. Crude Futures Fall From Four-Month Highs

U.S. crude-oil futures pulled back from a four-month high Thursday as oil traders' recent optimism about economic growth faded ahead of Friday's monthly jobs data.

The number of U.S. workers filing for unemployment benefits jumped last week to a higher-than-expected 368,000, the Labor Department reported Thursday, which has prompted some worries about the more closely watched January U.S. employment report.

With such qualms, many cashed in on bets of higher prices, traders said. U.S. crude futures had risen 14% over the last seven weeks.

"The energy and equities [markets] are pricing in a pretty good number tomorrow, so oil may sell off on it. If we get a bad number, it could sell off even more," said Rich Ilczyszyn, a broker and trader at iiTrader in Chicago. "I think there's going to be a correction."

Light, sweet crude for March delivery settled 45 cents, or 0.5%, lower, at $97.49 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 61 cents higher, at $115.51 a barrel.

Gasoline prices also slumped Thursday, ending a 10-session rally as traders took profits before the expiration of the February contract.

Seasonal refinery maintenance has tightened supply and driven gasoline prices up sharply in the past two weeks, with gasoline futures settling at an all-time high for January of $3.0315 a gallon Wednesday. But investors stepped back from bullish bets, concerned that prices rallied too high, too quickly.

"We were due for a pullback in gasoline," said Jim Ritterbusch of Ritterbusch & Associates. "We had a huge price spike, and now we're seeing a little correction."

Front-month February reformulated gasoline blendstock, or RBOB, settled 1.29 cents lower at $3.0258 a gallon. February heating oil settled 1.25 cents higher at $3.1298 a gallon.

The February fuel-product futures expired at settlement Thursday.

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

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BP Names New Safety, Operational Risk EVP

BP announced Tuesday it has named Bob Fryar as executive vice-president for Safety and Operational Risk (S&OR), reporting directly to Bob Dudley, group chief executive.

Fryar, who is currently executive vice president for production in BP’s upstream business will take up his new position from Feb. 15.

The appointment follows the decision of Mark Bly, who has headed BP’s safety functions since March 2008, to retire from BP in the summer.

"Mark has played a key role in advancing BP’s safety agenda, ensuring that we are heading towards industry-leading safety performance and processes, and helping to drive safe, reliable and compliant operations across BP’s operating businesses.

"I thank him wholeheartedly for his tremendous efforts,” said Dudley. “And Bob Fryar’s deep technical expertise, profound knowledge of our operations and commitment to our values will serve him well in his new role on my executive team."

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Two Nominees, Two Opportunities for Growth

Two Nominees, Two Opportunities for Growth

This opinion piece presents the opinions of the author.
It does not necessarily reflect the views of Rigzone.

In the coming months, President Obama will have to make two huge decisions about the future of American energy policy: whether to permit the Keystone XL pipeline and whether to allow Shell to move forward with its Arctic offshore drilling program. Coincidentally, both decisions may be influenced by the President's new appointments at the State Department and the Interior Department.

With Nebraska Governor Heineman's approval this week of the new route through Nebraska, the stage is set to bring more than 4 years of wrangling, delay, and political posturing on the Keystone XL pipeline to a close. Once the State Department conducts an environmental review that is already underway, there will be nothing preventing President Obama from making a final decision on the project - finally.

The President's decision to reject Keystone XL's application for a permit last January, despite the fact that the Department of State has affirmed that Keystone XL would be the safest pipeline ever constructed, was a political move meant to allay environmentalists until after the election. After suffering significant blowback from labor groups and the majority of Americans who support the project, the President enthusiastically supported construction of the southern leg of the pipeline and invited TransCanada to reapply for the permit that they need to cross the border from Alberta into Montana.

The delays and route changes that TransCanada has been forced to endure have added more than a billion dollars to the cost of the project, suspended tens of thousands of high paying jobs, delayed relief at the pump for millions of American drivers and prevented the project from pumping more than $20 billion into the U.S. economy.

As the State Department makes its final Environmental Impact Statement and National Interest Determination, supporters of the pipeline should make clear to both the White House and to the President's nominee for Secretary of State, Massachusetts Senator John Kerry, the importance of the project to the U.S. economy. Members of the Senate should ensure that Mr. Kerry pledges not to inject politics into the Department's review of the project in his confirmation hearings.

At the other end of the country, another energy company is wading through arbitrary delays and red tape in its efforts to develop resources off the Alaskan coast. In 2005 and 2008, the federal government sold Shell leases in the Beaufort and Chukchi Seas with a good faith agreement that the company would be able to explore the leases for oil and natural gas. In 2007, a federal court prevented Shell from drilling wells in the area due to a lawsuit by environmental groups. It happened again in 2009 and 2011 when baseless lawsuits aimed at the federal approvals process stopped the project from moving forward. Despite years of insisting that Alaskan offshore energy is part of the President's "all of the above" energy strategy, Secretary Salazar and the Department of the Interior has failed to permit the project in a timely manner.

Now, Mr. Salazar is departing Washington for the family ranch in Colorado, leaving the future prospects of the Alaska project in limbo. President Obama and his new nominee for Secretary of the Interior must understand the consequences of imposing further delays on the Alaskan offshore project. Beyond simply setting a standard of bad business on the part of the federal government, delay by the Interior Department would also jeopardize efforts by other energy companies invested in the region and would diminish the United States' ability to lead in Arctic energy development.

The potential energy and economic benefits of the Keystone XL project and Shell's Arctic development are staggeringly large. The pipeline project would create 20,000 jobs and pour $20 billion into the U.S. economy. Offshore Alaskan energy development will create more than 54,000 jobs annually for 50 years and generate $300 billion in revenue for the U.S. Treasury. We cannot afford further delay.

President Obama and Sen. Kerry should move quickly to give final approval to the Keystone XL pipeline. Meanwhile, Congress should ensure that his nominee to lead the Interior Department understands the importance and benefits of energy development off Alaskan shores. It would be a boon for the U.S. economy, and the U.S. energy consumer.

Michael Whatley is the executive vice president of Consumer Energy Alliance in Washington D.C.

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