Petrobras Starts Up Production at Sapinhoa Norte Early Production System

Petrobras announced that FPSO Cidade de São Vicente went on stream Feb. 12 kicking off production of the Sapinhoá Norte Early Production System (SPA), through exploratory well 3-BRSA-788-SPS (3-SPS-69), located in block BM-S-9, in the pre-salt of Santos Basin.

Production will be around 15,000 barrels of oil per day, due to gas utilization limitations and will be extended for a maximum period of six months. The platform is anchored at a water depth of 7,021 feet (2,140 meters), 193 miles (310 kilometers) off the coast and the produced oil, which is of medium density (30 degree API) and high quality, will be transported via relief tankers.

The Sapinhoá Field Development Plan lays out two permanent systems composed of FPSOs Cidade de São Paulo, in production since Jan. 5 and Cidade de Ilhabela, whose hull is in China and production plant modules are under construction in Brazil. This platform, which has a production capacity of 150,000 barrels of oil per day and 6,000,000 m3/of gas, is expected to go on stream in the second half of 2014.

Sapinhoá Field is one of Brazil's biggest oil fields, with estimated total recoverable volumes of 2.1 billion barrels of oil equivalent. Commercial production at the field began four and a half years after it was discovered in July 2008.

Block BM-S-9 is operated by Petrobras (45%), in partnership with BG E&P Brasil Ltda (30%) and Repsol Sinopec Brasil S.A. (25%).

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Blake International Pens Drilling Gig

Blake International Rigs, LLC and ANKOR Energy LLC have entered into a contract to mobilize the Blake Rig 1505 onto the Vermillion 379 D platform. The contract term is 4 wells, to commence following the Drilling Unit's current contract term.

The Blake Rig 1505 recently completed a drilling project at Main Pass 308 A, and is currently at Blake's Houma facility waiting to mobilize to the High Island A595 D platform to fulfill the remainder of the contract term with Apache Corporation.

The remainder of the Apache contract, followed by the ANKOR project, is expected to keep the rig working into 3Q 2014.

"We are very excited about working with ANKOR Energy and establishing a lasting relationship along the way. This contract further strengthens our goal to be the preferred platform rig contractor in the region and secures long term work for half our rig fleet," said President and CEO of Blake International Beau Blake.

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EXCO Finalizes $725M Deal with Harbinger Group

EXCO Resources, Inc. announced Friday that it closed its conventional oil and natural gas partnership with Harbinger Group Inc., effective Feb. 14 and received net proceeds of $573.3 million, after preliminary closing adjustments. The cash proceeds received by EXCO were used to repay a portion of its revolving credit facility. EXCO's revolving credit facility now has a $900 million borrowing base with $541 million drawn.

The Partnership holds conventional oil and natural gas assets previously owned by EXCO in West Texas, including and above the Canyon Sand formation, as well as in the Danville, Waskom, Holly and Vernon fields in East Texas and North Louisiana, including and above the Cotton Valley formation. Under the terms of the definitive agreements announced Nov. 5, 2012, the Partnership acquired the oil and natural gas assets from EXCO for $725 million of total consideration. The purchase by the Partnership was funded with approximately $225 million of bank debt, $348.3 million (after preliminary closing adjustments) in cash contributed from HGI and $119.2 million (after preliminary closing adjustments) in oil and natural gas properties and related assets being contributed by EXCO. EXCO has a 50 percent interest in the general partner of the Partnership and a 24.5 percent limited partnership interest in the Partnership. After giving effect to the 2 percent general partner interest in the Partnership, EXCO and HGI own an economic interest in the Partnership of 25.5 percent and 74.5 percent, respectively. The Partnership will be governed by a Board of Directors of the general partner consisting of two EXCO directors and two HGI directors. EXCO will continue to manage and operate the assets as contract operator of the properties and provide services pursuant to contract operating and administrative service agreements with the Partnership.

EXCO and HGI intend to opportunistically add incremental cash flow to the Partnership through the acquisition of other mature, conventional assets over time. On Feb. 14, the Partnership agreed to acquire certain conventional oil and natural gas assets in the Danville, Waskom and Holly fields in East Texas and North Louisiana, including and above the Cotton Valley formation, from an affiliate of BG Group plc for $132.5 million, with an economic effective date of January 1, 2013 and subject to customary closing adjustments. These properties represent an incremental working interest in properties that EXCO contributed to the Partnership. This transaction is expected to close in March 2013. The Partnership intends to fund the acquisition using its revolving credit agreement. In connection with this acquisition, EXCO and BG Group plc agreed to remove these assets from their East Texas/North Louisiana joint venture arrangement, including the termination of the area of mutual interest that was previously applicable to shallow rights acquisitions in the East Texas/North Louisiana area.

"We are pleased to finalize the private partnership transaction with Harbinger Group and look forward to a long and profitable association. This partnership vehicle allows our companies the opportunity to capitalize on a robust market for conventional assets and to build a very substantial entity over the next few years. We are appreciative of the efforts of our collective teams in getting this transaction closed," EXCO's Chief Executive Officer Douglas H. Miller commented.

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STX OSV Bags Contract to Design, Builds Subsea Construction Vessel

STX OSV revealed Thursday that it has secured a new contract for the design and construction of one offshore subsea construction vessel for Solstad Offshore. The value of the contract is approximately $109 million (NOK 600 million).

The vessel will be of STX OSV's OSCV 03 design, and will be equipped with a 250 tonne crane and accommodation capacity for 100 people. The overall length of the vessel will be around 367 feet (121 meters), with a beam of 76 feet (23 meters).

Delivery is scheduled from STX OSV Aukra in Norway in 2Q 2014. The hull will be delivered from STX OSV Tulcea in Romania.

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Det Norske All Set to Develop Ivar Aasen

Det norske oljeselskap announced Friday that the main contracts for the development of its Ivar Aasen field in the Norwegian North Sea are now in place.

Det norske also reported that an independent assessment has estimated the firm's reserves at between 308 and 487 million barrels, of which about 80 percent are from its share of the Johan Sverdrup field.

The company confirmed that a Plan for Development and Operation (PDO) of the Ivar Aasen field, where Det norske is operator with a 35-percent holding, was submitted to the Ministry of Petroleum and Energy in December. The company now plans to embark on a development project of approximately $4.5 billion (NOK 25 billion).

Det norske CEO Erik Haugane commented in a statement:

"Our goal has been to become a fully fledged oil company engaged in exploration, development and operation. The goal has now been reached. This represents a significant achievement for the company, and plays an important role in ensuring good competition on the Norwegian shelf."

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Beach's Halifax-1 Well Flows Back Gas and Stimulation Fluid

Beach Energy disclosed Thursday that the flow back of stimulation fluid and gas from the Halifax-1 well, located in the onshore ATP 855P permit, started Feb.11, 2012.

As at 1800 local time Wednesday, the flow was being constrained to 2.2 million standard cubic feet per day by a 24/64 inch choke due to temperature restrictions on elements of the surface equipment. It is anticipated that the choke will be further opened as the ratio of gas to fluid in the well stream increases.

The well reached total depth at 13,994 feet (4,267 meters), after which a 14 stage fracture stimulation program was completed throughout the whole of the gas saturated Permian target zone.

Seven stages were completed in the deeper Patchawarra Formation, one in the Murteree Shale, two in the Epsilon Formation, two in the Roseneath Shale, one in the Daralingie Formation and one in the Toolachee Formation.

Commenting on the well's results, Beach's Managing Director Reg Nelson said: "Halifax-1 is the fourth vertical well to have flowed gas from the unconventional exploration program that Beach has operated to date. Each well in the exploration program is integral to the program as a whole, with various data points obtained along the way. It is anticipated that Halifax-1 will provide relevant information over the coming months that will continue to move this unconventional play toward commercialization."

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BG Group Sells Texas Cotton Valley Assets

BG Group announced it signed a sale and purchase agreement with EXCO Resources for the divestment of all its interests in the shallow, non-core, conventional producing assets and acreage in the Cotton Valley formation for a consideration of $132.5 million.

These assets, covering approximately 54,165 net leasehold acres across East Texas and North Louisiana, are not required to be held by BG Group in order to hold, drill and produce the undeveloped Haynesville/Bossier formation shale reserves which lie beneath the Cotton Valley formation.

Closing of this transaction is expected in the first quarter of 2013.

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Technip Scores Sabah Shell Subsea Project for Malikai Proj.

Technip was awarded by Sabah Shell Petroleum Company Ltd an important subsea pipelines contract for the Malikai deepwater project, located offshore Sabah, at a water depth of approximately 2,133 feet (650 meters).

The contract includes transportation, installation and pre-commissioning of a 8" 31-mile (50-kilometer) gas pipeline and a 10" 34-mile (55-kilometer) liquid pipeline including steel catenary risers. The pipelines stretch from the Malikai tension leg platform site to the Kebabangan platform.

Technip's operating centers in Kuala Lumpur, Malaysia and Singapore will execute the contract, which is scheduled to be completed by the second semester of 2015. Offshore installation will be carried out by Technip's flagship S-Lay vessel, the G1201.

"This contract confirms our strength in the promising subsea business in Asia Pacific. As the second contract awarded to Technip in relation to the Malikai Deepwater Development project, after the [engineering, procurement and construction] of the tension leg platform, it is a reflection of Shell's continuing confidence in Technip's expertise and work," Chief Operating Officer Subsea at Technip in Asia Pacific Hallvard Hasselknippe commented.

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Bill Seeks to Lift Ban on Hydraulic Fracturing in North Carolina

A North Carolina state senator has introduced legislation that would lift the state's ban on issuing permits for shale exploration and production in a move to spur economic development within the state.

Senate Bill (SB) 76, the Domestic Energy Jobs Act, would authorize the state's Department of Environment and Natural Resources to issue permits on or after March 1, 2015 for oil and gas exploration and production in North Carolina, including the use of horizontal drilling and hydraulic fracturing.

The bill, introduced into the state's General Assembly earlier this month, also directs North Carolina's Mining and Energy Commission, with the assistance of the state's Department of Environment and Natural Resources, to study development of a comprehensive environmental permit for oil and gas exploration and development activities that involve horizontal drilling and hydraulic fracturing.

This permit would encompass well construction, siting, and closure requirements, hydraulic fracturing treatments, including subsurface injection of fluids; water quality, and management and regulation of water resources, waste and air emissions.

The Department of Natural Resources will also seek needed approvals from the U.S. Environmental Protection Agency for a coordinated permitting program to allow a single comprehensive environmental permit for oil and gas exploration and development activities using horizontal drilling and hydraulic fracturing treatments.

The Mining and Energy Commission will report its findings and recommendations to the Environmental Review Commission and the Joint Legislative Commission on Energy Policy on or before Oct. 1, 2013.

SB 76 would modify appointments to the state's Mining and Energy Commission and modify provisions in the state's Oil and Gas Conservation Act concerning the Mining and Energy Commission's authority to set allowables, or to allocate or pro-rate production.

Additionally, SB 76 would appropriate money from the state's mineral interest fund to the Department of Environment and Natural Resources to operate the Mining and Energy Commission and for related expenditures, and assign future revenue from energy exploration and production to preserve North Carolina's natural resources, cultural heritage and quality of life.

The bill would also:

Eliminate the registration requirements for people conducting landmen activities in the stateEstablish a tax for energy produced from the state's soil and gas waterRepeal outdated oil and gas tax statutes, and authorize suspension of permits for failure to file a return for severance taxesEncourage the Governor to Develop the Regional Interstate Offshore Energy Policy CompactAmend the Energy Policy Act of 1975 and the Energy Policy CouncilDirect the medical care commission to adopt rules authorizing facilities licensed by the Department of Health and Human Services to use compressed natural gas as an emergency fuel

In July 2012, North Carolina's General Assembly ratified the Clean Energy and Economic Security Act, which reorganized the state's Mining Commission as the North Carolina Mining and Energy Commission, and directed the commission and other state regulatory agencies to develop a modern regulatory program for the management of oil and gas activity in the state, including horizontal drilling and hydraulic fracturing.

This bill also authorized horizontal drilling and hydraulic fracturing, but prohibited permits for these activities being issued pending subsequent legislative action. This bill also sought to enhance landowner and public protections related to horizontal drilling and hydraulic fracturing, and called for establishment of a joint legislative commission on energy policy.

The U.S. Geological Survey in 2011 estimated that mean undiscovered natural gas resources of 3,860 billion cubic feet and a mean undiscovered gas liquids resource of 135 million barrels existed in continuous accumulations within five of the U.S. East Coast Mesozoic basins. These basins include the Deep River, Dan River-Danville and Richmond basins within North Carolina's Piedmont Province.

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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Strong Interest Shown in Latest Norwegian APA Round

Norway's Ministry of Petroleum and Energy announced Friday that is offering shares in 51 new production licenses to 40 companies in connection with the 2012 Awards in Predefined Areas licensing round.

"Today, I am sending out offers linked to 51 new production licenses for the Norwegian continental shelf. I am pleased to see strong, broad-based interest in the most well-known parts of the continental shelf. This year's licensing round confirms that Norway's combination of framework conditions and geological opportunities is internationally competitive," Minister of Petroleum and Energy Ola Borten Moe said in a statement.

The Ministry said that the 51 production licenses are distributed among the North Sea (34), the Norwegian Sea (14) and the Barents Sea (3). Forty seven companies in total applied for licenses, with 40 being offered shares in one or more of these. Twenty three companies will be offered operatorships.

The APA licensing round includes mature areas on the Norwegian continental shelf, which have already been well explored and where the geology is known. The expected size of discoveries in mature areas is smaller, although the Ministry pointed out that recent years "have shown that positive surprises can still happen".

Borten Moe added:

"The award of new licenses is vital for effective, long-term resource management. Today's awards will facilitate the efficient exploration of the parts of the continental shelf that we know best. The next step is for the companies to deliver good results in the form of profitable discoveries."

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