Ezion Inks LOI to Supply Liftboat Service to Southeast Asian Oil Company

Ezion Holdings revealed Thursday that it has inked a letter of intent with a Southeast Asian based national oil company to provide a liftboat to support the latter's oil and gas activities.

Ezion expects to deploy the liftboat by 3Q 2013, after its final commissioning and completion. The $43.5 million contract, said Ezion, will run for two years.

This is the second contract Ezion has bagged in the Southeast Asian this year.

Earlier on Jan. 15, the company announced that it won a contract to supply a liftboat to a Southeast Asian firm. The contract, worth $116.8 million, is expected to start from 1Q 2015 and run for four years.

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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Iraq Begins Design of $18B Oil Pipeline to Jordan

AMMAN - Oil-rich Iraq has started technical work on a planned $18 billion oil-export pipeline from Basra in southern Iraq to the Jordanian port of Aqaba on the Red Sea, bypassing the Strait of Hormuz, senior Iraqi oil officials said Thursday.

If realized, the pipeline would deliver a significant export outlet for Iraq's growing crude-oil production, which rose by 15% last year as the country focused on rejuvenating its energy sector. It could also provide an alternative to seaborne transport of oil through the Strait of Hormuz after Iranian officials threatened last year that they could block the potential chokepoint if the West didn't ease pressure on the country over its nuclear program.

Iraq has signed some 11 post-war oil deals, three gas agreements, and four oil and gas exploration contracts with international energy companies.

The first phase of the 1,680-kilometer oil pipeline will export some 1 million barrels a day from Basra, which pumps around 2.3 million barrels a day, or about 70% of Iraq's total oil production, Basra Governor Khalid Abdul Samad Khalaf said at an Iraqi conference in Amman.

The second phase will export a further 1.25 million barrels a day to the Syrian Banias port in the Mediterranean, said Jamal Faleh Hassan, head of designs section at the State Company for Oil Projects, an affiliate of the Iraqi oil ministry.

"Our priority now is to set up the part of the pipeline which goes to Aqaba in Jordan, while the part to Syria has been delayed because of the [security] situation there," he said.

Pipeline developers from the U.S., Canada, Germany, Japan and China attended the Amman conference, organizers said.

The Iraqi oil ministry has already awarded Canadian consultant SNC-Lavalin Group Inc. (SNC.T) a contract worth between $13 million and $14 million to carry out front-end engineering designs, said Mr. Hassan. The company is expected to finish the FEED work in the next three months, he said.

The 680-kilometer section of the pipeline located inside Iraq--which would extend from Basra to Haditha, northwest of Baghdad in the western Anbar province near the Jordan border--will be financed by the Iraqi government, said Sabah Abdul Kadhim al-Saedi, deputy head of the contracts office at the Iraqi oil ministry.

The Iraqi and Jordanian governments will choose investors to fund, build and operate the remaining 1,000 kilometers inside Jordan.

A gas pipeline will be built parallel to the oil pipeline to supply gas to power stations that will be constructed along the route. Some three pumping stations and three power stations will be built in Iraq to operate the pipeline. In the Jordan section, there will also be three pumping stations, Mr. Hassan said.

The project will also build storage facilities near Basra and Haditha with a total capacity of 28 million barrels, he said.

The gas-pipeline section inside Iraq will have a transport capacity of 350 million cubic feet a day to feed power stations operating the pipeline in Iraq.

The Jordan section will handle some 258 million cubic feet a day. About 100 million cubic feet a day of that gas will go to Jordan for domestic use while the remainder will be used to operate the pipeline inside Jordan.

Out of the 1 million barrels a day of oil exports, about 150,000 barrels a day will go to Jordan for domestic use as the Jordanian government has requested, Mr. Hassan said.

Jordan is dependent on imported oil and gas, as 96% of its needs come from other markets. The pipeline, if built, could easily meet all of Jordan's needs.

Last year, the Paris-based International Energy Agency estimated that Iraq would be able to pump up to 6.1 million barrels a day in 2020 and 8.3 million barrels a day in 2035. Iraq said it would be able to reach 8 million to 9 million barrels a day in 2020.

The bulk of Iraqi crude oil exports are handled by the southern oil terminals in the Gulf, where Iraq is pumping between 2.1 million and 2.2 million barrels a day while 350,000 to 400,000 barrels a day are handled by the Iraq-Turkey pipeline to the Mediterranean port of Ceyhan.

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2H Offshore Wins Detailed Design Project with LLOG

2H Offshore Inc., an Acteon company, has recently been awarded a Steel Catenary Riser (SCR) detailed design project with LLOG Exploration Company. The SCRs will be the first attached to the Exmar OPTI-11000 semisubmersible.

The scope of work includes the provision of detailed design of the production and export SCRs tied back to the Exmar OPTI-11000 semisubmersible for the Delta House field development. LLOG is currently developing the Marmalard and SOB2 fields in the Mississippi Canyon area of the Gulf of Mexico which will both be tied back to the Delta House Floating Production Facility located in MC Block 254 in approximately 4,500 feet of water.

"2H has supported and provided riser engineering services to Exmar since 2005 in their development of the OPTI-EX semisubmersible which was used to develop LLOG's Who Dat Field," said 2H Offshore Inc. Vice President David Walters. "We look forward to providing our expertise in detailed design on the first SCRs attached to the OPTI-11000 semi-submersible"

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Energy 2025: Independence Day

North America's production is surpassing the nation's current existing infrastructure, creating a bottleneck effect, discussed Edward Morse, managing director and global head of commodity research at Citi Group, at Platts 2nd Annual North American Crude Marketing Conference.

A panel of industry leaders discussed the U.S. crude movement, shale oil supply growth prospects for North America and beyond, and if the U.S. can absorb the soaring shale oil volumes.

"This year we will see extraordinary change that has been driven by what's going on in the United States and Canada," stated Morse.

So much production is coming online that the question of exporting crude is coming up and creating a "game changing" event that will have long-term impacts on global supply and demand. Over the next 12 years, industry leaders anticipate exporting crude to lead North America to the Promised Land – energy independence.

It is expected that North American crude oil production is expected to increase at an average rate of 6 percent per annum from 2012 to 2020. Non-U.S., non-Canadian waterborne imports will decrease from about 50 percent of crude oil supply in 2010 to 14 percent in 2017 and to 5 five percent in 2022, according to Bentek Energy. Furthermore, from 2012 to 2020 about half of all incremental global crude oil production, about 4.5 million barrels per day, will emanate from North America.

"Booming energy output from North Dakota to Texas is now driving U.S. economic growth, with U.S. onshore crude oil output growth exceeding previous growth rates in liquids, natural gas," said Francisco Blanch, head of global commodities and derivatives research at Bank of American Merrill Lynch.

"Non-OPEC supply growth is finally improving. If the U.S. had not been able to get this oil out of the ground last year, the U.S. would have been in a recession. It's setting north America apart from the rest of the world," Blanch said.

Rising oil output by the United States is "nothing short of spectacular" and will exceed Saudi Arabia or Russia by 2017, according to an International Energy Agency report.

With so much production coming online, industry officials expect that the nation will gain energy independence by 2025. If this projection comes true, "it will have dramatic ripple effects on U.S. manufacturing, foreign policy, defense spending, the account balance and the nation's budget deficit," said Gary Morsches, managing director of energy products at CME Group.

Furthermore, onshore production growth in North America will "provide a meaningful opportunity for the U.S. to dramatically wean itself away from non-Canadian waterborne imports," said Blanch.

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 Settle at 2013 Low of $90.68 a Barrel

Crude-oil futures prices tumbled 1.5% Friday to a low for 2013 as new concerns rose over the global economy.

Prices slumped early on official data from China, the world's second-biggest oil consumer, showing the February purchasing managers' index at 50.1, fractionally above the no-growth mark and down from a reading of 50.4 in January.

Worries over a record-high euro-zone unemployment rate of 11.9% in January kept the market on edge as traders worried about Italy's ability to continue economic reforms after its recent elections.

In the U.S., the Commerce Department said personal income dropped to a 20-year low in January as higher taxes kicked in. Personal incomes fell 3.6%, compared with economists' forecasts for a 2.5% decline. Consumers responded by saving less, rather than spending less, as consumer spending ticked up 0.2%.

Meanwhile, President Barack Obama offered no hint of any deal between the White House and Congress to avoid automatic spending cuts of $85 billion as a deadline loomed.

The president on Friday said the lack of a deal would result in government furloughs and layoffs, but he cautioned that the cuts would not trigger a new financial crisis. "It is absolutely true that this is not going to precipitate the kind of crisis we talked about with America defaulting and some of the problems around the debt ceiling," Mr. Obama said. "I don't anticipate a huge financial crisis, but people are going to be hurt."

Analysts said the pall cast over the U.S. economy in the near term by the cuts doesn't bode well for an already shaky oil-demand outlook for the world's biggest oil consumer.

Light, sweet crude-oil futures for April delivery on the New York Mercantile Exchange dropped $1.37 a barrel to settle at $90.68, the weakest since Dec. 24. In the past month, crude prices have fallen more than $7 a barrel, or 7.3%.

ICE North Sea Brent crude oil for April dropped 98 cents to settle at $110.40 a barrel, also the lowest price since Dec. 24. The price has fallen $4 a barrel since Monday.

Jim Ritterbusch, president of Ritterbusch & Associates, said dollar strength against the euro will be crucial to the near-term oil price. Strength in the dollar discourages some investors with foreign currencies from investing in dollar-based commodities, like oil futures. The euro dropped to the lowest level this year against the dollar on Friday, at $1.30.

"The next $5 price move [is] heavily contingent upon the direction of the U.S. dollar and, more specifically, swings in the euro currency," Mr. Ritterbusch said in a note to clients.

Crude prices also are undermined by the highest levels of U.S. crude oil stocks for this time of year in 30 years.

"We've got really ample supplies, but we're not really seeing any significant pickup or sign that demand is humming along," said Gene McGillian, analyst and broker at Tradition Energy.

April-delivery contracts for reformulated gasoline blendstock futures and heating oil began trading as the front-month on Friday, after March contracts expired Thursday.

The April RBOB contract meets the requirement for summer-grade gasoline, which fetches a higher price than the winter-grade fuel traded in the March contract.

April RBOB settled up 1.69 cents at $3.1286 a gallon, the highest front-month price since Feb. 15.

April heating oil settled down 3.02 cents at $2.9301 a gallon, the lowest price since Dec. 11, as the winter peak demand season essentially ends with the March contract's expiry.

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Ezion's Marine Supply Base in NW Australia Operational End-2013

Singapore-listed Ezion Holdings announced Friday that its marine supply base in North Western Australia will be operational by the end of this year, with basic load out and lay down services to be made available.

The company said in a disclosure that several oil and gas services companies have expressed their interest in using the supply base's facilities.

The supply base is built on a plot of land leased by Ezion, from North West Australia, in July 2010. The sea front land, located in close proximity to oil and gas projects in Northwest Australia, Papua New Guinea and Timor-Leste, is leased to Ezion for an initial period of five years, with a 30-year extension option at monthly rental rates.Ezion noted in 2010 that it has plans to develop marine bases in other areas, based on a similar concept.

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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Centrica Achieves First Gas from York Platform

Gas production has begun at Centrica Energy Upstream's York platform in the southern North Sea, the company announced Friday afternoon (UK time).

The field, which is 100-percent owned by Centrica, will produce around 120 million cubic feet of gas per day at its peak, the firm said.

Centrica highlighted that the York platform is the third significant greenfield project completed in as many years after Ensign, also located in the southern North Sea, and F3-FA, the first self-installing platform in the North Sea. The field also represents a successful collaboration between Centrica Energy and Centrica Storage, with gas from the field being exported via pipeline to Centrica Storage's terminal in Easington, in northeast England.

Drilling is now underway on York's second well which, at some 3.75 miles, is the longest well Centrica Energy has drilled and is one of the longest wells in the southern North Sea.

Greg McKenna, Centrica's regional director for the southern North Sea, commented in a company statement:

"The team is celebrating as first gas is achieved from York, which will produce enough gas to meet the demands of half a million households. We have taken this project from investment decision to production in just 24 months, which is testament to the hard work of the project teams in both Centrica Energy and Centrica Storage. We will continue to work closely in the coming weeks as we bring gas onshore to the upgraded Easington Terminal."

The York platform is located around 25 miles east of Humberside, England, in a water depth of 150 feet.

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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Report: Anadarko, Dhoot to Sell 20% of Mozambique Gas Block

U.S. oil-and-gas explorer Anadarko Petroleum Corp. and Indian billionaire Venugopal Dhoot will auction off 20% of a Mozambique gas field, Reuters news agency reported on its website Tuesday citing unnamed sources.

The sale could be worth $4.5 billion, the report said citing the sources who are familiar with the matter.

PetroChina and Exxon Mobil Corp. are among those expected to bid, the report said citing the sources. Royal Dutch Shell PLC is also looking, the report added.

First-round bids are due on March 14 after an information memorandum on the sale was sent to potential bidders in early February, the report quoted one of the sources saying.

Anadarko said last month it is looking to sell a 10 percent of the block--taking its stake to 26.5 percent.

Mr. Dhoot, who controls electronics conglomerate Videocon Group, wants about $2.5-$3 billion for 10%. Mr. Dhoot paid $75 million for his 10% Rovuma 1 stake in 2008.

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Amsterdam Conference to Focus on HR Strategies for the Energy Industry

One of the top concerns in the Energy industry is the demographic factor, and consequential the shortage of skilled resources, especially in regards to the operational staff.

The upcoming Marcus Evans conference on HR Strategies for the Energy Industry addresses the current issues and invites managers and leaders to take part in the discussion.

Taking place in Amsterdam from June 10-12, leading industry experts will come together to discuss new strategies to address the technical talent shortage as well as to understand the global impact on day to day operations.

For more information on the agenda, please send an email to conferences-emea@marcusevansuk.com or click here.

This marcus evans conference will take an in depth look at the resourcing strategies the industry is implementing to address this skills shortage and highlight the profound impact this has on day to day operations. For a 10-percent early bird discount on delegate seats, use discount code: RZ13

Click here to visit the event website

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Chevron All Smiles over St. Malo Production Test in Gulf of Mexico

Chevron Corporation announced Thursday that it had conducted a successful production test on the St. Malo PS003 well in the prolific Lower Tertiary trend in the deepwater Gulf of Mexico. Oil flow rates, though limited by testing equipment constraints, exceeded 13,000 barrels of oil per day.

The test, in Walker Ridge Block 678, targeted Lower Tertiary sands more than 20,000 feet (6,096 meters) under the sea floor and was conducted during August and September 2012. This is the first development well in the St. Malo field, which is being jointly developed with the Jack field.

"The well test is a further demonstration of the potential of the Lower Tertiary and highlights our leadership in developing deepwater resources globally," said Chevron Vice Chairman George Kirkland.

"The results of this production test further confirm the significance of the St. Malo field," said Gary Luquette, president, Chevron North America Exploration and Production Company. "The jointly developed Jack and St. Malo fields are expected to provide a major step-up in Chevron's production from 2014 and produce domestic energy for decades to come."

The Jack and St. Malo fields are located within 25 miles (40 kilometers) of each other and are being jointly developed with a host floating production unit located between the two fields in 7,000 feet (2,134 meters) of water, approximately 280 miles (450 kilometers) south of New Orleans, Louisiana. The facility is planned to have a design capacity of 177,000 barrels of oil-equivalent per day to accommodate production from the Jack/St. Malo development, which is estimated at a maximum total daily rate of 94,000 barrels of oil-equivalent, plus production from third-party tiebacks. Total project costs for the initial phase of the development are estimated at $7.5 billion.

Chevron has a working interest of 51 percent in the St. Malo field. Other owners of the St. Malo field are Petrobras (25 percent), Statoil (21.5 percent), ExxonMobil (1.25 percent) and ENI (1.25 percent).

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