Thursday, April 25, 2013

Talisman Scraps Yme Project after SBM deal

Dutch oilfield services firm SBM Offshore has settled its dispute over the Yme project, offshore Norway. The firm has agreed to pay to Talisman Energy Norge and its partners an additional $270 million, on top of an earlier payment of $200 million, to cover the decommissioning of the abandoned Yme platform.

Talisman and its partners have seen a number of delays, as well as safety issues, at Yme. This included an evacuation of 140 workers from the platform in July 2012 due to structural concerns.

Once it has received the settlement payment, Talisman said it will complete the work necessary to ensure the safe re-manning of the platform and will then remove the MOPU (mobile offshore production unit), which will subsequently be scrapped.

Paul Warwick, Talisman's executive vice-president for Europe-Atlantic, commented in a statement:

"Delays to first production on the Yme project have been a great disappointment to the Yme joint venture partners. Recent analysis has concluded that a new topsides solution is needed in order to develop the Yme field. The arrangement with SBM Offshore allows the Yme joint venture partners to continue to evaluate options for the field."

Meanwhile, SBM noted that the settlement paves the way for it to carry out a fundraising exercise required to help balance the firm's books.

"Today we have resolved the legacy difficulties of Yme at an agreed cost, bringing an end to a period of significant uncertainty for the company," SBM director Sietze Hepkema said.

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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Lundin Spuds Luno II Well

Sweden's Lundin Petroleum has spud its exploration well 16/4-6S, targeting the Luno II prospect, located south of the Edvard Grieg field in the Norwegian North Sea, the company announced Tuesday.

Lundin said the main objective of the well is to prove the presence of hydrocarbons in Jurassic reservoir sandstones. The firm estimates the Luno II prospect contains un-risked prospective resources of some 139 million barrels of oil equivalent.

The planned total depth of the well is approximately 6,890 feet below mean sea level and the well will be drilled using the Bredford Dolphin (mid-water semisub) rig.

Lundin is the operator of production license 359, where Luno II is located. It has a 40-percent interest in the license, while Statoil and Premier Oil each have a 30-percent holding.

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Rosneft's TNK-BP Takeover Completed by End March

LONDON - A $55 billion transaction in which Russian state-controlled OAO Rosneft will acquire TNK-BP from BP PLC and the AAR consortium of Soviet-born tycoons is expected to close by the end of the month, three people familiar with the matter said this week.

The deal will transform both companies: it will make the British oil giant a one-fifth holder of the Kremlin's oil champion, while Rosneft will end up controlling about one-third of crude output in Russia, cementing its position as the world's largest publicly traded oil company.

BP hopes the deal will give it access to the Russian Arctic and other potential prospects such as the massive Bazhenov shale-oil resources in western Siberia.

Approval from the European Union's antitrust authorities Friday for the deal was the last major hurdle to be cleared and the transaction will close once the lawyers have finished due diligence on the documentation, the people said.

"There aren't any other major unresolved issues outstanding – there's a lot of technical work to be done for a transaction of this size, but it's all going very smoothly," one person familiar with the matter said.

The loan financing has yet to be drawn down, and that will take place once the contracts are completed and signed, said a loan financier on the deal.

The two companies had originally said they expected the deal to complete in the first half of 2013.

Rosneft's takeover of TNK-BP marks a major milestone in President Vladimir Putin's reassertion of Kremlin control over oil production, much of which was sold off under the privatizations of the 1990s to well-connected tycoons like AAR's owners. Since Mr. Putin came to power in 2000, the tide has turned in an industry the Kremlin depends on both as a source of international influence and more than half of all tax revenues.

The transaction also enables BP to reap a windfall from the sale of its stake in Russia's third-largest oil producer, which it paid around $8 billion for in 2003 but which has returned around $19 billion in dividends.

The deal is a vindication for BP Chief Executive Bob Dudley, who suffered a major setback last year when his previous effort to partner with Rosneft in Russian oil exploration was blocked by opposition from AAR.

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

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Argentina's YPF to Boost Capex 60% in 2013

BUENOS AIRES - Argentina's largest oil and gas producer, state-run YPF SA, expects to boost investment in its operations by 60% this year as it seeks to lift production, YPF Chief Executive Miguel Galuccio said Monday.

Argentine President Cristina Kirchner nationalized YPF last year and tapped Mr. Galuccio to reverse years of declining output. YPF invested 16.48 billion pesos ($3.25 billion) in 2012, an increase of nearly 26% from the preceding.

YPF sold about ARS9.4 billion in debt on the local capital market last year to fund a portion of that investment.

"We are going to need volumes of financing much greater than in 2012," Mr. Galuccio said at a press conference.

The executive said YPF would tap global capital markets if the opportunity arises. He also hinted that equity could play a bigger role in YPF's investment program this year.

YPF said Monday its net profit fell 12% in 2012 to ARS3.90 billion due to losses at subsidiaries and accounting factors. Operating cash flow soared 36% to ARS17.3 billion.

Oil output rose 2.2%, compared to a 7.6% drop the previous year. The decline in natural gas output slowed to 2.3%.

YPF's shares traded in New York rose 0.8% to close at $14.77 Monday, giving the company a market capitalization of about $5.8 billion. Its ADR hit a 52-week low of $9.21 last November.

Last year, Mrs. Kirchner formally expropriated a 51% stake in YPF from Spain's Repsol SA in a dispute over investment. Mrs. Kirchner blamed the Spanish company for Argentina's falling oil and gas output, saying that Repsol bled YPF dry through an overly generous dividend policy that left the company without enough money to invest in exploration and production.

Repsol has denied those accusations and is seeking about $10 billion in compensation for its YPF shares.

Analysts say that Argentina could become an energy exporter again and provide consumers and industry with cheap natural gas if it is able to replicate the shale boom the U.S. has enjoyed in recent years. The South American nation is thought to be home to the world's third-largest shale gas reserves after the U.S. and China, with some 774 trillion cubic feet of recoverable gas, according to U.S. Energy Information Administration estimates. Argentina is also thought to have significant quantities of shale oil.

But getting those hydrocarbons out of the ground and to consumers will require billions of dollars that neither YPF nor Mrs. Kirchner's government have on their own.

Mr. Galuccio has been courting international partners to boost output and help Argentina reduce its dependence on imported energy, especially natural gas.

Last year, Mr. Galuccio held talks with Norway's Statoil ASA, Russia's government-controlled gas company, Gazprom, and Chevron Corp., among others.

In December, YPF inked a deal with a company linked to Argentina's Bulgheroni family to invest $1.5 billion together over the next two years to develop shale-gas and oil resources.

YPF also announced an agreement that same month with Chevron that could see the California-based company and YPF spend about $1 billion to drill 100 wells for unconventional energy in Argentina's resource-rich Neuquen Province.

However, a court-ordered embargo on the assets of Chevron's local subsidiary, stemming from a decades-old case involving environmental damage claims in Ecuador, has raised questions about Chevron's ability to invest in Argentina. Chevron has said it will use all legal means available to fight the embargo.

"Today, I can say the commitment exists and if we have to find an economic model different than what was originally planned, the commitment is there," Mr. Galuccio said, referring to the Chevron deal.

Taos Turner and Shane Romig contributed to this story.

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

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Japanese Firm JOGMEC in Ice Gas Breakthrough

Japanese Firm JOGMEC in Ice Gas Breakthrough

Japan Oil, Gas and Metals National Corporation (JOGMEC) reported Tuesday that it has successfully extracted natural gas from methane hydrate deposits from under the seabed offshore Japan. The successful extraction of gas from this source promised a new energy source for the world.

Methane hydrate is a compound in which a large amount of methane is trapped within a crystal structure made up of water, so forming a solid that is similar to ice.

JOGMEC said that it successfully used a depressurization method to flow gas from methane hydrate layers.

The firm has been preparing for an experimental test since February 2012 at the Daini Atsumi Knoll, off the coasts of the Atsumi and Shima Peninsula. After preparatory drilling and an operation to acquired pressurized core samples last summer, it began its flow test Tuesday. The flow test is expected to end at the end of this month.

JOGMEC hopes the experimental test will help it better understand dissociation behavior of methane hydrate under the seabed and the impact to the surrounding environment. A second offshore test is planned ahead of commercial production that could be achieved later this decade.

JOGMEC pointed out that some 40 trillion cubic feet of methane is held in methane hydrate deposits under the sea in the eastern Nankai Trough, off the southern coast of the Japanese island of Honshu. This is equivalent to around 11 years of the amount of liquefied natural gas currently imported to Japan, the firm added.

Dow Jones Newswires reported that Takami Kawamoto, an official responsible for the methane hydrate project at JOGMEC, said developing the technology will take a long time, and "we are studying many things that are not yet known about methane hydrate".

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.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

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Talisman Scraps Yme Project after SBM deal

Dutch oilfield services firm SBM Offshore has settled its dispute over the Yme project, offshore Norway. The firm has agreed to pay to Talisman Energy Norge and its partners an additional $270 million, on top of an earlier payment of $200 million, to cover the decommissioning of the abandoned Yme platform.

Talisman and its partners have seen a number of delays, as well as safety issues, at Yme. This included an evacuation of 140 workers from the platform in July 2012 due to structural concerns.

Once it has received the settlement payment, Talisman said it will complete the work necessary to ensure the safe re-manning of the platform and will then remove the MOPU (mobile offshore production unit), which will subsequently be scrapped.

Paul Warwick, Talisman's executive vice-president for Europe-Atlantic, commented in a statement:

"Delays to first production on the Yme project have been a great disappointment to the Yme joint venture partners. Recent analysis has concluded that a new topsides solution is needed in order to develop the Yme field. The arrangement with SBM Offshore allows the Yme joint venture partners to continue to evaluate options for the field."

Meanwhile, SBM noted that the settlement paves the way for it to carry out a fundraising exercise required to help balance the firm's books.

"Today we have resolved the legacy difficulties of Yme at an agreed cost, bringing an end to a period of significant uncertainty for the company," SBM director Sietze Hepkema said.

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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Crude Oil Squeezes Out Gain as S&P 500 Forges Higher

NEW YORK--Oil futures eked out a gain Monday, rebounding from earlier losses, as equities posted fresh highs on the day.

Light, sweet crude for April delivery settled 11 cents, or 0.1%, higher at $92.06 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled 63 cents, or 0.6%, lower at $110.22 a barrel.

Crude oil often follows the equities market, which traders turn to as a barometer for overall economic sentiment, and appeared to pull oil prices out of negative territory in afternoon trading.

Although the relationship between the two markets hasn't been as strong in recent weeks, "there's a certain degree of risk-on," said Bob Yawger, director of energy futures at Mizuho. "It's hard to cream crude when equities are posting all-time highs."

The Standard & Poor's 500 index was recently 0.3% higher, at 1555.72. Last week, the Dow Jones Industrial Average posted record highs.

Nymex crude was lower earlier in the session after data on Chinese industrial production and retail sales came in below expectations, raising concerns about oil demand in the world's No. 2 oil consumer.

Elevated stockpiles and production in the U.S. and slack demand there have also weighed on oil prices. U.S. oil inventories are up nearly 6% this year and are well above five-year average levels. Analysts surveyed by Dow Jones Newswires expect an additional build of 2.4 million barrels in the Energy Information Administration's weekly survey due Wednesday.

"In the big picture, we're still looking for a build," said Carl Larry, president of the oil-trading advisory firm Oil Outlooks & Opinions.

Brent crude in particular has posted steep losses in recent sessions, as a key North Sea pipeline has resumed operations, restoring supply of the European benchmark.

Several analysts say oil prices have found a floor near $90 a barrel. Two key technical indicators, the 100-day moving average and the 200-day moving average, are both around $90 a barrel and have served as important thresholds.

Front-month April reformulated gasoline blendstock, or RBOB, settled 5.11 cents, or 1.6%, lower at $3.1524 a gallon. April heating oil settled 0.58 cent, or 0.2%, lower at $2.9691 a gallon.

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

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Confidence Increasing in UK Oil, Gas Sector

Confidence Increasing in UK Oil, Gas Sector

Confidence within the UK's oil and gas industry is increasing steadily, according to trade body Oil & Gas UK's business confidence index.

Oil & Gas UK said the index, updated Tuesday, shows that the sector has moved further into positive territory with a score of 60 points on a 100-point scale. The organization said that while the confidence of operators remained steady but unchanged between the fourth quarter of 2012 and the previous quarter (at 57 points), it is contractors who are driving the gradual rise in optimism with their score having risen three points since 3Q 2012.

Oil & Gas UK Operations Director Oonag Werngren commented in a statement:

"The rising confidence within the contractor sector suggests that the tax changes introduced by the [UK] government last year to incentivise investment in the UK Continental Shelf are now bearing fruit. With operators investing around £11.4 billion [$17 billion] in 2012, supply chain companies which perform essential functions supplying parts and specialist services and equipment to the operators are experiencing increasing demand for their services."

Oil & Gas UK added that within the operator community it is the majors who are most optimistic, while independents reported a two-point fall in confidence. The trade body believes this suggests majors have the resources to make the most of the favorable business environment created by last year's tax changes, while smaller companies are seeing their growth restrained by poorer access to finance and resources.

Werngren pointed out that the challenge of recruiting and retaining skilled staff, while also accommodating increasing operational costs, emerges as a recurrent them in feedback from the majority of companies surveyed.

Oil & Gas UK's business confidence index is just the latest survey this month to suggest that things are looking buoyant for the UK oil and gas sector. A report from Ernst & Young (in collaboration with Oil & Gas UK) published March 7 stated that UK oilfield services firms plan to increase their workforces by an average of 10 percent during the next two years, partly in response to the more favorable fiscal regime in the country.

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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House Members Outline New Keystone XL Path

House Energy and Commerce Committee leaders on March 4 outlined a new path forward on the Keystone XL pipeline, releasing a discussion draft of legislation that will remove the project’s fate from the president’s hands and clear away the roadblocks preventing construction of the pipeline. The draft legislation, authored by Rep. Lee Terry (R-NE), will eliminate the need for a Presidential Permit and find that the Final Environmental Impact Statement (FEIS) issued by the Secretary of State on Aug. 26, 2011, shall satisfy all NEPA requirements. The legislation also limits the legal challenges that can be brought against the project to prevent further unnecessary delays.

The Keystone XL pipeline is a $7 billion jobs and energy infrastructure project that has been tied up in regulatory review for over four years. Last week, the State Department released its draft Supplemental Environmental Impact Statement (SEIS), which found that the pipeline, including the revised Nebraska route, would have limited adverse environmental impacts. This review follows the State Department’s initial analysis that lasted for more than three years and found the pipeline to be environmentally sound.

"It's been over four years and thousands of pages of environmental reviews. The experts have weighed in. Now is the time to build the Keystone Pipeline," said Terry. "If we see further delays as we have in the past; Congress is ready to act. This discussion draft is part of that process."

Energy and Commerce Democrats Jim Matheson (D-UT) and John Barrow (D-GA) partnered with Rep. Terry to co-author the legislation that would allow construction of the pipeline to move forward.

"Construction of the Keystone XL pipeline is long overdue. This project creates thousands of high-paying, high-skilled jobs, and puts America on a long-term path to energy independence," said Matheson and Barrow. "Multiple reviews by the Obama Administration indicate that this pipeline will have no significant environmental impacts. This delay is just playing politics with American jobs and American energy security, and it’s time to move forward with construction of the pipeline."

House Energy and Commerce Committee Chairman Fred Upton (R-MI) and Energy and Power Subcommittee Chairman Ed Whitfield (R-KY) were also co-authors of the bill and committed to moving the bipartisan solution through the committee.

"Rep. Terry has been a leading champion for Keystone in the House and he will continue to carry the torch as we work to stop the administration’s delays and get this pipeline built. We have already waited four years for this pipeline, and without congressional action, we can expect the waiting to continue," said Upton and Whitfield. "We should learn from our experience with the Trans-Alaska Pipeline and act swiftly to move this legislation through the committee and through the House so we can stop waiting and start building and get folks back to work."

This is the fourth piece of legislation authored by Rep. Terry to advance construction of the job-creating Keystone XL pipeline. Last Congress, the House voted a total of six times to allow for construction of the Keystone XL pipeline, which is estimated to create thousands of direct and indirect jobs and carry nearly a million additional barrels per day of secure Canadian oil supplies to U.S. refineries.

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Qatar Makes First New Gas Find in Over 40 Years

DUBAI - Qatar has discovered an offshore gas field containing 2.5 trillion cubic feet of natural gas, its first such discovery since 1971, energy minister Mohammed bin Saleh al-Sada was quoted as saying Sunday.

The discovery was made at the 4-North offshore block near the large North Field, by a consortium that includes Wintershall AG of Germany and Mitsui Gas Development Qatar, the Qatar News Agency quotes Mr. Sada as saying.

Qatar, a member of the Organization of the Petroleum Exporting Countries, holds the world's largest natural gas reserves and is the single-largest supplier of liquefied natural gas.

The Gulf state has proven natural gas reserves of about 890 trillion cubic feet--about 13% of total world natural gas reserves--most of which is located in its offshore North Field, the world's largest non-associated gas field.

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

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