Tuesday, May 14, 2013

Adnoc Selects Shell to Operate Bab Gas Field

DUBAI - State-run Abu Dhabi National Oil Co., or Adnoc, has selected Royal Dutch Shell PLC to operate the strategically important Bab sour-gas field, the International Oil Daily reported Tuesday, citing industry sources.

The company had shortlisted Shell and French major Total SA for the estimated $10 billion deal, but Shell won the bid, according to the report in the daily, which is run by Energy Intelligence Group.

Both Shell and Total had put forward competitive offers, but the main difference was their approach in handling the massive amounts of sulfur produced at the field.

The Bab field, once developed, will produce 500 million-800 million cubic feet of gas per day, but expertise is required to handle the large amounts of sulfur generated from the estimated 15% hydrogen sulfide content of the gas.

Shell recommended exporting the sulfur, while Total submitted a proposal to reinject the sulfur back into the reservoir, the report said.

The deal needs to be signed off by the emirate's highest oil authority, the Supreme Petroleum Council--which includes the most senior leaders in the emirate--according to the report.

Shell declined comment when contacted by Dow Jones Newswires.

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

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DNV Welcomes New UK Head

DNV, the multinational provider of risk management and sustainability services, has appointed Frank Ketelaars as its Head of UK Advisory Services to oversee a further growth in the oil and gas sector, drawing on a diverse and experienced pool of consultants.

Mr. Ketelaars will have overall responsibility for DNV's advisory units in London, Manchester and Aberdeen, and will also be responsible for enhanced collaboration with European colleagues based in Paris, Milan, Rotterdam, and Bilthoven.

Mr. Ketelaars started his professional career in Shell International in 1989. Subsequently he worked for 10 years for Jardine and Associates, specializing in asset performance and availability analysis, covering upstream, midstream and downstream assets. He joined DNV as part of the company's acquisition of Jardine in 2005, and has worked as head of the DNV advisory unit in London since 2008, responsible for advisory activities covering safety, environmental and asset risk.

DNV have a long track record of delivering advisory services to most of the International, National and Independent Oil Companies for over 30 years and have built a strong reputation for their competency and consistency in the market.

Mr. Ketelaars said: "My role as UK head will, both complement an initiative to have greater impact through tighter networking, and allow for simpler and faster decision making. I am delighted to be taking on this challenge."

With Mr. Ketelaars stepping up to this new role, Carlo Buccisano is being promoted to Head of London Advisory. Richard Whitehead, Head of Manchester Advisory, will be Mr. Ketelaar's deputy and continues to be responsible for DNV's Gas/LNG growth across Europe. Robert O'Keeffe will continue in his role as Head of Aberdeen Advisory and Peter Boyle, Advisory Services Business Development Director, will also report to Mr. Ketelaars, with specific responsibility for business development, sales and customer service management.

Hari Vamadevan, DNV's UK regional manager, said: "The three advisory units have a number of areas that will benefit from a common approach, in particular resource management and competence development. Whilst having much in common, they also have a number of strong niche positions - Manchester in onshore activities, Aberdeen in offshore activities and London on new build projects with EPC contractors. By working more closely I am sure all three offices will be more successful."

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Pemex's Proven Oil Reserves Edge Up to 13.87 Billion Barrels

MEXICO CITY - Mexican President Enrique Pena Nieto announced Sunday that the nation's proven reserves of oil and gas rose slightly at the start of 2013 versus a year earlier to 13.87 billion barrels of crude-oil equivalent, while hinting that a coming energy reform proposal will include legal changes to "transform" the state-dominated industry.

Mr. Pena Nieto made the reserve announcement at a ceremony to mark the 75th anniversary of the expropriation of the oil industry from foreign owners, where he reiterated that the energy overhaul proposal--now being negotiated with lawmakers--will not privatize state oil monopoly Petroleos Mexicanos, or Pemex.

"Pemex will not be sold nor privatized; Pemex must be transformed," Mr. Pena Nieto said to the applause of unionized oil workers present at the ceremony at a Pemex refinery in central Mexico.

The Mexican president didn't given any details on the reform proposal, saying only that the industry needs more investment.

Administration officials have said the proposal will include measures to attract more private players, including international oil companies that could partner with Pemex on projects like drilling in the deep waters of the Gulf of Mexico, where Pemex has no commercial production.

Mexico's oil reserves are traditionally announced once a year at the expropriation ceremony and correspond to figures from the first of the calendar year. Mr. Pena Nieto said that Mexico's proven reserves would last about 10 years at current production rates.

In recent years, Pemex has been finding new oil each year about equal to production, meaning that for every barrel produced, another barrel has been found, so that overall reserves fluctuate little from year to year.

Proven reserves at the start of 2012 were 13.81 billion barrels of oil, Pemex said on its webpage, also equal to about 10 years of production at production rates at the time.

In a much broader measurement of oil reserves--proven, probable and possible, or 3P--Mr. Pena Nieto said the nation had 44.53 billion barrels of crude-oil equivalent at the beginning of the year, compared with the 43.84 billion barrels at the start of 2012.

Pemex's crude-oil production has fallen for eight consecutive years to about 2.55 million barrels a day in 2012 from around 3.4 million barrels in 2004.

Company officials have said new fields ramping up this year will end the string of declines, and early output numbers show that Pemex production has been higher so far this year than during the same time period last year.

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

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Europa Begins Seismic Acquisition over UK Onshore License

Europa Oil & Gas announced Tuesday that it has started the acquisition of 2D seismic data on its onshore PEDL 181 license in east Lincolnshire, UK.

According to the company, PEDL 181 is located in a working hydrocarbon system where a number of discoveries have been made.

Europa said that it will focus on four leads in the southern part of the license, where several prospects have been confirmed following technical evaluation. Three leads lie within the northeast trending Caistor anticline, while another – named Cuxwold – is located south of the anticline.

Europa's existing oil production at the Crosby Warren field lies at the westernmost end of the Brigg-Broughton anticline – which is an analogous trend to the west of the Caistor anticline.

The company has now begun the acquisition of approximately 50 miles of 2D seismic, as well as the reprocessing of existing 3D seismic over the Caistor anticline.

Europa CEO Hugh Mackay commented in a statement:

"The identification of four leads on PEDL 181, which is located next to the PEDL 180 & 182 licences, where we are due to drill an exploration well this year, and our producing oil field at Crosby Warren, is highly encouraging. As previously identified targets are drilled, it is important we maintain a pipeline of leads and prospects at various stages of development.

"Our strategy of developing a diversified asset base comprised of multiple licences including UK production and exploration, a gas appraisal project onshore France, and high impact frontier exploration in the Irish Atlantic Margin where we recently identified two large prospects, provides a portfolio for future drilling. The results of the 2D seismic acquisition
programme, alongside the interpretation of the reprocessed existing 3D datasets, will further define the prospectivity of the PEDL 181 licence and determine our future work programme."

Europa has a 50-percent interest in the PEDL 181 license and is the operator. Egdon Resources UK and Celtique Energie Petroleum each hold a 25-percent stake.

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Expro Bags Subsea Services Gig in China

Expro has been awarded a $4.5 million (GBP 2.9 million) one year contract for the supply of 7 3/8" completion landing string services in China. This contract will enable Expro to capitalise on an emerging and highly lucrative deepwater market, which is set for major growth over the next five years.

Work will commence this month and as part of the contract, Expro will supply a 7 3/8" 10k direct hydraulic (DH) completion landing string system and a set of topside and DH controls. This will be the latest DH operation in China following previous successful campaigns on other horizontal tree developments.

Subsea Sales Director Graham Cheyne said, "The South China Sea deepwater market is crucial for our growth strategy going forward and the contract win further enhances our presence in China. The opening of our new base in the Shekou industrial zone positions us perfectly to provide our customers in China with high quality service offshore and onshore.

"Our investment in technology innovation and infrastructure in China, coupled with the dedication to ongoing training and personal development, means we are well positioned to provide bespoke engineering solutions to our China customer base."

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Total Sells 25% of Tempa Rossa Field to Mitsui

France's Total announced Monday that it is selling a 25-percent interest in the Tempa Rossa field, onshore southern Italy, to Mitsui E&P Italia.

Total will retain a 50-percent holding, as well as operatorship, of the concession, which is located in the Basilicata region. Shell holds the remaining 25 percent.

The Tempa Rossa field is scheduled to come on stream in early 2016, when it is expected to produce 50,000 barrels of oil per day at its peak, as well as 1.4 million cubic feet of gas per day, significantly boosting Italian oil production.

"We are very pleased with this transaction, which further strengthens the ties between Total and Mitsui," Olivier de Langavant, senior vice president for Strategy, Business, Development and R&D at Total, said in a company statement.

"It is another step toward achieving the asset disposal objectives announced by Total for the period 2012-2014."

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Expro Bags Subsea Services Gig in China

Expro has been awarded a $4.5 million (GBP 2.9 million) one year contract for the supply of 7 3/8" completion landing string services in China. This contract will enable Expro to capitalise on an emerging and highly lucrative deepwater market, which is set for major growth over the next five years.

Work will commence this month and as part of the contract, Expro will supply a 7 3/8" 10k direct hydraulic (DH) completion landing string system and a set of topside and DH controls. This will be the latest DH operation in China following previous successful campaigns on other horizontal tree developments.

Subsea Sales Director Graham Cheyne said, "The South China Sea deepwater market is crucial for our growth strategy going forward and the contract win further enhances our presence in China. The opening of our new base in the Shekou industrial zone positions us perfectly to provide our customers in China with high quality service offshore and onshore.

"Our investment in technology innovation and infrastructure in China, coupled with the dedication to ongoing training and personal development, means we are well positioned to provide bespoke engineering solutions to our China customer base."

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Northern Petroleum Could Sell Netherlands Operations

Northern Petroleum is considering the sale of its operations in the Netherlands as part of an extensive corporate review of its activities, the firm said Tuesday. The firm also announced that it plans to enter Canada and that it has upgraded its resource estimate at its Cygnus prospect in Italy.

Northern said that in the past year a number expressions of interest have been made to purchase its Netherlands assets and the firm has held negotiations with two parties. One party has made an offer for the Netherlands subsidiary while the other wants to buy both the Netherlands subsidiary and Northern's UK assets.

The company said that it has begun a new light-oil production redevelopment project in northern Alberta, Canada. It has acquired over 5,300 acres with an estimate potential to yield in excess of one million barrels of oil in place. The leased area contains 22 abandoned wells with 11 candidates currently identified as being capable of re-entry for further production.

Meanwhile, Northern said that its Cygnus prospect offshore Italy has now been mapped as an estimated un-risked prospective resource of up to 790 million barrels of recoverable oil within its F.R39.NP permit. The prospect is adjacent to and up-dip of the producing Aquila oil field.

"This project is materially valuable to shareholders and our efforts in Italy have now been concentrated upon this. Discussions are currently progressing with major industry partners to join with Northern to drill the prospect," Northern Managing Director Derek Musgrove said in a company statement.

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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Rail to Become New Key Player in Crude Transportation

Rail to Become New Key Player in Crude Transportation

While America has gone through an energy transformation, so have railways, thanks to shale production growing faster than available pipeline space. Although rail is typically more costly than pipelines, railcars are able to reach markets that pipelines don't, particularly North Dakota's Bakken formation, yielding higher prices for producers.

This trend is not temporary. Small amounts of crude have long been transported by rail, but since 2009, the increased movements have been significant. U.S. railways have seen a boost in transportation of crude oil and petroleum products in the first half of 2012 by about 38 percent, compared to the same period in 2011, according to the U.S. Energy Information Administration.

"Rail is the new player in the infrastructure expo for oil. Five years ago nobody was talking about rail infrastructure," said IHS' Vice President of Upstream Research Andrew Slaugher at the recent IHS CERAWeek conference.

Rail deliveries of crude oil and petroleum products in June 2012 jumped 51 percent to 42,000 tanker cars from a year earlier to an average weekly record high of 10,500 tanker cars for that same month.

Furthermore, North Dakota produced 747,000 barrels a day in October 2012, up 50 percent from 2011, and an estimated 52 percent of the crude moved was by rail, versus 38 percent by pipeline, according to the North Dakota Pipeline Authority.

The most important shale plays for the rail industry are the Bakken in North Dakota and Montana; Barnett in Texas; and Marcellus in the east, explicitly in Pennsylvania, Ohio and New York.

"If recent patterns hold, crude oil movements by rail could easily surpass 600,000 barrels per day within a quarter or two," said Holly Arthur, Association of American Railroads (AAR) vice president of media and public relations, to Rigzone. "The movement of crude by rail is definitely growing at a fast pace."

Rail crude oil originations have risen for 11 straight quarters through the third quarter of 2012, according to AAR. And much of this crude is being shipped by Burlington Northern Santa Fe LLC (BNSF), transporting one-third of Bakken oil production alone with unit trains carrying up to 85,000 barrels of oil. BNSF witnessed a 60-percent increase in car loadings of crude oil and petroleum products during the first six months of 2012.

"We have garnered a lot of attention lately on our crude by rail, hauling about 525,000 barrels a day of crude oil, and we expect to be hauling about 700,000 barrels a day by the end of this year," said BNSF CEO Matthew Rose. "By year-end, we will have moved out of the Bakken about 350 million barrels of crude oil."

Historically, pipelines have been the main mode for transporting crude oil long distances. However, shale output is exceeding pipeline capacity and the time lag in planning and building new pipelines is causing producers to use railways to reach the most profitable refineries. It takes about 40 days for crude oil from the Bakken to reach the Gulf via pipeline while trains average about 90 hours each way, according to Credit Suisse analyst Chris Ceraso in a February 2013 research note.

Rose said rail is becoming the infrastructure of choice because of three components: flexibility, reliability, and safety.

By the end of 2014, BNSF will offer service from shale plays throughout North America to more than 50 in or around coastal refineries and ports by using both unit and manifest trains, while offering market participants enormous flexibility to shift products quickly to different places in response to market needs and price opportunities.

In recent years, U.S. railroad companies have been reinvesting in their businesses, about $23 billion was invested in 2011 to create and maintain a healthy freight rail network, according to AAR.

"Every dollar of investment in rail infrastructure generates another $3 in economic activity," said Arthur.

"The enormous flexibility that the rails have to respond to rapidly changing and unforeseeable market conditions is a tremendous asset that should ensure the industry's long-term sustainability in the shale revolution," Ceraso stated.

With tighter Environmental Protection Agency regulations set for 2015 and the 10 million gallons of diesel U.S. railroads use in a day (at a cost of $31 million per day), BNSF has started to look at natural gas as a fuel.

The company will begin testing a small number of locomotives using liquefied natural gas as an alternative fuel in the second half of the year, Rose announced at CERAWeek. Natural gas could help railroads lower emissions and save on rising diesel fuel prices.

BNSF is working with two principal locomotive manufacturers, GE and EMD, a unit of Caterpillar, to develop the technology that will be used in the pilot program. The company originally launched this program in the late 80s and operated the LNG trains for about two years, but eventually shelved the project due to high LNG prices.

The company re-launched the project about two years ago due to improved economics and technology. The pilot will be the first step in how the technology can be implemented with hopes of reducing rail diesel consumption by about 76 percent.

"It's really transformational for our industry, specifically BNSF. This will be the largest change from the C locomotive to the diesel locomotive," said Rose. "It makes tremendous societal sense in terms of reducing our emissions that we put into the environment as well as providing a more competitive rail product versus the highway that suffers mightily from underfunding. But, its like everything else, any great idea comes with lots of challenges and this one certainly will as well."

Over the next year, the company will work with federal regulators to determine the safety of the new LNG fuel tanks, devise new supply systems for delivering the gas to the train depots and train employees in how-to and safety.

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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