Saturday, June 1, 2013

Crude-Oil Futures Settle up 1.6% at 5-Week High of $96.34/Barrel

U.S. crude-oil futures jumped 1.6% Tuesday to a five-week high spurred by signs of economic improvement in the world's biggest oil-consumer.

"The market is embracing the fact that the U.S. economy is doing better," said Phil Flynn, broker and analyst at Price Futures.

Benchmark oil futures also were aided in their push to the biggest single-day rise this year by continuing signs that a glut of oil in the Midwest--that weighed on prices--is being drained off.

The Commerce Department said U.S. spending on durable goods rose 5.7%, topping the 4% increase forecast by economists in a Dow Jones Newswires poll. Traders looked favorably on the data, even as a jump in civilian aircraft orders helped mask a decline in business investment in big-ticket items.

The strong durable goods showing was joined by indications of recovery in the housing market. U.S. home prices rose more than expected during January from a year earlier, the biggest increase since the summer of 2006, according to Standard & Poor's Case-Shiller home-price indexes.

But the Conference Board said U.S. consumer confidence fell more than eight points to 59.7 in March, amid economic uncertainty created by mandated federal budget cuts.

Andy Lebow, senior vice president for energy futures at Jefferies Bache LLC, said "traders live in great hope that the economic data translates into higher oil demand."

Light, sweet crude oil for May delivery on the New York Mercantile Exchange settled 1.6% higher at $96.34 a barrel, the highest price since Feb. 19. Front-month crude oil has gained 4.2%, or $3.89 a barrel in the past three sessions, vaulting higher after breaking through the top of a $91-$94 trading range that framed prices for the past month.

May ICE North Sea Brent crude oil settled $1.19 a barrel higher, $109.36 a barrel.

Brent's premium to the U.S. benchmark, which stood at $20 a month ago, dropped back to $13.02 a barrel, the lowest level since July 3, after falling below $12 a barrel in intraday trading.

Rising flows of North Sea oil after production snags were resolved in recent weeks is keeping pressure on Brent, as is weaker demand in Europe caused by refinery maintenance and the economic slowdown.

Gene McGillian, broker and analyst at Tradition Energy, said new investors continue to emerge in the market buying the Nymex contract and selling the Brent contract.

The U.S. benchmark has been gaining at the expense of Brent as increased volumes of domestic oil are moving out of the chokepoint at Cushing, Okla. down to Gulf Coast refineries, where they are grabbing market share from imported crudes and depressing Brent prices.

"We've seen Cushing levels drop below 50 million barrels as the bottleneck is easing," he said. "We've seen draws for the past two weeks and people are expecting more as folks are moving barrels by trains and trucks as well as the pipeline. That's really added more fuel to the bulls' fire."

Upcoming U.S. oil inventory data is expected to show crude oil stocks rose, despite a modest gain in refinery operations last week.

According to early estimates from five analysts surveyed by Dow Jones Newswires, U.S. crude oil inventories rose by 700,000 barrels in the week ended March 22.

The closely watched government survey from the Energy Information Administration is due to be released at 10:30 a.m. EDT Wednesday. The American Petroleum Institute, an industry group, is due to report its own data at 4:30 p.m. EDT Tuesday.

Forecasters expect the data to show gasoline stocks dropped by 900,000 barrels, while distillate stocks (heating oil and diesel fuel) fell by 600,000 barrels. Refiners are expected to boost operations by 0.3 percentage point to 83.8% of capacity, based on EIA's data.

Mark Waggoner, president of Excel Futures, said he expects declines in inventories of refined products, especially gasoline, will keep prices support as the spring-summer driving season approaches, boosting fuel demand.

April-delivery reformulated blendstock gasoline futures settled 4.8 cents higher, at $3.1106 a gallon. April heating oil settled 0.41 cent higher, at $2.8813 a gallon.

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

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First Oil in Sight at Huntington

The Huntington oil and gas field, located on Block 22/14b in the UK sector of the North Sea, is on track to commence production by the end of the month.

Sevan Marine reported that all risers are connected to the FPSO Voyageur Spirit as well as the entire Huntington system, from the wells to the FPSO. The final preparations for first oil and pre-commissioning are expected to take place shortly, Sevan Marine said in a released statement.

The transfer of title to the unit will commence upon first oil, which is dependent upon weather conditions and completion of certain final technical work.

Huntington's production facilities will have a capacity of 30,000 barrels of oil per day. Produced oil will be stored in the vessel's integrated tanks before it is shipped to the market with shuttle tankers, while natural gas will be exported via pipeline.

E.ON Ruhrgas UK E&P is the operator of the oil field, owning a 25 percent interest in the license. Other partners in the license include Altinex Oil Limited (20%), Premier (40%), and Carrizo Oil & Gas, Inc. (15%).

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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First Oil in Sight at Huntington

The Huntington oil and gas field, located on Block 22/14b in the UK sector of the North Sea, is on track to commence production by the end of the month.

Sevan Marine reported that all risers are connected to the FPSO Voyageur Spirit as well as the entire Huntington system, from the wells to the FPSO. The final preparations for first oil and pre-commissioning are expected to take place shortly, Sevan Marine said in a released statement.

The transfer of title to the unit will commence upon first oil, which is dependent upon weather conditions and completion of certain final technical work.

Huntington's production facilities will have a capacity of 30,000 barrels of oil per day. Produced oil will be stored in the vessel's integrated tanks before it is shipped to the market with shuttle tankers, while natural gas will be exported via pipeline.

E.ON Ruhrgas UK E&P is the operator of the oil field, owning a 25 percent interest in the license. Other partners in the license include Altinex Oil Limited (20%), Premier (40%), and Carrizo Oil & Gas, Inc. (15%).

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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Finalists Selected for UK O&G Safety Awards

Industry body Oil & Gas UK reported Wednesday that it and its partner Step Change in Safety have shortlisted the finalists for the 2013 UK Oil and Gas Safety Awards. Seven awards will be presented on the day of the event, which is scheduled for April 24 at the Aberdeen Exhibition and Conference Centre.

A new prize has been created this year: an Award for Workforce Engagement, which will be contested by Shell UK, Cosalt Offshore and Global Producer 3.

Other awards for Safety Leadership, Safety Representative of the Year, Preventative Safety Action, Most Promising Individual, Innovation in Safety and Ideas in Safety will see 15 other firms – including majors and independents like BP, Marathon, Nexen and TAQA Bratani – considered for recognition.

Oil & Gas UK Health and Safety Director Robert Paterson commented in a statement:

"Once again, I'm pleased to say we've seen a very high calibre of entries to the UK Oil and Gas Industry Safety Awards. I'd like to congratulate all the finalists and wish them all the very best of luck on the day."

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EnQuest Cuts 2013 Production Forecast due to Brent Shutdown

North Sea-focused independent EnQuest reported Wednesday that it has reduced its guidance for production during the whole of 2013 by approximately 1,000 barrels of oil equivalent per day (boepd), mainly as a result of shutdowns involving the Brent pipeline during the first quarter.

Reporting its results for 2012, EnQuest said that it now expects average production for 2013 to come in at between 22,000 boepd and 27,000 boepd. For 2012, EnQuest reported average production of 22,802 boepd – down 3.8 percent on 2011.

Meanwhile, the firm added that it expects to drill 12 wells during 2013. These will include six production wells, three injection wells and three exploration/appraisal wells.

Capital expenditure for 2013 is expected to be approximately $750 million, with around $350 million invested in EnQuest's Alma/Galia development located on the P1825 license, Block 30/24b, in the UK North Sea. The development is scheduled to begin in 4Q 2013.

$75 million has been earmarked as pre-development expenditure for the North Sea's Kraken development prior to the submission of the project's field development plan. First oil from Kraken is targeted for 2016.

Appraisal wells will be drilled at Cairngorm and Kraken during 2013, while the firm also expects to drill an exploration/appraisal well in the Sabah area, offshore Malaysia.

Oil sector analysts at JPMorgan Cazenove noted that the Alma/Galia and Kraken projects remain on track. "These major projects at the main drivers behind EnQuest's medium term production growth, and they reduce EnQuest's reliance on third party infrastructure," they said.

EnQuest's results for 2012 showed that the firm's proved and probable reserves stood at 128.6 million barrels of oil equivalent at the start of 2013 – an 11-percent increase compared with the start of 2012. Meanwhile, the firm's UK production licenses increased from 22 at the start of 2012 to 39 by the end of the year – with 11 licenses coming from the UK's 27th Licensing Round. 

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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Chevron's Board to Cut Compensation for Executives Due to Safety Issues

Chevron Corp.'s board is cutting compensation for its chief executive and other top executives in the wake of a string of accidents and other operational problems since late 2011, according to people familiar with the matter.

Chevron's board on Wednesday trimmed equity awards by 11% and bonuses by at least 10% for Chairman and CEO John S. Watson and several other executives, one of the people said.

"When things go poorly, the pay should reflect it," this person said. The directors "absolutely want to deliver a message to management."

Chevron has been performing well financially. But in February, the company disclosed it reduced the number of stock-options and performance shares awarded to Mr. Watson from last year, without revealing the bonus cuts or explaining the cause of the reductions. Mr. Watson's 2012 compensation package was valued at $24.7 million, about half of which came from equity grants awarded the previous year.

The same equity awards, which are tied to how Chevron's stock performs, were reduced for four other top executives, according to filings with the U.S. Securities and Exchange Commission.

Lloyd Avram, a spokesman for the company, said the board was still meeting.

"The company does not have a comment to provide until such time as the board meeting has concluded," he said.

Unlike other oil companies criticized in recent years for lavishly rewarding top brass, Chevron's executive pay practices have not prompted controversy among shareholders. An advisory vote on its compensation for 2012 was supported by 95% of votes cast at Chevron's annual meeting last year.

The San Ramon, Calif.-based energy giant has been leading its peers in profit and stock performance; shares are up 12% this year, outperforming larger rival Exxon Mobil Corp., and its $233 billion stock-market value recently topped that of Royal Dutch Shell PLC.

But Chevron has also suffered a string of operational setbacks since late 2011. Oil leaks from the seafloor at its Frade field off the Brazilian coast in November 2011 and March 2012 led the company to halt production there, forfeiting daily production of 29,000 barrels of oil and its equivalent in natural gas. The field has yet to restart and Chevron is still fighting the resulting legal quagmire.

In January 2012, a drilling rig in Nigeria operated by a Chevron subsidiary exploded, resulting in two deaths. And in August 2012, a huge fire broke out at its Richmond refinery after a badly corroded pipe ruptured. A state agency said in January it would seek fines totaling nearly $1 million for the incident.

Safety has become critical for oil companies operating under increasingly tough regulatory scrutiny, a concern heightened by the 2010 BP PLC Gulf of Mexico oil spill.

Mr. Watson earlier this month touted Chevron's safety performance to analysts in New York, saying that its 250,000 employees had a total of 70 injuries that required them to miss a day of work last year.

"That's not just the best in the industry, it's world-class performance," he said, adding that the company still had room to improve.

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

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Turkey Suspends ENI Energy Deals over Cyprus Exploration

Turkey Suspends ENI Energy Deals over Cyprus Exploration

Turkey has suspended energy deals with ENI over the Italian firm's involvement in exploring for oil and gas offshore Cyprus.

According to a report from the Anatolia news agency Wednesday, Turkish Energy Minister Taner Yildiz said: "We have decided not to work with ENI in Turkey, including suspending their ongoing projects."

ENI is a partner in the Samsun-Ceyhan pipeline project that is intended to deliver Russian and Kazakh oil to Turkey's Mediterranean coast. But this year has seen the firm sign license agreements that gave it and its partner Korea Gas Corporation the right to explore for hydrocarbons in blocks 2,3 and 9 within the Republic of Cyprus's Exclusive Economic Zone (EEZ), in the western part of the Levant Basin.

ENI CEO Paolo Scaroni confirmed Wednesday that the oil pipeline project is on hold. "I am sorry over the reaction from Turkey and I am hopeful we will find an accord," Dow Jones reported him as saying.

Turkey has long-demanded that oil and gas companies involved in bidding and acquiring licenses offshore Cyprus withdraw from deals made with the Republic of Cyprus. Rigzone reported May 18, 2012 that Turkey had threatened reprisals against several major companies that had made applications for licenses in the Mediterranean island's waters.

Cyprus has been divided on ethnic Turkish and Cypriot lines since a brief war in 1974 and the prospect of oil drilling in the EEZ has renewed tensions between Turkey and the currently cash-strapped Republic of Cyprus.

Yildiz recently declared that revenues generated from drilling offshore Cyprus should be shared between the Republic of Cyprus and its Turkish-dominated neighbor in the north of the island. Other oil and gas companies that have deals with the Republic of Cyprus include Total and Noble Energy, which has already found up to nine trillion cubic feet of gas in the country's waters at its Aphrodite discovery.

Last week, in a bid to avoid a punitive bail-out deal from the EU and the IMF the Republic of Cyprus was rumored to have considered a proposal from Gazprom to allow the Russian company to explore for offshore gas in return for a package that would see small country's books balanced.

Cypriot waters are not the only part of the Levant Basin where there is potential for disputes and conflict. Lebanon and its southern neighbor Israel are both keen to develop offshore oil and gas in their respective portions of the basin, with the pre-qualification period to apply for Lebanese licenses set to end tomorrow (March 28, 2013).

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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EPA Advisory Board Forms Panel to Peer Review Hydraulic Fracturing

The Environmental Protection Agency (EPA) has formed the Hydraulic Fracturing Research Advisory panel, consisting of an independent body to peer-review the agency’s research on hydraulic fracturing and its potential impact on drinking water resources.

"Serious concerns have been raised by citizens and their representatives about the potential impact of hydraulic fracturing on drinking water, human health and the environment,” EPA said on their website. “These concerns demand further study."

The Hydraulic Fracturing Research Advisory Panel, made up of 31 nationwide academics and experts, was created by EPA’s Science Advisory Board (SAB) to review a congressionally ordered 2014 draft report looking at the potential health impacts of hydraulic fracturing on drinking water resources.

EPA said it will conduct research using the best available science through independent sources of information, and will conduct the study in consultation with others using a transparent, peer-reviewed process. Furthermore, EPA noted that this study is intended to both provide the data where there is a lack of adequate information and to contribute to resolving scientific uncertainties.

In March 2010, EPA announced that Congress directed the organization to conduct the study. The draft study plan was submitted to EPA’s Science Advisory Board (SAB) for review in March 2011 with a final draft report expected for release for public comment and peer review in late 2014.

"Our final report on the potential impacts of hydraulic fracturing on drinking water resources must be based on sound science and take into account the latest practices being used by the industry,” Acting Administrator Bob Perciasepe said in a written statement. “We have worked to ensure that the study process be open and transparent throughout, and the SAB panel is another example of our approach of openness and scientific rigor."

The SAB sought public nominations of nationally and internationally recognized scientists and engineers having experience and expertise related to hydraulic fracturing in an August 2012 Federal Register notice.

SAB is scheduled to convene on May 7 and 8, 2013 to provide feedback from the panel members regarding EPA’s 2012 progress report on the study. The public will also have the opportunity to provide comments for the panel’s consideration, noted EPA.

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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Brazil's OGX Evaluating Funding Options for Concession Auction

RIO DE JANEIRO - Brazilian independent oil producer OGX Petroleo e Gas Participacoes SA plans to invest $1.3 billion in 2013, but that total doesn't include the company's potential participation in an important new auction of oil and natural-gas concessions, OGX's chief financial officer said Wednesday.

"We think that it is interesting for us to participate in the 11th bid round," CFO Roberto Monteiro said during a conference call with analysts. "But we are not disclosing at the moment how much we want to spend or even if we will participate."

Brazil is scheduled to hold the country's 11th auction of oil and natural-gas exploration blocks in May, the first such sale since December 2008.

OGX, part of billionaire Brazilian businessman Eike Batista's industrial empire, doesn't have the financial wiggle room to take on more debt, so participating in Brazil's 11th round auction of oil and natural-gas concessions will require "capital discipline," Mr. Monteiro said. OGX ended 2012 with $1.7 billion in cash.

Among the "alternatives" listed by Mr. Monteiro was a potential sale of a stake in some of OGX's exploration blocks and oil fields, where the company retains majority stakes of between 70% and 100%.

"We have some options still open," he said.

OGX had previously planned to sell a stake in its blocks in the Campos Basin, but never completed a deal.

During the conference call to discuss OGX's fourth-quarter earnings, company officials admitted disappointment with crude-oil output at the Tubarao Azul field. Lower-than-expected production at the field has not only weighed on the company's shares since mid-2012, but also dragged down shares of other companies under Mr. Batista's EBX Group umbrella. The production has generated concern among investors about the ability of his companies to generate returns.

"Production levels in the first two production wells stabilized at a rate below our earlier projections," Chief Executive Luiz Carneiro said during the call. That could result in a reduction in estimates for recoverable reserves at Tubarao Azul, currently projected at 110 million barrels of crude, the CEO added.

OGX officials also said that just because output at Tubarao Azul has been a disappointment doesn't mean that the results can be "extrapolated" to other fields such as Tubarao Martelo, which is expected to start production by year-end, Mr. Carneiro said.

The OSX-2 and OSX-3 floating production platforms should arrive in Brazil in the third quarter, Mr. Monteiro said. OSX-2 will be installed at the Tubarao Tigre, Tubarao Gato and Tubarao Areia fields, while OSX-3 will produce from the Tubarao Martelo field, the executive said.

A well-head platform will also arrive for installation at Tubarao Martelo "sometime mid-next year," Mr. Monteiro said.

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

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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Turkey Suspends ENI Energy Deals over Cyprus Exploration

Turkey Suspends ENI Energy Deals over Cyprus Exploration

Turkey has suspended energy deals with ENI over the Italian firm's involvement in exploring for oil and gas offshore Cyprus.

According to a report from the Anatolia news agency Wednesday, Turkish Energy Minister Taner Yildiz said: "We have decided not to work with ENI in Turkey, including suspending their ongoing projects."

ENI is a partner in the Samsun-Ceyhan pipeline project that is intended to deliver Russian and Kazakh oil to Turkey's Mediterranean coast. But this year has seen the firm sign license agreements that gave it and its partner Korea Gas Corporation the right to explore for hydrocarbons in blocks 2,3 and 9 within the Republic of Cyprus's Exclusive Economic Zone (EEZ), in the western part of the Levant Basin.

ENI CEO Paolo Scaroni confirmed Wednesday that the oil pipeline project is on hold. "I am sorry over the reaction from Turkey and I am hopeful we will find an accord," Dow Jones reported him as saying.

Turkey has long-demanded that oil and gas companies involved in bidding and acquiring licenses offshore Cyprus withdraw from deals made with the Republic of Cyprus. Rigzone reported May 18, 2012 that Turkey had threatened reprisals against several major companies that had made applications for licenses in the Mediterranean island's waters.

Cyprus has been divided on ethnic Turkish and Cypriot lines since a brief war in 1974 and the prospect of oil drilling in the EEZ has renewed tensions between Turkey and the currently cash-strapped Republic of Cyprus.

Yildiz recently declared that revenues generated from drilling offshore Cyprus should be shared between the Republic of Cyprus and its Turkish-dominated neighbor in the north of the island. Other oil and gas companies that have deals with the Republic of Cyprus include Total and Noble Energy, which has already found up to nine trillion cubic feet of gas in the country's waters at its Aphrodite discovery.

Last week, in a bid to avoid a punitive bail-out deal from the EU and the IMF the Republic of Cyprus was rumored to have considered a proposal from Gazprom to allow the Russian company to explore for offshore gas in return for a package that would see small country's books balanced.

Cypriot waters are not the only part of the Levant Basin where there is potential for disputes and conflict. Lebanon and its southern neighbor Israel are both keen to develop offshore oil and gas in their respective portions of the basin, with the pre-qualification period to apply for Lebanese licenses set to end tomorrow (March 28, 2013).

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.

View the original article here