ExxonMobil Plans World's Biggest FLNG Facility

SYDNEY - ExxonMobil Corp. laid out plans for a development using the world's biggest floating natural gas processing plant, in a technically challenging move that underscores its bullish view on Asian demand for the fuel.

Exxon and partner BHP Billiton Ltd. want to anchor a vessel extending 495 meters--the equivalent of around five football pitches--at sea to tap into the remote Scarborough natural gas field offshore Western Australia. They're seeking government approval for the multibillion dollar project, and targeting first production as early as 2020.

Floating liquefied natural gas technology, known as FLNG, is untried but has captured the attention of some of the world's biggest energy companies seeking to access gas fields that are too small or remote to develop using pipelines and onshore facilities. Royal Dutch Shell PLC is a leading proponent of FLNG vessels, which it plans to deploy in Australia and possibly elsewhere.

The relative calm of the waters off Australia's northeastern coastline make the country a strong candidate to accommodate the world's first FLNG vessels. Its stable political environment and proximity to Asian markets that have a growing appetite for fuels that are cleaner than coal when burnt are also drawcards. According to the International Energy Agency, China's natural gas demand alone will more than quadruple to 545 billion cubic meters between 2011 and 2035.

However, companies like Exxon need to ensure their vessels can withstand stormy seas. One main concern is that the forces generated by liquefied gas sloshing in partially filled containers can damage the storage system. That issue is being addressed with containers designed to minimize sloshing and with elaborate anchoring systems that limit the movement of vessels in the water.

Exxon's proposed facility would produce between 6 million and 7 million metric tons of liquefied natural gas, or LNG, a year for several decades. The Scarborough resource was discovered in 1979 and is estimated to hold up to 10 trillion cubic feet of gas--equal to more than a third of the U.S.'s annual gas consumption.

Early design work would begin next year, ahead of a final investment decision in 2014-15, Exxon said in a filing to the federal government's environment department. A Melbourne-based spokeswoman for Exxon said FLNG has "the capacity to reduce our capital costs by removing the need for infrastructure" and has a smaller environmental footprint.

With close to a dozen natural-gas export terminals planned for its coastline, Australia is poised to leapfrog Qatar as the world's top exporter of LNG by the end of the decade. LNG is natural gas chilled to a liquid so that it can be shipped by tanker.

The industry, however, is facing increasing cost headwinds driven by a strong local currency and a shortage of skilled labor. Underscoring these challenges, Chevron Corp. and smaller joint venture partners including Exxon and Shell said in December the cost of building their giant Gorgon LNG project on the Western Australian coast had blown out by a fifth to 52 billion Australian dollars (US$54.4 billion).

The budget overruns come as Australia becomes increasingly likely to face rising competition from emerging gas-export industries in North America and Africa, which could make it tougher to secure customers.

FLNG is often touted by company executives as a means of mitigating cost pressures because much of the construction process occurs offshore in countries with cheaper sources of labor. Companies also don't have to pay for acquiring and clearing land.

"For some of the more economically challenged gas resources out there, floating LNG is going to take on a much higher profile," said Andrew Williams, a Melbourne-based energy analyst at RBC Capital Markets.

In 2011, Shell committed to use a FLNG vessel to process natural gas from its Prelude field in the Browse Basin offshore northwestern Australia. The vessel is due to begin producing 3.6 million tons of LNG each year from 2017.

Shell estimated that its project would cost between US$3 billion and US$3.5 billion for every 1 million tons of production capacity, or between US$10.8 billion and US$12.6 billion.

In its filing Tuesday, Exxon didn't estimate a cost for its Scarborough development.

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

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Study: Fracking May Boost California's Economy, Adding 2.8M Jobs

Development of California's Monterey shale formation can play the major role in the state's future economic well-being, noted a recent study, "Powering California: The Monterey Shale and California's Economic Future", released by the University of Southern California (USC) and Los Angeles-based think tank Communications Institute.

California's Monterey shale is estimated to hold 15 billion barrels of oil and development of the 1,750-square mile formation in central California could generate half a million new jobs by 2015 and 2.5 million jobs by 2020.

"This report provides an indication that there is one potential bright spot in California's economic future: the increased production of energy," the report stated. "California has long served as the incubator for emerging energy sources and technologies, as the state has taken advantage of both technology and its natural resources to become a leader in the generation of renewable energy. Now, these same technological and resource advantages can allow the state to return to leadership in the production of oil."

The Monterey/Santos play, a prolific source rock for many of California's large oil fields, is considered by far the largest shale oil formation in the United States, roughly two-thirds of total oil shale potential. By those numbers, the Monterey reserves trump the Bakken and Eagle Ford fields.

This new onshore oil play can easily pump up the nation's oil output by 25 percent in just a few years and help the state's local energy picture. California has more recoverable reserves in shale than nearby big oil-producing countries, according to a July 2012 report issued by the U.S. Energy Information Administration (EIA).

To tap this prolific shale play, horizontal drilling and hydraulic fracturing would most likely be used, which has riled environmentalists to oppose this widely-used drilling technique. And much pressure has been placed on California's Governor Jerry Brown, a Democrat, but the opposite has occurred.

"We want to get the greenhouse gas emissions down, but we also want to keep our economy going," he said at a March 13 press conference, Reuters reported. "That's the balance that's required. The fossil fuel deposits in California are incredible, the potential is extraordinary. But between now and development lies a lot of questions that need to be answered."

The study forecasts that the state could greatly benefit, about $4.5 billion in oil-related tax revenue in 2015 and $24.6 billion by 2020. California boasts perhaps the largest deep-shale reserves in the world – reserves that, unlike elsewhere, hold the promise for an unprecedented volume of advanced crude oil production, the study noted. California's well-known offshore reserves contain more than 10 billion barrels of oil and nearly 12 trillion cubic feet of natural gas but the onshore play is projected to hold even more oil – more than 15 billion barrels, according to the EIA.

"Gov. Brown is trying to do what he feels is best for California and he realizes that much of the negative publicity was not based on an understanding of the facts," stated Don Clarke, a Los Angeles consulting geologist, in an interview with Rigzone. "We must protect the environment and any Monterey development can only be done with proper consideration to the environment and especially the groundwater."

Development of the oil-shale deposits may boost the state's economic activity by as much as 14.3 percent, the study said. And with that, increasing the state's per-capita gross domestic product (GDP).

"California, whose Monterey Formation alone is estimated to be four times larger than North Dakota's Bakken reserve, has chosen… to sharply limit its fossil-fuel industry. As a result, it has generated barely one-tenth the new fossil-fuel jobs in archrival Texas. Not surprisingly, California … lagged behind in GDP and income growth, while the energy states have for the most part enjoyed the strongest gains," author Joel Kotkin said Dec. 7 in the Daily Beast.

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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Schlumberger and PdVSA Working Things Out

Schlumberger Ltd. said Monday it expects to keep working in Venezuela and is on the way to resolving its problems with that nation's state-run oil giant, which owes the oil-service provider hundreds of millions of dollars.

The announcement came two weeks after Schlumberger Chief Executive Paal Kibsgaards cited "collection issues" while saying that the company would "temporarily" cut back on activity.

Venezuela depends on international oilfield-services companies' help it develop its vast oil resources, analysts say. But they add that the country's government also relies on its national oil company, Petroleos de Venezuela, or PdVSA, as a source of cash to finance some social programs--leaving it short on cash at times.

Venezuela's oil minister, Rafael Ramirez, told reporters on March 22 that PdVSA's debts to service providers rose by 35% in 2012 compared with the previous year, when it said it owed service providers more than $12 billion.

PdVSA has not yet released its complete 2012 financial results, but said in a report on its website that its total debt rose 15% to $40 billion last year.

Still, Schlumberger has offered few specifics on what has changed in its relationship with PdVSA that led the company to stay.

Mr. Kibsgaards, in a statement posted on the company's website Sunday, said that collections from Venezuela have improved to the point where the company will recognize revenue from Venezuela in its first-quarter operations.

"We further expect to finalize a new payment agreement with PdVSA," he said, adding, "we anticipate ramping up activity to meet the current and future needs [of PdVSA]."

Schlumberger wrote in its most recent annual report that Venezuela accounts for between 5% and 10% of its outstanding payment balance, which puts the amount it is owed at $650 million and $1 billion--one of only five countries to account for that much.

Last month, after Mr. Kibsgaards's comments on cutting back on activities, Oil Minister Ramirez, who is also PdVSA's chief, said that many statements were taken out of context by various media outlets, incorrectly suggesting tensions were high between PdVSA and its partners.

Mr. Ramirez said he was visited by the Schlumberger head and had a "very good meeting" where "we clarified all of the issues."

"We don't just resolve our problems through the microphone. We called the president of Schlumberger. He showed up yesterday," Mr. Ramirez told reporters at the PdVSA headquarters in Caracas on March 22. He added that the Schlumberger chief will return to Venezuela at the end of April to tour the Orinoco heavy oil belt with PdVSA officials "to see the big push our guys are making out there in drilling and production."

In securities filings, several oil-field-services companies have complained about delayed payments from PdVSA and have said they are owed hundreds of millions of dollars for their work there, in addition to write-downs some have had to take after Venezuela announced a surprise devaluation of its currency earlier this year.

Barclays analyst James West said Monday that Schlumberger "took a hard line" with PdVSA, and the Schlumberger report of progress on the issue is good news for the other Big Four services companies--Halliburton Co., Baker Hughes Inc. and Weatherford International, which all have significant operations in Venezuela.

Mr. West said that although there have been periods of nonpayment in Venezuela depending on what else is going on in the country politically, some 95% of all receivables have been paid eventually.

"It ebbs and flows. When there's an election, PdVSA tends to stop paying," he said. "Usually over time, the majority of it is resolved for the big services companies."

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

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Study: Fracking May Boost California's Economy, Adding 2.8M Jobs

Development of California's Monterey shale formation can play the major role in the state's future economic well-being, noted a recent study, "Powering California: The Monterey Shale and California's Economic Future", released by the University of Southern California (USC) and Los Angeles-based think tank Communications Institute.

California's Monterey shale is estimated to hold 15 billion barrels of oil and development of the 1,750-square mile formation in central California could generate half a million new jobs by 2015 and 2.5 million jobs by 2020.

"This report provides an indication that there is one potential bright spot in California's economic future: the increased production of energy," the report stated. "California has long served as the incubator for emerging energy sources and technologies, as the state has taken advantage of both technology and its natural resources to become a leader in the generation of renewable energy. Now, these same technological and resource advantages can allow the state to return to leadership in the production of oil."

The Monterey/Santos play, a prolific source rock for many of California's large oil fields, is considered by far the largest shale oil formation in the United States, roughly two-thirds of total oil shale potential. By those numbers, the Monterey reserves trump the Bakken and Eagle Ford fields.

This new onshore oil play can easily pump up the nation's oil output by 25 percent in just a few years and help the state's local energy picture. California has more recoverable reserves in shale than nearby big oil-producing countries, according to a July 2012 report issued by the U.S. Energy Information Administration (EIA).

To tap this prolific shale play, horizontal drilling and hydraulic fracturing would most likely be used, which has riled environmentalists to oppose this widely-used drilling technique. And much pressure has been placed on California's Governor Jerry Brown, a Democrat, but the opposite has occurred.

"We want to get the greenhouse gas emissions down, but we also want to keep our economy going," he said at a March 13 press conference, Reuters reported. "That's the balance that's required. The fossil fuel deposits in California are incredible, the potential is extraordinary. But between now and development lies a lot of questions that need to be answered."

The study forecasts that the state could greatly benefit, about $4.5 billion in oil-related tax revenue in 2015 and $24.6 billion by 2020. California boasts perhaps the largest deep-shale reserves in the world – reserves that, unlike elsewhere, hold the promise for an unprecedented volume of advanced crude oil production, the study noted. California's well-known offshore reserves contain more than 10 billion barrels of oil and nearly 12 trillion cubic feet of natural gas but the onshore play is projected to hold even more oil – more than 15 billion barrels, according to the EIA.

"Gov. Brown is trying to do what he feels is best for California and he realizes that much of the negative publicity was not based on an understanding of the facts," stated Don Clarke, a Los Angeles consulting geologist, in an interview with Rigzone. "We must protect the environment and any Monterey development can only be done with proper consideration to the environment and especially the groundwater."

Development of the oil-shale deposits may boost the state's economic activity by as much as 14.3 percent, the study said. And with that, increasing the state's per-capita gross domestic product (GDP).

"California, whose Monterey Formation alone is estimated to be four times larger than North Dakota's Bakken reserve, has chosen… to sharply limit its fossil-fuel industry. As a result, it has generated barely one-tenth the new fossil-fuel jobs in archrival Texas. Not surprisingly, California … lagged behind in GDP and income growth, while the energy states have for the most part enjoyed the strongest gains," author Joel Kotkin said Dec. 7 in the Daily Beast.

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 16 Cents Lower; Brent Climbs 1%

Global benchmark oil prices diverged sharply Monday, with North Sea Brent crude gaining on concerns over the shutdown of a U.S. pipeline in the key Gulf Coast refining region.

U.S. crude oil futures on the New York Mercantile Exchange settled 16 cents lower, at $97.07 a barrel, on profit taking after a 5.2% gain over the previous five sessions.

Traders, meantime, bid up the price of North Sea Brent crude oil futures on the belief that oil imports that compete with Brent will be strongly sought after by U.S. Gulf Coast refiners after the closure of Exxon Mobil's Pegasus Pipeline.

The 95,000 barrels a day pipeline that brings Canadian crude oil from Patoka, Ill. to Nederland, Texas was closed Friday after a leak on a section in Arkansas. The company hasn't given a likely date for restarting the line yet.

Analysts said the closure of the pipeline means that crude oil inventories will continue to build up at bottlenecks in the middle of the country, such as the Cushing, Okla. terminal that is the delivery point for the Nymex crude oil futures contract. Refiners have in recent week increased the volumes of oil that they move from Cushing, using shipments by rail and truck to augment stunted pipeline flows.

Expectations of a strong and steady draining of inventories at Cushing have brought strong pressure to bear on Brent prices in recent week and lifted the value of the Nymex benchmark contract. Greater moves of oil out of Cushing would make Gulf refiners less dependent on crude oil imports, which are priced against Brent, a global benchmark and would bolster U.S. crude oil prices. "Brent has dropped so much recently that we are seeing a turnaround in that now," said Gene McGillian, analyst and broker at Tradition Energy.

ICE North Sea Brent for May delivery was up $1.07, or 1%, at $111.09 a barrel late Monday. Brent posted a premium of $14.02 a barrel to the Nymex contract, the most since March 21. Brent ended March at $12.79 a barrel above the Nymex contract, down from a premium at the end of February of $19.33 a barrel.

Mr. McGillian said prices of U.S. oils were also undermined by indications of slower than expected growth in the manufacturing sectors in both the U.S. and China, the world's top two oil consumers.

Meantime, traders also are concerned about rising oil inventories in the U.S.

U.S. crude oil inventories rose 1.9 million barrels in the week ended March 29, according to early estimates from five analysts surveyed by Dow Jones Newswires. A rise of that size would put crude stocks at their highest level since July 1990 and at their highest end March level since 1931.

The closely watched government inventory data from the Energy Information Administration is due to be released at 10:30 a.m. EDT Wednesday. The American Petroleum Institute, a trade group, releases its data at 4:30 p.m. EDT on Tuesday.

Gasoline stocks are expected to drop by 300,000 barrels, while distillate stocks, comprising heating oil and diesel fuel, were expected to fall 400,000 barrels. Refiners, returning from maintenance work, are expected to boost capacity utilization by 0.4 percentage point to 86.1%.

Elsewhere, May heating oil settled up 2.17 cents, at $3.0687 a gallon, while May reformulated gasoline blendstock futures were 0.91 cent lower, at $3.1015 a gallon.

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

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Japan to Study Ice Gas Reserves

Japan is planning a three-year study into how much methane hydrate, or "ice gas", it has within its territorial waters in the Japan Sea over the next three years, the country's trade and industry minister said Tuesday.

Japan will also continue to develop technologies to extract natural gas from undersea methane hydrate reserves with the aim of making commercialization of the process viable by as early as 2023, Minister of Economy, Trade and Industry Toshimitsu Motegi said Tuesday.

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.

Japan Oil, Gas and Metals National Corporation (JOGMEC) reported March 12 that it successfully extracted natural gas from methane hydrate deposits from under the seabed offshore Japan.

Dow Jones Newswires contributed to this article.

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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NOV TDS-11 500 Ton Top Drive Drilling System Package – Rebuilt

NOV TDS-11, 500 Ton Top Drive Drilling System Package that Includes the following:

Technical specification:

Load path: 500 Ton
Mud path: 5000 PSI
Motor rating: Two (2) 400 HP AC motors

Torque rating:
55,000 ft-lb @ breakout (intermittent)
48,000 ft-lb @ makeup (intermittent)
37,000 ft-lb @ (continuous)
220 RPM

Stack up height 18’

Weight 30,000 lbs

Local blower for top drive cooling

Bail for block interface for a standard hook application

PH 75 pipe handler that includes a dual crank upper safety valve

Gooseneck with fig 4” 1002 connection

Hydraulic power unit mounted to top drive

Top drive shipping skid suitable for tail boarding

Top drive VFD house includes:

VFD (AC drive)

Top drive control system with mcc to run required auxiliary motors.

Set up to operate at 600 VAC 60 Hz

Insulated building with required air conditioning and lighting

Suitable plug board for quick rig up and down

Top drive control console includes:

All control buttons and meters to operate the top drive unit

Stainless steel enclosure that can be purged to meet zone requirements

Control wires and plugs between control house and console

Top drive rig specific interface includes:

Guide beam suitable for a standard 142 foot triple mast

Tie back kit for attaching the guide beam to the mast

Service loop kit includes:

Cables to reach from the top drive to the control house

Set up for a standard 142 mast and has 120’ of tails from the saddle assembly to the control house

Saddle kit with hardware to mount to the mast

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Study: Fracking May Boost California's Economy, Adding 2.8M Jobs

Development of California's Monterey shale formation can play the major role in the state's future economic well-being, noted a recent study, "Powering California: The Monterey Shale and California's Economic Future", released by the University of Southern California (USC) and Los Angeles-based think tank Communications Institute.

California's Monterey shale is estimated to hold 15 billion barrels of oil and development of the 1,750-square mile formation in central California could generate half a million new jobs by 2015 and 2.5 million jobs by 2020.

"This report provides an indication that there is one potential bright spot in California's economic future: the increased production of energy," the report stated. "California has long served as the incubator for emerging energy sources and technologies, as the state has taken advantage of both technology and its natural resources to become a leader in the generation of renewable energy. Now, these same technological and resource advantages can allow the state to return to leadership in the production of oil."

The Monterey/Santos play, a prolific source rock for many of California's large oil fields, is considered by far the largest shale oil formation in the United States, roughly two-thirds of total oil shale potential. By those numbers, the Monterey reserves trump the Bakken and Eagle Ford fields.

This new onshore oil play can easily pump up the nation's oil output by 25 percent in just a few years and help the state's local energy picture. California has more recoverable reserves in shale than nearby big oil-producing countries, according to a July 2012 report issued by the U.S. Energy Information Administration (EIA).

To tap this prolific shale play, horizontal drilling and hydraulic fracturing would most likely be used, which has riled environmentalists to oppose this widely-used drilling technique. And much pressure has been placed on California's Governor Jerry Brown, a Democrat, but the opposite has occurred.

"We want to get the greenhouse gas emissions down, but we also want to keep our economy going," he said at a March 13 press conference, Reuters reported. "That's the balance that's required. The fossil fuel deposits in California are incredible, the potential is extraordinary. But between now and development lies a lot of questions that need to be answered."

The study forecasts that the state could greatly benefit, about $4.5 billion in oil-related tax revenue in 2015 and $24.6 billion by 2020. California boasts perhaps the largest deep-shale reserves in the world – reserves that, unlike elsewhere, hold the promise for an unprecedented volume of advanced crude oil production, the study noted. California's well-known offshore reserves contain more than 10 billion barrels of oil and nearly 12 trillion cubic feet of natural gas but the onshore play is projected to hold even more oil – more than 15 billion barrels, according to the EIA.

"Gov. Brown is trying to do what he feels is best for California and he realizes that much of the negative publicity was not based on an understanding of the facts," stated Don Clarke, a Los Angeles consulting geologist, in an interview with Rigzone. "We must protect the environment and any Monterey development can only be done with proper consideration to the environment and especially the groundwater."

Development of the oil-shale deposits may boost the state's economic activity by as much as 14.3 percent, the study said. And with that, increasing the state's per-capita gross domestic product (GDP).

"California, whose Monterey Formation alone is estimated to be four times larger than North Dakota's Bakken reserve, has chosen… to sharply limit its fossil-fuel industry. As a result, it has generated barely one-tenth the new fossil-fuel jobs in archrival Texas. Not surprisingly, California … lagged behind in GDP and income growth, while the energy states have for the most part enjoyed the strongest gains," author Joel Kotkin said Dec. 7 in the Daily Beast.

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.

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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Sea Dragon Boosts Output in Egypt

Sea Dragon Energy Inc. announced the following operational update for its recent work activities in Egypt.

The company's net production in Egypt averaged 1,526 barrels of oil per day (bopd) in the month of January 2013 and has now reached 1,840 barrels of oil equivalent per day (boepd) or 1,720 bopd and 120 boepd in gas and NGL's. In NW Gemsa, oil production is averaging 9,900 bopd gross (990 bopd net), while gas and NGL's are adding another 1,200 boepd gross (120 boepd net). In Kom Ombo, production is averaging 500 bopd gross (250 bopd net); while in Shukhier Marine the company is producing 480 bopd.

Over the past two months, Sea Dragon has also been able to collect a significant percentage of its aging receivables thus enabling it to reduce the receivables amount to $4.63 million and the age of its receivables to two months based on current production.

Current production from the Al Amir SE and Geyad fields is approximately 9,900 bopd gross (990 bopd net). Total production, including solution gas and natural gas liquids, is approximately 11,100 boepd gross (1,110 boepd net). The concession has eight current oil producers at Al Amir SE field, two at Al Ola and five at Geyad. Cumulative production from the NW Gemsa Concession has now exceeded 10.6 million barrels of 42 degree API Crude oil.

Water injection is ongoing with three injectors currently operating at Al Amir SE Field and one injector at Geyad Field. Current total injection rates are approximately 17,800 bopd. Cumulative injection to date is 6.9 million barrels at Al Amir SE and 1.7 million barrels at Geyad.

Al Amir SE-16 Well

This well is now being completed as a Shagar water injector. The well was spud Feb. 28 and successfully drilled to its total depth of 11,000 feet in the Upper Rudeis Formation. It encountered 27 feet of good quality wet sand in the shagar member of the Karim Formation in the interval 10,807.5 to 10,834.5 feet. This well will add another water injection point in the field, which will improve sweep efficiency and maximize oil recovery.

Future Plans

Beyond the completion of Al Amir SE-16, future plans at NW Gemsa include the drilling of two additional water injectors, one producer and one exploration well in 2013.

The NW Gemsa concession is located onshore on the west side of the Gulf of Suez, approximately 186 miles (300 kilometers) southeast of Cairo. Two main oil fields are producing light oil, the Al Amir SE field along with the Al Ola extension to the south and the Geyad field to the north. Sea Dragon has a 10 percent working interest in the NW Gemsa Concession with Vegas oil and gas at 50 percent, as operator and Circle Oil PLC with 40 percent.

The Shukheir Marine Concession contains both the Shukheir Bay and Gamma development leases.

Current production from the concession is 480 bopd. Sea Dragon is the sole owner and operator of the concession.

Shukheir Bay #5 Well Work-Over

Following the successful completion of work-over operations on this well, it has now recovered its kill fluid and restored its pre work-over production of 380 bopd. The SHB-5 well produces from the Upper and Lower Rudeis sands within the Shukheir Bay field. The well began production in 2006 and has produced over 1.1 million barrels of oil to date.

Future Plans

The company continues to plan an acid stimulation treatment in the Gamma #1 well which may add 100 bopd.

Exploratory drilling opportunities also exist in the Gamma lease, prospecting the prolific Nubia Formation and in the Shukheir Bay lease in the Upper and Lower Rudeis Formations. The Company is currently re-mapping its 3-D seismic coverage in the area to evaluate these opportunities.

The Shukheir Marine Concession is located in the shallow offshore waters of the Gulf of Suez approximately 186 miles (300 kilometers) southeast of Cairo. Following the acquisition of 100 percent interest in the concession which contains both the Shukheir Bay and Gamma oil fields, Sea Dragon began a comprehensive review of the upside potential believed to still exist in both fields.

Current production from the Al Baraka field is approximately 500 gross (250 net) bopd.

Future Plans

Plans are to monitor production from West Al Baraka-2 and then if warranted commence an appraisal/development drilling program which could involve the drilling of up to three new wells.

The Kom Ombo Concession is located onshore in the southern part of Egypt some 621 miles (1,000 kilometers) south of Cairo. It contains the Al Baraka and the newly discovered W. Al Baraka oilfields, producing light oil from multiple reservoirs. Sea Dragon owns a 50 percent working interest and is a joint operator of the Kom Ombo Concession with Dana Gas owning the remaining 50 percent.

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Volga Gas Boosts Production in Russia

Russia's Volga Gas said Tuesday that its production in January and February averaged 2,679 barrels of oil equivalent per day (boepd) compared with the 1,995 boepd it achieved during 2012.

Reporting its results for 2012, Volga Gas said that the key event of last year was the start of production from its largest field, Vostochny Makarovskoye, which was achieved on completion of the first stages of an ongoing upgrade to Voga’s gas processing plant located on the nearby Dobrinskoye field. The Dobrinskoye gas plant currently operates close to its processing capacity of 8.8 million cubic feet per day (MMcf/d), and the upgrade is expected to expand capacity to 35 MMcf/d during 2013.

Volga said that it will add a third production well to its Vostochny Makarovskoye field during 2013, after a successful workover of well No. 30 on the field last year.

Volga Chief Executive Mikhail Ivanov commented in a company statement:

"2012 was a pivotal year for Volga Gas and while our production was marginally down compared to 2011, the start of production from VM and the continuing upgrade to the gas plant capacity will signal a new growth phase for production from our fields. The key strategic aim for 2013 and 2014 is to realize the full production potential of the VM field by completing the gas plant upgrade and adding further production wells to the field. This will provide a significant lift in revenues and cash flows and a platform for future growth for Volga Gas."

Volga's assigned proven and probable reserves were independently assessed last August at some 44 million barrels of oil equivalent.

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