Statoil Farms Out Mozambique License

Norwegian oil major Statoil announced Tuesday that it has farmed down a 25-percent working interest in its exploration license offshore Mozambique to Japan's Inpex Corporation.

The license, which consists of two blocks, is located in areas 2 and 5 offshore Mozambique in the Rovuma Basin. They are situated in a frontier area covering 3,100 square miles in water depths that vary between 985 and 8,200 feet.

"The farm-down reflects the attractiveness of Statoil's acreage in Mozambique. Bringing INPEX onboard allows the companies to diversify geological risk while sharing the potential upside. The first out of two wells in the license will be drilled during 2Q by the drillship Discoverer Americas," Nick Maden, Statoil's senior vice president for international exploration at Statoil.

"Our presence in Mozambique is in line with Statoil's exploration strategy, focusing on early access in a prolific region. Large gas discoveries have recently been made north of the acreage and the prospectivity for hydrocarbons in the Statoil operated blocks is promising."

After the farm-in completion the license will continue to be operation by Statoil Oil & Gas Mozambique with a 40-percent participating interest. As well as Inpex, other partners include Tullow Mozambique, with a 25-percent interest, and the Mozambican state oil company, which has 10 percent.

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Petronas Staff Awarded One-Off Bonus

KUALA LUMPUR, Malaysia - About 40,000 state-run Petroliam Nasional Bhd. employees will receive a MYR1,000 (US $324), one-time bonus, Prime Minister Najib Razak told them on Tuesday.

The bonus is "a gesture toward our nation-building efforts," a Petronas worker told The Wall Street Journal on condition of anonymity.

The bonus was confirmed by a prime minister's office spokeswoman.

Mr. Najib last month pledged annual cash handouts for the poor.

Malaysia must hold a general election by the end of June. It is predicted by experts to be the most closely contested in Malaysia's history.

Earlier on Tuesday a local news media report said Mr. Najib may dissolve the parliament as early as Wednesday.

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Natural Gas Begins to Flow From Israel's Tamar Field

JERUSALEM - Natural gas from Israel's offshore Tamar field began to flow into the country's energy grid Sunday after two years of a gas shortage. The gas will allow Israel to be energy independent for at least three decades, in addition to becoming a net exporter of gas, according to the Ministry of Energy and Water Resources.

The gas production from Tamar is also expected to add about 1% to Israel's economic growth this year, according to the Bank of Israel. Taking the gas production into account, gross domestic product is expected to grow 3.8% in 2013; without the gas, GDP would only grow 2.8%, the bank said. In 2012, GDP grew about 3%.

"This is an important day for the economy of Israel," Prime Minister Benjamin Netanyahu said in a statement. "This is something that will enhance the economy of Israel along with all the citizens of Israel."

Most of the gas from Tamar, which contains an estimated 9 trillion cubic feet of gas, will initially be used by the state-owned electric company. The electric company is currently in debt and has had to raise prices recently due to a gas shortage since a supply deal with Egypt fell apart in the wake of political regime change there. Since gas stopped coming in from Egypt in 2011, the electric company has had to rely on more expensive forms of fuel, including diesel.

Israel recently created a sovereign wealth fund for profits from the gas in Tamar and the nearby larger Leviathan field, which is scheduled to begin production later this decade.

Stakeholders in Tamar include Delek Drilling Ltd. Partnership and Avner Oil Exploration Ltd. Partnership both subsidiaries of Delek Group Ltd. which each hold a 15.6% stake; Isramco Negev 2 LP, which holds 28%; and Houston-based Noble Energy Inc., which holds 36%.

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Huntington Subsea Preps Complete

Norwegian Energy Company (Noreco) reported Tuesday that all subsea preparations have been completed an final commissioning activities are now taking place at the Huntington field development in the UK sector of the North Sea.

Noreco said that during recent weeks there had been some delays in the project due to weather conditions and technical work that had taken longer than planned. But the firm added that first oil is expected during the first half of April.

After a ramp-up period, the field is expected to produce approximately 6,000 barrels of oil equivalent per day net to Noreco, it added.

Noreco has a 20-percent interest in the Huntington field, which is operated by E.ON Exploration & Production.

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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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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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Petrofac Awarded Satah Al Razboot Contract

Petrofac announced Tuesday that it has been awarded an engineering, procurement, installation and commissioning (EPIC) contract by Abu Dhabi Marine Operating Company (ADMA-OPCO) for the Satah Al Razboot (SARB) package 3 project offshore Abu Dhabi. The $500-million contract will start shortly and will be delivered by April 2016, Petrofac said.

The SARB Project is described by the firm as a high-priority and new field development off the northwest coast of Abu Dhabi. Drilling will be conducted from two artificial islands (SARB1 and SARB2) with the well fluid sent by subsea pipeline to a facility on Zirku Island for processing, storage and export.

Under the terms of the contract Petrofac will deliver approximately 130 miles of subsea pipelines for well fluid, water injection, gas injection, flare and export, along with two miles of onshore pipeline and 32 miles of subsea power and communication cables. The offshore scope of the contract includes the provision of two riser platforms and four flare platforms with four interconnecting bridges and one single point mooring (SPM) buoy located at the north of Zirku Island.

The onshore scope of the contract includes the following: drilling utilities, foundations on SARB1 and SARB2, transport, install, hook up and assistance in the commissioning of the accommodation modules.

Yves Inbona, managing director of Petrofac's Offshore Capital Projects (OCP) business, commented in a company statement:

"We are delighted to have been chosen to deliver this important project as part of the high priority SARB development. This award is further confirmation of the increased demand we see for Petrofac to broaden its market leading EPC capability offshore, and we look forward to cooperating with ADMA-OPCO and meeting its fast track requirements on this highly significant development." 

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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.

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Judge Rules CSB Has Jurisdiction Over Deepwater Horizon Accident

A federal judge has ruled that the U.S. Chemical Safety Board has jurisdiction to investigate the 2010 Deepwater Horizon accident in the Gulf of Mexico.

A Congressional committee had asked the board, which typically investigates accidents at chemical plants and refineries, to examine the oil-rig explosion and accident, which killed 11 workers and triggered the largest offshore oil spill in U.S. history.

But Transocean Ltd., which owned the drilling rig that sank during the explosion, refused to honor subpoenas issued by the board in 2010 and 2011 for documents and employee testimony. It argued that the board lacked jurisdiction over offshore oil spills and that most of the documents had been turned over to other government agencies.

U.S. District Judge Lee Rosenthal disagreed with Transocean, ruling late Monday that it had to honor the subpoenas because legislation that created the board, known as the CSB, didn't bar it from looking at all offshore incidents. He noted that the investigation focused on the explosion on the rig, not the ensuing oil spill. The House Energy and Commerce Committee had asked the board to compare the Deepwater Horizon disaster to a lethal 2005 explosion at what was then BP PLC's Texas City, Texas refinery.

Transocean didn't immediately respond to requests for comment on Tuesday.

"This ruling greatly supports the CSB's ongoing investigation and will enable CSB investigators to access critical information that might have otherwise been unavailable," the board said in a statement.

The board issued a report last July concluding that offshore oil and gas drillers put too much emphasis on issues such as individual worker injuries while neglecting other indicators of danger, such as whether safety equipment is being maintained on schedule.

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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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