Houston: Oil, Gas Boomtown

Houston, Texas' energy industry is flourishing, making the job market for today and tomorrow very robust, remarked Huw Rothwell, executive director of Michael Page International at the American Petroleum Institute's (API) Houston chapter luncheon Tuesday. Michael Page is a global publically traded professional and executive recruitment consultancy with more than 5,000 employees worldwide.

"The oil and gas industry in Houston is in very good condition, adding about 102,000 jobs in the last three years," he said.

The driving economic growth is attributed to:

high oil prices - levels that encourage investmentinnovative technology - hydraulic fracturing, deep waterincreased domestic productioninvestments made to new infrastructure

Overall, Texas is witnessing an increase in employment in the oil and gas industry. Last week, the Texas Independent Producers and Royalty Owners (TIPRO) published the "State of Energy" report focusing on quarterly Bureau of Labor census data. Oil and gas industry employment in the state increased from 65,000 to 971,000 in 2012, according to TIPRO.

The industry itself has witnessed growth in the United States over the past five years, which has mainly been driven by increased domestic production from shale, said Sandy Fielden in her report "We Should be Heroes! – The Economic Bounty of Shale Oil & Gas".

In 2012, 65,000 new jobs were created in the nation's industry, including 36,000 new jobs in operations and support activities, 12,750 jobs in crude oil and gas extraction and nearly 8,000 jobs in oil and gas field machinery and equipment, according to the TIPRO report. These numbers are then broken down state by state with Texas ranking as the biggest oil and gas employer, adding more than 380,000 new jobs in 2012. Louisiana ranked second at 81,400, followed by Oklahoma (74,600), California (46,400), and Pennsylvania (34,900). 

With Texas ranking number one on the employment list, Houston is also ranked at the top as far as employment and people relocating to the city.

"The number of mid-to-large companies relocating to the city in 2011 was 195," stated Rothwell. "People see Houston as the real hub and investments in and around Houston are apparent."

Fifteen major buildings were completed in the first three quarters of last year, and currently, 3.9 million square feet of office space is under construction. Exxon Mobil Corp. is building a new complex on 385 acres near the Woodlands, a suburb north of downtown Houston. It is estimated the company will bring 10,000 jobs to the Woodlands in 2014. Additionally, ExxonMobil businesses in Virginia and Ohio and a refinery in southeast Houston are also relocating to the new campus.

With the booming job market and companies moving to Houston, the city is expected to see an increase in people relocating, making it the fastest growing major metropolitan area in the country, according to a Comerica Regional Economic report.

Job creation in the Houston-Sugar Land area increased 3.7 percent through October 2012, compared to the same time period in 2011. The area's average job creation outpaced the nation's 1.5 percent average increase through October 2012, according to the Comerica Regional Economic report. Furthermore, the report predicts that the unemployment rate will slip to 6.8 percent in 2013 and 6.4 percent in 2014.

"We anticipate that this boom will continue for the next five to 10 years, with Houston remaining a buoyant candidate-driven market," stated Rothwell. 

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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WPX's Niobrara Well Hits Output Milestone

WPX Energy announced Monday that its Niobrara Shale discovery well in the Piceance Basin exceeded 1 billion cubic feet of natural gas production in just over 100 days of operation.

At this rate, WPX expects the Niobrara well to produce in its first four months what a typical well in the Piceance Basin's Williams Fork formation produces over its estimated lifecycle of 25 to 30 years.

The Niobrara well is located on WPX's acreage in Western Colorado, where the company has the lease rights to approximately 180,000 net acres of the Niobrara/Mancos shale play.

The discovery well initially produced 16 million cubic feet per day at a flowing pressure of 7,300 pounds per square inch. It registered an average production rate of almost 10 million cubic feet per day over its first 90 days, despite being choked back substantially.

"We're very pleased with what we're seeing," said Ralph A. Hill, WPX's president and chief executive officer. "This well is demonstrating tremendous strength. It's a large discovery that has significant upside potential for creating shareholder value."

Over time, WPX believes that its Niobrara discovery has the potential to more than double the company's proved, probable and possible (3P) reserves, which were approximately 18 trillion cubic feet at year-end 2012.

WPX started drilling its second Niobrara well Wednesday, April 3. The company expects to begin completion activities in June.

As previously announced, WPX plans to drill a total of four horizontal Niobrara wells in 2013. The drilling plan is designed to prove up adjacent acreage and test the repeatability of the play on additional acreage the company owns.

WPX already has extensive processing and takeaway capacity under contract in the Piceance to support Niobrara production.

The Niobrara and Mancos shales are generally located at depths of 10,000 to 13,000 feet. The Williams Fork is a shallower formation, generally located at depths of 6,000 to 9,000 feet. In the Piceance Basin, WPX holds an average working interest of 66 percent in the Niobrara and Mancos shales.

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Huntington Field Starts Production

Premier Oil announced Monday that oil production has begun at the Huntington field in the UK zone of the central North Sea. After an initial ramp-up period, the field is expected to produce between 23,000 and 25,000 barrels of oil equivalent per day.

Premier holds a 40-percent interest in the field, while its operator, E.ON Exploration and Production holds 25 percent. Noreco and Iona Energy have 20 percent and 15 percent stakes respectively in Huntington.

Premier CEO Simon Lockett commented in a company statement:

"We are delighted to have achieved first oil from the Huntington oil field. This marks the first of four UK North Sea projects from our development portfolio which will come on-stream over the next few years.  We look forward to the field making a significant contribution to our worldwide production and cash flow growth."

The Huntington development is using the Voyageur Spirit FPSO vessel, a six-well subsea drilling template and a 7-mile gas export pipeline that is connected to the BP CATS transportation system.

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Swire Strengthens East African Presence with New Manager

Swire Oilfield Services, the leading global supplier of cargo carrying solutions, modular systems, offshore aviation services and fluid management, is strengthening its newly established presence in Kenya, East Africa with the appointment of Dan Davies as the new commercial manager. Dan will be responsible for the commercial activity across East Africa and further developing business in Kenya, Tanzania, Uganda, Madagascar and the wider East African region.

The opening of an office in Kenya and the appointment of Dan comes as part of an overall growth strategy for Swire Oilfield Services in East Africa. The company is investing approximately $16 million (£10.5 million) in its rental fleet and infrastructure in the African Continent this year demonstrating its commitment to a region that provides an increasingly optimistic outlook created by a number of onshore and offshore discoveries.

Wayne Manning, general manager & director of Swire Oilfield Services Sub-Saharan Africa, said: "The East coast of Africa is one of the most exciting exploration areas in the region and bringing Dan onto the team will enhance Swire Oilfield Services offering. We have identified a growing demand for our quality equipment and services as a result of exploration inland on the great lakes and in remote and challenging locations.

"Activity both on and offshore is continuously growing. Oil and gas majors have recognised that the region is a hotspot frontier for reserves, with significant onshore discoveries in Uganda and Kenya by Tullow Oil and Total E&P as well as offshore oil and gas discoveries made in Kenya and Tanzania by BG Group Plc, Statoil and Anadarko Petroleum Corporation."

Swire Oilfield Services first began operations in Africa more than 10 years ago and now employs over 120 staff with recognition as the largest supplier of rental units across its other offices in Nigeria, Angola and Ghana. The organisation offers the highest specification, DNV 2.7-1 and EN 12079, across all of its certified reliably dynamic equipment including cargo carrying units, modular systems, fluid management and aviation services.

Globally, Swire Oilfield Services has in excess of 150 standard unit designs and has increased its fleet size by approximately 67 percent in the last six years from 34,000 to 57,000 cargo carrying units.

Copyright 2013 Universal Solutions S.A.E. Provided by Syndigate.info, an Albawaba.com company. All Rights Reserved.

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Wintershall Spuds Mjosa Well

Anglo-Norwegian junior Bridge Energy reported Monday the spudding of the Mjøsa exploration well on production license 511 in the Norwegian Sea.

Operated by Wintershall, exploration well 6406/6-3 is located around six miles northeast of the Linnorm discovery in the Haltenbanken area of the Norwegian Sea. It is targeting Lower and Middle Jurassic reservoirs.

Bridge – which has a 7.5 percent stake in the license – said the estimated un-risked mean potential of Mjøsa attributed to the company is 14 million barrels of oil equivalent.

Other parties involved in the well include: Wintershall, with 25 percent; Maersk, also with 25 percent; Petoro, with 20 percent; VNG, with 12.5 percent; and Tullow, which has a 10-percent stake.

The well is being drilled by the Transocean Arctic (mid-water semisub) rig.

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Regal Updates on Ukrainian Reserves

Regal Petroleum issued an update Monday on its reserves and resources in its onshore Ukrainian gas and condensate fields.

Regal reported that remaining reserves as of Dec. 31 2012 in the Visean reservoirs of its Mekhediviska-Golotvshinska (MEX-GOL) and Svyrydivske (SV) gas and condensate fields stood at 7.7 million barrels of oil equivalent of proved (1P) reserves, 31.6 MMboe of proved and probable (2P) reserves and 52.6 million barrels of proved, probable and possible (3P) reserves.

Contingent resources at the reservoirs were estimated at between 36.6 MMboe (1C) and 148.8 MMboe (3C).

Regal noted that there has been a "material reduction" in 1P and 2P reserves compared to estimates made in 2010 that showed them to be 40.9 MMboe and 151.3 MMboe respectively. The firm said that these reductions reflect lower expected recovery factors. However, it said that further development of the fields may result in future movement of contingent resources into reserves.

Regal said that independent petroleum consultants ERC Equipoise carried out the assessment for the remaining reserves and contingent resources.

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Egypt Says It Will Invest To Raise Oil Output

DUBAI - Cash-strapped Egypt will spend $18 billion over coming years to build new refineries and modify existing plants in a move to increase its annual fuel output, the country's oil minister said in an interview with Al Tahrir Television.

"There are some urgent measures to be taken this fiscal year to operate some refineries safely ... and there are measures in the next couple of years to lift the output of the existing refineries from the current 25-26 metric tons a year to more than 30 million tons," Osama Kamal told the Egyptian channel.

Overall "we have decided in November to invest $18 billion until 2017 to build new refineries and upgrade the existing refineries we have," he said.

Egypt has been paying hefty premiums for its crude deliveries for its refineries due to a weaker pound and difficulties in securing letters of credit for its transactions, while a shortage of state-subsided diesel has paralyzed transportation in many parts of the country.

Continuing unrest in the country since the ousting of former President Hosni Mubarak has led to a risky economic mix of dwindling foreign-exchange reserves, declining tourism revenue and costly price subsidies, economists said. To prop up the Egyptian currency, the central bank has gone through nearly two-thirds of its foreign-currency reserves, pushing the country to the brink of a liquidity crisis.

Egypt is trying to secure a $4.8 billion loan from the International Monetary Fund, a move viewed as critical to rescuing its economy and mending its reputation as a place to do business.

The IMF wants Egypt to reduce its subsidy spending, as part of a reform plan for the loan, say those close to the talks. But any subsidy changes would likely only enrage the legions of poor who rely on cheap fuel.

Copyright (c) 2013 Dow Jones & Company, Inc.

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Protect dolphins from deafening airgun blasts

Call your Representative today to stand up for our Atlantic wildlife

Seismic airgun testing is used to find deep pockets of oil in the sea floor. The decibels produced by airgun blasts are loud enough to kill a human at close range. For marine life, like the endangered North Atlantic right whale, the stakes are too high.

The Obama administration’s Department of the Interior will decide on whether or not to allow seismic airgun testing in 2013. To show public opposition to this proposal, New Jersey Senator Frank Lautenberg is urging other members of the Senate to voice their opposition to airgun testing.

Call and ask your Senators to stand with Senator Frank Lautenberg and other leaders in Congress against seismic airgun testing in the Atlantic.

Act now: http://ow.ly/gRFcw

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Uganda: Close to Drilling Deal with International Oil Companies

KAMPALA, Uganda - Uganda is close to an agreement over oil drilling in the Lake Albertine Rift basin, its president said late on Tuesday.

"We are now about to conclude an oil-and-gas extraction plan that will be equitable to Uganda and the oil companies," a presidential spokeswoman quoted President Yoweri Museveni as saying.

"Uganda discovered oil in 2006 but has not been able to start the extraction process owing to a battle...with oil companies."

Uganda has an estimated 3.5 billion barrels in reserves which could see it join Nigeria, Angola and Sudan as a big, sub-Saharan producers.

The government has denied drilling licences unless oil companies agree to build a refinery and process most of the crude in Uganda. The companies are demanding a pipeline be built to the east African coast.

Oil projects worth as much as $12 billion are on hold since the impasse started more than a year ago.

Total S.A. said executives met Mr. Museveni last month but added that it won't start work on its concessions until the pipeline is approved.

Other companies ready to start production in Uganda are Tullow Oil PLC and Cnooc Ltd.

Copyright (c) 2013 Dow Jones & Company, Inc.

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Egypt Says It Will Invest To Raise Oil Output

DUBAI - Cash-strapped Egypt will spend $18 billion over coming years to build new refineries and modify existing plants in a move to increase its annual fuel output, the country's oil minister said in an interview with Al Tahrir Television.

"There are some urgent measures to be taken this fiscal year to operate some refineries safely ... and there are measures in the next couple of years to lift the output of the existing refineries from the current 25-26 metric tons a year to more than 30 million tons," Osama Kamal told the Egyptian channel.

Overall "we have decided in November to invest $18 billion until 2017 to build new refineries and upgrade the existing refineries we have," he said.

Egypt has been paying hefty premiums for its crude deliveries for its refineries due to a weaker pound and difficulties in securing letters of credit for its transactions, while a shortage of state-subsided diesel has paralyzed transportation in many parts of the country.

Continuing unrest in the country since the ousting of former President Hosni Mubarak has led to a risky economic mix of dwindling foreign-exchange reserves, declining tourism revenue and costly price subsidies, economists said. To prop up the Egyptian currency, the central bank has gone through nearly two-thirds of its foreign-currency reserves, pushing the country to the brink of a liquidity crisis.

Egypt is trying to secure a $4.8 billion loan from the International Monetary Fund, a move viewed as critical to rescuing its economy and mending its reputation as a place to do business.

The IMF wants Egypt to reduce its subsidy spending, as part of a reform plan for the loan, say those close to the talks. But any subsidy changes would likely only enrage the legions of poor who rely on cheap fuel.

Copyright (c) 2013 Dow Jones & Company, Inc.

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Noble Energy Spuds Carla South Prospect Offshore West Africa

Noble Energy Inc. began drilling the I-7 exploratory well on the Carla South prospect in Block I using the Atwood Hunter (DW semisub) last week, PA Resources reported.

The Carla South prospect is on trend with the Carla North discovery recently appraised in Block O to the north of Block I, which houses the Aseng field, in Equatorial Guinea, PA Resources stated in a press release. The operator, Noble Energy, is targeting Tertiary sandstones of similar age to those in the discovery to the north. Drilling is expected to reach total depth in around 25 days with plans for a subsequent sidetrack of similar duration.

"We are very glad to have resumed exploration drilling in Block I, following an extended period focused on development of the Aseng and Alen Fields," said PA Resources' CEO Bo Askvik in a press release. "In addition it is likely that an appraisal well will be drilled in Block I later this year on the existing Diega discovery and this year's drilling program will be valuable in progressing the next field development or developments in Block I."

The Carla discovery that was made in November 2011 encountered 26 feet of oil pay in good quality upper Oligocene sands below the Alen field. It was drilled in 1,900 feet of water and reached a total depth of 11,500 feet. Noble Energy estimates between 35-100 million barrels of oil equivalent, of which 80 percent are liquids, at the Carla prospect.

Noble plans to develop the field and connect it to the producing Aseng field in Block I, or the Alen field in Block O, that is due to come onstream in late 2013.

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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Shell Optimistic Over Global LNG Outlook

Royal Dutch Shell plc remains optimistic that the Chevron Corp.-operated Gorgon liquefied natural gas (LNG) project will move forward according its planned timeline, despite the construction cost impacting LNG projects across Australia that prompted Woodside Petroleum Ltd. to scrap its Browse LNG development plans.

"We feel Gorgon remains attractive even with cost increases," said Andy Brown, director of Shell's Upstream International division, in a conference call Friday.

Brown discussed the company's global natural gas strategy and the growing role internationally of LNG ahead of the LNG17 conference in Houston next week. Shell holds a 25-percent interest in Gorgon.

However, Shell anticipates a moderation in the LNG project activity rate due to cost overruns. The company is looking at options for derisking drilling costs and collaboration opportunities going forward with its proposed Arrow LNG plant, whose supply would come from coalbed methane resources in Queensland. Shell CEO Peter Voser said in November 2012 that the company might delay until 2014 a decision on its Arrow LNG venture, Bloomberg reported.

Brown noted that floating LNG was an attractive alternative that could lower LNG project development costs. Construction of the hull and topsides is currently underway at South Korea's Samsung Shipyard on the floating LNG vessel for Shell's Prelude field development project offshore Australia. Prelude LNG will deliver 3.6 million tonnes of LNG and 1.7 million tonnes of condensate and liquefied petroleum gas.

The vessel will weigh 600,000 tonnes, the heaviest object that man has ever built, which Brown called a "real achievement". Shell acts as operator for the Prelude project and also holds a 6.4 percent interest in the Chevron-operated Wheatstone LNG project.

Globally, Shell sees significant LNG potential. Shell has a number of LNG projects under study worldwide, including Badi in Indonesia, Elba Island in the United States and expansion opportunities at the Gorgon LNG and the Sakhalin LNG project in Russia. Shell's recent acquisition of Peru and Trinidad midstream LNG assets from Repsol Corp. will add another 4 million tonnes of equity LNG coming to Shell. The $4.4 billion acquisition will generate substantial cash flow moving forward, Brown said.

Shell anticipates natural gas will become the largest energy supply source as global energy demand doubles between 2000 and 2050 due to global population growth.

"While we see renewables growing, we see energy needs being met predominantly by hydrocarbons," Brown commented. "It is our belief that natural gas will rival both coal and oil as the number one energy supplier."

Shell produces as much as gas as we do oil, and of the majors, has the largest portion of gas, Brown commented, citing the energy industry's commitment to promoting the use of environmentally-friendly natural gas.

Brown estimates that 250 million tonnes of gas supply per annum to meet the mismatch in gas demand and supply. By 2025, that demand will grow to 500 million tonnes per annum as LNG demand continues to grow significantly over the next 12 to 30 years.

Gas demand is expected to double in Asia and the Middle East moving forward. Gas demand in China could grow fivefold. Brown expects to see quite a pickup in North America energy demand as the nation finds ways to tap its indigenous gas supply, including its shale gas resources. However, gas demand in Europe will grow at a more gradual pace.  

Shell's LNG strategy for Europe involves the use of LNG in marine transportation. Interestingly, Shell has seen European gas demand decline in Europe, Brown said. The abundance of U.S. natural gas thanks to the development of shale and tight gas has resulted in Henry Hub gas prices undercutting U.S. coal prices. As a result, U.S. coal is now being imported to Europe, where coal-fired power consumption has actually increased in the past two years, Brown commented.

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Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

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Batista's OGX Drops on Financing Outlook

SAO PAULO - Shares in OGX Petroleo e Gas Participacoes SA extended losses Friday after the oil company controlled by Brazilian billionaire Eike Batista had its credit rating cut by Standard & Poor's.

A Thursday report in O Estado de S Paulo newspaper that Brazilian President Dilma Rousseff had refused to aid Mr. Batista's companies added to the poor sentiment.

"The market is seeing ever-increasing risk [at OGX] and they had hoped that talks with Dilma and BTG [Pactual, a Brazilian bank] would bring about an eventual improvement," said Guilherme Sand, a fund manager at Zenith Asset Management. "The stock is highly liquid, so obviously that opens it up to a lot of speculative trading."

OGX shares had dropped as much as 17% to 1.64 reais (81 U.S. cents) Friday before closing 13.6% lower at BRL1.71. Shares dropped more than 10% Thursday after S&P cut its credit rating on the company late Wednesday.

According to Estado columnist Dora Kramer, representatives of national development bank BNDES, together with private lenders Itau Unibanco Holding SA, Banco Bradesco SA and Banco BTG Pactual SA--all of which have lent money to Mr. Batista--met with Ms. Rousseff this week to request help for Mr. Batista's companies, but were rebuffed.

But according to a person familiar with the government's thinking, Brazil's government considers it important for Brazil to have a large port, such as the multibillion-dollar Acu Port currently under construction in the state of Rio de Janeiro by LLX Logistica SA, also controlled by Mr. Batista.

Brazil failed for decades to invest in infrastructure, and is now bumping up against the limits to growth that entails, with transportation bottlenecks eroding the country's competitiveness. To resolve that problem, the government has announced several infrastructure investment programs in recent years, which could see $250 billion of investment in roads, railways, ports and airports.

LLX is currently in talks with government oil company Petroleo Brasileiro SA (Petrobras) and would like to sign up the company for a berth at Acu, people close to talks have said. Petrobras could decide to go ahead if some concessions are made by Mr. Batista's companies, which include OGX and shipbuilding company OSX Brazil SA, one person added. According to Petrobras, Acu is one of the alternatives under analysis for a new base for offshore operations.

OGX's bonds were also falling Friday, as warning lights came on in the market following the reports coming out regarding the company, according to Marco Aurelio de Sa, head of the Latin American trading desk at Credit Agricole Securities in Miami.

OGX's bonds due in 2018 were trading around 77 cents on the dollar Friday, from around 80 cents on the dollar Thursday.

"The level that OGX equity and bonds are at now, it's difficult for the company to raise more money. That's going to make it difficult for them to roll over debt, much less carry out investments," said Paulo Nepomuceno, fixed-income strategist at the Coinvalores brokerage.

A banker close to Mr. Batista noted Friday that his intention is to keep selling stakes in some of the group's more-mature companies to strengthen the group's finances and not to seek refinancing of the group's debt with the private banks.

"He is far from that," the person added.

Mr. Batista has seen his companies' stock suffer since the middle of last year, when disappointing output data at OGX led investors to start questioning whether he could get his startup companies off the ground and generating the promised revenue before heavy investment needs ate through all the capital Mr. Batista had raised in the last five years.

Since the start of this year, Mr. Batista has been selling stakes in his companies and seeking new partners to shore up his business. He recently announced the sale of a stake in electric utility MPX Energia SA (MPXEY, MPXE3.BR) to Germany's E.ON SE (EONGY, EOAN.XE), and that he would partner with Brazilian banker Andre Esteves and his BTG Pactual for financing and management assistance.

Mr. Batista is currently discussing the sale of stakes in some of OGX's exploration blocks and oil fields, according to people familiar with the situation.

OGX declined to comment for this story.

"There seems to be a speculative attack on OGX to force Eike to hand over assets at the cheapest price possible," Mr. Nepomuceno said. "Equity holders are in a better position because they can buy at BRL3 and see the stock fall to BRL2, but bond holders are in a tough place because they're seeing that it's increasingly likely they may not get their money back."

Zenith fund manager Mr. Sand noted that about 260 million shares of the company, representing about 20% of OGX's free-floating stock, is being borrowed by the market, with a majority of that likely borrowed by short sellers, who benefit from the stock's decline in price.

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