Lukoil Targets 150,000 Barrels per Day from West Qurna-2

OAO Lukoil Holdings, Russia's largest non-state oil producer, aims to produce 150,000 barrels of oil a day at Iraq's supergiant West Qurna-2 oilfield by the end of December 2013, a company executive said Tuesday. 

The 13-billion-barrel field is expected to raise output to 400,000 barrels a day by April 2014 and to hit 550,000 barrels a day in 2015, the executive told Dow Jones Newswires. 

Lukoil will invest $1 billion in 2013 to start first production from the green field, located in the Basra governorate near the Iranian border, he said. Last year the company invested a similar amount, putting total investment in the field by the end of this year at $2 billion. Lukoil had said that it would invest a total of $30 billion to upgrade the field. 

To date the company has drilled eight production wells and is planning to drill another 27 wells this year, he said, adding that four rigs are drilling in the field. 

In January, Lukoil signed a supplementary agreement with Baghdad to reduce the project's target production and prolong its duration. The agreement also put on record the transfer to Lukoil of Statoil ASA's participation interest of 18.75% in the project. 

The parties agreed to reduce the project's target production level to 1.2 million barrels a day from 1.8 million barrels a day, and to prolong the validity of the contract to 25 years from 20. 

The company has increased its stake in the West Qurna-2 project in Iraq to 75%, following last year's withdrawal of Statoil. Iraq's state-owned North Oil Company owns 25%. 

Operator Lukoil and Statoil were awarded the technical service contract at West Qurna-2 in December 2009.

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

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Has Canada’s government been muzzling its scientists?

By Pallab Ghosh Science correspondent, BBC News. 2 April 2013

Canada's Information Commission is to investigate claims that the government is "muzzling" its scientists.

The move is in response to a complaint filed by academics and a campaign group.

BBC News reported last year instances of the government blocking requests by journalists to interview scientists.

Some scientists alleged that the muzzling could help suppress environmental concerns about government policies.

The former president of the Canadian Science Writers' Association, Veronique Morin, says that the commissioner's office will now have to find out if the federal government has in effect been operating a policy of censorship.

"Vital stories pertaining to the environment, natural resources, food safety, fisheries and oceans are not coming out in Canada because, for several years now, the government has imposed rules which prevents its scientists from speaking freely about their publicly funded research," she said.  Read the full article

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Gulfsands Appoints New CEO

North Africa and Middle East-focused Gulfsands Petroleum announced Thursday that it has appointed a new chief executive officer.

Gulfsands said that Mahdi Sajjad, currently the firm's executive director and president, has been appointed to succeed Ric Malcolm as CEO. The change is effective immediately, although Malcolm has agreed to remain available until the early summer to facilitate the transition in management.

Malcolm commented in a statement:

"Following the acquisition of Cabre Maroc in Morocco, the successful award of two permits in Colombia and the consolidation of our position in Tunisia, Gulfsands Petroleum has embarked upon a new phase in its evolution. This represents an appropriate time for me to move on, confident that I am leaving to my successors a solid business platform that should provide the company with a promising future. 

"I have therefore offered to remain available until the early summer to assist the company during this period of management transition."

Gulfsands Chairman Andrew West added:

"I would like to record the board's gratitude to Ric for his contribution to the company over the past four and a half years.  In the face of all the challenges we have had to deal with, particularly in recent times, he has remained resolute and has played a key role in identifying and implementing the company's recent diversifications and developing its technical capabilities.  Ric leaves the company in very good hands and with some promising new opportunities in train."

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Petrofac Consortium Wins $3.7B Abu Dhabi Deal

A Petrofac-led consortium has been awarded a $3.7-billion contract to supply the Upper Zakum, UZ750 field development in Abu Dhabi.

The contract was awarded by Zakum Development Company (an Abu Dhabi National Oil Company subsidiary). It has been secured by a consortium including Petrofac Emirates (Petrofac's joint venture with Mubadala Petroleum) and Daewoo Shipbuilding & Marine Engineering Company. Petrofac Emirates' share of the contract is valued at $2.9 billion.

Petrofac said the project comprises engineering, procurement, construction transportation and commissioning of island surface facilities on four artificial islands.  Specifically, this will include wellhead control, manifolds, crude oil process facilities, water injection and gas lift, oil export pumps, power generation and associated utilities. These facilities are scheduled to commence operations during 2016.

Subramanian Sarma, managing director of Petrofac's Onshore Engineering & Construction business, commented in a company statement:

"I am delighted that Petrofac has been selected to deliver this landmark project for the Upper Zakum development in Abu Dhabi. Through Petrofac Emirates we continue to show our commitment to supporting the oil & gas industry in Abu Dhabi and this project builds on the substantial work we have underway in the UAE.  We look forward to developing our relationship with ZADCO through the successful delivery of this strategically important project."

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Aker Wins Solan Field Contract

Aker Solutions reported Thursday that UK independent Premier Oil has awarded it a $46-million contract to provide hook-up, commissioning and facility management services to Premier Oil at its Solan field development, west of Shetland. The contract is valid for three years from first oil, with two one-year extension options.

Aker said the hook-up project will see two subsea production and two subsea injection wells tied back to a fixed production platform located in Block 205/26a of the UK North Sea, the first of its kind west of Shetland. The platform, which will not be permanently manned, will produce oil that will be stored in a subsea tank before being exported via an oil-offloading system to shuttle tankers.

Aker said that work on the project will be led from its Aberdeen facility.

 Mike Forbes, Aker's managing director for its maintenance, modifications and operations business, commented in a statement:

"I am pleased that we are continuing to develop our relationship with Premier Oil and their joint venture partner on this significant project in a challenging and increasingly important sector of the North Sea.

"Having worked with Premier Oil and Chrysaor on the project since 2010 and played a supporting role in the sanction of this development and the technology behind it, we look forward to embarking on the next stage of Solan's evolution."

The UK's Department of Energy and Climate Change approved Premier's plans for the Solan oil field in April 2012. Once brought online, Solan is expected to produce 40 million barrels of oil at an initial rate of 24,000 barrels per day.

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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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FX Energy 'Disappointed' over Polish Mieczewo Well

FX Energy, Inc. reported on plans for three of its wells in Poland.

Field operations are underway to frac three intervals in the Rotliegend and carry out three separate production tests. The project is expected to take approximately four to six weeks in total and results are anticipated in the latter part of May. Halliburton will carry out three separate fracs at intervals between 12,336 and 13,445 feet (3,760 and 4,098 meters). After all three fracs have been completed, each interval will undergo a five or six day production test.

The Plawce-2 well was completed in the 3rd quarter of 2011 and is located in what is believed to be a several kilometer wide uplifted band of tight Rotliegend sandstone that stretches across the northern border of the Fences concession. The Plawce-2 well was designed to test whether a vertical multi-frac well could yield commercial production and whether this tight sand band merits further evaluation. The Plawce-2 well encountered 1,575 feet (480 meters) of tight Rotliegend sandstone. Logs, cores and a drill stem test yielded gas shows with no water. The Polish Oil and Gas Company is the Operator and owns 51 percent of the working interest; FX Energy owns the remaining 49 percent working interest.

The Tuchola-3K encountered good light hydrocarbon shows but poor reservoir quality in a 118-foot (36-meter) section of the Main Dolomite. Deeper in the well it also encountered very good hydrocarbon shows and up to 20 percent interpreted log porosity within a 328-foot (100-meter) section of the reefoidal Upper Devonian. This horizon warrants further testing.

The well is now approximately 1,115 feet (340 meters) from an estimated total depth of 13,058 feet (3,980 meters), where the target is oil in the middle Devonian sands. Once drilling is complete the Company plans to log, evaluate the middle Devonian, and then move uphole to test the reefoidal Upper Devonian.

Meanwhile, the Company's technical team has recalibrated the seismic to directly image porous dolomite in the Main Dolomite near the existing wellbore. If they interpret better reservoir quality nearby, and if the well is not completed for production in the Devonian, the Company is considering a side-track operation further uphole to test the Main Dolomite a few hundred meters away from the current well bore.

The Tuchola-3K well is the Company's first test well in one of the Edge concession blocks in northern Poland. Previous drilling by other companies encountered live oil and gas in a number of horizons in the region, including the Zechstein, Rotliegend, Devonian and Carboniferous. The Tuchola-3K well was designed to test the Zechstein Main Dolomite, the Upper Devonian and middle Devonian. FX Energy is the operator and owns 100 percent of the working interest.

The Mieczewo well was drilled on a small Rotliegend structural target in the western part of the Fences concession. It is the Company's thirteenth well targeting a Rotliegend structural feature. A drill stem test of the upper 31 feet (9.6 meters) of Rotliegend flowed gas with no water. The well now has been completed and production tested. Based on test results plus log and core data it appears the gas column is not much more than 33 feet (10 meters). This is not commercial and the well will be plugged and abandoned. The Polish Oil and Gas Company is the Operator and owns 51 percent of the working interest; FX Energy owns the remaining 49 percent working interest.

"Of course we are disappointed that the trap is too small to be commercial," said David Pierce, FX Energy's CEO. "This small a target would not have been on our drilling schedule but for encroaching home building which forced the decision to drill now or permanently abandon the target. Our primary focus in the Fences concession is on much larger targets, such as the Lisewo area where we plan to begin production and drill 2 to 3 more wells later this year."

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Cairn Seeks Key Changes in Barmer Field Regime

Vedanta Group explorer Cairn India has sought six changes in the approvals regime for its oil fields at Barmer in Rajasthan, which, if approved by the government, could prove to be a game-changer for the domestic exploration industry by drastically reducing the discovery-to-delivery time.

The changes suggested by the company essentially suggest an omnibus development for an entire acreage instead of for each discovery made in a block.

This would do away with the multiple approvals that have to be sought before starting production each time a discovery is made. This process could stretch to three-four years from the time that a company declares a commercially viable oil or gas strike; sources quoted Cairn as arguing with the oil ministry.

Cairn sought these changes days before it announced the 26th discovery in the block on Tuesday. This is the first strike the company has made after the government in February allowed oil hunters to conduct additional exploration in a producing field at their own financial risk, with the rider that costs would be allowed to be recovered only in case of commercial discoveries.

One of the key changes sought by Cairn suggests scrapping the system of seeking individual approval for declaring a discovery as commercially viable, called 'DoC or declaration of commerciality' in industry parlance. The company has argued that this would be "superfluous" under an omnibus development plan for acreage.

Under the omnibus plan, the company has suggested replacing multiple, individual field development plans by a single integrated plan for the entire block.

To address concerns over any possible slackness in oversight of expenditure, which could adversely impact government revenue, Cairn has suggested that once the omnibus block development plan is approved, expenditure on bringing a discovery into production could be done through a 'work program and budgeting' process annually.

Another major change sought is in the joint operating agreement for the field in line with the "best global oil industry practices". State-run ONGC is 30% partner in the field and Cairn, as in-charge of operations, cannot on its own decide on contracts worth more than $500,000. This involves "cumbersome multiple touch points between partners" that delay the process of procuring equipment or services, the company has argued.

Cairn's situation is similar to many of the 260 blocks in the country under exploration or development. In block after block, companies are hamstrung by red tape, delay in approvals and differences between partners. In case the government agrees to the key changes sought by Cairn, it would have to be done as a policy measure and would take time.

Copyright 2013 Bennett Coleman & Co. Ltd. All Rights Reserved.

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Petroamerica Updates Testing Results from Colombia Well

Petroamerica Oil Corp. presented preliminary drilling results for its Las Maracas-8 well on the Los Ocarros Block, and provide the results of selective testing for the La Casona-1 well on the El Eden Block, Colombia.

The Las Maracas-8 well was targeting the northern extension of the Las Maracas field and reached its total depth in a record drilling time of 10 days. A petrophysical evaluation of wireline logs from the well indicates more than 56 feet (true vertical depth (TVD)) of net pay, comprising 34 feet (TVD) in the Mirador Formation and 22 feet (TVD) in the middle Gacheta reservoir. The well is currently being cased, and it is expected that the well will be completed as a Mirador producer initially. Following completion, the rig is expected to drill Las Maracas-9 that will target the Gacheta and Une reservoirs.

The Las Maracas Field is currently producing between 8,000 to 9,000 barrels of oil per day (bopd) in total and the permanent production facility is still on schedule for completion by the end of May 2013.

The Company also carried out an extensive testing program of the Une and Gacheta reservoirs in its La Casona-1 well using a workover rig.

The Une Formation in La Casona-1 flow tested at an average rate of 1,700 bopd and 6 million cubic feed per day (MMcf/d) of gas over a 56-hour period. The well produced under natural flow conditions and the quality of the crude oil produced was 35 degree API. The measured watercut at the end of the test was 1 percent.

A number of basal Gacheta sands, not previously described in net pay numbers that were announced in the November 13, 2012 press release, were also tested and produced 105 bopd of light 24 degree API oil and 0.5 MMcf/d of gas. The watercut at the end of the test was 2 percent. A middle Gacheta sand was also tested separately yielding no flow to surface. It is speculated that this last test was dry due to either formation damage, or the well required more clean-up time to flow naturally.

The Mirador Formation, which had good oil shows and potential hydrocarbon pay from logs, could not be tested in this well due to a poor cement bond. It is expected that the Mirador, Gacheta and Une reservoirs will be further evaluated with a follow-up well, La Casona-2, to be drilled later this year.

The operator of the block is currently procuring production facilities that include natural gas compression equipment and plans to use the produced gas as a power source at the Las Maracas and Kona production facilities. Production from the La Casona discovery is expected to commence sometime during the third quarter of 2013.

Petroamerica holds a 50 percent participating interest in the Los Ocarros Block where the Las Maracas field is situated, and a 40 percent participating interest in the El Eden Block, 15 percent of which is still pending approval by the Colombian National Hydrocarbon Agency (ANH), where the La Casona discovery is located.

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Drilling report, April 7

Click HERE to read a PDF of the April 7 Tyler Morning Telegraph Drilling Report

The drilling report was produced with data from the Texas Railroad Commission, from March 24-30. The following counties were searched: Anderson, Angelina, Camp, Cass, Cherokee, Dallas, Ellis, Freestone, Gregg, Harrison, Henderson, Houston, Kaufman, Leon, Limestone, Marion, Nacogdoches, Navarro, Panola, Rains, Robertson, Rusk, San Augustine, Shelby, Smith, Upshur, Van Zandt and Wood. For information contact Business Editor Casey Murphy at cmurphy@tylerpaper.com or 903-596-6289.

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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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