Friday, July 5, 2013

Premier Strikes Oil at Bonneville

UK independent Premier Oil confirmed a strong start to its 2013 exploration program with the announcement Tuesday that both its Bonneville exploration well, 28/9a-6, and its side track well, 28/9a-6z, in the UK North Sea have discovered oil. The Bonneville prospect – in which Premier as operator has a 50-percent interest – is located around 2.5 miles south of the Burgman discovery on the Catcher license in the central North Sea.

The news comes on the back of the firm's previously-announced exploration success at Luno II, offshore Norway, which is now undergoing testing with results expected before the end of the month. 

Meanwhile, in Indonesia, Premier also reported Tuesday that its Matang-1 exploration well on Block A Aceh has discovered gas and will now be tested.

The Bonneville was drilled to a depth of 4,481 feet and encountered a gross oil column of 66 feet in the Tay interval with an estimated net oil pay of 26 feet. The Bonneville well was subsequently sidetracked to the Bonneville East prospect, and this found 34 feet of net oil pay.

Premier said that the discoveries are in "excellent-quality" reservoirs, with average porosities of approximately 30 percent and that initial sampling indicated that the gravity of the oil is around 25 degrees API.

The estimated oil in place from the Bonneville discoveries is approximately 30 million barrels.

In Indonesia, the Matang-1 well, drilled to a depth of 7,893 feet, penetrated a gross gas column of at least 90 feet. The base of the gas column has not been encountered.

Premier CEO Simon Lockett commented in a company statement:

"We are delighted with the strong start to our 2013 exploration drilling programme with the previously announced discovery at Luno II and now the discoveries at Bonneville and Matang. We look forward to the outcome of the test programmes at Luno II and Matang while the Bonneville discoveries will be tied back to our important Catcher area development, which is targeted for project sanction by year-end."

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BP Reviewing Mad Dog Phase 2 Development Plans

BP plc and partners are reviewing their plans for the second phase of the Mad Dog field development in the U.S. Gulf of Mexico as current market conditions and industry inflation have made the current development scheme less attractive.

BP, Chevron Corp. and BHP Billiton Petroleum are reviewing the existing plans and other options in evaluating how to develop the project, BP's largest greenfield development in the U.S. Gulf in a decade and one of the world's largest spars.

However, BP told Rigzone it fully intends to develop the Mad Dog Phase 2 resources and is committed to moving forward with the right plan.

"It is too early to speculate when the details of the final plan will be approved by BP and its co-owners," a BP spokesperson said in an email statement.

The current plans for Mad Dog Phase 2 include a spar floating system with infield flow lines and associated subsea infrastructure to connect the subsea production and injection wells. The project also includes export pipelines connected to the existing Mardi Gras system.

The spar will have production capacity of 130,000 barrels of oil per day, 75 million cubic feet per day of total compression, and water injection capacity of 280,000 barrels per day (bopd) for waterflood of western and southern field segments. Water injection capacity can be expanded to 350,000 bopd to accommodate future injection requirements.

The development concept includes 33 wet wells, 19 production and 14 injection wells.

BP is operator of Mad Dog Phase 2 with 60.5 percent working interest. BHP Petroleum holds 23.9 percent interest and Chevron owns 15.6 percent.

Mad Dog Phase 2 was one of seven projects BP anticipated would be in the post-final investment decision stage in the 2015-2020 timeframe. BP expected to kick off construction of the Mad Dog 2 infrastructure around the end of 2013, according to a BP December 2012 presentation.

Mad Dog Phase 2 is one of 11 BP megaprojects that will each require a gross investment of over $10 billion.  Located in the southern Green Canyon area of the U.S. Gulf in water depths of 4,500 to 6,800 feet (1,372 to 2,073 meters), Mad Dog is estimated to contain reserves ranging from 200 to 450 million barrels of oil equivalent.

The company reported late last year it was on track to deliver 15 projects from 2012-2014. BP started up three of those projects in 2012, including the Galapagos project in the U.S. Gulf, Clochas Mavacola in Angola and Devenick in the North Sea.  

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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Contango Mourns Loss of Founder

Contango Oil & Gas Company announced that the Company's founder and visionary, Kenneth R. Peak, passed away Friday evening at the age of 67, in the company of his family. Mr. Peak was diagnosed with an inoperable brain tumor in August 2012 that he was no longer able to battle.

The Company's Board of Directors has elected Joseph J. Romano, Contango's President and Chief Executive Officer, as the Company's new Chairman of the Board.

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Drilling report, April 21

The drilling report was produced with data from the Texas Railroad Commission, from April 7 to 13. 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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Lupin Well Comes up Dry

Norwegian Energy Company (Noreco) reported Monday that the exploration well on the Lupin prospect in license PL360 in the Norwegian zone of the North Sea has come up dry. Noreco said it had been informed by the well's operator Statoil that the well was about to be completed and that it had not encountered hydrocarbons.

Noreco said that further work in the license will concentrate on prospectivity in Upper an Middle Jurassic layers, which have become more attractive following recent discoveries in the area.

Noreco holds a 15-percent interest in license PL360.

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Bill Seeks to Allow Drilling Near US Mexico Maritime Border

Bill Seeks to Allow Drilling Near US Mexico Maritime Border

A legislative hearing will take place Thursday in Washington D.C. as lawmakers consider a bill that would lift the current moratorium on drilling along the U.S.-Mexico maritime border in the Gulf of Mexico.

H.R. 1613, the Outer Continental Shelf Transboundary Hydrocarbon Agreement Authorization Act, would amend the Outer Continental Shelf Lands Act and implement the terms of the U.S.-Mexico Transboundary Hydrocarbon Reservoirs Agreement. That agreement, signed in February 2012 by then Secretary of State Hillary Clinton and Mexico's Minister of Foreign Affairs Patricia Espinosa Castellano at the G-20 Summit in Los Cabos, Mexico, would govern development of shared oil and natural gas resources in the U.S. Gulf between the United States and Mexico maritime border.

The agreement lifts the current moratorium on exploration and production along the Western Gap section of the boundary, opening up 1.5 million acres in the Gulf previously off limits due to border issues, and provides a framework for the safe management of oil and gas resources in the boundary area. Leaseholders on the U.S. side of the boundary and Petroleos Mexicanos would be able to explore and exploit a transboundary reservoir as a unit as leaseholders are permitted to do on the U.S. side of the boundary. The agreement also would allow a means of resolving disputes and establish a system of joint inspections.

"This bill is another step towards embracing an all of the above approach to energy that safely develops our natural resources to help achieve North American energy independence," said Rep. Jeff Duncan (R-S.C.), who co-authored the bill along with House Natural Resources Committee Chairman Doc Hastings (R-Wash.) and House Foreign Affairs Subcommittee on Western Hemisphere Chairman Matt Salmon (R-Ariz.), in a statement. "This bill will help lower energy costs while creating American jobs by safely opening up more areas in the Gulf of Mexico for exploration and production."

"Approval and implementation of this agreement is unquestionably in the national interests of the U.S. as a step towards energy security and job creation in the United States, as well as much needed energy reform in Mexico, and Western Hemisphere energy independence," said Salmon in a statement. "We can achieve energy independence and better energy cooperation with our neighbor and this is an important step in that direction."

Mexico's Senate ratified the agreement in April 2012. The agreement was negotiated pursuant to the 2000 Treaty on the Continental Shelf, which called for the United States and Mexico to establish a mechanism that transboundary oil and gas reserves would be shared equitably, according to a December 2012 report prepared for the U.S. Senate's Committee on Foreign Relations. At the time, concern that companies would drain Mexican reserves from the United States side of the border was reportedly a hot button political issue in Mexico. The United States placed a moratorium on oil and gas exploration on the U.S. side of the maritime border upon conclusion of the 2000 Treaty.

Former Sen. Richard Lugar (R-Indiana) last year urged the Obama administration to send the U.S. Mexico Transboundary Agreement to Congress and for his colleagues to pass the agreement. Lugar, who requested senior staff members review opportunities for enhanced U.S.-Mexico engagement on oil and gas issues including the transboundary agreement, said congressional attention to the Mexican energy situation is critical for understanding bilateral issues between our countries and for consideration of U.S. energy security.

"Mexico is a reliable supplier of oil to the United States," said Lugar in a December 2012 report. "The question for U.S. policymakers is what volumes Mexico will be able to export in the future."

Mexican production has dropped by over a quarter in the past decade, and the collapse of Venezuelan heavy oil production and insufficient pipeline infrastructure to bring Canadian oil sands production to Gulf Coast refineries means the United States in effect has had to increase imports of Middle East crudes to make up for Mexico production shortfalls, Lugar added.

"After the Obama administration did the important work of negotiating the Transboundary Hydrocarbon Agreement, they have failed to either send the agreement to the Senate as a treaty or decide that the agreement is an Executive Agreement," said Daniel R. Simmons, director of regulatory and state affairs, with the Institute for Energy Research in an a Congressional hearing last month. "So far, the administration's actions on the agreement are similar to its actions (or really, lack of action) on the Keystone XL pipeline."

The U.S.-Mexico maritime border area could hold up to 172 million barrels of oil and 304 billion cubic feet of natural gas, according to the U.S. Department of the Interior.

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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Chesapeake Relaxes Non-Compete Clause for Ex-CEO McClendon

Chesapeake Energy Corp. will allow former Chief Executive Aubrey McClendon to acquire oil and gas holdings adjacent to the company's wells in which he is a part-owner, relaxing a contractual restriction that limited his ability to compete with the company.

The Oklahoma City-based company disclosed that it had altered terms from Mr. McClendon's last employment contract in a filing with the U.S. Securities and Exchange Commission Friday afternoon.

The agreement had restricted Mr. McClendon from acquiring, or helping others acquire, oil and gas assets immediately next to Chesapeake.

A Chesapeake spokesman said he had no comment on the filing. A spokesman for Mr. McClendon didn't immediately respond to a request for comment.

Mr. McClendon, 53, left Chesapeake earlier this month after co-founding the natural-gas producer in 1989 and building it into the country's second-biggest natural-gas producer after Exxon Mobil Corp. (XOM).

He has registered two companies in Oklahoma, McClendon Operating Energy Inc., which is the joint partner of American Energy Partners, and leased office space about a mile from Chesapeake.

Chesapeake will pay Mr. McClendon nearly $50 million in severance, with the last payment due in 2014. The company also disclosed Friday that it will allow him the use of a company Citation X aircraft through 2016.

Mr. McClendon remains deeply invested in Chesapeake. Through an unusual perk, he has acquired small stakes in almost every well Chesapeake has drilled, sharing equally in the costs and profits of the well.

But the expense of the program has led Mr. McClendon to borrow heavily. He has pledged his interests in Chesapeake's wells to secure loans for more than $1 billion, including from a private-equity group that has done deals with Chesapeake.

The revelation of Mr. McClendon's borrowing practices last year sparked a governance controversy.

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Genel Confirms Production Guidance for 2013

Genel Energy confirmed in an interim management statement Monday that its 2013 guidance remains unchanged. The firm expects to produce between 45,000 and 55,000 barrels of oil per day (bopd) along with revenue of between $300 and $400 million.

Genel said that its new working-interest production for the first quarter of 2013 averaged 37,000 bopd. The firm said that two fields in Iraqi Kurdistan in which it has an interest, Taq Taq and Tawke, averaged 73,000 bopd and 18,000 bopd respectively, with volumes affected by the New Year national holiday and maintenance work at Tawke.

Genel said that production capacity at its key Taq Taq and Tawke assets continues to grow, with Taq Taq's gross production capacity currently at 120,000 bopd and Tawke gross capacity at 100,00 bopd. Genel is targeting 200,000 bopd at both fields by the end of 2014.

Genel began exports to Turkey by truck of Kurdish oil in January. In Monday's statement the firm said it expected volumes exported to rise to 15,000/20,000 bopd during the rest of the year.

Meanwhile, Genel also reported that it had made significant progress with infrastructure developments, with the Taq Taq-Khurmala pipeline now complete. The second phase of this pipeline, from Khurmala to the Fishkabur pump station on the border with Turkey is under construction and will have an initial capacity of 300,000 bopd. The firm expects this to be completed during the fourth quarter of this year.

Genel reported progress in developing and commercializing its Miran and Bina Bawi assets. The Miran West field development is progressing for both oil and gas, with an extended well test for oil at Miran West seeing production at around 3,000 bopd. Bina Bawi saw an extended well test flow oil at an initial capacity of 5,000 bopd.

Genel's exploration activities saw a new oil discovery at the Chia Surkh field, testing flow rates of up to 11,950 bopd. The first appraisal well has spud here. The firm also has an extensive well testing program underway at Tawke Deep over more than 6,500 feet of previously untested Jurassic and Triassic sections.

Genel plans four more high impact wells in Kurdistan during 2013, targeting prospective resources of 1.5 billion barrels of oil equivalent.

Meanwhile, in Africa Genel is in advanced negotiations to secure a rig with 10 slots. It plans a drilling programme to start in late 2013, including wells in Morocco and Malta. The firm also has a 2D seismic data acquisition program underway in Somaliland.

Genel Energy Chief Executive Tony Hayward commented in a company statement:

"Genel has started 2013 strongly with a significant oil discovery at Chia Surkh, very encouraging results so far from our Bina Bawi appraisal wells and good progress made across the board in our major development projects. As political momentum continues to build and the construction of independent regional infrastructure moves forward rapidly, it is evident that 2013 is set to be a highly significant year for both Genel and the Kurdistan Region's oil and gas industry."

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India Clears Projects Worth Billions of Dollars

NEW DELHI - An Indian ministerial panel on Monday approved 25 oil and gas and 13 power projects involving investments worth billions of dollars as part of its efforts to boost economic growth.

These are among the many projects in India which are facing delays due to bureaucratic red-tape, creating an obstacle to growth in an economy expanding at its weakest pace in a decade. In December, the government set up the Cabinet Committee on Investments, headed by Prime Minister Manmohan Singh, to fast-track industrial and infrastructure projects.

In a meeting held late Monday, the panel approved 25 oil and gas exploration projects. The defense ministry had objected to these projects due to their proximity to naval bases, missile firing ranges and other defense locations.

Fresh investment of $1.9 billion will now be made over the next three to five years in these 25 projects, the government said in a statement. Investments of $2.71 billion have already been made in them, it added.

The panel also reviewed 20 power projects and approved 13 of them involving investments of 330 billion rupees ($6.1 billion), the government said. These include transmission networks as well as hydroelectric and thermal-power projects which needed clearances mainly from the environment ministry.

The remaining seven power projects involving investments of 320 billion rupees still haven't been cleared. These are facing delays over land acquisition, fuel supply and environmental clearances, the minister said.

The Cabinet Committee on Investments has cleared several large projects in recent months, although many more still need urgent attention. Finance Minister P. Chidambaram recently said as many as 215 projects involving investments of 7 trillion rupees were facing delays.

Meanwhile, a separate cabinet panel Monday decided against allowing Coal India Ltd. to blend local and imported coal to meet its supply shortfall.

Blending of local and imported coal would have increased costs for power producers which source the fuel from the state-run monopoly supplier.

Saurabh Chaturvedi also contributed to this article.

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