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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Max Petroleum Starts Drilling Ops at ZMA-E5

Max Petroleum Plc, an oil and gas exploration and production company focused on Kazakhstan, announced that it has commenced drilling the ZMA-E5 development well in the Zhana Makat Field on Block E using Zhanros Drilling's ZJ-20 rig. Total vertical depth of the well will be approximately 2,904 feet (885 meters) targeting Jurassic reservoirs.

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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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Priodontes-1 Well Comes Up Dry

Tullow Oil reported Tuesday that its Priodontes-1 well, offshore French Guiana, has come up dry.

Drilled to a depth of 20,730 feet, the well encountered no hydrocarbons and has been plugged and abandoned. The Stena Ice Max (DW drillship) rig, which was used to drill the well, will now move to the site of Tullow's Cebus exploration well (GM-ES-4), which the firm said will test a new and separate fan.

Tullow Exploration Director Angus McCoss commented in a company statement:

"Although this well did not encounter significant hydrocarbons, we have added substantially to our knowledge of the formations in this frontier exploration area. The campaign now moves to the Cebus prospect which is located in a separate fan to Zaedyus and Priodontes.

"This means that there is limited read-across for Cebus from the wells drilled thus far. However, all have demonstrated, to differing degrees, that the Cingulata fan system has been charged with oil and Cebus is an excellent prospect from which we can expect a result later this year."

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Seismic Ops Underway at Petromanas' Albania Blocks

Petromanas Energy Inc. announced late Monday that its 2013 seismic program on Blocks 2 and 3 in Albania is underway.

Petromanas said its contractor, Geotec SpA of Italy, has initiated survey work and the drilling of shot holes. Recording commenced April 15.

Under the terms of the company's farm-out agreement with Royal Dutch Shell plc, Petromanas will be carried on the first $20 million spent on the seismic program, including the test line which was shot in 2012 and which is currently being processed. Any costs in excess of that amount will be shared equally by both parties.

Petromanas also announced that it has cased the Shpirag-2 well in Albania to the top of the main objective carbonate reservoir at a depth of 16,942 feet (5,164 meters). The company set casing from the previous casing depth of approximately 15,584 feet (4,750 meters) to put the lower zone of unstable flysch shale behind pipe. The well is currently drilling ahead in the upper carbonate zone at a depth of approximately 17,060 feet (5,200 meters).

"Successfully casing to this point means we can turn our attention to the carbonate target zone, without having to worry about instability higher in the hole," Petromanas CEO Glenn McNamara said.

"We and our partner remain committed to drilling the target carbonate zone to a sufficient depth so we can run logs and gather sufficient information to assess the potential of this prospect."

Petromanas estimates the total costs to drill the well to date are approximately $60 million, or $17 million net to the firm. The firm's management estimates the total costs to drill the well to the target depth of 19,029 feet (5,800 meters) at approximately $67 million gross. The logistics planning and sourcing for the Shpirag-2 completion/testing program is in the final stages and will be mobilized once the well reaches total depth.

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Exxon Spuds Dunquin Well Offshore Ireland

Irish explorer Providence Resources reported Tuesday that drilling has begun on the 44/23-1 well at the Dunquin exploration prospect in Frontier Licence 3/04 (FEL 3/04) off the west coast of Ireland.

Providence said that the operator, ExxonMobil, is expected to take several months to complete drilling operations using the Eirik Raude (DW semisub) rig.

Providence Chief Executive Tony O'Reilly commented in a company statement:

"We are pleased to confirm that drilling operations on the Dunquin exploration well have now commenced. This is a landmark well given that it is the first to be drilled in the central part of the deep-water southern Porcupine Basin and is designed to test a new and potentially material Lower Cretaceous carbonate exploration play concept. The 44/23-1 well is the second of six wells being drilled as part of Providence's Irish concerted multi-basin, multi-well drilling programme which kicked off in November 2011 with the Barryroe appraisal well."

The Dunquin target is a large gas prospects that is estimated to contain some 1.7 billion barrels of oil equivalent. Providence will be hoping that Exxon can replicate its own success in the Celtic Sea off the south coast of Ireland, where Providence's Barryroe discovery was recently estimated to contain recoverable resources of 346 million barrels of oil equivalent.

Exxon has a 27.5-percent interest in FEL 3/04. Its partners include: Eni, with 27.5 percent; Repsol, with 25 percent; Providence, with 16 percent; and Sosina Exploration, with four percent.

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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UAE: 'Days of Easy, Cheap Oil are Gone'

ABU DHBAI - The United Arab Emirates is planning to get up to 25% of its power from nuclear energy by 2021 as it looks to reduce its domestic reliance on fossil fuels and ensure it has enough oil to export as its economy expands, the country's new energy minister said Monday. 

"Nuclear energy is expected to account for between 20% to 25% of power production by 2021 through the operation of four nuclear power plants," Suhail Al Mazrouei told an energy event in Abu Dhabi. 

U.A.E. is also planning to up its production capacity to 3.5 million barrels per day by 2017 from around 3 million barrels per day, said Mr.Mazrouei, who was appointed oil minister last month in a cabinet reshuffle aimed at accelerating the pace of economic development in the Gulf state. 

Mr. Mazrouei said the days of easy, cheap oil are gone and finding new discoveries is becoming difficult and costly, while global oil demand will increase by one million barrels per day until it reaches 105 million barrels per by 2030. 

Emirates Nuclear Energy Corp., or ENEC, last year secured permission to construct two nuclear power units--the first in a string of civilian power plants planned in the Persian Gulf region. The firm is building the nuclear plants in the Gulf state, a member of the Organization of the Petroleum Exporting Countries, and said in March it has applied to the country's nuclear regulator for a license to build a third and fourth nuclear reactor in the western area of Abu Dhabi. 

Several Gulf states, including top oil exporter and fellow OPEC member Saudi Arabia, are looking at nuclear power after failing in recent years to develop enough gas production to meet their rising electricity demand, especially during the summer when use of electric-powered air conditioning soars. 

The U.A.E, which produces around 2.6 million barrels per day of crude, is one of the world's top five power consumers per capita. Currently, around 80% of the country's power is generated from burning natural gas, while the rest comes from oil, which the Gulf state wants to preserve for lucrative crude exports. 

ENEC signed in August contracts worth $3 billion with six international companies, including Russia's Tenex, Rio Tinto PLC and France's Areva SA, to supply nuclear fuel, conversion and enrichment services for its four South Korea-designed advanced pressurized water reactors. Each of the four planned reactors is capable of producing 1,400 megawatts of electricity. 

The contracts, which cover the first 15 years of the reactors' operations, will provide ENEC with long-term security of supply, and favorable pricing and commercial terms, the company said. ENEC said it expects to return to the market again when conditions are favorable to strengthen its supply position. 

ENEC has already started construction of the first unit in Barakah, in western Abu Dhabi, and is expected to start building its second reactor this year. 

The U.A.E. is investing billions of dollars in developing alternate sources of energy as part of plans to diversify its economy away from hydrocarbons. Its planned nuclear reactors are set to be the first in a string of civilian power plants in the Middle East, potentially including Egypt and Saudi Arabia. 

Unlike nearby Iran, the U.A.E. is committed to not enriching uranium itself nor reprocessing spent fuel. 

Hamad al-Kaabi, the Gulf state's national representative to the International Atomic Energy Agency, the United Nations' nuclear watchdog, has previously said that the U.A.E. hasn't yet finalized a strategy for managing spent fuel from the reactors, but a national waste strategy document is in advanced stages of negotiation. 

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Chevron Discovers Additional Natural Gas Offshore Australia

Chevron Corp. said it made another natural-gas discovery off the shore of Australia, adding to the oil major's portfolio in the region, where the company has major liquefied-natural gas projects.

Chevron, the second-largest U.S. oil company by market value after Exxon Mobil Corp., said the discovery well, located in the Carnarvon Basin about 106 miles northwest of Barrow Island, encountered approximately 132 feet of net gas pay. The well, located in 3,570 feet of water, was drilled to a total depth of 11,909 feet.

Melody Meyer, president of Chevron's Asia-Pacific exploration-and-development unit said a string of discoveries in the Carnarvon Basin has created a robust gas portfolio in Australia, which helps position Chevron to supply future LNG demand in the Asia Pacific region.

Chevron Australia is the operator, with a 50% interest.

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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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