Successful Drill Stem Test for Mzia-2 Well

BG Group reported Wednesday that it has completed another successful drill stem test in Block 1, offshore Tanzania, with initial results from the Mzia-2 well showing better-than-expected properties in the deeper Cretaceous reservoir.

BG said that the test on Mzia-2, the first carried out on a Cretaceous discovery in deep water off Tanzania, flowed at a maximum rate of 57 million cubic feet of gas per day.

Mzia-2 is some 2.5 miles from the Mzia-1 discovery, approximately 30 miles off the coast of southern Tanzania.

BG Group Chief Executive Chris Finlayson commented in a statement:

"The successful Mzia-2 drill stem test follows completion of a multi-well appraisal program earlier this year on the nearby Jodari field. Results from the current campaign demonstrate the excellent quality of our interests offshore Tanzania, where our resources, and those of other participants in the region, are helping support plans for a multi-train LNG export project.
"While we continue exploration and appraisal offshore, BG Group and others are jointly studying suitable sites for a potential onshore LNG terminal and anticipate providing proposed locations to the Tanzania Government in the next few months."

In a separate statement Ophir Energy, BG's partner in the license with a 40-percent interest, also welcomed the news. Ophir CEO Nick Cooper hailed the achievement as "another important step forward in Tanzania's first LNG development project", noting that the drill stem test result "has increased estimated recoverable resources from the field to an estimated 4.5 trillion cubic feet".

The Deepsea Metro I (UDW drillship), used to drill the Mzia-2 well, has now relocated to Block 4 to drill an exploration well, Ngisi-1, adjacent to the Pweza and Chewa discoveries.

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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First Kenyan Oil Production Seen by 2019

NAIROBI - Kenya could be six years away from becoming Africa's latest oil producing nation, the International Monetary Fund said in a recent report, though the company leading the country's exploration efforts cautioned it is still too early to predict when commercial output will begin.

"Kenya expects to start producing oil in six to seven years," the International Monetary Fund said in a review of the country's macroeconomic outlook released April 30.

Big oil discoveries in Kenya's northern Turkana region--one in early 2012 and another in May--have raised hopes of the East African nation joining Uganda, Tanzania and Mozambique as the continent's newest energy heavyweights.

However, the company that made the finds, London-listed wildcatter Tullow Oil PLC, said more wells would need to be drilled before any assurances could be made about when commercial production could start.

"I have seen the IMF report but would stress that we are still at the early stages of exploration in Kenya," said Tullow Oil spokesman George Cazenove.

"While the exploration so far has been very successful, we have only drilled three wells so any projections of when commercial oil might flow are premature," said Mr. Cazenove.

Tullow's success has whetted the appetite of other major foreign oil companies, the IMF said in its report.

"Out of 46 blocks made available by the Minister for Energy under the Petroleum Act, 45 have been licensed to 23 international oil companies," the IMF said.

Norway's Statoil ASA and U.K. heavyweight BG Group PLC are two of the biggest firms currently exploring in the region.

"The companies are at different stages of exploration, and the productive capacity of two oil wells is currently being assessed," said the report.

Kenya will be helped by the IMF to re-draft its rules for regulating the sectors, the organization said in its review.

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

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Andy Brown Joins BMT as VP of Business Development

BMT Scientific Marine Services (BMT), a subsidiary of BMT Group Ltd, is pleased to announce that Andy Brown has been appointed as vice president of business development.

Andy has worked in the offshore oil and gas sector for over 25 years and has wide ranging experience in business development, marketing, commercial documentation, project management, cost control, corporate finances and personnel management. His technical experience includes the management, design and development of numerous multidisciplinary oceanographic projects including oceanographic data acquisition systems, deepwater oceanographic moorings and buoyed systems on behalf of governments, oil and gas operators, engineering firms and construction companies worldwide. Andy has previously held senior management positions at large consultancies in the offshore sector, with responsibility for operations throughout the Americas and SE Asia.

In his new BMT role based in Houston, Andy will oversee the development and implementation of sales plans for all geographic regions and participate in identification, promotion and implementation of new products and services that will best benefit our clients.

Tom Johnson, President of BMT Scientific Marine Services, said on this new appointment: “I am delighted that Andy has joined BMT Scientific Marine Services.  I expect that Andy’s technical expertise and management experience will allow him to lead our dynamic business development team as we expand our global sales efforts. Our goal, as always, is to serve our client’s needs and to be able to deliver locally in many of the major oil basins worldwide.”

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Ex-Mil Recruitment Program Seeks Charity Status

An ex-army officer who works for oil and gas services provider Senergy Development Solutions is seeking charitable status for a program he launched in 2011 in Aberdeen, Scotland, that seeks to smooth the path for former military personnel looking to move into the energy industry.

Magnus Jeffrey, a former captain in the Royal Scots Borderers and who is now a project manager at Senergy, set up The Network Aberdeen in November 2011 to help other former service staff interested in following him into the energy sector. According to Jeffrey, in spite of lacking the technical experience for a career change to the energy industry, the nine years he spent operating in demanding conditions and environments for the army meant he had the right skills for taking on a role with Senergy.

“The hardest thing is definitely that initial step. A lot of people leave the services without relevant industry qualifications, but they often have the knowledge and skills needed, as well as broader experience garnered from operational military work,” Jeffrey said in a statement released Friday.

“The oil and gas industry is a dynamic and exciting industry in which to work, and is in many ways similar to the military. Critically, it has job opportunities so will naturally be a focus for service leavers.

“However, many of these individuals struggle to get past the initial application stage. Their applications often fall foul of the automated systems as it is difficult to relay their appropriate skills and expertise on paper. If the same individual is able to meet with someone and given the opportunity to explain what they can offer, the outcome can be very positive for both parties.”

Senergy itself has recently recruited another former infantryman, Andy Wilson, as well as an ex-Swedish naval officer, Erik Bergman.

The Network Aberdeen is now attempting to gain charitable status in the UK after having been successful in helping more than 10 people into work. The organization aims to be the focal point for service leavers in the North East of Scotland, while it is also now providing an increasing level of support to those people leaving other uniformed services, including the police and fire brigade.

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Interior Secretary Tours Rig in U.S. Gulf

Secretary of the Interior Sally Jewell on Friday visited an offshore drilling rig and production platform in the Gulf of Mexico, capping a two-day visit to the Department's regional offices that oversee oil and gas development in federal waters. Earlier, Secretary Jewell met with Interior employees, praising them for their professionalism and commitment to their mission, including safe and responsible energy development and Gulf Coast restoration.

"Oil and gas production from the Gulf of Mexico plays an important role in powering our nation and strengthening our economy," said Jewell. "The Department of the Interior will continue to work with industry to ensure that these resources are developed safely and responsibly, while also delivering a fair return to the American taxpayer, businesses and communities."

Jewell was accompanied by Bureau of Safety and Environmental Enforcement (BSEE) Director Jim Watson and a BSEE Gulf Region inspector on the visits, which included seeing first-hand LLOG’s drilling operations onboard the ENSCO 8502 rig, approximately 120 miles southeast of New Orleans, LA. There she observed a cementing operation for a production well and was briefed on LLOG’s development plan for the area.

Jewell then visited Chevron’s deepest producing facility in 6,500 feet water depth, a semisubmersible platform approximately 125 miles southeast of New Orleans, LA. There she toured the production equipment and discussed Chevron’s deepwater strategy for exploration and development in the Gulf of Mexico.

In speaking to employees on Thursday, including Bureau of Ocean Energy Management (BOEM) and BSEE employees, the Secretary thanked them for their work to implement the most significant drilling and safety reforms in U.S. history following the 2010 Deepwater Horizon tragedy.

"Maintaining the public’s trust in the safety and environmental performance of oil and gas production is critically important as we continue to tap into the Gulf’s abundant resource potential," Jewell told the employees. "I have immense admiration and respect for your efforts to carry out aggressive restructuring and strengthening of the oil and gas regulatory system."

The Gulf of Mexico contributes about 25 percent of U.S. domestic oil and 11 percent of domestic gas production, providing the bulk of the $12.2 billion in revenue from energy production that Interior distributed last year. The Gulf is home to a number of world-class producing basins, including many in deepwater areas that are increasingly accessible with new technology.

In 2012, Interior approved 112 new deepwater well permits in the Gulf, the most since 2005, and more rigs are now operating there than before Deepwater Horizon. Under Interior’s new five-year program for offshore leasing, more than 75 percent of the total undiscovered, technically recoverable oil and gas resources estimated on the OCS were made available for exploration and development. Fifteen potential lease sales are scheduled for the 2012-2017 period, including 12 in the Gulf and three off the coasts of Alaska.

Two Gulf lease sales held under the five-year program have demonstrated industry’s continued strong interest, especially in the deepwater region. The most recent sale in March offered 39 million acres, attracting more than $1.2 billion in high bids. The 20- million-acre sale held last November netted nearly $134 million. A third sale in August will offer 21 million acres offshore Texas, making all unleased areas in the Western Planning Area available for development.

These sales include conditions, developed in tandem with safety and drilling reforms, to ensure both orderly resource development and protection of the human, marine and coastal environments. The economic terms for the leases include a range of incentives to encourage diligent development and ensure a fair return to American taxpayers.

A 2011 BOEM assessment estimated that the Central Gulf holds more than 30 billion barrels of oil and about 134 trillion cubic feet of natural gas yet to be discovered. The Western Gulf of Mexico is estimated to contain 12 billion barrels of oil and nearly 80 trillion cubic feet of natural gas.

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Chesapeake Says Goodbye to Director, Names Replacement

Chesapeake Energy Corporation announced Friday that its board of directors has accepted the resignation of director Louis A. Simpson. Thomas L. Ryan, president and chief executive officer of Service Corporation International (SCI), has been elected to fill the vacancy and has been appointed to the audit committee. He will stand for election at the 2013 annual meeting of shareholders on June 14. Ryan replaces R. Brad Martin on the audit committee, with Martin becoming chair of the nominating, corporate governance and social responsibility committee.

Chairman Archie Dunham said, "The Board has greatly appreciated and benefited from Lou’s service to Chesapeake over the past two years. He was elected to our Board in June 2011 and has chaired the nominating, corporate governance and social responsibility committee since the 2012 annual meeting of shareholders. Lou has made significant contributions to strengthening Chesapeake’s corporate governance. We wish him the very best as he leaves the board to pursue his business interests."

Regarding the election of Ryan, Dunham stated, "Tom was recommended by our largest shareholder, Southeastern Asset Management, to replace Lou on Chesapeake’s board. With his extensive management experience and financial expertise in running a leading North American public company, Tom will be a great addition to our audit committee and a terrific resource for our board and management team. We are pleased to welcome Tom and are confident that his insight and experience will benefit the company and all of our shareholders."

Ryan commented, "It is a privilege to be selected to join the board of one of our country’s leading energy producers – a company that has played a pivotal role in changing the U.S. energy supply paradigm through its pioneering of unconventional natural gas and oil exploration and development. I look forward to learning more about Chesapeake’s world-class assets which clearly have tremendous potential for future value creation."

Ryan has been chief executive officer of Service Corporation International (SCI) since 2005 and has served as president of SCI since 2002. SCI is North America's leading provider of deathcare products and services, with more than 21,000 employees. From 2002 to 2005, Ryan was also chief operating officer of SCI, and from 2000 to 2002 he was chief executive officer of SCI’s European operations. He served in a variety of financial management roles from the time he joined SCI in 1996 until 2000. Before joining SCI, Ryan was a certified public accountant with Coopers & Lybrand LLP for eight years. He holds a bachelor’s degree in business administration from the University of Texas at Austin. Ryan is a member of the Board of Trust Managers of Weingarten Realty Investors and serves as a director of Texas Industries, Inc. He also serves as Chairman of the Board of Trustees of the United Way of Greater Houston and on the Board of Directors of the Greater Houston Partnership, Greater Houston Community Foundation Governing Board and the University of Texas McCombs Business School Advisory Council.

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Clayton Williams Energy Closes on Andrews County Wolfberry Assets

Clayton Williams Energy, Inc. announced it has closed the previously reported transaction to monetize its Wolfberry oil and gas reserves, leasehold interests and facilities located in Andrews County, Texas.

At the closing, the company contributed 5 percent of the assets to a newly formed limited partnership in exchange for a 5 percent general partner interest, and a financial investor contributed cash of $215.2 million to the limited partnership in exchange for a 95 percent limited partnership interest.

The limited partnership then purchased 95 percent of the assets from the company for $215.2 million, subject to customary closing adjustments, with $26.5 million being placed in escrow pending resolution of certain title requirements and $188.7 million being paid to the company.

If the title requirements are not satisfied, waived or extended within 180 days, the affected properties will be conveyed back to the company and the escrowed funds will be returned to the limited partner. Management of the company believes that the defects will be cured timely.

Effective with the closing, the borrowing base under the company’s revolving bank credit facility was reduced from $585 million to $470 million to account for the release of collateral, providing the company with approximately $100 million of additional availability under the facility.

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BP Sees Strong 1Q after TNK-BP Sale

U.K. energy giant BP PLC Tuesday posted a more than threefold increase in profit for the first quarter as proceeds from the sale of Russian joint venture TNK-BP offset a fall in oil and gas production and downtime at the company's key Whiting refinery in Indiana. 

"These strong first-quarter results demonstrate the progress BP is making...and underpin our commitment to material operating cash flow growth by 2014," said BP Chief Executive Bob Dudley. 

The London-based oil and gas company said its replacement cost profit, a figure that excludes gains or losses in the value of inventories and is therefore equivalent to the net profit figure reported by U.S. oil companies, was $16.60 billion in the three months ended March 31, compared with $4.78 billion in the first quarter of 2012. 

First-quarter earnings were bolstered by the sale of BP's half of TNK-BP to OAO Rosneft, which completed March 21, for a total consideration of $27.5 billion in cash and Rosneft shares. BP now holds a 19.75% interest in Rosneft. The 11 days of earnings from Rosneft attributable to BP in the first quarter were estimated at $85 million. 

The gain on the sale was $15.5 billion, of which $12.5 billion was recognized in the first quarter. The rest of the proceeds will be released to the income statement over time, BP said. 

Excluding the proceeds of the TNK-BP sale and other one-off gains, the company's profit was $4.22 billion, down 9.4% on the year and above average expectations of $3.25 billion in a Dow Jones Newswires poll of nine analysts.

Excluding TNK-BP and Rosneft, BP's total oil and gas production was 2.330 million barrels of oil equivalent per day, a 5% decrease on the year due mostly to other asset sales, and slightly above analyst expectations of 2.322 million barrels of oil equivalent a day. 

The company announced a quarterly dividend of 9 cents a share to be paid in June. Group revenues were $107.21 billion, compared with $97.42 billion in the first quarter of 2012. Diluted earnings per share were 87.61 cents, compared with 29.97 cents the previous year.

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

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EC225: On Target for 2013 Return?

When a Super Puma helicopter with 19 people on board was forced to ditch in the North Sea, west of Shetland, last October the incident was another reminder of 2009's fatal crash that saw 16 people killed – the biggest loss of life in a helicopter incident in the North Sea in two decades.

The April 2009 crash also involved a Super Puma, and given that October's incident was the second ditching of a Super Puma in 2012, a major question was raised as to the continuing safety of the aircraft for use in offshore transfers.

While Bond Aviation operated the helicopters involved in the 2009 crash and the May 2012 ditching, the Super Puma in October's incident was operated by a separate company: CHC Helicopter. No lives were lost in either of 2012's ditching incidents, but having Super Pumas ditching into the sea has not exactly inspired confidence in a particular variant of the aircraft: the EC225 made by Eurocopter.

Flights of the EC225 variant were soon suspended after the October incident, with certain exceptions for what CHC CEO William Amelio described as "life-or-death search-and-rescue missions".

The EC225 Super Puma (courtesy of Eurocopter)

At the time of the October incident, preliminary investigations by the UK's Air Accidents Investigations Branch (AAIB) indicated that the controlled ditching of the EC225 – in which all 17 passengers and two crew were evacuated safely – showed strong similarities to May's ditching incident. This was because a problem with a particular critical gearbox component appeared to be the trigger for both incidents.

In May's incident, the crew ditched the helicopter after a warning that the main gearbox lubrication system had failed and a subsequent attempt to operate the emergency system on the aircraft also caused a failure warning.

In the October incident, the main gearbox lubrication system was lost after the complete failure of the helicopter's bevel-gear vertical shaft. Just as with the May incident a 360-degree crack had been found in the bevel-gear vertical shaft, with the fracture causing the gears operating the main oil pump on the helicopter to fail.

Although the October incident saw the emergency system operating correctly, it gave a false warning of failure which led the crew to decide to ditch the helicopter.

To find out how the firm is progressing in working out a solution to the problems with the EC225, Rigzone recently spoke to Eurocopter. This was after the firm's CEO Lutz Bertling, said in mid-April that he was confident that the helicopter would be able to return to service during the third quarter of this year after the firm identified both an interim fix and what it thinks might be the final solution to the gearbox problem.

A third test campaign by the company has seen significant progress made regarding the root cause of the crack initiation in the gear box, according to a Eurocopter spokesman. The company believes a combination of factors led to weakened fatigue strength in the vertical shaft and it added that it has replicated the crack initiation in scenarios conducted on test benches.

Meanwhile, a flight test is currently in progress to demonstrate the crack-propagation scenario. The firm has been working with Georgia Technology Research Institute and Shainin Engineering, which was involved in identifying the wing crack issues that dogged the Airbus A380 fleet during the first half of last year.

"We believe we have found the root cause at Eurocopter. That has to be verified by all the regulatory authorities," the spokesman said. "It's only our opinion in finding what the root cause is at this moment in time. So what we're saying is that the long-term fix will be a new shaft and interim solutions will be put in place, but only [when] cleared by the operators and all the regulatory bodies."

This means that the 3Q 2013 deadline for a return to service of the EC225 could prove optimistic.

"We can't give dates specifically and [Bertling] has given the third quarter as a reasonable period of time. So we'll work as close to that as we can," added the spokesman.

How soon the Scottish oil and gas industry will see a return of the EC225 will depend on what the interim fix is and if the regulators allow them to employ it to get the aircraft back in the air, according to Jake Molloy – the Aberdeen-based organizer for the RMT Union.

"There are too many ifs and buts at this minute in time to say with any authority whether or not they will be back. They've also got to satisfy the Helicopter Safety Steering Group, which is a broad church of employers' associations, trade unions, workforce representatives and others," said Molloy, whose union's offshore energy branch represents thousands of workers in the UK North Sea.

"So, there's a long, long way before we get to that question of whether or not we're happy. It's really got to be decided, in the first instance, whether Eurocopter is happy, the regulators are happy, the HSSG is happy and then the question will come to whether or not we as workforce representatives and, moreover, the workforce are happy."

Molloy added that his union is not putting any timeline on when it expects to see the EC225 back in service.

Commenting on the 3Q 2013 deadline set by Bertling, he said:

"If that's what Eurocopter think then they are entitled to their opinion on that, but we're not putting any timeline on it. It will be done when it's done.

"As things stand, the helicopter providers are doing a sterling job in providing a service and getting people in and off shore. We'd like to see the full fleet back, and operating safely obviously, because it would get a lot of people back to work who are currently sitting at home."

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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