Total Production to Increase 3% PA to 2015

PARIS - French oil major Total SA's chairman and chief executive, Christophe de Margerie, Friday confirmed the group's medium-term production targets. 

Speaking during the group's annual shareholders meeting, Mr. de Margerie said Total still expects its hydrocarbon output will increase an average 3% a year between 2011 and 2015. 

Over the past two years the company has focused its strategy on an aggressive search for additional oil and gas reserves, as demand from emerging markets, notably Asia, keeps increasing. 

"Clearly in terms of exploration we decided to shift gears," Mr. de Margerie said, noting that the group recently acquired many blocks in Brazil's deep offshore fields as part of its new policy for riskier exploration locations. 

"Now we need to make discoveries," he added. 

He said he remains confident the group would be able to produce as much as 3 million barrels of oil equivalent per day by the end of 2017.

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ConocoPhillips CEO Says Production Will Start Rising by Year's End

HOUSTON - ConocoPhillips Chief Executive Ryan Lance told shareholders at the company's annual meeting Tuesday that the company's long-awaited production growth rebound will begin by the end of this year.

He said 2013 will be an "inflection point" for ConocoPhillips, as it closes on $8.5 billion in announced asset sales and reaches a production low. But production will start to ramp up again by the end of the fourth quarter and into next year as the sales put cash on the company's balance sheet to fund development and grow its dividend.

"The growth is coming," Mr. Lance said. "You don't have to wait for that growth and the margin improvement for our company."

ConocoPhillips is in the midst of a transformation facilitated by drilling technologies that have unlocked oil and natural gas within the U.S. that had been unreachable or too expensive to drill. Mr. Lance's presentation to shareholders emphasized ConocoPhillips' ability to fund its operations and deliver on its promises of 3-5% production and margin growth even as it continues to pay a high dividend.

Mr. Lance said there's a "clear line of sight" to production of 1.9 million barrels of oil equivalent a day by 2017, up from an estimated 1.5 million barrels of oil equivalent per day this year. Much of that will be fueled by ConocoPhillips' acreage in unconventional U.S. shale formations--the Eagle Ford and Permian formations in Texas, and North Dakota's Bakken.

Income brought in from production in those areas will be used to fund the company's major projects around the world and exploration that is expected to fuel long-term growth. Mr. Lance highlighted the company's work in the Gulf of Mexico, where company is working to renew its presence. It will participate in five to eight wells this year, including its first operated well there in nearly a decade.

"We are back," Mr. Lance said of the Gulf.

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ExxonMobil Taps FMC for Julia Equipment

Exxon Mobil Corp. has awarded FMC Technologies, Inc. a subsea equipment order for the Julia development in the Gulf of Mexico. FMC's scope of supply includes six subsea trees, a manifold and associated tie-in equipment.

"FMC Technologies is pleased to provide ExxonMobil with subsea systems for this offshore project," said Tore Halvorsen, FMC Technologies' senior vice president, subsea technologies, in a statement. "We look forward to supporting ExxonMobil as they overcome the technological challenges of this ultra deepwater development."

Julia was discovered in 2007 and is estimated to hold almost 6 billion barrels of oil. The field is located in the Walker Ridge area in about 7,000 feet of water. The $4 billion project is expected to start producing in 2016. Phase 1 of the development will be designed to produce 34,000 barrels of oil per day from six subsea wells connecting to the Jack/St. Malo production facility.

Development drilling on the field is planned to kick-off in 2014 in waters ranging from 4,000 to 8,700 feet.

ExxonMobil operates the field with a 50 percent stake while Statoil holds the remaining percentage.

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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AmericaCNG to Roll Out Solution to Associated Gas Production

Dallas-based AmericaCNG.com Inc. will begin offering in September a new service that allows natural gas liquids (NGL) and methane to be stripped from production at the wellhead. The company's new mobile, portable plants offer producers a temporary solution for dealing with NGLs and methane until the necessary pipeline infrastructure is in place.

Through a Y-grade extraction process, natural gas is separated at the wellhead from oil production, and the NGLs and methane are separated through two pipes. The NGLs are sold off and the producer paid on the netback, while the methane is converted to liquefied natural gas (LNG). The converted LNG can then be used to power drilling rigs, allowing producers to keep drilling at fields where no gas lines are available and still make money. That LNG can also be transported to a pipeline on behalf of the producer.

The company's skid-mounted LNG machines allow LNG in the field to be sold for $1/gallon, depending on individual company analysis, saving exploration and production companies millions each month in fuel costs, allowing them to drill with no flaring, according to a company presentation.

The company's strategic alliance partners construct the plants based on the gas analysis obtained from oil and gas producers.

"The volume commitment that we get from the oil and gas producers and the gas analysis will dictate the sizes of these plants," said Joseph Farley, director of global business development, in an interview with Rigzone.

Plant sizes can range from 5,000 gallons up to 100,000 gallons.

AmericaCNG can also build a LNG/compressed natural gas (CNG) station for companies interested. Once methane is converted to LNG, it can be taken to a LNG/CNG station and distributed. LNG is stored at minus 260 degrees; however, once it begins to warm up, it turns back into a gas and that gas can then be compressed and placed in CNG storage tanks. The company would need to have a commitment of 5,000 gallons per day in order to build a CNG/LNG station for larger fleet customers.

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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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Job Market Particularly Strong for Deepwater Pros

An uptick in deepwater activity has contributed to a marked increase in demand for riser, drilling and completion engineers worldwide over the past year, an oil and gas recruitment specialist told Rigzone at last week's Offshore Technology Conference (OTC) 2013.

"The demand is great," Carolyn Stewart, Houston-based business development manager with NES Global Talent, said at the sidelines of OTC, which was held May 6-9 in Texas' energy hub Houston.

"We've seen quite a bit of drilling and completion," Stewart explained. "There's more specialization coming into play in high-pressure areas, deepwater areas."

As a result of this trend toward deeper developments, wells are becoming more complex and operators are placing wells closer together, Stewart noted.

"The technology for an FPSO [floating production, storage and offloading unit], FSO [floating storage and offloading vessel] – even just a general offshore rig, a TLP [tension-leg platform] or spar – has greatly increased," Stewart continued, adding that how operators configure wells is changing.  

In turn, the skill sets that companies are demanding from engineers, technicians and other specialists needed to drill and complete wells and position infrastructure are becoming more specialized, she said.

Although companies are asking more of deepwater professionals, qualified individuals seeking these highly specialized positions can earn very competitive compensation packages and be selective in terms of work rotations, Stewart said. In addition, she pointed out that demand for such candidates is robust is virtually all offshore oil and gas provinces – ranging from the Gulf of Mexico and the North Sea to West Africa and Southeast Asia.

For Stewart's company, the tight demand for drilling engineers, riser engineers and other deepwater experts has been good for business.

"We follow our clients," she said, noting that NES Global Talent now operates 46 locations worldwide and applies a "discipline-specific" recruiting approach that aids in expanding the breadth of its networking capabilities.

"Our focus is in all areas. We've been able to open offices on our clients' growth."

Because the demand for deepwater experts far outstrips the pool of available talent, offshore employers will need to redouble their efforts to encourage seasoned professionals to impart their expertise to their younger peers, Stewart said.

"Companies will have to get creative in how they bring that workforce in, how they train the workforce," she explained.

In some cases, companies have instituted mentoring programs in which senior-level engineers work directly with their less experienced counterparts, she added.

"I think as we go along, we'll see more mentoring programs, more development programs," Stewart concluded.

Matthew V. Veazey has written about the upstream and downstream O&G sectors for more than a decade. Email Matthew at mveazey@downstreamtoday.com. Twitter: @Matthew_Veazey

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OMV Petrom to Redevelop Oprisenesti Field

BUCHAREST - Romania's largest oil and gas group OMV Petrom plans to invest about 90 million euros ($115.7 million) by the end of this year to redevelop its Oprisenesti oil field in the eastern county of Braila, the company said in a statement Friday, news agency Mediafax reports. 

The project targets unlocking additional oil reserves of 8 million barrels of oil equivalent. 

"OMV Petrom is constantly investing in new technologies and secondary recovery methods to redevelop mature fields in Romania in order to improve the oil and gas recovery rate and stabilize production levels," said Johann Pleininger, member of OMV Petrom's executive board, responsible for exploration and production. 

Oprisenesti is a mature oil field, in production for almost 50 years, with a daily production of around 2% of the total oil production of Petrom in Romania, the oil company said. 

The redevelopment project entails drilling 30 new wells, as well as the construction of a water treatment station, a new pipeline transport network and three new pump stations. 

Oprisenesti is one of the six redevelopment projects Petrom plans to implement between 2013 and 2015. Total investment in the six projects is estimated at EUR400 million. 

Petrom is 51.01% owned by Austrian oil and gas group OMV AG, while the Economy Ministry holds a 20.64% stake.

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Premier Reaches Out to Xodus for Catcher FEED Study

Premier Oil has reached out to Xodus Group to conduct a subsea Front End Engineering Design study for the Catcher project in the Central North Sea. Catcher is situated on Block 28/9. The oil field was discovered in June 2010.

Xodus will develop and engineer field and subsea architecture, flow assurance processes, subsea control systems, pipelines and tie-ins, as well as providing technical safety and risk support. The company will also assist in the FEED for the three riser systems for each of the wells, to allow production from the field through the subsea tieback.

Work for the FEED contract will be developed in two phases. Premier stated in a release that a review of previous and current studies, preliminary process flow diagrams and investigative work to identify structural functional requirements, will lay the foundations for the subsequent select phase.

Premier Oil and partners formally agreed on a development concept and have moved into the design phase, which should be completed by the end of September.

"Xodus is proud to be involved in the Catcher project which is a significant development in the North Sea," said Andrew Wylie, senior consultant at Xodus Group in a statement. "Our fully independent, integrated and highly technical service will deliver a wealth of knowledge to this project. Xodus is committed to Aberdeen and the North Sea market and our breadth of capability and multidisciplinary service makes us a preferred partner for FPSO projects. From risers to pipelines, and design to pre-commissioning, we have a proven track record."

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Transocean Inks New Contracts, Extensions; Sees More Downtime

Drilling contractor Transocean Ltd. reported late Wednesday several new contracts and contract extensions valued at approximately $662 million.

The company also increased its expected downtime estimate for this year by 117 days, Transocean reported in its fleet summary update. However, 75 percent of this downtime is related to preparations for a new ultra-deepwater award at a leading-edge day rate, according to a May 16 analysts note for Barclays Research.

This downtime includes 89 days due to shipyard acceleration into 2013 from 2014 and contract preparation for the Deepwater Millennium (UDW drillship), which has been awarded a two-year contract through February 2016 by an unnamed operator for work offshore Australia. The rig currently is drilling the Kiboko-1 well for Anadarko Petroleum Corp. offshore Kenya, according to Rigzone's RigLogix database.

Deepwater Millennium will work at a day rate of $605,000, higher than its previous day rate of $545,000. The new award represents a $442 million estimated contract backlog, Transocean said in its rig fleet summary.

Transocean also received a three-month contract through October for Jack Bates (DW semisub) from an undisclosed operator for work offshore Australia. The rig currently is drilling the Bassett West 1 well, according to RigLogix.

ConocoPhillips awarded a two month extension through February 2014 to the Transocean Legend (mid-water semisub). The rig will work at a day rate of $440,000, higher than Barclays' previous estimate of $325,000 and higher than its current rate of $293,000, Barclays analysts noted.

Transocean John Shaw (mid-water semisub) has also been awarded a one-year contract extension for work in the UK North Sea at $415,000, up from the rig's previous day rate of $360,000. The rig has been working for TAQA Bratani in the region.

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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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Brazil's First Oil Auction in Five Years Draws Record Bids

RIO DE JANEIRO - Brazil saw record bidding at its first oil auction in five years Tuesday as the growing promise of oil finds along the equator attracted huge interest in exploration blocks at the mouth of the Amazon River.

Large oil finds in the Gulf of Guinea off the coast of Africa, along with promising finds in French Guyana on the South American continent, have shifted attention to Brazil. The South American country suspended its annual oil auctions in 2008 after the discovery of the subsalt oil province--close to 40 billion barrels of oil equivalent trapped under a layer of salt several thousand meters below the South Atlantic seabed.

Interest in that so-called equatorial margin "created more appetite for companies to invest," said Magda Chambriard, head of Brazil's national petroleum agency, ANP. "Those areas have become more important" to the global oil industry, which was reflected in the heavy bidding for the blocks, she said Tuesday.

A group led by France's Total SA--and that includes BP PLC and Brazil's state-run oil Petroleo Brasileiro SA--agreed to pay 345.95 million Brazilian reais ($172 million) for rights to explore an area of about 900 square kilometers at the mouth of the Amazon, topping a previous record set in 2006 for an oil field off Brazil's southeastern coast.

Ms. Chambriard said she sees the possibility of several platforms in the region producing 120,000 to 150,000 barrels of oil a day, similar to what is already happening in the Jubilee oil field off the African coast.

At the end of the auction, Brazil's government had raised BRL2.88 billion from selling exploration rights, topping the record BRL2.1 billion raised during a 2007 auction.

The record bids suggest that companies weren't scared off by requirements imposed by Brazil's government that a portion of exploration equipment be manufactured locally. However, bids Tuesday hewed relatively close to the minimum local-content level, showing that firms are being "more cautious," even as they acknowledge that the local-content requirement is "here to stay," Ms. Chambriard said.

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Transocean Shareholders Reject Icahn's Dividend Proposal

Transocean Ltd. shareholders voted overwhelmingly Friday to reject a $4 a share dividend proposal by activist investor Carl Icahn but ousted long-time company Chairman Michael Talbert and added one of Mr. Icahn's candidates to the offshore drilling giant's board of directors.

"I'm glad the shareholders took a reasonable and thoughtful approach to the issues and voted overwhelmingly in favor of our business model," Transocean Chief Executive Steve Newman said in a phone interview following the company's annual meeting in Zug, Switzerland.

Nearly 75% of shareholders, not including Mr. Icahn's shares, voted against the $4 dividend, Mr. Newman said.

Mr. Newman said that Sam Merksamer, one of three director candidates recommended by Mr. Icahn, was elected against Mr. Talbert. Mr. Newman said that despite the difference of opinions between the board and Mr. Icahn, it won't be an issue to add Mr. Merksamer to the board. "We welcome Mr. Merksamer to the board," Mr. Newman said. The board will meet Friday to change committee assignments to include the new member.

Investor advisory firms Institutional Shareholder Services and Glass, Lewis & Co. both backed a smaller dividend announced by the company and recommended replacing Mr. Talbert, despite an announcement earlier this week that if re-elected, he would step down in the next year. It was a move by Transocean that appeared to be aimed at appeasing shareholders frustrated with the company's lagging performance while preventing Mr. Icahn's candidates from winning board seats.

Mr. Icahn first revealed his stake in the world's largest offshore oil and gas driller in February. He argued Transocean has underperformed its peers in total shareholder returns over the past five years due to a litany of poor investment decisions.

Analysts and Mr. Icahn have said some of the problems could be blamed on the 2010 Deepwater Horizon accident, in which a Transocean rig leased by BP PLC exploded, killing 11 and leading to the largest oil spill in U.S. waters.

But Mr. Icahn argues there were problems that preceded the accident, including paying too much to purchase rival Global Santa Fe in 2007, an acquisition that the company says helped it become the largest offshore driller in the world.

Mr. Icahn also criticized the fact that the company unexpectedly had to issue debt and equity to cover the 2011 acquisition of rival Aker Drilling.

Transocean's Mr. Newman has acknowledged some of the troubles, but argued that Mr. Icahn's recommendation to focus on an oversized dividend ignored the realities of the offshore drilling business, namely that companies need to continue to invest in their offshore drilling fleets while keeping the balance sheet strong enough to weather expected down cycles in the oil and gas business.

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