Total Confirms Output Targets, Sees Further Growth After 2017

SHETLAND, Scotland - French company Total SA still expects its oil and gas output to grow 3% on average on an annual basis between 2011 and 2015, and then sees accelerated growth after 2017 as new projects come on stream, the head of the exploration and production division Yves-Louis Darricarrere said, ahead of the group's release of its first-quarter earnings later this week.

By 2017, the group expects to have increased its production capacity potential to 3 million barrels of oil equivalent per day, from currently around 2.3 mboe/d, Mr. Darricarrere said during a press presentation there Monday.

The group is strongly competing with peers to find more oil and gas as energy demand keeps growing in emerging markets and while most conventional hydrocarbon reservoirs around the world are believed now to be depleting. Total has engaged in a strategic change and has become more aggressive in terms of exploration, allowing it to recently make substantial discoveries, notably in risky areas also called "frontier basins," such as the rough seas of West Shetlands and the Barents Sea, at the most northern tip of Europe.

Total even sees its output growth accelerating after 2017, as "already 90% of the 2017 potential is either in production or in development," Mr. Darricarrere said.

"We're seeing the results of our revitalized exploration strategy. Accepting to take more risks and looking for larger projects are our new focuses," Mr. Darricarrere said, adding the group's potential resources has doubled in the last three years to six billion barrels of oil equivalent.

In the North Sea alone, the group plans to invest as much as $20 billion over the five coming years, he said.

The strategy has allowed Total's production decline rate to remain steady, at around 3%, he said.

"We're able to control the decline, but this is because attention has been brought to existing fields and all our projects must be on time... Any delay of a project is a destruction of growth," he added.

Total has currently 15 projects under development, four of which are located in the North Sea and the Barents Sea. Mr. Darricarrere said "these projects, for the time being, are on time" and should add around 175,000 boe/d to Total's production.

The group will release its first-quarter earnings on Friday at 0600 GMT. Analysts polled by Dow Jones Newswires expect Total's first-quarter output to have dropped 2.1% from a year earlier to 2.323 mboe/d from 2.372 mboe/d.

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

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Total Confirms Output Targets, Sees Further Growth After 2017

SHETLAND, Scotland - French company Total SA still expects its oil and gas output to grow 3% on average on an annual basis between 2011 and 2015, and then sees accelerated growth after 2017 as new projects come on stream, the head of the exploration and production division Yves-Louis Darricarrere said, ahead of the group's release of its first-quarter earnings later this week.

By 2017, the group expects to have increased its production capacity potential to 3 million barrels of oil equivalent per day, from currently around 2.3 mboe/d, Mr. Darricarrere said during a press presentation there Monday.

The group is strongly competing with peers to find more oil and gas as energy demand keeps growing in emerging markets and while most conventional hydrocarbon reservoirs around the world are believed now to be depleting. Total has engaged in a strategic change and has become more aggressive in terms of exploration, allowing it to recently make substantial discoveries, notably in risky areas also called "frontier basins," such as the rough seas of West Shetlands and the Barents Sea, at the most northern tip of Europe.

Total even sees its output growth accelerating after 2017, as "already 90% of the 2017 potential is either in production or in development," Mr. Darricarrere said.

"We're seeing the results of our revitalized exploration strategy. Accepting to take more risks and looking for larger projects are our new focuses," Mr. Darricarrere said, adding the group's potential resources has doubled in the last three years to six billion barrels of oil equivalent.

In the North Sea alone, the group plans to invest as much as $20 billion over the five coming years, he said.

The strategy has allowed Total's production decline rate to remain steady, at around 3%, he said.

"We're able to control the decline, but this is because attention has been brought to existing fields and all our projects must be on time... Any delay of a project is a destruction of growth," he added.

Total has currently 15 projects under development, four of which are located in the North Sea and the Barents Sea. Mr. Darricarrere said "these projects, for the time being, are on time" and should add around 175,000 boe/d to Total's production.

The group will release its first-quarter earnings on Friday at 0600 GMT. Analysts polled by Dow Jones Newswires expect Total's first-quarter output to have dropped 2.1% from a year earlier to 2.323 mboe/d from 2.372 mboe/d.

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

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Exillon Well Ahead of Growth Target for 2P Reserves

Onshore Russia-focused junior Exillon Energy reported an update Friday in which the firm highlighted that it was well ahead target when it comes to both production and reserves.

In the statement, Exillon CEO Mark Martin said:

"The three components of our growth strategy are to increase our production, EBITDA and reserves. Our production during 2012 grew by 45 percent, our EBITDA by 137 percent and our 2P reserves by 96 percent.

"Our target was to double our 2P reserves within three years. We have done this in one year."

Exillon reported that its total proved (1P) reserves increased by 56 percent in 2012 to 196 million barrels, while its proved plus probable (2P) reserves almost doubled to 520 million barrels from 265 million barrels at the end of 2011.

At Exillon's ETP II-III field at Timan-Pechora in northern Russia, 2P reserves increased by 110 percent to 107 million barrels. At the firm's EWS I field in Western Siberia, 2P reserves increased 75 percent to 180 million barrels.

Recent acquisitions by Exillon in Timan-Pechora added seven million barrels of 2P reserves, although they also added 95 million barrels of 3P reserves, said the firm.

Exillon said that it plans to drill 24 wells this year, which represents a 50-percent increase on the firm's 2012 drilling activity.

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Energy Boom Helps Fuel West Texas, Great Plains Population Growth

The boom in Bakken and Permian Basin oil and gas activity helped fuel population growth in North Dakota and Texas from 2011 to 2012, the U.S. Census Bureau reported Thursday.

Midland, Texas ranked as the fastest-growing metro area from July 1, 2011 to July 1, 2012, with population growth of 4.6 percent. Neighboring Odessa, Texas, ranked fifth, with Casper and Cheyenne, Wyo., and Bismarck, N.D. ranked among the top 20 fastest-growing metropolitan areas.

"After a long period of out-migration, some parts of the Great Plains – from just south to the Canadian border all the way down to West Texas –are experiencing rapid population growth," said Thomas Mesenbourg, the Census Bureau's senior adviser and acting director, in a statement. "There are probably many factors fueling this growth on the prairie, but no doubt the energy boom is playing a role. For instance, the Permian Basin, located primarily in West Texas, and North Dakota accounted for almost half of the total U.S. growth in firms that mine or extract oil and gas, during a recent one-year period."

In micropolitan areas, which contain an urban cluster of between 10,000 and 49,999 people, Williston, N.D. topped the list of fastest-growing cities with 9.3 percent. Dickinson, N.D. ranked third among fastest-growing micropolitan areas with 6.5 percent.

Eleven Texas counties ranked among the 50 fastest-growing as well as among the 50 highest numeric gainers from July 1, 2011 through July 1, 2012. Bexar County, which encompasses San Antonio and close to the core South Texas counties impacted by Eagle Ford shale activity, ranked 11th among the largest numeric gainers in this timeframe, a U.S. Census Bureau spokesperson told Rigzone in an email.

Dimmitt County, located on the Texas-Mexico border, ranked 20th on the list of U.S. counties that experienced the largest percentage gain in population from 2011 to 2012. Guadalupe County, just east of San Antonio, ranked 49th among the counties nationwide with the largest percent gain in population.

Two North Dakota counties, Williams and Stark, ranked among the five fastest-growing counties with populations of 10,000 or more.

Exploration and production activity from Permian Basin and Eagle Ford helped bolster Texas oil production to nearly 1.5 million barrels of oil per day, an almost 50 percent increase in crude oil production since 2011, Texas Railroad Commissioner Christi Craddick said in a Feb. 28 statement. Craddick added that Texas now represents nearly a fourth of total U.S. crude oil production, and noted that the oil and gas energy sector created 427,761 jobs in Texas and paid $9.25 billion in state taxes in 2011.

The surge in exploration and production (E&P) activity in the Eagle Ford supported nearly 50,000 full-time jobs in 20 counties and contributed more than $25 billion to the South Texas economy, according to a March 13 report by the Eagle Ford Shale Task Force. However, the surge in E&P activity has created infrastructure challenges for South Texas, including the need for a sustainable housing plan for the region and roads wearing down from greater traffic.

The Permian Basin continues to play a significant role in Texas oil production as the increased use of enhanced oil recovery practices in the Permian Basin has substantially impacted U.S. oil production. More than 270 million barrels of oil were produced in the Permian Basin in 2010, and over 280 million barrels of oil were produced in 2011, according to the Texas Railroad Commission.

In 2011, North Dakota was the fourth largest crude oil producing U.S. state, accounting for more than 7 percent of U.S. oil production, according to the U.S. Energy Information Administration (EIA). A 35 percent increase in production from 2010 to 2011 was primarily driven by horizontal drilling and hydraulic fracturing in the Bakken formation.

EIA expects U.S. crude oil production to keep growing rapidly over the next two years, growing from an average 6.5 million barrels per day in 2012 to an average 7.3 million bpd in 2013 and 7.9 million bpd in 2014. Drilling in tight oil plays in the onshore Williston, western Gulf of Mexico and Permian Basins, is expected to account for the bulk of that forecasted production growth, EIA reported in its March 12 Short-Term Energy Outlook.

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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Energy Boom Helps Fuel West Texas, Great Plains Population Growth

The boom in Bakken and Permian Basin oil and gas activity helped fuel population growth in North Dakota and Texas from 2011 to 2012, the U.S. Census Bureau reported Thursday.

Midland, Texas ranked as the fastest-growing metro area from July 1, 2011 to July 1, 2012, with population growth of 4.6 percent. Neighboring Odessa, Texas, ranked fifth, with Casper and Cheyenne, Wyo., and Bismarck, N.D. ranked among the top 20 fastest-growing metropolitan areas.

"After a long period of out-migration, some parts of the Great Plains – from just south to the Canadian border all the way down to West Texas –are experiencing rapid population growth," said Thomas Mesenbourg, the Census Bureau's senior adviser and acting director, in a statement. "There are probably many factors fueling this growth on the prairie, but no doubt the energy boom is playing a role. For instance, the Permian Basin, located primarily in West Texas, and North Dakota accounted for almost half of the total U.S. growth in firms that mine or extract oil and gas, during a recent one-year period."

In micropolitan areas, which contain an urban cluster of between 10,000 and 49,999 people, Williston, N.D. topped the list of fastest-growing cities with 9.3 percent. Dickinson, N.D. ranked third among fastest-growing micropolitan areas with 6.5 percent.

Eleven Texas counties ranked among the 50 fastest-growing as well as among the 50 highest numeric gainers from July 1, 2011 through July 1, 2012. Bexar County, which encompasses San Antonio and close to the core South Texas counties impacted by Eagle Ford shale activity, ranked 11th among the largest numeric gainers in this timeframe, a U.S. Census Bureau spokesperson told Rigzone in an email.

Dimmitt County, located on the Texas-Mexico border, ranked 20th on the list of U.S. counties that experienced the largest percentage gain in population from 2011 to 2012. Guadalupe County, just east of San Antonio, ranked 49th among the counties nationwide with the largest percent gain in population.

Two North Dakota counties, Williams and Stark, ranked among the five fastest-growing counties with populations of 10,000 or more.

Exploration and production activity from Permian Basin and Eagle Ford helped bolster Texas oil production to nearly 1.5 million barrels of oil per day, an almost 50 percent increase in crude oil production since 2011, Texas Railroad Commissioner Christi Craddick said in a Feb. 28 statement. Craddick added that Texas now represents nearly a fourth of total U.S. crude oil production, and noted that the oil and gas energy sector created 427,761 jobs in Texas and paid $9.25 billion in state taxes in 2011.

The surge in exploration and production (E&P) activity in the Eagle Ford supported nearly 50,000 full-time jobs in 20 counties and contributed more than $25 billion to the South Texas economy, according to a March 13 report by the Eagle Ford Shale Task Force. However, the surge in E&P activity has created infrastructure challenges for South Texas, including the need for a sustainable housing plan for the region and roads wearing down from greater traffic.

The Permian Basin continues to play a significant role in Texas oil production as the increased use of enhanced oil recovery practices in the Permian Basin has substantially impacted U.S. oil production. More than 270 million barrels of oil were produced in the Permian Basin in 2010, and over 280 million barrels of oil were produced in 2011, according to the Texas Railroad Commission.

In 2011, North Dakota was the fourth largest crude oil producing U.S. state, accounting for more than 7 percent of U.S. oil production, according to the U.S. Energy Information Administration (EIA). A 35 percent increase in production from 2010 to 2011 was primarily driven by horizontal drilling and hydraulic fracturing in the Bakken formation.

EIA expects U.S. crude oil production to keep growing rapidly over the next two years, growing from an average 6.5 million barrels per day in 2012 to an average 7.3 million bpd in 2013 and 7.9 million bpd in 2014. Drilling in tight oil plays in the onshore Williston, western Gulf of Mexico and Permian Basins, is expected to account for the bulk of that forecasted production growth, EIA reported in its March 12 Short-Term Energy Outlook.

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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Exillon Well Ahead of Growth Target for 2P Reserves

Onshore Russia-focused junior Exillon Energy reported an update Friday in which the firm highlighted that it was well ahead target when it comes to both production and reserves.

In the statement, Exillon CEO Mark Martin said:

"The three components of our growth strategy are to increase our production, EBITDA and reserves. Our production during 2012 grew by 45 percent, our EBITDA by 137 percent and our 2P reserves by 96 percent.

"Our target was to double our 2P reserves within three years. We have done this in one year."

Exillon reported that its total proved (1P) reserves increased by 56 percent in 2012 to 196 million barrels, while its proved plus probable (2P) reserves almost doubled to 520 million barrels from 265 million barrels at the end of 2011.

At Exillon's ETP II-III field at Timan-Pechora in northern Russia, 2P reserves increased by 110 percent to 107 million barrels. At the firm's EWS I field in Western Siberia, 2P reserves increased 75 percent to 180 million barrels.

Recent acquisitions by Exillon in Timan-Pechora added seven million barrels of 2P reserves, although they also added 95 million barrels of 3P reserves, said the firm.

Exillon said that it plans to drill 24 wells this year, which represents a 50-percent increase on the firm's 2012 drilling activity.

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Energy Boom Helps Fuel West Texas, Great Plains Population Growth

The boom in Bakken and Permian Basin oil and gas activity helped fuel population growth in North Dakota and Texas from 2011 to 2012, the U.S. Census Bureau reported Thursday.

Midland, Texas ranked as the fastest-growing metro area from July 1, 2011 to July 1, 2012, with population growth of 4.6 percent. Neighboring Odessa, Texas, ranked fifth, with Casper and Cheyenne, Wyo., and Bismarck, N.D. ranked among the top 20 fastest-growing metropolitan areas.

"After a long period of out-migration, some parts of the Great Plains – from just south to the Canadian border all the way down to West Texas –are experiencing rapid population growth," said Thomas Mesenbourg, the Census Bureau's senior adviser and acting director, in a statement. "There are probably many factors fueling this growth on the prairie, but no doubt the energy boom is playing a role. For instance, the Permian Basin, located primarily in West Texas, and North Dakota accounted for almost half of the total U.S. growth in firms that mine or extract oil and gas, during a recent one-year period."

In micropolitan areas, which contain an urban cluster of between 10,000 and 49,999 people, Williston, N.D. topped the list of fastest-growing cities with 9.3 percent. Dickinson, N.D. ranked third among fastest-growing micropolitan areas with 6.5 percent.

Eleven Texas counties ranked among the 50 fastest-growing as well as among the 50 highest numeric gainers from July 1, 2011 through July 1, 2012. Bexar County, which encompasses San Antonio and close to the core South Texas counties impacted by Eagle Ford shale activity, ranked 11th among the largest numeric gainers in this timeframe, a U.S. Census Bureau spokesperson told Rigzone in an email.

Dimmitt County, located on the Texas-Mexico border, ranked 20th on the list of U.S. counties that experienced the largest percentage gain in population from 2011 to 2012. Guadalupe County, just east of San Antonio, ranked 49th among the counties nationwide with the largest percent gain in population.

Two North Dakota counties, Williams and Stark, ranked among the five fastest-growing counties with populations of 10,000 or more.

Exploration and production activity from Permian Basin and Eagle Ford helped bolster Texas oil production to nearly 1.5 million barrels of oil per day, an almost 50 percent increase in crude oil production since 2011, Texas Railroad Commissioner Christi Craddick said in a Feb. 28 statement. Craddick added that Texas now represents nearly a fourth of total U.S. crude oil production, and noted that the oil and gas energy sector created 427,761 jobs in Texas and paid $9.25 billion in state taxes in 2011.

The surge in exploration and production (E&P) activity in the Eagle Ford supported nearly 50,000 full-time jobs in 20 counties and contributed more than $25 billion to the South Texas economy, according to a March 13 report by the Eagle Ford Shale Task Force. However, the surge in E&P activity has created infrastructure challenges for South Texas, including the need for a sustainable housing plan for the region and roads wearing down from greater traffic.

The Permian Basin continues to play a significant role in Texas oil production as the increased use of enhanced oil recovery practices in the Permian Basin has substantially impacted U.S. oil production. More than 270 million barrels of oil were produced in the Permian Basin in 2010, and over 280 million barrels of oil were produced in 2011, according to the Texas Railroad Commission.

In 2011, North Dakota was the fourth largest crude oil producing U.S. state, accounting for more than 7 percent of U.S. oil production, according to the U.S. Energy Information Administration (EIA). A 35 percent increase in production from 2010 to 2011 was primarily driven by horizontal drilling and hydraulic fracturing in the Bakken formation.

EIA expects U.S. crude oil production to keep growing rapidly over the next two years, growing from an average 6.5 million barrels per day in 2012 to an average 7.3 million bpd in 2013 and 7.9 million bpd in 2014. Drilling in tight oil plays in the onshore Williston, western Gulf of Mexico and Permian Basins, is expected to account for the bulk of that forecasted production growth, EIA reported in its March 12 Short-Term Energy Outlook.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

Exillon Well Ahead of Growth Target for 2P Reserves

Onshore Russia-focused junior Exillon Energy reported an update Friday in which the firm highlighted that it was well ahead target when it comes to both production and reserves.

In the statement, Exillon CEO Mark Martin said:

"The three components of our growth strategy are to increase our production, EBITDA and reserves. Our production during 2012 grew by 45 percent, our EBITDA by 137 percent and our 2P reserves by 96 percent.

"Our target was to double our 2P reserves within three years. We have done this in one year."

Exillon reported that its total proved (1P) reserves increased by 56 percent in 2012 to 196 million barrels, while its proved plus probable (2P) reserves almost doubled to 520 million barrels from 265 million barrels at the end of 2011.

At Exillon's ETP II-III field at Timan-Pechora in northern Russia, 2P reserves increased by 110 percent to 107 million barrels. At the firm's EWS I field in Western Siberia, 2P reserves increased 75 percent to 180 million barrels.

Recent acquisitions by Exillon in Timan-Pechora added seven million barrels of 2P reserves, although they also added 95 million barrels of 3P reserves, said the firm.

Exillon said that it plans to drill 24 wells this year, which represents a 50-percent increase on the firm's 2012 drilling activity.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

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Chevron: On Track for 20% Production Growth By 2017

NEW YORK - Chevron Corp. expects to increase its oil and natural gas production by more than 20% by 2017, the company said Tuesday at its annual investor conference.

Chevron is in the midst of completing a number of expensive, large-scale projects meant to raise production around the globe, including a massive natural gas project in Australia and new oil wells in the ultra-deep waters in the U.S. Gulf of Mexico. The company hopes to boost its daily oil and natural gas production to 3.3 million barrels in 2017 from the nearly 2.7 million barrels it averaged in the fourth quarter of 2012.

"Our key development projects remain on track," said John Watson, Chevron's chief executive.

Global oil companies have scouted the globe for new production fields as such countries as China and India increase their energy appetite. The two countries are expected to increase their natural gas imports by 10% a year for the next decade, Mr. Watson said. Chevron, the second-largest U.S. oil company in terms of capital after Exxon Mobil Corp. (XOM), is spending $36.7 billion in 2013 alone to search for and develop fields in nearly every continent.

"Spending in 2014 and 2015 will be higher," Mr. Watson said. "Any legacy-sized asset will be expensive."

After new projects come online, Chevron expects to generate $50 billion in cash in 2017, up more than $10 billion from 2012, said Patricia Yarrington, Chevron's chief financial officer.

Chevron expects to export natural gas starting in early 2015 from its Gorgon project and the following year from its Wheatstone project, both in Australia, said George Kirkland, Chevron's head of upstream operations. The two projects are expected to have a combined capacity of more than 15 million metric tons a year.

Chevron last month said it started test production at the St. Malo well in the relatively undeveloped Lower Tertiary trend far out in the Gulf of Mexico. Oil production from the well, more than 20,000 feet under the sea floor, was more than 13,000 barrels a day despite being constrained by the use of test equipment, the company said.

Chevron expects St. Malo and its twin well, Jack, to ultimately produce 177,000 barrels a day.

Chevron, of San Ramon, Calif., also may expand its operations in unconventional onshore fields in North America, including the Permian Basin in Texas and New Mexico and the Marcellus gas field in Pennsylvania, the company said. Hydraulic fracturing, or fracking, and other recent innovations in drilling techniques have yielded growing amounts of oil and natural gas from those and other shale rock formations.

Chevron plans to "selectively pursue growth" in petrochemicals and lubricants production, the company said. Demand for chemicals and lubricants is expected to outpace that for motor fuel in Asia, said Mike Wirth, Chevron's head of refining operations.

Chevron also is investing in its California refineries to run more varieties of crude oil in a push to drive down operating costs. Its refinery in Richmond, Calif., has started processing crude oil from North Dakota and will use discounted crudes from a variety of sources, Mr. Wirth said.

"Our bread and butter is optimizing our operations by using different feedstocks," Mr. Wirth said.

Copyright (c) 2012 Dow Jones & Company, Inc.

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Chevron: On Track for 20% Production Growth By 2017

NEW YORK - Chevron Corp. expects to increase its oil and natural gas production by more than 20% by 2017, the company said Tuesday at its annual investor conference.

Chevron is in the midst of completing a number of expensive, large-scale projects meant to raise production around the globe, including a massive natural gas project in Australia and new oil wells in the ultra-deep waters in the U.S. Gulf of Mexico. The company hopes to boost its daily oil and natural gas production to 3.3 million barrels in 2017 from the nearly 2.7 million barrels it averaged in the fourth quarter of 2012.

"Our key development projects remain on track," said John Watson, Chevron's chief executive.

Global oil companies have scouted the globe for new production fields as such countries as China and India increase their energy appetite. The two countries are expected to increase their natural gas imports by 10% a year for the next decade, Mr. Watson said. Chevron, the second-largest U.S. oil company in terms of capital after Exxon Mobil Corp. (XOM), is spending $36.7 billion in 2013 alone to search for and develop fields in nearly every continent.

"Spending in 2014 and 2015 will be higher," Mr. Watson said. "Any legacy-sized asset will be expensive."

After new projects come online, Chevron expects to generate $50 billion in cash in 2017, up more than $10 billion from 2012, said Patricia Yarrington, Chevron's chief financial officer.

Chevron expects to export natural gas starting in early 2015 from its Gorgon project and the following year from its Wheatstone project, both in Australia, said George Kirkland, Chevron's head of upstream operations. The two projects are expected to have a combined capacity of more than 15 million metric tons a year.

Chevron last month said it started test production at the St. Malo well in the relatively undeveloped Lower Tertiary trend far out in the Gulf of Mexico. Oil production from the well, more than 20,000 feet under the sea floor, was more than 13,000 barrels a day despite being constrained by the use of test equipment, the company said.

Chevron expects St. Malo and its twin well, Jack, to ultimately produce 177,000 barrels a day.

Chevron, of San Ramon, Calif., also may expand its operations in unconventional onshore fields in North America, including the Permian Basin in Texas and New Mexico and the Marcellus gas field in Pennsylvania, the company said. Hydraulic fracturing, or fracking, and other recent innovations in drilling techniques have yielded growing amounts of oil and natural gas from those and other shale rock formations.

Chevron plans to "selectively pursue growth" in petrochemicals and lubricants production, the company said. Demand for chemicals and lubricants is expected to outpace that for motor fuel in Asia, said Mike Wirth, Chevron's head of refining operations.

Chevron also is investing in its California refineries to run more varieties of crude oil in a push to drive down operating costs. Its refinery in Richmond, Calif., has started processing crude oil from North Dakota and will use discounted crudes from a variety of sources, Mr. Wirth said.

"Our bread and butter is optimizing our operations by using different feedstocks," Mr. Wirth said.

Copyright (c) 2012 Dow Jones & Company, Inc.

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Repsol's Upstream Unit Sees Strong Growth

Spain's Repsol reported Thursday that its upstream division saw an improved performance in all metrics during 2012.

Repsol's total production increased 11 percent during the year, with average production reaching 332,435 barrels of oil equivalent per day. The firm's reserve replacement ratio reached a record high of 204 percent.

Repsol said it completed the execution of four of its 10 key projects from its 2012-to-2016 strategic plan, which was announced in May 2012. It added new production from Bolivia (Margarita-Huacaya), the US (Mid-Continent) and Spain (Lubina and Montanazo). The company also added assets in Russia through its AROG joint venture.

The firm also highlighted five new discoveries during the year, including: Pão de Açucar in Brazil, the Sagari discovery in Peru,TIHS1 in Algeria, and Chipirón T2 and Cano Rondón East in Colombia. Repsol said these discoveries mean it has exceeded the annural resources incorporation goal it set in its strategic plan.

Meanwhile Repsol began commercial production at the giant Sapinhoá field in Brazil at the start of this year. It expects this field to reach an output of 120,000 barrels of oil equivalent during the first development phase.

Repsol results for 2012 showed it made a net profit of $2.7 billion – which was down 6.1 percent on 2011 (although the since-nationalized Argentinian subsidiary YPF contributed to 2011's figure). The firm's operating revenue during the year was 13.2 percent greater than that for 2011 at $78 billion.

On Tuesday this week, Repsol reported that it had sold several of its liquefied natural gas assets to Royal Dutch Shell for $6.7 billion. The firm said that the sale of these assets means that it has more than met its asset divestment targets that are part of the 2012-to-2016 strategic plan announced in May 2012.

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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Malaysia's Oil, Gas Worker Needs to Rise amid Ambitious Growth Plans

Oil and gas production has been central to Malaysia's growth ever since oil was first drilled in Sarawak at the start of the 20th century. Given Malaysia's prolific hydrocarbon resources, it comes as no surprise to industry watchers that the government's focus will continue to be placed on developing the country's oil and gas sector moving towards 2020.

Global oil and gas production has grown by around 1.5 percent per year in the last decade driven by rising demand from developing countries, notably China, India and Southeast Asia, according to a report by the International Energy Agency (IEA) released in July 2012.

Oil demand in the developing world, said the IEA, will overtake that in industrialized countries for the first time this year, a tipping point in oil demand geography.

"Strong economic growth in Asia, the former Soviet Union and the Middle East has pushed up demand in these regions, while the Eurozone and the U.S. remain weak," the IEA report noted.

Meanwhile, a tighter balance of supply and demand is expected in both oil and gas markets by the middle of the decade, as demand growth catches up with supply infrastructure. Beyond 2014, the momentum for deepwater exploration – especially among emerging economies – is expected to markedly increase as easy plays among shallow waters become rarer, research group Douglas Westwood revealed in a July 2012 presentation.

Against Asia's structural shortage for hydrocarbons, in particular oil, it is no surprise that Malaysia – a country famed for its light, sweet crude produce – is placing a renewed interest on developing its oil and gas industry.

Malaysia's oil and gas policy, which historically has focused on maintaining its reserve base, has evolved in recent years. A roadmap published by the Malaysian government in July last year states that the country aims to achieve the following oil and gas-related goals:

Rejuvenate existing fields through enhanced oil recoveryDevelop small fields through innovative solutionsIntensify exploration activitiesBuild a regional oil and gas trading hub by 2020Unlock premium gas demand in the PeninsulaAttract multi-national corporations to bring a sizable share of their global operations to the country

The Malaysian government noted that in order to deliver on its long-term oil and gas goals, it needs to develop its manpower infrastructure. In its report, the government disclosed that the country, alongside with state-owned and private enterprises, will be looking to hire over 60,000 workers by 2020.

"A significant proportion of these jobs will be highly-skilled jobs, with an estimated 21,000 (40 percent) for qualified professionals such as engineers and geologists, with monthly salaries in the range of $1,618 to $3,236 (MYR 5,000 to MYR 10,000)," the report revealed.

The Malaysian government pointed out that the bulk of its hiring efforts will be targeted at the country's oilfield services segment, liquefied natural gas (LNG) exploration and trading sector and its small field development strategy.

In the case of the country's oilfield services sector, the Malaysian government remarked that no other country in the world comes as a close second to challenging Malaysia as an oilfield services hub.

"While there are dispersed pockets of activity, there is no clear hub elsewhere in the world. With a burgeoning domestic oil and gas industry, proximity to oil fields and a cost-competitive workforce, there is potential for Malaysian companies to first become domestic champions and then subsequently regional champions as they capture a larger share of the market," the report said.

As part of its transformation initiative, Malaysia is aiming to focus on attracting international oilfield service companies to relocate their global operations to the country and enter into joint ventures to move up quickly on the technological curve.

In line with its aim to grow the oilfield services sector, Malaysia anticipates that around 40,000 additional workers will need to be employed to support the industry.

The Malaysian government also laid out an equally strong mandate for the country's LNG sector. An intricate long-term employment blueprint has been weaved by Malaysia's leadership as the country looks to position itself as Asia's LNG hub for storage, trade and transportation for the commodity.

"For the first phase, which is to be commissioned by this year, a capacity of 3.5 million tonnes of LNG per annum has been planned (actual capacity, cost and timing will be determined by Petronas). Petronas will execute all elements of the end-to-end gas delivery including partial marketing of this imported gas," the report stated.

Like its oilfield services sector, Malaysia is banking on its cost advantage – over that of neighbor Singapore – to realize its LNG potential. The Malaysian government projected in its 2020 vision that the rise of country's LNG industry would provide the foundation for some 27,000 new jobs; the bulk of which is concentrated to support the construction of the fixed and floating elements of gas regasification and processing projects in Johor and Sabah-Sarawak.

In the small field development area, the spotlight is on developing the country's small risk contracts. The Malaysian government noted that a significant proportion of Malaysia's remaining petroleum resources are sited in fields with less than 30 million barrels of recoverable oil.

"Developing these fields in an economically attractive manner is often challenging, as they need the same expensive infrastructure as large fields, while the expected revenue streams are smaller due to the smaller reserve sizes," the government admitted.

As such, despite the relatively high price of crude, the small risk contract industry is characterized by smaller employment growth numbers when compared to the oilfield services and LNG regasification sectors.

While small risk contracts have much interest among international oil exploration companies, the industry's development has been slow amid strong differing viewpoints between Petroliam Nasional Berhad (Petronas) and international oil corporations.

Back in 2011, Petronas noted that it aimed to award four marginal fields per year. However, thus far, only the Kapal-Banang-Meranti and Balai fields have been dished out. This offers a plausible explanation for the country's conservation employment growth rate; the industry is expected to generate slightly below 400 new jobs by 2020.

But development in the small risk contracts sector could evolve rapidly in the near-term. Industry watchers agree that Petronas could ramp up its efforts on the small risk contracts front and look to award more contracts this year as it seeks to compensate for the shortfall of its development target in the previous years.

Quintella has reported on the upstream and downstream oil and petrochemicals markets from 2004. Email Quintella at quintella.koh@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

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Malaysia's Oil, Gas Worker Needs to Rise amid Ambitious Growth Plans

Oil and gas production has been central to Malaysia's growth ever since oil was first drilled in Sarawak at the start of the 20th century. Given Malaysia's prolific hydrocarbon resources, it comes as no surprise to industry watchers that the government's focus will continue to be placed on developing the country's oil and gas sector moving towards 2020.

Global oil and gas production has grown by around 1.5 percent per year in the last decade driven by rising demand from developing countries, notably China, India and Southeast Asia, according to a report by the International Energy Agency (IEA) released in July 2012.

Oil demand in the developing world, said the IEA, will overtake that in industrialized countries for the first time this year, a tipping point in oil demand geography.

"Strong economic growth in Asia, the former Soviet Union and the Middle East has pushed up demand in these regions, while the Eurozone and the U.S. remain weak," the IEA report noted.

Meanwhile, a tighter balance of supply and demand is expected in both oil and gas markets by the middle of the decade, as demand growth catches up with supply infrastructure. Beyond 2014, the momentum for deepwater exploration – especially among emerging economies – is expected to markedly increase as easy plays among shallow waters become rarer, research group Douglas Westwood revealed in a July 2012 presentation.

Against Asia's structural shortage for hydrocarbons, in particular oil, it is no surprise that Malaysia – a country famed for its light, sweet crude produce – is placing a renewed interest on developing its oil and gas industry.

Malaysia's oil and gas policy, which historically has focused on maintaining its reserve base, has evolved in recent years. A roadmap published by the Malaysian government in July last year states that the country aims to achieve the following oil and gas-related goals:

Rejuvenate existing fields through enhanced oil recoveryDevelop small fields through innovative solutionsIntensify exploration activitiesBuild a regional oil and gas trading hub by 2020Unlock premium gas demand in the PeninsulaAttract multi-national corporations to bring a sizable share of their global operations to the country

The Malaysian government noted that in order to deliver on its long-term oil and gas goals, it needs to develop its manpower infrastructure. In its report, the government disclosed that the country, alongside with state-owned and private enterprises, will be looking to hire over 60,000 workers by 2020.

"A significant proportion of these jobs will be highly-skilled jobs, with an estimated 21,000 (40 percent) for qualified professionals such as engineers and geologists, with monthly salaries in the range of $1,618 to $3,236 (MYR 5,000 to MYR 10,000)," the report revealed.

The Malaysian government pointed out that the bulk of its hiring efforts will be targeted at the country's oilfield services segment, liquefied natural gas (LNG) exploration and trading sector and its small field development strategy.

In the case of the country's oilfield services sector, the Malaysian government remarked that no other country in the world comes as a close second to challenging Malaysia as an oilfield services hub.

"While there are dispersed pockets of activity, there is no clear hub elsewhere in the world. With a burgeoning domestic oil and gas industry, proximity to oil fields and a cost-competitive workforce, there is potential for Malaysian companies to first become domestic champions and then subsequently regional champions as they capture a larger share of the market," the report said.

As part of its transformation initiative, Malaysia is aiming to focus on attracting international oilfield service companies to relocate their global operations to the country and enter into joint ventures to move up quickly on the technological curve.

In line with its aim to grow the oilfield services sector, Malaysia anticipates that around 40,000 additional workers will need to be employed to support the industry.

The Malaysian government also laid out an equally strong mandate for the country's LNG sector. An intricate long-term employment blueprint has been weaved by Malaysia's leadership as the country looks to position itself as Asia's LNG hub for storage, trade and transportation for the commodity.

"For the first phase, which is to be commissioned by this year, a capacity of 3.5 million tonnes of LNG per annum has been planned (actual capacity, cost and timing will be determined by Petronas). Petronas will execute all elements of the end-to-end gas delivery including partial marketing of this imported gas," the report stated.

Like its oilfield services sector, Malaysia is banking on its cost advantage – over that of neighbor Singapore – to realize its LNG potential. The Malaysian government projected in its 2020 vision that the rise of country's LNG industry would provide the foundation for some 27,000 new jobs; the bulk of which is concentrated to support the construction of the fixed and floating elements of gas regasification and processing projects in Johor and Sabah-Sarawak.

In the small field development area, the spotlight is on developing the country's small risk contracts. The Malaysian government noted that a significant proportion of Malaysia's remaining petroleum resources are sited in fields with less than 30 million barrels of recoverable oil.

"Developing these fields in an economically attractive manner is often challenging, as they need the same expensive infrastructure as large fields, while the expected revenue streams are smaller due to the smaller reserve sizes," the government admitted.

As such, despite the relatively high price of crude, the small risk contract industry is characterized by smaller employment growth numbers when compared to the oilfield services and LNG regasification sectors.

While small risk contracts have much interest among international oil exploration companies, the industry's development has been slow amid strong differing viewpoints between Petroliam Nasional Berhad (Petronas) and international oil corporations.

Back in 2011, Petronas noted that it aimed to award four marginal fields per year. However, thus far, only the Kapal-Banang-Meranti and Balai fields have been dished out. This offers a plausible explanation for the country's conservation employment growth rate; the industry is expected to generate slightly below 400 new jobs by 2020.

But development in the small risk contracts sector could evolve rapidly in the near-term. Industry watchers agree that Petronas could ramp up its efforts on the small risk contracts front and look to award more contracts this year as it seeks to compensate for the shortfall of its development target in the previous years.

Quintella has reported on the upstream and downstream oil and petrochemicals markets from 2004. Email Quintella at quintella.koh@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

New Albany Shale Could Create Jobs, Economic Growth in Illinois

The New Albany shale play could add jobs and economic growth to the southern Illinois economy – but only if environmental protestors don't succeed in banning hydraulic fracturing statewide.

A minimum of approximately 1,000 jobs would be created or supported each year through exploration of the play, which is in its infancy. However, more than 47,000 jobs per year, or more than $9.5 billion of economic impact, could be created or supported if the study's highest scenario is realized, according to the study conducted by Dr. David G. Loomis, professor of economics at Illinois State University.

Loomis conducted the study for the Illinois Chamber of Commerce Foundation in response to environmental groups' push for a moratorium on hydraulic fracturing as the Illinois General Assembly seeks to create regulations governing fracking.

The foundation decided it wanted to put some numbers down for the industry's economic impact if the play becomes productive, Tom Wolf, executive director for the foundation's energy council, told Rigzone.

The foundation shied away from a study focused on oil because of uncertainty surrounding the amount of oil in the New Albany shale play.

Some companies are looking at the play for its oil potential, Wolfe noted anecdotally. The state has produced oil from conventional resources since 1905.

While the play might not turn out to be productive, particularly with current natural gas prices, crafting a regulatory model on hydraulic fracturing will create a roadmap for the industry so oil and gas companies know where to go.

Wolfe said the foundation is fine with regulating hydraulic fracturing, but wants to see it done in a way that does not stifle economy activity.

"Illinois is in no position to turn its back on the play's potential and the jobs and tax revenues it would generate," Wolf commented.

New tax revenue sources are needed as the state continues to grapple with financial challenges, including underfunded state worker pension funds.

A report by the Illinois State Financial Task Force, "Just the Facts: A Primer on Illinois Pensions", noted that Illinois' five state pension plans are not sustainable, with an aggregate unfunded pension liability of $83 billion in fiscal year (FY) 2011. The growth of the unfunded pension liability of the plans from $20 billion in FY 1996 to $83 billion is partly due to the "Great Recession", but also inadequate state funding, lower than expected returns on pension fund assets and changes in actuarial assumptions played a role.
To address underfunding, state contributions to the pension plans have grown dramatically from FY 2008 to FY 2013.

The task force was formed in 2006 by the Civic Committee of The Commercial Club of Chicago in an effort to reform the state's pension, retiree health care programs and last spring proposed substantial cuts in other areas of Illinois' budget.

In FY 2008, pension contributions used six percent of general funds revenue; in FY 2013, they will consume 15 percent, even after the recent tax increase.

"The growth in general funds pension contributions from 2008 to 2013 represents $3.5 billion that could have gone to other critical state programs," according to the report.

The $3.5 billion is larger than the entire general funds appropriation to the Department of Human Services in Illinois Gov. Pat Quinn's proposed FY 2013 budget, and more than half of the general funds appropriation to the state Board of Education.

"Those extra resources could have ameliorated the deep Medicaid cuts currently under consideration, or funded increases in General State Aid to Illinois' public schools, or paid the bills owed to financially-strapped social service agencies," according to the task force report.

Job creation has also been a priority for the state after it suffered consecutive monthly declines in employment in 2008 and 2009. Illinois added over 167,000 private sector jobs since January 2010, when job growth returned.

The state's unemployment rate declined from 9.7 percent in December 2011 to 8.7 percent in December 2012, but the December 2012 percentage was still higher than the U.S. national unemployment rate of 7.8 percent, according to a Jan. 17 press statement from the Illinois Department of Employment Security (IDES).

The bill that would regulate hydraulic fracturing is under negotiations. Senate Bill 3280, which would include a requirement for companies to disclose the chemicals they use in hydraulic fracturing fluids, has been the subject of intense and serious negotiations among legislators, oil and gas industry representatives and their allies and environmental groups, Wolf commented.

Wolf said he hopes to have a bill in place at the end of the assembly's five-month session in May that will hit a sweet spot – one in which the environment is protected and provides the industry the certainty it needs to be successful.

The New Albany play is estimated to hold shale gas resources off 11 trillion cubic feet (Tcf), and is the fourth largest play of the U.S. Northeast region, according to a 2011 estimate by the U.S. Energy Information Administration (EIA).

The New Albany shale play formation covers 60,000 square miles across Illinois, Indiana and Kentucky and lies at a depth ranging from 600 feet to 5,000 feet. The play may hold oil resources as well, but it is too early to give an estimate of its size or economic impact, said Loomis.

Approximately 155,000 oil, gas and injection wells have been drilled in Illinois since exploration first began in 1853, according to the Illinois Department of Natural Resources website. The state's oil production peaked between 1955 and 1963 with average yearly production of 80 million barrels. Currently, Illinois' yearly production is approximately 10 to 12 million barrels per year.

Most oil production occurs in the southern portion of the state in the Illinois Basin, a geological structure that also covers western Kentucky and western Indiana, according to the Illinois Department of Natural Resources. The majority of wells in the state are stripper wells with a daily production of 1.5 barrels per day.

In the study, Loomis examined the total impact on direct, indirect and induced impact on employment under three different scenarios:

Loomis noted that the high scenario is similar to historical employment impacts of shale gas in Arkansas, Pennsylvania, Louisiana and Texas' Eagle Ford play. He points out that several national studies of the economic impact of shale gas, including the October 2012 report by IHS Global Insight, which reported the total number of direct jobs generated by shale gas activity stood at 187,360 in 2012 and would rise to 436,773 jobs by 2035.

"In summary, the number of jobs coming from shale gas plays is large and is expected to get much larger in the coming years," said Loomis. "Many earlier studies have updated their estimates which proved to be too low in the early years."

Besides oil and gas drilling, the sectors with the largest employment impacts in the low, medium and high scenarios in order of impact are:

Food servicesPrivate hospitalsReal estate establishmentsWholesale trade businessesHealth practitionersArchitects and engineers

The local labor impacts under the three local content assumptions, which include wages and benefits, is estimated to range from $53.8 million to $484.6 million.

No exploratory drilling had taken place in the New Albany play in Illinois as of third quarter 2012.

"Much more will be known about the potential for future drilling after the first test sites are completed and analyzed," according to the report.

Breitling Oil & Gas CEO Chris Faulkner told Rigzone that the company has accumulated 10,000 acres in the New Albany shale play, where the company will start shooting seismic soon, with plans to drill later this year or in 2014. Faulkner said that the New Albany play offers a mix of oil and associated natural gas, similar to the Bakken shale play.

In southern Illinois, Faulkner is seeing local residents battling over whether to allow hydraulic fracturing of shale. Opponents of shale fracking include NIMBYs (Not In My Back Yard) as well as farmers who may not need the money. But their neighbors whose farms are not doing as well may want shale exploration and production on their land.

The New Albany Shale play in Illinois, along with the Marcellus shale play in New York and the Monterey play in California, are the three areas in the United States with huge oil and gas production potential, Breitling commented.

But these same three areas also share another characteristic: the existence of a tremendous amount of anti-fracking activity. The move by many states to update their oil and gas regulations to account for new technology as well as how to manage fluid disposal and water treatment presents an Achilles heel for environmentalists.

"It's black or white with environmentalists. They don't want fracking, whether there's regulations or not," commented Faulkner, who said he found the opposition troubling due to the huge economic opportunity for jobs and state and federal tax revenues associated with these plays.

"The trouble with environmentalists is they are against every form of energy – wind power because it kills birds, solar because of they don't want the chemicals used in manufacturing photovoltaic components, nuclear because of a possible meltdown, and coal because it is dirty."

Faulkner believes New York will set some standards for hydraulic fracturing regulations that only Illinois and California will adopt. While a moratorium on hydraulic fracturing might be implemented around New York's watershed and other regulations be put in place, he doesn't see the state banning the practice altogether.

He also doesn't see the U.S. federal government overstepping the states' authority in regulating fracking on private or state owned lands, even though federal guidelines are being crafted by the U.S. Environmental Protection Agency.

Concerns over hydraulic fracturing that have sprung up in other parts of the country –including heavy traffic on roads and concerns over fracking's impact on local water supplies – also have cropped up in Illinois. Southern Illinoisans Against Fracturing Our Environment (SAFE) launched a website earlier this year with the intent of banning hydraulic fracturing in southern Illinois.

The Carbondale, Illinois-based group in a Jan. 15 letter to Illinois county officials asked how local government units in the state would decide to address hydraulic fracturing as oil and gas companies lease mineral rights across Southern Illinois to explore the New Albany Shale. SAFE urged county officials to sign a letter supporting a moratorium on high-volume horizontal hydraulic fracturing in the state "until it can be shown that this practice will be done without harming the health, future economic viability, environment, or quality of life of residents of Illinois."

"Currently, in Springfield, politicians are working without public oversight on a bill to 'regulate' fracking in Illinois," SAFE commented in the letter. "Regulation has proven meaningless in other states in regard to providing public and environmental safety."

SAFE noted that governments cannot regulate the amount of water used in fracking and its impact on drinking water supplies.

"Secondly, the state does not have the money, the manpower, nor a system in place to monitor, regulate and enforce an industry that is so dangerous and complicated."

Another group, Food & Water Watch, has been seeking to impose moratoriums on high-volume horizontal hydraulic fracturing in U.S. states, including Illinois. The national group participated in local campaigns in Anna and Carbondale to bank hydraulic fracturing.

The national group has also been targeting 2016 presidential hopefuls Gov. Mario Cuomo of New York, New Jersey Governor Chris Christie, Governor Martin O'Malley of Maryland, and Colorado Gov. John Hickenlooper in their efforts to ban fracking, saying any moves by the four governors to support hydraulic fracturing "will come back to haunt them in 2016".

The Sierra Club and Natural Resources Defense Council are also among groups seeking to ban hydraulic fracturing in Illinois and around the country.

Late last year, Alto Pass became the first Illinois municipality to specifically ban hydraulic fracturing within city limits. The town of Carlyle, Illinois, in January 2012 banned all drilling or operations of oil and gas wells within its city limits, including hydraulic fracturing. Other Illinois cities and counties have also passed or called for bans on hydraulic fracturing.

While environmentalists have successfully pushed counties that have not traditionally had oil and gas development to pass moratorium, they want to go a step further and see a statewide moratorium passed.

"In fact, they even say they want a ban in their mission. So you know they're not pushing a moratorium to 'allow more time to study,'" said Taylor Smith, policy analyst with The Heartland Institute, in an email to Rigzone.

"I think the controversy over hydraulic fracturing, and the fact that it can now be done horizontally and at high-volume does play a role in the opposition," said Smith.

"But I think a bigger reason is the overall expansion that will happen if regulations are finalized and signed into law, thus lifting the de facto moratorium in place, since no company will invest or drill if they don't know what the rules will be. The move would allow oil and gas development to take place in both areas that haven't traditionally had development, and areas that have had it, but now possibly to a greater degree," Smith commented.

Between 30,000 and 50,000 wells have been hydraulically fractured in Illinois since the 1950s, the Interstate Oil & Gas Compact Commission (IOGCC) reported on its website. None of these wells caused any harm to groundwater, IOGCC added.

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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OPEC Flags Risks to Global Supply Growth

LONDON - The Organization of the Petroleum Exporting Countries Tuesday warned that expectations of growth in non-OPEC oil supply this year, seen as essential to meeting global oil demand in the long term, face significant stumbling blocks.

"A high level of risk is associated with non-OPEC supply forecasts on political, price, economic, weather, environmental and geological factors," the group of major oil producers said in its monthly oil market report.

Non-OPEC supply growth is projected to increase by almost 1 million barrels a day this year, largely due to a boom in production in the U.S.--the result of technology that has made it possible to release large reserves of oil trapped in shale rock.

The output growth in America is a boon to consumers there who already benefit from lower oil prices compared with elsewhere, but for OPEC it has significant implications for the group's historical dominance in the oil market.

In a landmark study last October, the International Energy Agency forecast that by 2020 U.S. oil output could overtake that of OPEC's kingpin, Saudi Arabia. According to the IEA's forecast, the increase in U.S. output will force OPEC members to adapt rapidly to changing trade patterns, and potentially even put them in competition with North American oil exports.

In its report Tuesday, OPEC said it expects demand for its crude to fall by 300,000 barrels a day in 2013 compared with last year.

Although OPEC initially said it wasn't concerned by the shale-oil boom, it has since warned that forecasts of rising U.S. oil production could curtail its own investment in maintaining output.

"If the [IEA] estimates for U.S. production are not met," that "could trigger the possibility of oil shortages and higher prices" as producers could have cut their investment based on these forecasts, OPEC Secretary General Abdalla Salem el-Badri said in an interview in November following the release of the IEA's report.

In its latest report, the group of major oil producers forecast the shale boom in the U.S. would help increase oil production by 520,000 barrels a day this year, giving the U.S. the highest production growth among the non-OPEC countries, but it also played down the positive side of these developments by warning of the challenges facing the industry.

"There are remaining risks associated with the growth forecast on the back of weather, technical, environmental and price factors," the report said. It said that the heavy decline rate associated with the first year of shale oil production from individual wells in the first year was a major factor that could impact growth.

The group projected U.S. production would rise to 10.6 million barrels a day in the fourth quarter from 10.42 million barrels a day in the first quarter of this year.

Overall, OPEC forecast that non-OPEC supply would increase by 940,000 barrels a day this year to 53.9 million barrels a day, driven primarily by growth in the U.S., Canada, Latin America and the Former Soviet Union.

It also highlighted risks to supply growth in Canada, Australia, Latin America and Russia, though the growth projections for these countries pale in comparison to the rapid production increase expected in the U.S.

Data from secondary sources showed that output from OPEC member countries declined in recent months.

Oil production by members of the group fell to its lowest level since October 2011 last month as the price for the group's oil benchmark rose to settle at $109.28 a barrel, its highest monthly average since September 2012.

The decline in production was primarily the result of lower output from Saudi Arabia, Nigeria and Algeria but was offset slightly by higher production from Angola.

Benoit Faucon in London contributed to this article.

Copyright (c) 2012 Dow Jones & Company, Inc.

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Two Nominees, Two Opportunities for Growth

This opinion piece presents the opinions of the author.
It does not necessarily reflect the views of Rigzone.

In the coming months, President Obama will have to make two huge decisions about the future of American energy policy: whether to permit the Keystone XL pipeline and whether to allow Shell to move forward with its Arctic offshore drilling program. Coincidentally, both decisions may be influenced by the President's new appointments at the State Department and the Interior Department.

With Nebraska Governor Heineman's approval this week of the new route through Nebraska, the stage is set to bring more than 4 years of wrangling, delay, and political posturing on the Keystone XL pipeline to a close. Once the State Department conducts an environmental review that is already underway, there will be nothing preventing President Obama from making a final decision on the project - finally.

The President's decision to reject Keystone XL's application for a permit last January, despite the fact that the Department of State has affirmed that Keystone XL would be the safest pipeline ever constructed, was a political move meant to allay environmentalists until after the election. After suffering significant blowback from labor groups and the majority of Americans who support the project, the President enthusiastically supported construction of the southern leg of the pipeline and invited TransCanada to reapply for the permit that they need to cross the border from Alberta into Montana.

The delays and route changes that TransCanada has been forced to endure have added more than a billion dollars to the cost of the project, suspended tens of thousands of high paying jobs, delayed relief at the pump for millions of American drivers and prevented the project from pumping more than $20 billion into the U.S. economy.

As the State Department makes its final Environmental Impact Statement and National Interest Determination, supporters of the pipeline should make clear to both the White House and to the President's nominee for Secretary of State, Massachusetts Senator John Kerry, the importance of the project to the U.S. economy. Members of the Senate should ensure that Mr. Kerry pledges not to inject politics into the Department's review of the project in his confirmation hearings.

At the other end of the country, another energy company is wading through arbitrary delays and red tape in its efforts to develop resources off the Alaskan coast. In 2005 and 2008, the federal government sold Shell leases in the Beaufort and Chukchi Seas with a good faith agreement that the company would be able to explore the leases for oil and natural gas. In 2007, a federal court prevented Shell from drilling wells in the area due to a lawsuit by environmental groups. It happened again in 2009 and 2011 when baseless lawsuits aimed at the federal approvals process stopped the project from moving forward. Despite years of insisting that Alaskan offshore energy is part of the President's "all of the above" energy strategy, Secretary Salazar and the Department of the Interior has failed to permit the project in a timely manner.

Now, Mr. Salazar is departing Washington for the family ranch in Colorado, leaving the future prospects of the Alaska project in limbo. President Obama and his new nominee for Secretary of the Interior must understand the consequences of imposing further delays on the Alaskan offshore project. Beyond simply setting a standard of bad business on the part of the federal government, delay by the Interior Department would also jeopardize efforts by other energy companies invested in the region and would diminish the United States' ability to lead in Arctic energy development.

The potential energy and economic benefits of the Keystone XL project and Shell's Arctic development are staggeringly large. The pipeline project would create 20,000 jobs and pour $20 billion into the U.S. economy. Offshore Alaskan energy development will create more than 54,000 jobs annually for 50 years and generate $300 billion in revenue for the U.S. Treasury. We cannot afford further delay.

President Obama and Sen. Kerry should move quickly to give final approval to the Keystone XL pipeline. Meanwhile, Congress should ensure that his nominee to lead the Interior Department understands the importance and benefits of energy development off Alaskan shores. It would be a boon for the U.S. economy, and the U.S. energy consumer.

Michael Whatley is the executive vice president of Consumer Energy Alliance in Washington D.C.

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New Evidence Highlights Threat to Caribbean Coral Reef Growth: Many Caribbean Coral Reefs Are Starting to Erode

ScienceDaily. Jan. 29, 2013 — Coral reefs build their structures by both producing and accumulating calcium carbonate, and this is essential for the maintenance and continued vertical growth capacity of reefs. An international research team has discovered that the amount of new carbonate being added by Caribbean coral reefs is now significantly below rates measured over recent geological timescales, and in some habitats is as much as 70% lower.

Coral reefs form some of the planet's most biologically diverse ecosystems, and provide valuable services to humans and wildlife. However, their ability to maintain their structures and continue to grow depends on the balance between the addition of new carbonate, which is mostly produced by corals themselves, set against the loss of carbonate through various erosional processes. Scientists have long known that reef ecosystems are in decline and that the amount of live coral on reefs is dwindling. But the paper, published on DATE TBC in Nature Communications, is the first evidence that these ecological changes are now also impacting on the growth potential of reefs themselves. Read more

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U.S. Will Remain Largest Source of New Oil Growth in 2013

Topping the list of the big oil and gas stories in 2012 was the dramatic surge in U.S. oil production. In 2013, the U.S. will remain the largest source of new oil growth worldwide aided by the shale boom, but surpassing Saudi Arabia as the globe’s top oil producer by 2020 will be a challenge.

The big turnaround of U.S. oil production brought by new light tight oil developments was fully recognized in 2012, putting to rest the long-held notion that domestic oil production was in terminal decline. The rise in domestic oil output and the expectation that U.S. oil development will continue to grow amid high oil prices prompted some market observers to predict the U.S. could become the world’s largest oil producer, upstaging Saudi Arabia, by 2020.

But while U.S. oil output growth is expected to continue to be strong, it’s going to be hard to rival Saudi Arabia. U.S. oil production comes at an extremely high cost. Some anticipated increases in domestic oil production may not materialize if crude prices decline below $80 a barrel.

"Whether the U.S. will become the world’s top producer is not the most important thing to focus on," said Marcela Donadio, Americas Oil and Gas Leader for the global Ernst & Young organization. "What matters is the dramatic reversal of the U.S. energy fortunes and the need for the U.S. to take significant steps to ensure oil supply growth continues. Coherent energy policy, access to resources, improved infrastructure and economic stability are all key to future success."

Oil

In 2013, the global oil supply-demand balance is expected to remain uneasy amid geopolitical tensions and economic uncertainty. Oil markets could face an ugly Arab winter given the unstable political environments in Syria, Egypt and Libya. Meanwhile, Iraqi production continues to grow, currently topping 3 million barrels of oil a day, taking the No. 2 spot among OPEC producers from Iran. The Iraqi increases put significant pressure on OPEC members to cut back their production in order to make room for Iraq’s new output.

The long overdue, super-giant Kashagan project offshore Kazakhstan is expected to start production by mid-year and contribute to the rising global oil supplies from non-OPEC sources.

In the U.S., despite a substantial build-out of the oil transportation infrastructure this year, bottlenecks in the Midwest are expected to continue the pressure on US and Canadian oil prices.

Gas

Last year, U.S. natural gas prices averaged below $3/MMBtu for the first time since the late 1990s amid a glut of production, leaving many if not most natural gas producers in a bind. Small gas producers are expected to continue struggling this year with questions remaining about their ability to survive. Low natural gas prices, however, will continue driving a renaissance in the U.S. petrochemical and manufacturing sectors as they lower feedstock costs. U.S. natural gas exports will remain a controversial issue this year as supporters and adversaries escalate political tensions around how much exports could impact domestic natural gas prices.

Downstream

Profit margins for the U.S. refining business were up across the board in 2012, with Midwest refineries having another stellar year thanks to access to cheaper WTI and Canadian crudes. While expected to diminish somewhat, the structural imbalances in the U.S. Midcontinent are expected to continue this year, prolonging the advantage of regional refiners that have access to cheaper oil supplies.

Globally, refiners had a good year in 2012, but their performance was nowhere near the profitability seen in the U.S. Going forward, the consensus view is that the economics for refiners outside the U.S. will remain challenging as more refining capacity comes online and plants continue to process relatively more expensive crudes.

Oilfield services

Last year was not a bad year for oilfield services companies as rig counts held up and global upstream spending cautiously increased. The U.S. rig count was slightly off as gas-directed drilling slowed and was not fully offset by new oil- and liquids-directed drilling. Oilfield service cost pressures slowed somewhat due to efficiency gains, while labor pressures rose. Offshore, there still are a large number of new-builds coming into the market, that are expected to keep a lid on day rates, utilization and profit margins.

Transactions

Annual transaction activity in terms of total reported deal value was up 20 percent in 2012 compared with a year earlier, topping $400 billion, the highest ever reported value. However, activity in terms of deal volume or the number of deals was down slightly for the year. A full $60 billion of the total transaction value involved Russia’s oil giant Rosneft, which struck deals with AAR and BP for the TNK-BP joint venture. Asian outbound oil and gas acquisitions had another strong year in 2012, and the acquisition pace looks to continue in 2013.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

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Apache Promotes Executives To Lead Worldwide Growth Initiatives

Since 2010, Apache has completed more than $16 billion in acquisitions across its global portfolio. In addition, Chevron recently joined the Kitimat LNG project -- a move that is expected to help Apache monetize two of the largest natural gas resources in North America -- Horn River and Liard in British Columbia, Canada -- through a planned liquefied natural gas project on the province's northwest coast.

"These events have significantly expanded the scope and breadth of Apache's operations," said G. Steven Farris, Apache's chairman and chief executive officer. "Simply put, we are bigger, stronger and more diverse than ever as we head into 2013."

To accommodate this growth, Thomas E. Voytovich will assume the newly created position of executive vice president of international operations, with responsibility for all of Apache's regional activities outside the U.S. Lower 48, excluding the Kitimat gas monetization project.

Voytovich has served as region vice president and general manager of Apache's Egypt operations since 2009. Earlier, he was vice president of the Central Region from 2006 to 2009 and the region's exploration manager from 2004 until 2006. Prior to joining Apache in 1993, he worked in geological, engineering and management positions with Shell Oil Co., Petro-Lewis, Berexco, and Hillin-Simon Oil Co. Voytovich received a bachelor of science degree in geological engineering from Michigan Tech and is an American Association of Petroleum Geologists (AAPG) Certified Petroleum Geologist.

Thomas M. Maher, currently vice president and managing director of Apache's operations in Australia, will assume the role of vice president and general manager of Apache's Egypt operations. Prior to his promotion to vice president in Australia in 2010, Maher served in Egypt as manager of geology from 2002 to 2005 and manager of exploration from 2005 until 2010. He also was exploration manager of the Central Region from 1995 to 2002. Prior to joining Apache, he worked in various exploration and development geology assignments with Cotton Petroleum and Texaco in the Mid-continent, Rockies and China. Maher holds a bachelor of science degree in geology from the University of Massachusetts, a master's degree in geology from Miami University (Ohio), and an MBA from the University of Phoenix. He is an AAPG Certified Petroleum Geologist.

Faron J. Thibodeaux has been promoted to vice president and managing director in Australia. He joined Apache in 2008 and served most recently as director of operations in Australia. In 2011, Thibodeaux was transferred to Australia from Egypt, where he was the drilling manager. Prior to joining Apache, he worked for Chevron and Unocal in various engineering and management positions, including assignments in the Gulf of Mexico, Indonesia, Cambodia, and Thailand. He holds a bachelor of science degree in petroleum engineering from the University of Louisiana at Lafayette.

As a result of the change in operatorship of Kitimat LNG and Apache's continued focus on the upstream development of Horn River and Liard, Timothy O. Wall will lead the initiative as president of Kitimat Upstream Operations. Wall has served as region vice president and president of Apache Canada Limited since 2009. Prior to these Canadian leadership roles, Wall held several international positions for Apache Corporation. He first joined Apache in 1990 as an engineer in Houston, and moved to Midland as Permian Basin district manager in 1993. He became Gulf Coast production manager in 1996, country manager for China in 1997, Central Region operations manager in 2000, and North Sea operations manager in 2004. In 2006, he assumed the positions of Australia Region vice president and managing director of Apache Energy Ltd. Wall graduated from Texas A&M University with a bachelor of science degree in petroleum engineering.

Robert Spitzer will join the Kitimat Upstream Operations team as executive vice president of development. Spitzer has held leadership positions in Apache's exploration program in Canada since joining the company in 1999. Prior to joining Apache, he held geology and exploration management positions at Shell Canada. He holds degrees in geology and geography from McMaster University.

Janine J. McArdle will continue as senior vice president of gas monetization and president of Kitimat LNG. McArdle served as vice president of oil and gas marketing from 2002 to 2010, directing Apache's worldwide crude oil and natural gas marketing activities. Prior to joining Apache, she served in management positions with Aquila Europe Ltd., Aquila Energy Marketing and Hesse Gas, and was a member of the board of directors of Intercontinental Exchange, the electronic trading platform. McArdle holds a bachelor's degree in chemical engineering from the University of Nebraska and an MBA from the University of Houston.

Timothy J. Sullivan has been promoted to region vice president and president of Apache Canada Limited, replacing Wall. Sullivan joined Apache in 1986 and has served as reservoir engineering manager of the Central Region since 1997. Prior to joining Apache, he served in various engineering roles for Cotton Petroleum and Texaco. He holds a bachelor of science degree in civil engineering from Iowa State University.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

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Where to go for growth and avoid pitfalls in 2013

Investors looking for clear ideas on where to invest in 2013 and beyond should keep in mind three important themes: that quantitative easing (QE), dubbed the greatest financial experiment in history, is ongoing and its results are not yet known; that income has become very expensive to extract from many assets, particularly bonds; and that some stockmarkets, especially China, have become historically cheap.

We will also need to keep an eye on the actions of politicians and policymakers this year. The global economic background remains challenging: experimental (or perhaps increasingly desperate) measures - from Washington and Tokyo to Brussels and London - will continue to be used to get credit flowing again, kick-start anaemic economic growth and shore up the eurozone.

Will inflation be benign or damagingly high? Will interest rate expectations start to rise in 2013? Can we look forward to normal, higher levels of economic growth or more years of austerity-driven weakness? Is the global financial system on firmer foundations or are the tough decisions still being kicked down the road?

We cannot be sure what effect all of the unconventional, experimental measures that are being adopted will have, but it's safe to assume that we won't know all the answers in 2013.

Money Observer's Wealth Creation Guide should not, therefore, simply be viewed as a compendium of tips for 2013 alone, but as an analysis of the current and potential future state of financial affairs and how you might want to factor some of the resulting investment ideas and themes into your own wealth creation, or preservation, strategy.

Certainly the most compelling theme for me is just how expensive income has become. Put another way, investors are not being adequately rewarded for the risks they are taking by investing in particular asset classes, chiefly bonds. The chart below shows the 20-year range of yields on various assets, with the yellow dots indicating where, worryingly for bond investors, they are now.

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