Canada Minister Sees Better Prospect of Change to EU Oil-Sands Law

OTTAWA - Canadian Natural Resources Minister Joe Oliver said the possibility of changes to a proposed European Union law that seeks to treat Canadian oil-sands crude as dirtier than conventional fuel have improved, because the law would increase costs and threaten the competitiveness of European refineries at a time when the continent's economy is struggling.

The European Commission, the EU's executive body, is considering singling out crude from Alberta's oil sands as being dirtier than other fuel types in a revision to its Fuel Quality Directive, or FQD, a law designed to lower carbon emissions from transportation fuels.

"We believe that the prospects for an improvement--for fundamental change here--are better than they were a year ago," Mr. Oliver told reporters on a conference call from the U.K., adding that "the issue of competitiveness, including in the refinery industry "are really very much top of mind."

He said Ottawa would consider taking action against the EU at the World Trade Organization as a "very last resort."

Canadian officials, who have long lobbied against the proposed law, say it discriminates against oil-sands crude and isn't based on science. The issue was re-ignited recently as Canada and the EU try to conclude a free-trade agreement that's been four years in the making. Officials from both side have repeatedly said the FQD and trade negotiations are being kept separate. A decision on the FQD is expected later this year.

Mr. Oliver said oil-sands opponents are unrealistic in lobbying for a world powered by alternative energy, and their message could "hurt the economy in a significant way." He said Canada wants its approach to climate change "to be based on reality" and will focus on reducing greenhouse gas emissions while continuing to invest in green energy and technology.

Meanwhile, Mr. Oliver said opponents of TransCanada Corp.'s proposed Keystone XL pipeline are getting "desperate," as U.S. decision on the controversial project nears, hence "the shrillness of their arguments, the hyperbole and the exaggeration that we're hearing from some sources."

Mr. Oliver said the project would be "very positive" for Canada and the U.S, creating jobs on both sides and contribute to economic growth.

The Obama administration is expected to make a decision on Keystone later this year.

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

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Noble Energy Spuds Carla South Prospect Offshore West Africa

Noble Energy Inc. began drilling the I-7 exploratory well on the Carla South prospect in Block I using the Atwood Hunter (DW semisub) last week, PA Resources reported.

The Carla South prospect is on trend with the Carla North discovery recently appraised in Block O to the north of Block I, which houses the Aseng field, in Equatorial Guinea, PA Resources stated in a press release. The operator, Noble Energy, is targeting Tertiary sandstones of similar age to those in the discovery to the north. Drilling is expected to reach total depth in around 25 days with plans for a subsequent sidetrack of similar duration.

"We are very glad to have resumed exploration drilling in Block I, following an extended period focused on development of the Aseng and Alen Fields," said PA Resources' CEO Bo Askvik in a press release. "In addition it is likely that an appraisal well will be drilled in Block I later this year on the existing Diega discovery and this year's drilling program will be valuable in progressing the next field development or developments in Block I."

The Carla discovery that was made in November 2011 encountered 26 feet of oil pay in good quality upper Oligocene sands below the Alen field. It was drilled in 1,900 feet of water and reached a total depth of 11,500 feet. Noble Energy estimates between 35-100 million barrels of oil equivalent, of which 80 percent are liquids, at the Carla prospect.

Noble plans to develop the field and connect it to the producing Aseng field in Block I, or the Alen field in Block O, that is due to come onstream in late 2013.

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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Valiant Farms out Handcross Prospect

North Sea-focused Valiant Petroleum announced Thursday that it is farming out 20-percent of its Handcross project to Germany's RWE Dea.

The Handcross prospect is located west of Shetland on licenses P1631 (Block 204/18b) and P1832 (Blocks 204/14c and 204/19c). It is a large Palaeocene, channelized fan prospect that is close to the Suilven and Tornado discoveries and around 13 miles from BP's Quad 204 redevelopment.

The Handcross exploration well is scheduled to be drilled during the fourth quarter of this year by the Stena Carron drillship.

Following the completion of the transaction the Handcross partners will be: Valiant, as operator with a 70-percent stake; RWE Dea, with 20 percent; and Sussex Energy, with 10 percent.

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North Sea's Magnolia Prospect Comes Up Dry

The Magnolia exploration well was drilled to its target depth of approximately 4,920 feet true vertical depth subsea, fulfilling the partners' license obligations.

The well hit its primary targets – the Captain, Corable and Punt sandstones within the Lower Cretaceous interval – but no significant hydrocarbons were encountered, according to Trapoil. The well will now be plugged and abandoned.

The operator of license P1610 is Dana Petroleum, which has a 45-percent interest. Partners in the license include: Summit Petroleum (25 percent), Atlantic Petroleum UK (20 percent) and Trapoil (10 percent). The P1610 license is located to the south and southeast of the producing Captain Field in the Moray Firth and is also close to the Blake and Ross fields.

In February, Trapoil reported that it was buying one third of the Trent East Terrace Area license, located in the southern North Sea, from Perenco UK.

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North Sea's Magnolia Prospect Comes Up Dry

The Magnolia exploration well was drilled to its target depth of approximately 4,920 feet true vertical depth subsea, fulfilling the partners' license obligations.

The well hit its primary targets – the Captain, Corable and Punt sandstones within the Lower Cretaceous interval – but no significant hydrocarbons were encountered, according to Trapoil. The well will now be plugged and abandoned.

The operator of license P1610 is Dana Petroleum, which has a 45-percent interest. Partners in the license include: Summit Petroleum (25 percent), Atlantic Petroleum UK (20 percent) and Trapoil (10 percent). The P1610 license is located to the south and southeast of the producing Captain Field in the Moray Firth and is also close to the Blake and Ross fields.

In February, Trapoil reported that it was buying one third of the Trent East Terrace Area license, located in the southern North Sea, from Perenco UK.

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Valiant Farms out Isabella Prospect to Maersk

North Sea-focused Valiant Petroleum announced Friday that it has signed a farm-out deal with Maersk Oil North Sea UK that will see Valiant’s stake in the Isabella prospect reduce from 50 percent to 20 percent.

The Isabella prospect, which sits in the UK zone of the central North Sea in blocks 30/6b, 30/11a and 30/12d on production license 1820, is a gas condensate prospect. According to Valiant, the prospect is located on one of the largest undrilled fault blocks in the area and has prospectivity across a number of geological horizons.

Following the completion of the transaction the P1820 partners will be operator Apache North Sea (with a 50-percent stake), Valiant and Maersk Oil North Sea, which will have a 30-percent stake.

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Valiant Farms out Isabella Prospect to Maersk

North Sea-focused Valiant Petroleum announced Friday that it has signed a farm-out deal with Maersk Oil North Sea UK that will see Valiant’s stake in the Isabella prospect reduce from 50 percent to 20 percent.

The Isabella prospect, which sits in the UK zone of the central North Sea in blocks 30/6b, 30/11a and 30/12d on production license 1820, is a gas condensate prospect. According to Valiant, the prospect is located on one of the largest undrilled fault blocks in the area and has prospectivity across a number of geological horizons.

Following the completion of the transaction the P1820 partners will be operator Apache North Sea (with a 50-percent stake), Valiant and Maersk Oil North Sea, which will have a 30-percent stake.

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Bering Exploration Concludes Initial Production Test at North Edna Prospect

Bering Exploration, Inc. announced Wednesday that it has completed the initial production test conducted at the conclusion of the re-completion performed on one of its wells on its North Edna prospect. The initial test report showed that the well flowed at 400 million cubic feet per day on a #6 choke at a 2914 pressure rate with a recovery rate of 4.33 barrels per day of condensate and no water from a virgin zone in this formation. This 348 acre prospect is located in Jefferson Parish, Louisiana and has potential gross reserves of the equivalent of 1 million barrels which, based upon current prices, equates to a gross value of more than $95 million dollars.

"We are very pleased to get a positive test result," stated Steven Plumb, VP of Finance of Bering. "We are now taking bids to complete the well and establish a gas pipeline tie-in."

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Bering Exploration Concludes Initial Production Test at North Edna Prospect

Bering Exploration, Inc. announced Wednesday that it has completed the initial production test conducted at the conclusion of the re-completion performed on one of its wells on its North Edna prospect. The initial test report showed that the well flowed at 400 million cubic feet per day on a #6 choke at a 2914 pressure rate with a recovery rate of 4.33 barrels per day of condensate and no water from a virgin zone in this formation. This 348 acre prospect is located in Jefferson Parish, Louisiana and has potential gross reserves of the equivalent of 1 million barrels which, based upon current prices, equates to a gross value of more than $95 million dollars.

"We are very pleased to get a positive test result," stated Steven Plumb, VP of Finance of Bering. "We are now taking bids to complete the well and establish a gas pipeline tie-in."

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Sound Opts to Keep All of its Badile Prospect

Sound Oil announced Tuesday that it has decided to retain its 100-percent position in its Badile exploration prospect in northern Italy.

Sound confirmed that it had received an offer before Feb. 1 to farm into the Badile prospect from an unnamed "Italian oil and gas major". It said that the major had "deep knowledge of the area" having conducted extensive technical due diligence, but that it had decided to decline the offer as it did not reflect the asset's potential.

According to Sound, the Badile prospect potentially holds 185 billion cubic feet of gas or 22 million barrels of oil (MMbo). It is located some 20 miles southeast of the geologically-analogous Villafortuna-Trecate field – which has recoverable reserves of around 250 MMbo.

Sound estimates that an exploration well on the Badile prospect will cost some $27 million. During the next few months the company plans to submit a drilling request and Environmental Impact Assessment to the Italian permitting authorities, targeting a Badile well in 2014 with Sound as an operator.

Sound CEO James Parsons commented in a statement:

"I am pleased to have secured an offer from a credible potential partner, which validates our technical view of the asset.

"We have chosen to retain the upside exposure and also control of project budgets and timelines. We will now prepare for drilling and continued de-risking of the asset whilst remaining open to offers, either after securing the EIA approval or indeed after delivery of a successful exploration well in 2014."

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