Land Rigs

Tuesday, March 5, 2013

Gunmen Blow Up Marib Oil Pipeline in Yemen

SAN'A, Yemen - Gunmen in Yemen Friday blew up a key oil pipeline that has been repeatedly attacked in the country's eastern Marib province, a security official and witnesses said.

"Subversive elements in Wadi Obaida (around 12 kilometers from Marib) blew up" the 320-kilometre pipeline that carries oil from the Safer oilfields in Marib to an export terminal on the Red Sea, the official said.

Witnesses said flames erupted from the pipeline that carries around 180,000 barrels a day following the explosion early Friday.

Attacks on oil and gas pipelines by al Qaeda or by tribesmen seeking to win concessions from the central government are common in Yemen, an impoverished country that produces about 300,000 barrels of oil a day, mostly for export.

In December, the army launched an offensive against tribesmen suspected of repeatedly sabotaging the pipeline, sparking clashes which left 17 people dead.

According to official figures, lost production because of pipeline attacks in the east cost the government more than $1 billion in 2012, while oil exports fell by 4.5%.

In July, Petroleum and Minerals Minister Hisham Abdullah said Yemen had lost more than $4 billion in revenues since February 2011 because of such attacks.

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

Kazakhstan in 2013 and Beyond: Entering An Oil Fatigue?

With 2013 poised as the "big jump" in Kazakhstan's oil productivity following the first-phase output startup of the country's first major offshore project known as Kashagan, at least two setbacks have been reported in other prospective schemes. With output from existing resources in decline through 2012 for the second year in a row, raising money and satisfying fund providers proves to have gotten harder and harder as time flows by more steadily than oil flows out.

According to the latest figures presented by Kazakhstan's National Statistics Agency last week, the country's crude oil output has been down through 2012 for the second year in a row, and decreased by 1. 6 million tons, or close to 2 per cent, from its peak in 2010. With the exception of coal, most of which is used for electricity generators and metal smelting but also as household fuel in most of the north and northeast of Kazakhstan which still have no gas distribution networks, other hydrocarbon sectors show similar signs of stagnation.

Surrounded by controversySalvation must come from the Kashagan field and (eventually) its four adjacent blocks, with total proven recoverable reserves standing at 13 billion barrels of crude, which should boost Kazakhstan's oil output by 370,000 barrels a day initially by the end of the current year, to reach 1. 5 million barrels per diem by the middle of the upcoming decade. But relief can only come gradually, observers say.

"Kazakhstan's oil supply is predicted to increase by 70,000 barrels per day over the previous year to average 1. 66 million barrels a day in 2013," the latest OPEC market survey reads. "The expected growth in 2013 is supported by the anticipated start-up of the Kashagan field in the late second quarter. [...] Uncertainties surrounding the start-up of Kashagan and strike actions in some oil-producing areas could affect output in 2013. On a quarterly basis, Kazakhstan's supply is expected to average 1. 62 mb/d, 1. 61 mb/d, 1. 65 mb/d, and 1. 73 mb/d respectively."

The highly hazardous and expensive Kashagan project ($46 billion including this year's budget has been spent so far) remains indeed surrounded by controversy. Following the withdrawal of a tandem consisting of BP and Statoil back in 2001 and of British Gas later, a third partner in the consortium, ConocoPhillips of the US, has dropped out last year. Right of first refusalIt looks as though foreign partners in Kashagan have let their deadline of January 25 to bid for the share of ConocoPhillips in the consortium slip, which according to the contract comes down to a waiver.

On behalf of the state, Kazakh national oil and gas company Kazmunaygas has until summer to use its preemption right. It has been reported, though, that the state company will have to raise money in debt to pay for it - something which requires state guarantees in a broadly suspicious financial market. What could save the day is an offer made by India's state oil and gas corporation ONGC to buy ConocoPhillips' stake.

Kazakhstan today remained non-committal on supporting state-owned Oil and Natural Gas Corp's $5 billion acquisition of ConocoPhillips' stake in the Central Asian nation's giant Kashagan oilfield," India's daily Economic Times wrote on January 9 this year. In its biggest acquisition till date, ONGC Videsh Ltd, the overseas arm of the state explorer, on November 26 last year agreed to pay US energy giant ConocoPhillips about $5 billion for the 8. 4 per cent stake in Kashagan, the biggest oilfield discovery in over four decades.

The deal is subject to the approval of the government of Kazakhstan and other partners in the Caspian Sea field waiving their right of first refusal. The stake at stake is not 8. 4 but 7. 56 per cent. At the current state of affairs, the Royal Dutch Shell, Total, Eni, ExonMobil and Kazmunaygas each have a one-seventh (16. 81 per cent) share in the Kashagan consortium, the official name of which is North Caspian Operating Company (NCOC).

The remainder is split between ConocoPhillips and Japan's Inpex. 'People with knowledge'But while other partners seem to have given a silent nod to the entry, Kazmunaygas seems to drag its feet with the government, its majority owner, remaining undecided.

The Indian paper also quoted Kazakhstan's Vice Minister for Oil and Gas Bolat Akchulakov as avoiding a clear answer, indicating that "the decision to approve or not approve the deal is to be decided by related ministries in due course of time", in the newspaper's words.

The Kazakh government has yet another 180 days following January 25 to make up its mind. And there seems to be more hard nuts to crack in sight. The waiver by at least two of the foreign partners in the consortium contradicts earlier rumors. "Exxon Mobil and Royal Dutch Shell are seeking bigger stakes and operating control in the Kashagan oil field before starting to expand the $46 billion project," Bloomberg reported on August 30 last year, quoting two unnamed "people with knowledge of the matter" in the agency's words.

Exxon and Shell have warned they may quit the project unless they gain more control in the venture and Kazakhstan's government agrees to extend the production-sharing contract for 20 years. Earlier reports also suggested that some of the foreign partners seek prolongation of the contract, which expires in 2041, in exchange for the boost in investments. At the same time, it looks more and more indeed like Kashagan is Kazakhstan's last straw - and more trouble surrounding the project is the last thing everybody needs.

According to a report by the Baku-based news agency Trend dated January 22, quoting a Kazakh periodical called Kazakh Petroleum, two greenfield projects in the form of prospective fields to be explored and developed have fallen through last year. In spring, concession holder Total of France tore up its contract for the Zhenis block which it held in a tandem with Norway's Statoil, followed in September by Eni of Italy informing the government that it would not go ahead with its field of Shagala. Both are located in the west of Kazakhstan.

Both projects were relatively fresh. On 6 June 2010, Total announced that they had signed agreements to explore the Caspian Sea for oil and gas with Kazmunaygas. Kazmunaygas said in a statement it had signed a memorandum of understanding with Total to assess the exploration potential of the Zhenis block of the Caspian, where recoverable oil reserves are estimated at 179 million tons.

The Zhenis block, 80 km from the shore, has estimated [total] resources of 615 million tons of oil equivalent and is located at a depth of between 75 and 100 meters. Eni's project had been clinched and trumpeted on a much higher-profile level. "Eni CEO Paolo Scaroni and Kazmunaygas President Kairgeldy Kabyldin signed today, in the presence of Kazakhstan President Nursultan Nazarbayev and the Italian Prime Minister Silvio Berlusconi, a cooperation agreement on exploration and production activities and strategic industrial facilities in Kazakhstan," a press release from Eni dated November 5 2009 read.

"Under the agreement, which follows a preliminary Memorandum of Understanding signed in July 2009, Eni and Kazmunaygas (KMG) will jointly study the Isatay and Shagala exploration areas located in the Caspian Sea, the optimization of gas usage in Kazakhstan, and a number of industrial initiatives including a gas sweetening plant, a gas turbine power plant, a drydock shipyard and the upgrading of the Pavlodar refinery, in which KMG holds a majority interest.

Final investment decisions on all these projects are expected by two years after the completion of the detailed technical and commercial studies. Whether such studies have ever been completed is not publicly known. But whatever the case, the setback could jeopardize Kazakhstan's entire scheme to secure energy provisions for its northeastern regions, where the country's heavy industry is concentrated, for decades to come.

View the original article here

ABB Bags $160M Worth of Electrical Systems for Drillship Orders in Brazil

ABB disclosed Friday that it has won orders worth $160 million from Jurong Shipyard for the design, supply, supervision of installation, testing and commissioning of the main electrical systems for seven next generation drill ships that will operate in the deep water oil and gas fields off the coast of Brazil. The orders were booked in 4Q 2012 and 1Q 2013.

The ships will be used to drill wells in the enormous offshore pre-salt fields off the southeast coast of Brazil. ABB's integrated electrical package will provide a reliable power supply to subsystems onboard ships and help the operators maximize their energy efficiencies.

The seven vessels are the first in a series of high-efficiency drill ships designed for ultra-deep water operations and built by Estaleiro Jurong Aracruz at their shipyard on the central eastern coast of Espirito Santo, Brazil. It is a wholly-owned shipyard of the Jurong Shipyard based in Singapore.

"ABB's ability to provide locally produced content for this project and the expertise of our local organization were important factors in winning this order. This represents a breakthrough for ABB in the Brazilian market," said Veli-Matti Reinikkala, Head of ABB’s Process Automation division.

"ABB has a great record of project execution for similar projects with Jurong’s shipyard in Singapore; the trust achieved over time with the shipyard was crucial for us in closing this agreement," added Haider Rashid, region manager for ABB in South Asia and country manager of Singapore.

ABB's scope of supply includes complete electrical systems including generators, distribution switchboards, transformers, drives and motors to power the ships' thrusters and drilling systems. Equipment deliveries to the shipyard are scheduled for this year, with the first vessel to be delivered to the ship-owner in the second quarter of 2015.

Equipment deliveries to the shipyard are scheduled for 2013, with the first vessel to be delivered to the ship-owner in the second quarter of 2015.

The ships will be delivered to Sete Brazil, a company established in 2010 by various Brazilian and international investors. On delivery, the seven drill-ships will be chartered to Petrobras for 15 years. Three of the ships will be partially owned and operated for Petrobas by Odfjell and three by Seadrill, both Norwegian based companies.

View the original article here

Pickens: Lack of Govt Leadership 'Missing Link' in O&G Development

A decade ago, energy industry veteran T. Boone Pickens struggled with the speeches he gave on U.S. college campuses, hesitant to tell students whether or not they had picked the right career by going into oil and gas.

When he spoke at Southern Methodist University six months ago, Pickens felt confident he could tell his audience of petroleum engineering and geology students that they had picked the right career.

"I didn't know where the industry was headed as we were starting to grind down on drillable prospects," Pickens said of his previous doubts at the North America Prospect Expo (NAPE) Winter Expo Thursday in Houston.

But the North American unconventional and tight sand boom changed the industry's future.

However, Pickens views lack of leadership at the federal government level as the missing link in the United States fully developing its resources and weaning its dependence on oil imports from the Organization of Petroleum Exporting Countries (OPEC).

Pickens was shocked by the fact that neither President Barack Obama nor former Republican presidential candidate Mitt Romney credited the U.S. oil and gas industry's efforts for the cheap energy prices the United States enjoys versus other countries. Pickens, who advised Romney during his campaign, said both candidates seemed afraid to associate themselves with oil and gas.

"Now the president is saying that the industry makes enough and that rich people don't pay their fair share of taxes," Pickens commented on Obama's calls to eliminate oil and gas tax provisions such as intangible drilling credits.

Pickens noted that he paid $665 million in taxes and gave away over $1 billion from ages 70 to 84. But in a three-part interview for CNN, the section about how much Pickens has paid in taxes was edited, Pickens commented, noting that it "didn't fit with what they wanted to feed the public."

As with the media, the oil and gas industry also does not get much help from Washington. Pickens questioned whether he had accomplished anything with his efforts to act as a champion for the industry and his advocacy of switching the U.S. heavy duty truck fleet from diesel to natural gas. If the U.S. heavy duty diesel truck fleet was converted overnight, it would save three million barrels of oil, or reduce imports by two-thirds.

"With all their talk of green and cutting coal fired plants, it comes down to the fact that they really don't like anything that's fossil," said Pickens, adding that he found it unbelievable that the federal government would not support development of additional oil and gas resources.

Pickens also criticized lack of leadership on energy policy decisions, noting that somebody who calls for study after study doesn't want to make a decision.

"When you see somebody who doesn't want to make a decision, it's probably because they're in a position they shouldn't be in."

However, Pickens acknowledged that some of the biggest mistakes he made occurred when he decided to do something too quickly. Pickens, who spent 40 years as CEO of Mesa Petroleum, said he'd made good decisions, bad decisions, and some he wished had been rained out. These mistakes include not believing natural gas prices would plummet and not anticipating the shale and tight sands plays.

But he also said he'd made a lot of money, most of that after 1996, when he founded BP Capital.

"Some decision- makers hesitate because they don't want to make mistakes," Pickens commented, relating a story from childhood about his grandmother saying he would have to "sit on his own bottom" sooner or later, or take responsibility for his actions.

"You should analyze carefully, but don't hesitate to pull the trigger."

Additionally, Pickens said he supports liquefied natural gas (LNG) exports from the United States, criticizing Dow Chemical and Koch industries for wanting to block LNG exports to keep domestic natural gas prices low and cheap manufacturing feedstock available.

"If you go out and risk your money, you should be allowed to sell the gas into any market you want."

But he also supports increasing opportunities to use natural gas at home.

Pickens also called into question the need for the Strategic Petroleum Reserves, which currently contains 750 million barrels.

"Nobody has questioned me on it," Pickens commented, adding that nobody can have a five-minute conservation in Washington on energy. "After three minutes, you run out of everything they know."

With four U.S. aircraft carriers in the Middle East and $2 trillion in funds spent by the United States since the first Iraqi war in the Middle East, Pickens questioned why the United States continued to put its soldiers at risk for the 2 million barrels of oil per day (MMbopd) destined for the United States out of the 17 MMbopd that flows through the Strait of Hormuz.

"When we buy OPEC oil, we're paying money to the Taliban. They'll hate you and burn your flag and you'll get absolutely nothing out of the campaigns," Pickens commented.

Instead, Pickens advised the United States should join forces with Mexico and Canada to make up the 2 MMbopd in production.

Pickens, who likes to see younger workers given a chance to prove themselves and employed a young workforce at Mesa, wishes he could go back and experience the energy industry again with the opportunities that the shale plays bring to the table. But he also sees no reason to step aside and let someone younger take the reins.

"I see opportunity in America in terms of a feed trough in a feed lot that is infinite in length. You don't have to wait for someone else to finish. All you have to do is get up to the feed trough."

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

View the original article here

Technip Wins TLP Malikai Deepwater Contract

Sabah Shell Petroleum has awarded Technip and Malaysia Marine and Heavy Engineering a contract for the engineering, procurement and construction of a tension leg platform (TLP) for the TLP Malikai Deepwater Project.

Technip said Friday that the TLP will be designed as a fully-manned platform that will be installed some 70 miles offshore Sabah, Malaysia, in a water depth of approximately 1,600 feet. It will weight approximately 26,000 tons – including a topside, which will have facilities to process 60,000 barrels of oil and 50 million cubic feet of gas per day.

Technip will lead the joint venture, with engineering and procurement to be carried out at its operating center in Kuala Lumpur, Malaysia. Hull and moorings engineering will be done at KL by Technip MHB Hull Engineering.

Meanwhile, the Malikai TLP will be constructed and commissioned at MMHE's fabrication yard at Pasir Gudany in Johor, Malaysia.

The tendons will be fabricated in the US Gulf of Mexico before being transported to Malaysia.

Lim Kwee Keong, senior vice president for Technip's Asia Pacific operation, commented in a statement:

"This award to the Technip-MMHE joint venture extends our participation in pioneering deepwater field development projects in Malaysia. It also confirms Shell's trust in the combined Technip and MMHE's capabilities to deliver successful projects. This contract marks Technip's first TLP contract and a new step in our development into the burgeoning deepwater floating production facilities market in the Asia Pacific region."