Thursday, March 7, 2013

JKX Upgrades Elizavetovskoye Reserves

JKX Oil & Gas announced Monday that it has seen an upgrade to the remaining reserves for its Elizavetovskoye field near Poltava, Ukraine. The reserves have been revised upwards to 22 billion cubic feet of gas (3.7 million barrels of oil equivalent) with a further 22 million barrels of net prospective resources in the license.

JKX said the revisions have followed long-term testing of the legacy East Machesvska 53 (M-53) well under a joint production agreement (JPA) between JKX and the well owner and former operator of the field. The reserves revision is based on mapping and material balance data from the M-53 well and other wells on the field.

JKX acquired the Elizavetovskoye license in November 2004 and finalized the JPA for the three legacy wells on the license in late 2011. In April 2012, JKX restored the M-53 well to production and now receives 33 percent of the production from it. It currently flows at 2.7 million cubic feet of gas per day on a restricted choke.

The firm is now proceeding with a five-well development of the license, with the spudding of the first new well scheduled for middle of this year. First gas is anticipated in 4Q 2013.

JKX Chief Executive Dr Paul Davies commented in a statement:

"We are very pleased that the data collected from our joint activity with the Ukrainian state production company has demonstrated both the materiality of the 2P reserves and the significant prospective resources on our Elizavetovskoye licence."

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Israel Firms Invest In US Energy Search Off Cyprus

Israel Firms Invest In US Energy Search Off Cyprus

NISCOSIA - Israeli firms Delek and Avner signed an agreement on Monday to acquire a 30% stake in exploration rights for gas and oil off Cyprus's southern shore carried out by U.S. company Noble Energy.

Commerce Minister Neoclis Sylikiotis told reporters that the signing provided a "new era of Cyprus-Israeli strategic cooperation which includes economic and political dimensions."

Noble Energy Inc was the first to drill when awarded block 12 after Cyprus launched its energy search in 2007.

In December 2011, Noble said it had discovered gas reserves of up to 226 billion cubic meters, with an estimated value of 100 billion euros.

This would satisfy domestic needs for decades and could enable Cyprus to become a regional player by exporting gas to Europe from 2019.

Delek Drilling and Avner Oil and Gas Exploration own majority rights in Israel's own large gas finds in the nearby Leviathan and Tamar fields.

The latest deal move comes less than a week after Cyprus signed an agreement with French energy giant Total to conduct exploratory drilling for gas and oil in two blocks off its southern shore.

Cyprus aspires to become a regional energy hub with the prospect of oil as well as natural gas being tapped beneath the sea bed.

Total signed a deal to exploit blocks 10 and 11 that are adjacent to a large natural gas find in block 12 and said it seeks to proceed in drilling for oil as well as gas reserves.

Turkey has protested strongly against Nicosia's energy search, branding it illegal and beginning its own exploratory drilling off the breakaway north of the island.

Ankara has warned that companies involved in the Cyprus process could be shut out of Turkey's energy investment.

Sylikiotis said that having countries such as France, the United States, Israel and Italy involved in the island's hydrocarbon exploration acted as a "political shield" against Turkish threats.

Cyprus has been divided since 1974, when Turkish troops invaded and occupied its northern third in response to an Athens-engineered coup in Nicosia aimed at union with Greece.

It is estimated that there could be around 60 trillion cubic feet of gas lying in the 13 blocks that make up Cyprus's 51,000 square kilometer exclusive economic zone.

Cyprus is banking on its energy bonanza to eventually rescue it from recession as it seeks a European Union bailout. It plans to bring gas onshore in 2018 and to build a liquefied natural gas plant.

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

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Wednesday, March 6, 2013

BG Group Director Retires

BG Group announced Monday that one of its non-executive directors, Philippe Varin, has retired from the firm's board.

BG Group Chairman Andrew Gold commented in a company statement:

"I would like to express on behalf of BG Group's board our thanks and appreciation for Philippe's advice and support over the years. We have benefited greatly from his contributions."

Varin was appointed as a non-executive director in 2006. He was a member of the firm's audit and remuneration committees.

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BG Group Director Retires

BG Group announced Monday that one of its non-executive directors, Philippe Varin, has retired from the firm's board.

BG Group Chairman Andrew Gold commented in a company statement:

"I would like to express on behalf of BG Group's board our thanks and appreciation for Philippe's advice and support over the years. We have benefited greatly from his contributions."

Varin was appointed as a non-executive director in 2006. He was a member of the firm's audit and remuneration committees.

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Enegi in New Farm-Out Deal with Azimuth

Enegi Oil announced Monday that it is farming out part of Block 22/12b in the UK North Sea to Azimuth Limited. The block contains the Phoenix discovery, while its remaining acreage is made up of potential exploration opportunities.

Azimuth will earn a 50-percent interest in the exploration area in exchange for the completion of an agreed work program that includes certain geological, geophysical and reservoir analysis. This analysis will use existing seismic and well data in respect of both the Phoenix area and the exploration area that Azimuth currently possesses. Enegi, and its partner ABTechnology, will retain a 100-percent working interest in the Phoenix area.

Block 22/12b is located in the Forties-Montrose High area of the central North Sea. The license was awarded to Enegi in the 27th Seaward licensing round for the UK Continental Shelf in October 2012.

Enegi CEO Alan Minty commented in a statement:

"This is the second farm-out agreement that we have completed with Azimuth and we are delighted to be working with them and have access to their extensive exploration expertise on both our North Sea assets.

"Both deals are completely in line with our strategy of de-risking our portfolio whilst maintaining a significant interest in work programmes which we believe have the ability to deliver value to the Company for a minimal capital outlay."

On February 1, Enegi announced it had reached an agreement to farm out to Azimuth part of North Sea Block 3/23, which contains the Malvolio prospect.

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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UK Fracking: A Safe Regulatory Environment?

UK Fracking: A Safe Regulatory Environment?

Hydraulic fracturing operations are back on in the UK after the country's government declared in early December that it had lifted a temporary ban on the practice. But the controversy surrounding the safety of shale gas fracking has not gone away despite the announcement from the Chancellor of the Exchequer that the Department of Energy and Climate Change would establish an Office for Unconventional Gas and Oil.

The news was followed in January by an announcement from Cuadrilla Resources that it plans to submit a planning application to Lancashire County Council, in northwest England, to conduct hydraulic fracturing and flow testing at a well site near the village of Banks. In December, Rigzone reported that the British Geological Society believes shale deposits in the Bowland Basin area of Lancashire could amount to 300 trillion cubic feet of gas.

One of the conditions for the UK government's relenting over shale gas fracking was that it would be subject to new controls to mitigate the risks of seismic activity.

Fracking was originally suspended in the UK in May 2011 after two small seismic tremors were detected in Lancashire near what was then the country's only fracking operation.

As a result, companies planning to carry out hydraulic fracking must now:

Conduct a prior review before fracking begins to assess seismic risk and the existence of faultsSubmit a fracking plan to the Department of Energy and Climate Change (DECC) showing how seismic risks will be addressedCarry out seismic monitoring before, during and after fracking

The government also insists that a new traffic light system is employed to categorize seismic activity and direct appropriate responses, with a trigger mechanism being used to stop fracking operations in certain conditions.

Cuadrilla, meanwhile, appears to be taking the seismic issue very seriously. Late January, the company announced plans to install the same sensitive monitoring technology around its Anna's Road site that the company had already installed at the Banks site last year.

However, the new focus on monitoring seismic activity connected to fracking is not nearly enough to make the practice safe, according to several groups. As soon as the government decision to allow fracking was made in December, Friends of the Earth Executive Director Andy Atkins issued a statement in which he accused the government of being reckless and that the decision "threatens to contaminate our air and water".

Greenpeace UK added that Freedom of Information requests had revealed that the UK Environment Agency privately expressed fears to the government over threats to drinking water near proposed fracking sites in Sussex, England.

Greenpeace and Friends of the Earth are two organizations fundamentally opposed to any technology that will see an increased use in fossil fuels – even if it means the increased use of natural gas (which is cleaner in terms of carbon emissions than oil and coal). But there are other voices, friendlier to the oil and gas industry, who believe that the government has got it wrong when it comes to its approach to fracking.

Mike Hill, an engineer who lives in the area where Cuadrilla is carrying out its fracking operations, has been lobbying the UK government for a more rigorous approach to regulating the activity. Having worked in the oil and gas sector himself, and now a director of Gemini Control & Automation, he takes a more sober view of fracking but wants to see operations thoroughly checked to ensure it is done safely.

"I got involved in this about two years ago simply because, when I heard that fracking was coming to the UK, I knew that if it is not regulated properly the risks are fairly high," he told Rigzone in a recent interview.

After getting in touch with the UK's Health and Safety Executive (HSE) and the Environment Agency two years ago, Hill expected these bodies to be "very hot" when it came to regulating fracking.

"I was really expecting that was going to be the case but the responses I got at the time… were absolutely atrocious. It was breathtakingly complacent. Well, breathtakingly complacent from the HSE and, quite frankly, incompetent from the Environment Agency," he said.

"They didn't know what they were talking about. They don't understand oil and gas. They've never had to with [UK] oil companies being offshore and out of their scope and remit."

A key criticism Hill has is that these agencies – which are charged with health and safety, as well as environmental protection, in the UK – have been approaching the practice of fracking "with an offshore bent".

While acknowledging that the UK has sufficient regulations to ensure that its offshore oil and gas sector cannot cause another Deepwater Horizon or Exxon Valdez disaster, Hill believes that the problem with applying these same regulations onshore is that they do not take the public into account.

"There is no public offshore," he said.

"Cuadrilla is fracking 250 meters [820 feet] from the largest housing estate in Lytham St. Annes, with 2,000 homes on it. There is a public – a big one. And you can't ignore that fact."

"I live in the fracking zone. My kids live in the fracking zone. If this [activity] is properly regulated, I've no issue with it. I am not anti-fracking at all. But if you don't regulate this industry properly, introduce some specific onshore shale gas exploration regs and do proper inspections, then I do have a problem with it."

Hill, who has met with various government advisers involved with fracking (as well as Cuadrilla itself) several times during the past two years, has made it clear to them that he feels the offshore regulations developed in the 1990s, (following the North Sea’s Piper Alpha disaster in 1988) are not sufficient to address the issues with onshore drilling, exploration and production.

He wants to see regulations that cover the quality of cement used in onshore drilling, including onsite sampling and laboratory testing, along with several other regulations that will cover good safety practices such as: surface methane detection, post tremor actions, publication of which fracking chemicals are used at each well and the storage and disposal of flow-back water.

Hill also insists that well site inspections should be required and that they be random so that the Environment Agency or Health and Safety Executive can go and check which chemicals are being put down shale fracking wells "because, believe it or not, they don't check".

"You've got to have independent regulation. You can't just rely on self-regulation because, when push comes to shove, this is a very expensive business and if [a company] gets an issue that's going to cost it, say, three million pounds to resolve, or they can do it for 30,000 but in a slightly naughty manner, which option is it going to take when it knows categorically that no-one is inspecting and it absolutely won't be caught out? These are private companies that are there to make a profit."

The HSE confirmed to Rigzone that it made an inspection visit to Cuadrilla's Preese Hall and Grange Hill sites in March 2011 and that, as part of its well notification process, it has held six "inspection meetings" with Cuadrilla at both the firm's offices and at the HSE's own offices. The body also insists that it has well inspectors who "maintain regular contact" with Cuadrilla so that they are kept up to date with shale gas operations.

The HSE also made the point that well site visits, whether planned or unannounced, "can be of very limited value on their own in assessing well integrity and the management of well risks". Instead, it said that given the complexity of oil and gas wells "the key to well integrity inspection is to ensure that the operator is managing risks effectively throughout the life cycle of the well".

Hill is sticking to his guns, however, and believes a set of onshore drilling proper regulations are required to prevent a major incident.

"I think unless that happens we are going to have some sort of disaster at some point in time – our own version of Gaslands. There will be a public outcry and shale gas will then be banned in the UK. So we won't get that shale gas out of the ground and the UK won't benefit from the energy security it would provide."

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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PetroNeft Successfully Completes Arbuzovskoye Well

PetroNeft Resources reported Friday that it has successfully completed its Arbuzovskoye well 112 on Licence 61 in the Tomsk Oblast, Russia, while well 105 is currently drilling ahead.

PetroNeft said there was no water production associated with well 112, which had an initial flow rate of 140 barrels of oil per day. The well is currently shut in for pressure build-up testing.

Production from two Arbuzovskoye wells has been temporarily reduced by around 300 bopd due to mechanical issues, but the firm expects this will be fixed by work over or pressure maintenance.

PetroNeft added that total production on the license is running at 2,600 bopd – which excludes the 400-plus bopd potential from well 112 and the two mechanically-reduced Arbuzovskoye.

PetroNeft Resources CEO Dennis Francis commented in a statement:

"The initial flow rate on well 112 is encouraging and the fact that there is no water production bodes well. We continue to delineate the field and hope to alleviate the issues with the two Arbuzovskoye wells in the coming weeks. We also look forward to completing further wells in Arbuzovskoye and implementing the planned pressure maintenance programme over the coming months."

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