Cairn Seeks Key Changes in Barmer Field Regime

Vedanta Group explorer Cairn India has sought six changes in the approvals regime for its oil fields at Barmer in Rajasthan, which, if approved by the government, could prove to be a game-changer for the domestic exploration industry by drastically reducing the discovery-to-delivery time.

The changes suggested by the company essentially suggest an omnibus development for an entire acreage instead of for each discovery made in a block.

This would do away with the multiple approvals that have to be sought before starting production each time a discovery is made. This process could stretch to three-four years from the time that a company declares a commercially viable oil or gas strike; sources quoted Cairn as arguing with the oil ministry.

Cairn sought these changes days before it announced the 26th discovery in the block on Tuesday. This is the first strike the company has made after the government in February allowed oil hunters to conduct additional exploration in a producing field at their own financial risk, with the rider that costs would be allowed to be recovered only in case of commercial discoveries.

One of the key changes sought by Cairn suggests scrapping the system of seeking individual approval for declaring a discovery as commercially viable, called 'DoC or declaration of commerciality' in industry parlance. The company has argued that this would be "superfluous" under an omnibus development plan for acreage.

Under the omnibus plan, the company has suggested replacing multiple, individual field development plans by a single integrated plan for the entire block.

To address concerns over any possible slackness in oversight of expenditure, which could adversely impact government revenue, Cairn has suggested that once the omnibus block development plan is approved, expenditure on bringing a discovery into production could be done through a 'work program and budgeting' process annually.

Another major change sought is in the joint operating agreement for the field in line with the "best global oil industry practices". State-run ONGC is 30% partner in the field and Cairn, as in-charge of operations, cannot on its own decide on contracts worth more than $500,000. This involves "cumbersome multiple touch points between partners" that delay the process of procuring equipment or services, the company has argued.

Cairn's situation is similar to many of the 260 blocks in the country under exploration or development. In block after block, companies are hamstrung by red tape, delay in approvals and differences between partners. In case the government agrees to the key changes sought by Cairn, it would have to be done as a policy measure and would take time.

Copyright 2013 Bennett Coleman & Co. Ltd. All Rights Reserved.

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Petroamerica Updates Testing Results from Colombia Well

Petroamerica Oil Corp. presented preliminary drilling results for its Las Maracas-8 well on the Los Ocarros Block, and provide the results of selective testing for the La Casona-1 well on the El Eden Block, Colombia.

The Las Maracas-8 well was targeting the northern extension of the Las Maracas field and reached its total depth in a record drilling time of 10 days. A petrophysical evaluation of wireline logs from the well indicates more than 56 feet (true vertical depth (TVD)) of net pay, comprising 34 feet (TVD) in the Mirador Formation and 22 feet (TVD) in the middle Gacheta reservoir. The well is currently being cased, and it is expected that the well will be completed as a Mirador producer initially. Following completion, the rig is expected to drill Las Maracas-9 that will target the Gacheta and Une reservoirs.

The Las Maracas Field is currently producing between 8,000 to 9,000 barrels of oil per day (bopd) in total and the permanent production facility is still on schedule for completion by the end of May 2013.

The Company also carried out an extensive testing program of the Une and Gacheta reservoirs in its La Casona-1 well using a workover rig.

The Une Formation in La Casona-1 flow tested at an average rate of 1,700 bopd and 6 million cubic feed per day (MMcf/d) of gas over a 56-hour period. The well produced under natural flow conditions and the quality of the crude oil produced was 35 degree API. The measured watercut at the end of the test was 1 percent.

A number of basal Gacheta sands, not previously described in net pay numbers that were announced in the November 13, 2012 press release, were also tested and produced 105 bopd of light 24 degree API oil and 0.5 MMcf/d of gas. The watercut at the end of the test was 2 percent. A middle Gacheta sand was also tested separately yielding no flow to surface. It is speculated that this last test was dry due to either formation damage, or the well required more clean-up time to flow naturally.

The Mirador Formation, which had good oil shows and potential hydrocarbon pay from logs, could not be tested in this well due to a poor cement bond. It is expected that the Mirador, Gacheta and Une reservoirs will be further evaluated with a follow-up well, La Casona-2, to be drilled later this year.

The operator of the block is currently procuring production facilities that include natural gas compression equipment and plans to use the produced gas as a power source at the Las Maracas and Kona production facilities. Production from the La Casona discovery is expected to commence sometime during the third quarter of 2013.

Petroamerica holds a 50 percent participating interest in the Los Ocarros Block where the Las Maracas field is situated, and a 40 percent participating interest in the El Eden Block, 15 percent of which is still pending approval by the Colombian National Hydrocarbon Agency (ANH), where the La Casona discovery is located.

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Drilling report, April 7

Click HERE to read a PDF of the April 7 Tyler Morning Telegraph Drilling Report

The drilling report was produced with data from the Texas Railroad Commission, from March 24-30. The following counties were searched: Anderson, Angelina, Camp, Cass, Cherokee, Dallas, Ellis, Freestone, Gregg, Harrison, Henderson, Houston, Kaufman, Leon, Limestone, Marion, Nacogdoches, Navarro, Panola, Rains, Robertson, Rusk, San Augustine, Shelby, Smith, Upshur, Van Zandt and Wood. For information contact Business Editor Casey Murphy at cmurphy@tylerpaper.com or 903-596-6289.

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Huntington Field Starts Production

Premier Oil announced Monday that oil production has begun at the Huntington field in the UK zone of the central North Sea. After an initial ramp-up period, the field is expected to produce between 23,000 and 25,000 barrels of oil equivalent per day.

Premier holds a 40-percent interest in the field, while its operator, E.ON Exploration and Production holds 25 percent. Noreco and Iona Energy have 20 percent and 15 percent stakes respectively in Huntington.

Premier CEO Simon Lockett commented in a company statement:

"We are delighted to have achieved first oil from the Huntington oil field. This marks the first of four UK North Sea projects from our development portfolio which will come on-stream over the next few years.  We look forward to the field making a significant contribution to our worldwide production and cash flow growth."

The Huntington development is using the Voyageur Spirit FPSO vessel, a six-well subsea drilling template and a 7-mile gas export pipeline that is connected to the BP CATS transportation system.

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Centrica, Qatar Petroleum to Buy Suncor Gas, Oil Assets

LONDON - U.K.-based energy firm Centrica PLC and state-owned Qatar Petroleum International said Monday they have reached an agreement with Suncor Energy Inc. to acquire a vast chunk of its natural gas and crude oil business in Canada for $1 billion Canadian dollars (US$0.986 billion), marking the first investment the two companies have made together since signing an agreement to explore such purchases two years ago.

The deal is in line with Centrica's quest to become a more self-sufficient retail energy provider in North America where it owns the retail business Direct Energy, and marks its first big purchase after announcing two months ago that it would no longer invest in a new U.K. nuclear power plant, thus freeing up cash to invest elsewhere in its business.

For QPI, the international arm of Qatar Petroleum, the deal represents an attempt to diversify its business, which is heavily concentrated in oil and gas production in the Persian Gulf.

The assets will be jointly held by Centrica and QPI in a joint venture that will own be 60% owned by Centrica and 40% owned by QPI, with Centrica acting as the operator. The transaction is expected to close in the third quarter of 2013, subject to regulatory approval.

The assets are located in the Canadian regions of Alberta, northeastern British Columbia and southern Saskatchewan.

The business is forecast to produce about 250 million cubic feet of natural gas equivalent a day in 2013 or 15 million barrels of oil equivalent a year, and has proven and probable reserves of 978 billion cubic feet equivalent of natural gas of which 10% is crude oil.

"Growing our upstream gas operations is an important step to ensuring the company is a solid long-term partner to millions of residential and business customers across North America," said Wes Morningstar, senior vice president at Centrica in Calgary.

Once the transaction is closed, Centrica will be able to cover about 60% of its unregulated daily gas requirements from its growing North American Direct Energy retail energy business.

Nasser Al-Jaidah, chief executive officer of QPI, said the deal "is a significant step in the development of QPI's global upstream business. We look forward to continuing to advance QP's overall North American energy business."

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

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Aker Wins Solan Field Contract

Aker Solutions reported Thursday that UK independent Premier Oil has awarded it a $46-million contract to provide hook-up, commissioning and facility management services to Premier Oil at its Solan field development, west of Shetland. The contract is valid for three years from first oil, with two one-year extension options.

Aker said the hook-up project will see two subsea production and two subsea injection wells tied back to a fixed production platform located in Block 205/26a of the UK North Sea, the first of its kind west of Shetland. The platform, which will not be permanently manned, will produce oil that will be stored in a subsea tank before being exported via an oil-offloading system to shuttle tankers.

Aker said that work on the project will be led from its Aberdeen facility.

 Mike Forbes, Aker's managing director for its maintenance, modifications and operations business, commented in a statement:

"I am pleased that we are continuing to develop our relationship with Premier Oil and their joint venture partner on this significant project in a challenging and increasingly important sector of the North Sea.

"Having worked with Premier Oil and Chrysaor on the project since 2010 and played a supporting role in the sanction of this development and the technology behind it, we look forward to embarking on the next stage of Solan's evolution."

The UK's Department of Energy and Climate Change approved Premier's plans for the Solan oil field in April 2012. Once brought online, Solan is expected to produce 40 million barrels of oil at an initial rate of 24,000 barrels per day.

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ConocoPhillips Suspends 2014 Alaska Drilling Plans

ConocoPhillips will place on hold its 2014 drilling plans for Alaska's Chukchi Sea due to the uncertainties of evolving federal regulatory requirements and operational permitting standards.

While the company is confident in its expertise and ability to safely conduct offshore Arctic operations, ConocoPhillips believes it needs more time to ensure that all regulatory stakeholders are aligned, said ConocoPhillips Alaska President Trond-Erik Johansen in a statement.

"We welcome the opportunity to work with the federal government and other leaseholders to further define and clarify the requirements for drilling offshore Alaska," Johansen commented. "Once those requirements are understood, we will reevaluate our Chukchi Sea drilling plans. We believe this is a reasonable and responsible approach given the huge investments required to operate offshore in the Arctic."

ConocoPhillips in 1998 was awarded 98 exploration lease tracts in the Chukchi Sea Outer Continental Shelf. The company is Alaska's largest oil producer and is operator of the Kuparuk and Alpine fields. ConocoPhillips' leases will expire in 2019. As of year-end 2012, the company had invested $650 million net in its Chukchi Sea operations, including leases, seismic, biological studies and well planning, a ConocoPhillips spokesperson told Rigzone in an email.

Royal Dutch Shell plc in February suspended its 2014 offshore Alaska drilling plans, saying it needed more time to ensure the readiness of its equipment and employees for future drilling.

Last month, the U.S. Department of the Interior (DOI) concluded that Shell failed to finalize key components of its 2012 Alaska Arctic drilling program. DOI called on the industry and government to collaborate to develop an Arctic-specific model for offshore Alaska oil and gas exploration.

DOI Secretary Ken Salazar said the agency would proceed with ConocoPhillips using the same regime it did with Shell. While the Obama administration is interested in pursuing Arctic resources, Salazar said they wouldn't allow shortcuts in terms of requirements, and that exploration would only be carried out with the "utmost safety."

Greenpeace International called decisions by ConocoPhillips and Norway-based Statoil ASA to shelve Arctic drilling plans on admission that the oil industry is still not capable of meeting the enormous challenges posed by operating in the world's most extreme environment.

"The time has come for governments around the world to call for a permanent halt to the reckless exploitation of the far north," said Greenpeace International Arctic campaigner Ben Wycliffe in a statement.

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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