Monthly Archives: November 2014

Libya Fails To Restart El Sharara Oilfield Due To Blocked Pipeline

CAIRO, Nov 12 (Reuters) – Libya on Wednesday abandoned an attempt to restart production at the El Sharara oil field, one of the country’s biggest, after a pipeline blockage, state-run National Oil Corp (NOC) said.

The field, which used to pump at least 200,000 barrels a day, was caught up in the country’s political strife when gunmen forced a production shutdown last week.

Workers at the field and some Libyan blogs say tribesmen supporting an armed group controlling the capital Tripoli took over the field, expelling a rival group from Zintan, which was guarding it.

The fighting is part of a wider struggle in the OPEC producer where two competing governments and parliaments allied to various armed groups and factions are jostling for political control and energy resources three years after the ousting of Muammar Gaddafi.

Reports from a Libyan industry source said the pipeline leading to the Zawiya port had been blocked in Zintan territory. The Zintanis are allied to Prime Minister Abdullah al-Thinni whose cabinet had to move to the east after it lost control of Tripoli.

NOC spokesman Mohamed El Harari said production at the El Sharara field, located deep in the southern desert, had been shut due to a blockage but the reasons were unclear. He gave no more information.

The field operator, run by NOC and Spain’s Repsol, had restarted wells at 1100 local time (0900 GMT), he said earlier.

The failed restart also means that the neighbouring El Feel field, co-operated by Italy’s ENI, will remain shut.

In another setback for authorities a protest at the eastern Hariga port continued. State oil guards had gone on protest late last week to press for salary payments.

The closure of the two fields and the port means that output has fallen to 500,000 bpd or less, according to Reuters calculations based on previous data. NOC has not published an output update for a month.

McDermott Delivers Riser Support Structure for Inpex’s Ichthys LNG Project

McDermott International, Inc. (McDermott) reported Wednesday that it has successfully delivered the riser support structure (RSS) for the Inpex-operated Ichthys LNG Project’s subsea umbilical, riser, flowline development offshore Western Australia.

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“The completion of the RSS fabrication, load-out and successful installation is a major milestone,” said Tony Duncan, executive vice president Subsea. “Few companies in the industry have the capability to deliver a full engineer, procure, construct and install of a subsea project of this scale and nature. The timely delivery of the RSS is testament to the effective project execution delivery model we have adopted for the Ichthys LNG Project highlighting the strong capabilities of McDermott’s team comprised of industry experts from key locations, including Singapore, Batam and Perth and significantly de-risks the project execution schedule.”

Through smart engineering, McDermott was able to optimize the design and constructability of the structure that translated into cost savings in both time and materials for the customer. The innovative design concept of the structure was brought to reality by the combined expertise of our in-house Singapore based engineering team and our fabrication facility located on Batam Island, Indonesia.

The 7,200-ton RSS connects the field’s subsea infrastructure to a semisubmersible central processing facility. The RSS structure is comprised of a tower, more than 328 feet tall, with an arch 410-foot long also designed and fabricated by McDermott to be installed at a later date, to support 25 large-diameter flexible risers and dynamic umbilicals.

“The RSS accounts for more than 25 percent of the total 28,700 ton of subsea structures we are fabricating for Ichthys,” explained Duncan. “It is an integral piece of the subsea field architecture as all other subsea structures will be installed and oriented relative to its location.”

In addition to the RSS, the facility is undertaking the fabrication of subsea structures including the Flow Line End Terminations, In Line Tees, manifolds and riser bases.

The Ichthys project awarded to McDermott in 2012 includes EPCI and pre-commissioning of product flowline systems, a Mono Ethylene Glycol injection system, start-up condensate transfer and fuel gas transfer flowline systems, control systems and other associated SURF elements in waters up to 900 feet. McDermott will also install mooring systems for the Floating Production, Storage and Offtake vessel and Central Processing Facility as well as engineering for future flowlines, risers and umbilicals.

December North Sea Oil Output Set To Jump By 11.5%

LONDON, Nov 13 (Reuters) – North Sea daily oil output tracked by Reuters is set to jump by 11.5 percent in December from November, which traders said the market would struggle to absorb unless there is a pick-up in the number of shipments heading to Asia.

“With just one VLCC a month going to Asia, North Sea differentials have been fairly stable, but this increase in volume is likely to weigh on differentials,” a trader said.

November’s cargoes have been slow to clear, and physical crude prices have slipped over the week. The rise in North Sea output could add pressure to the main global crude benchmark – the Brent futures contract – which has already fallen to a four-year low below $79 a barrel.

Output from 12 of the main British and Norwegian crude streams is set to average 2.028 million barrels per day (bpd) in December, up from a revised 1.819 million bpd in November.

November’s volumes have been revised downwards because the loading dates of three Ekofisk cargoes, two Forties, one Oseberg and one Brent cargo were pushed back into December.

As a result, the Brent, Forties, Oseberg and Ekofisk streams, which underpin dated Brent, will load 1.007 million bpd in December, up 19.9 percent on November’s daily loadings.

To date, only one VLCC has been fixed to Asia for November, and an early fixture for December failed. Traders noted that freight rates had increased, limiting arbitrage opportunities, especially as Middle Eastern and local Asian crudes are currently cheap.

“Without the Asian option to relieve the pressure of growing supplies, the overhang in the Atlantic Basin will grow longer,” analysts at JBC Energy said.

On the flip side, if freight rates keep rising, it could restrict the amount of West African crude moving to Europe, and force European refiners to buy North Sea crudes.

Refinery margins are currently fairly robust because of tightness in both the European gasoline and diesel markets.

A Rotterdam refinery cracking Brent was making $8.39 a barrel on Nov. 13, according to Reuters’ models, up from an average of $5.80 a barrel in October.

“Cracks are extraordinarily strong and product stocks are low,” a trader said.

End-user demand is also quite healthy due to lower outright prices, which have encouraged consumers to stock up on heating oil and drive their cars more.

“This will certainly entice European refiners to lift runs,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas, told Reuters Global Oil Forum.

Sea Lion Partners Agree to Lower-Cost Development

Partners in the Falkland Islands’ Sea Lion field announced Thursday that they have agreed to adopt a phased, lower-cost development solution for the field with an initial phase designed to commercialize approximately 160 million barrels of oil.

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Rockhopper Exploration said the development concept will target a gross production plateau of between 50,000 and 60,000 barrels of oil per day.

The cost of developing the field to its initial phase is estimated to be less than $2 billion. Premier said that it believed that it could achieve this with a smaller, initial development of just the northeast part of the field – which would utilize a reduced well count. The firm said that it would be similar in scale to Premier’s existing Catcher field development in the UK North Sea.

In spite of the lower-cost development solution, the firms said that they will continue to target first oil from Sea Lion in 2019 following sanction during the first half of 2016.

Rockhopper CEO Sam Moody commented in a company statement:

“We have worked closely with Premier Oil on a lower cost initial development scheme that allows us to move together towards project sanction that is not contingent on the involvement of a third party.
 
“Overall, we are delighted with this revised approach as it materially reduces uncertainty of first-oil from Sea Lion, which we expect to be on production in 2019, as well as very significantly reduces the capex required to reach production.”

Genel Strikes Deal to Develop Major Gas Fields in Iraqi Kurdistan

LONDON, Nov 13 (Reuters) – Genel Energy has signed an agreement with the Kurdistan Regional Government (KRG) to develop two huge gas fields that could supply Turkey with gas from the winter of 2017/18.

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The Miran and Bina Bawi gas fields, with combined estimated resources of 11.4 trillion cubic feet, are valued by analysts at around $2.6 billion and are expected to help the KRG meet a gas export deal it signed with Turkey last year.

“This is a world-scale resource and the market was absolutely looking for confidence that we can come to a contractual agreement with the KRG to develop this asset,” Genel Chief Financial Officer Julian Metherell told Reuters.

Genel, one of the main oil producers in Iraqi Kurdistan, owns all of the Miran gas field and on Thursday agreed to buy the remaining 36 percent stake in Bina Bawi that it does not already own from Austria’s OMV for $150 million.

The London-listed company also said it expected a steady stream of income from its oil and gas operations in Iraqi Kurdistan from the first quarter of 2015 as it was still owed around $150 million by the KRG for oil exports at the end of September.

The autonomous government announced last week it would make initial payments of $75 million to oil producers in the region for their exports and Genel said it was expecting a transaction this month.

The advance of Islamic State fighters near Genel’s operations in August meant it was forced to evacuate some of its international contractor staff.

This has slightly delayed its plans to increase capacity at the Taq Taq oil field, in which it owns a 44 percent stake, to 200,000 barrels per day to the third quarter of 2015.

The delay meant its 2015 production guideline slightly undershot analysts’ expectations, at 90,000-100,000 barrels per day.

The energy company, which is led by ex-BP Chief Executive Tony Hayward, also said it was expecting to make $500-600 million in revenue next year, based on $80 per barrel oil prices, in line with its forecast for 2014.

Shares in Genel were up 1.6 percent at 835.5 pence at 0944 GMT.

Gulf Keystone says Iraqi Kurdistan Oilfield Output Target on Track

Nov 13 (Reuters) – Gulf Keystone Petroleum Ltd said it was on track to meet its full-year production target at Shaikan, its key oilfield in Iraqi Kurdistan.

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The company’s stock, however, fell as much as 13.2 percent in early trade, primarily on the uncertainty around how much money Gulf Keystone would receive from the Kurdistan Regional Government (KRG) for oil exports, according to a trader.

The KRG said last Friday that it would pay $75 million to oil producing companies for their exports in November and make further payments on a regular basis.

The oil producer said on Thursday it was nearing its production target of 40,000 gross barrels of oil per day at the Shaikan field by the end of 2014.

“Gulf Keystone’s production operations and export oil sales have continued uninterrupted in 2014,” Chief Executive John Gerstenlauer said.

Gulf Keystone’s shares recovered most of its losses, trading down 2 percent at 75.2 pence at 0956 GMT.

Schlumberger Makes Mozambique Survey Available

Schlumberger announced Monday the availability of its multiclient seismic survey offshore Mozambique. The Schlumberger multiclient seismic data offered in collaboration with the National Petroleum Institute of Mozambique (INP) includes reprocessed 2D lines and newly acquired seismic data, and provides detailed imaging of the subsurface.

“The recent discoveries and regional appraisals in the area indicate significant frontier exploration potential,” said Maurice Nessim, president, PetroTechnical Services, Schlumberger. “By combining multidisciplinary expertise for advanced attribute analysis and high quality acquisition technology, the data can provide valuable insights in this geologically complex area including illumination of the profile of structures and identification of faults.”

More than 68,350 square miles (110,000 km) of exclusive 2D seismic data—the most extensive data library of offshore Mozambique—are available for licensing, including more than 22,369 miles (36,000 km) of recently acquired long-offset 2D data using the ObliQ sliding-notch broadband acquisition and imaging technique.

The Schlumberger multiclient data are available in all offshore blocks offered in the Mozambique 5th Licensing Round issued by INP.

EnQuest Awards Technip Kraken Contract

Technip was awarded by EnQuest earlier this year a large engineering, procurement, installation and construction (EPCI) contract for the Kraken development located in the North Sea, 249 miles (400 kilometers) North-East of Aberdeen and 81 miles (130 kilometers) East of Shetland, at a water depth of approximately 394 feet (120 meters).

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The contract covers various project management engineering and installation works, which include:

  • fabrication and pipelay of approximately 31 miles (50 kilometers) of rigid pipe – 15.5 miles (25 kilometers) of metallurgically clad pipe and 15.5 miles (25 kilometers) of HDPE lined
  • installation of 3 umbilicals totaling 8.7 miles (14 kilometers)
  • installation of 4.3 miles (7 kilometers) of flexible risers and jumpers
  • template and manifold installation at three drill centers
  • diverless tie-ins to pipelines and manifolds
  • pipeline flooding, hydro testing and leak testing

Technip’s operating center in Aberdeen, United-Kingdom, will execute the contract.

The Group will leverage its unique vertical position in the subsea business. The Group’s spoolbase in Evanton, United-Kingdom, will weld and load-out the rigid pipe and Technip Umbilicals, Technip’s wholly-owned subsidiary in Newcastle, United-Kingdom, will manufacture the umbilical. All construction work on the project will be undertaken via diverless construction methods.

A number of vessels from the Technip fleet will be utilized for the offshore campaign, including Technip’s Deep Energy, one of the largest pipelay vessels ever built.

Bill Morrice, managing director of Technip in the UK, said: “We are delighted to have been awarded this contract which builds upon our excellent relationship with EnQuest. Our vast experience in the delivery of efficient, cost-effective solutions for our clients has been recognized once again and we look forward to supporting EnQuest to maximize production from the Kraken field, currently one of the largest developments in the UK North Sea.”

Metgasco Responds to Gas Plan Mooted by NSW Government in Australia

Natural gas explorer Metgasco Limited announced Friday that it welcomes the New South Wales (NSW) Government’s recognition that gas supplies are essential to the future of NSW and that the gas industry in the Australian state can be managed safely.

Metgasco is, however, concerned about the repeated changes in regulation and policy since the current Government came to office and the uncertainty the latest announcement has created.

In March 2011 the NSW Government effectively put a hold on the industry while it created new regulations, which included a Strategic Land Use Policy and a myriad of other regulations. In September 2012 it announced that the industry had the toughest standards in the world and gave the green light for exploration and development to proceed. It correspondingly renewed exploration licenses and announced the approval of Metgasco’s first production license (just south of Casino).

Since then it has taken a number of actions which have had the effect of stifling the industry.

The new policy announcement does not sufficiently clarify the business and regulatory environment for the gas industry in NSW. Business needs a degree of certainty to justify expenditure. We now have new rules and regulatory responsibilities, many of which will not be defined until well into 2015, uncertainty about the rules for land holder compensation and some indication that the royalty regime might change to encourage exploration.

Metgasco has invested approximately $104.4 million (AUD 120 million) over the past ten years exploring for natural gas in NSW and has established the second largest gas resource in the state. It did so with the expectation that its exploration rights would be respected.

Metgasco is seeking a meeting with the Minister for Resources and Energy to clarify the impact of the new policy on the potential of the significant gas resource in the Northern Rivers region.

It is important that the NSW Government sends a message to all investors that NSW is a place in which investment can be made with confidence.

Romania Does Not Have Shale Gas, PM Ponta Says

BUCHAREST, Nov 10 (Reuters) – Romania has fought hard to discover shale gas that apparently does not exist, Prime Minister Victor Ponta said late on Sunday.

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Like its emerging European Union peer Poland, Romania has opened the door to companies seeking to uncover shale gas, hoping to replicate a boom in cheap energy seen in the United States.

The drive to find alternative gas resources has become more urgent since the conflict broke out in Ukraine, through which Russia sends almost half of its gas exports to the EU.

But Poland sharply slashed its estimated shale gas reserves to about a tenth of the 5.3 trillion cubic metres that the U.S. Energy Information Administration initially anticipated.

The administration has also estimated Romania could potentially hold 51 trillion cubic feet of shale gas, which would cover domestic demand for more than a century.

“It looks like we don’t have shale gas, we fought very hard for something that we do not have,” Ponta told television channel Antena 3. “I cannot tell you more than this but I don’t think we fought for something that existed.”

Earlier this year, U.S. energy major Chevron Corp finalised exploration works at a well in the eastern Romanian village of Pungesti, after repeatedly postponing operations because of protests from local residents.

Chevron, the first company to begin exploring for shale gas in Romania, has said it was analysing data collected from Pungesti and that it aimed to drill more wells in the area. It also has rights for three licence blocks near the Black Sea.

In October, Energy Minister Razvan Nicolescu told Reuters Romania will produce more gas than it and smaller eastern neighbour Moldova consume by 2020.

Local firm Petrom and U.S. major ExxonMobil have discovered 1.5-3 trillion cubic feet (42-84 billion cubic metres of gas reserves in the Black Sea, which could become commercially viable in 2019. The country plans to tender 36 new onshore and offshore areas for exploration next year.

Romania is the third-most energy-independent state in the EU and unlike many of its emerging European peers it imports only a fifth of its gas needs from Russia.