Monthly Archives: May 2015

Statoil Classifies Gudrun Leak as ‘Serious’

Statoil ASA announced Wednesday that a condensate leak which occurred on the Gudrun platform recently was “of the highest degree of seriousness”.

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The classification was made by Statoil’s corporate investigation team following reports of noise and vibrations on the Gudrun site in the North Sea Feb. 18. A 0.07 inch crack extending approximately 90 percent across the circumference of a two inch pipeline was found at Gudrun and condensate had leaked from the pipeline and resulted in gas distribution. Statoil estimated the volume of condensate from the leak at four cubic meters and the leak rate was calculated to be around 17 pounds per second.

No one was injured as a result of the incident, although the investigation concluded that the outcome could have been fatal if anyone was exposed to the leak. Based on material technical investigations, Statoil believes that the crack was the result of fatigue and overload. An under-dimensioned level valve led to vibrations in the valve itself and in the surrounding piping system during regular plant operation. The vibrations resulted in loss of level valve control, which caused repeating powerful vibrations and strokes in the piping system.

Statoil Senior Vice President of Safety and Sustainability of Development and Production Norway Øystein Arvid Håland commented in a company statement:

“The condensate leak on Gudrun was serious with major incident potential.

“Statoil is working systematically on gas leak prevention, and the learnings from this incident shall be translated into specific actions. We must ensure that these efforts help prevent future incidents.”

ConocoPhillips Says to Maintain Capex for Next 3 Years

KUALA LUMPUR, May 18 (Reuters) – ConocoPhillips expects to maintain capital expenditure for the next three years, after reducing it earlier this year due to the oil price drop, Chief Executive Ryan Lance told Reuters on Monday.

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The largest independent U.S. energy company, which cut its 2015 capital budget by $2 billion to $11.5 billion in January, “should hold (investment) flat for three years”, despite a slight recovery in oil prices, Lance said on the sidelines at the Asia Oil and Gas Conference in Kuala Lumpur.

Crude prices have almost halved from $115 a barrel in June 2014 as global supplies grew and demand was dented by slowing economies in places like China.

ConocoPhillips, like other exploration and production companies, has slashed capital spending in response to persistently lower oil prices, and is further reducing its rig count for fields in the lower 48 U.S. states.

Production is expected to fall in the third and fourth quarters in the company’s shale fields, including the Permian in West Texas and the Bakken in North Dakota. But its total output was still expected to rise 2 percent to 3 percent for the year.

The company, which is focusing on the Eagle Ford shale in Texas and North Dakota’s Bakken shale, has said it would also spend less on major projects, many of which are nearing completion.

ConocoPhillips is also preparing to sell noncore oil and gas producing acreage in the United States, in the latest sign that oil majors are becoming more accepting of lower oil prices.

BP Suspends West Azeri Platform for Planned Maintenance

BAKU, May 21 (Reuters) – British oil major BP has suspended operations at West Azeri, one of its platforms in the Caspian Sea, for planned maintenance, Tamam Bayatly, a spokeswoman for BP Azerbaijan, told Reuters on Thursday.

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Operations are suspended for 22 days, she added.

“This is a routine, planned programme and is part of normal operations,” Bayatly said, adding exports would continue according to the schedule.

She said the work would maintain the ability of the platform to produce in a safe, reliable and environmentally sound way.

Oil output from the main Azeri, Chirag and Guneshli (ACG) oilfields operated by BP, which account for most of Azerbaijan’s output, rose to 8 million tonnes in the first quarter of 2015 from 7.9 million in the same period last year, BP said last week.

Daily oil production at the ACG fields rose to an average 661,000 barrels per day (bpd) from 645,800 bpd a year ago.

Azerbaijan said total crude oil and condensate production in Azerbaijan rose to 14.2 million tonnes in the first four months of 2015 from 13.6 million a year earlier, driven by rising oil output at the ACG fields.

Falling output at the ACG oilfields has been a cause of concern in Baku.

BP and its partner, Azeri state energy company SOCAR, tried to calm those worries in 2013, saying production had stabilised. Total oil output rose in 2013 for the first time since 2011, but the decline resumed in 2014.

Azerbaijan plans to produce 40.3 million tonnes of oil and 29 billion cubic metres (bcm) of gas in 2015.

(Reporting by Nailia Bagirova; Writing by Margarita Antidze and Polina Devitt; Editing by Gareth Jones and Mark Potter)

Flood Of New Cash Sustains US Oil Firms; Energy Dealmakers Gripe

HOUSTON, May 20 (Reuters) – U.S. oil companies, still smarting from the crude price rout, are attracting a wave of new investment from unlikely sources – hedge funds and private equity firms flocking to the energy market for the first time to bet on a rebound.

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By pouring billions of dollars into energy shares and bonds in the past few months these newcomers, dubbed “energy tourists” by Houston’s seasoned dealmakers, have thrown a lifeline to scores of companies that a few months ago looked like potential targets for bigger rivals or distressed debt and restructuring specialists.

“You’ve got generalist funds that have never invested in energy coming out of the woodwork,” Michael Ames, an energy investment banker at Raymond James, told a meeting of oil and gas executives this month.

So far this year, 40 oil and gas companies raised $18.7 billion in new share sales, while 35 firms issued $26.4 billion in debt in the first four months, Thomson Reuters data show. The share sales are the highest in at least 15 years while bond issuance is on track to be the heaviest in three years. Ames estimated private equity firms have raised about $35 billion in dedicated U.S. energy sector funds in the past six months.

Among those that see opportunity in energy are distressed investor Marc Lasry at Avenue Capital Group and hedge fund Och Ziff Capital Management Group LLC.

With record-low interest rates and stock indexes near record highs, energy assets are one of the few sectors to offer a significant upside because of heavy losses of more than 50 percent suffered during the crude price slide, investors say.

But local veterans, mindful of past busts, worry a 34 percent rise in U.S. crude since mid-March to nearly $60 a barrel might not continue. Some also point out that debt and equity valuations imply oil prices of $85 to $90 and warn of an industry shakeout if crude prices stall.

BP Agrees To Cut Spending On Iraq’s Rumaila Field After Oil Price Drop

DUBAI, May 18 (Reuters) – BP has cut its development budget for Iraq’s giant Rumaila oilfield by $1 billion this year after the government warned a slump in crude prices and its battle against Islamic State was making it difficult to pay oil companies.

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The British oil major has agreed with Baghdad to reduce its 2015 spending on the country’s largest oilfield to $2.5 billion, from the initially planned $3.5 billion, an industry source familiar with the matter said on Monday.

International firms operate in Iraq’s southern oilfields under service contracts, whereby they are paid a fixed dollar fee for volumes produced.

But the arrangement has put Baghdad’s coffers under immense strain, as a dramatic drop in crude prices since last summer has hammered the revenue it receives from selling oil.

Oil companies have proposed millions of dollars of budget cuts, a senior Iraqi oil ministry official told Reuters in March.

It came after the government – wary of a boost in production costs that would further stretch state finances – asked them to revise development plans by considering postponing new projects and delaying already committed undertakings.

The oil ministry could not be immediately reached for comment on Monday.

GDF Suez Says Natural Gas Discovery Made in Southeast Algeria

PARIS, April 20 (Reuters) – French utility GDF Suez said on Monday that gas had been discovered in a region of southeast Algeria where it holds a licence with partners.

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The discovery was made in the Illizi basin, where the company holds a 20 percent licence alongside operator Repsol with 52.5 percent and Enel with 27.5 percent. Sonatrach is to participate with a 51 percent stake in the development and productions phases.

GDF Suez said that a successful test produced a gas flow of 175,000 cubic meters per day. “Appraisal work will be conducted later to assess the size of the discovery,” the company said in a statement.

The Illizi licence is GDF Suez’s second in the country where its Touat project in the southwest is in the development phase and due to enter production in 2017.

Bass Strait Oil Provides Update on Gippsland Basin Operations off Australia

Bass Strait Oil Company Ltd., an petroleum explorer focused on southeast Australia, revealed Monday that as part of its strategic review in February, the company advised that it has received an initial assessment of the Company’s Gippsland Basin asset base. This technical review involved the engagement of technical personnel as well as the Company’s internal technical team.

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The Bass technical team have been mapping the data and already identified new oil and gas opportunities similar to and on trend with the Longtom, Basker/Manta/Gummy and Kipper fields. Furthermore, Bass has identified a number of follow up targets on trend with Bass’ wholly owned Leatherjacket oil discovery contained in Vic/P68 permit. Leatherjacket was drilled by Esso in 1986 and discovered an oil column of over 82 feet (25 meters) in the highly prospective upper LaTrobe group.

The Company also wishes to advise that it had sought and has received approval from the National Offshore Petroleum Titles Authority (NOPTA) for a 6 month suspension of the work program for both its Gippsland basin permits, Vic/P41 and Vic/P68.

Bass had sought the variation of the work program for both permits to allow further time to integrate and map the reprocessed 3D seismic data and Quantitative Interpretation (QI) data analysis from the NOMB seismic survey.

Bass Starit Company Executive Director, Tino Guglielmo, said, “I am pleased with the progress the Bass team has made in identifying additional oil and gas exploration targets to date. The extension of the work programs provides the opportunity to mature these targets to prospects and leads.”

Searcher Processing Seismic Datasets in the Philippines, Papua New Guinea

Australia’s Searcher Seismic Pty Ltd. reported Friday that it is currently reprocessing two prominent regional seismic datasets in the Philippines and Papua New Guinea.

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The Pala-Sulu seismic survey, was acquired in 2011 to provide industry with a regional framework for understanding the prospectivity around Palawan Island, in the Philippines.

The dataset is currently being reprocessed with broadband deghosting and pre-stack depth migration to further enhance the quality of the existing data.

The Pala-Sulu survey is being processed immediately following the recently completed Mialara 2D new acquisition seismic survey, creating a comprehensive tied 6.2 mile (10 kilometer) grid over the PECR5 blocks.

In addition to the Pala-Sulu seismic survey, Searcher is also reprocessing the Lahara 2D seismic survey in Papua New Guinea.

The Lahara survey includes over 7,456 miles (12,000 kilometers) of 2D long-offset seismic data over the south eastern Papuan Basin, which remains one of the most comprehensive seismic exploration datasets in the Gulf of Papua.

Rachel Masters, Global sales manager for Searcher, said the survey greatly improved the understanding of the deep compressional fold belt and changed the prospectivity outlook by showing potential for new pre-Tertiary petroleum systems.

“However, the area is plagued with a complex overburden which pushed the limits of traditional PSTM imaging.”

“By applying broadband deghosting and a modern PSDM processing sequence, previous understanding of the basin is being fundamentally changed and there is fresh insight into old plays”.

Preliminary PSDM data for both surveys is available now.

Kea Faces ‘Precarious’ Future as it Seeks Shannon Partner

Onshore New Zealand-focused junior explorer Kea Petroleum admitted Tuesday that its future is “precarious” as it seeks funds to drill a well to test the potentially company-changing Shannon prospect.

The Shannon Prospect – which lies in onshore zone of the Taranaki Basin and contains an estimated 9.6 million barrels of gross un-risked mean prospective resources – is ready to drill, with Kea’s directors wanting to drill the Shannon-1 well during the third quarter of 2015. But the company is facing severe financial constraints, which means it is talking to partner MEO about potentially contributing towards the GBP 3 million ($4.5 million) cost of drilling Shannon-1 as well as enlisting the help of Rockpoint Corporate Finance to find a farm-in partner.

The Shannon Prospect is located directly beneath Kea’s Puka production station, which is part of the PEP51153 license area that Kea has already invested GBP 22 million ($32.8 million) in over last five years. Kea noted that in the current low oil price environment many companies are reassessing expensive offshore portfolios as onshore, conventional prospects can withstand lower prices.

“If we make a discovery in the Shannon Prospect 9.6 million barrels recoverable, then over 15 years, presuming an average of $70 per barrel, this translates into $673 million of gross income,” the firm said in a statement issued to the London Stock Exchange.

Kea also noted that even if Shannon-1 is not a success there is a second potential prize for the firm.

“The Shannon-1 well is expected to intersect the Mount Messenger sandstone reservoir, above the oil-water contact, that Kea has previously penetrated from the shallower Puka wells. As a safety net for investors in any future fundraising, the well will be drilled so there is a fall back production scenario from the Mount Messenger reservoir if, as expected, it contains oil,” the firm added, pointing out that production from another Mount Messenger well with similar characteristics to Puka-1 and Puka-2 would improve the economics of resuming production from these wells – which have been shut in since January.

TGS, Dolphin Agree Barents Sea 3D Seismic Survey

Norwegian seismic surveyor TGS announced Thursday that it has signed a joint venture deal with Dolphin Geophysical to acquire approximately 1,675 square miles of 3D seismic data over the western part of the Hammerfest Basin in the Barents Sea.

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TGS said the multi-client survey will provide the industry with broadband data over acreage not previously covered by 3D.

The new survey has been planned using TGS’s and Dolphin’s existing data as well as geological and geophysical knowledge from the area. The new project links Dolphin’s Gotha 3D survey with TGS’s Finnmark Platform 3D surveys and will provide seamless data coverage over large areas of the western Barents Sea, TGS said.