Awl Bidness

[trysail]

The Brent-WTI differential persists.

http://research.stlouisfed.org/fredgraph.png?g=eby


​

 

[rosco rathbone]

Just finished this book on the BP Macondo blowout:

http://aholeatthebottomofthesea.com/

Pretty good,especially the part describing the chaos of the blowout. The guy is heavily influenced by Tom Wolfe and imitates some of his more annoying tics, but all in all not afraid to get into the stuff I find interesting--the nuts and bolts.

Only complaint is not enough explanation for the layman. He throws in tons of oil field jargon like "float collar" and "annulus" and then doesn't always clarify what he's talking about.

Still worth a read though.

 

[trysail]

Just finished this book on the BP Macondo blowout:

http://aholeatthebottomofthesea.com/

Pretty good,especially the part describing the chaos of the blowout. The guy is heavily influenced by Tom Wolfe and imitates some of his more annoying tics, but all in all not afraid to get into the stuff I find interesting--the nuts and bolts.

Only complaint is not enough explanation for the layman. He throws in tons of oil field jargon like "float collar" and "annulus" and then doesn't always clarify what he's talking about.

Still worth a read though.

Thanks. Here's a very good good oil country glossary:
http://www.glossary.oilfield.slb.com/

(thank you, Schlumberger)

Float collar:

1. n. [Well Completions]
ID: 2656

A component installed near the bottom of the casing string on which cement plugs land during the primary cementing operation. It typically consists of a short length of casing fitted with a check valve. This device may be a flapper-valve type, a spring-loaded ball valve or other type.
The check-valve assembly fixed within the float collar prevents flowback of the cement slurry when pumping is stopped. Without a float collar, the cement slurry placed in the annulus could U-tube, or reverse flow back into the casing. The greater density of cement slurries than the displacement mud inside the casing causes the U-tube effect.


http://www.glossary.oilfield.slb.com/en/Terms/f/en/~/media/PublicMedia/OGL00013.ashx

 

[thør]

LUKoil Agrees to Cut Iraq Production

 

[trysail]

LUKoil Agrees to Cut Iraq Production

Iraq Tells Lukoil to Cut Oil Production Target at West Qurna-2
By Stephen Bierman
December 27, 2012

OAO Lukoil, the Russian oil company with the most assets overseas, said Iraq asked it to cut its production target at the West Qurna-2 project by 33 percent.

Lukoil will aim for peak output of 1.2 million barrels a day in 2017 rather than 1.8 million barrels a day at the request of the Iraqi government, Andrei Kuzyaev, head of Lukoil Overseas, said on Russian state television in comments confirmed by Grigory Volchek, a company spokesman.

Iraq, a member of the Organization of Petroleum Exporting Countries, or OPEC, is currently not assigned allocations or quotas for its oil output as the war-torn middle eastern nation attempts an economic recovery.

The Iraqi request is related to infrastructure issues and a nationwide reduction in planned output, Kuzyaev said, without elaborating.

Lower output targets mean Lukoil will have a better chance of reaching the production levels that trigger compensation payments, said Alexei Kokin, an oil and gas analyst at UralSib Financial Corp. in Moscow, in a research note today.


http://www.bloomberg.com/news/2012-...ut-oil-production-target-at-west-qurna-2.html

 

[trysail]

http://www.bloomberg.com/news/2013-...-production-to-highest-level-in-20-years.html



Fracking Pushes U.S. Oil Production to Highest Level in 20 Years
By Asjylyn Loder
January 9, 2013

U.S. oil production exceeded 7 million barrels a day for the first time since March 1993 as improved drilling techniques boosted exploration across the country and reinforced a shift toward energy independence.

The Energy Department reported today that weekly average output rose to 7.002 million barrels a day in the week ended Jan. 4, a 1.16 million-barrel increase from the same week last year. The country met 83 percent of its energy needs in the first nine months of 2012, on pace to be the highest annual rate since 1991, department data show.

Production grew by the fastest pace in U.S. history last year as horizontal drilling and hydraulic fracturing, or fracking, unlocked crude trapped in formations such as North Dakota’s Bakken shale. The state boosted production 40 percent last year through October, Energy Department data show. Texas was up 23 percent, and Utah rose 11 percent.

“I don’t think anyone expected the magnitude of the change in just one year,” said Andy Lipow, president of Lipow Oil Associates LLC, a Houston-based consulting firm. “It’s extraordinary.”

The Paris-based International Energy Agency said in November that the U.S. is on track to surpass Saudi Arabia as the world’s largest oil producer by 2020. The Persian Gulf country pumped 9.57 million barrels a day in December, according to data compiled by Bloomberg.

The U.S. will pump an average 7.32 million barrels a day this year and 7.93 million in 2014, the department said yesterday in its monthly Short-Term Energy Outlook.

North Dakota last year overtook Ecuador, the smallest producer is the Organization of Petroleum Exporting Countries, and is closing in on Qatar, the second-smallest, which produced 750,000 barrels a day in December, according to data compiled by Bloomberg. The state’s output reached 747,000 barrels a day in October, Energy Department data show.



http://www.bloomberg.com/news/2013-...-production-to-highest-level-in-20-years.html

 

[trysail]

http://www.bloomberg.com/news/2013-...usive-as-price-gap-closes-energy-markets.html




U.S. LNG Profit Seen Elusive as Price Gap Closes
By Matthew Brown
January 11, 2013

Profits from selling U.S. liquefied natural gas abroad may be elusive, belying the $60 billion race for export licenses as the price gap between Asia and North America shrinks from record levels.

The difference between U.S. and Asian gas is poised to drop by more than 60 percent by 2020, leaving exporters facing a loss of as much as $6 million per tanker, according to calculations by Bloomberg based on data from Rice University in Houston. The U.S. share of the global LNG market will be in “single digits,” according to Royal Dutch Shell Plc, which has stakes in more than 25 percent of the world’s liquefaction capacity.

As many as 16 applications for LNG export projects from Texas to Maryland and Oregon are being considered by the U.S. Department of Energy as companies look to follow Cheniere Energy Inc. in exploiting record price differentials between the U.S. and Japan, the world’s largest consumer. Buyers from Tokyo to London are seeking supplies in the U.S., where prices are less than a third of those in Europe and a fifth of Asian costs.

“The idea that the world will be flooded with spot LNG is not going to happen,” said Frank Harris, global head of LNG at Wood Mackenzie Ltd. in Edinburgh. “Returns are already getting squeezed. By the end of the decade, the LNG market looks better supplied, and spot cargoes from the U.S. won’t necessarily look so attractive.”

Losses Increasing
U.S. natural gas has risen 71 percent from a decade-low in April to $3.246 a million British thermal units in electronic trading today on the New York Mercantile Exchange. U.S. exports to Asia would help damp the Platts Japan-Korea Marker, a daily price assessment of Asia-bound LNG known as JKM, to a mean of $8.08 through 2020, from $17.80 yesterday, Rice University’s James A. Baker III Institute for Public Policy said in a study.

The average cost of shipping U.S. natural gas to Japan will be $9.05 from 2011 to 2020, assuming a U.S. price of $3.98, leaving a loss of $0.96 per million Btu taking into account the costs of transportation and liquefaction, the study shows.

Losses widen to $1.77 per million Btu in the decade to 2030 as the price at Louisiana’s Henry Hub, the U.S. benchmark, rises to an average $4.69 and the JKM falls to $7.98, according to the study, published Aug. 10.

The loss to the U.K. is $0.49 through 2020 and $1.23 from 2021 to 2030. U.K. next-month gas, the European benchmark, today rose 0.1 percent today to the equivalent of $10.86 on London’s ICE Futures Europe exchange.

Domestic Use
“Applications for export licenses are around 29 billion cubic feet a day,” Kenneth B. Medlock III, the study’s author, said from Houston. That’s equivalent to about 48 percent of domestic consumption in October, according to the Energy Department. “I doubt we’ll see more than 6 billion,” he said.

The economic rationale for delivering LNG to Asia would be significantly diminished at a U.S. price of about $6 per million Btu, while in Europe it disappears at about $5, according to James, Henderson, a research fellow at the Oxford Institute for Energy Studies.

Interest in U.S. LNG exports blossomed in recent years as growing supplies of gas from previously inaccessible shale rocks and the fourth-warmest winter on record cut Henry Hub prices to a 10-year low of $1.902 per million Btu on April 19 from as high as $13.69 in 2008.

The average Japanese LNG price was $16.92 in 2012 to October, peaking at $18.07 in July, according to data from the nation’s Finance Ministry. Prices soared from a mean of $9.04 in 2009 as utilities were forced to switch to natural gas in the wake of the March 2011 Fukushima nuclear disaster that led to the temporary closure of all the nation’s reactors.

Price Gaps
“The arbitrage opportunity that is driving actors to seek export permits and licenses for new liquefaction facilities is based on current price differentials,” said Iain Grant, a manager of special projects at Athabasca University in Canada who has written about the political economy of natural gas trading.

“But should we expect either the low Henry Hub prices or the high Japanese prices to last long enough to justify the massive effort that is underway to capitalize on it?”

Cheniere, based in Houston, is investing about $5 billion in its 18 million metric ton facility at Sabine Pass in Louisiana, which in April became the first facility in almost half a century to receive approval to export to countries that the U.S. doesn’t have a free trade agreement with. Shipments are scheduled to start in late 2015 with 11 percent of capacity available to the spot market and the rest tied up in long-term contracts with Korea Gas (036460) Corp., GAIL India Ltd. (GAIL) and BG Group Plc. (BG/)

Louisiana Coast
Main Pass Energy Hub LLC applied in September for authorization to export 3.22 billion cubic feet of natural gas a day, or 23.5 million tons of LNG per year, from a site 16 miles off the Louisiana coast, according to the Energy Department’s website. Gulf Coast LNG Export LLC in January 2012 requested permission to build a 2.8 billion cubic feet LNG terminal at the Port of Brownsville, Texas.

In total, 29.21 billion cubic feet a day of projects have applied for licenses to export LNG, according to the Energy Department. Assuming investment costs similar to those at Sabine Pass, they have a value of almost $60 billion.

Half of North America’s 120 million tons a year of LNG export potential will be built, Andy Brown, upstream director at Shell, the world’s largest shipping operator of the fuel, told reporters On Dec. 5. The U.S. share of the global LNG market will be “modest,” he said.

The world’s biggest LNG tankers, known as Q-Max vessels, can carry as much as 122,000 tons of the liquid fuel, or about 6.3 trillion Btu of natural gas.

NERA Report
All outstanding applications were waiting until after a Department of Energy report into the probable effect on domestic prices published on Dec. 5. Exports would have “net economic benefits” for the U.S., according to the study, written by NERA Economic Consulting.

While U.S. regulators decide how much gas they are prepared to send overseas, export projects are coming online from Australia to Angola. Some 221 billion cubic meters of annual liquefaction capacity will be added to the 413 billion currently in existence over the next four years, according to Barclays Plc. Of that, 115 billion will come from Australia.

U.S. natural gas prices will rise to $4.80 and $8.70 per million Btu by 2035 with a reference case of $6.30, according to the NERA study. The price increases by 14 percent above the base case by 2020 and 6.4 percent by 2035 assuming low expansion of LNG exports. Under a high and rapid expansion scenario, the increase will be 20 percent by 2020 and 14 percent by 2035.

‘Different Economics’
Long-term buyers of U.S. LNG who invest in shipping and liquefaction infrastructure may be able to make significant savings, according to Jonathan Whitehead, global head of commodities markets at Societe Generale SA in London.

“It’s completely different economics for spot versus long- term contracts,” he said. “A spot-shipping rate of $3 to Japan from the U.S. Gulf coast is probably true, but over 20 years it’s probably $1 and a bit. Liquefaction might be $2.”

Korea Gas, the world’s biggest LNG-buying company, agreed last January to buy LNG from Sabine Pass based on Henry Hub prices. The contract may help the utility pay 30 percent less than supplies in Asia, which are traditionally indexed to oil, the state-owned company said in April. Exports to Asia would cost $9.35 per million Btu, based on a Henry Hub price of $3, Cheniere said last year.

The introduction of contracts linked to Henry Hub instead of crude will help speed a move away from oil indexation, according to the Oxford Institute’s Henderson.

“Even if the volumes of North American gas that actually arrive in Asia and Europe are relatively small, their impact on prices and price formation across the globe could be significant and long-lasting,” he said.




http://www.bloomberg.com/news/2013-...usive-as-price-gap-closes-energy-markets.html

 

[trysail]

http://www.reuters.com/article/2013...0115?feedType=RSS&feedName=marketsNews&rpc=43




Russia minister offers compromise on Arctic oil control
Tuesday Jan 15, 2013
9:45am EST

MOSCOW Jan 15 (Reuters) - Russia's Natural Resources Minister offered a compromise on Tuesday between state oil companies fighting to defend their legal right to the country's Arctic offshore hydrocarbon deposits and private companies clamouring for new reserves.

Minister Sergei Donskoi told a meeting with the oil industry, chaired by Prime Minister Dmitry Medvedev, that non-state oil companies could get access to deposits rejected by state companies Gazprom and Rosneft.

In return, state companies could have an option on discoveries by non-state companies, he said.

The core of Russia's onshore conventional reserves is in decline and the country is hoping that exploration of its northern seas will reveal new fields to rival Samotlor, the West Siberian supergiant which helped sustain the Soviet Union through its final decades.

But those waters are the legal preserve of state companies, and the state gas export monopoly, Gazprom, and state oil company Rosneft have bitterly resisted suggestions by government officials that non-state companies should be allowed in.

The conflict also reflects a dispute between liberals in the Medvedev government, who say they favour more competition in the oil and gas sector, and powerful Rosneft chief executive Igor Sechin, an ally of President Vladimir Putin.

The Sechin camp argues that only state companies can shoulder the expense and responsibility of operating in sensitive offshore zones.

Private companies such as LUKOIL, for their part, have been driven abroad in search of reserves to compensate for declining output in Russia. LUKOIL chief Alekperov has been a vocal lobbyist for non-state access to the Arctic.

The government, keen to stave off declines in oil production which threaten a key source of revenue to cover heavy social and military spending in the state budget, also views Arctic development as a means of attracting investment and technology.

Rosneft has brought in ExxonMobil, Statoil and ENI as partners in some of its Arctic licence areas to draw on their experience in other countries.

Both have said they are willing to commit billions of dollars to offshore development. Alekperov said earlier on Tuesday that LUKOIL could spend 325 billion roubles on existing offshore projects alone, including projects in the Russian sector of the Caspian Sea.

Sechin said Rosneft would spend 1.2 trillion roubles ($39.6 billion) in offshore oil and gas exploration within the coming decade.

"Within the next 10 years we will spend 1.2 trillion roubles only for exploration works as part of our licencing obligations," Sechin told reporters when asked about offshore development.

 

[trysail]

http://www.bloomberg.com/news/2013-...-companies-weighing-cuts-on-oil-discount.html




Suncor Weighing Spending Cuts on Oil Discount
By Jeremy van Loon and Rebecca Penty
January 16, 2013

Suncor Energy Inc. is considering making an C$11.6 billion ($11.8 billion) oil-sands project the first major spending reduction among Alberta energy producers as the region’s crude prices sink to the lowest in the world.

The oil-sands benchmark, West Canada Select, traded at a record $42.50 a barrel less than U.S. crude on Dec. 14. Canadian companies are forgoing about C$2.5 billion a month because of the lower prices, according to an estimate by Houston-based investment bank PPHB Securities LP. The discount has helped erode Canadian oil profits and hurt companies’ shares.

Lowering production costs is one of the few options available for producers facing shrinking commodity prices, said Barry Munro, Canada oil and gas leader at Ernst & Young LLP in Calgary.

“This year will challenge oil-sands companies,” Munro said in a Jan. 3 telephone interview. “Most executives are coming back to work focused on how to manage a margin that has been severely depressed. That means better cost management.”

Canadian heavy oil is being discounted because of a lack of pipeline capacity to ship increasing volumes of crude to higher- paying markets. The decline has been exacerbated by surging U.S. production from reserves such as the Bakken field in North Dakota and falling demand as vehicles become more fuel efficient.

Steam Tar
Companies have already begun to decrease investment. Suncor, Canada’s largest energy producer by market value, last month reduced its annual capital spending plan to C$7.3 billion for 2013 from an estimate of C$7.5 billion on Nov. 1. Cenovus Energy Inc. said on Dec. 12 that cash flow this year will be as low as C$3.1 billion, compared with 2012 guidance of C$3.7 billion, because of lower prices, while Canadian Natural Resources Ltd. expects to reduce spending on its thermal-sands production, a process that warms up bitumen underground.

Canadian Natural, Suncor, Cenovus and Imperial Oil Ltd. are among the largest companies that scrape and steam tar-like bitumen from the sub-Arctic reaches of northern Canada. The oil- sands bitumen is then put through machines called upgraders to separate out the sand.

Suncor has said it plans to decide the fate of the Voyageur upgrader project, a joint venture with France’s Total SA that would process 269,000 barrels a day of bitumen, by the end of March. The company is also reviewing its Fort Hills and Joslyn oil-sands projects, Suncor Chief Executive Officer Steve Williams said on a conference call on Nov. 1.

Suncor Options
“It is possible for them to go either together as part of a sequence or for them to be split apart and for one to go and one not to go. All of those options are possible,” Williams said.

Sneh Seetal, a Suncor spokeswoman, didn’t immediately respond to calls seeking comment. Alishia Paradis, a spokeswoman for Canadian Natural, declined to comment. Pius Rolheiser, an Imperial Oil spokesman, declined to comment ahead of the company’s 2012 earnings report.

Suncor’s adjusted per-share earnings fell 9.4 percent in 2012 to C$3.27 and will remain little changed this year, according to the average of 19 analysts’ estimates compiled by Bloomberg. Canadian Natural may report adjusted profit of C$1.62 a share for 2012, a 30 percent decline from 2011, according to the average of 20 estimates.

‘Train Wreck’
“I can’t envision somebody shutting down existing operations in the oil sands,” said Allen Brooks, managing director at PPHB Securities LP. “Might the trucks go a little slower? Maybe. Might they not complete a few wells, that’s the kind of thing. It’s more at the margin.”

Shares of Canadian oil producers shrank last year. The S&P/TSX Energy Index fell 3.6 percent compared with a gain of 4 percent on the broader S&P/TSX Composite Index in 2012. Canadian Natural fell 25 percent while Suncor bucked the trend, rising 11 percent last year.

Suncor fell 0.4 percent to C$33.80 at 9:35 a.m. in Toronto, while Canadian Natural dropped 0.9 percent to C$28.84.

“The revolution in domestic production in the U.S. is obviously a train wreck for most Canadian producers, compounded by the gridlock in pipeline approval,” Chris Damas, an investment adviser at BCMI Research in Barrie, Ontario, said in an e-mail. “I don’t think this has sunk in for most retail, and many institutional investors.”

Pipeline Opposition
Canadian producers are encouraging the construction of new pipelines to reach coastal refineries and overseas markets and relieve a glut of supply that has constrained prices. TransCanada Corp.’s Keystone XL pipeline to the the U.S. Gulf Coast and Enbridge Inc.’s Northern Gateway project to the Pacific Coast have faced delays because of environmental opposition.

The main U.S. oil grade is also trading lower than global benchmark Brent, due to record production in the country and a lack of pipeline capacity to the coasts. That discount is poised to remain “for years,” keeping a lid on oil prices in Canada that track New York-traded West Texas Intermediate, and encouraging Calgary-based producers to lower spending, said Robert Mark, director and equities analyst at MacDougall, MacDougall & MacTier Inc. in Toronto, which has C$2.5 billion under management.

Brent oil ended the session at $110.30 a barrel yesterday, West Texas Intermediate closed at $93.28, while West Canada Select was at $55.69.

Capital Allocation
“The big companies, when they’re looking at their capital spending for the next number of years, they’re realizing this WTI-Brent discount is not going away and they have to be conscientious with their investors about how they allocate their capital,” Mark said.

Companies with international operations may shift spending to operations that fetch global crude prices, such as Exxon Mobil Corp.’s decision on Jan. 4 to proceed with developing the $14 billion Hebron oil project off the coast of Newfoundland and Labrador, Mark said.

Canadian heavy crude’s discount will affect some companies, including Canadian Natural and Baytex Energy Corp., “quite substantially,” said John Stephenson, who helps manage C$2.7 billion at First Asset Investment Management Inc. in Toronto.

“The nitty-gritty is it’s going to impact quite a few producers in the quarter and through the second quarter,” Stephenson, who owns shares of both companies, said by phone. “It’s a huge buying opportunity. These names are dirt cheap and this is going to be one of those great themes for energy in 2013 is just how much that gap closes from its historically high ratio.”

Narrowing Gap
Canada exported C$68.3 billion worth of oil products in 2011, more than the nation’s other main products including vehicles, logs and metals.

Upgrades that will allow the biggest refinery in the U.S. Midwest, BP Plc’s facility in Whiting, Indiana, to take Canadian heavy crude are soon scheduled to be complete and new pipeline capacity to the U.S. Gulf Coast is being added, Stephenson said, predicting the gap between Canadian crude and the U.S. benchmark is set to start narrowing.

Canada’s heavy oil will probably face even steeper discounts in the first half of the year before the differential narrows, PPHB’s Brooks said.

“What you’ve got is this confluence of a weak economy here in the U.S. and continued production growth putting a squeeze on the U.S. market,” Brooks said. “Canada becomes, to some degree, the odd man out.”





http://www.bloomberg.com/news/2013-...-companies-weighing-cuts-on-oil-discount.html

 

[trysail]

http://www.bloomberg.com/news/2013-...erov-instructs-son-not-to-sell-his-stake.html



Lukoil Billionaire Alekperov Instructs Son Not to Sell His Stake
By Anna Shiryaevskaya
February 6, 2013

OAO Lukoil’s billionaire Chief Executive Officer Vagit Alekperov, who owns about a fifth of the Russian oil producer, arranged for his son Yusuf to maintain his holding beyond his death.

“I’ve already arranged for my stake, even if I leave this life, to be indivisible to secure the company’s stability for many years ahead,” Alekperov said in an interview on Ekho Moskvy radio late yesterday. “My son won’t have the right to split and sell it.”

Alekperov, 62, owns more than 20 percent of Lukoil, Russia’s second-largest oil producer and the country’s biggest non-state energy company. His son Yusuf, a graduate of Gubkin Russian State University of Oil and Gas, works at oilfields in western Siberia as a technologist, according to the CEO.

“He must follow that path and see how people work at fields,” Alekperov said, adding that he isn’t preparing Yusuf to replace him. “Let him choose his fate for himself.”

The billionaire said he “always buys shares” in Lukoil and neither he nor other key holders offer them for sale on the market. The company is trading at half its true value, he said.

Lukoil shares have risen 12 percent in the past year, valuing the Moscow-based company at 1.7 trillion rubles ($57.2 billion). Alekperov’s net worth is estimated at $13.2 billion, according to the Bloomberg Billionaires Index.




http://www.bloomberg.com/news/2013-...erov-instructs-son-not-to-sell-his-stake.html

 

[trysail]

New discovery of good quality oil in Santos Basin pre-salt

Rio de Janeiro, February 25th, 2013 – Petróleo Brasileiro S.A. – Petrobras announces that it has confirmed the presence of good quality oil (31 º API) in ultra deep waters of Santos Basin pre-salt while drilling well 1-SPS-98 (1-BRSA-1063-SPS), informally known as Sagitário. This is the first well to be drilled in block BM-S-50 and is located 194 km off the coast of São Paulo state, at a water depth of 1,871 meters.

The concession were this well is being drilled is located west of the main discoveries of the Santos Basin pre-salt (cluster blocks). The importance of this discovery lies on the fact that this is an exploratory frontier.

The oil was found in carbonate reservoirs below the salt layer at a depth of 6,150 meters. The well is still in the drilling phase, which is set to continue until the planned depth of 6,950 meters, with the aim of defining the base of the oil reservoirs.

Petrobras is the operator of the consortium (60%) in partnership with BG E&P Brasil (20%) and Repsol Sinopec Brasil (20%).


http://www.investidorpetrobras.com.br/data/files/8A78D6843AFA67F3013D13EA79DF5EA0/Mapa_descoberta_SAGITARIO_reduzido.jpg

 

[thør]

Rumor is that Repsol's three rigs working up north have each got serious problems. Could Repsol be the problem?

 

[trysail]

Rumor is that Repsol's three rigs working up north have each got serious problems. Could Repsol be the problem?

All I know about Repsol is that Argentina just stole half the company. As a result, they had to sell a big chunk of their LNG business to you-know-who. If I was a Repsol shareholder, I'd be hopping mad at the goddamned Argentines.

 

[mercury14]

http://www.bloomberg.com/news/2013-...-production-to-highest-level-in-20-years.html



Fracking Pushes U.S. Oil Production to Highest Level in 20 Years
By Asjylyn Loder
January 9, 2013

So the conservative line about Obama blocking American oil production was all a lie?

 

[trysail]

People who do productive work do their utmost to ignore politicians and political junkies.

 

[trysail]

The Potential of Thermal Stimulation Techniques
http://www.slb.com/news/inside_news/2013/2013_0129_hot_rocks.aspx

The world contains a vast store of energy in fluids that scientists believe could provide the world with transportation fuels for a century or more. Operators are using new thermal stimulation techniques to unlock this potential from heavy oil, tar sands, bitumen, and oil shale. The efficiency of these programs, however, requires that engineers who are usually well versed in the properties of reservoir fluids also consider thermal properties of reservoir rocks.

http://www.slb.com/news/inside_news/2013/~/media/Images/news/inside/2013/hot_rocks_600x600.ashx
Primary production of oil from bitumen in the shallow Yarega field started in the 1930s and
peaked in the early 1950s. Production was declining rapidly around 1970, when new
programs of thermal mining by steam injection were introduced


​

Increasing oil production using thermal stimulation techniques
Today about 60% of world oil production attributed to enhanced oil recovery (EOR) methods comes from thermal stimulation methods, such as injected steam or hot water, which have been practiced for more than half a century. In the Kern River oil field in California, USA, where production had stagnated for decades, steam injection increased production more than tenfold.

In wells in the Yarega oil field in the Komi Republic, Russia, production per zone increased from about 4% per zone average recovery using conventional wells to 33% and, in some cases, nearly 70% per zone from wells using thermal mining techniques.


Studying reservoir thermal properties to improve EOR methods
An article in the Autumn 2012 issue of Oilfield Review examines this critical facet of thermal EOR program design with a review of the basic thermal properties of rocks. It looks at their measurement using conventional, often time-consuming, techniques.

The article also introduces a new measurement technique that uses optical sensors to rapidly quantify thermal properties of rock. The technique has been used on thousands of rock samples gathered from deep scientific boreholes around the world and, more recently, it has been used in sandstones, shales, and carbonates from petroleum reservoirs.

Also highlighted is research on cores from Russian oil fields which has revealed surprising variability in reservoir thermal properties. Reservoir simulations demonstrate the importance of this variability in predicting EOR outcomes and the impact such understanding can have on project economics.



http://www.slb.com/news/inside_news/2013/2013_0129_hot_rocks.aspx

 

[thør]

Shell has suspended work offshore in the Chukchi and Beaufort for 2013.

 

[trysail]

Shell has suspended work offshore in the Chukchi and Beaufort for 2013.

A billion here and a billion there, and pretty soon, you're talking about real money.

-Sen. (R., IL) Everett Dirksen (1896-1969)​

 

[trysail]

http://www.bloomberg.com/news/2013-...turn-to-hit-shell-and-government-revenue.html



Nigeria’s Oil Thieves Return to Hit Shell and Government Revenue
By Elisha Bala-Gbogbo
March 4, 2013

Nigeria’s oil thieves are back in action, sabotaging pipelines to rob Africa’s biggest crude producer of more than a 10th of its daily production.

In the first two months of this year alone, Royal Dutch Shell Plc and other oil companies have declared three times force majeure, a legal clause that allows them to miss contracted deliveries due to circumstances beyond their control. The thefts threaten to outpace the worst year, 2009, at the height of the insurgency by militants in the Niger River Delta.

“The situation in the last few weeks is unprecedented,” Shell Nigeria’s Managing Director Mutiu Sunmonu said yesterday in an e-mailed statement. “The volume being stolen is the highest in the last three years; over 60,000 barrels per day from Shell alone.”

Nigeria depends on crude exports for 80 percent of government revenue and 95 percent of its export income. The Hague-based Shell, Exxon Mobil Corp., Chevron Corp., Total SA and Eni SpA run joint ventures with state-owned Nigerian National Petroleum Corp. that pump most of the country’s oil. The West African nation was the seventh-biggest producer in the Organization of Petroleum Exporting Countries last month, with output at about 2.1 million barrels a day.

In 2009, during the insurgency by the Movement for the Emancipation of the Niger Delta, companies declared force majeure 12 times. The figure, which dropped to four in 2010 after the government declared an amnesty for MEND fighters, was back up to 11 last year as thousands of former rebels who gave up their weapons returned to a life of crime.

‘Criminal Syndicates’
“There have been growing opportunities for some of these organized criminal syndicates to operate with greater impunity,” Roddy Barclay, an analyst at Control Risks, a London-based business consulting group, said in a phone interview. “Certainly some of the ex-militant actors that were engaged in the armed attacks against the oil industry are now also involved in the more criminally lucrative” theft.

President Goodluck Jonathan is seeking international help by approaching countries that receive stolen crude from Nigeria or where the proceeds are laundered to help close the loopholes, Petroleum Minister Diezani Alison-Madueke said on Feb. 19.

While Jonathan gave the navy “a specific mandate to curb” oil theft, the Chief of Naval Staff, Vice Admiral Dele Ezeoba, said in Abuja, the capital, on Feb. 21, it’s difficult to eradicate because of the expanse of pipelines covering a 70,000 square-kilometer (27,027 square-mile) region. That is bigger than the U.S. state of West Virginia.

‘Stop Theft’
As many as 250,000 barrels of crude are stolen daily, according to former Nigerian diplomat Patrick Dele-Cole, who has started a “Stop the Theft” campaign. His estimate is similar to one contained in a Nov. 2 Petroleum Ministry report prepared for Jonathan.

The thefts cost the government $7 billion in revenue in 2011, about a quarter of this year’s national budget, according to the central bank.

The armed gangs are tapping crude from pipelines either for local refining or to move it in barges for sale to tankers waiting off the country’s Atlantic coast.

The ships then take it to destinations as far flung as the Balkans or Singapore, says Dele-Cole, whose son Tonye Cole runs Sahara Energy Field Ltd., a Lagos-based oil exploration and trading company.

Boiling Crude
To refine the oil, gangs boil the crude in large, open cauldrons, a process that often results in burning down large patches of the Niger River delta’s mangrove and rain forests and polluting its rivers. Their gasoline grade, known locally as Asari, after former militant leader Mujahid Dokubo-Asari, is sold at filling stations in the region, according to Sam Dike, a taxi driver in the southeastern city of Owerri.

“We believe that criminal syndicates control the vast majority of crude oil theft in the Niger delta,” Dele-Cole said in an interview. “The Nigerian government and its international partners have not focused their attention on gathering the evidence required to clearly indicate who these people are.”

Nigerian prosecutors charged 22 people, including 10 Indian nationals, with oil theft in the southern city of Yenagoa on Jan. 23. A 15-man Russian crew is also facing charges of weapons smuggling after their vessel was seized in waters in the oil region in October, with authorities alleging links with the oil gangs.

At least 7,000 improvised refineries dotting the delta were destroyed by troops in the past two years, Joseph Okogie, a navy spokesman, told reporters last week.

Government Failure
The former rebels are turning to crime because the government failed to follow up the amnesty by meeting their demands to end poverty and grant the region more benefits from crude production, said Anyakwee Nsirimovu, executive director of Institute of Human Rights and Humanitarian Law, based in the oil industry hub of Port Harcourt.

“When the government failed to do what they’re supposed to do, self-help became the real deal,” said Nsirimovu. “As long as politicians are sitting in government houses, sitting in the legislature and stealing public money, then you must always find people who are cooking crude oil somewhere to make ends meet.”



http://www.bloomberg.com/news/2013-...turn-to-hit-shell-and-government-revenue.html

 

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http://www.bloomberg.com/news/2013-...ad-challenged-as-taxes-strangle-drilling.html



Russia’s Oil Lead Challenged as Taxes Strangle Drilling
By Joe Carroll
March 4, 2013

The U.S. and Saudi Arabia are approaching Russia as the world’s leading oil producer, with production rising 12 percent in the U.S. and 5.9 percent in Saudi Arabia last year. The U.S. production spurt is 10 times Russia’s 1.2 percent growth rate.

The prime reason, according oil company executives on the ground, is the Russian failure so far to repeal taxes that devour more than two-thirds of the revenue from a barrel of crude and thus have choked output.

While Russia’s shale oil deposits sprawl over territory twice the size of U.S. discoveries, energy companies have little incentive to explore them because of production and mineral- extraction taxes that take the equivalent of $71 a barrel when crude trades for $100, said Donald Wolcott, chief executive officer of RusPetro Plc (RPO), a Moscow-based oil producer with wells in Western Siberia.

The Russian bureaucracy and Duma, the lower house of Russia’s parliament, haven’t fulfilled President Vladimir Putin’s call 11 months ago for tax breaks to spur drilling, Wolcott said in a telephone interview.

“There are hundreds of shale and tight-oil opportunities in Russia but the one thing missing is a tax break” to make drilling economical, said Thane Gustafson, a senior director at IHS Inc. who will lead a panel with executives from TNK-BP and Lukoil OAO at the IHS CERAWeek conference in Houston today. “The crews are there and the skills are there but it’s the above-ground tax issues that are limiting factors.”

Exxon Venture
Putin’s April pledge to reduce the tax burden on producers that explore more costly unconventional resources such as shale helped convince Exxon Mobil Corp. to undertake a $3.2 billion venture with Russia’s Rosneft OAO. (ROSN) In exchange for access to the Arctic Ocean and Siberia, Exxon gave state-controlled Rosneft entry into oil fields from the Gulf of Mexico to the Canadian Rocky Mountains.

Other explorers counting on tax relief for unconventional drilling include TNK-BP, Gazprom Neft and Royal Dutch Shell Plc. TNK-BP began drilling pilot wells in formations including Severo-Khokhryakovskoye and Em-Egovskoye that hold an estimated 4.4 billion barrels of crude in December and January, respectfully, according to a Feb. 28 slide presentation. Those projects are expected to deliver their first crude later this year.

Gazprom Neft, the oil-producing arm of gas giant Gazprom OAO, has a partnership with Shell that plans to spend $80 million this year to explore the Salym shale exploration, Ekaterina Stenyakina, a spokeswoman for Gazprom Neft, said in a Jan. 31 e-mailed statement. The company estimates it has 3.67 billion barrels of resources in unconventional formations that would qualify for tax breaks, she said.

‘Adjusted’ Taxes
“Russia’s tax system needs to be adjusted to make their development economic,” Stenyakina wrote.

Russia produced an average of 10.73 million barrels a day last year -- leading the world for the second straight year -- according to an International Energy Agency report released on Feb. 13. Saudi Arabia ranked second with an average output of 9.57 million barrels a day while the U.S. ranked third with an average of 9.11 million barrels.

The IEA’s crude tallies include condensates and so-called natural gas liquids.

The impact of the production and mineral-extraction taxes when crude is selling for $100 a barrel means that, after paying pipeline fees, producers in Russia are left with about $22 a barrel to lease rigs, pay workers, rent equipment and service debt before recording any profit, said Wolcott, a petroleum engineer who oversaw production and reservoir performance at Mikhail Khodorkovsky’s Yukos Oil Co. from 1999 to 2005.

The production tax is the larger of the two, accounting for about $50 of the per-barrel levy when crude trades for $100. That would remain unchanged under Putin’s proposal.

Unprofitable Fields
The mineral-extraction tax, which accounts for about $21 of the government take, would be reduced or eliminated, depending on the criteria eventually adopted by the Duma, according to Wolcott. In addition to those two taxes, oil producers usually are charged another $7 a barrel in transportation costs, he said.

In other parts of the world, that level of taxation would make some fields unprofitable. Exxon Mobil, the world’s biggest energy company by market value, recorded production costs last year as high as $26.94 a barrel in some regions where it operates, according to a Feb. 27 U.S. Securities and Exchange Commission filing.

‘Aggressive Taxes’
The company, based in Irving, Texas, spent as little as $3.74 a barrel to pump crude in Asia and as much as $26.94 a barrel in Canada and South America, according to the filing.

Wolcott and others think relief is coming in Russia -- perhaps as soon as next month. The issue, he said, seems to be bureaucratic as Russian government regulators continue to mull how to structure the tax breaks and which geological formations will qualify. Once they weigh in, the recommendations will be forwarded to lawmakers for approval.

“Even when oil is $100 a barrel, here in Russia you’re operating in a low oil-price environment because of these really aggressive taxes,” Wolcott said. Tax relief “would certainly help” spur more drilling.




http://www.bloomberg.com/news/2013-...ad-challenged-as-taxes-strangle-drilling.html

 

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http://www.bloomberg.com/news/2013-...as-u-s-imprint-as-king-grooms-successors.html



Saudi Next Generation Has U.S. Imprint as King Picks Leaders
By Glen Carey
March 6, 2013

As he opens Saudi Arabia’s top government jobs to a new generation of princes, King Abdullah may also be rebooting the kingdom’s ties with the west.

Abdullah, who turns 89 this year, has picked younger royals with international and security experience, often involving the U.S. Bandar bin Sultan, named head of intelligence last year, was ambassador in Washington for more than two decades. Mohammed bin Nayef, the recently appointed interior minister, worked with the Americans on measures to fight al-Qaeda, while Khaled bin Bandar, the new Riyadh governor, is a graduate of the British Royal Military Academy at Sandhurst.

On issues from Iran’s nuclear program to Syria’s civil war, the revamped Saudi government’s approach may overlap with western priorities. That would strengthen ties between the world’s biggest oil exporter and the U.S., its main arms supplier. The decades-old alliance has showed signs of wavering, first after Saudis were involved in the Sept. 11, 2001 attacks, and then as differences arose over the Arab uprisings in 2011.

“Abdullah is saying with these appointments that a shift in thinking is important for the direction of the country,” said Crispin Hawes, head of the Middle East program at the New York-based Eurasia Group, which monitors political risk. “The king sees the U.S. strategic relationship as a cornerstone of Saudi foreign policy for the next decade. Saudi Arabia also needs to feel secure to address some of the fundamental issues at home.”

Avoiding Unrest
Since the Arab revolts, King Abdullah has been seeking to ease domestic problems such as unemployment which had the potential to stoke similar unrest. About a quarter of Saudis aged between 20 and 30 are out of work. The kingdom is investing $500 billion to build industrial cities in the desert and new airports and universities, as it seeks to create jobs and diversify the economy away from oil.

Government spending has helped push the main index for the Middle East’s largest stock exchange up 2.9 percent in the first two months of this year, while the MSCI Emerging Markets benchmark fell 0.8 percent. As political threats recede, Saudi Arabia’s five-year credit default swaps are trading at about 67 basis points, near a five-year low. They reached more than twice that level in February 2011 when uprisings were spreading across the Arab world.

Saudi and U.S. responses to that wave of unrest diverged. Saudi Arabia stood by Egypt’s Hosni Mubarak, a longtime ally against the Muslim Brotherhood’s influence in the region, right up until he was pushed out by protesters. The Saudis also sent troops to Bahrain in support of a crackdown on Shiite-led protests by the Al Khalifa rulers. The U.S. eventually abandoned its support for Mubarak and backed a transition, while it called for dialogue in Bahrain.

‘Getting Closer’
Any tensions that emerged in that period are easing, said Paul Sullivan, an economics professor specializing in Middle East security at Georgetown University in Washington.

In Riyadh on March 4, Secretary of State John Kerry and his counterpart Prince Saud al-Faisal stressed shared interests, including helping the Syrian opposition overthrow Bashar al- Assad and preventing Iran from getting nuclear weapons. The U.S. is tightening sanctions on Iran’s oil industry.

“As the results of the Arab Spring get more questionable, and as energy markets get more complex, U.S.-Saudi relations seem to be getting closer,” Sullivan said.

The U.S. has narrowed Saudi Arabia’s lead in production to 1.9 million barrels a day this year, the smallest since 2002, according to data compiled by Bloomberg. Saudi Arabian Oil Co. is “committed” to exports to the U.S., Chief Executive Officer Khalid Al-Falih said yesterday at a conference in Houston.

‘Bandar Bush’
Among the new appointees, Bandar has been nicknamed “Bandar Bush” for his close connection to the family of two U.S. presidents. Mohammed Bin Nayef, the new interior minister who was injured in a failed suicide bomb attack in 2009, has won American plaudits for his work to counter threats from al-Qaeda.

Prince Mohamed “has proven himself to be very successful in fighting al-Qaeda and terrorists,” said Khalid al-Dakhil, a politics professor at King Saud University in Riyadh. “That is the core interest of the regime here. It happens that it goes along very well with the Americans.”

Saudi Arabia signed a $29.4 billion accord to buy Boeing Co. F-15 fighters in the last week of 2011. More than half of that year’s $66.3 billion in U.S. arms sales agreements were with the Saudis, according to a Congressional Research Service report last year. The Pentagon said in November that Saudi Arabia is planning to buy 20 military transport planes from Lockheed Martin Corp. (LMT), valued at about $6.7 billion.

USS Quincy
Saudi Arabia’s alignment with the U.S., whose support for Israel and military operations in the Middle East are unpopular among Muslims, is often cited by Islamist opponents of the Saudi monarchy.

Militants attacked an oil installation and stormed a housing complex in the city of al-Khobar in 2004, killing 22 foreign workers. Two years later, a group linked to al-Qaeda tried to penetrate the southern gate of Abqaiq, the world’s largest oil facility, with twin car bombs. The New York Times reported last month that the U.S. Central Intelligence Agency operates a drone base out of Saudi Arabia.

The U.S. alliance was cemented when King Abdul-Aziz Al Saud met President Franklin D. Roosevelt aboard the USS Quincy in 1945. The next generation of Saudi leaders may oversee a shift in its nature as U.S. strategic attention shifts toward Asia, said Theodore Karasik, director of research at the Institute for Near East and Gulf Military Analysis in Dubai.

Attitudes Changing
“You could argue that Saudi Arabia is going to take a more pro-active role in the region as the U.S. footprint starts to decline,” he said.

Abdullah, who underwent back surgery in November, is only the sixth king since Saudi Arabia was founded in 1932. The ruler must by law be a son or grandson of Abdul-Aziz. The heir apparent is Crown Prince Salman, the king’s half-brother, born in 1935.

Next in line is Prince Muqrin, another half-brother born in 1945, who was named as second deputy premier last month. Muqrin trained as an air force officer in the U.S. and U.K. before serving as a provincial governor and intelligence chief. Prince Mohamed, who as interior minister is the most senior of the founding king’s grandchildren, was born in 1959.

A decade ago, the pro-American reputation of these younger royals might have hurt them in the eyes of the Saudi public, said Mustafa Alani, an analyst at the Geneva-based Gulf Research Center. Attitudes toward the U.S. under President Barack Obama are more favorable, he said.

“The people like Bandar, like Mohammed, like Muqrin, who have connections to the U.S., I don’t think people look at it negatively,” Alani said.



http://www.bloomberg.com/news/2013-...as-u-s-imprint-as-king-grooms-successors.html

 

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http://www.bloomberg.com/news/2013-03-07/putin-pipeline-to-send-25-of-russia-s-oil-exports-east.html



Putin Pipeline to Send 25% of Russia’s Oil Exports East
By Jake Rudnitsky
March 7, 2013

Russia is on course to send an unprecedented 25 percent of its crude exports to eastern markets by 2015 as rising demand from China and other Asian consumers attracts sales at the expense of Europe.

The country sent 1.1 million barrels a day east in February, or 22 percent of exports, according to Bloomberg estimates based on loading programs and Energy Ministry data. In October, before the East Siberia-Pacific Ocean pipeline was expanded, it shipped 18 percent to Asia. OAO Transneft, the state pipeline monopoly, says the ESPO line will reach its full capacity in two years.

The growth in eastern flows shows how the $23 billion ESPO link, Russia’s most expensive infrastructure project, is helping President Vladimir Putin realize the country’s aim of shifting exports away from Europe to tap the faster-growing economies of the Asia-Pacific region. China’s crude imports from Angola, Iraq, Venezuela and Russia grew by 14 percent to 33 percent last year, according to the Beijing-based Customs General Administration.

“Asia is a region where demand is increasing, as opposed to Europe.” Ehsan Ul-Haq, senior market consultant at KBC Energy Economics in Walton-on-Thames, England, said by phone on Feb. 27. “Producers prefer shipping east and this trend is likely to continue.”

ESPO crude was trading at $110.21 a barrel today, while the Urals grade sold in northwest Europe fetched $107.81, according to data compiled by Bloomberg. Volumes to the Pacific port of Kozmino reached a record 445,000 barrels a day in February, according to a loading program obtained by Bloomberg.

Pricing Point
ESPO oil has emerged since 2009 as a new pricing point for Russian crude, which was traditionally dominated by Urals grade exported to Europe via the Druzhba pipeline and to ports on the Black and Baltic seas. ESPO is moving toward becoming an international benchmark in its own right, Transneft President Nikolay Tokarev said in Moscow on Dec. 19.

A barrel of crude shipped from Surgut in West Siberia to Kozmino via the ESPO pipeline minus transportation fees and taxes would earn a company $46.35 a barrel on Feb. 27, compared to $42.01 if it were sent to the port of Primorsk on the Baltic Sea, according to Platts, the commodities price-reporting agency owned by McGraw-Hill Cos.

Transneft expects ESPO to operate at maximum capacity of 30 million metric tons a year, or 600,000 barrels a day, by 2015. Bloomberg calculations on the volume moving eastward comprise four components; tanker shipments from Kozmino at the end of the pipeline, crude from Sakhalin Island, oil sent to Kazakhstan and 300,000 barrels a day supplied via a separate spur to China on the ESPO pipe.

Realistic Benchmark
West-bound Russian crude supplies will fall an average 90,000 barrels a day this year, according to four of six traders and analysts in Moscow, London and Vienna surveyed by Bloomberg. Two predicted little or no change. All six people expect ESPO profit to remain higher than Urals.

Russian companies are interested in turning ESPO into a pricing benchmark, according to the Alexei Rybnikov, President of the St. Petersburg International Mercantile Exchange, which plans to add the grade to the oils and products it trades.

“The prospects of ESPO becoming a benchmark, as opposed to Urals, are much more realistic,” Rybnikov said yesterday. This could happen within five years, he said.

Of Russia’s five biggest oil companies, OAO Rosneft, TNK-BP and OAO Surgutneftegas have east Siberian oil fields along the ESPO line. OAO Gazprom Neft resumed shipments of west Siberian crude via the pipeline in December, after a 12-month hiatus.

Access Requests
OAO Lukoil (LKOH), the only one of Russia’s five biggest producers never to ship via the ESPO pipe, has applied for access to the expanded link to take advantage of the higher returns from Asian sales, said Vladimir Semakov, a spokesman for the company.

Lukoil has asked Russia’s Energy Ministry for permission to ship 600,000 tons of west Siberian crude to Kozmino in the second quarter, Semakov said by phone March 1.

“It’s an attractive proposition because there’s a cost- effective tariff and a healthy market for this sort,” he said.

Rosneft is in talks to increase supplies to China, a spokeswoman said Feb. 19, asking not to be identified because of company policy. Rosneft signed 5-year supply contracts with Glencore International Plc (GLEN) and Vitol Group, two of its biggest purchasers of Urals, for a total of 67 million tons of crude and prepayments of as much as $10 billion, the company said in an e- mailed statement today.

Superior Quality
Higher transportation costs via the link are offset by higher prices at Kozmino, partly because ESPO crude is of a superior quality, with less sulfur content and lower density than Urals sold to Europe. That translates into an advantage when taxes are applied per ton rather than barrel.

ESPO crude has about 0.5 percent sulfur content, while Urals has 1.5 percent to 1.7 percent, according to Transneft. Crude with low sulfur is considered “sweet” and generally cheaper to refine into gasoline.

“The price is $20 to $30 higher than at Primorsk, which is why companies want to ship there,” Transneft Deputy Vice President Igor Katsal told journalists at a Feb. 28 conference, referring to the price per ton at Kozmino. A ton of crude equates to about 7.3 barrels, depending on how dense it is.

After opening the Baltic Pipeline System-2 to Ust-Luga in the west, and expanding the ESPO link last year in the east, Russia has excess pipeline capacity that enables it to direct oil to the most profitable destinations, according to Ul-Haq.

Export Duty
Some new fields in East Siberia also benefit from a reduced export duty to compensate companies for the expense of investing in the region. The discounted export duty is $211.40 a ton this month, or about half of the standard rate of $420.60.

The first phase of the ESPO pipeline opened in 2009, bringing crude from fields in east Siberia to Skovorodino near the Chinese border. Before the December completion of the second phase, which doubled capacity and extended the line to Kozmino, oil was carried from the end of the line to the port by rail.

“Pricing agencies are pushing for a new Asian benchmark crude, and Russia would be thrilled to see it become ESPO,” Ul- Haq said. “The more volumes, the more interest, and not only in Asia. It is also popular in the U.S. West Coast.”



http://www.bloomberg.com/news/2013-03-07/putin-pipeline-to-send-25-of-russia-s-oil-exports-east.html

 

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http://www.bloomberg.com/news/2013-...al-gas-deposit-in-42-years-minister-says.html



Qatar Finds First Natural Gas Deposit in 42 Years, Minister Says
By Robert Tuttle
March 10, 2013

Qatar, the emirate with the third- largest global reserves of natural gas, found a deposit with 2.5 trillion cubic feet of the fuel, its first discovery since uncovering the world’s biggest gas field 42 years ago.

State-run Qatar Petroleum, Wintershall AG and Mitsui & Co plan to develop the reservoir in a 544 square-kilometer (338 square-mile) area called block 4N off the Persian Gulf state’s northern coast, the companies said today at a news conference in the Qatari capital, Doha. Qatar’s North Field, shared with neighboring Iran, was discovered in 1971 and provides the emirate with 900 trillion cubic feet in gas reserves.

“We will start production, God willing, in the next few years” from Block 4N, Mohammed Saleh Al Sada, Qatar’s energy minister, told reporters. “We have already started planning and looking at different engineering options.”

The discovery is larger than Germany’s total proven gas reserves, which the BP Statistical Review of World Energy published in June 2012 lists at 2.2 trillion cubic feet. Russia holds the biggest gas reserves, followed by Iran, according to data compiled by BP Plc.

Qatar produces as much as 77 million tons a year of liquefied natural gas, making it the world’s biggest exporter of the fuel chilled for shipment by sea. A government moratorium on further development of the North Field has prevented Qatar from increasing LNG exports since it started operating its 14th and final gas liquefaction plant in 2011.

Wintershall, based in Kassel, Germany, signed a contract with Qatar to explore block 4N in 2008, according to a statement distributed today. Mitsui bought a 20 percent stake in the project two years later.

Other companies exploring for gas in separate blocks off Qatar include Royal Dutch Shell Plc, China National Petroleum Corp., Total SA and JX Nippon Oil & Gas Exploration Corp.




http://www.bloomberg.com/news/2013-...al-gas-deposit-in-42-years-minister-says.html

 

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http://www.reuters.com/article/2013...2?feedType=RSS&feedName=rbssEnergyNews&rpc=43



* Evaluated fields could hold 35 bln barrels
* Subsalt auction to be held Nov. 28

RIO DE JANEIRO, March 12 (Reuters) - Areas of Brazil's giant subsalt oil and gas region explored so far could yield 35 billion barrels of recoverable oil equivalent, more than double Brazil's existing reserves, an energy ministry representative said on Tuesday.

That is more than the 17.9 billion barrels of discovered recoverable oil Brazil's ANP oil regulator said the subsalt area had in 2011. Analysts have said the total amount of oil in the region could be 100 billion barrels.

"Subsalt discoveries that have been evaluated so far suggest a volume of recoverable oil more than double Brazil's proven reserves," said Marco Antonio Martins Almeida, secretary of oil and gas at Brazil's Ministry of Mines and Energy.

He described the estimate as conservative at a conference in Rio de Janeiro. Brazil's current oil reserves are an estimated 14.52 billion barrels, according to the ANP.

The BM-S-8 block operated by state-led oil company Petrobras in the Santos Basin alone likely has 1 billion barrels of recoverable oil, he said.

Petrobras said it found good-quality oil in the Carcara well in the block, located in the Santos Basin, on Jan. 2.

Almeida said exploration rights to subsalt fields, a region the size of New York State where oil was discovered in 2007, will be auctioned to private investors on Nov. 28 under a new regulatory framework for the industry in Brazil.

Brazil will also auction 289 blocks outside the subsalt region in its 11th-around auction on May 14 and 15 in Rio de Janeiro, its first offering in five years.



http://www.reuters.com/article/2013...2?feedType=RSS&feedName=rbssEnergyNews&rpc=43