Production to start at Fausse deep gas find

Partners in the Fausse Point prospect in Louisiana will start commercial production from the TGR Land Company-1 discovery well, which struck an unexpected deep gas accumulation, to find further exploration of the find.

Project partner Golden Gate Petroleum (GGP) said testing of the deepest levels of the well suggested the zone was possibly connected to a much larger accumulation. The well was now being completed for production from the zone at a depth of 8370 feet to generate early cash for further exploration.

The well was expected to be tied in at a rate of about 500,000 cubic feet of gas per day. Further testing of two hydrocarbon-bearing overlying zones – the original targets of the well – would be determined on the performance of the deep zone.

Australia-listed GGP said the venture would now build access roads, production facilities and a short pipeline to allow commercial production, which it expected to achieve at a cost of a about $400,000.

Schlumberger and Smith International announce $11.34 billion merger agreement

Schlumberger Ltd and Smith International, Inc. jointly announced today that their Boards of Directors have unanimously approved a definitive merger agreement in which the companies would combine in a stock-for-stock transaction.

Under the terms of the agreement, Smith shareholders will receive 0.6966 shares of Schlumberger in exchange for each Smith share. Based upon the undisturbed closing stock prices for both companies on February 18, 2010, the agreement places a value of $45.84 per Smith share, representing a 37.5% premium. Upon closing, and reflecting the issuance of new Schlumberger shares, Smith stockholders collectively will own approximately 12.8% of Schlumberger’s outstanding shares of common stock.

Schlumberger expects to realize incremental pretax synergies—after integration costs—of approximately $160 million in 2011 and approximately $320 million in 2012. Schlumberger expects the combination to be accretive to earnings per share in 2012.

The transaction is subject to various conditions including Smith stockholder approval and customary regulatory approvals, including the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. It is anticipated that the closing of the transaction will occur in the latter half of 2010.

Goldman, Sachs & Co. acted as financial advisor and Baker Botts LLP served as legal counsel to Schlumberger. UBS Investment Bank acted as financial advisor and Wachtell, Lipton, Rosen & Katz served as legal counsel to Smith International.

Schlumberger is already the world’s largest oilfield services company and the merger will see the Paris and Houston-based company rake in double the revenues of Halliburton, based on the 2009 revenues of each company.

Apache to start production at Van Gogh development

US independent Apache Corporation announced it has started oil production from the Van Gogh development in the Exmouth basin, off Western Australia.

"Production from Van Gogh is projected to ramp up during the first half of the year, making a significant contribution to Apache's growth in 2010," said co-chief operating officer and president Rod Eichler.

The Van Gogh field is being developed using the Ningaloo floating production storage and offloading vessel. The FPSO has the capacity to process 150,000 barrels of liquids per day, including 63,000 barrels of oil per day, and store 540,000 barrels of oil.

“Apache plans to invest nearly $1 billion in Australia during 2010, funding exploration and a range of projects that includes Van Gogh, Pyrenees, Julimar/Wheatstone and Reindeer/Devil Creek,” said the company in a statement.

Apache is operator of the Van Gogh field with a 52.5% share, with partner Inpex holding the remaining stake.

Petrobras makes 25-million-barrel oil find in Campos Basin

Brazilian giant Petrobras has made a new oil find in the shallow waters of the Campos basin, saying the discovery holds estimated recoverable reserves of 25 million barrels.

Petrobras said the 4-PM-53 well hit a 128 metre net pay column of 20 degree API oil.

“The volume of recoverable oil has been estimated at 25 million barrels,” the company in a statement. Due to the quality and thickness of the reservoir, it is estimated the oil wells flow will be approximately 3000 barrels per day.”

The well lies close to existing platforms in the Pampo and Bicudo concessions.

“Since there is already production infrastructure installed at the site, the well will go on stream later on this year,” said Petrobras.

PDO makes new oil, gas field discoveries in Oman

Petroleum Development Oman (PDO) on has announced the discovery of three new oil fields, one with a major volume of oil in place, as well as a potentially large gas field in Oman.

Following an ambitious exploration program in central Oman, PDO said the major oil discovery had been made at Al Ghubar South, close to the existing Al Ghubar and Qarn Alam fields. In all, four exploration and appraisal wells were drilled in 2009 to confirm the discovery, and further drilling to delineate further extensions of the field is planned during 2010.

The amount of oil in place could be in excess of 1 billion barrels, the company said.

During 2009, PDO made two further oil discoveries at Dafiq West in the north of PDO's concession area and Anbar in the central region of the Sultanate. The Anbar discovery, close to the existing Sadad field, followed an innovative drilling campaign in which 12 wells were drilled in a grid pattern.

Five of the wells encountered oil in the Gharif reservoir and these are currently being hooked up to the existing production network in the area as part of an early production system designed to evaluate the new field.

The new Dafiq West field is close to the Dafiq field which was originally discovered in 2005. A production test well at Dafiq West has already been connected to local production system, joining three existing test wells from the Dafiq field. Once the evaluation process is completed, the Dafiq West and Dafiq fields will be jointly developed.

PDO also said it had made a large gas discovery at Khulud in the north of PDO's concession area.

Gas in potentially large volumes was found at a depth of more than 5,000 metres. Two new wells are currently planned in the area in 2010 to help evaluate this discovery, the company added.

Aramco plans to inject CO2 into world's biggest oilfield

State oil giant Saudi Aramco plans to inject carbon dioxide into the world's biggest oilfield by 2012, a year ahead of previous plans, a government official said on Monday.

The giant field Ghawar pumped 5 million bpd in 2008, more than half of top oil exporter Saudi Arabia's output. The Kingdom announced plans last year for a pilot project to pump the climate warming gas into the field to both improve production and reduce emissions. Muhammed al Sabban, head of the Saudi delegation to UN talks on climate change and a senior economic adviser to the Saudi oil ministry, said: "This is a major project that will be implemented by Aramco by 2012."

The project would be entirely financed by Aramco, he added.

The kingdom plans to inject 40 million standard cubic feet per day (cfd) of CO2 into the field, and has said this is part of the global push to trap emissions rather than because it needs to enhance oil recovery from the field.

Carbon capture and storage is looked upon favourably by oil producers as they need to inject gas into oilfields anyway to maintain oil pressure. If they can use CO2 instead of natural gas, they can send the natural gas to local grids where it can be used by industry or in power plants.

Aramco is also making efforts to reduce emissions from oil products it makes by upgrading refineries to produce cleaner fuels. The kingdom has said it supports moves to reduce climate change, but registered opposition to schemes that singled out oil's role in global warming while promoting other fuels.

Melrose Resources makes exploration discovery in Egypt

Melrose Resources has announces a new exploration discovery and commencement of seismic data acquisition in Egypt.

The South Damas No.1 exploration well has been successfully drilled to test a prospect in the Sidi Salim formation in the South East Mansoura concession, in which Melrose holds a 100 percent working interest. The well encountered the top reservoir at a depth of 4345 feet and penetrated 76 feet of net gas pay with good reservoir properties.

The preliminary estimate of the discovered reserves is 30 Bcfe, which is in line with the pre-drill analysis. The discovery well will be completed and tied-back for production to existing facilities and is expected to be on stream within six months at an initial rate of in excess of 12 MMcfepd. The capital cost, including the well completion and flow line, is estimated at 3.3 million US dollars giving an attractive unit development cost of 11 US cents per Mcf.

Following the completion of the South Damas No.1 well, the EDC-9 rig will be used to drill another Sidi Salim prospect in the South East Mansoura concession called Tall Rak. This prospect is on trend with a number of other discoveries, including the Tamad field, and has mean unrisked reserves of 190 Bcfe and a chance of success of 34 percent.

Exxon drills first development well on Alaska’s North Slope

Exxon Mobil has drilled and cased the first development well at the Point Thomson natural gas project on Alaska’s North Slope. The company said it has also built a 60-mile ice road that enables the transport of heavy equipment and materials to the site.

Exxon drilled the well to a measured depth of over 16,000 feet and the shore-based rig drilled under the Beaufort Sea to the targeted gas reservoir which is located more than 1.5 miles offshore.

Point Thomson is a remote natural gas and condensate field located on Alaska’s North Slope, about 60 miles east of Prudhoe Bay. According to some estimates, it may hold 8 Tcf of gas — about 25% of the North Slope’s gas resources — and about 200 million bbl of condensate.

Exxon and the state of Alaska have been involved in a legal battle over Point Thomson, with the state threatening to confiscate the leases on grounds that Exxon and its partners have not moved quickly enough to develop the gas.

In February of 2008, Exxon submitted a $1.3 billion, six-year development for Point Thomson, which foresees production of 200 MMcf/d and 10,000 b/d of condensate by 2014.

OGX estimates between 100 and 200 million barrels of recoverable oil from OGX-4 well

OGX Petróleo e Gás Participações S.A. (“OGX”) announced that it has completed the drilling of well 1-OGX-4-RJS, located in block BM-C-42, in the shallow waters of the southern part of the Campos Basin. Additionally, OGX has identified an oil-bearing interval in the Aptian section of well 1-OGX-5-RJS, located in the BM-C-43 block, also situated in the shallow waters of the southern part of the Campos Basin. OGX holds a 100% working interest in both blocks.

The well, OGX-4, was drilled to a depth of 3,467 meters, resulting in the detection of hydrocarbons in sandstone reservoirs characterized by excellent levels of permo-porosity in the Eocene section, as announced on January 11, 2010. Based on the final well information combined with the 3D seismic data interpretation, OGX estimates recoverable oil volume of between 100 and 200 million barrels.

In well OGX-5, an oil column of 46 meters with around 20 meters of net pay was encountered in carbonate reservoirs of the Aptian section. The drilling of OGX-5 is in its final stage and is expected to reach a depth of approximately 4,300 meters. This is the second discovery in well OGX-5. The first one was made in carbonate reservoirs of the Albian section.

The OGX-5 well is located in the BM-C-43 block and is situated approximately 79 kilometers off the coast of the state of Rio de Janeiro at a water depth of approximately 150 meters. The rig Ocean Ambassador, provided by Diamond Offshore, initiated the drilling activities on December 26, 2009.

Ocean Quest, the rig used at OGX-4, was mobilized to well 1-OGX-6-RJS in block BM-C-41. The drilling of this next well, OGX-6, also located in the shallow waters of the southern part of the Campos Basin, will commence in the next days and it is expected to take approximately 60 days.

New oil field discovered offshore Dubai

Dubai today announced the discovery of a new offshore oil field in the Persian Gulf. "I can confirm that oil has been discovered and expect production to start within a year," Sheik Ahmed bin Saeed Al Maktoum, the chairman of government-owned Dubai Petroleum Establishment, or DPE, told Zawya Dow Jones, confirming local media reports earlier Thursday that a new offshore oil field had been discovered in the emirate.

Sheik Ahmed, who is also chief executive of Emirates Airline, declined to comment on the size of the find.

Unlike Abu Dhabi, the U.A.E.'s largest emirate and holder of almost all the country's oil reserves, Dubai has little hydrocarbon reserves on its own. Income from crude and natural gas contributed only 5.3%, or 7.5 billion U.A.E. dirhams ($2.04 billion), to Dubai's gross domestic product in 2005, according to the latest available data on the Dubai Chamber of Commerce and Industry Web site.

Oil was first discovered in Dubai in 1966 and production started in 1970, according to U.K.-listed Petrofac Ltd. (PFC.LN), which manages the emirate's offshore oil and gas assets. Production rates reached the peak during the late 1980's, but have since fallen. The last discovery was made in 1991, according to industry experts.

Dubai produces crude from four offshore oil fields in the Persian Gulf--Fateh, Southwest Fateh, Rashid and Falah. The emirate's oil output is estimated at 60,000-70,000 barrels a day, according to industry estimates.

The U.A.E., a member of the Organization of Petroleum Exporting Countries, presently pumps about 2.25 million barrels a day.