Total to develop Shtokman gas field

According to Dow Jones Newswire, Total plans to develop the huge Shtokman natural gas field in the Barents Sea remain on track, with a final investment decision expected in 2011, Arnaud Breuillac, the company's senior vice-president for Continental Europe and Central Asia, said in an interview.

"Shtokman is not being further delayed," Breuillac said, dismissing rumors that the project was facing further postponement due to the gas price weakness after lengthy earlier delays.

The consortium holding rights to the field has decided to split its development, with a final decision on the natural gas extraction in March 2011 and a decision on liquefying the gas "around nine months after the natural gas part, by end 2011," Breuillac said.

Shtokman, which is one of the world's largest natural gas fields, is being developed by Shtokman Development, a consortium in which Russia's oil and gas major Gazprom owns 51%, StatoilHydro 24% and Total 25%.

Shtokman Development's Chief Executive Yuri Komarov resigned earlier this year and will be replaced by a Gazprom executive. Breuillac declined to give the name of Komarov's successor.

Shtokman's reserves are estimated at around 3,800 billion of cubic meters of natural gas and 37 million tons of gas condensate.Total expects LNG from Shtokman to be produced from 2017, Breuillac said. The existence of unconventional gas won't deter Total from conventional natural gas sources, notably in Russia and Central Asia such as Shtokman, Breuillac said.

Total bought a 25% stake in U.S.-based company Chesapeake Energy in early January, which is specialized in shale gas extraction, for $2.25 billion, and is exploring a potential shale gas field near Montelimar, in southern France.

Total's shale gas ventures won't affect the company's focus on big (conventional natural gas) projects, Breuillac said.

The current weakness of natural gas prices and the drop in demand won't have an impact on Total's natural gas investments decisions either, Breuillac said. As for Turkmenistan, the group is maintaining its efforts to convince the government there to open its on-shore fields to foreign integrated oil and gas companies such as Total.

Marathon makes new deepwater discovery in GOM

Marathon Oil Corp. reported a discovery on the Flying Dutchman prospect on Green Canyon Block 511 in the Gulf of Mexico about 100 miles south of New Orleans.

The well, drilled in 3,700 ft of water, reached 30,000 ft TD. It encountered 100 ft of net hydrocarbon-bearing sands in an Upper Miocene reservoir. A Marathon spokeswoman declined to elaborate on the type of hydrocarbons.

The results of Flying Dutchman will be evaluated along with additional potential drilling on GC Block 511 to determine overall commerciality.

CNPC signs agreement for interest in Shell Syria

Shell and the China National Petroleum Corporation (CNPC) have concluded an agreement under which CNPC has acquired a 35% interest in Syria Shell Petroleum Development (SSPD), currently 100% owned by Shell. SSPD has interests in three production licenses including Deir-Ez-Zor, Fourth Annex and Ash Sham that are operated by the Al Furat Petroleum Company (AFPC) (Shell interest 31.25%).

The agreement strengthens the partnership between Shell and CNPC. Both parties will look to continue growing and investing in attractive opportunities in Syria's upstream industry.

The licenses cover some 40 oil fields, production in 2009 was 23 thousand boe/d (Shell share). Shell has a long history in Syria. It has had a presence in the country since the 1940s and been a shareholder in AFPC for some 25 years.

CNPC already has an interest in the production licenses and in AFPC through its 50% ownership of Himalaya Energy Syria BV.

BP identifies 7 control mechanisms for investigation

BP announced Tuesday that its internal investigation team began sharing initial perspectives of its review of the causes of the tragic Deepwater Horizon fire and oil spill.

The investigation is a fact-finding effort that has not reached final conclusions, but has identified various issues for further inquiry. BP has shared these early perspectives with the Department of the Interior and will do so with all official regulatory inquiries into the accident as requested.

This is an internal investigation. There is extensive further work to do - including further interviews, and in addition full forensic examinations of the Blow Out Preventer (BOP), the wellhead, and the rig itself - all of which are still currently on the sea bed. The internal investigation was launched on April 21, 2010 and is being conducted by BP's Head of Group Safety and Operations. He has an independent reporting line to the Group Chief Executive.

The investigation team's work thus far shows that this accident was brought about by the failure of a number of processes, systems and equipment.

There were multiple control mechanisms - procedures and equipment - in place that should have prevented this accident or reduced the impact of the spill: the investigation is focused on the following seven mechanisms.

These mechanisms are: the cement that seals the reservoir from the well, the casing system, which seals the well bore, the pressure tests to confirm the well is sealed, the execution of procedures to detect and control hydrocarbons in the well, including the use of the BOP, the BOP Emergency Disconnect System, which can be activated by pushing a button at multiple locations on the rig, the automatic closure of the BOP after its connection is lost with the rig, and features in the BOP to allow Remotely Operated Vehicles (ROV) to close the BOP and thereby seal the well at the seabed after a blow out.

"I understand people want a simple answer about why this happened and who is to blame. The honest truth is that this is a complex accident, caused by an unprecedented combination of failures," said Chief Executive Tony Hayward. "A number of companies are involved, including BP, and it is simply too early - and not up to us - to say who is at fault."

"This is a basic summary of the facts as gathered by the investigation team to date. A lot remains unknown, but we hope that the briefings will help the government's inquiries. This was a tragic accident and we need to understand the causes of it to try to ensure that nothing like it ever happens again."

Statoil makes gas discovery in the Norwegian Sea

Statoil has struck gas in an exploration well north of the Mikkel field in the Norwegian Sea. The discovery is being considered for development as a satellite to the Åsgard field.

"This again shows how prospective this area is,” says Geir Richardsen, head of Statoil’s exploration of infrastructure-led areas in the Norwegian Sea.

The gas deposit was proven through the drilling of exploration well 6407/2-6 S, some five kilometres north of the Mikkel field and 200 kilometres north of Kristiansund.

The well confirmed the existence of gas with a small oil column in the Tilje formation.

Extensive data acquisition and sampling are now being performed. Preliminary estimations of the size of the gas discovery suggest between 2 and 4 million standard cubic metres of recoverable oil equivalent reserves.

“This is a relatively small, but still commercial gas discovery. We are now planning the next steps in this interesting area,” the exploration manager explains.

The licensees in the exploration licence will consider various development solutions producing the discovery towards existing infrastructure on the Åsgard field. The well is the first exploration well in the Statoil-operated production licence 473 awarded in 2007. The drilling is now completed and the well will be permanently plugged and abandoned.

Offshore natural gas platform sinks off Venezuela

An offshore natural-gas platform sank off Venezuela on Thursday, and 95 workers were rescued safely, the government said. All of the workers on the Aban Pearl platform off eastern Sucre state were safely evacuated, and the sinking poses no threat to the environment, Oil Minister Rafael Ramirez told state television. The navy rescued the workers using a frigate and boats after the gas platform disappeared into the Caribbean Sea at 1:50 a.m. Houston time, Ramirez said.

President Hugo Chavez announced the sinking on Twitter early Thursday, saying: “To my sorrow, I inform you that the Aban Pearl gas platform sank moments ago. The good news is that 95 workers are safe.”

Officials are investigating what caused the platform to sink, Ramirez said. He said there was a problem with the flotation systems of the semi-submergible platform that led to a massive water leak in one area.

He said alarms went off three hours before the sinking, giving the crew time to evacuate. Three workers including the captain stayed behind until it was clear that the platform was at risk of collapsing, and then abandoned the rig, Ramirez said. Unlike the disastrous oil spill caused by a rig explosion off the coast of Louisiana on April 20, the sinking of the gas rig posed no apparent threat to the environment, officials said.

Ramirez said a tube connecting the rig to the gas field was disconnected and safety valves shut.

“There’s no problem of any sort of any leak from the field into the environment,” Ramirez said. The rig was operating in waters about 525 feet (160 meters) deep.

Last week, Ramirez stood atop the platform on live television as its gas flare was lit to inaugurate the project. Chavez praised the project at the time as an important step in Venezuela’s efforts to tap its huge natural-gas deposits, saying, “We’re making history.”

The exploration platform at the Dragon 6 gas field was operated by the state energy company Petroleos de Venezuela SA off the Paria Peninsula of eastern Venezuela, near Trinidad and Tobago. Venezuela, a major oil exporter and OPEC member, is exploring offshore natural-gas fields that are among the biggest known deposits in the world.

“Before starting operations, this platform was repaired, inspected and certified,” Ramirez told state television. He said it was certified as being “in optimal condition.”

Specialists will now use one of the robots on a separate drill boat to inspect the underwater structures that supported the platform to try to determine what went wrong, he said. Officials have been flying over the area, and the evacuated workers were being taken by boat to the town of Carupano on the coast, Ramirez said.

BP continues with drilling and containment system

Subsea Source Control and Containment
Subsea efforts continue to focus on progressing options to stop the flow of oil from the well through interventions via the blow out preventer (BOP), and to collect the flow of oil from the leak points. These efforts are being carried out in conjunction with governmental authorities and other industry experts.

The riser insertion tube tool (RITT) containment system that was put into place in the end of the leaking riser is operational. It is estimated to be collecting and carrying about 2,000 barrels a day (b/d) of oil to flow up to the drillship Discoverer Enterprise on the surface 5,000 feet above. Produced oil is being stored on the drillship while produced gas is being flared.

It is expected that it will take some time to increase the flow through the system and maximize the proportion of oil and gas flowing through the broken riser that will be captured and transported to the drillship.

This remains a new technology and both its continued operation and its effectiveness in capturing the oil and gas remain uncertain. Other containment options continue to be progressed.

BP also continues to develop options to shut off the flow of oil from the well through interventions via the failed BOP.
Plans continue to develop a so called "top kill" operation where heavy drilling fluids are injected into the well to stem the flow of oil and gas, followed by cement to seal the well. Most of the equipment is on site and preparations continue for this operation, with a view to deployment in the next week or so. Options have also been developed to potentially combine this with the injection under pressure of a variety of materials into the BOP to seal off upward flow.

Work on the first relief well, which began on May 2, continues. The DDII drilling rig began drilling the second relief well on May 16. Each of these wells is estimated to take some three months to complete from the commencement of drilling.

Surface Spill Response and Containment
Work continues to collect and disperse oil that has reached the surface of the sea. Over 750 vessels are involved in the response effort, including skimmers, tugs, barges and recovery vessels.

Intensive operations to skim oil from the surface of the water have now recovered, in total, some 158,000 barrels (6.6 million gallons) of oily liquid. The total length of boom deployed as part of efforts to prevent oil reaching the coast is now more than 1.7 million feet, including over 400,000 feet of sorbent boom.

In total over 19,000 personnel from BP, other companies and government agencies are currently involved in the response to this incident. So far 15,600 claims have been filed and 2,700 have already been paid.

On 17 May, BP announced further grants, totalling $70 million, to Florida, Alabama, Louisiana and Mississippi to help mitigate the economic impact of the oil spill. Including these grants, the cost of the response to date amounts to about $625 million, including the cost of the spill response, containment, relief well drilling, previous grants to the Gulf states, settlements and federal costs.

Rockhopper makes first oil discovery in Falkland Basin

Rockhopper Exploration's Sea Lion prospect has reached a depth of 2,744 meters. Initial indications from the data collected suggest that this well is an oil discovery, which would be the first in the North Falkland Basin. The 14/10-2 well was drilled by Diamond Offshore's Ocean Guardian.

The Company has run a suite of wireline logs and logging data collected thus far indicate that the well has encountered a 150 meter gross interval of sand and shales. The data show that the well has 53 meters of net pay distributed in multiple pay zones, the thickest of which has a net pay of 25 meters. These pay zones have an average porosity of 19%.

Rockhopper now intends to collect additional logging information prior to making a decision whether to plug and abandon the well, or to suspend the well for future testing. The Company is also considering whether to drill an appraisal well on Sea Lion later during the current drilling campaign.

Further information will be distributed in due course.

It remains the intention of the Company to drill the Ernest prospect in the fourth slot of the overall Falklands Drilling program.

Coastal Energy to test wells offshore Thailand

The Benjarong A-02 well was drilled to a total vertical depth of 11,127 feet (3,391 meters), encountering 31 feet (9 meters) of net pay in the Eocene reservoir with 15% average porosity. Furthermore, a non-conventional zone with oil shows was encountered in the Oligocene limestone.

Coastal Energy plans to test the viability of the Eocene and the non-conventional play. Completion casing was run on the Benjarong A-01 and A-02 wells and the operator will begin completing A-01 this week.

Once both wells are completed, the drilling rig will be mobilized to Bua Ban and a mobile offshore production unit will be set at Benjarong to commence flow testing on both wells. It is estimated that spudding of the first Bua Ban well and testing at Benjarong will begin during the third week of May.

Chevron Canada begins drilling deepest offshore well

Chevron Canada has begun drilling the country's deepest offshore oil well, as the firm sought to soothe fears over a repeat of the massive oil slick in the Gulf of Mexico.

The exploratory well in the North Atlantic, a prospect known as Lona 0-55, is set to establish a new record in Canada with water depth at 2,600 meters, Chevron said. The Stena Carron drill ship is sinking the well. This is one kilometer deeper than the well that was being drilled by the Deepwater Horizon rig before it ruptured, gushing an estimated 210,000 gallons of crude into the Gulf of Mexico each day.

Eager to avert the kind of public relations disaster that has embroiled rival energy giant BP Plc (BP) over the U.S. oil slick, Chevron was careful to stress that for its new Canada drilling, "the primary focus of the experienced team managing drilling operations is on ensuring safe and incident-free operations during drilling."

The exploratory well, expected to be drilled and evaluated over several months, is located in the largely unexplored Orphan Basin, an area stretching across 100,000 sq km. It is about 430 km northeast of Newfoundland's capital St. John's.

According to CBC, Chevron Canada has two drill ships under contract that could drill relief wells for the Lona 0-55 prospect, which could slow any spill by relieving pressure should the well suffer a blowout.

Chevron Canada has a 50% stake in the venture. Other participants include Shell Canada Energy, ExxonMobil Canada Ltd. and Imperial Oil Resources Ventures Limited.

Cabot makes new discovery in Eagle Ford Shale

Cabot Oil&Gas announced a discovery in the oil window of the Eagle Ford Shale, more completions in the Marcellus Shale and a third, best to date, success in the Cotton Valley Taylor Sand.

"These results highlight not only a widening footprint of shale activity but also a commitment to focus on the most capital efficient portions of our portfolio," said Dan O. Dinges, Chairman, President and Chief Executive Officer.

Cabot's Pettet development continues to excel with one recent completion producing over 1,200 barrels of oil per day from a 5,471' lateral with 14 frac stages. The Company has inventoried 75 to 100 locations and will expand its program this year and next.

Additionally in Texas, the Company completed its third horizontal Cotton Valley Taylor Sand well with the best result to date. This well flowed at an initial production rate of 11.1 Mmcf per day with pressure at 2,425 psi. "The estimated recovery of our recent wells in this area ranges between six to seven Bcfe," commented Dinges.

Mercury found in Longtom field

Nexus Energy halted production at its Longtom field after low levels of mercury were detected in gas produced by the Longtom-4 well. Test samples were acquired from the Longtom-3 well over the weekend, and if test results confirm acceptable mercury levels, gas production will recommence.

If not, the operator will have to install mercury-removal equipment, which will take at least two months and cost about US $1.8 million (A $2 million). During the installation period, production will be deferred. Longtom is situated in a water depth of 184 feet (56 meters) offshore Gippsland Basin, Australia in exploration permit VIC/P54.

Carnarvon awarded exploration permit for offshore Australia

Carnarvon Limited was awarded a new exploration permit, WA-443-P in the Bedout sub basin offshore Western Australia. The new permit is located adjacent to Carnarvon's four existing permits, WA-435-P, WA-436-P, WA-437-P and WA-438-P, which are referred to as the Phoenix permits.

Drilling has not been performed on the WA-443-P block, although one large Middle Triassic prospect was identified, named Jaubert, which is a faulted anticlinal closure. The company's three-year work program includes reprocessing and interpreting 345,948 acres (1,400 square kilometers) of existing 2D seismic. Geological and geophysical studies will also be performed.