Production halted at Norway Troll A Field after gas leak reported

According to Dow Jones, production has been suspended at several Norwegian North Sea oil and gas facilities after a small gas leak at Statoil's Troll A field earlier Tuesday, the company said.

Production has been halted at Norway's largest gas field, Troll A following the leak, in addition to flows from Kvitebjoern and Visund oil and gas fields. Output has also been reduced at sister Statoil fields Troll B and Troll C.

Statoil spokesman Gisle Johansen confirmed a gas leak was reported at Troll A at 0530 GMT and production had subsequently been shut-in.

The Troll A incident means gas hasn't flowed into the Kollsnes Gas Processing plant, which handles nearly 40% of total Norwegian gas exports. Prompt U.K. gas prices have gained ground on growing concern over tighter flows from the Norwegian Continental Shelf, say traders who pegged within-day gas at 45 pence a therm up from closer to 40 pence a therm in recent days, and gas for Wednesday at 44.50 pence a therm.

According to the Norwegian Petroleum Directorate's website, the Troll Field--including Troll B and Troll C--produced 28.7 billion cubic meters of gas in 2009 and 1.08 million meters of natural gas liquids. Visund produced 25,000 barrels a day of oil and 730 million cubic meters of gas, while Kvitebjoern produced 41,000 barrels a day of oil and 5.41 billion cubic meters of gas.

This latest technical glitch follows a temporary shutdown at the field in January also relating to a gas leak.

The Gullfaks field, operated by Statoil, has three platforms Gullfaks A, B, C. Gullfaks A and C receive and process oil and gas from Gullfaks Soer and Gimle. All three facilities are also involved in production and transport crude oil from Tordis, Vigdis and Visund fields.

DOI offers offshore drilling requirements

The Department of the Interior (DOI) issued a directive to oil and gas lessees and operators on the Outer Continental Shelf implementing stronger safety requirements that Secretary of the Interior Ken Salazar recommended in his 30-day safety report to the President.

The Notice to Lessees focusing on safety measures issued applies to both deepwater and shallow water operations, although drilling operations in water deeper than 500 feet remain under a six-month moratorium. Shallow water drilling operations and production activity in both deep and shallow waters are not under a moratorium and will continue, provided they are in compliance with the new safety requirements.

"Oil and gas from the Outer Continental Shelf remains an important component of our energy security as we transition to the clean energy economy, but we must ensure that offshore drilling is conducted safely and in compliance with the law," said Secretary Salazar. "The deepwater drilling moratorium that is in place will provide time for the Presidential Commission to complete its work, but production and shallow water drilling may continue under the stronger safety requirements that we are implementing today."

The Safety NTL issued implements the seven safety requirements that Secretary Salazar's 30 day safety report to the President determined could be implemented immediately. Under the NTL, lessees and operators are required to:
• Show certification by the operator's Chief Executive Officer that they are conducting their operations in compliance with all operating regulations and that they have tested their drilling equipment, ensured that personnel are properly trained, and reviewed their procedures to ensure the safety of personnel and protection of the environment;
• Provide certification from a Professional Engineer – before beginning any new drilling operations using either a surface or subsea blowout preventer (BOP) stack – of all well casing and cement design requirements, including that there are at least two independent tested barriers for the well, and adhere to new casing installation procedures;
• Provide independent third-party verification, before drilling any new well, that the BOP will operate properly with the drilling rig equipment and is compatible with the specific well location, borehole design and drilling plan;
• Provide independent third-party verification that shows that the blind-shear rams installed on the surface or subsea BOP stack are capable of shearing the drill pipe in the hole under maximum anticipated surface pressures;
• Adhere to new inspection and reporting requirements for BOP and well control system configuration, BOP and well control test results, BOP and loss of well control events, and BOP and loss of well control system downtime;
• Receive independent third-party verification, before spudding a new well, of re-certification of BOP equipment used on all floating drilling rigs to ensure that the devices will operate as originally designed, and that any modifications or upgrades conducted after delivery have not compromised the design or operation of the BOP;
• Have a secondary control system for subsea BOP stacks with remote operated vehicle (ROV) intervention capabilities, including the ability to close one set of blind-shear rams and one set of pipe rams. The subsea BOP system must have an emergency shut-in system in the event of lost power, as well as a deadman system and an autoshear system;
• Conduct ROV Hot Stab Function Testing of the ROV Intervention Panel on subsurface BOP stacks; and
• Provide documentation that the BOP has been maintained according to the regulations.

Drilling operations that are not subject to the deepwater drilling moratorium must fulfill their BOP reporting requirements by June 17 and submit the required safety certifications by June 28. Failure to provide required certifications will result in the issuance of an incident of non-compliance and may result in a shut-in order.

In the coming days, the Department of the Interior will be also be issuing expanded requirements for exploration plans and development plans on the Outer Continental Shelf, said Bob Abbey, who is the Director of the Bureau of Land Management and who has also been called upon to serve as Director of the Minerals Management Service. The Department of the Interior and the Council on Environmental Quality are also conducting a review of MMS’ procedures under the National Environmental Policy Act.

Honeywell to Provide Control, Safety Systems

Honeywell has been selected to provide the control and safety systems for the world�s longest gas pipeline. The 8,704-kilometer West-to-East II pipeline is the second of two massive pipelines to be constructed to transport fuel from energy-rich western China to the country�s eastern regions.

PetroChina, China�s top oil producer and operator of the pipeline, selected Honeywell�s Experion Process Knowledge System (PKS) and Safety Manager solutions to manage the pipeline operation and help guard against hazardous incidents.

The new pipeline crosses 14 Chinese provinces, autonomous regions and municipalities and will transport approximately 30-billion cubic yards of natural gas per year. It will play a critical role as the country, the second-largest energy consumer in the world behind the United States, transitions from coal fuel-based energy to natural gas. Each year the gas transported by the pipeline is expected to replace 76.8 million tons of coal, reduce sulfur dioxide emissions by 1.44 million tons and carbon dioxide by 130 million tons.

PetroChina will use Experion as the main integration and control software platform at the pipeline�s 73 control stations. Specifically, Experion will integrate alarm and event subsystems to give pipeline operators a complete view of how the pipeline is functioning. By integrating Safety Manager into the overall system, Experion will help improve process-safeguarding practices such as emergency shutdowns, equipment protection, fire and gas monitoring and critical control.

�Pipelines present unique challenges because their size makes them more difficult for operators to monitor and respond to problems, but an integrated approach provides unparalleled visibility into their operations,� said Samuel Wu, regional general manager, Honeywell Process Solutions Greater China. �The system we�re putting in place for PetroChina will increase its operators� access to information and help them make better-informed decisions to promote its integrity.�

Far East Long-Term Gas Sales Agreement for Shouyang

Far East Energy Corporation announced that it has negotiated a Gas Sales Agreement (GSA) with its partner, China United Coal Bed Methane Corporation (CUCBM) and Shanxi Provincial Guoxin Energy Development Group Co., Ltd. (SPG) to sell all production of coalbed methane (CBM) from the contract area covered by the Shouyang Production Sharing Contract (the Shouyang Block).

The price received by Far East for its gas will be 1.55 Rmb per cubic meter, including enacted and recently announced Chinese government subsidies, which equates to approximately $6.55 per Mcf at current exchange rates.

�We are thrilled,� said Michael R. McElwrath, CEO and President of Far East Energy. �This gas price is over thirty-five percent higher than current US gas prices, which are running about $4.80 per Mcf. This is one of the advantages of producing CBM in China, and we are pleased to sign a gas sales contract with a pipeline that has the capacity to take up to 40 to 50 million cubic feet per day of our Shouyang gas.�

The GSA is a 20-year agreement that provides that SPG is required to purchase all gas produced from the Shouyang Block up to 300,000 cubic meters (10,584,000 cubic feet) per day of CBM gas on a take-or-pay basis with any quantities above such amount to be negotiated pursuant to a separate agreement. This provision gives Far East and CUCBM the opportunity to negotiate a new contract for volumes above 10.584 million cubic feet per day at a time when a second pipeline may have been built to the area, and/or when gas prices may have risen further. The GSA does not have any minimum delivery obligations, but does commit all production from the Shouyang Block up to 300,000 cubic meters per day to SPG.

Gas sales are expected to commence upon completion of Far East�s in-field gathering system, which will interconnect with SPG�s 18-inch diameter line in Shanxi Province that is currently under construction and is scheduled to be completed by September or October 2010.

�We have pursued this gas sales contract tenaciously, but have also been incredibly fortunate,� said McElwrath. �Our great good fortune arose from the circumstance that SPG was already routing a pipeline between Yuxian and Jinzhong passing very near our Shouyang Pilot Development; and then was sufficiently hungry for gas to be willing to build a short connecting line at its expense. SPG was also willing to commit to take all volumes that we produce (or pay for any gas not taken).�

�Furthermore,� continued McElwrath, �it is remarkable that we can move straight from early-stage gas production to pipeline sales. In China, first gas must nearly always be sold as compressed natural gas (CNG).�

As is the practice in China, the GSA was signed by and between CUCBM (Far East�s Chinese partner), as seller, and SPG, as purchaser, with Far East being an express beneficiary thereto. Simultaneously with the execution of the GSA, CUCBM and Far East entered into an agreement in accordance with the PSC, whereby CUCBM and Far East agreed to jointly market and sell all production from the Shouyang Block.

�CUCBM continues to be the best partner one could hope to have in China,� said McElwrath. �Their leadership is visionary. They worked tirelessly to get this sales agreement in place, and negotiated excellent terms for our benefit.�

McElwrath continued, �We are looking forward to a long and mutually beneficial relationship with SPG. They have built a very impressive pipeline network in Shanxi Province in a very short period of time, and we are fortunate that such a well-managed and dynamic company is constructing a network of pipelines ideally situated to provide offtake for our gas.

Oil executives testify before US House Energy and Environment subcommittee

The executives were ExxonMobil Chairman and CEO Rex Tillerson, Chevron Chairman and CEO John Watson, ConocoPhillips CEO James Mulva, Shell Oil President Marvin Odum, and BP America chairman and president Lamar McKay.

In advance of the hearing, top oil-company executives moved to distance their companies from BP. Exxon Mobil Chief Executive Officer Rex Tillerson called the April 20 explosion and subsequent collapse of the Deepwater Horizon rig "a dramatic departure from the industry norm in deepwater drilling."

Exxon is eager to know "what went wrong at this well that did not occur at the 14,000 other deepwater wells that have been successfully drilled around the world," Mr. Tillerson said.

Upon questioning by the subcommittee about the spill, Tillerson stated, "We are not well equipped to handle them. That's why we need an emphasis on preventing them from occurring."

Tillerson says that his company doesn't "proceed with operations if we cannot do so safely."

Was the BP well a once-in-a-lifetime, black swan event, or are there other deep-water wells at risk of catastrophe? The oil executives were asked by Rep. Charles Gonzales, D-Texas, whether they could say their operations were 100 percent safe. "No, I cannot," Tillerson responded.

Chevron Chairman and Chief Executive John S. Watson said in prepared remarks that he believes an independent investigation of the accident "will show that this tragedy was preventable."

Chevron's drilling and well-control practices in deep water "are safe and environmentally sound," he said. He urged lawmakers not to use this incident as the basis for scaling back or shutting down "the many positive benefits of offshore development in the Gulf of Mexico and elsewhere."

A representative of Royal Dutch Shell, Marvin Odum, said in his prepared remarks that the company remains confident in its drilling expertise and procedures. He predicted that the Obama administration's decision to halt new deep-water drilling for six months will cost "thousands of jobs and billions in lost wages and spending."

Combined news sources: AP, Wall Street Journal

Obama appoints oil industry watchdog, urges shift to renewable energy

In a speech to the nation from the White House, US President Barak Obama announced the appointment of former Justice Department inspector general Michael Bromwich as his choice for the new head of the Minerals Management Service. Bromwich replaces Liz Birnbaum, who resigned in May in the fallout over the government's response to the spill. "His charge over the next few months is to build an organization that acts as the oil industry's watchdog – not its partner," Obama declared. "In the coming days and weeks, these efforts should capture up to 90% of the oil leaking out of the well. This is until the company finishes drilling a relief well later in the summer that is expected to stop the leak completely."

President Obama admitted the enormity of the problem caused by the sinking of the Deepwater Horizon and and the consequent oil spiil. "Because there has never been a leak of this size at this depth, stopping it has tested the limits of human technology," he said.

Obama placed the blame for the spill and its environmental damages clearly on BP. "We will make BP pay for the damage their company has caused. And we will do whatever's necessary to help the Gulf Coast and its people recover from this tragedy. Tomorrow, I will meet with the chairman of BP and inform him that he is to set aside whatever resources are required to compensate the workers and business owners who have been harmed as a result of his company's recklessness. And this fund will not be controlled by BP. In order to ensure that all legitimate claims are paid out in a fair and timely manner, the account must and will be administered by an independent, third party."

In his speech, Obama announced the deployment of 17,000 US National Guard troops to assist in all phases of the cleanup. "I have authorized the deployment of over 17,000 National Guard members along the coast. These servicemen and women are ready to help stop the oil from coming ashore, clean beaches, train response workers, or even help with processing claims – and I urge the governors in the affected states to activate these troops as soon as possible," Obama explained.

Obama reiterated his six-month moratorium on deepwater drilling. " I have issued a six-month moratorium on deepwater drilling. I know this creates difficulty for the people who work on these rigs, but for the sake of their safety, and for the sake of the entire region, we need to know the facts before we allow deepwater drilling to continue. And while I urge the Commission to complete its work as quickly as possible, I expect them to do that work thoroughly and impartially."

Declaring fossil fuel as being a finite resource, Obama appeared intent on using the oil spill to press for renewable energy sources. "We consume more than 20% of the world's oil, but have less than 2% of the world's oil reserves. And that's part of the reason oil companies are drilling a mile beneath the surface of the ocean – because we're running out of places to drill on land and in shallow water," Obama said, "Last year, the House of Representatives acted on these principles by passing a strong and comprehensive energy and climate bill – a bill that finally makes clean energy the profitable kind of energy for America's businesses. Now, there are costs associated with this transition. And some believe we can't afford those costs right now. I say we can't afford not to change how we produce and use energy – because the long-term costs to our economy, our national security, and our environment are far greater."

Obama to consider reopening drilling

According to the Wall Street Journal, the Obama administration, facing rising anger on the Gulf Coast over the loss of jobs and income from a drilling moratorium, said Monday that it would move quickly to release new safety requirements that would allow the reopening of offshore oil and gas exploration in shallow waters.

Gulf Coast residents, political leaders and industry officials said delays in releasing the new rules, along with the administration's six-month halt on deepwater drilling -- both issued amid public pressure -- threatened thousands of jobs.

Well-owner BP PLC, meanwhile, faces penalties "in the many billions of dollars," for the Deepwater Horizon drilling disaster that has been spewing an estimated minimum 12,000 to 19,000 barrels of oil a day into the Gulf, said White House Press Secretary Robert Gibbs. The costs of the spill will "greatly exceed" the amount BP could recoup by selling any of the captured oil on the market, he said Monday.

U.S. Coast Guard Admiral Thad Allen, who heads the federal response, said BP's latest emergency containment system is on track to capture as much as 15,000 barrels of oil per day. Officials said BP's latest oil capping system, put in place at the end of last week, was so far collecting about 11,000 barrels a day.

The oil industry is awaiting new safety regulations from the Interior Department's Minerals Management Service, which canceled some offshore drilling permits last week and has had others on hold since early May. Administration officials say new rules for shallow water oil and gas drilling could be released as soon as Tuesday.

President Barack Obama met with Cabinet officials on the spill Monday and expressed optimism that the spill would be contained, but he pointed to the potential for long-term economic damage. "What is clear is that the economic impact of this disaster is going to be substantial and it is going to be ongoing," he said.

The new drilling regulations are expected to require drillers to have independent operators certify that the blowout preventers work as designed to shut off the flow of oil; that independent operators certify the well design plan is adequate, including proper casing, or cement lining; that the driller certifies it is in compliance with all regulations and have done all needed tests.

The moratorium on offshore drilling is shaping up to be one of the most contentious elements of Mr. Obama's response to the April 20 explosion that sank the rig and touched off the worst offshore oil spill in U.S. history.

The White House is working on a legislative package that will include further unemployment benefits for people who have lost work due to the spill or the drilling moratorium.

The Small Business Administration is offering economic injury loans to Gulf Coast businesses that have been impacted.

Industry trade groups say that each deepwater rig employs 180 to 280 workers, with each of those jobs supporting another four industry workers, for a total potential loss of more than 40,000 jobs. The moratorium "will result in crippling job losses and significant economic impacts for the Gulf region," the National Ocean Industries Association said in a letter Monday.

The House passed an economics package in May that more than quadruples a levy on oil companies for spill mitigation, to 34 cents a barrel from eight cents.

House Democratic leaders will meet on Tuesday with committee chairs to work out the House's next steps on raising liability limits, reorganizing the federal regulatory structure on oil drilling and forcing the oil industry to spend more on safety and environmental technology research.

The White House said Monday that it supported lifting the cap on liability damages altogether for any oil companies drilling offshore. The cap is $75 million unless the government can show criminal negligence.
Some Republicans and industry groups have cautioned that putting the liability cap too high could make it tough for smaller companies to drill offshore.

The debate over how to respond to the Gulf spill disaster has put Mr. Obama in a difficult spot. He has sought to answer environmental concerns in part by ordering a six-month moratorium on new wells in water deeper than 500 feet, and calling for tougher safety regulation.

But during a trip to the Gulf on Friday, Mr. Obama also heard widespread complaints about the deepwater moratorium.

A group of political leaders demanded the administration issue new safety regulations for shallow-water drilling, since no new permits were being approved until the oil firms can show they will abide by the tougher standards.

During a meeting at a bait shop between the president and local fishermen in Grand Isle, La., local shrimper Terry Vegas told the president that oil companies were not necessarily the bad guys.

"We're not bitter at the oil companies for what's happening. We're just bitter at those that cut the corners and cause the havoc that we're having right now," Mr. Vegas said.

On Monday, the widows of two Deepwater Horizon crewmembers called at a congressional hearing for stepped up safety enforcement in the offshore drilling industry, and voiced their support for continuing to drill offshore.

"I fully support offshore drilling and I always will," said Natalie Roshto, of Liberty, Miss., whose husband, Shane, was among 11 people killed in the blast.

Mr. Obama defended the deep-water moratorium on Friday, and administration officials said Monday that it wasn't being reconsidered.

"A repeat of the BP Deepwater Horizon spill would have grave economic consequences for regional commerce and do further damage to the environment," the White House said Monday.

* Home * WO Wire WO WIRE RIL introducing streamer positioning technology to benefit 4D seismic projects

A further step towards improving the accuracy of 4D seismic using towed streamer acquisition for monitoring oil and gas reservoirs during production is being introduced this summer by Reservoir Imaging Ltd (RIL), the 4D seismic software services consultancy based in Edinburgh, Scotland.

RIL’s 4D Specialist’s are due to start using the new version of RIL’s Osprey suite of 4D technologies around the world for major oil companies which for the first time addresses the impact of waves, current and weather on the movement of towed streamers during a survey so that repeat surveys can effectively follow the so called ‘feathering’ pattern of previous surveys. Osprey software is expected to produce more economic, better quality data for monitoring reservoir performance at some of the most important oil and gas fields worldwide.

There is no question that 4D seismic is emerging as a significant tool in reservoir management allowing geoscientists and engineers to compare the imaging results of repeat seismic surveys to track the behaviour of hydrocarbons in the reservoir during production. Demand for 4D projects has remained remarkably resilient over the last two years and is expected to grow this year.

A key challenge in a successful 4D is for subsequent ‘monitor’ surveys to replicate the feathering of streamers from the baseline survey to ensure good repeatability. Up until recently a target feather had to be computed for each line, and then during acquisition the 4D survey contractor had to predict and then match this feather as closely as possible.

In 2008 RIL undertook a major analysis of typical baseline data and determined that focusing on the precise feathering of each line might be unnecessarily restrictive and complicated. Instead the company introduced the concept of a feather tunnel, This allows more flexibility in the line selection process during a survey which translates into acceptable repeatability being achieved more efficiently. Prototype software was created in late 2008 to build 4D tunnels for each line to test the applicability of the technique.

Development of the RIL software coincided with recent industry advances in the ability to steer both sources and streamers which also offer new opportunities to optimise the accuracy of 4D surveys. As a result RIL is bringing in a second generation of tunneling software which enables optimal 4D repeatability by ensuring the streamers are steered down the centre of the tunnels. This meets the repeatability requirement more efficiently and ensures future monitor surveys will also be easier to repeat.

The RIL software is about to be applied this summer on a large number of 4D projects in the UK, Norway, Gulf of Mexico, West Africa and the FarEast.

OGX finds more oil in Campos Basin

OGX has encountered additional oil-bearing reservoirs in two wells in the shallow waters of the Campos Basin.

An oil-bearing interval in the 1-OGX-13-RJS well in the BM-C-41 block, the second appraisal well on the Vesuvio prospect, had a net pay of 33 feet (10 meters) in the sandstone reservoirs. The company also discovered a 361-foot (110-meter) oil column in the 1-OGX-10-RJS well on the Hawaii prospect in the BM-C-42 block.

Carbonate reservoirs in the Aptian section yielded a net pay of 131 feet (40 meters). Drilling at both wells has been completed and the rigs will now move to other prospects – the Sea Explorer will tap the Huna prospect and the Ocean Lexington will drill the Pero prospect. OGX wholly owns and operates both blocks.

BP preps for deployment of LMRP system

Subsea Source Control and Containment
Preparations are ongoing for deployment of the lower marine riser package (LMRP) cap containment system. Remotely operated vehicles (ROVs) are engaged in preliminary operations, including preparing for operations to cut through and separate the damaged riser from the LMRP at the top of the Deepwater Horizon's failed blow-out preventer (BOP).

Deployment of the system will involve connecting the containment cap to a riser from the Discoverer Enterprise drillship and then placing it over the LMRP, with the intention of capturing most of the oil and gas flowing from the well and transporting it to the drillship on the surface.

All of these operations, including the cutting of the riser, are complex, involve risks and uncertainties, and have to be carried out by ROVs at 5,000 feet under water. Systems such as the LMRP containment cap have never before been deployed at these depths and conditions, and their efficiency and ability to contain the oil and gas cannot be assured. It is currently anticipated that attachment of the LMRP cap will be attempted later this week; however, operational delays could impact anticipated timeframes.

Preparations to use the Discoverer Enterprise to deploy the LMRP cap and the intended severing of the damaged riser mean that the riser insertion tube tool, previously deployed, will not be reinserted into the main leak at the end of the riser.

Work on the first relief well, which started on May 2, continues and it has currently reached a depth of 12,090 feet. Work on the second relief well, which started on May 16, had reached a depth of 8,576 feet before drilling was temporarily suspended on May 26. Drilling operations on the second relief well resumed on May 30. Both wells are still estimated to take around three months to complete from commencement of drilling.

Surface Spill Response and Containment
Work continues to collect and disperse oil that has reached the surface of the sea, to protect the shoreline of the Gulf of Mexico, and to collect and clean up any oil that has reached shore.

Over 1,600 vessels are now involved in the response effort, including skimmers, tugs, barges and recovery vessels. Operations to skim oil from the surface of the water have now recovered, in total, some 321,000 barrels (13.5 million gallons) of oily liquid.

The total length of containment boom deployed as part of efforts to prevent oil reaching the coast is now over 1.9 million feet, and an additional 1.8 million feet of sorbent boom has also been deployed.

So far, approximately 30,000 claims have been submitted and more than 15,000 payments already have been made, totaling some $40 million. BP has received more than 110,000 calls into its help lines to date.