Circle Oil makes gas discovery in Morocco

Circle Oil announced that the ADD-1 exploration well has been drilled, logged and successfully tested in the Sebou Permit, Rharb Basin, Morocco.

The Company confirms a gas discovery in both the Main Hoot target and the secondary Guebbas target. The well first tested gas at a sustained rate of 3.57 mmscf/d on a 24/64" choke from the Main Hoot. The perforated Main Hoot zone of 4.4 meters at 969.6-974 meters MD has a calculated net gas pay of 4 meters. The Guebbas zone was then perforated and flowed gas at a sustained rate of 1.89 mmscf/d on a 16/64" choke. The perforated Guebbas zone of 2.1 meters at 889.4-891.5 meters MD has a calculated net gas pay of 1.5 meters.

The well is being completed as a potential producer.

A full technical evaluation of all the results of the well is underway. This will allow for forward planning as a precursor to further assessment of the resource, including conducting an extended well test to give a more complete estimation of the reserves.

The drilling rig is now moving to commence testing DRJ-6, being the untested well from the previous drilling campaign, with a calculated 4 meters of net gas pay in the Guebbas.

Following this, the exploration well KSR-11, the fifth and final well in the current campaign will be drilled.

The re-entering or re-drilling of the KAB-1 well (the first well of the current campaign, drilled in September 2010, and which encountered drilling problems), will be postponed to a later date pending third party evaluation and recommendation of a suitable drilling fluid to enable the well to be successfully drilled, logged and completed. This is required to counter a problem with swelling clay experienced on first drilling.

The Sebou permit lies to the north-east of Rabat in the Rharb Basin in Morocco. The Rharb Basin is a foredeep basin located in the external zone of the Rif Folded belt. The concession agreement, in which Circle has a 75% share and ONHYM, the Moroccan State oil company, has a 25% share, includes the right of conversion to a production license of 25 years, plus extensions in the event of commercial discoveries.

Prof. Chris Green, CEO, said, "I am obviously pleased to be able to report that we are continuing with our drilling success in Morocco's Rharb Basin. Three out of four wells in this campaign have been successful and the other remains as a target for future study. The ADD-1 well has been completed and, when required, will be available for future production."

Pride International adds new deepwater drillship to fleet

Pride International, Inc, announced that the company has dedicated and accepted delivery of the Deep Ocean Mendocino, the third new deepwater drillship to be added to the Pride International fleet, during a ceremony at the Samsung Heavy Industries Ltd. (SHI) shipyard in South Korea. The Mendocino is expected to mobilize to the U.S. Gulf of Mexico and commence a five-year contract with a subsidiary of Petroleo Brasileiro (Petrobras) during the second quarter of 2011, following the completion of integrated testing and acceptance by the client.

Louis A. Raspino, President and Chief Executive Officer of Pride International, Inc., commented, "The addition of the Deep Ocean Mendocino is the latest example of our successful deepwater expansion program with SHI and increases our deepwater fleet to 11 units. Also, the Mendocino provides for an expansion of our long-standing relationship with Petrobras, representing our initial opportunity to operate for them outside of Brazil."

The Mendocino is one of five new drillships in Pride's deepwater drillship expansion program with SHI. The first two drillships, the Deep Ocean Ascension and the Deep Ocean Clarion, were delivered by SHI in 2010. Both rigs are preparing to commence five-year contracts with BP, with the Ascension expected to mobilize to the Mediterranean Sea, while the Clarion, currently in the U.S. Gulf of Mexico, is preparing for final testing and commissioning. The fourth drillship, the Deep Ocean Molokai, is scheduled to complete construction in December 2011. In December 2010, Pride announced that it had reached an agreement with SHI for the construction of a fifth deepwater drillship with an expected delivery in mid-2013. The agreement includes an option for a sixth unit which could be exercised during the first quarter of 2011.

Each of the company's new deepwater drillships are equipped with the industry's latest technology for constructing deepwater wells with increased safety and efficiency. In addition to being designed with numerous parallel features intended to reduce the amount of time to construct a well in up to 12,000 feet of water, the Mendocino is equipped with dynamic positioning in compliance with DPS-3 certification, a 6,000-barrel active fluid storage and handling system, significant storage and deck space and accommodations for up to 200 personnel.

Venezuela surpasses Saudi Arabia with world’s largest oil reserves

Oil Minister Rafael Ramirez announced that Venezuela now has the world’s largest proven crude oil reserves, surpassing Saudi Arabia.

"At the end of 2010 we had a level of 217 billion barrels of oil, and right now at the start of this year we can certify 297 billion barrels," the minister said at a press conference.

OPEC member Venezuela produces over 2.22 million barrels of oil a day and has had a series of heavy oil discoveries in the Orinoco Belt.

In addition to crude oil reserves, Venezuela also holds some of the largest gas reserves. In 2009, Repsol YPF SA made a giant gas discovery in shallow waters of the Gulf of Venezuela. The Perla field is on the Cardon IV block in the Gulf of Venezuela and has potential reserves of more than 6 Tcf. Perla is the largest gas discovery in Venezuela and may be one of the world's largest natural gas discoveries

ONGC begins drilling third well offshore India as negotiations continue with Rocksource

Block operator, the Oil and Natural Gas Company of India Ltd (ONGC), has informed Rocksource ASA (Rocksource) that drilling of a third well on the block CY-DWN-2001/1 will commence within the next week. As with the first two wells, this third well will not test the prospect associated with the primary positive electromagnetic (CSEM) anomaly, as interpreted by Rocksource. Block CY-DWN-2001/1 is located offshore southeast India in the Cauvery Basin.

In its last update on its India operations (stock exchange announcement from 19th April 2010), Rocksource announced that ONGC and Rocksource were in negotiations related to the Farm-out Agreement (FOA) between the two companies and that, amongst other issues, these negotiations include the extent of Rocksource’s liability for costs relating to the first two exploration wells on the Block. These negotiations continue, and both Rocksource and ONGC wish to find a mutually agreeable way forward in order to utilize Rocksource’s integrated EM/Seismic technology in ONGC’s operations on the Indian Continental Shelf.

The process for assignment of a 10% Participating Interest under the FOA is not completed and Rocksource has not signed the Production Sharing Contract (PSC). It is Rocksource’s considered position that, unless there is a successful outcome from the ongoing negotiations, Rocksource will not be liable for any costs on the block.

Rocksource will continue to update the market as negotiations progress.

Norwest signs drilling contract for Red Hill South

Norwest Energy NL through its wholly owned subsidiary Westranch Holdings Pty Limited have executed a contract with Hunt Energy & Mineral Co Australia Pty Ltd (Hunt) to drill the Red Hill South 01 Well with Rig 2. In addition advice was also received today that the Western Australian Department of Mines and Energy had approved and registered the transfer of equity in each of TP15 (50% ) and EP413 ( 27.803%) to Bharat PetroResources Limited.

Peter Munachen, Norwest’s CEO commented “This is very significant for Norwest and sets the stage for drilling to commence on the target date of 14 February 2011 and as well with the registration of the BPRL interest was the final condition to be met for BPRL to contribute $3m towards the Red Hill South estimated drilling cost of $5 million.”

The Red Hill South prospect is estimated to have potential recoverable oil of 9MMbbl. The target reservoir is at a depth of 1,580 metres (TD is at 1,910 metres) and is approximately 100 metres offshore. The well will be drilled from an onshore location about 200 metres inland and approximately 3km south of Port Dennison. It is anticipated that target reservoir depth will be reached towards the end of February 2011.

In September Norwest entered into an Agreement to farm-out a 50% interest in TP15 to BharatPetro Resources Limited (BPRL). Under the agreement BPRL will contribute $3m to the dry hole cost of the Red Hill South well and Norwest $2m. The parties will contribute equally to the cost of testing the well. BPRL is also required to re-imburse $500,000 to Norwest for past costs.

BP awarded four Australian deepwater exploration blocks

BP announced that it has been awarded four deepwater offshore blocks in the Ceduna Sub Basin within the Great Australian Bight, off the coast of South Australia.

BP said that it will explore Exploration Permit for Petroleum (EPP) areas EPP 37, EPP 38, EPP 39 and EPP 40 covering an area of 24,000 km2 for oil and gas reserves, with the right to develop any commercially viable discoveries.

"This is a material and early move into an unexplored deepwater basin," said Mike Daly, Executive Vice President of Exploration for BP.

"The Ceduna Sub Basin is a very exciting new exploration area for BP. Our experience tells us that the geology has a high potential for containing hydrocarbons," added Dr Phil Home, Managing Director of BP's Australian upstream oil and gas business.

BP said that the proposed exploration activity would be phased over 6 years and, as part of the regulatory approval process, would be subject to detailed environmental assessment.

Total, YPF partner in Argentina licenses to explore shale gas potential

Total announced that it has acquired interests in four exploration licenses in Argentina in partnership with YPF in order to appraise their shale gas potential. Located in the Neuquén Basin, the licenses were awarded by the provincial authorities for a six-year period. The four new blocks are the latest addition to the Group’s portfolio of assets in Argentina, which includes significant holdings in shale gas play.

More specifically, Total has acquired:
- A 42.5% interest in both the Aguada de Castro and Pampa las Yeguas II licenses, which Total will operate.
- A 40% interest in the Cerro Las Minas license and a 45% interest in the Cerro Partido license which will be operated by YPF.

Commenting on the transactions, Yves-Louis Darricarrère, President of Total Exploration & Production, said: “These new interests in acreage that is potentially rich in shale gas further strengthen Total’s presence in unconventional gas, a domain in which Total has the ambition to grow significantly.”

The latest transactions follow on from the acquisition of 85% stakes in the La Escalonada and Rincón La Ceniza blocks in the same shale gas play in early 2010. As operator, Total is currently conducting geological, seismic and petrophysical studies in these blocks.

In 2010, the Group carried out similar studies on two other long-held blocks that it operates: Aguada Pichana (27.3%) and San Roque (24.7%). Total is planning to drill exploration wells in 2011 to evaluate the play’s potential. The entire shale gas zone held by Total represents a combined area of 1,548 square kilometres (approximately 380,000 acres) in Total’s net share.

Present in Argentina since 1978, Total, through its subsidiary Total Austral, operates 28% of the country’s gas production. The Group’s equity share of production averaged 82,700 barrels of oil equivalent per day in 2010.

Its main assets in the Neuquén Basin are Aguada Pichana and San Roque, which account for around 56% of the Group’s operated production in Argentina. Its other main production hub is Tierra del Fuego, where

Total operates the onshore Ara and Cañadon Alfa fields and the offshore Hidra, Kaus, Argo, Carina and Aries fields, which together account for 44% of Total’s operated production.

Iran discovers new gas field worth $50 billion

According to Asia Pulse Pte, Iran's Oil Minister Masoud Mirkazemi said on Sunday that a major gas field, Khayyam, has been discovered in the southern Iranian oilfield of Assalouyeh. It is estimated to earn US $50 billion at current prices.

The minister told reporters that the gas field is located in the east of Assalouyeh, opposite to Lavan Island and on the Persian Gulf on shore.

The in-place capacity of the gas field is 260 billion cubic meters and 80 percent of its reserves can be exploited, Mirkazemi added.

He noted that if the 18 to 21 rigs are dug for exploiting gas, a total of 24 million cubic meters of gas per day can be exploited, according to expert studies.

The value of the Khayyam gas field, with a capacity of 220 barrels of exploitable gas liquids, is about $50 billion, the oil minister further said.

Petroceltic makes gas discovery at Algeria well

Petroceltic, in association with its partner Sonatrach, issued an operational update on its Isarene permit in the Illizi Basin in South Eastern Algeria.

Well AT-4, the first of a four well appraisal campaign, was successfully drilled and completed within budget. The well commenced drilling on November 16, 2010, and reached total depth of 2142 meters on December 18, 2010, having successfully cut and recovered 48 meters of core in the objective Ordovician Unit IV reservoir sequence.

AT-4 is a vertical well located approximately 10 km to the east of AT-2 and is the first well to be drilled on the eastern flank of the field. The principal objective of the well was to determine the nature and extent of the gas in place in this previously undrilled area of the field.

The well encountered a gross gas column of 155 meters with no gas-water contact observed. Additionally, static reservoir pressure readings indicated that the main Ordovician gas reservoir in this area is in the same pressure regime as that encountered at wells AT-1, AT-2, and AT-3.

Completion operations on the well finished on 27th December 2010 when the rig was released to move to AT-5. The well has now been suspended, pending rigless fracture stimulation and flow testing over the coming month.

Appraisal well AT-5 was spudded on 9th January 2011 and has an expected drilling duration of approximately 65 days. This well is targeted at a "pop-up" feature to the north of the Ain Tsila field, where natural reservoir fracturing in combination with the near horizontal well bore trajectory may lead to enhanced productivity. The well will be drilled first as a semi-vertical pilot hole, and then sidetracked as a deviated well with a 450 meter horizontal section through the objective Ordovician reservoir.

Brian O'Cathain, Chief Executive of Petroceltic, commented, "The first well in the current Ain Tsila appraisal campaign has successfully achieved its objective of confirming the presence of a gas column with pressure continuity on the previously undrilled eastern flank of the field. Whilst AT-4 was designed with a primary focus on proving up gas in place rather than productivity, we are optimistic for a positive outcome from testing.

The next well in the appraisal drilling program (AT-5) will test the potential for encountering natural fractures in horizontal wells, in addition to the potential for multiple fracture stimulations to improve productivity and recovery factor for the field."

Exploration well offshore Cameroon encounters payzones

Bowleven, the West Africa focused oil and gas exploration group, announced that the Sapele-1 exploration well in the Douala Basin offshore Cameroon has encountered further hydrocarbon-bearing pay in both Tertiary and Cretaceous zones. This is believed to have occurred at the extremities of Lower and Deep Omicron and the Cretaceous Epsilon Complex. The well was designed to intersect multiple stacked objectives of Tertiary to Cretaceous age. Wireline log evaluation indicates all of the five objectives are hydrocarbon-bearing, with net pay confirmed in three. The well has reached a current TD of 4,539 m (14,892 ft), and the intention is to set liner and continue drilling operations.
The Sapele-1, on block MLHP-5 in the Etinde Permit, was selected to intersect multiple independent exploration targets from the proven Miocene fairway down to the deeper Cretaceous fairway from a single location. This required that a number of the targets be intersected at sub-optimal locations. Consequently, while the well has confirmed the prognosed targets as hydrocarbon-bearing,.
Since the announcement on 25 November 2010, the well, which is drilling in shallow water depths of around 20 m, has been drilled to a current TD of 4,539 m and has drilled through the Cross-cut event and into the Cretaceous.

Ghana well tests for condensate

Tullow Oil’s Tweneboa-3 appraisal well in the Deepwater Tano license offshore Ghana has encountered gas condensate in sandstone reservoirs. Wireline logs and samples of reservoir fluids along with the well's down-dip position confirms the well’s resource base potential.
The well was drilled by the Deepwater Millennium drillship to a total depth of 3,906 m in a water depth of 1,601 m. It is located 6 km southeast of the Tweneboa-2 well and 12 km from the Tweneboa-1 discovery well. The well was planned with two deviated boreholes to test separate areas of the Tweneboa field. The first leg was drilled to calibrate the potential of an area with a very weak seismic response, and encountered thin reservoir sands and about 9 m of gas condensate pay. The well was then sidetracked 550 m west, targeting the significant Ntomme anomaly, an area of strong seismic response. This leg successfully encountered a gross vertical reservoir interval of abouty 65 m containing 34 m of net gas condensate pay in two zones of high quality stacked reservoir sandstones. On completion of operations, the rig will remain in the Deepwater Tano block to drill the top-hole section of the Tweneboa-4 appraisal well.
Tullow operates the Tano license and with partners Kosmos Energy Ghana, Anadarko Petroleum, Sabre Oil & Gas and the Ghana National Petroleum Corp.

OGX makes new discovery offshore Brazil

OGX reported the presence of hydrocarbons in the Eocene section of well 1-OGX-25-RJS and provided additional information concerning the previously announced discovery in the Albian-Cenomanian section of this well, which is located the BM-C-39 block, in the shallow waters of the Campos Basin. OGX holds a 100% working interest in this block.

Subsequent to the provision of information to the market on December 8, 2010, the drilling of well OGX-25 proceeded, reaching carbonate reservoirs in the Albian-Cenomanian section, and allowing the identification of a total column of approximately 198 meters and total net pay of around 145 meters in this section, as compared to the 125 meters of column and 116 meters of net pay previously announced.

Moreover, new studies, which included logging and cable tests, also permitted the identification of hydrocarbons in sandstone reservoirs in the Eocene section, specifically a gas accumulation with a column of approximately 16 meters and net pay of around 8 meters.

It should be noted that the name of well 1-OGX-25-RJS has changed to 6-OGX-27P-RJS with the drilling of the Albian section. Its drilling will continue until a total estimated depth of 3,100 meters. This well is located in the BM-C-39 block at about 94 kilometers off the coast of the state of Rio de Janeiro at a water depth of approximately 105 meters. The rig, Pride Venezuela, initiated drilling activities there on November 14, 2010.

Iran elected to chair OPEC in 2011

The presidency of OPEC, which traditionally rotates among its members, has been gi ven to Iran for the first time since the Iranian Revolution. OPEC ministers elected Iran’s oil minister, Masoud Mirkazemi, to chair the 12-nation organization during 2011. The Iraqi oil minster, Hussain Al-Shahristani, will serve as alternate president. The members reportedly elected Iran unanimously. It is not certain whether Iran will try to use the position to persuade the organization to base its oil prices on some other currency than the U.S. dollar, or perhaps a group of currencies. Iran along with its allies Venezuela and Ecuador have spoke out for the change, citing the weakness in the dollar. So far, however, the group has not taken up the issue.
Iran’s election as OPEC president comes the US and the EU have increased pressure on Iran to curb its nuclear program. The U.S. government enacted a policy in 2010 that penalizes companies that sell refined petroleum products to Iran. The EU has focused its sanctions on the export of equipment for Iran’s energy sector.
Mirkazemi told reporters at the meeting in Vienna that the sanctions have had “no impact whatsoever,” instead had spurred Iran’s energy sector to become self-sufficient. Iran is the second-largest oil producer in OPEC with the second-largest proven reserves behind Saudi Arabia. In 2009, Iranian crude production was about 3.8 million bpd, but because of limited refining capability it has had to import up to 40% of its refined products.

Analysts predict that oil prices in 2011 will be second-highest ever

Oil demand increasing twice as fast as supply may result in the second-highest price on record in 2011, some industry forecasters predict.
Sanford C. Bernstein & Co. said that crude will average $90/bbl this year. Natixis Bleichroeder Inc.expects $100/bbl, a 26% increase over 2010. Global oil consumption will increase 1.7% to a record 87.8 million bpd in 2011 while output will rise only 0.9%, according to the US Energy Department. According to the median estimate in Bloomberg surveys of economists, economic growth in China, while moderating, will still increase by 9%, three times the US growth rate and six times Europe’s. Crude futures on the NYMEX will average $87 in 2011, based on the median of 34 analyst estimates, which would be the highest since the record $99.75 reached in 2008 and 40% more than 2009.

Maersk Oil to buy Brazilian assets for $2.4 billion

Mærsk Olie og Gas A/S has agreed with SK Energy Co., Ltd. to acquire SK do Brasil Ltda. for US$2.4 billion on a cash and debt-free basis. The acquisition is subject to governmental approval. The acquisition gives Maersk Oil access to large pre-salt assets Offshore Brazil, one of the most prolific regions in the world.
Maersk Oil CEO Jakob Thomasen said in a statement “the acquisition is consistent with our strategy as it will transform Brazil into a core producing country for Maersk Oil. Through our partnerships in the three blocks we acquire, we will strengthen our position in Deepwater exploration and production, an area where we have acquired acreage and built strong competencies in recent years”.
The acquisition comprises three blocks: BM-C-008, which includes the Polvo Field (40%, Devon operated); BM-C-030, which includes the Wahoo discovery (20% share, Anadarko operated); and BM-C-032, which includes the Itaipu discovery (27% share, Devon operated). BP has bought Devon’s Brazilian activities and will become operator of these, pending regulatory approval.
The Polvo Field offers a current net production of about 10,000 bopd. The Wahoo and Itaipu discoveries will be appraised in 2011, and first oil may be possible by 2016 and 2018, respectively. Additional prospects have been observed in both these blocks.

srael could become net gas exporter

Noble Energy reported that it has made a significant natural gas discovery at the Leviathan prospect Offshore Israel. At 16 TCF in estimated resource potential, the find is the company’s third major natural gas discovery in the Offshore Levantine Basin in two years, and offers the potential for Israel to become a net exporter of natural gas. Altogether the three discoveries, including the Tamar and Dalit discoveries, hold an estimated 25 Tcf of gas. “Israel is now positioned to become an exporter of natural gas,” said David Wurmser, executive member of the Delphi Global Analysis Group. The Leviathan-1 discovery well encountered at least 220 net ft of natural gas pay in several Subsalt Miocene intervals, similar to those found at Tamar. The well is at a current depth of 16,960 ft, and drilling will continue to a planned TD of 23,600 ft to evaluate other intervals. The Leviathan field covers about 125 sq mi and is located in 5,400 ft of water 80 miles Offshore Haifa. Two appraisal wells are planned to evaluate the field’s potential.

ExxonMobil to explore for Shale Gas in Argentina’s Neuquen province

ExxonMobil plans to explore for Shale gas in Argentina following the award of two blocks in the western Neuquen province. ExxonMobil spokesman Patrick McGinn told Dow Jones news service that the exploration agreements were signed in December 2010.
YPF, Argentina’s state oil company, will be ExxonMobil’s partner in the Loma del Molle and Pampa de las Yeguas I blocks. The awards were the result of a tender round submission launched in 2010 by Gas & Petroleo de Neuquen, the provincial oil and gas company. On Dec. 7, YPF announced the discovery of 4.5 Tcf of proven Shale gas reserves in the Patagonia area of the Neuquen Basin. The Argentinean government has suggested that the Neuquen Basin may hold 257 Tcf of Shale Gas reserves.
ExxonMobil’s entry into Argentina’s shale play follows its acquisition of shale operator XTO in 2009 and Shale exploration activities in Canada, Germany, Hungary and Poland.

Varadero makes Central North Sea oil discovery

EnCore Oil announced that the Varadero exploration well 28/9-2 located in UK Central North Sea block 28/9 was drilled to a total depth of 5,205 ft measured depth (MD) and successfully encountered high-quality hydrocarbon-bearing Reservoir sandstones at 4,020 feet MD within the target Tay Sandstone. Initial analysis indicates the discovery of a 400-ft hydrocarbon-bearing interval with a calculated net pay of 106 ft. Wireline sampling and pressure testing of the zones have been undertaken and suggest the oil has an API gravity of about 26°. Analysis of the logs suggests sands with average porosities of approximately 33%. The well will now be plugged and abandoned as planned, and the Galaxy II rig will be moved to the Burgman prospect.

Cairn secures rigs for Greenland exploration

Cairn Energy has secured two dynamically positioned drilling vessels for its 2011 dual rig exploration program Offshore Greenland. The Leiv Eiriksson, a fifth-generation semi-submersible drilling rig and the Ocean Rig Corcovado, a sixth-generation drillship, have been contracted to operate in the 2011 drilling season on Cairn’s Offshore Greenland exploration program. Both vessels are operated by Ocean Rig. Subject to approval from the Government of Greenland, Cairn intends to drill up to four wells in 2011. Further details on the exploration program will be provided in Cairn’s next operational update.