Plans unveiled to drill world’s deepest well

HOUSTON -- Discussion of a plan to drill  in the seafloor more than 12,000 feet beneath the surface of the Pacific Ocean  impressed even the technical professionals at the Offshore Technology Conference, who already know a lot about doing complicated work under water.

The project,  scheduled for 2017 in the Pacific Ocean, would involve drilling a scientific well  to retrieve a core of the Earth’s mantle. It would bring the sample to the surface using a riser similar to the pipe that connects underwater wellheads to surface rigs.

If successful, it would drill in water as deep as 12,000 or 14,000 feet, well beyond the deepest drilling now, around 10,000 feet.
Nicolas Pilisi, an engineer for Blade Energy Partners, said the  greater water depths are accessible with changes in materials used and with additional power to move mud and other materials into and out of the hole.

While  steel risers used now are too heavy and pose a risk of buckling at greater depths, innovative designs using thinner risers, or ones made from titanium or aluminum, would offer strength and also cut down weight, Pilisi said.

Those advancements — which Pilisi said aren’t far from reality — could advance offshore capability, especially if the project settled for a more shallow site off the coast of Hawaii.

“Drilling and coring a scientific hole in the upper mantle is definitely possible,” Pilisi said. “A hole could be drilled today with the existing technology.”

Anadarko reports strong results from Utica program

HOUSTON -- Anadarko Petroleum Corporation provided an update on its drilling program in the Utica Shale play in eastern Ohio after filing the required production history with Ohio Department of Natural Resources. To date, the company has drilled and is producing from three wells in the Utica Shale, the most recent of which has delivered more than 9,500 barrels of light-gravity crude oil during its first 20 days on line.

"Though it is very early in our exploration program, the strong initial results are encouraging," said Bob Daniels, Anadarko Sr. Vice President, Worldwide Exploration. "We expect to begin flowing back our fourth Utica exploration well in the next few days and are currently drilling our fifth exploration well in the play. We plan to continue an active drilling program throughout the year, as we evaluate the liquids-rich potential of our 390,000-acre (gross) position in the Utica Shale."

Anadarko's Brookfield A-3H well in Noble County has produced approximately 9,500 barrels of oil and approximately 12 million cubic feet (MMcf) of high-BTU (British thermal units) natural gas during its first 20 days on line. The Spencer A-1H and Spencer A-5H wells, located in Guernsey County, have cumulatively produced a combined 20,000 barrels of light-gravity crude oil and 37 MMcf of liquids-rich natural gas in just under two months on line. All three horizontal wells were drilled to a vertical depth of approximately 6,500 feet and a lateral length of about 5,000 feet with 16- to 19-stage completions.

Anadarko operates the Brookfield and Spencer wells with a 100-percent working interest (82.5-percent net revenue interest) subject to a participation agreement with Artex Energy Group LLC.

Total weighing Elgin options

PARIS -- Total is still accessing its options with regards to plugging a large gas leak at a North Sea facility which the French major says is diminishing.

One of two rigs chartered with a view to drilling relief wells also continues towards the scene of the leak from the Elgin processing, utilities and quarters (PUQ) platform but will stand off at the perimeter of an exclusion zone, a spokesperson told Upstream on Monday.

Last week Total will send a team of well control experts b y helicopter to the leaking facility and, although they returned safely, the company has yet to decide on a plan to stop the leak.

Total is considering a ‘top kill’ procedure to plug the leak using drilling mud. Simultaneously it intends to begin drilling two relief wells which would be halted should the top kill job be successful.

Transocean’s Sedco 714 rig is en route to the scene, the spokesperson said. A broking source suggested last week that it would arrive on the scene on Sunday or Monday.

The Rowan Gorilla V has also been hired by the French company with a view to drilling relief wells.

Total shut in all production at its Elgin and Franklin fields following the discovery of the leak over two weeks ago. The oil major evacuated all 238 workers from the Elgin facility and the adjacent Rowan Viking.

Anglo-Dutch supermajor Shell also pulled all workers from its nearby Shearwater platform.

ConocoPhillips begins Browse basin campaign

Karoon Gas Australia Ltd's 2012 Browse Basin exploration drilling campaign has now commenced.
The Boreas-1 exploration well spudded at 02:30 (WST) on April 5, 2012. The proposed operation is to drill a 36" hole to planned casing point, then run and cement the 30" conductor prior to drilling ahead in a 17½" hole.

Boreas-1 is located approximately 2.5 miles (4 kilometers) south of Poseidon-1 in WA-315-P on a large tilted fault block which is part of the of the north-east trending structural high of the greater Poseidon structure. The objective of the well is to test the extent, presence and quality of reservoirs within the Boreas-1 fault block.

Boreas-1 Location:
• Latitude: 13 degrees 39' 24.87170" S
• Longitude: 122 degrees 17' 52.78733" E

UPCOMING WELL PROGRAM
The exploration program, operated by ConocoPhillips, plans to utilize the Transocean Legend (mid-water semisub) rig for the entire campaign and is expected to continue through 2013.

A minimum of five wells will be drilled during the exploration program. The principal objective of the exploration program is to better define the size and quality of the hydrocarbon accumulations within the exploration permits which contain the greater Poseidon trend.

The second well, Zephyros-1, is located in permit WA-398-P on a large tilted fault block approximately 5 miles (8 kilometers) south west of Kronos-1 discovery location. The third well, Proteus-1, is located in WA-398-P on a large tilted fault block approximately 9 miles (14 kilometers) south east of the Poseidon-1 discovery location.

Additional well locations for the remainder of the program will be announced as they obtain joint venture approval.

ConocoPhillips is the operator of the jointly held WA-314-P, WA-315-P and WA-398-P Browse Basin permits containing the previously announced Poseidon and Kronos gas discoveries. Karoon Gas Australia Ltd holds a 40-percent interest of permit WA-315-P and WA-398-P, and a 90-percent interest of permit WA-314-P.

Anadarko makes new gas find off Mozambique

HOUSTON -- Anadarko Petroleum Corp. has scored another success in the Rovuma basin, offshore Mozambique, with a new gas find at its Barquentine-4 appraisal well.

The Barquentine-4 well – located approximately 19 miles north of the Lagosta discovery well at the southern end of the Windjammer/Lagosta/Barquentine/Camarao gas complex – encountered 525 net feet of natural gas pay.

This is Anadarko's ninth successful well in the complex, which is part of the larger Prosperidade complex that is estimated to hold recoverable resources of between 17 and 30 trillion cubic feet of gas.

Worldwide upstream M&A unconventional resource spending reached record high $75 billion

NORWALK, Conn. – Fueled by national oil companies and international buyers making acquisitions in North American shale gas, shale oil and tight oil basins, global transactions involving unconventional oil and gas resources reached a record high $75 billion in 2011, according to the IHS Herold 2012 Global Upstream M&A Review, which was just released by information and analytics provider IHS (NYSE: IHS). This figure represents 48 percent of total 2011 worldwide upstream merger and acquisition (M&A) spending

“Cross-border buyers, led by Asian-based investors, continued to stream into North American unconventional resource plays through asset partnerships and select corporate deals, with a bullish view on potential LNG exports to the Asia-Pacific region in the coming decades,” said Christopher Sheehan, director of energy M&A research at IHS. “In 2011, high crude oil and international gas prices were juxtaposed against persistently depressed North American natural gas prices, leading to a 15-year high in deal counts outside North America.”
Total global upstream M&A transaction value, including corporate mergers, fell 30 percent from an all-time high in 2010, which was driven by massive asset divestiture programs. Corporate deal value in 2011 rose 19 percent to more than $58 billion, including BHP Billiton’s $15 billion takeover of unconventional resource-focused Petrohawk Energy, the first upstream corporate merger greater than $10 billion since the ExxonMobil-XTO deal in late 2009.
Sheehan noted the deal flow also increased in all regions outside the U.S. and Canada as international investors pursued the prolific oil discoveries that have occurred in recent years in regions such as deepwater Brazil and Africa. In Australia, the coal seam gas-to-LNG market consolidated further, and evolving markets such as Iraq’s Kurdistan region welcomed new entrants through M&A.
Said Sheehan: “These areas are enticing international investors who continue to face access barriers in established hydrocarbon basins such as Venezuela, Russia and in the Middle East. World-class oil assets continue to be highly sought after by both cash-rich national oil companies and international integrated companies that continue to struggle to materially grow reserves through the drill bit.”
In the international gas markets, growing Asian LNG demand will increasingly fuel merger and acquisition activity from Australia to East Africa. In these regions, Sheehan believes small-cap international E&Ps that own huge resources, but lack sufficient development capital, will increasingly be takeover targets, particularly as the European debt crisis has impacted their access to and the costs of capital.
U.S. transaction value in 2011 reached a 10-year high despite a lower deal count than the prior year, as large joint-venture asset acquisitions by overseas buyers fueled mergers and acquisition activity. The U.S. accounted for approximately 50 percent of global upstream M&A spending, well above its historical average. Producing oil assets commanded a large deal price premium to gas properties, with a growing focus on liquids potential in emerging basins.
“Established shale gas and emerging shale oil and tight oil plays in the U.S. are attractive to foreign buyers since these plays offer massive discovered resources with low exploration risk in a country with relatively high political and fiscal stability, versus other global regions such as the Middle East, Africa and Latin America. The longer-term potential of LNG exports to the Asia Pacific from Canada and the U.S. is a strategic driver of many of the cross-border shale gas acquisitions in North America,” Sheehan added.
Meanwhile, decade low deal pricing for conventional gas assets, and the upside from liquids-prone plays, attracted increased M&A spending by private equity buyers seeking to benefit from a longer-term North American natural gas price revival.
Continued uncertainty in commodity price direction, wide-ranging geographic oil and gas price spreads, fragile global economic conditions, and limited or higher cost access to capital for many upstream companies are challenging strategic decision making in the industry and causing a consensus gap between potential buyers and sellers.
Added Sheehan: “We believe that, in the present volatile environment, global upstream M&A consolidation will accelerate in 2012 and beyond as the well-financed ‘haves’ prey on the capital-constrained ‘have-nots.’ Many of the latter are key holders of massive undeveloped gas and liquids resources that can provide material growth opportunities or establish a strategic foothold in emerging basins. Consolidation, including a rise in corporate takeovers, will be led by national oil companies and sovereign-wealth funds, major integrated companies, global industrial conglomerates, and private-equity investors, who all seek opportunistic purchases of capital-intensive oil and gas assets and financially strained companies that own prolific resource potential.”
IHS provides comprehensive analyses of 2011 transactions and forward-looking insights into 2012 and beyond in the just-released IHS Herold 2012 Global Upstream M&A Review. This year, the study identifies thirty key regional plays across the globe that need to be on the radar of oil and gas M&A market participants, including buyers, sellers, advisors, and capital providers.
The regional profiles in each of the study sections are drawn from the IHS Herold Company Research module Regional Play Assessments (RPAs), which use IHS proprietary geological data to independently value the resource potential and investment opportunities in established and emerging oil and gas plays around the world. This research features detailed analysis of company well results, acreage positions, drilling activity, financial strength, play economics and company and asset valuations.

Exxon, BP, Conoco agree to initial Pt. Thomson gas production by early 2016

HOUSTON -- Exxon Mobil, ConocoPhillips and BP have agreed to start producing natural gas at their Pt. Thomson development in Alaska by May 2016 at the latest, according to a settlement agreement between the companies and the state of Alaska.
The oil companies will be allowed to continue developing Pt. Thomson in exchange for the commitment to begin producing natural gas and condensate by end of the winter season of 2015-2016. The initial production system, which could be later ramped up, is being designed to produce about 200 MMcfd of gas and 10,000 bpd of condensate. Also, a pipeline is being designed to move about 70,000 bpd of liquid hydrocarbons from Point Thomson that will help move the fossil fuels to the Trans-Alaska pipeline. The companies also agreed to "undertake work for commercialization of North Slope gas," the document said. The Alaska government has said it would like to see a liquefied natural gas development to ship local natural gas to Asia. If a deal to sell the natural gas hasn't been struck by June 2016, the companies agreed to expand the amount of natural gas condensate shipped to the Trans-Alaska pipeline by 20,000 to 30,000 bpd. Point Thomson gas could also be delivered to oil operations in Prudhoe Bay for injection into the large oilfield there, the document said. The agreement said that a "major gas sale off the North Slope of Alaska is a primary goal of the parties."
The settlement puts to rest a long-standing dispute between the oil companies and the Alaska government. In 2006, the state revoked the Point Thomson license it had assigned Exxon and its partners alleging they hadn't moved quickly enough to develop the resource.

BP, BG, Total, Tullow awarded blocks offshore Uruguay

MONTEVIDEO, Uruguay -- ANCAP received 19 offers for offshore oil exploration and production in 8 of the 15 offered blocks, by 9 of the 11 oil companies qualified for the bidding process. There was competition between three or more companies in 5 of the blocks offered. More than 50 percent of the area from the bidding process will develop exploration works by the four new companies (the British companies BP and BG, the French company Total and the Irish company Tullow Oil) that adds to the work already being done by Petrobras, YPF, and GALP in the Uruguayan offshore.
Blocks from the three Uruguayan offshore basins were awarded: the basins named Oriental del Plata, Punta del Este and Pelotas, this last who received particular interest from the oil companies.
After the assessment of the winning bids and the approval of the Uruguayan government ANCAP will sign the contracts with the winning companies with a deadline of September 2012.

LNG Energy completes Sling seismic program

CALGARY -- LNG Energy announced the successful completion of the 2011 "Sling" 2D seismic program on its 100 percent held PPL 319 licence, onshore Papua New Guinea.

PPL 319 is in the lowland area of the Papuan fold and thrust belt between several substantial oil and gas fields and is on-trend with Oil Search's Kutubu and Gobe producing oil fields. Ninety-one miles (148 kilometers) of 2D data was acquired during the periods April-June and October-December 2011, with interpretation in early 2012. The survey comprised 41 miles (67 km) of alluvial river flats around the Kikori River, 36 miles (59 kilometers) of karst limestone and 13 miles (22 kilometers) of volcanic terrain.

PPL 319 contains proven, mature Late Jurassic (Kimmeridgian) Lower Imburu Fm. source rocks that are presently generating hydrocarbons from local kitchen areas. It is believed that PPL 319 contains clastic reservoirs of Lower Cretaceous-Upper Jurassic age (Toro-Hedinia-Iagifu sandstones), particularly in the western part and the Kikori Bend area of the PPL 319 Licence. The company believes the presence of source, seal, reservoir and structural traps on PPL 319 are extremely prospective in this proven hydrocarbon trend.

There has been little exploration activity in PPL 319 over the 20 years prior to its acquisition by LNG, despite the prospective location of the licence. In 2010, LNG undertook a HRAM/AIRGrav survey, flown by Sander Geophysics Ltd that, among other structures, identified a large structure between PPL 319 and InterOil's PPL 237. This structure was subsequently confirmed by the 2010 2D Poroman seismic survey on the eastern boundary of PPL 319.

This aeromagnetic/gravity survey and the reprocessed Base Resources 1988 Victory Junction seismic data identified another prospective area referred to by LNG as the "Kikori Bend" area near the western part of PPL 319, on trend with the Gobe oil field. The 2011 Sling seismic survey was undertaken over the entire western section of PPL 319 including the Kikori bend area and clearly identified the Tuyuwopi prospect.

The extensional fault related prospects identified at Kikori Bend are early rift-related structures that exhibit little late stage structural movement. These preserved extensional traps have increased longevity and the proven Jurassic source rocks are in the oil window in this area. The traps are believed to have been charged early as oil was generated, have good top seals and are less likely to be affected by late stage uplift or subsequent gas charge. LNG believes the reservoir will be oil charged and is undertaking a detailed analysis of the traps identified. As with many PNG discoveries, LNG anticipates multiple pay zones in the sandstone reservoirs of Lower Cretaceous-Upper Jurassic age.

Logistically, PPL 319's Kikori Bend area is strategically placed in the lowlands with river, road and helicopter access. It is in close proximity to Oil Search's existing crude export pipeline and the Exxon LNG Gas line  which traverse part of PPL 319. Also within PPL 319 is Kopi base, a hub for Exxon and Oil Search's oil and gas development activities. In a country where logistics often define economics, PPL 319 and specifically the Tuyuwopi prospect are favorably situated.
"The Sling seismic program has identified the very attractive Tuyuwopi prospect. Given the location and surrounding hydrocarbon production trends, we are very encouraged by this target and are developing our work program around it," said Dave Afseth, President and CEO. "Additional leads have also been identified that will be further investigated."

FMC Technologies signs $1.5 billion pre-salt subsea tree agreement with Petrobras

HOUSTON -- FMC Technologies, Inc. announced today that it has signed a four-year agreement with Petrobras for the supply of pre-salt subsea equipment. The total award would result in approximately $1.5 billion in revenue to FMC Technologies if all of the subsea equipment included in the agreement is ordered. The initial call-off has an approximate value of $900 million in revenue to FMC and includes 78 subsea trees.

FMC’s total scope of supply could include the delivery of up to 130 subsea trees, subsea multiplex controls and related tools and equipment. The tree systems are for use offshore Brazil in water depths up to 8,200 feet (2,500 meters). The equipment will be engineered at FMC’s South American Technology Center and manufactured at FMC’s subsea facility, both of which are located in Rio de Janeiro, Brazil. The subsea trees will achieve 70% Brazilian local content and deliveries are scheduled to commence in 2014.

"We have made significant investments in our Brazilian operations to enable large scale product manufacturing and the development of new technologies,” said Tore Halvorsen, FMC’s Senior Vice President, Subsea Technologies. “Petrobras has awarded more than 500 subsea trees to our operations in Brazil over the past 30 years, and we are pleased to support them in developing their pre-salt reservoirs.”

BOEM releases Mid- and South Atlantic environmental impact statement for public comment

NORFOLK, Va. — Bureau of Ocean Energy Management (BOEM) Director Tommy P. Beaudreau has announced that the Department of Interior is taking steps to assess the conventional and renewable energy resource potential in the Mid- and South Atlantic. The draft Programmatic Environmental Impact Statement (PEIS), released for public comment, will help inform future decisions about whether, and if so where, leasing would be appropriate in these areas.
This milestone advances BOEM’s regionally-tailored approach to Outer Continental Shelf (OCS) exploration and development, consistent with the Proposed OCS Oil and Gas Leasing Program for 2012-2017, which stresses the importance of better understanding resource potential in the Mid- and South Atlantic. The draft PEIS assesses proposed geological and geophysical (G&G) activities, including seismic and other offshore surveys, in the Mid- and South-Atlantic planning areas.
Interior Secretary Ken Salazar and Beaudreau traveled to Norfolk, Va., where they met with personnel from Fugro Atlantic, which provides geotechnical, hydrogeologic, environmental and marine survey services.
“Both government and industry rely on G&G surveys, using state-of-the-art technology, for information about the location and extent of our offshore resources,” said Beaudreau. “This analysis will move us forward toward developing an updated body of scientific information about the Mid- and South Atlantic regions that will support future decisions about potential conventional and renewable resource development.”
The PEIS evaluates the potential environmental effects of multiple G&G activities in these OCS planning areas and, where needed, outlines mitigation and monitoring measures that will reduce or eliminate potential impacts.
To access the draft PEIS, go to www.boem.gov/oil-and-gas-energy-program/GOMR/GandG.aspx. The PEIS and related documents will also be available for public inspection tomorrow in the Federal Register at: http://www.archives.gov/federal-register/public-inspection/index.html.
Public meetings to receive comments are scheduled in Jacksonville, Fla.; Savannah, Ga.; Charleston, S.C; Norfolk, Va; Wilmington, N.C.; Annapolis, Md.; Wilmington, Del; and Atlantic City, N.J., to allow the public to comment on the draft PEIS and assist BOEM in developing the final PEIS. The complete public meeting schedule is available online at: www.boem.gov/oil-and-gas-energy-program/GOMR/GandG.aspx.