Petrobras Argentina makes second major discovery in Santa Cruz

BUENOS AIRES -- Petrobras Argentina, the Argentine unit of Brazil's oil and gas company Petroleo Brasileiro, has found an estimated 6 MMboe in the province of Santa Cruz.
The discovery is the second at Petrobras's Estancia Agua Fresca concession in the province, where it already produces almost 3,000 bopd and close to 3.2 MMcfd.
Petrobras Argentina operates the concession and is a 50% shareholder in it along with Compania General de Combustibles, according to a statement Petrobras Argentina sent to the Buenos Aires Stock Exchange Tuesday.
In November, Petrobras Argentina said it would invest $800 million over the next four years in Santa Cruz.

Technip awarded contract for Ichthys FPSO unit

PARIS - Technip was awarded a services contract for the Ichthys floating production storage and offloading (FPSO) unit. The FPSO unit will be located in the Browse basin, Western Australia, at a water depth of 250 m. Technip will provide these services to Daewoo Shipbuilding & Marine Engineering (DSME).

This contract covers detailed engineering and procurement assistance for the topsides(1) facilities of the 1.2-million-bbl storage capacity Ichthys FPSO.

The Ichthys LNG project is a joint venture between INPEX (operator) and Total. Gas from the Ichthys field, in the Browse basin approximately 200 km offshore Western Australia, will undergo preliminary processing offshore to remove water and extract condensate. The condensate will be pumped to the FPSO facility anchored nearby, from which it will be transferred to tankers for delivery to markets.

The gas will then be exported to onshore processing facilities in Darwin via an 889 km subsea pipeline. The Ichthys LNG project is expected to produce 8.4 million tonnes of LNG and 1.6 million tonnes of LPG per annum, along with approximately 100,000 bbl of condensate per day at peak.

RIL scouts for additional shale gas assets

NEW DELHI -- Reliance Industries, India's second largest company by market value, is scouting for more shale gas assets in the US, Canada and Poland, investment bankers working on the potential assets said.

"RIL is looking for large shale gas assets, which will need investments of anywhere between $500 million and $2 billion," one of the bankers looking for assets said. The company has chosen not to appoint a specific investment bank, but has given indications to bankers to scout for such assets. "They have hinted at looking at assets brought to the table."
"We will not comment on market speculation," RIL spokesperson said in a email response. Shale gas will strengthen energy security for the US to a net exporter in several years.

RIl, which has more cash of R70,252 crore than its debt, has raised $1.5 billion as long-term loans through its US subsidiary Reliance Holdings USA. RIL had invested in excess of $3.5 billion for three shale gas assets in the US in the past few years.

The company has invested $2.14 billion in Pioneer shale gas fields, $1.04 billion in Chevron's shale gas field and $0.59 billion in Carrizo fields. "There has been been a seven-fold increase in RIL's share of gross production," the company told its shareholders on its website.

"Petroleum and refining, which will be the core of RIL, will be a capacity driven business with no chances of growth year after year," said Alok Deshpande, oil and gas analyst at Elara Capital, a brokerage. "In exploration and production, even with low investment, they can get a good find which can be their future growth avenues."

The US energy department is now accessing how exports could affect job creation, trade and domestic price of natural gas and is expected to release a report later this year. Some companies have been allowed to export gas in small quantities.

Cheniere Energy has been allowed to supply 3.5 million tonnes of liquid gas every year from 2017 to India's largest gas distributor Gas Authority of India. Other gas producers are pushing for exports.

The demand for gas could come from China, Japan and India. "China's large shale gas reserves could even be bigger than North America's, yet the country is arranging long-term natural gas supplies via ships and new pipelines," Peter Voser, Royal Dutch Shell's chief executive, said at an industry conference in Malaysia on June 5. "Between now and 2050, we see energy demand will double and gas will play a much larger role in meeting that demand."

The rise in Japan's demand is triggered by the closure of n-power plants following the 2011 Fukushima Daichi nuclear accident as it switches to gas to generate electricity. As India's demand for gas overshoots supply, many oil companies are scouting for gas field assets across the globe to reduce energy deficit.

On March 30, 2012, India's largest hydrocarbon explorer Oil and Natural Gas Corp signed an agreement with ConocoPhilips, America's third-largest energy company, to cooperate in areas including equity partnership in shale gas assets and deep water oil and gas exploration blocks. The Indian company will ride on the technological expertise of the US company.

RIL acquisition of shale gas assets have given them an early mover advantage with their peers in the US. One, it gives enough time to gain technological expertise and, two, prepare itself to bid for shale gas assets in India. Petroleum minister Jaipal Reddy told parliament on March 13, that his ministry is working on a strategic policy on shale gas assets and will be finalized by end of 2013 fiscal.

Chinese companies have invested roughly $17 billion in shale gas assets in the US to gain expertise before it starts exploring in their home country.

The Financial Express

Sinopec mulling large buy of Chesapeake Energy assets

OKLAHOMA CITY -- China Petroleum & Chemical Corp., or Sinopec, is considering a multi-billion-dollar purchase of Chesapeake Energy Corp. assets, and has conducted due diligence on the matter, the Financial Times reported Wednesday on its website, citing people familiar with the move.
Sinopec Chairman Fu Chengyu was in Oklahoma this week as part of the company's due diligence, the newspaper reported.

U.S. Central Gulf lease sale drew $1.7 billion in winning bids

HOUSTON  - U.S. Interior Secretary Ken Salazar said Wednesday that the first lease sale in the central U.S. Gulf of Mexico since the Deepwater Horizon oil spill drew $1.7 billion in winning bids from energy companies.
The central area of the Gulf is considered the most promising by the oil and gas industry, and has yielded a huge bounty of oil in the past two decades. It is also where in 2010, a well blow-out destroyed the Deepwater Horizon rig, killed 11 and unleashed the largest offshore spill in U.S. history.
The high demand for drilling leases in the central region underscores both its potential and the eagerness of oil and gas companies to ramp up activities in the area after months of acrimonious exchanges with U.S. authorities over tough revisions of drilling regulations.
The sum of winning bids is the fourth largest raised in a lease sale for the central Gulf, which includes waters off the coast of Louisiana, Mississippi and western Alabama. It is also the largest amount in bids in a sale held after the Deepwater Horizon incident. In December, a lease sale in the less developed western part of the Gulf raised $337 million.
Mr. Salazar, who called the sale "record-breaking," said the interest is "proof positive" that the oil and gas industry is confident it can meet new drilling rules put in place following the 2010 accident.
"The Gulf of Mexico is a crown jewel for oil production," Mr. Salazar said, adding that the total bids indicate that " this is the right place to be."
Norway's Statoil ASA (STO) offered the highest single bid, $157 million, for a block in the Mississippi Canyon area, Salazar said. Anglo-Dutch oil giant Royal Dutch Shell Plc (RDSA) submitted the highest total value of bids, $406.5 million.
If fully developed, the U.S. government estimates that the leases for sale could result in the production of up to 1 billion barrels of oil and 4 trillion cubic feet of natural gas.
At Wednesday's lease sale, 56 companies made 593 bids on 454 blocks. There were 7,250 blocks up for lease, comprising 39 million acres.
Several environmental groups filed suit in federal court seeking to block Wednesday's sale, including Oceana, the Center for Biological Diversity, Defenders of Wildlife and the Southern Environmental Law Center.
"It's premature to increase drilling in the Gulf before we know how much damage has already been done to the ecosystem," said Jacqueline Savitz, vice president for North America at Oceana. "The big question remains--can endangered species like sea turtles, and commercially important ones like Bluefin tuna, handle more drilling?"
Since 1954, the U.S. government has conducted 112 offshore lease sales, including Wednesday's sale.
The record bid for a U.S. Gulf of Mexico lease came in 1973 when a consortium of Mobil Oil Corp, Champlin Petroleum Co. and Exxon Corp. bid $212 million for a block off the Alabama coast. But entering the winning bid hardly guarantees a big payout for companies. That particular block, known as Destin Dome 162, came up with seven dry holes drilled by the companies.
In another instance, in the 1960s, Texaco Inc. spent more than $280 million on acreage that turned out to be light on oil but heavy with natural gas, which at the time was less desirable to exploration and production companies.
Another firm, Pennzoil Co., was unable to develop all of the acres it successfully bid on in the early 1970s, leading the company to sell the leases or bring in partners to develop them.

Ernst & Young: Banner year for growth through drilling

HOUSTON -  As a result of strong oil prices and technology advances making domestic shale resources accessible, the US oil and gas industry had a banner year for growth across several categories. Combined exploration and development spending increased 38% in 2011, according to Ernst & Young's annual U.S. E&P benchmark study. Oil reserves grew by 9%, or 1.7 billion barrels, in 2011, while oil production increased 3%. Gas reserves and production rose 4% and 9%, respectively in 2011. Oil and gas revenues experienced 23% growth in 2011.
"Long thought of as an oil region in decline, the combination of strong prices for oil and ever-improving technology has turned the US into a growth market," said Marcela Donadio Americas Oil & Gas Sector Leader for Ernst & Young. "The tremendous success of oil production in the Bakken formation, for example, is a true testament to the domestic opportunity and the industry's ability to act on that opportunity."
Capital expenditures
Total capital expenditures for the companies reviewed were down 16% as a result of lower property acquisition activity. But significant capital went into identifying new resources and developing existing reserves with an investment of $106.1 billion for exploration and development spending in 2011. The smaller independent producers led the growth in exploration and development spending with a 51% increase over 2010; while the large independents increased spending by 39% and the integrated oil companies increased their investments by 25%. Three companies increased exploration and development spending by more than $2 billion in 2011: large independents Occidental Petroleum and Chesapeake Energy along with Hess (an integrated). Ninety-six percent of the companies surveyed increased their capital budgets for exploration and development spending in 2011.
The cost to find and develop new reserves rose from $17.78 per BOE in 2010 to $19.38 per BOE in 2011, reflecting the higher cost of activity in the current economic environment.
Oil and gas reserves
End-of-year oil reserves increased 9% from 18.6 billion barrels in 2010 to 20.3 billion barrels in 2011. This growth was primarily driven by extensions and discoveries of 2.4 billion barrels, the highest level in five years. Oil production rose 3% to 1,403.5 million barrels in 2011.
The growth in oil reserves over the five-year period studied was driven by the independents and large independents with increases of 92% and 37%, respectively.
Led by development in unconventional shale gas or tight gas formations, natural gas reserves experienced a 4% increase to 178.2 Tcf in 2011, while gas production increased 9% to 12.9 Tcf.
"The year-over-year growth in US reserves is impressive," said Donadio. "Increases in exploration and production budgets in light of new potential resources create a very positive outlook for future production potential."
Revenues and profits
Strong oil prices drove a 23% increase in revenues from $147.8 billion in 2010 to $181.4 billion in 2011. US production costs, however, rose 27% in 2011 as the costs for labor, services and other expenses rose by $5.8 billion and production taxes increased $3.9 billion. After-tax upstream profits were $45.6 billion in 2011, an increase of 21% over 2010.

Myanmar inks oil exploration deals with international operators

YANGON -- Myanmar has signed a raft of oil exploration deals with foreign companies as the reformist government seeks overseas investment to spur economic development.
State-owned Myanma Oil and Gas Enterprise has inked nine agreements since early March to allow firms from Asia and Europe to explore for oil and natural gas, the Myanmar Ahlin newspaper reported.
"It was the first time in the history of Myanma Oil and Gas Enterprise to sign nine agreements within such a short period," the report said, without giving financial details.
"More significantly, Myanmar national companies were involved in all nine agreements as partners," it added.
The firms are EPI Holdings of Hong Kong, Geopetro International Holding of Switzerland, Petronas of Malaysia, Jubilant Energy of India, PTTEP of Thailand, Istech Energy of Indonesia and CIS Nobel Oil of Russia.
The report said the energy ministry had decided in principle to grant licenses to foreign companies to invest in Myanmar only if they cooperate with domestically owned firms.
It said 10 foreign companies were exploring for oil at 24 offshore energy fields, while eight overseas firms--as well as seven joint ventures with local companies--were exploring 20 inland fields.
"Many companies are contacting Myanma Oil and Gas Enterprise to explore for oil and natural gas by investing at other inland and offshore fields," it said.
Myanmar's reform-minded President Thein Sein said in a televised speech on Tuesday that economic development would be at the center of his next phase of reforms, which aim to boost the role of the private sector.

BP spill fine may hit $25 billion

HOUSTON--Federal regulators are seeking a settlement of $15 billion to $25 billion from BP PLC (BP) for the 2010 oil spill in the Gulf of Mexico from the ruptured Macondo well, according to report by the Financial Times over the weekend.
Analysts at Tudor Pickering Holt said the $25 billion figure is above what they have assumed BP's liability would be under the Clean Water Act. "It is encouraging that a dialog with the U.S. government appears to be open/ongoing and removal of the threat of criminal prosecution would be helpful to BP shares," analysts said.

ATP Oil & Gas resumes production at Gulf of Mexico Titan platform

ATP Oil & Gas Corporation said it has resumed production at the ATP Titan platform in the U.S. Gulf of Mexico, which was shut-in May 14 due to a temporary closure of a pipeline.
The Titan platform, which services the ATP's Telemark Hub, resumed production after the operator of the Mars pipeline temporarily completed the tie-in of a new platform, the company said in a press release. Production at Titan is proceeding as expected and will ramp up over the next few days, the company added.
ATP also announced that fracturing process on the Mississippi Canyon 941 A-2 well, which is part of the Telemark Hub, is expected to be completed before the end of June and that the well will be placed on production immediately.
ATP operates the ATP Titan and Telemark Hub which is in about 4,000 feet of water with a 100% interest.

ONGC discovers oil well in Golaghat

ONGC said it has discovered a new oil well in the Chalukpather area in Golaghat district and the oil major's Assam and Assam-Arkan basin has started drilling operations at the new site from Wednesday.
"Assam & Assam-Arakan Basin has commenced drilling operations in its new well at Chalukpather. The well will be drilled as a directional well with state-of-the-art technology, having a horizontal drift of 1,240 metres from surface location," said an ONGC official.
He added, "The well was formally spudded by Upper Assam commissioner Syed Iftekar Hussain in the presence of senior district authorities of Upper Assam districts and senior executives of ONGC. After its big find at Merapani in 2010, the ONGC is optimistic to strike it big in the nearby petroleum habitats."
Hussain said ONGC's operations in Upper Assam have resulted in significant development of the region's economy. "I wish all the best to ONGC for its petroleum business here and all communities here should share a sense of ownership with ONGC's operations, which leads to socio-economic development of local communities," he added.
ONGC's Assam & Assam-Arakan Basin manager S K Jain said ONGC is taking up exploration of oil and gas in Upper Assam aggressively. "This northeast basin is unique in the sense that there is both exploration and production of oil and gas. After a long time, the financial fortune of this basin, headquartered in Jorhat, is looking up. We are optimistic to sustain this healthy trend in the days ahead."
After the spudding of the well, a meeting was held between ONGC executives and senior district authorities. ONGC, recently crowned as the most admired company of the northeast, presented some sustainable socio-economic developmental programs to be undertaken in its operational locations to engage and enrich the local communities. The district authorities assured support to ONGC to deliver the programs professionally.
Evincing keen interest in oilfield operations of ONGC, Hussain volunteered for more such meetings between ONGC executives and district authorities on various administrative issues.