Ecuador expects to raise block 6 gas output by 61% next year

QUITO -- Ecuador expects to increase its natural gas output in block 6, in the Amistad field, by 61%, to 100  Mcfpd by the end of next year, state run company Petroecuador said.In a press release, the company said four new development wells will be drilled in the field, thanks to a rented rig that recently arrived in Ecuador and expected to start operations in December.
The rig was rented by Petrex, a unit of Italy's Eni, that will run the operations over 18 months.
The cost of renting the rig is about $48 million and includes perforation of two additional exploratory wells and a workover of another two.
Petroecuador also aims to raise gas production from the field to 85 Mcfpd from the current 62 Mcfpd by the end of this year.
Last March, Petroecuador said it had upgraded the size of the reserves in the Amistad field to about 1.7 Tcf of natural gas, following a review and reinterpretation of seismic testing in the Amistad Norte, Santa Clara, BBJ, BBJ Sur and Amistad Suroeste areas.
The Amistad gas field was formerly operated by a local unit of Noble Energy, but Petroecuador took it over after the U.S. company refused in 2010 to change its production sharing contract to a new service agreement.

Cnooc and CPC plan joint deepwater exploration pact

TAIPEI -- State controlled energy firms in China and Taiwan are preparing to jointly explore for natural gas in deepwater in the Taiwan Strait, having failed to make significant shallow-water finds despite nearly a decade of prospecting together.
Chinese oil and gas giant Cnooc and CPC are now drawing up a pact to jointly explore the northern end of the 180 km wide Taiwan Strait, and may invite a foreign partner to join them, a CPC official told the Wall Street Journal. He declined to be named.
Energy-deficient China's search for offshore oil and gas reserves has pit it against several of its neighbors, resulting in naval jousting with Japan, Vietnam and the Philippines near disputed islands and atolls.
CPC has been working with Chinese oil companies in several overseas exploration ventures for over a decade. But since China friendly Ma Ying Jeou became Taiwan's President in 2008 and the subsequent signing of a landmark trade pact with China, both Beijing and Taipei have been expanding economic cooperation.
Large gas reserves have already been found in undisputed Chinese waters south of Hong Kong by Husky Energy, working with Cnooc's listed unit, Cnooc. Gas from their Liwan field is due to be piped onshore from late 2013.
No other major discoveries have been made in the South China Sea since then, and in the meantime China's energy deficit has resulted in soaring natural gas imports in the first nine months of 2012 they rose 35.5% to 30.5 Bcm.
Taiwan imports more than 95% of its energy needs, shipping in 14 to 15 Bcm of LNG annually, mostly from Qatar, Indonesia and Malaysia.
The new Cnooc-CPC project follows the failure a 2002 Cnooc-CPC joint venture to find gas under shallow waters in the southern end of the Taiwan Strait and the Chaozhou Shantou Basin off the coast of China's Guangdong province, officials at the two energy firms said. That deal is due to be terminated later this year.
Under the new deal, the CPC official said, Cnooc and CPC will explore off the coast of Keelung and Hsinchu counties of Taiwan. A formal agreement is expected by late 2013.
Cnooc is transforming itself from a shallow water domestic oil producer to a global player with deepwater, unconventional and conventional hydrocarbon assets in countries ranging from Uganda to Argentina and the United States
In July, Cnooc agreed to acquire Nexen for $15.1 billion, which if approve by the government will allow it to absorb deepwater drilling technology Nexen is using in six Gulf of Mexico prospects.
Cnooc is now working domestically with foreign partners in at least 11 deepwater projects in an effort to grow its oil and gas reserves at home.
All foreign companies exploring in deepwater in South China Sea have signed production sharing contracts with Cnooc, which retains the right to take a majority interest in any commercial oil or gas discovery.
However, it isn't clear what arrangement will apply to the new Cnooc-CPC joint venture. Among international energy majors active in the South China Sea are Chevron, BP and ENI.

Occidental awarded $1.77 billion in Ecuador case

WASHINGTON DC -- A World Bank arbitration tribunal has aawarded Occidental damages of $1.77 billion in a claim the United States oil company brought against the government of Ecuador, according to the ruling posted on the International Centre for Settlement of Investment Disputes website.
The Washington based arbitration tribunal ruled that Ecuador illegally nullified Occidental's exploration and production rights in 2006, violating the Ecuador Bilateral Investment Treaty.
The country violated the treaty by "failing to accord fair and equitable treatment to Occidental's investment," and by "expropriating" the company's investment, according to the written ruling released by the tribunal.
Ecuador canceled Occidental's operating contract in May 2006, during the administration of President Alfredo Palacio, alleging that Occidental broke the terms of its contract by transferring a 40% stake to Encana without obtaining approval from the country's energy ministry.
The tribunal agreed that Occidental did fail to get approval for its farm out agreement, so the $1.77 billion award is a 25% reduction from what the tribunal otherwise would have awarded.
The tribunal also ordered Ecuador to pay interest on the award at the rate of 4.188% per year, compounded annually from May 16 of 2006. Ecuador's government, currently led by President Rafael Correa, has taken a hard-line stance with resource-extraction companies operating in the Andean nation, legislating to increase the government's control of production.
Mr. Correa told to reporters in Quito that the Andean country would ask for the ruling to be declared null. Mr. Correa said the country is reviewing the ruling, although there are "unacceptable things" and his government "will appeal" the tribunal decision and "will ask to annul it."
Previously, the office of Ecuador's attorney general said the government "categorically rejects this award," claiming the annulment of Occidental's contract in Ecuador was "in compliance with our domestic laws and the contract." The attorney general's office said it will make an official announcement, although it added Ecuador respects domestic and international laws and investment treaties.
Raymond James analyst Pavel Molchanov said the tribunal has no mechanism to enforce its ruling if Ecuador doesn't comply. The Ecuadorean government previously has said it would pay up to $417 million, and Mr. Molchanov said Occidental may be unable to recover more than that.
I think Occidental is going to find it very difficult to make Ecuador pay anything more than what Ecuador wants to pay, he said.

GE technology to power Cheniere Energy’s LNG export facility in Louisiana

LONDON -- GE Oil & Gas will supply gas compression trains for Cheniere Energy’s Sabine Pass liquefaction expansion project in Cameron Parish, La., about 170 miles west of Baton Rouge. Adding liquefaction capabilities will transform the existing Sabine Pass LNG terminal into the first LNG terminal capable of importing and exporting LNG in the U.S.

GE will supply 12 PGT25+G4 aeroderivative gas turbines to drive the first two liquefaction trains of the Sabine Pass Liquefaction Project currently under construction. Each train will have the capacity to produce approximately 4.5 million mtpa of LNG. Cheniere has received regulatory approvals from the Federal Energy Regulatory Commission to construct up to four liquefaction trains at Sabine Pass. Cheniere is expected to reach a final investment decision on its third and fourth liquefaction trains in the first quarter of 2013, with construction of those trains expected to commence shortly thereafter.
GE’s PGT25+G4 aeroderivative gas turbine, which has been selected for the Sabine Pass liquefaction project, features high efficiency and reliable performance. The G4—derived from CF6 aircraft engines—contains a rugged GE high-speed 34-megawatt gas turbine, the LM2500+G4, coupled with a two-stage high-speed power turbine module with increased flow capacity. A highly efficient machine for mechanical and generator drive applications, the PGT25+G4 was developed based on GE’s extensive experience with heavy-duty gas turbines.
“We’re pleased that our well-proven technology has been selected for the Sabine Pass liquefaction project. We have been able to build a strong presence in the LNG sector by leveraging our gas turbine, compressor and offshore production technology for many of the world’s leading LNG projects,” said Prady Iyyanki, president and CEO—turbomachinery for GE Oil & Gas.
“Technology innovation and economies of scale have been the two key contributors to the oil and gas industry's progress. GE Oil & Gas has played a key role in the evolution of LNG technology. Our sustained commitment to innovative design and world-class engineering and our production and testing capabilities have allowed us to push the envelope of highly reliable, advanced LNG solutions,” added Iyyanki.

Uruguay signs $1.65 billion in offshore exploration deals

MONTEVIDEO -- Uruguay's government has signed offshore exploration deals with four oil and gas companies that have committed to invest $1.65 billion over the next three years.
The companies include BP, BG, Total, and Ireland's Tullow Oil. They will join Uruguay's state-owned energy company, Ancap, to explore in eight offshore blocks, according to a statement on the Uruguay president's website.
The blocks are located in waters that range from 500 m to 2,500 m deep. BP and BG will each explore three blocks, while Total will explore one and Tullow another.
"This is the most significant event in the search for energy resources in recent years," Industry, Energy and Mining Minister Roberto Kreimerman said in the statement.
Mr. Kreimerman said the projects aim to diversify Uruguay's energy matrix. "We have the chance for a country that is not an oil producer to have new wealth through this exploratory work, which will be done over the next three years, as well as the exploitation that follows," he said.
Mr. Kreimerman expects the drilling work to begin in mid-2013. He also said that by 2015 half of Uruguay's energy matrix will come from renewable energy.

Tanzania delays offshore oil and gas licensing round

KAMPALA, Uganda -- The Tanzanian government said that it would delay a licensing round for up to nine deep sea oil and gas blocks, previously slated for this month, to allow parliament first to ratify a new natural gas policy next month.
In a statement, the state-run TPDC said that the delay will allow the policy to be ratified before the start of the next round.
"As TPDC is the key player in the preparation and consultation of this policy document, their management and staff will be unable to attend the previously scheduled roadshow events throughout september and october," TPDC stated.
The licensing round will include nine blocks sitting between 1,200 m and 3,500 m of water depth. The blocks on offer include new areas and blocks that have been relinquished by current operators.
According to TPDC, despite the postponement, bid round data packages will be available for review and purchase by the end of september. "This will allow potential investors in Tanzania an extended the time period to evaluate the technical data and assess the prospectivity of the nine blocks on offer," TPDC said.
Tanzania continues to attract international oil and gas companies following a spate of huge natural gas discoveries. In june, the country announced that new natural gas discoveries had pushed its reserve estimates up to 28.7 Tcf from 10 Tcf.
The East African nation is trying to revamp its natural resource laws and policies to ensure that it "benefits" more from the recent gas discoveries.
In July, the government announced that it would renegotiate the production-sharing agreement with Pan African Energy, which operates the country's largest gas field Songo Songo to enable TPDC to get "better profit-sharing arrangements".
Among the companies with oil and gas exploration licenses in Tanzania are ORC, Statoil and Exxon Mobil.
The United States geological survey estimates that East Africa's coastal region holds up to 441 Tcf of natural gas.

U.S. offshore leasing plan limited to explored areas of Gulf of Mexico and Alaska Arctic

WASHINGTON – Secretary of the Interior Ken Salazar and Bureau of Ocean Energy Management (BOEM) Director Tommy Beaudreau today announced the release of a proposed final offshore oil and gas leasing program for 2012-2017 that is mostly limited to the already-explored areas of the Gulf of Mexico and Alaska Arctic.
The 15 scheduled potential lease sales contained in the plan will occur in six planning areas – the Western and Central Gulf of Mexico, the portion of the Eastern Gulf Of Mexico not currently under Congressional moratorium, and the Chukchi Sea, Beaufort Sea and Cook Inlet Planning Areas offshore Alaska.
In the Central and Western Gulf of Mexico Planning Areas, the Proposed Final Program includes annual area-wide sales of all available, unleased acreage, as has been the typical practice in the Central and Western Gulf of Mexico. Additionally, two sales are scheduled within a portion of the Eastern Gulf of Mexico Planning Area.
The Proposed Final Program re-affirms existing protections for Arctic coastal areas by continuing to exclude certain areas from leasing, including a 25-mile buffer area near the coast of the Chukchi, as well as two subsistence whaling areas in the Beaufort near Barrow and Kaktovik, Alaska. The program also identifies an additional exclusion area in the Chukchi, near Barrow, that will not be made available for leasing because of input received from Native Alaskan communities and because the area is known to be of particular importance for subsistence hunting and fishing. With respect to all other areas in the Arctic that are open to oil and gas exploration and development in the Proposed Final Program, BOEM will identify targeted areas to offer in the lease sales based on information the agency will gather about industry interest, resource potential, subsistence hunting and fishing, wildlife, and environmental sensitivities.
As is mandated by the OCS Lands Act, the Proposed Final Program has been submitted to Congress. The Secretary may implement the Program in 60 days, however no further action is needed prior to its implementation, and BOEM is on track to hold the first sale under the new program later this year. Earlier this month, BOEM held a lease sale for nearly 39 million acres in the Central Gulf of Mexico, which attracted more than $1.7 billion in high bids for more than 2.4 million acres. That follows on a Western Gulf of Mexico lease sale held in December 2011, in which 21 million acres were offered for lease.