Total shares slump after 7 MMcfd North Sea gas leak

PARIS -- Following a three-day gas and condensate leak at its Elgin platform, French supermajor Total  said it could take several months to bring the leak under control, raising industry speculation of a huge payout bill.

Total says early reports of a subsea gas leak were incorrect and the leak is emanating at the surface at an estimated rate of 200,000 Cmd, and a 6-mile long trail of condensate has been seen on the water around the rig.

The Elgin facilities account for around 3% of the UK’s domestic gas supply.

Total said the leak may continue for up to six months, as this is how long the company estimates it will takes to drill an emergency relief well to plug the leak.

Meanwhile, Total’s share price has taken a pummeling on the French bourse, falling 6% Wednesday and a further 2.18% Thursday, over uncertainties of the costs to cap the well.

Should Total have to shut the Elgin field to cap the well, Total would take a EUR 5.7 billion hit in net present value terms, according to ratings agency Fitch, citing third party analysts. In cash terms Total has a EUR 2.6 billion stake in Elgin, and may have to reimburse its partners for their losses should responsibility for the leak fall in the operator’s lap.

WesternZagros discovers major oil column at Kurdamir-2, Kurdistan

WesternZagros Resources Ltd.  has reported a major oil discovery in the Oligocene reservoir at the Kurdamir-2 exploration well in the Kurdistan region of Iraq.
The Kurdamir-2 well has reached the intermediate casing depth of 2,812 m, and has drilled through the Oligocene interval. Wireline logs indicate a porous zone of 140 m thickness within the Oligocene interval, between 2,422 and 2,562 m, all of which is hydrocarbon bearing. Within this hydrocarbon zone, well log data indicates 22 m of gross natural gas pay above 118 m of gross oil pay. No evidence of water has been encountered within the Oligocene interval.
"We are excited to learn that the Kurdamir and adjacent Topkhana structures have a common oil leg in the Oligocene reservoir with the potential of containing a giant oil and gas field. We're even more excited by the fact that we don't yet know the full extent of the resources that the Oligocene, alone, contains," said Simon Hatfield, WesternZagros's Chief Executive Officer.
"Our 100% drilling success rate continues with this major oil discovery. The Kurdamir-2 discovery is the third high-impact discovery on our Blocks in ten months and is an important confirmation of our queue of high-quality, light oil exploration opportunities. In particular, our view is that this discovery significantly improves the oil potential of the deeper, as yet undrilled reservoirs in Kurdamir-2 and also those prospects adjacent to Kurdamir on our Garmian Block."
When the well reached a depth of 2,477 m, a drill stem test was conducted of the open hole from the base of the 13 5/8-in. liner at 2,315 m to 2,477 m, which included 55 m of the Oligocene porous zone. This test was conducted across the interpreted gas-oil contact at 2,444 m and tested 22 m of gas pay in contact with 33 m of oil pay. The test achieved a flow rate of 7.3 million cubic feet per day of gas and a stabilized flow rate of 950 bpd of 47°API mixture of light oil and condensate over the final seven hours of the main flow period. This rate was achieved through a 56/64-in. choke at an average flowing well head pressure of 650 psi and without any stimulation. There was no observed decline and no formation water was recovered during the testing.
The deeper Oligocene oil pay will not be tested at this time due to time constraints, as the well is required to drill and evaluate the deeper Cretaceous by the end of June 2012. The Company interprets these results as an additional successful confirmation of a significant oil column underlying the gas cap in the Oligocene reservoir. (The first confirmation was provided in Kurdamir-1 as disclosed in the Company's news release of December 16, 2010.)
The company interprets that since the test was conducted across the gas-oil contact, and the fact that gas flow impedes oil flow, the results do not represent the true oil rate potential of this interval. According to analysis by an independent third party engineering expert, the 33 m of oil pay tested to date is capable of flowing at rates of 4,000 bpd if isolated from the gas pay and stimulated. The Company is working with the operator, Talisman (K44) B.V., to examine options for additional cased hole testing focused on the full 118 m of gross oil pay in the Oligocene after the well has met the PSC commitments. The co-venturers are also planning a 3D seismic program and a further appraisal well to help determine the ultimate size of the Oligocene reservoir.

India awards 16 exploration blocks to local companies

NEW DELHI -- India's federal cabinet Friday approved the allocation of about half of the 34 oil and gas exploration blocks it offered for development through an auction in March 2011, while rejecting bids of companies such Essar Oil Ltd.
The South Asian nation had received bids for 33 of 34 exploration blocks auctioned in its ninth bidding round last year.
According to a government statement, the cabinet approved the award of 16 oil and gas exploration blocks and rejected bids for 14 other blocks in a late-Friday meeting. The government was to evaluate the bids and award the blocks within three months, and the entire process, including the signing of contracts, was expected to be completed within four months of the bidding round. However, because of certain security issues with some blocks the process of award delayed.
The auctions covered eight deep-water blocks, seven shallow-water blocks off both the eastern and western coasts, and 19 land blocks in Gujarat, Rajasthan, Tripura and Assam states.
India wants to fully explore its sedimentary basins by 2015, from about 65% explored so far, as it seeks to ramp up output to meet growing energy demand and reduce dependence on imports. India imports about four-fifths of its crude oil needs.
The cabinet approved award of two shallow water and two onland blocks to consortia led by ONGC. State-owned OIL led consortia got two onland blocks in the Assam-Arakan basin. Deep Energy walked away with two Cambay basin blocks while Focus Energy beat Reliance Industries to bag an area in Rajasthan. Five blocks were awarded to relative unknowns such as Sankalp Oil and Natural Resources, Pratibha Oil and Natural Gas Pvt Ltd and Pan India Consultants.

BP expands Brazilian upstream presence to explore four blocks with Petrobras

BP announced today that the Brazilian National Petroleum Agency (ANP) has approved its farm-in to four deepwater exploration and production concessions operated by Petróleo Brasileiro S.A. (Petrobras) in the Brazilian equatorial margin. BP Energy do Brasil Ltda. is taking a 40% interest in each of the blocks, located in the Barreirinhas and Ceará basins, from Petrobras.
The move will give BP access to four new concession blocks in Brazil: BM-BAR-3 and BM-BAR-5 in the Barreirinhas basin, and BM-CE-1 and BM-CE-2 in the Ceará basin. Together the blocks cover a total area of 2,113 sq km.
“BP is building on our strengths in exploration and the deepwater and these four new blocks bring exciting new exploration opportunities, adding to the already significant position we hold in Brazil,” said Bob Dudley, BP group chief executive. “I am pleased that this also deepens our strong relationship with Petrobras, one of the world’s leading deepwater operators.”
Guillermo Quintero, BP Brazil President added: “Over the past year, in addition to acquiring 10 upstream concessions from Devon Energy in May, we have made major investments in biofuels and expanded our aviation business in Brazil. I am delighted with this continued growth of our presence in Brazil.”
Following the farm-in, BP will hold concessions in 14 blocks in Brazil, operating six. BP will be a partner with Petrobras in nine of these concession areas: the Xerelete field, BM-C-34 and BM-C-35 (in the Campos basin); BT-PN-2 and BT-PN-3 (in the Parnaíba basin); BM-BAR-3 and BM-BAR-5 (in the Barreirinhas basin) and BM-CE-1 and BM-CE-2 (in Ceará basin).

Total starts up production at deepwater Usan project off Nigeria

Paris -- Total, operator of Block OML138, announces the start-up of production of the offshore Usan field in Nigeria, in line with the planned schedule. Usan is the second deep offshore development operated by Total in Nigeria, coming on stream less than three years after Akpo.

Discovered in 2002, the Usan field lies around 100 kilometers off the South East Nigerian coast in water depths ranging from 750 to 850 meters. The Usan development comprises a spread moored Floating Production, Storage and Offloading (FPSO) vessel designed to process 180 000 barrels per day and with a crude storage capacity of 2 million barrels. Its size of 320 meters long and 61 meters wide makes it one of the largest vessels of this type in the world. Development involves 42 wells that are connected to the FPSO by a 70 kilometers long subsea network.

The Usan project has involved an unprecedented level of Nigerian local content, with over 500,000 engineering man-hours and 14 million construction and installation man-hours performed in Nigeria. FPSO construction included an offshore integration of 3,500 tons of locally fabricated structures. In addition, large-scale training and capacity building programs were put in place, raising the skills of the local workforce to the benefit of future projects.

Total’s wholly owned subsidiary Total E&P Nigeria Ltd. operates OML 138 with a 20% interest, while Nigerian National Petroleum Corporation (NNPC) is the concession holder. Total’s partners are Chevron Petroleum Nigeria Ltd. (30%), Esso E&P Nigeria (Offshore East) Ltd. (30%) and Nexen Petroleum Nigeria Ltd. (20%).