CLEAN INNOVATION Announcing the world’s first hydraulic fracturing system made from ingredients sourced from the food industry How ingredients sourced exclusively from food industry suppliers are helping produce more natural gas The world asked for cleaner fracturing chemistry and Halliburton delivered it The new CleanStim™ formulation provides an extra margin of safety to people, animals and the environment Laboratory testing indicates that it also produces higher retained conductivity than conventional fracturing fluids under many conditions The CleanStim recipe is designed for downhole use, not dinner tables But it will help satisfy the world’s appetite for natural gas See if it’s right for you Learn more at Halliburton.com/cleanstim Solving challenges.™ © 2011 Halliburton All rights reserved Hallib_OGJ_110103 12/28/10 1:35 PM International Petroleum News and Technology NEWSLETTER 28 STATISTICS | www.ogj.com Feb 14, 2011 10 LETTERS / CALENDAR 12 JOURNALLY SPEAKING 14 EDITORIAL 31 MARKETPLACE 34 EDITOR’S PERSPECTIVE / MARKET JOURNAL | Volume 109.7 27 EQUIPMENT 27 ADVERTISERS’ INDEX GENERAL INTEREST 16 Industry seeks new offshore rigs, longer onshore laterals in shale Paula Dittrick Oil and natural gas companies are asking oil service contractors for sophisticated technology to drill longer horizontal wells in onshore shale plays and for new offshore rigs that can fulfill increasingly stringent deepwater drilling safety standards and regulations 17 Ensco to acquire Pride in $7.3 billion deal 22 API: Congress, not EPA, should direct GHG policy Paula Dittrick 22 EIA: Oil demand to rise by 1.5 million b/d in 2011 24 WATCHING THE WORLD Israel reconsiders new taxes 24 New areas could expand Arctic’s oily component 25 EXPLORATION/DEVELOPMENT BRIEFS Paula Dittrick Ensco PLC agreed to buy Pride International Inc for $7.3 billion, marking the biggest consolidation in the offshore drilling industry since Transocean Ltd announced plans to acquire GlobalSantaFe Corp in July 2007 18 Supply, demand trends still drive oil prices, Senate panel told Nick Snow The video below, courtesy of Range Resources Corp., Fort Worth, features a virtual field tour of the company’s Appalachian division CLICK TO VIEW VIDEO Visit our video library www.ogj.com/index/video.html 20 WATCHING GOVERNMENT Canadian oil choices 21 GOP energy leaders float draft bill to halt EPA’s GHG effort Nick Snow 110214OGJ_1 2/10/11 1:11 PM we are the people of Baker Hughes and we’re ready for anything Tauseef Salma, Chief Engineer Whatever your challenge, count on Baker Hughes to build dependable We deliver what’s promised and stand behind solutions tailored to your specific needs our performance To see how Tauseef and From reliable equipment to disciplined personnel, our ongoing commitment the Baker Hughes team integrate reliability to best practices, consistent procedures, and repeatable performance gives throughout our culture, starting with the you the capability you need to manage your risks and make the most of technology design process, please visit us your assets at www.bakerhughes.com/tauseef www.bakerhughes.com ©2011 Baker Hughes Incorporated All Rights Reserved 110214OGJ_2 2/8/11 3:08 PM ADVERTISING SALES Houston U.S Sales Manager, Marlene Breedlove; Tel: (713) 9636293, E-mail: marleneb@pennwell.com Regional Sales Manager, Mike Moss; Tel: (713) 963-6221, E-mail: mikem@pennwell.com PennWell - Houston, 1455 West Loop South, Suite 400, Houston, TX 77027 Fax: (713) 963-6228 South / Southwest / Texas / Northwest / Midwest / Alaska Marlene Breedlove, 1455 West Loop South, Suite 400, Houston, TX 77027; Tel: (713) 963-6293, Fax: (713) 963-6228; E-mail: marleneb@pennwell.com PennWell, Houston office 1455 West Loop South, Suite 400, Houston, TX 77027 Telephone 713.621.9720 / Fax 713.963.6285 Web site: www.ogj.com Editor Chief Editor-Exploration Chief Technology Editor-LNG/Gas Processing Production Editor Pipeline Editor Senior Editor-Economics Senior Editor Northeast / Texas / 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Convention Design Inc 6F, Chiyoda Bldg., 1-5-18 Sarugakucho, Chiyoda-ku, Tokyo 101-8449, Japan, Tel: +81.3.3219.3641, Fax: 81.3.3219.3628; Kimie Takemura, Email: takemurakimie@ics-inc.co.jp; Manami Konishi, E-mail: konishimanami@ics-inc.co.jp; Masaki Mori, E-mail: masaki mori@ics-inc.co.jp Brazil Grupo Expetro/Smartpetro, Att: Jean-Paul Prates and Bernardo Grunewald, Directors, Ave Erasmo Braga 22710th and 11th floors Rio de Janeiro RJ 20024-900 Brazil; Tel: 55.21.3084.5384, Fax: 55.21.2533.4593; E-mail: jpprates@pennwell.com.br and bernardo@ pennwell.com.br Singapore / Australia / Asia-Pacific Michael Yee, 19 Tanglin Road #05-20, Tanglin Shopping Center, Singapore 247909, Republic of Singapore; Tel: 65 9616.8080, Fax: 65.6734.0655; E-mail: yfyee@singnet com.sg India Rajan Sharma, Interads Limited, 2, Padmini Enclave, Hauz Khas, New Delhi-110 016, India; Tel: +91.11 6283018/19, Fax: +91.11.6228 928; E-mail: rajan@ interadsindia.com Italy Ferruccio Silvera, Viale Monza, 24 20127 MILANO Italy; Tel:+02.28.46 716; E-mail: info@silvera.it 110214OGJ_3 Senior Writer Senior Staff Writer Survey Editor/News Writer Publisher Vice-President/Group Publishing Director Vice-President/Custom Publishing Bob Tippee, bobt@ogjonline.com Alan Petzet, alanp@ogjonline.com Warren R True, warrent@ogjonline.com Guntis Moritis, guntism@ogjonline.com Christopher E Smith, chriss@ogjonline.com Marilyn Radler, marilynr@ogjonline.com Steven Poruban, stevenp@ogjonline.com Sam Fletcher, samf@ogjonline.com Paula Dittrick, paulad@ogjonline.com Leena Koottungal, lkoottungal@ogjonline.com Jim Klingele, jimk@pennwell.com Paul Westervelt, pwestervelt@pennwell.com Roy Markum, roym@pennwell.com PennWell, Tulsa office 1421 S Sheridan Rd., Tulsa, OK 74112 PO Box 1260, Tulsa, OK 74101 Telephone 918.835.3161 / Fax 918.832.9290 Presentation/Equipment Editor Associate Presentation Editor Statistics Editor Illustrators Editorial Assistant Production Director Production Manager Jim Stilwell, jims@pennwell.com 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Addresses to: P.O Box 1632, Windsor, ON N9A 7C9 2/10/11 1:19 PM World GTL Trinidad Limited (In Receivership) Investment Opportunity Trinidad, West Indies Offers are invited for the purchase of a Gas to Liquids plant and other assets of World GTL Trinidad Limited (In Receivership) which are located in Pointe-a-Pierre, Trinidad, West Indies This Gas to Liquids plant is the first commercial gas to liquids facility in the Americas and is designed to produce between 2,050 to 2,400 barrels per day of ultra-low sulphur diesel and naphtha based on the conversion of used methanol plants to Fischer Tropsch GTL plants The major process units of the plant are a Steam Methane Reformer, an Amine Unit, a Hydrogen Prism unit, Fixed Bed FT Reactors and a Hydrotreating unit The Gas To Liquids plant is being constructed by using equipment relocated from Methanol Plants located in the United States of America and Guatemala supplemented by new equipment to convert the process from methanol synthesis to Fischer Topsch synthesis One of the assets is a gas to liquids technology with proprietary FT catalysts developed through extensive testing in pilot plants The Gas to Liquids plant is now in the completion phase with significant construction completed The Receiver is in the process of selling the plant and other related assets on an AS IS WHERE IS basis subject to the payment by the purchaser of all outstanding rates and taxes and the purchaser obtaining certification from the Trinidad and Tobago Ministry of Energy Interested parties can make arrangements for viewing and/or inspecting the plant and other assets and receiving additional information from the Receiver at the under mentioned address Offers must be communicated in writing to the Receiver and submitted in a sealed envelope addressed as shown below The Receiver is under no obligation to accept any of the offers received All correspondence and inquiries should be directed to: World GTL Trinidad Limited (In Receivership) c/o PricewaterhouseCoopers Limited GTL Drive, Petrotrin, Pointe-a-Pierre Trinidad, West Indies Attention: Mr Varune Mungal Email: varune.mungal@tt.pwc.com Tel: (868) 658-7980 or (868) 623-1361 ext 162 Fax: (868) 623-6025 110214OGJ_4 2/8/11 4:54 PM OGJ Newsletter Feb 14, 2011 ® International News for oil and gas professionals GENERAL INTEREST Q U IC K TA K E S Chevron to sell fuels, aviation business in Spain Chevron Corp agreed to sell its Spanish fuels, finished lubricants, and aviation business to Cia Espanola de Petroleos SA (CEPSA) The companies being sold are Chevron Espana SA and Chevron Estaciones de Servicio The sale is subject to regulatory approvals CEPSA plans to buy 62 Texaco-branded service stations in the Canary Islands and its aviation supply agreements at 11 airports The transaction also includes the Valencia lubricants blending plant Chevron will retain its marine lubricants business in Spain BOEMRE announces EIS for 2012-17 lease sales The US Bureau of Ocean Energy Management, Regulation, and Enforcement began environmental reviews for proposed Gulf of Mexico oil and gas lease sales during 2012-17 by announcing it would prepare an environmental impact statement (EIS) for the offerings The US Department of the Interior agency said it will propose a single, multi-tiered EIS for all proposed sales in the gulf’s central and western planning areas during the next 5-year planning period for the US Outer Continental Shelf It said federal, state, and local government agencies, and other interested parties can submit comments to help BOEMRE determine significant issues and alternatives which need to be analyzed in the EIS The agency also has scheduled public scoping meetings in Houston on Feb 15, New Orleans on Feb 16, and Mobile, Ala., on Feb 17 in conjunction with similar meetings for preparation of the overall programmatic EIS for the entire 2012-17 federal OCS oil and gas leasing program PTTF recommends against regulation of CO2 network The Pipeline Transportation Task Force’s (PTTF) research into options for a future national US carbon dioxide pipeline system found the current state-based regulatory system sufficient to handle CO2 transportation needs for the foreseeable future PTTF presented the findings in its final report, “A Policy, Legal, and Regulatory Evaluation of the Feasibility of a National Pipeline Infrastructure for the Transport and Storage of Carbon Dioxide.” Oil & Gas Journal 110214OGJ_5 For up-to-the-minute news, visit www.ogjonline.com The report noted that in response to demand for CO2 for enhanced oil recovery and other uses, the private sector had successfully constructed and is operating about 4,000 miles of CO2 pipelines in the US The task force recommended the status quo model of private sector pipeline development and state regulation be continued The report explicitly stated that “no federal role is required in order to develop CO2 pipeline projects.” It said, “The assumption that a federal mandate will produce the desired result (capture, transportation, and storage of nationally produced CO2) may not follow Other state-based regulatory solutions should be carefully considered before pursuit of an untested federal strategy that could prove harmful to future CO2 pipeline construction.” The report also urged care be taken to ensure pipelines transporting CO2 for storage-only purposes are not viewed less favorably by the public then pipelines transporting CO2 for EOR The Interstate Oil & Gas Compact Commission and the Southern States Energy Board assembled regulators, policymakers, and industry representatives to form PTTF The PTTF study focused on identifying various pipeline regulatory and business development models and the opportunities and difficulties associated with each of them EXPLORATION & DEVELOPMENT Q U IC K TA K E S Statoil to develop find near Gullfaks South Statoil plans to develop a gas and condensate discovery in the Norwegian North Sea via tieback to facilities on nearby Gullfaks South field The 34/10-53 S well confirmed about 300 m of gas pay in the Middle Jurassic Brent Group The Odfjell Drilling Deepsea Atlantic semisubmsersible rig drilled the well to 3,847 m vertical depth below sea level in 136 m of water The well, km west of Gullfaks South in an area called Rimfaks Valley, bottomed in the Early Jurassic Statfjord formation, which yielded no hydrocarbons Statoil did not formation-test the well It estimated recoverable oil equivalent hydrocarbons at 19-75 million bbl Statoil said the rig will plug the discovery well and drill a sidetrack, 34/10-53 A, to test a Brent Group prospect called Opal west of Rimfaks Valley 2/10/11 1:11 PM IPE BRENT / NYMEX LIGHT SWEET CRUDE $/bbl 105.00 102.00 99.00 96.00 93.00 90.00 87.00 85.00 US INDUSTRY SCOREBOARD — 2/14 Latest week 1/28 wk average wk avg year ago1 Change, % YTD average1 YTD avg year ago1 Change, % Product supplied, 1,000 b/d Feb Feb Feb Feb Motor gasoline Distillate Jet fuel Residual Other products 8,694 3,695 1,400 491 4,704 18,984 8,644 3,705 1,360 461 4,580 18,750 0.6 –0.3 2.9 6.5 2.7 1.2 8,689 3,700 1,396 493 4,704 18,982 8,644 3,705 1,360 461 4,580 18,750 0.5 –0.1 2.6 6.9 2.7 1.2 Crude production NGL production2 Crude imports Product imports Other supply2, TOTAL SUPPLY Refining, 1,000 b/d 5,417 2,057 9,073 2,713 2,151 21,411 5,431 2,262 8,432 2,790 1,646 20,561 –0.3 –9.1 7.6 –2.8 30.7 4.1 5,411 2,057 9,080 2,714 2,133 21,395 5,431 2,082 8,432 2,790 1,593 20,328 –0.4 –1.2 7.7 –2.7 33.9 5.3 Crude runs to stills Input to crude stills % utilization 14,374 14,766 83.9 14,126 14,070 80.0 1.8 4.9 ––– 14,374 14,766 83.9 14,296 14,603 82.7 0.5 1.1 ––– Feb TOTAL PRODUCT SUPPLIED Supply, 1,000 b/d WTI CUSHING / BRENT SPOT $/bbl 100.00 98.00 96.00 94.00 92.00 90.00 88.00 86.00 Feb Feb Feb Feb Feb Latest week 1/28 NYMEX NATURAL GAS / SPOT GAS - HENRY HUB $/MMbtu 4.60 4.50 4.40 4.30 4.20 4.10 4.00 3.90 Crude oil Motor gasoline Distillate Jet fuel-kerosine Residual Feb Feb Feb Feb Feb 340,565 230,074 165,657 42,748 41,654 Same week year ago1 Change Change 2,594 6,154 –1,579 1,021 –1,513 328,994 228,121 156,548 43,239 39,652 Change, % Crude Motor gasoline Distillate Propane Futures prices5 2/4 Change, % 23.9 27.2 44.4 22.8 23.4 26.2 45.3 25.9 90.68 4.37 87.27 4.44 14,165 8,107 7,530 530 489 4.3 3.6 4.8 1.2 1.2 Change, % 2.1 3.8 –2.0 –12.0 24.0 26.4 42.3 20.7 Change Light sweet crude ($/bbl) Natural gas, $/MMbtu –0.4 3.0 5.0 10.1 Change 3.41 –0.07 74.03 5.35 % 16.65 –0.98 22.5 –18.3 Based on revised figures 2OGJ estimates 3Includes other liquids, refinery processing gain, and unaccounted for crude oil 4Stocks divided by average daily product supplied for the prior weeks 5Weekly average of daily closing futures prices Source: Energy Information Administration, Wall Street Journal Feb Feb Feb Feb Feb ¢/gal 168.00 166.00 164.00 BAKER HUGHES INTERNATIONAL RIG COUNT: TOTAL WORLD / TOTAL ONSHORE / TOTAL OFFSHORE 3,900 3,600 3,300 3,000 2,700 2,400 2,100 1,800 1,500 300 3,226 2,898 328 Dec 09 Feb Feb Feb Feb Feb NYMEX GASOLINE (RBOB)1 / NY SPOT GASOLINE2 ¢/gal 250.00 248.00 246.00 244.00 242.00 240.00 238.00 236.00 343,159 236,228 164,078 43,769 40,141 Stock cover (days)4 PROPANE - MT BELVIEU / BUTANE - MT BELVIEU 134.00 133.50 133.00 132.50 Previous week1 Stocks, 1,000 bbl IPE GAS OIL / NYMEX HEATING OIL ¢/gal 278.00 275.00 272.00 269.00 266.00 263.00 260.00 257.00 Latest week Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sept 10 Oct 10 Nov 10 Dec 10 Note: Monthly average count BAKER HUGHES RIG COUNT: US / CANADA 1,739 1,800 1,600 1,335 1,400 1,200 1,000 800 626 557 600 400 Feb 1Reformulated Feb Feb Feb gasoline blendstock for oxygen blending 2Nonoxygenated regular unleaded 110214OGJ_6 Feb 200 11/27/09 11/20/09 12/11/09 12/4/09 12/25/09 12/18/09 1/8/10 1/1/10 1/22/10 1/15/10 2/5/10 1/29/10 11/26/10 12/10/10 11/19/10 12/3/10 12/24/10 12/17/10 1/7/11 12/31/10 1/21/11 1/14/11 2/4/11 1/28/11 Note: End of week average count Oil & Gas Journal | Feb 14, 2011 2/10/11 1:12 PM Newfield adds oil area to Arkoma Woodford play Newfield Exploration Co has begun producing oil from the Woodford shale on the far west side of its predominately dry gas play in the Arkoma basin in southeastern Oklahoma The company, which has drilled six wells in Coal County, Okla., reported a peak initial rate of 1,400 b/d of oil equivalent, 35% oil Four wells averaged 950 boe/d the first 30 days on production, 840 boe/d the first 60 days, and 760 boe/d the first 90 days The oil is 41° gravity Newfield plans to run two to three rigs and drill 12-18 wells in the oily part of the play in 2011 It has identified 100 potential well locations so far Practically all of the company’s 172,000 net acres in the overall play are held by production The leases are in Atoka, Coal, Hughes, and Pittsburg counties pressure gas” that precluded logging “Based on an initial analysis of the major step change in pressure encountered and the interpretation of the seismic, it is considered that the well may have encountered a significant hydrocarbon column in the Cretaceous “Further analysis of mudlogging and wireline data, together with gas chromatograph ratio analysis, has confirmed oil shows were encountered within thin sands in the upper part of the Cretaceous Epsilon Complex Further interpretation and calibration of the well and seismic data is required to assess fully the implications for Cretaceous volumetrics,” Bowleven said DRILLING & PRODUCTION Q U IC K TA K E S Shell drops plans for Beaufort Sea drilling in 2011 Realm Energy builds European shale acreage Realm Energy International Corp., White Rock, BC, is building a portfolio of shale gas and shale oil acreage in continental Europe, holding acreage in Poland and Germany and with more under application in other basins The company holds 465,000 net acres on two permits in the Baltic basin in northern Poland and one permit in the Podlasie basin in southeastern Poland It is completing first-year work commitments that include a geologic assessment of existing log and seismic data and designing three seismic programs It holds 15,888 acres southwest of Hanover in the middle of Germany’s Lower Saxony basin where a regional geological study should be finished by the end of February It targets two prospective organic rich shale units Also, several wells had oil and gas shows in tight sandstones The company has applied for more than 2.4 million acres in two basins in France, of which 1.65 million acres are on nine exploratory permits in the Paris basin Realm Energy is in discussions with an undisclosed integrated North American energy company and leading shale player to join it in developing the Paris basin shale oil play Realm Energy and Halliburton Consulting are evaluating shale gas and oil opportunities in other European basins This subsurface work has resulted in additional, large-scale shale exploration opportunities in respect of which Realm Energy has either submitted or is in the process or submitting new exploration permit applications High-pressure Cretaceous gas hit off Cameroon Bowleven PLC has cemented off the lower portion of the Sapele-1 exploratory well off Cameroon after encountering a high-pressure gas reservoir in the Cretaceous Sapele-1 went to a total depth of 4,733 m on Block MLHP-5 of the Etinde Permit in the Douala basin The company plans to test the well’s Tertiary discoveries and drill three firm Tertiary and Cretaceous appraisal wells and one contingent well in 2011 using an additional rig expected to arrive late this month Bowleven halted drilling due to a “rapid influx of very high Oil & Gas Journal | Feb 14, 2011 110214OGJ_7 Shell Alaska dropped its plans to drill in the Beaufort Sea this year, Shell Alaska Vice-Pres Peter Slaiby said during a Feb news conference in Anchorage The announcement came after a ruling last month revoked federal clean air permits to allow the drilling A federal environmental appeals board in January ruled the US Environmental Protection Agency needs to more extensive analysis of nitrogen dioxide emissions from vessels involved in drilling operations The ruling was based upon appeals from Alaska Native and conservation groups Slaiby said Shell’s decision to delay Beaufort exploratory drilling stemmed from “continuous regulatory delays.” Royal Dutch Shell PLC has worked for years and invested more than $50 million pursuing air permits to drill in Arctic waters off Alaska, he said Shell intends to work closely with the EPA to identify an improved process for delivering air permits for 2012, Slaiby said “Shell has dedicated significant time and resources to commencing a world-class, environmentally responsible exploration program for Alaska, and the loss of another drilling season is extremely disappointing,” he said Previously, Shell Alaska had planned exploratory drilling during 2010 in both the Chukchi and Beaufort seas, but those plans were put on hold following the oil spill in the Gulf of Mexico from the deepwater Macondo well operated by BP PLC Sen Lisa Murkowski (R-Alas.) issued a statement after Shell’s announcement Murkowski said the government’s decision could “result in all of us paying more for gasoline—not to mention the loss of jobs and revenue that responsible development brings.” “We talk a lot about the economy, but rarely our actions match our rhetoric,” Murkowski said “That’s unfortunate.” Shell Offshore Inc last year submitted an application to the US Bureau of Ocean Energy Management, Regulation, and Enforcement for a permit to drill an exploration well in the Beaufort Sea in 2011 The application was for the shallow waters of Camden Bay (OGJ Online, Oct 7, 2010) 2/10/11 1:12 PM Eni starts Nikaitchuq oil field off Alaska Eni SPA has started oil production from Nikaitchuq field off Alaska’s North Slope The company, with 100% interest, expects production to peak at 28,000 b/d and last 30 years It estimates reserves at 220 million bbl At full development, the field will have 26 producing wells, 21 water injectors, and water source and disposal wells Twenty-two of the wells will be onshore and the rest offshore, drilled from an artificial island The field lies in an average m of water Eni has completed the processing facility and 12 onshore wells It plans to drill the remaining wells by 2014 The wells have vertical depths of 4,000 ft and vertical reaches up to 20,000 ft The operator says the under-seabed pipeline bundle connecting the on and offshore facilities is the heaviest ever installed in the Arctic The processing facility can treat 40,000 b/d of heavy crude with sand and as much as 120,000 b/d of water, enabling Eni to ship sales-quality crude through the Trans-Alaska oil pipeline with no further processing Range hikes Marcellus resource, pursues Utica Range Resources Corp., Fort Worth, said its unproved resource potential rose to 35-52 tcf of gas equivalent at the end of 2010 compared with 24-32 tcfe a year earlier The company said its Marcellus shale resource potential rose to 20-31 tcfe due to higher per-well reserves It also included for the first time the unproved resource potential for the overlying Upper Devonian shale in the Appalachian basin That figure is 10-14 tcfe The remainder is attributable to the Nora area in Virginia and the Permian and Midcontinent areas where Range holds more than 560,000 net acres Range said its first Utica shale well in Pennsylvania averaged an encouraging 4.4 MMcfd of gas equivalent on a 7-day production test No Utica shale resource potential is included in the yearend estimate, but that issue will become clearer as Range and others drill more Utica wells in 2011 PROCESSING Q U IC K TA K E S Fire extinguished at Mont Belvieu complex Enterprise Products Partners LP, Houston, said Feb that it found the contract worker missing since a Feb fire at the west storage network at the company’s Mont Belvieu, Tex., complex about 35 miles east of Houston (OGJ Online, Feb 8, 2011) The worker did not survive the fire Much of the residual product in lines around the storage network burned off, and Enterprise cut off all flow of any product that was feeding the fire, a spokesman said Feb Cause of the fire will be investigated, the spokesman said, adding that the company also is evaluating the damages to the complex Previously, Enterprise reported that the main facilities at the Mont Belvieu complex “were not damaged” and “remain op- 110214OGJ_8 erational.” These unaffected systems include “the natural gas liquids fractionators, the propylene fractionators, the butane isomerization units, the octane enhancement facility, north and east facilities, and the import-export terminals on the Houston Ship Channel.” Aramco taps KBR for Jazan refinery work Saudi Aramco has let a front-end engineering and design and project management services contract to KBR for a grassroots refinery in the Jazan area of southern Saudi Arabia KBR reported crude capacity of the refinery, to be built in conjunction with a marine terminal on the Red Sea, at 400,000 b/d Aramco earlier has described capacity as 200,000-400,000 b/d Aramco says the refinery ultimately will be integrated with a world-scale power and water facility The terminal will be able to receive very large crude carriers The refinery will have berths to support product exports The refinery will be able to process Arabian crude oils and to yield about 75,000 b/d of gasoline, 100,000-160,000 b/d of ultralow-sulfur diesel, and 160,000-220,000 b/d of fuel oil, according to Aramco UAE refinery expansion contracts awarded Engineering and construction contractors for Abu Dhabi Oil Refining Co (Takreer) have awarded contracts for mass-transfer equipment to GTC Technology Korea Co Ltd., a unit of Houston-based GTC Technology International LP, as part of an expansion of the 350,000-b/d refinery at Ruwais The project is to be completed in 2013 No contract amount was announced The South Korea company will provide mass-transfer equipment for the crude distillation unit, saturated gas plant, and residue catalytic cracking unit under the subcontracts awarded by South Korean engineering and construction companies GS Engineering & Construction Ltd and SK E&C Co Ltd The scope includes engineering and fabrication of a variety of mass-transfer equipment including high-performance valve trays, structured packing, grid packing, vapor horns, and FCC feed distributors The RCCU is, according to the GTC Technology announcement earlier this month, the largest single unit of its kind in the world The contract includes a “giant‐sized pre-flash column, crude column, and residue fluidized catalytic cracking main fractionator.” The expansion includes 21 process units, off sites, and utilities, it said TRANSPORTATION Q U IC K TA K E S TransCanada begins Keystone oil deliveries to Cushing TransCanada Corp has begun commercial deliveries of crude oil to Cushing, Okla., on the second phase of its $12 billion Keystone Pipeline system The second phase is a 298-mile extension from Steele City, Neb., to Cushing and increases Key- Oil & Gas Journal | Feb 14, 2011 2/10/11 1:12 PM stone’s nominal capacity to 591,000 b/d, of which 530,000 b/d is contracted The next phase of expansion for the Keystone Pipeline system is the proposed US Gulf Coast Expansion (Keystone XL) project Keystone XL is a 1,661-mile, 36-in OD oil pipeline beginning at Hardisty, Alta., and extending southeast through Saskatchewan, Montana, South Dakota, Nebraska, and Oklahoma to delivery terminals near Port Arthur, Tex Keystone XL needs approval by the US Department of State before construction can begin (OGJ Online, Jan 27, 2011) TransCanada expects Keystone XL to enter service in firstquarter 2013, pending approval TransCanada concluded on open season in January for its Bakken Marketlink and Cushing Marketlink projects to deliver US-sourced crude from Baker, Mont., to Cushing and the US Gulf Coast Bakken Marketlink secured 65,000 b/d of firm, term contracts Cushing Marketlink will have capacity to move 150,000 b/d from Cushing to the US Gulf Coast Both Bakken Marketlink and Cushing Marketlink will use pipeline facilities forming part of TransCanada’s Keystone XL system Combined the two projects will transport up to 250,000 b/d of US crude oil production to the Gulf Coast (OGJ Online, Jan 27, 2011) LNG terminal and an interconnection with Pemex Gas y Petroquimica Basica This segment will be bidirectional and capable of transporting as much as 320 MMcfd of gas TransCanada’s Horn River pipeline receives NEB OK Egyptian gas supplies to Israel to resume Feb 17 Canada’s National Energy Board approved TransCanada Corp.’s Horn River natural gas pipeline project The pipeline will connect British Columbia shale gas supplies to TransCanada’s Alberta System TransCanada anticipates bringing Horn River into service second-quarter 2012 The $310 million, 155-km Horn River line consists of a new 36-in OD line and acquisition of an existing 24-in OD line The project will provide firm service for Alberta System gas transportation contracts exceeding 630 MMcfd by 2014 TransCanada expects British Columbia shale gas supplies to climb to more than bcfd by the end of the decade and the Horn River pipeline is the company’s second major pipeline connecting its Alberta System to these supplies The first extension of the Alberta System into British Columbia was the Groundbirch pipeline, which came into service in December 2010 Horn River and Groundbirch shippers have committed to Alberta System contracts reaching 1.9 bcfd by 2014 TransCanada plans to bring its Keystone Phase crude pipeline and Guadalajara gas pipeline in Mexico into service during 2011 Keystone Cushing (Phase 2) extends 36-in OD pipe from Steele City, Neb., to Cushing, Okla TransCanada commenced commercial operation on the 435,000 b/d Keystone Phase 1, June 30, 2010 Phase will boost capacity to 591,000 b/d The Guadalajara Pipeline will move gas from an LNG terminal under construction near Manzanillo on Mexico’s Pacific Coast to both Guadalajara and the CFE CT Manzanillo power plant The pipeline’s first segment consists of about km of 24-in OD pipeline capable of transporting 500 MMcfd to the power plant The second segment will consist of a 30-in OD pipeline extending roughly 295 km between the Manzanillo East Mediterranean Gas Co (EMG) advised Ampal-American Israel Corp that Egyptian National Gas Co (Egas) expects to be supplying pipeline gas to EMG and therefore to EMG’s Israeli clients by Feb 17 Ampal owns a 12.5% interest in EMG Ampal announced Feb that an explosion and fire in a metering station along the 10.3 billion cu m/year Arab Gas Pipeline from Egypt to Jordan, owned and operated by Egas subsidiary GASCO, had interrupted these supplies The affected GASCO station is about 30 km from the EMG line into which it feeds GASCO is repairing a 200-m long segment of its line which was damaged by heat from the explosion Neither EMG’s interconnect site its pipeline were damaged Oil & Gas Journal | Feb 14, 2011 110214OGJ_9 Plains All American plans Shafter LPG expansion Plains All American Pipeline LP reported plans to construct its Shafter Expansion Project, consisting of a 10,000 b/d LPG pipeline system and related upgrades to its Shafter LPG processing facility near Bakersfield, Calif A 5-year transportation agreement with a unit of Occidental Petroleum Corp underpins the project, currently expected to cost about $50 million Oxy also has a general partner ownership stake in Plains All American The pipeline will link the Shafter facility with Oxy’s Elk Hills gas processing plant and related infrastructure Plains has targeted a third-quarter 2012 in-service date The Shafter expansion involves building a 15-mile LPG pipeline system as well as enhancing Plains’ storage and rail capabilities at the Shafter facility The facility currently includes roughly 200,000 bbl of NGL storage and a processing facility with 14,000 b/d butane isomerization capacity and 12,000 b/d NGL fractionation capacity Plains expects to spend $30 million on the Shafter project in 2011 and the balance during 2012 Venezuela orders crude tankers from Itochu Corp Itochu Corp has won an order to supply four Aframax tankers to a subsidiary of Venezuela’s Petroleos de Venezuela SA (PDVSA) and has commissioned Sumitomo Heavy Industries to build the vessels The ships will have a capacity of 104,300 dwt each and are scheduled for delivery in 2012 The four new vessels are likely to be added to a group of PDVSA tankers that transport oil produced in Venezuela to its refineries in the US and Europe Construction of the tankers will cost ¥25 billion with funding to be provided by the Japan Bank for International Cooperation, which reportedly agreed to provide ¥20 billion The agreement follows earlier ones in 2009, when Venezuela signed 12 energy-related agreements with Japan At the time, PDVSA signed an MOU with Itochu, Mitsubishi, Itochu, Mitsui, and Marubeni regarding possible cooperation on the Mariscal Sucre LNG project 2/10/11 1:12 PM WATCHING GOVERNMENT NICK SNOW Washington Editor | Blog at www.ogj.com Canadian oil choices It was hardly surprising that proponents and opponents of the proposed Keystone XL crude oil pipeline project said that EnSys Energy’s recent analysis for the US Department of Energy supported their viewpoints TransCanada Corp., the project’s sponsor, said on Feb that the report confirmed the pipeline would help reduce US oil imports from outside North America Environmental groups said it showed US refineries really don’t need the pipeline because other routes exist So what, exactly, did the EnSys report say? Apparently, it was a little bit of both In its executive summary, the report said that inadequate Western Canadian Sedimentary Basin export capacity from 2005 to 2008 led to new export pipelines, notably Enbridge’s Alberta Clipper and TransCanada’s Keystone Mainline and Keystone Mainline Extension projects These are coming online, adding more than million b/d of capacity and creating a surplus for moving WCSB crudes across the border Capacity to get the oil to the Gulf Coast remains limited to less than 100,000 b/d, however “The future level of US refining activity is projected as relatively insensitive to the combination of pipelines available to carry crude out of the Edmonton/Hardisty area,” EnSys’s report continued “However, WCSB crude routings and future levels of WCSB imports into the US will be [more] sensitive.” 20 110214OGJ_20 20 Asian markets Canadian heavy oil exporters will have the principal choice of selling to either Asia or the US in the next 20 years, it indicated “Led by China, which has bought heavily into oil sands production, Asia constitutes the major region for future petroleum product demand and refining capacity growth and offers Canada diversification of markets,” it said Transportation costs to China, Japan, South Korea, and Taiwan via pipeline and tanker are less than for moving that same crude to the US Gulf Coast through a pipeline, it added EnSys’s study indicated that this market could absorb at least million b/d if such a route was developed, compared to the less than 50,000 b/d of WCSB crudes which move to Asia now Canadian Prime Minister Stephen Harper, at a Feb joint press availability with US President Barack Obama following their White House meeting, said that the US clearly will need more fossil fuels for the foreseeable future “The choice that the United States faces…is whether to increase its [production] capacity; to accept such energy from the most secure, most stable, and friendliest location it can possibly get that energy, which is Canada; or [acquire it] from other places that are not as secure, stable, or friendly to the interests and values of the United States,” Harper observed that fully considers demand and supply seems like the best approach.” Asked if adopting US President Barack Obama’s proposal to end current federal oil tax incentives would have serious economic consequences, Newell said that EIA is evaluating the matter and expects to issue a report Burhkard pointed out that US producers have overseas competitors which are either subsidized or fully owned by foreign governments All are contending with higher costs, he added “As oil prices rose and investment in new supplies increased for much of the past decade, so did demand for the people and equipment needed to find, develop, and produce oil,” he said in his written statement “But the previous legacy of more than two decades of low oil prices and industry consolidation meant a ‘missing generation’ in the energy chain—a generation of engineers, scientists, and others who skipped entering the petroleum industry As a result, shortages of equipment and personnel dramatically raised the cost of developing an oil field.” Burkhard said that IHS CERA’s Upstream Capital Costs Index, which he described as “sort of a consumer price index for the global oil industry,” illustrates what happened because it doubled from 2005 to 2008 “In other words, companies had to budget twice as much in 2008 as they did in 2005 to develop a barrel of oil,” he explained “Adding to the cost pressure were increasingly heavy fiscal terms on oil investments in the former of higher taxes and greater state participation globally in oil projects Costs did decline in the aftermath of the great recession and subsequent fall in oil prices, but since the middle of 2010, they have been on the rise again and consequently stand close to their peak in 2008.” Oil & Gas Journal | Feb 14, 2011 2/10/11 1:15 PM GENERAL INTEREST GOP energy leaders float draft bill to halt EPA’s GHG effort Nick Snow Washington Editor US House and Senate Republican energy leaders released a draft of their bill aimed at keeping the US Environmental Protection Agency from imposing carbon emissions limits under the Clean Air Act to address global climate change They said they were doing so to stimulate bipartisan debate Democrats immediately condemned the proposal House Energy and Commerce Committee Chairman Fred Upton (R-Mich.), Energy and Power Subcommittee Ed Whitfield (R-Ky.), and Senate Environment and Public Works Committee Ranking Minority Member James M Inhofe (ROkla.) said on Feb that their draft legislation would keep EPA from making decisions that should be made by Congress; clarify that the CAA was not intended to address climate change; halt an indirect cap-and-trade tax that would increase gasoline, fertilizer, and electricity prices; and protect US manufacturers from overreaching EPA regulations that put them at a disadvantage next to foreign competitors EPA has said that it is implementing regulations to control gases under the CAA in response to a 2007 US Supreme Court decision, which stated that the agency has that authority Federal lawmakers in both parties and the Obama administration have both said that Congress would a better job The House approved a bill by a 7-vote margin in 2009 with a provision which would have established a carbon cap-and-trade program to address global climate change, but the Senate did not act on it Instead, John D Rockefeller IV (D-W.Va.) early in 2010 proposed a 2-year delay in EPA’s implementation to give Congress time to act, while Lisa Murkowski (R-Alas.) tried to use a legislative maneuver to halt the program “With this draft proposal, we are initiating a deliberative, transparent process that we hope will prevent EPA from imposing by regulation the massive cap-and-trade tax that Congress rejected last year,” Upton, Whitfield, and Inhofe said in a joint statement “We firmly believe federal bureaucrats should not be unilaterally setting national climate change policy, and with good reason: EPA’s cap-and-trade tax agenda will cost jobs, undermine the competitiveness of America’s manufacturers, and, as EPA has conceded, will have no meaningful impact on climate In other words, [it will be] all cost with no benefit.” Halt, not delay Their bill would go beyond Rockefeller’s proposal and fully halt EPA’s effort because they believe a 2-year delay would not provide meaningful certainty for businesses creating jobs, Oil & Gas Journal | Feb 14, 2011 110214OGJ_21 21 and simply punt the decision past the next election, the three GOP federal lawmakers said The House Energy and Commerce Committee has scheduled a hearing on the proposal for Feb US Sen John A Barrasso (R-Wyo.), who serves on the Energy and Natural Resources and Environment and Public Works Committee, and 10 other Senate GOP members offered another bill aimed at halting EPA’s carbon emissions program implementation under the CAA on Jan 31 Democrats on the Senate Environment and Public Works Committee responded that Upton, Whitfield, and Inhofe’s proposal simply would roll back carbon pollution protections “Bipartisan environmental laws are now under attack,” said Barbara Boxer (D-Calif.), the committee’s chairwoman “EPA’s common-sense steps to address carbon pollution follow the law and the Supreme Court decision that the agency must consider this threat Congress should not turn its back on the American people by prohibiting EPA from doing its job to address carbon pollution.” “These attacks on the Clean Air Act will only take us backwards to a time when big polluters dirtied our air with impunity and hurt the health of our children,” said Frank R Lautenberg (D-NJ), chairman of the committee’s Superfund, Toxics, and Environmental Health Subcommittee “If Republicans want to tear down the progress we have made to make air cleaner in America, they’re going to get a fight from those of us who are committed to the public health of our communities.” Reps Henry A Waxman (D-Calif.), the Energy and Commerce Committee’s ranking minority member, and Edward J Markey (D-Mass.), the Natural Resources Committee’s ranking minority member, jointly said on Feb that Upton, Whitfield, and Inhofe’s draft bill would legislatively repeal the scientific determination that carbon pollution seriously threatens public health which EPA reached before beginning its program They cosponsored the climate change bill which the House narrowly approved in 2009 when Waxman chaired the full committee and Markey chaired its Energy and Environment Subcommittee “The Republicans have a lot of power, but they can’t amend the laws of nature,” Waxman said on Feb “Gutting the Clean Air Act is only going to make our problems worse This proposal threatens public health and energy security, and it undermines our economic recovery by creating regulatory uncertainty.” “The groundhog didn’t see his shadow today, signaling that spring is on the way,” Markey added “However, Republicans in Washington seem bound and determined to deliver an interminable winter of environmental and economic discontent for Americans who want cleaner air, water, and more clean-energy jobs created here in America.” 21 2/10/11 1:15 PM GENERAL INTEREST API: Congress, not EPA, should direct GHG policy Paula Dittrick Senior Staff Writer Congress should direct US policy on greenhouse gas emissions rather than the Environmental Protection Agency, American Petroleum Institute spokesmen told reporters during a Feb conference call from Washington, DC Khary Cauthen, API director of federal relations, said he sees growing, bipartisan sentiment among congressional members that EPA needs to be stopped from regulating GHG emissions under the Clean Air Act For instance, Cauthen said CAA never was intended to regulate stationary source GHG emissions Previously, API has asked EPA officials to reconsider using New Source Performance Standards (NSPS) under the CAA to set GHG standards Cauthen said API is concerned that “overly burdensome regulations” could hinder companies from creating jobs and spurring the nation’s economic growth Howard Feldman, API director of regulatory and scientific affairs, said EPA should finalize NSPS that remain under development before setting new GHG standards Refiners want to improve their energy efficiency in order to improve their own financial performance, Howard said API has worked with EPA to revise previous versions of the NSPS as required by the Clean Air Act “Any New Source Performance Standard must be cost effective and achievable so refineries can continue to make the changes necessary to meet the nation’s energy needs,” Howard said API supported EPA’s request for more time to issue a maximum achievable control technology (MACT) rule concerning air pollutants such as mercury and soot from industrial boilers and solid waste incinerators (OGJ, Dec 13, 2010, Newsletter) A US District Court for the District of Columbia rejected EPA’s request for an extension in a court-ordered schedule for issuing the rule The court told EPA to finalize the rule by Feb 21 Refiners already invested money into technology to make boilers highly efficient, Howard said He suggested an administrative stay might be imposed on a new boiler rule as a way to give the EPA more time to work on it EIA: Oil demand to rise by 1.5 million b/d in 2011 Worldwide oil demand will increase by 1.5 million b/d in 2011 and by 1.6 million b/d in 2012, with continued tightening of global oil markets over the next years, EIA said in its latest Short-Term Energy Outlook (STEO) In its previous STEO, released a month ago, EIA forecast this year’s global oil demand growth at 1.4 million b/d Developing countries outside the Organization for Economic Cooperation and Development will account for almost all of the growth in consumption over the next years, with the largest contributions coming from China, Brazil, and the Middle East Among the OECD regions, EIA expects that only North America will consume more oil over the next years, as demand declines in OECD Europe and Asia In the US, EIA expects oil demand to increase by 140,000 b/d in 2011, up 0.8% from last year, and by another 170,000 bbl/d in 2012 to average 19.5 million b/d Motor gasoline and distillate fuel will account for much of the growth in consumption, the report said Oil supply EIA forecasts that total oil and liquid fuels production from nonmembers of the Organization of Petroleum Exporting Countries will increase by 310,000 b/d this year, then decline slightly in 2012 Increases this year in non-OPEC oil production will be concentrated in a few countries, particu- 22 110214OGJ_22 22 larly in China and Brazil, where EIA expects each to post average production growth of 170,000 b/d Projected US oil production will decline by 50,000 b/d in 2011 and by a further 190,000 b/d in 2012 EIA expects Canadian crude production growth to average 170,000 b/d next year, while China and Brazil grow next year by 130,000 b/d and 110,000 b/d, respectively Mexico’s oil production will decline by about 210,000 b/d in 2011, followed by a further dip of 80,000 b/d in 2012 Production from the North Sea will fall by 220,000 b/d this year and by 160,000 b/d in 2012, according to the STEO EIA forecasts that OPEC crude production will increase by 400,000 b/d in 2011, followed by a further increase of 1.2 million b/d in 2012 in response to the increase in global demand for oil and limited growth in production in non-OPEC countries OPEC natural gas liquids production will increase by 700,000 b/d this year and by 400,000 b/d in 2012, and EIA expects that OPEC surplus production capacity will remain above million b/d during the next years Onshore commercial oil inventories in the OECD countries remained high last year, but reports indicate that volumes of floating oil in storage fell sharply, EIA said Now that floating storage has been reduced, EIA expects that OECD onshore inventories will decline over the forecast period Oil & Gas Journal | Feb 14, 2011 2/10/11 1:15 PM GENERAL INTEREST Projected OECD stocks will fall by about 55 million bbl in 2011, followed by an additional 60 million bbl decline in 2012 The number of days of supply will fall to 55 days from 57 days between December 2010 and the end of 2012, near the middle of the previous 5-year range, EIA said pane, flat expenditures for electricity, but lower expenditures for natural gas A forecast of milder weather in the South and the West compared with the 2009-10 winter leads to lower fuel consumption in those areas, EIA said Natural gas forecast EIA expects that 2011 US natural gas consumption will remain flat from 2010 but grow by 1% next year to 66.8 bcfd An increase in gas demand by elec- Oil price outlook EIA expects the price of WTI crude oil to average about $93/bbl in 2011, up $14/bbl from last year For 2012, EIA projects that WTI prices will continue to rise, averaging $98/bbl EIA’s forecast assumes that US real gross domestic product (GDP) will grow by 3% in 2011 and by 2.8% next year, while global GDP will grow by 3.9% and 4%, respectively, in 2011 and 2012 “There are many significant uncertainties that could push oil prices higher or lower than current expectations Among the uncertainties are decisions by key OPEC member countries regarding their production response to the global recovery in oil demand; the rate of economic recovery, both domestically and globally; fiscal issues facing national and subnational governments; and China’s efforts to address concerns regarding its growth and inflation rates,” the STEO said “In addition, even though Egypt is not a major supplier of crude oil or natural gas to world markets, the recent unrest in that country raises the concern that unrest could spread to other countries in the region with a larger role in supplying world energy markets or that key transit routes for energy and other goods could be disrupted,” EIA said EIA expects regular-grade motor gasoline retail prices to average $3.15/ gal this year, up 37¢/gal from 2010, and to average $3.30/gal in 2012 And EIA forecasts that average household expenditures for spaceheating fuels will total $991 during this 2010-11 winter season, $24 higher than a year earlier EIA projects higher expenditures for heating oil and pro- Oil & Gas Journal | Feb 14, 2011 110214OGJ_23 23 Higher Education for Energy Professionals Put yourself on the fast track to advancement with the most comprehensive and exciting training experiences available to energy professionals PennEnergy has brought together comprehensive and fully-accredited training programs specifically focused on downstream petroleum, alternative fuels, natural gas, and power Training programs are available for all stages of your career from entry to advanced levels and offered at locations worldwide including your own office Put your career on the fast 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Visit PennEnergy.com and click on “Training” for a complete listing of available programs www.PennEnergy.com 23 2/10/11 1:15 PM WATCHING THE WORLD ERIC WATKINS Oil Diplomacy Editor | Blog at www.ogj.com Israel reconsiders new taxes Government officials in Tel Aviv are apparently reconsidering their position concerning new natural gas discoveries off Israel following an alleged attack on a major gas pipeline in Egypt’s northern Sinai Desert Egyptian state media and local government officials said they suspected sabotage in the pipeline explosion at a gas terminal in Egypt’s northern Sinai Peninsula that temporarily shut down flow The incident has Tel Aviv worried as Egypt supplies about 40% of Israel’s natural gas Not least, the gas deal is a cornerstone of peaceful relations between the two countries But Israel fears Egyptian instability could render the agreement worthless, a point underlined by Israel’s National Infrastructures Minister Uzi Landau “We always hope for the good, in terms of the peace agreement that we have and with the gas commercial contract that we have, but we always have to prepare ourselves for the bad case,” Landau said Tax exemption… In fact, immediately after the explosion, Landau called for the government to exempt developers of new Israeli gas fields—including Houston-based Noble Energy Inc.—from proposed new taxes His aim, of course, is to speed up development of the offshore deposits that were discovered by Noble and its partners More to the point, Landau said that Israel must become energy independent Chances are that the country will 24 110214OGJ_24 24 indeed become energy independent in due course, given the amount of gas reported to be under Israel’s portion of the Mediterranean Sea Just last month, Noble reported an apparently major gas find with the Leviathan prospect it operates off Israel “This discovery has the potential to position Israel as a natural gas exporting nation,” said Nobel Pres and Chief Operating Officer David L Stover …welcomed by firms Altogether, Noble and its partners made three gas discoveries in the Levantine basin amounting to 25 tcf, according to Charles D Davidson, the firm’s chairman and chief executive officer Landau’s call for the government to exempt developers of new Israeli gas fields from proposed taxes will certainly be welcomed by the firms that intend to develop the offshore deposits It was just late last month that Israel’s Cabinet approved a sharp increase in taxes on profits from its recently discovered gas reserves, despite opposition from Noble and its Israeli partners The plan drafted by a Finance Ministry committee would roughly double current tax rates to collect 52-62% of revenues from gas and oil finds Now, it seems, a terrorist bomb in Egypt suddenly has the Israeli government thinking otherwise Now, it seems, gaining energy independence counts for more than a few extra shekels in the state treasury tric power producers of 2.9% and a 1.2% increase by industrial users will be partially offset by slight declines in residential and commercial consumption, EIA said, but electric power and industrial demand next year will grow by 2.9% and 1.2%, respectively Total marketed natural gas production grew strongly throughout 2010, with 4.4% annual growth Production in 2011 will slow considerably to just 0.8 %, EIA forecasts, as an increase of bcfd in the Lower 48 states is partially offset by a decline of 0.4 bcfd in the Gulf of Mexico Increasing consumption, especially in the electric power segment, will contribute to higher prices and more economic incentive for producers to resume drilling, according to the STEO Total US gas production will increase 1.1% in 2012, as Lower 48 production is expected to increase throughout 2012 and federal Gulf of Mexico production is forecast to decline by 0.4% in 2012 The Henry Hub spot price averaged $4.49/MMbtu in January, up 24¢/MMbtu from the previous month EIA forecasts that the Henry Hub spot price will average $4.16/MMbtu in 2011, down 22¢/MMbtu from the 2010 average EIA said it expects the gas market to begin to tighten in 2012, with the Henry Hub spot price increasing to an average of $4.58/MMbtu for the year New areas could expand Arctic’s oily component The Arctic, thought to be natural gasdominant on the basis of limited exploration, could become more oily as more of the region is more fully explored, delegates at the Arctic Technology Conference were told Feb in Houston The oil and gas industry must over- Oil & Gas Journal | Feb 14, 2011 2/10/11 1:15 PM GENERAL INTEREST come negative stereotypes and expectations in order to gain access to vast Arctic resources, another speaker said Prudhoe Bay field and its satellites on Alaska’s North Slope are the major exceptions to the gas-prone nature of the explored parts of the Arctic, said Marc Blaizot, Total SA senior vice-president, exploration But virgin Arctic basins cover an area five times the size of Texas, he noted More liquids could be found as exploratory drilling moves from the shelves into deeper water, where no drilling has occurred so far, and around the rims of basins where liquids might have been displaced by gas generation as in the case of giant Snohvit field in the Hammerfest basin off Norway, Blaizot said The Yamal Peninsula/Kara Sea area off northern Russia, where two supergiant gas fields were discovered in the 1980s, is one area that has basin characteristics similar to those of Hammerfest, he said Total’s studies indicate that oil discoveries can be expected both to the north and south around the edges of the Yamal/Kara area, as well as off North America and Greenland, Blaizot said When Arctic deepwater drilling commences, it will likely be off North America and could involve two to four operational seasons for staging and single-well costs of $200 million spread over groups of participants, the speakers said Industry may be more likely to gain access to Arctic resources if it emphasizes preserving the environment and livelihoods of local populations, said Mark Shrimpton, senior associate, Stantec Consulting Ltd., St John’s, Newf Oil and gas activity is viewed in many areas as a threat, not an opportunity, he said Shrimpton noted that Newfoundland and Labrador has grown from a bankrupt province in the 1930s to today when 40% of its gross domestic product comes from oil, gas, and mining The Arctic has a permanent population of million in five countries whose emphasis is on preserving their environment and livelihoods Unless industry trumpets the positive effects of industrial development such as those that have elevated Newfoundland, it faces consequences such as moratoria, long waits to obtain approvals, and limited access, Shrimpton said EXPLORATION/DEVELOPMENT BRIEFS Brazil Colombia OGX Petroleo e Gas Participacoes SA, Rio de Janeiro, said the 1-OGX-28D-RJS well on the BM-C-41 block in the southern Campos basin off Brazil intersected a 52-m hydrocarbon column with 24 m of net pay in Albian carbonates The well is on the Illimani prospect 80 km off Rio de Janeiro state in 126 m of water OGX holds 100% interest in the block OGX, which didn’t disclose the depth of the find, said drilling is to continue to 3,700 m Ecopetrol SA reported an oil discovery at the Tinkhana-1 well in the Area Occidental block in Colombia’s Putumayo basin The discovery, in the Orito municipality 4.8 km northeast of Quriyana field, tested at 140 b/d of 25° gravity oil from the Lower Caballos TD is 6,812 ft Ecopetrol has 100% interest in the area under the western area production agreement with Colombia’s National Hydrocarbon Agency Bahamas Congo (former Zaire) Bahamas Petroleum Co PLC expressed encouragement at early interpretation of 1,120 km of 8-km cable seismic on its southern licenses off the Bahamas The survey confirmed the presence of multiple prospects, some of which are four-way closures while others are stratigraphic-structural traps BPC has let a seismic processing contract to Spectrum Geophysical The prospects identified from shipboard analysis validate the presence of the leads identified in the pre-1987 evaluation, BPC said SOCO International PLC has plugged and abandoned the Bayingu-1 exploratory well on the Nganzi block onshore Congo (former Zaire) The well, 35 miles inland from Cabinda’s Malongo terminal, encountered oil and gas shows in the primary and secondary reservoir targets Reservoir sands at the primary Lower Bucomazi target were poorly developed, and the residual nature of the oil shows in the secondary Chela formation indicates lack of closure at this location Morocco San Leon Energy PLC let a contract to Fugro Robertson to reprocess seismic on the Foum Draa and Sidi Moussa Oil & Gas Journal | Feb 14, 2011 110214OGJ_25 25 25 2/10/11 1:15 PM GENERAL INTEREST licenses off Morocco The contractor will reprocess 1,500 sq km of 3D data on Foum Draa and 2,000 km of 2D data on Sidi Moussa The reprocessing will tie in information from the existing RAK-1 and Ifni Marine-1 wells The work is to be completed by the end of the 2011 second quarter Multiple prospects have been identified on each license, nine of which have resource potential greater than 50 million bbl Namibia UNX Energy Corp., Calgary, let a contract to Petroleum GeoServices to shoot 1,125 sq km of 3D seismic in the Orange basin east of Kudu gas field off southern Namibia Shooting is to start in mid-February 2011 on blocks 2815, 2816, and 2915 Survey size is roughly twice the minimum required work commitment The three blocks collectively cover 16,026 sq km along the marine boundary with South Africa UNX operates the blocks with 90% working interest Spain The government of Spain has awarded the Cairn Group two hydrocarbon exploration licenses in the Gulf of Valencia off Spain The licenses cover 3,992 sq km in five contiguous blocks in 50 m to more than 1,000 m of water Cairn has 100% interest in the blocks pects, and analogies with neighboring producing basins Data rooms will be available Feb 14-16 Zambia The Zambian Ministry of Mines and Minerals has awarded Frontier Resources International PLC petroleum exploration Block 34 in Zambia The license covers 6,400 sq km in the Kafue Trough 150 km southwest of Lusaka Frontier Resources said the area has no prior hydrocarbon exploration and may form part of a southwestern extension of the East African rift system The company will proceed to complete the license application process including opening an office in Lusaka Block 34 is the company’s first acreage in southern Africa, where it plans to pursue more opportunities Newfoundland Dragon Lance Management Corp has spud the Shoal Point 3K-39 exploratory well in western Newfoundland, said participant Canadian Imperial Venture Corp., St Johns The 3K-39 well will be drilled directionally from an onshore surface location on the northern tip of Shoal Point to a subsurface target beneath Port au Port Bay The well is designed to test the Green Point shale oil resource play in the EL 1070 permit Nabors Rig 112 is to take 20-30 days to drill a planned total depth of 2,200 m measured depth, 1,450 m true vertical depth Louisiana Tunisia Cooper Energy Ltd., Perth, has resumed drilling the Menzel Horr-1 exploratory well on the Bargou Permit in Tunisia east of Tunis after declaring force majeure and suspending operations Jan 17 due to civil unrest The well, suspended at 1,225 m after encountering trace oil shows in the initial Ain Grab limestone objective formation, is to continue drilling to the Bou Dabbous limestone at 1,898 m Permit interests are Cooper Energy 85% and Jacka Resources Ltd 15% Uruguay Uruguay’s ANCAP will make a presentation on the country’s offshore exploratory potential and Round II general bidding terms Feb 14 in Houston ANCAP plans to launch the round in late 2011 The presentation will cover geology, tectonic and stratigraphic evolution of the offshore basins, petroleum systems and models, direct and indirect hydrocarbons indicators, leads and pros- 26 110214OGJ_26 26 Caza Oil & Gas Inc has spud the Marian Baker-1 deep test in Midland field southeast of Jennings, La On the company’s Arran 3D seismic prospect in 18-10s1w, Acadia Parish, the well is projected to 16,000 ft in search of multiple potential hydrocarbon-bearing reservoirs It is supported by AVO data and is in a proven play fairway Caza has a 25% working interest before casing point and a 35.94% working interest after casing point and a 26.24% net revenue interest in the well Wyoming High Plains Gas Inc., Gillette, Wyo., has begun returning to production Powder River basin coalbed methane wells in the North and South Fairway units acquired from Marathon Oil Corp as of Dec 1, 2010 The units have 1,614 CBM wells and flow lines on 155,000 net acres producing 17 MMcfd of gas High Plains reactivated 52 of the 803 idle wells in December The company installed a 150-hp electric screw compressor in previously idle Kingsbury field and had planned to reactivate 75 of the field’s 247 wells by Jan 31 Oil & Gas Journal | Feb 14, 2011 2/10/11 1:15 PM EQUIPMENT | SOFTWARE | LITERATURE The improved version of the Apollo 600 blast hood respiratory protection equipment was developed by RBG Ltd., Aberdeen, in conjunction with Hodge Clemco Ltd., South Yorkshire, UK The improved blast hood has an area on the cape that allows entry to the rope access movement equipment It also has internal linings that restrict the movement of the hood to avoid reducing visibility when ascending, descending, and during abrasive blasting operations The developers say that the rope access cape used with the Apollo helmet and flame retardant blast suit offers the highest level of protection for wet and dry blasting in addition to rope access work The new internal hood liners and rope access cape are designed to be supplied as a retrofit or a manufacturer built item As with the traditional APH600CE helmet, the hood can be separated from the cape within seconds by releasing the NEW BLAST HOOD AND CAPE This newly modified blast hood and cape are designed to help improve the safety and effectiveness of rope access abrasive blasting in the oil and gas industry ratchet clamp, which helps improve access in the event of an emergency Source: RBG Ltd., Norfolk House, Pitmedden Rd., Dyce, Aberdeen, UK AB21 0DP NEW LEASING PROGRAM FOR DATA RETRIEVAL SYSTEM A new leasing program is available for the BirdDog remote data retrieval system Through the lease program, users can collect, process, and electronically access information from remote oil and gas operational sites without the need for upfront capital investments in communications equipment, software, or other infrastructure components The program options, as well as the availability of custom leases, means that existing equipment such as flow computers can typically continue to be used, thereby reducing overall lease and operating costs Source: Coastal Flow Measurement Cos., Box 58965, Houston, TX 77258-8965 ADVERTISERS INDEX COMPANY NAME PAGE Baker Hughes www.bakerhughes.com Energy Institute 19 www.energyinst.org Halliburton Digital Cover www.halliburton.com Offshore Asia 2011 13 www.offshoreasiaevent.com Oil & Gas Maintenance Technology North America 15 www.OGMTNA.com PennEnergy 23 www.PennEnergy.com PennEnergy JOBS 27 www.PennEnergyJOBS.com PennEnergy Research 32 www.PennEnergyResearch.com Unconventional Oil & Gas International Got jobs? We’ve got people The PennEnergy JOBS process puts your recruitment message in front of the industry’s best talent whether it’s online, in print, or at an event This approach offers you the flexibility to create custom recruitment advertising campaigns best suited to meet your budget and objectives | Learn More | Visit: www.PennEnergyJOBS.com Call: 1-800-738-0134 33 www.unconventionaloilandgas.com World GTL Trinidad, LTD www.world-gtl.com This index is provided as a service The publisher does not assume any liability for errors or omission Oil & Gas Journal | Feb 14, 2011 110214OGJ_27 27 27 2/8/11 4:54 PM STATISTICS IMPORTS OF CRUDE AND PRODUCTS — Districts 1-4 — — District — ———— Total US ———— 1-28 1-21 1-28 1-21 1-28 1-21 *1-29 2011 2011 2011 2011 2011 2011 2010 ––––––––––––––––––––––––— 1,000 b/d ––––––––––––––––––––––––— Total motor gasoline Mo gas blending comp Distillate Residual Jet fuel-kerosine Propane-propylene Other 1,159 1,032 318 261 74 138 (238) 633 577 253 314 12 243 450 14 14 23 53 (66) 121 11 11 52 (185) 179 1,173 1,046 318 284 127 72 (117) 644 588 253 366 16 58 629 926 719 438 495 116 103 150 Total products 2,744 2,482 Total crude 7,746 8,678 159 72 2,903 2,554 2,947 1,267 706 9,013 9,384 8,426 Total imports 10,490 11,160 1,426 778 11,916 11,938 11,373 *Revised Source: US Energy Information Administration Data available in OGJ Online Research Center PURVIN & GERTZ LNG NETBACKS—FEB 4, 2011 –––––––––––––––––––––––––––– Liquefaction plant –––––––––––––––––––––––––––––––– Algeria Malaysia Nigeria Austr NW Shelf Qatar Trinidad –––––––––––––––––––––––––––––––– $/MMbtu –––––––––––––––––––––––––––––––––––– Receiving terminal Barcelona Everett Isle of Grain Lake Charles Sodegaura Zeebrugge 8.46 4.14 7.18 1.90 6.28 7.73 6.21 1.97 4.87 -0.06 8.31 5.43 7.57 3.76 6.48 1.66 6.50 7.07 6.11 2.07 4.77 0.15 7.99 5.31 6.84 2.53 5.47 0.36 7.54 6.09 7.49 4.44 6.51 2.52 5.52 7.14 Additional analysis of market trends is available through OGJ Online, Oil & Gas Journal’s electronic information source, at http://www.ogj.com OGJ CRACK SPREAD *2-4-11 *2-5-10 Change Change, ———–—$/bbl ——–—— % SPOT PRICES Product value Brent crude Crack spread 108.10 100.05 8.04 FUTURES MARKET PRICES One month Product value 109.00 Light sweet crude 90.68 Crack spread 18.32 Six month Product value 113.30 Light sweet crude 97.93 Crack spread 15.37 82.16 72.56 9.60 25.94 27.49 –1.56 31.6 37.9 –16.2 82.49 26.50 32.1 74.59 7.90 16.09 10.42 21.6 131.9 86.36 26.94 31.2 77.21 9.14 20.72 6.23 26.8 68.1 *Average for week ending Source: Oil & Gas Journal Data available in OGJ Online Research Center Definitions, see OGJ Apr 9, 2007, p 57 Source: Purvin & Gertz Inc Data available in OGJ Online Research Center CRUDE AND PRODUCT STOCKS —–– Motor gasoline —–– Blending Jet fuel, ————— Fuel oils ————— PropaneCrude oil Total comp.1 kerosine Distillate Residual propylene ———————————————————————————— 1,000 bbl ————————————————————————— District PADD PADD PADD PADD PADD 10,440 99,173 171,308 16,366 45,873 60,033 53,228 80,874 7,059 35,035 49,501 28,510 56,868 2,205 30,601 8,687 8,349 15,045 719 10,969 58,608 33,547 53,609 3,556 14,758 13,582 1,454 20,225 188 4,692 3,055 16,108 17,465 1,136 — Jan 28, 2011 Jan 21, 2011 Jan 29, 20102 343,160 340,566 328,994 236,229 230,075 228,121 167,685 162,971 143,539 43,769 42,749 43,239 164,078 165,658 156,548 40,141 41,653 39,652 37,764 41,794 33,855 Includes PADD 2Revised Source: US Energy Information Administration Data available in OGJ Online Research Center REFINERY REPORT—JAN 28, 2010 REFINERY –––––– OPERATIONS –––––– Gross Crude oil inputs inputs ––––––– 1,000 b/d –––––––– District –––––––––––––––––––––––––––– REFINERY OUTPUT ––––––––––––––––––––––––––– Total motor Jet fuel, ––––––– Fuel oils –––––––– Propanegasoline kerosine Distillate Residual propylene –––––––––––––––––––––––––––––––– 1,000 b/d ––––––––––––––––––––––––––––––– PADD PADD PADD PADD PADD 1,097 3,398 7,520 499 2,346 1,126 3,355 7,219 499 2,103 2,681 2,164 2,209 283 1,438 69 216 725 22 368 319 933 2,306 161 463 67 48 167 11 136 46 245 709 52 — Jan 28, 2011 Jan 21, 2011 Jan 29, 20102 14,860 14,399 13,738 14,302 14,127 13,461 8,775 8,962 8,584 1,400 1,355 1,309 4,182 4,271 3,484 429 588 557 1,052 1,053 1,013 17,594 Operable capacity 84.5% utilization rate Includes PADD Revised Source: US Energy Information Administration Data available in OGJ Online Research Center 28 110214OGJ_28 28 Oil & Gas Journal | Feb 14, 2011 2/8/11 3:12 PM STATISTICS OGJ GASOLINE PRICES BAKER HUGHES RIG COUNT Price Pump Pump ex tax price* price 2-2-11 2-2-11 2-3-10 ————— ¢/gal ————— (Approx prices for self-service unleaded gasoline) Atlanta 264.5 303.7 Baltimore 265.9 307.8 Boston 259.9 301.8 Buffalo 250.6 313.8 Miami 263.4 315.8 Newark 275.0 307.9 New York 262.6 325.8 Norfolk 262.9 300.8 Philadelphia 255.1 305.8 Pittsburgh 266.1 316.8 Wash., DC 274.9 316.8 PAD I avg 263.7 310.6 266.1 271.0 267.1 281.0 284.1 264.0 280.1 261.0 275.1 274.0 276.1 272.7 Chicago Cleveland Des Moines Detroit Indianapolis Kansas City Louisville Memphis Milwaukee Minn.-St Paul Oklahoma City Omaha St Louis Tulsa Wichita PAD II avg 282.2 257.9 268.8 267.4 265.8 261.8 265.6 253.6 258.9 264.6 254.5 257.9 266.9 257.8 253.3 262.5 340.2 304.3 309.2 321.6 318.9 297.5 306.5 293.4 310.2 310.2 289.9 304.3 302.6 293.2 296.7 306.6 296.8 286.6 261.7 288.7 279.6 256.6 269.5 265.7 277.7 261.7 236.6 260.6 248.6 234.6 246.7 258.1 Albuquerque Birmingham Dallas-Fort Worth Houston Little Rock New Orleans San Antonio PAD III avg 255.6 257.5 253.4 252.4 253.6 256.4 259.4 255.5 292.8 296.8 291.8 290.8 293.8 294.8 297.8 294.1 257.4 257.1 251.3 253.3 249.2 257.8 260.4 255.2 Cheyenne Denver Salt Lake City PAD IV avg 253.2 251.7 252.1 252.4 285.6 292.1 295.0 290.9 252.5 275.6 257.6 261.9 Los Angeles Phoenix Portland San Diego San Francisco Seattle PAD V avg Week’s avg Jan avg Dec avg 2011 to date 2010 to date 266.7 273.0 270.8 269.7 290.0 279.3 274.9 262.7 261.9 249.1 262.1 224.3 334.1 310.4 314.2 337.1 357.4 335.2 331.4 308.0 307.2 294.4 307.3 269.1 297.0 278.6 291.2 299.0 301.1 294.4 293.5 266.8 269.7 259.2 - * Includes state and federal motor fuel taxes and state sales tax Local governments may impose additional taxes Source: Oil & Gas Journal Data available in OGJ Online Research Center REFINED PRODUCT PRICES 1-28-11 ¢/gal 1-28-11 ¢/gal Spot market product prices Motor gasoline No Distillate (Conventional-regular) Low sulfur diesel fuel New York Harbor 245.70 New York Harbor Gulf Coast 239.60 Gulf Coast Los Angeles Motor gasoline Kerosine jet fuel (RBOB-regular) New York Harbor 254.10 Gulf Coast 271.90 267.50 268.00 270.50 Propane No heating oil New York Harbor 268.50 Mt Belvieu 133.50 OGJ PRODUCTION REPORT 2-4-11 2-5-10 Alabama Alaska Arkansas California Land Offshore Colorado Florida Illinois Indiana Kansas Kentucky Louisiana N Land S Inland waters S Land Offshore Maryland Michigan Mississippi Montana Nebraska New Mexico New York North Dakota Ohio Oklahoma Pennsylvania South Dakota Texas Offshore Inland waters Dist Dist Dist Dist Dist Dist Dist 7B Dist 7C Dist Dist 8A Dist Dist 10 Utah West Virginia Wyoming Others—NV-4 36 38 38 64 0 24 175 114 15 22 24 9 80 148 165 109 750 70 47 45 44 73 56 61 215 28 34 68 29 20 47 41 24 23 48 21 198 133 11 16 38 0 55 76 115 70 541 23 14 36 45 79 70 11 54 108 20 31 46 25 27 38 Total US Total Canada 1,739 626 1,335 557 Grand total US Oil rigs US Gas rigs Total US offshore Total US cum avg YTD 2,365 818 911 27 1,717 1,892 445 878 44 1,265 2-4-11 2-5-10 –—— 1,000 b/d —–— (Crude oil and lease condensate) Alabama 17 Alaska 580 California 614 Colorado 71 Florida Illinois 24 Kansas 107 Louisiana 1,549 Michigan 14 Mississippi 61 Montana 67 New Mexico 173 North Dakota 342 Oklahoma 185 Texas 1,455 Utah 62 Wyoming 138 All others 67 Total 5,529 OGJ estimate 2Revised Source: Oil & Gas Journal Data available in OGJ Online Research Center US CRUDE PRICES *Current major refiner’s posted prices except North Slope lags months 40° gravity crude unless differing gravity is shown Source: Oil & Gas Journal Data available in OGJ Online Research Center WORLD CRUDE PRICES $/bbl1 SMITH RIG COUNT 2-4-11 Percent footage* 0-2,500 2,501-5,000 5,001-7,500 7,501-10,000 10,001-12,500 12,501-15,000 15,001-17,500 17,501-20,000 20,001-over Total 168 54 141 314 380 284 161 147 63 1,712 4.1 48.1 20.5 3.1 11.3 3.1 -7.2 INLAND LAND OFFSHORE 14 1,680 18 2-5-10 Rig Percent count footage* 95 48 139 260 275 206 181 80 44 1,328 16 1,267 45 *Rigs employed under footage contracts Definitions, see OGJ Sept 18, 2006, p 42 2.1 77.0 29.4 7.6 10.5 2.4 -10.0 1-28-11 United Kingdom-Brent 38° Russia-Urals 32° Saudi Light 34° Dubai Fateh 32° Algeria Saharan 44° Nigeria-Bonny Light 37° Indonesia-Minas 34° Venezuela-Tia Juana Light 31° Mexico-Isthmus 33° OPEC basket Total OPEC2 Total non-OPEC2 Total world2 US imports3 Source: Baker Hughes Inc Data available in OGJ Online Research Center Rig count 2-4-11 $/bbl* 85.74 94.50 84.90 93.45 80.28 85.00 80.50 85.50 85.50 78.50 77.50 84.50 74.00 Alaska-North Slope 27° South Louisiana Sweet California-Midway Sunset 13° Lost Hills 30° Wyoming Sweet East Texas Sweet West Texas Sour 34° West Texas Intermediate Oklahoma Sweet Texas Upper Gulf Coast Michigan Sour Kansas Common North Dakota Sweet Rotary rigs from spudding in to total depth Definitions, see OGJ Sept 18, 2006, p 42 Proposed depth, ft 18 639 618 75 22 106 1,531 19 65 59 168 242 179 1,416 59 138 72 5,429 96.86 92.82 94.75 92.48 97.40 98.24 100.24 89.14 89.03 94.40 93.95 90.48 92.47 88.03 - - Estimated contract prices 2Average price (FOB) weighted by estimated export volume 3Average price (FOB) weighted by estimated import volume Source: DOE Weekly Petroleum Status Report Data available in OGJ Online Research Center US NATURAL GAS STORAGE1 1-28-11 Producing region Consuming region east Consuming region west Total US Total US2 1-21-11 1-28-10 –——––—— bcf —––——– 856 912 798 1,165 1,280 1,263 332 350 362 2,353 2,542 2,423 Change, Nov 10 Nov 09 % 3,773 3,837 Change, % 7.3 –7.8 –8.3 –2.9 –1.7 Source: DOE Weekly Petroleum Status Report Data available in OGJ Online Research Center Oil & Gas Journal | Feb 14, 2011 110214OGJ_29 29 Source: Smith International Inc Data available in OGJ Online Research Center Working gas 2At end of period Source: Energy Information Administration Data available in OGJ Online Research Center 29 2/8/11 3:12 PM STATISTICS WORLDWIDE CRUDE OIL AND GAS PRODUCTION 10 month average Change vs Nov Oct ––– production ––– –––– previous year ––– 2010 2010 2010 2009 Volume % ––––––––––––––––––– Crude, 1,000 b/d –––––––––––––––––––––––– Argentina Bolivia Brazil Canada Colombia Ecuador1 Mexico Peru Trinidad United States Venezuela1 Other Latin America 605 44 2,089 2,953 821 470 2,512 150 88 5,581 2,190 82 605 43 1,997 2,707 800 470 2,571 150 87 5,616 2,210 81 609 43 2,043 2,728 781 465 2,576 150 99 5,500 2,229 81 605 40 1,946 2,584 664 472 2,602 128 107 5,352 2,161 83 97 144 117 –7 –26 22 –8 149 68 –1 Nov Oct Cum 2010 2010 2010 –––––––––– Gas, bcf –––––––––––––– 0.8 6.5 5.0 5.6 17.6 –1.5 –1.0 17.0 –7.2 2.8 3.2 –1.8 105.0 44.0 42.0 418.2 31.0 1.0 210.0 32.0 120.0 1,905.0 65.0 5.5 113.0 45.0 43.0 412.3 33.0 1.0 220.0 30.0 125.5 1,948.0 70.0 5.5 1,234.00 445.00 393.50 4,595.00 361.00 11.00 2,341.00 217.50 1,343.17 20,584.00 760.00 59.62 Western Hemisphere 17,585 17,336 17,305 16,744 561 3.3 2,978.7 3,046.3 32,344.79 Austria Denmark France Germany Italy Netherlands Norway Turkey United Kingdom Other Western Europe 16 259 19 49 98 19 1,867 48 1,259 16 247 18 50 97 18 1,952 48 1,247 17 245 18 51 95 20 1,868 48 1,252 19 262 18 56 83 26 2,068 45 1,346 –1 –17 –1 –5 13 –5 –200 –94 –5.9 –6.4 –2.8 –8.2 15.4 –20.8 –9.7 4.9 –7.0 36.0 4.7 21.7 2.2 38.1 23.0 250.0 355.4 — 166.8 1.0 5.0 20.0 2.0 37.2 24.0 230.0 328.0 — 171.4 1.0 54.43 243.38 22.50 408.19 258.00 2,375.00 3,370.73 — 1,939.67 11.37 Western Europe 3,637 3,698 3,620 3,926 –306 –7.8 862.9 818.6 8,683.27 Azerbaijan Croatia Hungary Kazakhstan Romania Russia Other FSU Other Eastern Europe 1,000 13 15 1,650 95 10,300 400 46 1,000 13 16 1,650 95 10,330 400 43 996 13 16 1,588 88 10,196 423 45 1,041 14 14 1,495 90 9,899 436 43 –45 –1 93 –2 297 –14 –4.3 –7.1 16.6 6.2 –2.5 3.0 –3.1 3.1 75.0 6.7 6.5 100.0 19.0 1,900.0 450.0 21.7 75.0 4.2 6.8 100.0 20.0 1,800.0 400.0 22.0 804.00 65.72 74.13 1,100.00 203.00 20,060.00 4,425.00 217.53 Eastern Europe and FSU 13,519 13,548 13,365 13,033 332 2.5 2,579.0 2,428.0 26,949.39 Algeria1 Angola1 Cameroon Congo (former Zaire) Congo (Brazzaville) Egypt Equatorial Guinea Gabon Libya1 Nigeria1 Sudan Tunisia Other Africa 1,270 1,660 60 28 280 740 255 250 1,560 2,180 470 69 191 1,270 1,680 60 28 280 740 255 250 1,560 2,200 470 71 191 1,255 1,785 64 28 269 740 255 245 1,549 2,064 475 79 191 1,239 1,784 73 28 240 750 260 228 1,548 1,808 500 82 196 15 –10 — 29 –10 –5 17 255 –25 –3 –5 1.2 0.1 –13.2 — 12.1 –1.3 –1.9 7.6 0.1 14.1 –4.9 –3.6 –2.5 240.0 6.0 — — — 115.0 0.1 0.3 46.0 70.0 — 8.0 8.7 250.0 6.5 — — — 120.0 0.1 0.3 46.0 70.0 — 8.5 9.4 2,730.00 69.80 — — — 1,284.00 0.66 3.34 506.00 770.00 — 106.04 100.18 Africa 9,014 9,055 8,999 8,737 263 3.0 494.0 510.7 5,570.02 Bahrain Iran1 Iraq1 Kuwait1 Oman Qatar1 Saudi Arabia1 Syria United Arab Emirates1 Yemen Other Middle East 34 3,680 2,350 2,290 881 820 8,500 370 2,290 250 — 33 3,650 2,350 2,300 867 800 8,600 370 2,330 260 — 30 3,703 2,360 2,297 863 804 8,305 369 2,305 267 — 30 3,735 2,399 2,274 812 765 8,189 371 2,270 276 — –33 –39 24 51 38 115 –2 35 –9 — 3.2 –0.9 –1.6 1.0 6.3 5.0 1.4 –0.5 1.5 –3.1 16.9 25.0 400.0 24.0 33.0 83.0 340.0 200.0 17.0 130.0 — 9.4 25.0 415.0 25.0 35.0 85.0 340.0 210.0 18.0 140.0 — 13.0 272.28 4,425.00 255.00 382.00 891.00 3,530.00 2,295.00 192.00 1,505.00 — 111.89 Middle East 21,465 21,560 21,302 21,121 182 0.9 1,261.4 1,306.0 13,859.17 Australia Brunei China India Indonesia Japan Malaysia New Zealand Pakistan Papua New Guinea Thailand Vietnam Other Asia–Pacific 414 165 4,274 810 922 14 550 44 66 20 232 320 46 415 160 4,192 779 900 13 555 48 64 20 234 320 58 427 159 4,074 739 948 15 573 53 64 22 241 318 48 465 151 3,766 662 953 16 592 50 64 39 238 299 48 –38 308 78 –4 –1 –19 –17 20 — –8.2 4.8 8.2 11.7 –0.5 –4.9 –3.3 7.0 0.8 –43.4 1.2 6.7 0.1 133.2 32.0 297.4 150.0 228.0 9.5 180.0 12.0 120.0 0.9 87.0 20.0 79.3 146.7 35.0 278.4 155.0 240.0 8.1 195.0 13.0 122.6 1.0 95.0 20.0 81.1 1,464.30 380.00 2,997.68 1,622.48 2,590.00 105.84 2,024.00 134.00 1,365.95 10.70 993.00 220.00 869.80 Asia–Pacific 7,878 7,758 7,681 7,340 340 4.6 1,349.3 1,390.9 14,777.75 TOTAL WORLD 73,098 72,955 72,272 70,901 1,372 1.9 9,525.4 9,500.5 102,184.38 OPEC Offshore Europe 29,260 3,419 29,420 3,470 29,119 3,389 28,645 3,697 475 –307 1.7 –8.3 1,555.0 618.8 1,608.5 588.2 17,238.80 6,263.15 OPEC member 2Kuwait and Saudi Arabia production each include half of Neutral Zone Totals may not add due to rounding Source: Oil & Gas Journal Data available in OGJ Online Research Center 30 110214OGJ_30 30 Oil & Gas Journal | Feb 14, 2011 2/8/11 4:54 PM MARKETPLACE DEADLINE for MARKETPLACE ADVERTISING is 10 A.M Tuesday preceding date of publication Address advertising inquiries to MARKETPLACE SALES, 1-800-331-4463 ext 6301, 918-832-9301, fax 918-832-9201, email: glendah@pennwell.com • DISPLAY MARKETPLACE: $390 per column inch, one issue 10% discount three or more CONSECUTIVE issues No extra charge for blind box in care Subject to agency commission No 2% cash discount • UNDISPLAYED MARKETPLACE: $4.00 per word per issue 10% discount for three or more CONSECUTIVE issues $80.00 minimum charge per insertion Charge for blind box service is $60.00 No agency commission, no 2% cash discount Centered/Bold heading, $12.00 extra • COMPANY LOGO: Available with undisplayed ad for $85.00 Logo will be centered above copy with a maximum height of 3/8 inch • NO SPECIAL POSITION AVAILABLE IN MARKETPLACE SECTION • PAYMENT MUST ACCOMPANY ORDER FOR MARKETPLACE AD EMPLOYMENT L E A S E S OR DRIL L ING BL OCK S GL Noble Denton, Inc seeks Senior Riser Engineer to work in Houston, TX to conduct design and analysis of all types of riser systems relying on knowledge of FEA and vessel motions Master’s degree and relevant experience required Travel up to 10% required Must put job code M1110 on resume and send to: L Byrd, Sr HR Generalist, GL Noble Denton, Inc 1155 Dairy Ashford, Suite 315, Houston, TX 77079 650,000,000 barrel potential Oat Mountain So California 640-2000 acres available Contact George 805-432-4701 or george@gtwaterproducts.com SBM Atlantia, Inc in Houston, TX seeks Electrical Engineering Specialist Qualified applicants will possess a Bachelor’s degree in Electrical Engineering or a related degree and four years of experience in the job offered or four years of offshore engineering experience particularly with offshore platform structures Email resume to Melissa.Ledoux@sbmoffshore.com Resume/cover letter must include job code 3052010 SBM Atlantia, Inc in Houston, TX seeks Multi-Discipline Supports Specialist Qualified applicants will possess Bachelor’s degree in Engineering Design and two years of experience in the job offered or two years of related experience in PDMS and multidiscipline support design E-mail resume to Melissa.Ledoux@sbmoffshore.com Must put job code 3052008 on resume EMPLOYMENT WANTED Senior Communications Engineer, 35 years experience Currently employed, need challenge 2-way, microwave, IT, SCADA Design, installation & maintenance experience Will relocate (214) 717-4444 w6pc@aol.com B U S I N E S S O P P O R T U N IT IES 200 Million Barrels For Sale Shallow One dollar per barrel Ready to go Need financial partner 503-253-7400, Fax 503-253-8888 Email: diamonda@teleport.com Oil & Gas Journal | Feb 14, 2011 110214OGJ_31 31 CONS ULTA NT BRAZIL: EXPETRO CAN BE YOUR GUIDE INTO THIS NEW INVESTMENT FRONTIER EFFECTIVE STRATEGIC ANALYSIS, QUALITY TECHNICAL SERVICES, COMPELLING ECONOMIC/REGULATORY ADVICE, AND REALISTIC APPROACH REGARDING BRAZILIAN BUSINESS ENVIRONMENT-120 SPECIALISTS UPSTREAM, 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Pipeline, Sulfur, or a package of all six surveys U.S Pipeline Study: Fourteen categories of operating and financial data on the liquid pipelines worksheet Thirteen categories of operating and financial data on the natural gas pipeline worksheet OGJ 150 / 100 International Company Survey: Financial and operating data for the largest 150 U.S and 100 international publicly traded oil and gas companies Versions: Current, 1989 to Current Production Projects Worldwide: Planned production megaprojects data includes project name, year, production volume, operator, and type Enhanced Oil Recovery Survey: Covers active, planned, and terminated projects worldwide Updated biennially Last update – March 2010 Versions: Current, 1986 to Current Specialized Statistical Package – OPEC: Includes 26 Excel files and country analysis profiles Worldwide Gas Processing Survey: Gas processing plants worldwide with data on company location, gas capacity and throughput, process method and product production Versions: Current, 1985 to Current Oil Sands Projects: Survey of Canadian oil sands projects includes major production projects, mining upgrading projects, in situ projects, reserve estimates, and historical tables of wells drilled FOR MORE INFORMATION OR TO ORDER VISIT: www.PennEnergyResearch.com EMAIL: orcinfo@pennwell.com PHONE: 1.800.345.4618 // 1.918.832.9267 Follow Us On: www.PennEnergyResearch.com 110214OGJ_32 32 2/8/11 3:12 PM unconvent ional resources WHERE FINANCE { & TECHNOLOGY MEET aug us t - s ep tembe r , 1 H E N RY B G O N Z A L E Z C O N V E N T I O N C E N T E R / S A N A N T O N I O, T X / U S A W W W U N C O N V E N T I O NA L O I L G A S COM OWNED & PRODUCED BY: ORGANIZED BY: } OFFICIAL MEDIA PARTNERS: ® 110214OGJ_33 33 2/8/11 3:12 PM From the Subscribers Only area of www.ogj.com THE EDITOR’S PERSPECTIVE MARKET JOURNAL More OPEC oil would boost rosy view of economy Weaker payroll data lower oil prices by Bob Tippee, Editor When Ali Al-Naimi, Saudi minister of petroleum and mineral resources, expressed confidence about global economic recovery last month, he was neither alone in his optimism nor without doubters At the Annual Global Competitiveness Forum in Riyadh, Naimi on Jan 24 described the world as “clearly” free of the financial and economic crisis Predicting global economic growth of 4% this year and an increase in oil consumption of 1.5-1.8 million b/d, he hinted strongly that OPEC members might raise production if necessary to meet demand US President Barack Obama also is optimistic “Two years after the worst recession most of us have known, the stock market has come roaring back,” he said in the State of the Union speech Jan 25 “Corporate profits are up The economy is growing again.” On the same day, the Conference Board reported an increase in its Consumer Confidence Index to 60.6 in January from 53.3 in December The index uses 1985 as the base year with a value of 100 Also on the same day, however, the International Monetary Fund sounded cautious “Global financial stability is still not assured, and there remain significant policy challenges to be addressed,” IMF warned in its Global Financial Stability Report The group’s World Economic Outlook projected expansion in global output of 4.5% in 2011, up about one fourth of a percentage point from its October forecast The group said “the most urgent requirements for robust recovery” are remedies for sovereign and financial troubles in the euro area and polices to fix fiscal imbalances and financial systems in advanced economies On Jan 26, the US Federal Reserve confirmed that recovery continues in the US, “though at a rate that has been insufficient to bring about a significant improvement in labor market conditions.” The Fed extended its emergency program of buying Treasury securities to boost liquidity More oil from OPEC would ease oil prices and help everyone share Naimi’s cheery economic view ONLINE FEB 4, 2011 | bobt@ogjonline.com 34 110214OGJ_34 34 by Sam Fletcher, Senior Writer Energy prices fell Feb with North Sea Brent dropping below $100/bbl in London and West Texas Intermediate down to less than $90/bbl in New York, partly in response to weaker-than-expected US payroll data The US Department of Labor reported an increase of just 50,000 payrolls during January vs expectations of a 150,000 gain Yet US unemployment dropped to 9% in January from 9.5% Improvement in unemployment had less to with the number of people returning to work than shrinkage of the workforce to a new low as 162,000 more people gave up looking for nonexistent jobs, lowering the unemployment rate by default Government officials—and some analysts—blamed the lower payroll data on snowstorms in the Midwest and Eastern US that reduced employment in construction and transportation as well as forcing many businesses to close However, Olivier Jakob at Petromatrix in Zug, Switzerland, noted, “It does usually snow in January, and that is why the numbers are seasonally adjusted It has snowed also in February, so we already know what will be the excuse [for] any worse-than-expected numbers next month.” Even if there had been no bad weather, he said, “The growth in jobs would not have been strong enough to start offsetting the losses of 2008-09 Those are still years away, and even the US Federal Reserve System has given up hoping for full employment to return before many years.” Jakob reiterated the two multibillion-dollar phases of the Fed’s “quantitative easing” program to stimulate the economy are “not doing much for unemployment but, boy, is it good for the US stock market.” Federal Reserve Chairman Ben Bernanke is no longer “even trying to pretend that the only merit of QE2 is the lift to the Standard & Poor’s 500 index and continued support (buy the dip) it provides to the equity market,” Jakob said A growing number of critics claim the Fed’s policies are setting the stage for severe inflation without much reducing unemployment But optimists argue most indicators suggest the economic recovery is gaining strength and eventually will be reflected by increased employment Meanwhile, both sides caution high energy prices could wreck worldwide recovery Mysterious Egypt Another factor behind the Feb sell-off of energy contracts was because it was a Friday, and traders were repositioning themselves in case Egyptian President Hosni Mubarak was ousted over the weekend, thus reducing a possible geopolitical threat to world oil supplies On Jan 31, Brent crude closed above $100/bbl for the first time in more than years as pictures of civil demonstrations in Egypt filled newspapers and TV newscasts amid speculation of possible disruption of the Suez Canal Some said the move to oust Egypt’s repressive government added a geopolitical premium of $5/bbl to the price of oil Jakob pointed out Brent was already trading at $99.20/bbl and trying to break $100/bbl barrier before dissidents unexpectedly took to Cairo streets, so the real premium was at most $1-2/bbl As for any danger to the Suez Canal or the SuezMediterranean Pipeline, he said, “The protesters in Egypt are fighting for the removal of an aging ruler, not for the destruction of their country.” By Feb 7, the turmoil appeared to have quieted after officials from the Mubarak administration began negotiations over the weekend with some of the demonstrators in an attempt to delay Mubarak’s departure until elections later this year At KBC Energy Economics, a division of KBC Advanced Technologies PLC, analysts said, “The army, which to date has appeared to side more with the protesters rather than the government and its supporters, has secured the Suez Canal area and is ready to act if the turmoil threatens oil and energy infrastructure So we are likely to see prices revert lower…when the political temperature reduces, particularly given the recent murmurings from the Organization of Petroleum Exporting Countries hinting at more ‘flexibility’ in the face of the latest rally.” ONLINE FEB 7, 2011 | samf@ogjonline.com Oil & Gas Journal | Feb 14, 2011 2/8/11 3:12 PM [...]... – 17 3 20 — –8.2 4.8 8.2 11 .7 –0.5 –4.9 –3.3 7. 0 0.8 –43.4 1.2 6 .7 0.1 133.2 32.0 2 97. 4 150.0 228.0 9.5 180.0 12.0 120.0 0.9 87. 0 20.0 79 .3 146 .7 35.0 278 .4 155.0 240.0 8.1 195.0 13.0 122.6 1.0 95.0 20.0 81.1 1,464.30 380.00 2,9 97. 68 1,622.48 2,590.00 105.84 2,024.00 134.00 1,365.95 10 .70 993.00 220.00 869.80 Asia–Pacific 7, 878 7, 758 7, 681 7, 340 340 4.6 1,349.3 1,390.9 14 ,77 7 .75 TOTAL WORLD 73 ,098... Barcelona Everett Isle of Grain Lake Charles Sodegaura Zeebrugge 8.46 4.14 7. 18 1.90 6.28 7. 73 6.21 1. 97 4. 87 -0.06 8.31 5.43 7. 57 3 .76 6.48 1.66 6.50 7. 07 6.11 2. 07 4 .77 0.15 7. 99 5.31 6.84 2.53 5. 47 0.36 7. 54 6.09 7. 49 4.44 6.51 2.52 5.52 7. 14 Additional analysis of market trends is available through OGJ Online, Oil & Gas Journal s electronic information source, at http://www.ogj.com OGJ CRACK SPREAD... motor gasoline Mo gas blending comp Distillate Residual Jet fuel-kerosine Propane-propylene Other 1,159 1,032 318 261 74 138 (238) 633 577 253 314 12 243 450 14 14 0 23 53 (66) 121 11 11 0 52 4 (185) 179 1, 173 1,046 318 284 1 27 72 (1 17) 644 588 253 366 16 58 629 926 71 9 438 495 116 103 150 Total products 2 ,74 4 2,482 Total crude 7, 746 8, 678 159 72 2,903 2,554 2,9 47 1,2 67 706... 2,089 2,953 821 470 2,512 150 88 5,581 2,190 82 605 43 1,9 97 2 ,70 7 800 470 2, 571 150 87 5,616 2,210 81 609 43 2,043 2 ,72 8 78 1 465 2, 576 150 99 5,500 2,229 81 605 40 1,946 2,584 664 472 2,602 128 1 07 5,352 2,161 83 5 3 97 144 1 17 7 –26 22 –8 149 68 –1 Nov Oct Cum 2010 2010 2010 –––––––––– Gas, bcf –––––––––––––– 0.8 6.5 5.0 5.6 17. 6 –1.5 –1.0 17. 0 7. 2 2.8 3.2 –1.8 105.0 44.0 42.0 418.2 31.0 1.0 210.0 32.0... Other Africa 1, 270 1,660 60 28 280 74 0 255 250 1,560 2,180 470 69 191 1, 270 1,680 60 28 280 74 0 255 250 1,560 2,200 470 71 191 1,255 1 ,78 5 64 28 269 74 0 255 245 1,549 2,064 475 79 191 1,239 1 ,78 4 73 28 240 75 0 260 228 1,548 1,808 500 82 196 15 2 –10 — 29 –10 –5 17 1 255 –25 –3 –5 1.2 0.1 –13.2 — 12.1 –1.3 –1.9 7. 6 0.1 14.1 –4.9 –3.6 –2.5 240.0 6.0 — — — 115.0 0.1 0.3 46.0 70 .0 — 8.0 8 .7 250.0 6.5 — —... Wyoming Others—NV-4 8 7 36 38 38 0 64 1 0 0 24 4 175 114 15 22 24 0 3 9 9 1 80 0 148 8 165 109 0 75 0 3 1 70 47 45 44 73 56 5 61 215 28 34 68 29 20 47 4 3 9 41 24 23 1 48 0 1 3 21 8 198 133 11 16 38 0 0 9 6 1 55 3 76 7 115 70 0 541 4 0 23 14 36 45 79 70 11 54 108 20 31 46 25 27 38 6 Total US Total Canada 1 ,73 9 626 1,335 5 57 Grand total US Oil rigs US Gas rigs Total US offshore... 1,948.0 70 .0 5.5 1,234.00 445.00 393.50 4,595.00 361.00 11.00 2,341.00 2 17. 50 1,343. 17 20,584.00 76 0.00 59.62 Western Hemisphere 17, 585 17, 336 17, 305 16 ,74 4 561 3.3 2, 978 .7 3,046.3 32,344 .79 Austria Denmark France Germany Italy Netherlands Norway Turkey United Kingdom Other Western Europe 16 259 19 49 98 19 1,8 67 48 1,259 4 16 2 47 18 50 97 18 1,952 48 1,2 47 4 17 245... crude 97. 93 Crack spread 15. 37 82.16 72 .56 9.60 25.94 27. 49 –1.56 31.6 37. 9 –16.2 82.49 26.50 32.1 74 .59 7. 90 16.09 10.42 21.6 131.9 86.36 26.94 31.2 77 .21 9.14 20 .72 6.23 26.8 68.1 *Average for week ending Source: Oil & Gas Journal Data available in OGJ Online Research Center Definitions, see OGJ Apr 9, 20 07, p 57 Source: Purvin & Gertz Inc Data available in OGJ Online Research Center CRUDE AND PRODUCT... 321.6 318.9 2 97. 5 306.5 293.4 310.2 310.2 289.9 304.3 302.6 293.2 296 .7 306.6 296.8 286.6 261 .7 288 .7 279 .6 256.6 269.5 265 .7 277 .7 261 .7 236.6 260.6 248.6 234.6 246 .7 258.1 Albuquerque Birmingham Dallas-Fort Worth Houston Little Rock New Orleans San Antonio PAD III avg 255.6 2 57. 5 253.4 252.4 253.6 256.4 259.4 255.5 292.8 296.8 291.8 290.8 293.8 294.8 2 97. 8 294.1 2 57. 4 2 57. 1 251.3 253.3... 1,252 5 19 262 18 56 83 26 2,068 45 1,346 4 –1 – 17 –1 –5 13 –5 –200 2 –94 1 –5.9 –6.4 –2.8 –8.2 15.4 –20.8 –9 .7 4.9 7. 0 36.0 4 .7 21 .7 2.2 38.1 23.0 250.0 355.4 — 166.8 1.0 5.0 20.0 2.0 37. 2 24.0 230.0 328.0 — 171 .4 1.0 54.43 243.38 22.50 408.19 258.00 2, 375 .00 3, 370 .73 — 1,939. 67 11. 37 Western Europe 3,6 37 3,698 3,620 3,926 –306 7. 8 862.9 818.6 8,683. 27 Azerbaijan Croatia Hungary Kazakhstan