NG Oil & Gas US

No more offshore drilling under Obama

Thu, 11 Mar 2010 15:52:00 +0000

The six-month delay the Obama administration put on approving offshore drilling leases in federal waters looks set to become a three-year ban as Obama's confusing policies on coastal drilling finally appear to have come to a conclusion - no more drilling off US shores under Obama.

Despite over 60 percent of the America people supporting the expansion of oil and gas drilling in Federal waters, according to a Rasmussen Poll conducted at the end of the last year, the Obama administration first term will not see the approval of any new leases.

The main reason American people seem to be behind the expansion of drilling is because they feel significant investments in such infrastructure will help to drive down oil and gas prices through opening up the estimated 14 billion barrels of oil and 55 trillion cubic feet of natural gas in untapped reserves.

The decision has left Americans, possible even Democrats, pining for the Bush administration. President Bush's policies on drilling anywhere was never in question. In 2008 he lifted an executive ban on Outer Continental Shelf leasing. In the same year with a bipartisan agreement, Congress lifted another longstanding ban on new oil and gas leasing in the OCS.

Anger among the Republicans

But Interior Secretary Ken Salazar has given the clearest indication yet that this administration does not share the same views on drilling as the previous administration, because the drilling resulting from the lifted bans in 2008 was supposed to start in July and now Salazar said he intends to discard the 2010-2015 lease plan developed by the Bush administration in favor of a new plan that won't even go into effect until 2012, as reported by the Washington Examiner.

This has obviously generated anger among the Republican camp where, the longer the delays in approving drilling leases went on, the more they became concerned that they would be blocked permanently.

"Secretary Salazar has finally confirmed what had long been feared - that the Obama Administration has no intention of opening up new areas for offshore drilling during his four-years in office," said Rep. Doc Hastings, the ranking Republican on the House Natural Resources Committee.

The jobs the drilling would have created are now lost. In states such as Louisiana, where thousands of jobs would have been generated from some offshore drilling leases, people have been left disillusioned by Obama's decision. This is on top of the fact that while billions of dollars more are spent on foreign oil, billions of dollars worth of domestic energy resources will remain unused.

Related Articles:

Washingto to announce coastal drilling plans | Offshore drilling still high on the agenda | Will change in political landscape make carbon tax inevitable?

Daniel Jones

Daniel is a Politics and Philosophy graduate from Cardiff University where he also worked as a section editor on the award winning student newspaper. After university he joined an IT support company where he was a B2B online writer. He loves anything to do with sport and joined GDS in July 2009.

Helix updates strategic plans for O&G business

Tue, 09 Mar 2010 08:34:00 +0000

Helix Energy Solutions announced in December 2008 that it intended to divest an array of non-core assets, including all or part of oil and gas assets. Now, some 15 months on, and as the divestment nears completion, further details around the plans emerge.

Today, reports from OilVoice.com confirm that the energy company is planning to engage with financial advisors as it evaluates the strategic alternatives available for a complete divestment of its oil and gas business.

Since the announcement in 2008, the company has divested nearly all of its interest in Cal Dive International and 100 percent of its reservoir consulting business, Helix RDS. The company has also sought to divest portions of its Gulf of Mexico shelf oil and gas assets.

Favorable transaction

According to a press statement, the company believes the business environment has become more favorable for a transaction and will now look at the alternatives available to divest its entire oil and gas business.

However, according to reports from today Helix remain unable to be specific about their plans - particularly with respect to a timetable for a divestment - given that there are a plethora of factors that will affect the company's ability to execute any solid plans.

Despite this, the company has said that it intends to aggressively focus on the monetization of its oil and gas business in order to complete its transformation to becoming a contracting services company focused on its core competencies in deep-water well intervention and subsea construction.

Departure

Coinciding with the firm's underlying strategy and objectives, the company has also announced today that Robert P. Murphy, Executive Vice President Oil and Gas, is to leave the firm. According to a press statement today, Johnny Edwards, the former head of Helix's oil and gas business and currently the president of the Company's oil and gas subsidiary, will return to his role to lead the Company's oil and gas division.

Owen Kratz, Helix's President and CEO, added: "Robert [Murphy] has played a major role in the success of Helix in the development of our deep-water oil and gas business. Since he initially joined the company, we have embarked on a different strategic direction for our oil and gas business. We appreciate all that Robert has done for Helix during his three and a half year tenure with [us], and we wish him the best of success."

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Washington to announce new coastal drilling plans | Atlas Energy announce reserve increase from Marcellus Shale | UK firms set to dominate global event

Washington to announce new coastal drilling plans

Fri, 05 Mar 2010 15:42:00 +0000

The Obama administration are set to announce two separate new plans this month for drilling in federal waters that would cover the years through mid-2017, US Interior Secretary Ken Salazar (pictured) said today.

For some time now the Obama administration has been put under increasing pressure by oil and gas companies to issue the long-heralded 2007-2012 blueprint, which was invalidated by a federal appeals court last year.

Now, Salazar has told the Senate Energy and Natural Resources Committee that he was preparing two plans to govern leases on the outer continental shelf - one with court-mandated changes that would apply through June 30, 2012, and another completely new blueprint for leasing from July 1, 2012, until 2017.

Scrapping of a Bush-era proposal

When invalidating the blueprint last year the federal appeal court said that the Bush administration had not conducted an adequate review of the environmental impact in the Beaufort, Bering and Chukchi seas off the Alaskan coast. Salazar's decision to move forward with sequential schedules essentially scraps a Bush-era proposal for 2010 through 2015 that would have allowed leases on Pacific and Atlantic waters where drilling has been off limits for decades.

As part of a broad plan to promote renewable energy development and combat climate change, President Obama has repeatedly touted the possibility of expanding offshore drilling this year. But some in the industry have been left confused over his stance on coastal exploration due to an apparent willingness to limit drilling US shores, whilst promoting it in foreign waters - like Brazil.

However a new plan for the outer continental shelf could for the first time detail exactly where the administration envisions any new offshore production.

Delays in crucial decision making

As detailed by Chron.com the Interior Department was forced to retool the current outer continental shelf schedule of leases through 2012 after a federal appeals court last April ruled that the Bush administration had not done a sufficient environmental review of expanded drilling off Alaska.

Salazar was quick to blame to delays in crucial offshore decision making on the failings of the previous administration, but insists that the new plans will make things much easier.

The revised plan could also shed light on whether the Obama administration will continue with a planned lease sale off Virginia, despite questions about the extent of seismic research that has been conducted in the Atlantic.

The administration's budget proposal includes:

* A new $4-per-acre fee on non-producing oil and gas leases on federal lands and waters
* A new inspection fee for onshore oil and gas drilling that the administration estimates would bring in $10 million in the 2011 fiscal year that begins October 1
* Raising existing inspection fees for offshore oil and gas drilling to raise an estimated $20 million in fiscal 2011
* Continuing a 1-year-old $6,500 fee for processing drilling permits, expected to bring in $45.5 million in the next fiscal year

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UK firms set to dominate global event | Is carbon tax inevitable? | Offshore drilling still top of the agenda

Daniel Jones

Atlas Energy announce reserve increase

Mon, 01 Mar 2010 08:58:00 +0000

Atlas Energy, Inc. has identified over 3,150 horizontal Marcellus Shale drilling locations on its acreage and estimates that the incremental net recoverable reserves from these are 13 trillion cubic feet equivalents (Tcfe).

Atlas' reserve report has so far identified 73 Marcellus horizontal locations as proved undeveloped.

Atlas has prioritised developing its Marcellus Shale acreage in southwestern Pennsylvania and announced that its year end 2009 proved reserves totaled 1.02 Tcfe, driven by 34 percent growth in Appalachia reserves.

Approximately 52 percent of the Company's proved reserves were proved developed and approximately 99 percent were natural gas, according to Oil Voice.

"Reserves reflect the success of Marcellus Shale"

Throughout 2009 Atlas replaced over 850 percent of its production through the drill bit, and incurred total capital costs of approximately $109 million drilling and completing wells last year. This was comprised of its own investments in drilling partnerships it sponsored as well as the cost of wells drilled directly for its own account.

The Company's reserves-to-production ratio is 27.7 years; indicating the long-lived nature of the Company's reserves.

Speaking of the company's progress, Atlas chairman and CEO Edward E.Cohen said: "Our year end proved reserves reflect the success of our Marcellus Shale development-albeit limited by having funded almost all of our Marcellus Shale drilling in 2009 through our drilling partnerships, which served to limit our capital investment, but also limited the growth of our reserves.

"Now in 2010, having improved our cash flow through our transformation from a master limited partnership making large distributions into an operating entity reinvesting our cash flow in operations, we intend to grow our reserves and cash flow at an increased rate by drilling most horizontal Marcellus Shale wells for our own account."

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Daniel Jones

UK firms set to dominate global event

Mon, 01 Mar 2010 08:27:00 +0000

The forthcoming Subsea Tieback Forum in Galveston, Texas looks set to be dominated by the presence of UK oil firms.

Subsea UK members will make up more than a third of the exhibitors at the major international oil and gas event happening Tuesday through Thursday this week.

Over 50 companies, many of whom are based in Aberdeen, will showcase their products and services at the event, now in its tenth year, which has quickly become a major date in the calender for Subsea, which itself is amongst the fastest growing sub-sector of the oil and gas industry.

The forum was set up as a means for companies to share knowledge and collective experiences in order to improve the overall quality, safety and economics of the subsea sector.

This year's forum will be addressing new operational issues, challenges, and solutions associated with expanding global deep-water subsea operations. The key topics this year include high pressure / high temperature wells, reliability, field architecture, flow assurance, pipeline repair and intervention.

"The cream of British subsea oil and gas"

The UK has emerged as a world leader in subsea, and Subsea UK CEO Alistair Birnie is in no doubt that the presence at this years forum sends out a message to the entire oil and gas industry.

"Given our world-leading position, it is fitting that 53 of the 150 exhibitors are British. The Subsea UK members attending - a massive 25 percent of our membership - represent the cream of British subsea oil and gas capability.

"This significant UK presence underlines the importance of the Gulf of Mexico as a prime marketplace for UK expertise and experience. The technology and capability developed and in development by our member companies will be key to unlocking the significant prize underneath the deep waters of the Gulf.

"If the UK subsea sector is to maintain its position it must increase exports from $4 billion at present to around $10 billion. The Gulf of Mexico is a market of choice for our companies as it is well suited to our existing expertise and shared experience.

"However, we have to build on our successes and plough the depths of our skills and knowledge base to deliver on the next generation projects in this region."

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Atlas Energy announce reserve increase | Will political change make carbon tax inevitable? | Chevron to build solar park in New Mexico

Daniel Jones

Chevron to build solar plant in New Mexico

Wed, 24 Feb 2010 16:45:00 +0000

Chevron Mining Inc., a subsidiary of oil giant Chevron Corp., has announced plans to build the "largest concentrating solar photovoltaic power (CPV) plant in the nation" at a tailings site in northern New Mexico".

CSP is such a unusual and complex hybrid technology that many expected major investors to steer well clear - but not Chevron.

Chevron Technology Ventures will build the $10 million, 1MW CPV system on the tailing site of a mine in Questa, New Mexico and it sounds like its going to be pretty impressive. Chevron says the site will consist of 175 solar panels over a massive 20 acres - construction will start this Spring and is planned to be finished before the end of the year - and when completed it will be the largest CPV installation in the US and one of the largest in the world.

Meeting the world's energy needs

Unlike concentrating solar thermal plants (CSP), the CPV installation at Questa will use lenses to focus sunlight onto three-layer solar cells. The technology is thought to be twice as efficient as traditional solar panels and will use less photovoltaic material, company officials said.

Chevron will use CPV technology from Concentrix Solar, a Freiburg, Germany-based company that was spun out of the Fraunhofer Institute for Solar Energy Systems in 2005, and was sold to microelectronics supplier the Soitec Group in December. (Soitec bought 80 percent of the shares and 20 percent remain owned by Fraunhofer ISE and the company's founders and senior management).

Like its competitor BP, Chevron insist that alternative energy is an essential part of its energy mix to help the world meet its energy needs.

According to the company web site: "Meeting the world's growing demand for energy requires a broad mix of energy sources and unprecedented advances in technology. Chevron Technology Ventures Investments works to meet that challenge."

Using contaminated sites for renewable energy

Contrary to the opinion of many, Desmond King, president of Chevron Technology Ventures insists the company really do care about the development of alternative energy sources and is determined to revolutionize the clean-tech sector: "This new technology, if it demonstrates and works well, has the potential to make a step change in the amount of energy we can get out of a solar panel."

The site in Questa is a brownfield site and so the will benefit from the development. The idea of using brownfields or other contaminated sites for renewable energy development is gathering support rapidly across America

The Chevron Questa mine, which produces the metal molybdenum used in steel alloys, made news last year when the recession forced the mine to cut 50 percent of its staff. So it comes at little surprise that New Mexico Governor Bill Richardson, who made the announcement, is standing behind turning the tailing site of the mine into a site for clean power.

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Daniel Jones

Anadarko teams up with Mitsui in Marcellus Shale

Thu, 18 Feb 2010 16:23:00 +0000

Anadarko Petroleum Corporation has announced it will be entering into a joint venture with Mitsui E&P USA LLC, an affiliate of Mitsui & Co. Ltd in the Marcellus Shale.

Mitsui will participate with Anadarko as a 32.5-percent partner in Anadarko's Marcellus Shale assets primarily located in north-central Pennsylvania, at a cost of approximately $1.4 billion.

Mitsui will earn approximately 100,000 net acres in exchange for funding 100 percent of Anadarko's share of development costs in 2010, and 90 percent of these costs thereafter, with an estimated completion of all obligations by 2013, as reported by Oil Voice.

Mitsui will also be given the option to purchase a 32.5 percent share of Anadarko's existing wells and additional acreage acquisitions by reimbursing a proportionate share of Anadarko's prior expenditures, currently estimated to be approximately $100 million.

Energy Company of the Year

2009 was a good year for Anadarko that saw them pick up Platts Energy Company of the Year with Chairman, President and CEO, James T. Hackett also being named CEO of the year.

Speaking of the acquisition Hackett said: "We are very pleased to have Mitsui as a partner in the Marcellus Shale.

"This transaction reflects the significant value of Anadarko's fairway position in the Marcellus Shale, which has a gross unrisked resource potential of more than 30 Tcf (trillion cubic feet) of natural gas and spans more than 715,000 gross acres.

"We continue to ramp up our activities in the Marcellus and anticipate drilling more than 4,500 wells over the coming years. We have successfully partnered with Mitsui in other parts of the world and look forward to working with them and our other partners in the Marcellus, as we continue to develop and deliver these domestically produced, clean-burning natural gas resources to American consumers."

The joint venture is effective of January 1 2010.

Relevant articles:

Exxon profits take a hit | Will political change aid carbon tax? | Offshore drilling high on agenda

Will political change make carbon tax inevitable?

Mon, 15 Feb 2010 16:33:00 +0000

The loss of a Democratic Senate seat in Massachusetts may have sent a few moderate ripples through Washington, but it could turn out to play a significant role in America's energy future.

This slight shift in the political landscape is likely to mean that the much-hyped "cap-and-trade" bill will not get passed this year. As a result, decision makers will be left with little choice but to pass an equally unpopular and contentious bill if they want to start seriously cutting carbon emissions - a carbon tax.

Something else that looks set to get the carbon tax wheels in motion is the current level of US budget deficit, expected to reach $1.35 trillion in 2010, according to US Congress estimates. The present and previous administrations have had to balance wars overseas and damaging recession which has meant excessive spending and falling revenue. By 2020, the government's debts will equal 77.2 percent of G.D.P. This level of indebtedness has not been seen since 1950, in the aftermath of the borrowing to finance World War II, and even these are based on relatively optimistic economic projections.

Creative ways to make money

This means the Obama administration has to be rather creative with ways to make money. Raising standard taxes is a highly unpopular move across the board but with taxes on emissions (either through cap-and-trade or the slightly more crude tax on carbon) Obama also appears to be helping the environment - two birds, one stone.

This would be a major source of much needed revenue for the government, but many economists are suggesting that this form of tax should be "recycled" by lowering income taxes or corporate taxes or giving it back to households in dividend checks.

This is where the nature of the tax changes from 'revenue maker' to 'problem solver', and this is where people may hopefully start changing their perception of tax as a means of fighting climate change rather than a means for Washington to line its pockets.

Homes and cars with 'eco-bling'

Generally speaking when something gets taxed people use less of it, so on paper a carbon tax, or carbon permit auction revenue, should work. But it isn't just the business world that will be affected. It will impact anybody using traditional fuels to power their cars or heat their homes, and as wealthier groups decide to decorate their homes and cars with 'eco-bling' (such as roof-mounted wind turbines), this will increasingly be the poor and middle classes.

So whereas the shift in political landscape may make a tax on carbon more likely, it won't make it any easier to take.

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IEA hikes up global oil demand forecast for 2010

Thu, 11 Feb 2010 17:06:00 +0000

The International Energy Agency (IEA) has revised up its oil demand growth forecast for 2010 saying most demand will come from emerging, non-OECD economies.

The Paris-based intergovernmental organization, and adviser to 28 industrialized economies, said today that it expects consumers globally, led by China, to burn more crude oil this year than previously forecast as the economic recovery gathers pace.

It expects oil demand this year to be 170,000 barrels per day (bpd) higher than previously expected. Demand is estimated at 86.5 million bpd, representing an increase of 1.6 million bdp compared with 2009 levels, the IEA said in its monthly report on Thursday.

Two years of falling consumption

The strong uptick in demand comes after two years of falling consumption as the world struggled with the deepest financial crisis in over sixty years. The IEA estimated oil demand would now average 86.50 million bpd this year, just 10,000 bpd below the all-time peak seen in 2007.

"The demand growth is all coming from countries east of Suez," David Fyfe, head of the oil industry and markets division of the IEA told Reuters.

"The emerging economies of China, India, the rest of Asia and the Middle East is where all the action is," he added.

Some argue the IEA's role as an advisor to wealthy nations means that it has no choice other than to "talk up" the need for oil markets to have plenty of the commodity available, and in the past the IEA's judgement has been called into question.

Extreme pressure to "distort" figures

Just last year UK newspaper the Guardian reported in November that that a whistleblower from within the IEA claims the organization came under extreme pressure from the US to "distort" figures that pointed towards a looming shortage, for fear of triggering panic buying.

So in what what seems to be a move that covers their back should things significantly go against its predictions, the IEA warned that if global economic growth doesn't meet expectations, oil demand could be around 400,000 bpd lower.

"We are aware of the economic uncertainty ... but we think there is significant growth potential in Asia, the Middle East and other [emerging] countries," said Fyfe.

Oil prices rose 25 cents to $74.80 in New York in early trading today. Prices have fluctuated between $70 and $80 a barrel in recent months amid due to consistently conflicting economic signals.

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BP Chief: Renewables not meeting needs | Offshore drilling still high on the agenda | Big exploration challenges

BP Chief: Renewables cannot meet our needs

Tue, 09 Feb 2010 17:15:00 +0000

It probably wouldn't come as a surprise to many to hear the CEO of one of the world's leading oil companies insisting that future energy needs will not be met by renewables alone, and that clean energy will need hydrocarbons to play a "major role".

That's what BP CEO Tony Hayward has claimed.

He told an audience at the London Business School that it would be foolish to rely on "ambitious" plans to expand offshore wind to meet demand in twenty years time, claiming that projections made by BP indicate that the global demand for energy will increase by 45 percent by the year 2030 and actually double by 2050.

Trying to meet this demand will cost around $1 trillion a year, every year according to BP. Meeting the increasing energy needs would also require changes in the "energy mix", Mr. Hayward said, including low carbon energy and greater energy efficiency.

"Re-engineering of the global economy"

New Energy Focus reports that Hayward argues it would be "foolish to underplay the role that natural gas and energy conservation can play in reducing carbon emissions" because of uncertainty surrounding many of the world's future renewable energy plans. But he does concede that the share of renewable power in the energy marketplace would increase.

He said that people had to be "realistic" about the overall contribution renewables could make - and the role oil and gas would therefore have to play.

"The challenge of creating a low-carbon economy is far from easy, requiring the wholesale re-engineering of the global economy over time," he said.

"Today, all of the world's wind, solar, wave, tide and geothermal energy accounts for around 1% of total consumption. Given the practical challenges of scaling up such technologies, the International Energy Agency can't see them accounting for much more than 5% of consumption in 2030, even with aggressive policy support.

"Undoubtedly nuclear energy and biofuels will play a part, and by 2030 carbon capture technology could be deployed at scale. But there will still be a major role for hydrocarbons."

Wide mix of energy types

It is quite dangerous for the chief of such a large and influential company to underplay the role of renewable energy at a time when so much time and money is being invested across the globe to create a cleaner, safer, more secure energy future not just to those who can afford it, but also to less developed nations where the effects of climate change are felt the most.

Whereas energy firms like BP have a right to make as much money as they can, they also have a responsibility to allow for the development of alternative sources of power in order to help improve the living standards of those who need it most.

However Hayward does not overwrite the need for clean energy all together, rather he stresses the need for a wide mix of energy types in 20 years time. A diversification of resources and technologies will be vital for moving us towards renewables until they are ready to stand alone in meeting the world energy demands.

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Exxon profits fall | Big exploration chalenges for Shell et al | Offshore drilling still high on the agenda

Exxon profits take a hit

Mon, 01 Feb 2010 16:50:00 +0000

America's largest oil company, Exxon Mobil Corp., has posted a 23 percent fall in profits but the result was slightly better than Wall St. feared as losses in its refining arm were offset by a boost in exploration thanks to a hike in natural gas projects.

Exxon made a net profit of $6.05 billion in the fourth quarter of 2009, compared with the $7.82 billion it made in the same period in 2008. Weak fuel demand in the global economic slowdown hurt the company's refining business much like pretty much every other energy company out there.

Exxon's oil and natural-gas production climbed 1.6 percent to the equivalent of 4.18 million barrels of crude a day, helping Exxon take advantage of the biggest yearly gain in oil prices since 1999. The recession eroded demand for motor fuels, leading to losses of $2 million a day at Exxon's refineries. Full-year profit fell below $20 billion for the first time since 2002.

"Given what a drag refining has been on earnings, these results were better than I expected," said Gianna Bern, president of Brookshire Advisory & Research Inc. in Flossmoor, Illinois, who predicted per-share profit of $1.11.

"Continue investing in new energy supplies"

"The increase in production is very encouraging and it shows this company has laid the groundwork for long-term growth," he added.

Exxon chairman Rex Tillerson said: "Our financial strength provided us with the foundation to continue investing in new energy supplies to help meet global energy demand and to fuel economic growth."

"Capital and exploration spending was $27.1 billion in 2009, another record year, and in line with our longer-term plan."

Exxon were helped in a big way by its wells in the US, Russia, the Middle East and Canada where, in the last three months of 2009, the company saw an impressive hike in oil being pumped.

Last week, Chevron reported a 37 percent drop in quarterly profit. Fellow oil giants BP and Royal Dutch Shell, not wanting to feel left out but hoping they can surprise Wall St. like its rival Exxon, also have figures out later this week.

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Big exploration challenges for Shell et al

Tue, 26 Jan 2010 09:22:00 +0000

Making money in the oil industry used to be pretty simple. If you found it, you drilled it and you made a whole lot of profit.

But if John D. Rokerfeller tried his hand in the oil market of today then Standard Oil probably would have been forced to diversify away from black gold. For example, nowadays if Rockerfeller struck oil in the desert he would have had to employ a whole army of scientists and engineers to construct a huge factory capable of transforming natural gas into liquid that can be used like oil.

He would have have been horrified by the price tag.

The capital cost of Royal Dutch Shell's Pearl gas-to-liquids plant in Qatar is a cool $18 billion or more - 10 percent of its market capitalization. Like Chevron's Gorgon liquefied-natural-gas project offshore Australia, it shows what big integrated oil companies are capable of spending.

But does it have to be like this for the world's oil giants? The Wall Street Journal asks the question: Have they neglected bread-and-butter exploration for lower-risk, lower-return engineering projects?

The figures regarding the percentage of energy-sector market capitalization made up by international oil companies (IOCs) have changed significantly over the last decade. At the start of the 2000s, it stood at 70 percent.

Exploration opportunities squeezed

Today the figures are 53 percent and 62 percent, according to Sanford C. Bernstein. Shell trades at a discount of 13 percent and 36 percent respectively to the 2010 forward price-to-earnings multiples at Petroleo Brasileiro and BG Group. But their estimated five-year average output growth is 5 percent and 9 percent compared with Shell's 3 percent, around the IOC average, writes WSJ's Matthew Curtin.

As geopolitics grow ever more tense and nations become increasingly over protective of their natural resources, governments face a tough choice between security and profit. This leads to exploration opportunities being squeezed.

What IOCs need nowadays is a blockbuster discovery that can shift the odds in their favor. You only have to compare companies such as Shell and BG to see this happening. When the smaller BG struck big off the coast of Brazil and West Africa, it spent 16 percent of net cash on exploration whereas Shell spent only 3 percent.

It is about finding the right balance between high-cost, widespread exploration and waiting for the one-off drilling blockbuster.

But sometimes you simply have to speculate to accumulate.

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Offshore drilling still high on the agenda

Thu, 21 Jan 2010 14:56:00 +0000

The federal courts remain a battle ground over the location of America's next oil frontier.

Obama's first year in office his policies over offshore drilling has been unclear to say the least. He despite his retoric about curbing fossil fuel usage, in December last year the Interior Department gave the go-ahead for Shell Oil to begin drilling three exploratory wells in the Chukchi Sea, a move that opened the door for production in a new region of Alaska's Arctic.

However another proposal, an aim to drill for oil or natural gas in Florida state waters, has been simmering for some time, yet debate remains heated.

Even as the state Legislature continues to tread water, with Senate President Jeff Atwater's directive that the proposal be studied further before legislation will be considered, around three dozen recently gathered in city commission chambers next to the Capitol to hold a pretty lively debate.

Interference from environmentalists

Progress for the issue of drilling off the coast of Florida has always painfully slow which can only be down to the interference from environmentalists, because the benefits have always been glaringly obvious. According to an ICF International study, offshore developments would create 13,142 jobs and $428 billion in revenues through offshore development, helping Florida to overcome its nearly 11 percent unemployment rate.

It looks like the coast of Florida will indeed soon be populated with a rig or two, which would contradict Obama's previous statements in opposition of any expansion in drilling off American shores based on environmental grounds.

It's easy to understand why both the oil and gas industry and environmentalists have been critical of Obama's policies, especially when, last year, he was involved in the decision that allowed the US Export-Import Bank to give Brazilian-based oil company Petrobras loan guarantees to help finance lucrative offshore drilling off the coast of Rio De Janeiro.

So whereas the oil sector was critical of his prolonged deliberation over exploration in Florida waters, environmentalists are furious with Obama for seemingly being willing to promote the conservation and protection of the ecology in the waters off the coast of America, whilst showing very little concern for the environment elsewhere.

And then he approves drilling in Alaska just to make sure everyone has no clue about his real policy on off-shore drilling.

Good news for off-shore lobbyists

However, there has been some good news for the off-shore drilling lobbyists. According to a new study commissioned by a group of retired military leaders and business executives that has long advocated increased domestic energy production, the argument that increased oil and natural gas drilling in the Gulf of Mexico would hurt military training and weapons testing has been dismissed as having "no merit".

Opponents have often cited a letter, written in 2005 by then-Secretary of Defense Donald Rumsfeld, that called offshore drilling "incompatible" with training and weapons testing off Florida's shores, but this claim is now facing a fierce challenge.

The report states that Rumsfeld's claims, "were, and continue to be, not credible".

Its assessments "are clearly showing that oil and natural gas production will not encroach on the military missions in the Gulf."

The study is based on an analysis of various Defense Department documents as well as consultations with officials from the Offices of the Secretary of Defense, the Department of the Navy, and the Department of the Air Force, and other government agencies.

One fears that this will only add fuel to the fire as the Senate continues the debate over drilling legislation.

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North Sea exploration lowest for five years

Tue, 19 Jan 2010 09:23:00 +0000

North Sea oil and gas exploration dropped by 35 per cent last year, taking it back to levels last seen five years ago, according to figures published by Deloitte yesterday.

Throughout the whole of 2009, only 78 new wells were drilled in the North Sea region in 2009, compared with the 121 drilled in 2008. Meanwhile exploration was down by almost 50 percent and appraisals by 25. However, in somewhat of an anomaly new drilling in the Norwegian North Sea shot up by 18 percent last year thanks to a more generous tax regime.

Harsh taxes are said to be the reason that activity in the UK's North Sea activity has been stunted. Oil production is also by far the most highly taxed part of the British economy, with its own special rate of 50 percent, rising to 75 percent for older fields.

Positive outlook for 2010

"The North Sea is in decline as a source of hydrocarbons and although there are companies out prospecting for more, Britain has no real incentives to encourage them and slow down the decline," Graham Sadler, the managing director of Deloitte's Petroleum Services Group, to UK newspaper the Independent.

Elsewhere the value of oil and gas deals announced last year increased by 10 percent from 2008 to $198 billion, although the total number of deals fell from 1,152 to 837, according to Ernst & Young's third annual global oil and gas transactions review.

Upstream deals accounted for 72 percent of oil and gas deals announced in 2009, leading to a positive outlook for the sector in 2010, says Ernst & Young.

"Stronger exploration budgets"

"The positive trends that we have seen in recent months are likely to continue into 2010 and the outlook for oil and gas transactions is healthy in upstream and oilfield services," says Andy Brogan, global oil and gas transaction advisory leader at Ernst & Young.

A strong recovery in the upstream sector has been attributed to higher oil prices generating a scurry of equity investments.

Jon Clark, oil and gas director at Ernst & Young, said: "The oil price has strengthened, equity capital is starting to flow back into the sector, development projects are coming back on stream with increasing frequency, and stronger exploration budgets are being set for 2010."

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Norex and Tesla agree merger deal

Tue, 12 Jan 2010 08:54:00 +0000

Exploration firms Norex and Tesla have agreed a merger deal in hope of creating an "internationally focused, financially strong, geophysical services company" that will capitalize on the existing strong fundamentals for global oil and natural gas development.

Norex Exploration Services Inc. and Tesla Exploration Ltd., a private company headquartered in Calgary, Alberta, announced today that they have entered into an agreement under which Tesla shareholders will exchange "each common share held, on an exempt take-over bid basis, for 8.4333 common shares of Norex", as described by Marketwire.com.

Shareholders representing in excess of 90 percent of the outstanding common shares of Tesla, and shareholders representing 64 percent of the outstanding common shares of Norex, have signed lock up agreements in support of the Combination.

Subject to customary conditions

The proposed combination is subject to customary conditions precedent to closing, stock exchange and regulatory approvals as well as approval by a simple majority of the shareholders of Norex voting in person or by proxy at a meeting of Norex shareholders to be scheduled for late March 2010.

Mr. Paul Crilly, the President & CEO of Norex, stated: "This transaction is consistent with Norex's continuing consolidation strategy and its pursuit of international expansion.

"Our long-term vision has been the creation of North America's premier seismic acquisition company, and the proposed Combination, we believe, facilitates this."

Mr. Richard Habiak, the President & CEO of Tesla, stated: "This transaction will create a leading geophysical services provider with strong operations internationally as well as a broad footprint in North America."

Aggressive international growth

He added, "Tesla has been successful in achieving aggressive international growth throughout the past five years and we are excited to continue this growth through the combination of the operations and equipment of Tesla and Norex.

"After the closing of the Combination, Tesla will be the largest geophysical services provider in Canada."

The deal, unanimously approved by the board of directors of both parties, means Tesla shareholders will own around 70 percent of the outstanding shares of the pro formal company and the current shareholders of Norex will own approximately 30 percent.

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Total enters US shale gas market

Mon, 04 Jan 2010 16:57:00 +0000

Europe's third largest oil producer, Total SA, has agreed to buy 25 percent of Chesapeake Energy Corp's upstream Barnett Shale assets in a deal worth $2.25 billion.

Total E&P USA will pay $800 million in cash but will provide an additional $1.45 billion by funding 60 percent of Chesapeake's share of drilling and completion expenditures until the end of 2012, Chesapeake said.

The assets include about 270,000 net acres of leasehold in the core and Tier 1 areas of the Barnett, about 700 million cubic feet of natural gas equivalent per day of current net production and about 3 trillion cubic feet of natural gas equivalent of proved reserves, according to the statement from Chesapeake.

The deal comes in addition to other similar investments by European rivals in North American shale gas after gas prices has fallen sharply over the last 18 months as a result of the global financial downturn.

Long-term resource base

"Total is pleased to be making a strategically important move by entering into the US shale gas business with Chesapeake, the world's leading shale gas operator," Total Chief Executive Officer Christophe de Margerie said in a statement.

"This joint venture will provide us with a solid position in an attractive long-term resource base under competitive terms," he said, adding that the deal provided another key support for Total to build its gas value chain position in the US, which is the world's largest and most liquid natural gas market, as told by Reuters.

Total have said they are aware of the environmental dangers involved in extracting shale gas, but made it clear that one of the things that attracted them to Chesapeake was its capacity to contain the impact of the Barnett Shale gas operations on the environment while also respecting local and federal regulations and guidelines.

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Exxon Mobil buys XTO Energy for $41bn

Tue, 15 Dec 2009 15:10:00 +0000

Yesterday was 'Mega Merger Deal Monday' for Exxon Mobil as they announced they would be snapping up Texas-based natural gas producer XTO Energy for a reported $41 billion.

The move comes as Exxon look to boost its US natural gas reserves in the ever more testing global energy market, analysts are calling the acquisition a bet on future demand for natural gas as the nation looks for energy sources with lower greenhouse-gas emission levels than coal and oil.

The deal also indicates a growing confidence among utilities that recent advances in exploiting natural gas from widespread deposits of shale rock have unlocked vast supplies of gas for wider use at reasonable prices.

Good for security and economy

Under the terms of the deal, Exxon will pay XTO shareholders 0.7098 common shares for each of their XTO shares, or about $51.69 based on Friday's closing prices. The deal, which is taking advantage of low natural gas prices, represents a 25 percent premium for XTO's shares, as reported by the New York Times.

The deal is also expected the generate a number of jobs, making it good news for America's economy as well as its energy security.

As WashingtonPost.com reports, the deal reflects the "long-term energy view, which would be that natural gas would be the fastest-growing fuel over the next 30 to 40 years," said Deutsche Bank oil analyst Paul Sankey. "We're moving from a 20th century driven by gasoline to a 21st century driven by electricity, and the way you're going to generate it is through natural gas as much as anything."

45 trillion cubic feet of gas

The deal will give Exxon the equivalent of about 45 trillion cubic feet of natural gas throughout the United States, in a bet that demand will continue to rise. XTO, founded in 1986, is the nation's largest domestic producer of natural gas.

"XTO is a leading U.S. unconventional natural gas producer, with an outstanding resource base, strong technical expertise and highly skilled employees," Rex Tillerson, Exxon's chief executive, said in a statement.

XTO's chairman, Bob Simpson, responded by saying, "as the world's leading energy company, Exxon Mobil will... open new opportunities for the development of natural gas and oil resources on a global basis."

There is speculation within the industry that the deal could spark a mass sell off of other natural gas producers with firms such as Devon Energy now considered potential takeover targets.

The deal is expected to be completed by late 2010.

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Iraq auctions expose US fall from grace

Mon, 14 Dec 2009 13:36:00 +0000

Iraq's biggest oil field auction in decades took place on Friday and Saturday of last week and should have presented to the world the huge steps Iraq are taking towards political and economic stability, but instead gave an insight into the fall of American capitalism.

Out of the ten deals done so far, including in auctions earlier this year, US-based oil firms emerged as the dominant party in only one. Joint ventures by companies from Europe and Asia took the lead role in what many are now seeing as a clear sign that America's dominance of the global financial system is finally coming to an end.

Companies from China, Russia, Malaysia and Angola, along with several European oil giants, won most of the rights for exploration and development of Iraq's oil fields as the company cries out for foreign investment after years of war.

Collapse felt around the world

Since the global economic slump the American financial system has suffered a huge blow to its reputation and the effects of its collapse were felt around the world. Now a number of world leaders are looking to move away from the ailing "superpower" in an effort to reduce their dependence on it. And it appears that even in a country conquered and occupied by the US military, American companies are struggling to match the ambitions of foreign rivals.

As reported by WSWS.org, a total of 15 oil fields were put up for bidding, with five receiving no bids, because they are located in areas in the center and north of Iraq that remain unstable. But the main interest was in oil fields in the southern part of the country, around Basra.

Obama has made his stance on the importing of foreign fuel quite clear - reduce reliance in order to ensure energy security. However, US energy companies would surely have been eager to take a decent slice of Iraq, which boasts the world's third-largest proven reserves. It is believed Iraq even has undiscovered reserves that could be as extensive as the oil already known to exist.

"Terms are not generous"

But the plentiful oil fields of Iraq may not be as exciting as first thought. Richard Champion, fund manager at Principal Investment Management, which owns Shell stock, says that although "the reserves potential from the fields is exciting the terms are not generous."

The main problem is that though the volumes are high and the costs of extraction low, the companies will receive a low, flat fee and will not benefit when oil prices rise. This has got investors worried.

And this could well be a reason US firms steered clear, because although seven of them registered and paid fees to participate, only one actually submitted a bid to the most recent auctions.

Furthermore, US firms needed higher fees to offset the substantially higher security costs they face in Iraq, due to the widespread popular hostility to the US occupation. Any US-run oil facility in Iraq would be a high-profile target for insurgent attack, and any attack could mean huge losses.

Oil companies justify their interest in Iraq by saying it will give them a presence from which they will be able to build a profitable business in the future. So although for the time being US firms view the decision to keep their distance as a sensible one, in a decade or so, when we are even closer to peak oil, they may regret it.

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Global firms fight over Iraqi oil fields

Fri, 11 Dec 2009 01:04:00 +0000

Today saw the biggest auction for Iraqi oil fields in decades as oil giants from across the globe looked to cash in on the country as it tries to emerge from war and widespread poverty.

Iraqi officials were hoping firms would look beyond persistent security fears and strike deals crucial for the country's reconstruction efforts. Iraqi Prime Minister Nouri al-Maliki, at the start of today's auction, looked to relieve oil executives concerns about the bombings and other incidents that have come to define this oil-rich nation after the 2003 US-led invasion to topple Saddam Hussein.

"There is no security deterioration in Iraq even if a security violation took place here," al-Maliki told officials and company representatives gathered at Iraq's Oil Ministry under extremely tight guard.

Luring major oil companies

However, his hopes of luring a significant number of oil companies with its plentiful oil reserves were met with mixed results. Only two deals were struck as security fears appeared to weigh heavy on the minds of oil executives.

Of the 15 fields on offer in the two-days of bidding, only those located in the relatively stable southern region of Iraq attracted heavy interest, while five located in more restive regions were withdrawn and a sixth field drew only one bid. In all, Iraq offered fields with roughly a third of its 115 billion in proven reserves of crude.

The volatile northern regions surrounding Kirkuk have been the subject of great concern for the Iraqi government and potential investors, as Kurdish extremists continue to make life difficult for those that actually want to see Iraq become an economically and politically stable state.

This comes as a rather sobering message to the Iraqi Prime Minister after his attempts to instill optimism.

Wave of attacks across Baghdad

It was clear, though, that the significance of a wave of attacks across Baghdad earlier this week, which killed at least 127 people, was not lost on executives from the 44 companies participating in the auction. The attacks shook confidence in the abilities of Iraq security forces as US troops depart, as reported by Click2Houston.com.

In the first deal of the day, European oil giant Shell teamed up with Malaysia's state-run Petronas to beat out a consortium grouping France's Total SA and China National Petroleum Corp. to win the southern Majnoon field. The 12.58 billion barrel behemoth in the Basra region was the biggest on offer in the first day of the auction.

The Shell-Petronas consortium will receive $1.39 per barrel produced, and said they would raise production from the current 45,900 barrels per day to 1.8 million barrels per day over a ten-year period. Total and CNPC had asked to receive $1.75 per barrel, while offering to raise production to roughly 1.4 million barrels per day.

More deals to come

The second and final deal of the day was on the 4.1 billion barrel Halfaya field. CNPC, Petronas and Total teamed up on that bid, beating out three other consortiums led by Italy's Eni, Norway's Statoil ASA and India's ONGC.

Under the terms of the deal, CNPC, Petronas and Total will get $1.40 per barrel produced, and said they would raise production from the current 3,100 barrels per day to 535,000 barrels per day over 13 years, according to details released by al-Shahristani.

Although the auction didn't go as hoped, the deals that were struck are absolutely vital to Iraq's future, and add to the deals that were done earlier this year. The country is currently limping along with production at about 2.5 million barrels per day, of which roughly 2 million barrels a day is exported.

Despite the disappointment, analysts say day two of the auction on Saturday, may see another major deal being signed.

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Anadarko: Energy company of the year 2009

Mon, 07 Dec 2009 17:03:00 +0000

Anadarko Petroleum Corporation has been given two major oil and gas awards by Platts.

At a recent ceremony, the oil giant won the 2009 Energy Company of the Year award and the its Chairman, President and CEO, James T. Hackett was named 2009 CEO of the year by Platts, a leading global provider of energy and commodities information serving customers across more than 150 countries.

Larry Neal, president of Platts, said "it's no surprise that the judges found Jim and his firm to be exemplary of not only leadership, but execution."

Three years ago Anadarko acquired two major competitors, and the judges highlighted the transformation within the company since then and during the recent global economic crisis. The judges praised the company and its CEO for successfully steering Anadarko through numerous divestitures, exceeding its production targets, restoring its balance sheet and maintaining its commitment to exploration, which paid off in one of the world's top 10 discoveries offshore Ghana, as reported by Scandoil.com.

"It is a tremendous honor"

In his acceptance speech, Hackett said: "It is a tremendous honor to accept these awards on behalf of our employees.

"I would like to thank Platts for this recognition and also express my gratitude to our Board of Directors for supporting our vision, and to all of the professional men and women at Anadarko who successfully deliver upon our commitments while adhering to our core values, which include serving others.

"We are proud to be a part of an industry that provides an essential resource for the health and welfare of our world. This has been a very good operational year for Anadarko, and we look forward to continued success in 2010 and beyond."

The Platts Global Energy Awards judge the Energy Company of the Year on innovation, strategic vision, financial results, customer care, operational excellence and sustainability initiatives.

Anadarko caught in a storm with the government

Earlier this eyar Anadarko were caught up in a storm with the US government when the Supreme Court passed a ruling that the Obama Administration claimed could block the federal government from collecting as much as $53 billion in royalties from energy companies drilling in the deep waters in the Gulf of Mexico.

The ruling meant that Anadarko no longer owed the Interior Department at least $350 million in royalties for production beginning in 2002.

But since 2006, Anadarko has designed a portfolio of assets that combines producing properties that have consistently met or exceeded the company's sales-volumes guidance with worldwide deep water exploration prospects that have resulted in numerous material discoveries in Brazil, the Gulf of Mexico and West Africa.

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