Saturday, 30 August 2014

Bakken operators told to cut flaring or face crude caps

North Dakota, the second-largest U.S. oil-producing state amid booming output from shale, plans to punish crude explorers that fail to curtail the burning of natural gas as waste.

Energy companies that don’t curb so-called gas flaring will face limits on the amount of oil they can pump from the Bakken shale formation, the North Dakota Industrial Commission said in a statement today, July 1.

North Dakota is cracking down on flaring that increases air pollution and also casts a glow in the night sky that can be seen miles away from remote well sites. Oil companies routinely burn off gas that emerges along with crude from wells when local pipelines or demand are insufficient to absorb the fuel.

North Dakota’s daily crude output surpassed 1 MMbbl in April for the first time in history, making the state a bigger oil supplier than OPEC members Ecuador or Qatar. In the U.S., Texas is the only state that pumps more crude than North Dakota, according to the Energy Department.

The industrial commission wants a 26% reduction in gas flaring statewide by the fourth quarter of this year and another 23% by the first quarter of 2015, according to the statement. The commission is comprised of Governor Jack Dalrymple, Attorney General Stenehjem Wayne and Agriculture Commissioner Doug Goehring.

Mosdor Global Estates, providing support in the buying and selling of crude oil, other petroleum products. Publishing news and reviews in the oil and gas plus real estate industry online.

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Thursday, 28 August 2014

Keystone win easier with Canada carbon limits, Trudeau says

Justin Trudeau says he would bolster Canada’s case for approval of the Keystone XL pipeline by introducing financial incentives to curb greenhouse-gas emissions in the oil and gas industry.

Canada should establish a price for carbon emissions to show it’s addressing climate change and to give President Barack Obama political “cover” to approve TransCanada Corp.’s $5.4 billion project, Trudeau, leader of Canada’s Liberal Party said yesterday, June 25, in an interview in Fort McMurray, Alberta. He said he was “agnostic” about how the price should be set.

“The way to promote Keystone XL is not to be shouting, ‘You need to approve this.’ It’s to actually get our own house in order and demonstrate we’re serious about the responsibilities that come with carbon emissions,” said Trudeau. “That’s why it’s become politically untenable to approve something that should have been approved years ago.”

Trudeau’s call to action contrasts with Prime Minister Stephen Harper’s position that he won’t regulate oil and gas emissions without similar U.S. measures because it would put Canadian producers at a competitive disadvantage. Harper and his ministers have continued to press for Keystone in speeches and meetings with U.S. officials.

The State Department said in April it would again delay a decision on Calgary-based TransCanada’s conduit in order to give parties more time to comment. That further stalled a project first proposed in 2008 and originally intended to come online in 2012. Obama has said he won’t approve the pipeline if it significantly adds to carbon emissions linked to global warming.

Crude Discount

Canada has the world’s third-largest crude reserves, much of it in the oil sands near Fort McMurray. The area’s heavy crude has traded at an average of $18.70 per barrel below the U.S. benchmark over the last five years due in part to transportation bottlenecks. The discount costs Canada’s economy as much as C$50 million a day, according to the Canadian Chamber of Commerce. Keystone XL would carry 830,000 bopd from the oil sands to Gulf Coast refineries.

Natural Resources Minister Greg Rickford said he’ll continue working with U.S. Energy Secretary Ernest Moniz to “enhance cooperation on energy and the economy.” Canada won’t “take actions unilaterally that would put Canadian jobs and the economy at a disadvantage,” Rickford said in an emailed statement today, June 26, in response to Trudeau’s comments.

Rickford, Finance Minister Joe Oliver and Foreign Affairs Minister John Baird all traveled to New York this month, arguing in media interviews and at an energy conference that Obama has unfairly entangled the $5.4 billion pipeline with U.S. politics.

‘Worse Relationship’

“It’s not moving forward,” Trudeau said of the pipeline. “We’ve never had a worse relationship with the United States, because perhaps our entire continental relationship has been reduced to not just one industry or one company but one single project.”

Trudeau, son of former Prime Minister Pierre Trudeau, cited moves by Obama this month to cut emissions from U.S. power plants, that country’s largest source of greenhouse gases.

Harper said June 9 that the U.S. moves don’t go as far as Canada’s regulations in the power-generation sector. He said Canada would deal with climate change in a way that protects Canadian jobs, not destroys them.

Trudeau, 42, said his Liberals would spell out in an election platform how they would go about putting a price on carbon. Former Liberal leader Stephane Dion lost the 2008 election after proposing a carbon tax that was vilified by the Conservatives.

Leading Polls

The Liberals have held a consistent lead in public opinion polls since Trudeau became leader in April last year. While the next general election is scheduled for October, 2015, there are partial elections scheduled June 30 to fill four vacancies, including the district containing Fort McMurray.

“The Liberal Party is somewhat agnostic,” Trudeau said. “We recognize the fact that the discussion around carbon pricing has been incredibly polarized politically.”

Harper’s Conservative-Party government has been regulating greenhouse-gas emissions on an industry-by-industry basis. The main opposition New Democratic Party has proposed a cap-and-trade system, which Conservative lawmakers have labeled a “tax on everything.”

At the provincial level, Alberta requires companies that emit more than 100,000 metric tons of greenhouse gases a year to cut emissions per barrel by 12% percent or pay a penalty of C$15 per ton. The proceeds of the levy are paid into a fund that invests in technologies that cut carbon output.

Carbon Tax

British Columbia established a carbon tax in 2008, which is imposed on fossil-fuel consumers and designed to encourage use of alternative fuels.

Whatever form the carbon price takes, businesses need clarity, Trudeau said. Companies “want to know where the benchmarks will be, what the expectations will be, for the next 10 years, for the next 25 years.”

“That kind of clarity will allow industry to make a business model, invest in capital upgrades they need to justify to their shareholders,” he said. “That kind of clarity is exactly what this government hasn’t given.”

While Trudeau has joined Harper in supporting Keystone XL, he reiterated his intention to kill another proposed pipeline: Enbridge Inc.’s Northern Gateway, which was approved by Harper’s cabinet earlier this month.

Trudeau said the project, which would cross the mountains of British Columbia and bring oil sands crude to the Pacific Coast for export by tanker, never had local support and was “doomed” from the beginning.

“There are a lot of tools at a prime minister’s and a government’s disposal,” Trudeau said when asked how he’d stop Northern Gateway. “We’ll use the most appropriate one that has the lowest impact and cost for Canadians.”

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Tuesday, 26 August 2014

NuPhysicia, Atlantic Offshore Medical Services to serve Canadian oilfield operations

NuPhysicia, Inc., a global telemedicine technology and care provider, announced that it will deploy telemedicine and electronic medical records (EMR) throughout Canadian locations with its latest partner, Atlantic Offshore Medical Services (AOMS).

AOMS is rolling these advancements out at 10 of its operated facilities throughout Canada, where it has been serving drilling contractors, operators and other industries for more than 35 years.

Through the added telemedicine applications, AOMS now enables on-site medical staff is now able to “beam in” a physician for diagnosis and treatment. Doctors and patients can see and speak to each other, and special medical scopes allow the doctor to listen to the patient’s heart and lungs, as well as see inside the patient’s ears, nose, and throat, without the wait or risk of a medical evacuation.

By implementing the EMR system, healthcare workers can share charts, vitals and medical information in remote situations, with the information captured for physician review and future care. AOMS now has 22 doctors and 50 paramedics and nurses using the system, the company reported.

Mosdor Global Estates, providing support in the buying and selling of crude oil, other petroleum products. Publishing news and reviews in the oil and gas plus real estate industry online.

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Sunday, 24 August 2014

OPEC June output rises as members fill in for Iraq, survey shows

OPEC crude production climbed for a second month in June as gains in Saudi Arabia and Nigeria made up for the loss of Iraqi barrels, a Bloomberg survey showed.

Production by the 12-member Organization of Petroleum Exporting Countries rose by 278,000 bpd to 30.223 million, according to the survey of oil companies, producers and analysts. Last month’s total was revised 43,000 bpd lower to 29.945 million because of changes to the Kuwaiti, Libyan and Ecuadorian estimates.

Iraqi production tumbled 400,000 bpd to 2.9 million this month, according to the survey. It was the biggest drop in June and left the country pumping the least oil since September. Iraq is OPEC’s second-biggest producer.

Saudi Arabia, the group’s biggest producer, bolstered output by 230,000 bpd to 9.9 million, the highest level since September, when the desert kingdom pumped 10 MMbpd, the most in monthly data going back to 1989.

Nigeria’s production rose 200,000 bpd to 2.15 million in June, the second-biggest gain in the survey. It was the highest output since September.

OPEC ministers kept their output target unchanged at 30 MMbpd on June 11 in Vienna.

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Friday, 22 August 2014

Pre-salt production hits new record, Petrobras says

On June 24, oil production in the fields operated by Petrobras in the so-called pre-salt province in the Santos and Campos basins broke through the 500,000 bpd mark, reaching 520,000 bpd, a new daily production record.

Of this volume, 78% (406,000 bpd) corresponded to Petrobras’ share and the remainder was contributed by its partner companies in the different production areas in the pre-salt layer.

This output of 520,000 bpd was attained just eight years after the first oil discovery in the pre-salt layer, in 2006. To arrive at this milestone, Petrobras used just 25 production wells.

The scale of this achievement can be better perceived by making a comparison with the company’s own production history. Petrobras was established in 1953 and it took 31 years to reach output of 500,000 bpd, which occurred in late 1984, using 4,108 production wells. In the post-salt layer of the Campos basin, where the first discovery was made in 1974, it took 21 years to produce 500,000 bopd. This production level, achieved in 1995, required 411 production wells. 

The performance of the Brazilian pre-salt also stands out when compared to other major oil-producing parts of the world. In the U.S. waters of the Gulf of Mexico, for example, it took 20 years from the first discovery to produce 500,000 bpd. In the North Sea, this level was reached in 10 years.

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Wednesday, 20 August 2014

Rift Energy commences 2D Seismic program on Block L19

Rift Energy  has commenced a 2D Seismic Program covering 680 line km on Block L19 in the Republic of Kenya. Data acquisition will take approximately 60 to 90 days, which will be followed by data processing and interpretation. Upon completion of the 2D Seismic Program, Rift Energy will have completed all of the minimum work requirements for the first two year exploration period under terms of the Block L19 Production Sharing Contract.

The 2D Seismic Program was designed to cover areas of interest resulting from an Aerial Gravity and Magnetic Survey (AGM) and a Geochemical Survey. Both surveys were completed during 2013 and yielded positive results.

The AGM formed the basis for a depth to basement map that identified multiple large basement structures and play types.

The Geochemical Survey resulted in indications of hydrocarbons over areas of interest identified by the AGM. As a result, the parameters of the 2D Seismic Program was designed to maximize the coverage of the identified areas of interest by these surveys.

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Monday, 18 August 2014

Brent retreats in absence of supply disruptions in Iraq

Brent crude futures slipped from the highest level in almost nine months as the widening conflict in Iraq has so far spared the country’s main oil-producing region.

Prices fell as much as 0.8% as Iraq’s army fought with an al-Qaeda breakaway group to recapture territory near the borders with Jordan and Syria and U.S. Secretary of State John Kerry called on Iraqi leaders to unite against the militants. The violence hasn’t spread to the south, home to more than three-quarters of Iraq’s output.

“At these levels we really need to see further disruption to get another rally,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The militants have not gotten anywhere near the oil-producing regions.”

Brent for August settlement slid 55 cents, or 0.5%, to $114.26 a barrel at 12:57 p.m. New York time on the London-based ICE Futures Europe exchange. The grade rose to $115.71 on June 19, the highest since Sept. 9. The volume of all futures was 41% above the 100-day average for the time of day.

West Texas Intermediate for August delivery fell 76 cents, or 0.7%, to $106.07 a barrel on the New York Mercantile Exchange. The volume of futures traded was about 23% below the 100-day average. Brent was at a premium of $8.04 to WTI on the ICE, compared with $7.98 on June 20.

Could Spread

President Barack Obama told CBS that the fighting could spread to allies like Jordan. The militants “are engaged in wars in Syria where - in that vacuum that’s been created -- they could amass more arms, more resources,” he told CBS in an interview that will be aired in full today, June 23, according to a transcript.

Iraqi government forces took back the Al Waleed border crossing into Syria and the Traibil passageway near Jordan, state-sponsored Iraqiya television reported, citing the defense ministry. Fighters from the Islamic State in Iraq and the Levant, or ISIL, were earlier reported to have seized the borders.

On a visit to Baghdad, Kerry met with Iraqi Prime Minister Nouri al-Maliki, as well as ministers and party leaders. He told reporters after the talks that Iraq faces an “existential threat,” and said U.S. support “will be intense, sustained, and if Iraq’s leaders take the necessary steps to bring the country together, it will be effective.” He said Obama has reserved the right to decide on further action such as air strikes against ISIL.

‘Still Flowing’

“Even though the situation in Iraq is still very intense, the worst-case scenario that the militants will take over the oil-producing region didn’t happen, and that’s why the market is coming down,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “The oil is still flowing.”

Iraq’s crisis flared when ISIL militants this month captured Mosul, the country’s biggest northern city, and advanced to towns just north of Baghdad. Iraq pumped 3.3 MMbopd last month, data compiled by Bloomberg show, second only to Saudi Arabia in the 12-member Organization of Petroleum Exporting Countries.

“It’s fear that drives prices up, not real supply disruptions,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said by email. “The latter remain very unlikely.”

Sent North

Southern Iraq accounted for more than 85% of the country’s 3.1 MMbpd of production in April and all of its 2.5 MMbpd of exports, which are shipped by tanker from the Persian Gulf, according to the latest data from the Ministry of Oil. Some crude can also be sent north to Turkey by pipeline from the autonomous Kurdish region and west to Jordan by truck.

WTI slipped as U.S. crude supplies stayed near a seasonal high. Inventories decreased 579,000 barrels to 386.3 million in the week ended June 13, the Energy Information Administration said last week. They climbed to 399.4 million in April, the highest since EIA began publishing weekly data in 1982.

“The fundamentals remain pretty weak, limiting the market’s advance,” McGillian said.

Gasoline futures dropped 1.82 cents, or 0.6%, to $3.1095 a gallon on the Nymex and ultra-low sulfur diesel decreased 1.92 cents, or 0.6%, to $3.032.

Hedge funds increased bets on rising WTI prices to a record in the week ended June 17. Speculators raised their net-long position in the U.S. benchmark by 4.3% to 356,336 futures and options, the most in Commodity Futures Trading Commission data going back to 2006.

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Saturday, 16 August 2014

U.S. seen as biggest oil producer after overtaking Saudi Arabia

The U.S. overtook Saudi Arabia and Russia to become the world’s biggest producer of oil as extraction of energy from shale rock strengthens the nation’s economy, Bank of America Corp. said.

U.S. production of crude oil, along with liquids separated from natural gas, surpassed all other countries in the first six months, the bank said in a report. The country became the world’s largest natural gas producer in 2010. A Commerce Department decision to allow the overseas shipment of processed light oil called condensate has fanned speculation the nation may ease its four-decade ban on most crude exports.

“America is now the world’s leading producer of oil and gas,” Francisco Blanch, the bank’s head of commodities research in New York, said in the report. “The American shale revolution has had a transformational effect on the U.S. and global economies in recent years. Low energy prices are a key edge of the U.S. economy.”

Oil extraction is soaring at shale formations in Texas and North Dakota as companies split apart rocks using high-pressure liquid, a process known as hydraulic fracturing, or fracing. The surge in supply combined with restrictions on exporting crude is curbing the price of West Texas Intermediate, America’s oil benchmark, prompting calls from some lawmakers to change overseas-shipment rules.

OPEC Unrest

Production growth outside the U.S. has been lower than the bank anticipated, keeping global oil prices high, Blanch said. Partly as a result of the output boom, WTI futures on the New York Mercantile Exchange remain at a discount of about $7 a barrel to their European counterpart, the Brent contract on ICE Futures Europe’s London-based exchange. WTI was at $103.93 a barrel as of 10:44 a.m. London time.

Rising U.S. oil supplies come as an Islamist insurgency threatens output in Iraq, the second-largest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia. Territorial gains in northern Iraq by a group calling itself the Islamic State has spurred concerns that oil flows from the south could be disrupted. Exports from Libya have been disrupted by protests, while Nigeria’s production is crimped by oil theft and sabotage.

Libya will resume exports as soon as possible from two oil ports in the country’s east after taking back control from rebels who blocked crude shipments for the past year, Mohamed Elharari, spokesman for the state-run National Oil Corp., said by phone yesterday, July 3, from Tripoli.

The U.S. will consolidate its position as the world’s biggest producer in the coming months if returning Libyan supply limits the need for Saudi barrels, said Julian Lee, an oil strategist who writes for Bloomberg News First Word. The observations he makes are his own.

North Dakota

Fracing is used in states from North Dakota to Pennsylvania, helping push U.S. natural gas production to new highs in each of the past seven years, according to the U.S. Energy Information Administration. Annual investment in oil and gas in the U.S. is at a record $200 billion, reaching 20% of the country’s total private fixed-structure spending for the first time, Blanch said.

Condensate export licenses awarded by the Commerce Department are “a positive first step” to dispersing the build up of crude supply in North America, Blanch said in a previous report on June 27.

Pioneer Natural Resources Co. said on July 25 that the Commerce Department had allowed export of condensate produced in Texas, provided it was first subject to preliminary distillation. The U.S. could potentially have daily exports of 1 MMbbl of crude, including 300,000 of condensate, by the end of the year, according to a June 25 report from Citigroup Inc.

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Thursday, 14 August 2014

Halliburton releases CYPHER 2.0 Seismic-to-Stimulation service

Halliburton has announced the release of the CYPHER 2.0 Seismic-to-Stimulation Service, a proprietary and collaborative workflow that links geoscience and reservoir, drilling, and completion engineering to allow operators to better predict and produce unconventional reserves.

The CYPHER 2.0 service builds on the complete full-field solution and provides enhanced capabilities through innovative software applications allowing operators to optimize the development of their unconventional reservoirs and reduce their cost per boe.

Powered by Landmark’s DecisionSpace next-generation earth modeling solution, the workflow is unique to the industry in that it is capable of updating dynamically and iteratively with the seismic and well data required to model the structure, rock and fluid properties. Halliburton’s petroleum systems modeling technology defines the distribution of hydrocarbons in the unconventional reservoir to aid well placement, while the company’s integrated formation evaluation module identifies the sweet spots for optimizing the spacing of perforation clusters.

Key scientific and technological advances in the CYPHER 2.0 service include modelling the interaction of the reservoir’s natural fracture networks with the fractures induced by the hydraulic fracturing process. This results in a more accurate fracture network model with which to simulate the production performance of the completion design. Critical operational factors can then be adjusted in real time between stages during the fracture treatment to further optimize well performance. Another advancement is the ability to evaluate, predict and alter perforation cluster efficiency. Leveraging these models to rapidly evaluate the production performance of different well placement and completion design options, Halliburton is able to quickly and iteratively optimize the development plans for operators’ shale assets.

Devon Energy first applied the CYPHER service in the Grasslands Area of the Northern Barnett shale. After seeing improved production results and EURs with far less production variations between wells, Devon has chosen to incorporate the CYPHER service in the Eagle Ford shale as part of their technology efforts to help them better understand the reservoir and also aid in the stimulation design to help improve their fracture efficiency and effectiveness.

The CYPHER service is deployed to all major shale developments in North America and many key international markets through multi-disciplined technical teams, with more than 300 technical professionals trained on major elements of the workflow.

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Tuesday, 12 August 2014

DNO issues force majeure, suspends production in Yemen

DNO has issued force majeure notices to Yemen' s Ministry of Oil and Minerals for Block 32 Howarime and Block 43 South Howarime. DNO had previously invoked force majeure for Block 47 South Hood in September 2013.

DNO has temporarily suspended production from Block 32 and Block 43. Production from the two blocks averaged 1,600 bopd on an aggregate company working interest basis prior to suspension.

Access to and conduct of operations on these blocks have been restricted since late last year as a result of blockades by local groups restricting movement of equipment, supplies and contractors.  On June 22 local labor unions initiated unilateral actions that have led to work stoppages at Block 32 and Block 43, including administrative staff.

The declaration of force majeure has been made in accordance with the provisions of the production sharing contracts for these blocks and suspends DNO' s obligations until the impediments to safe, secure and sustained operations are removed.

A DNO spokesman stated that the company is committed to resuming operations in Yemen where it has been active since 1998 and is engaged with the government and the unions to resolve the outstanding issues.

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Sunday, 10 August 2014

Oilfield set aside for U.S. Navy 99 years ago goes to auction

The U.S. government wants to sell a naval petroleum reserve field first set aside by presidential decree 99 years ago to ensure fuel supplies for American warships.

The Energy Department is seeking bids for the Teapot Dome field north of Casper, Wyoming, by Sept. 30, according to an offering document published on the website of Meagher Energy Advisors Inc. today, June 23. The field, which includes several layers of shale and oil wells more than 1 mile (1.6 km) deep, currently produces about 240 bbl of crude a day.

The Teapot Dome field was designated a naval reserve in 1915. The 9,481-acre parcel is the last such reserve still under control of the Energy Department, according to the offering document.

The field has several untapped layers of oil- and gas-soaked rocks that may be suitable for enhanced recovery techniques such as carbon-dioxide flooding, according to the offering. A data room with technical details about the geology of the field is scheduled to open on July 30.

The U.S. began divesting naval petroleum reserves in 1998, when it sold the Elk Hills field near Bakersfield, California, to Occidental Petroleum Corp. for $3.65 billion.

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Friday, 8 August 2014

Weatherford introduces Katy, Texas rod pump facility

In response to growing demand for artificial lift solutions in the North American shale plays, Weatherford has built a 354,000 sq-ft manufacturing facility and world-class training center on a 174-acre site in the suburban area west of Houston.

The new plant is currently producing 120 rod pump units per month, with the capacity to manufacture as many as 800 units per month. The plant employs 135 employees, but the company projects to fill 335 positions by year end.

“We use lean manufacturing techniques and cutting-edge robotics technology to increase operational efficiency, which includes machining, fabrication, painting, and assembly,” explained Karl Sakocius, Sr. Marketing Manager, during a media tour. “Our Katy facility delivers American-made rod pumping units to the market. We are the only original equipment manufacturer to engineer, service, repair, and refurbish pumping units.”

The Weatherford manufacturing facility features banks of advanced numerically controlled machine tools and includes a robotic welding unit. A systematic, single-piece flow process?as opposed to the traditional process of batching and sub-optimizing by department?reduces the amount of inventory in the plant, which reduces the potential for accidents. Emissions within the plant are minimized through the use of trolleys and conveyor systems instead of forklifts.

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Wednesday, 6 August 2014

Kurd oil sales seen by Deutsche Bank gaining market acceptance

Kurdish crude oil is poised to gain acceptance after the semi-autonomous region delivered a cargo and received a payment, according to Deutsche Bank AG.

“We expect trading houses to become increasingly comfortable handling Kurdistan Region of Iraq crude and steady-state exports to emerge,” analysts led by Lucas Herrmann wrote in an emailed report dated today, June 30.

The Kurdistan Regional Government started to export crude to Turkey’s Mediterranean port of Ceyhan through its own pipeline last month, without approval from Iraq’s central government. Four tankers have so far loaded cargoes of Kurdish crude in Ceyhan, with one shipment sold, according to Turkish Energy Minister Taner Yildiz.

Turkey’s Turkiye Halk Bankasi AS, or Halkbank, received $93 million for a shipment, Yildiz said on June 23. The destination of the crude isn’t of interest to Turkey, the minister said.

“Despite regional conflict and the threat of legal action from Baghdad, significant milestones have been achieved,” Hermann said.

Iraq’s government has warned that it will prosecute any buyers of the Kurdish oil and sought arbitration at the International Chamber of Commerce. The Kurdistan Regional Government says it’s abiding by the Iraqi constitution.

The Kurdistan Regional Government controls 45 billion barrels of oil reserves, according to its estimates.

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Monday, 4 August 2014

Petrobras slumps as deepwater boon exacerbates cost burden

Petroleo Brasileiro SA fell the most in six weeks as exploration success at one of its biggest deepwater prospects in Brazil signaled billions of dollars of additional expenditure for the world’s most indebted producer.

Shares in Petrobras slumped 3.6% to 17.64 reais, the biggest drop since May 8. It was up 3.2% before the announcement.

Petrobras will have to pay 2 billion reais ($900 million) this year to tap more crude at its giant Buzios field and surrounding area than its license authorizes, the Rio de Janeiro-based company said in a statement after a meeting of energy authorities in Brasilia today, June 24. The government expects to receive 13 billion reais from 2015 through 2018 as part of a production-sharing arrangement based on projected output.

“It’s very bad news, it’s what drove Petrobras from a gain of 3% to a 4% decline,” Fernando Goes, an analyst at brokerage Clear Corretora, said by phone from Sao Paulo. “It’s 2 billion reais more they’ll have to pay.”

Petrobras has found as much as four times the amount of crude that it’s authorized to produce at an offshore license it acquired four years ago. The company is already struggling to develop all the oil it has found in other sections of the pre-salt region and investors are more eager to see the company increase output than make discoveries after output has remained flat for the past four years.

The surplus area probably will start producing by 2020 or 2021, Oil and Gas Secretary Marco Antonio Almeida told reporters in Brasilia.

“If Petrobras had the financial capability, we would charge 15 billion reais upfront,” Almeida said. “We are providing Petrobras with a great oil area to explore.”

Petrobras is investing about $100 million a day to expand its capacity to produce and refine crude, contributing to the biggest cash flow deficit of any oil company, according to data compiled by Bloomberg.

In 2010, it paid $42.5 billion in shares and cash for the rights to produce 5 billion bbl at a section of the so-called pre-salt region that holds the Buzios field, formerly known as Franco. The area holds 9.8 billion to 15.2 billion bbl of recoverable oil in addition to what Petrobras was authorized to produce under the original contract, it said.

A government committee authorized Petrobras to produce the additional barrels under a profit-sharing model, Energy Minister Edison Lobao told reporters in Brasilia today.

Shares of Petrobras have returned 10% this year compared with a 16% average gain among global peers tracked by Bloomberg.

While the initial payments will put a strain on Petrobras, the project probably will be profitable in the long term, Luana Helsinger, an oil and gas analyst at brokerage GBM Grupo Bursatil Mexicano SA, said by phone from Rio de Janeiro.

“There’s a good chance the move will correct tomorrow,” Helsinger said. The project “probably has value and will bring cash flow.”

Mosdor Global Estates, providing support in the buying and selling of crude oil, other petroleum products. Publishing news and reviews in the oil and gas plus real estate industry online.

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Saturday, 2 August 2014

Comstock reports drilling results of Eagle Ford Shale well

Comstock Resources reported the results of its first well drilled in its East Texas extension of the Eagle Ford Shale in Burleson County, Texas. The Henry A #1H well (100% working interest) was tested at a peak 24-hour average production rate of approximately 1,267 boepd, comprised of 1,023 barrels of oil and 1.5 MMcf of natural gas and had a 6,841 foot completed lateral which was stimulated with 17 stages and 10.2 million pounds of proppant. This well was drilled to a vertical depth of 9,514 ft.

Comstock has 33,900 gross acres prospective for oil in its Burleson County East Texas Eagle Ford Shale play. Comstock' s second well drilled in Burleson County, the Mach A #1H, recently reached total depth and will be completed in July. Locations have been built for the next two wells, the Flencher A #1H and the Curington A #1H. Comstock has plans to drill 10 grosswells in 2014 on its acreage in this new play.

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