CGG announced two of its vessels each secured a strong backlog of acquisition work. Both vessels, the Alize and Harttman, have won contracts for a full season of work in the North Sea, lasting from May to September, before sailing to Brazil to acquire 6-month projects for Petrobras.

Khalda to be processed

Geotrace has been awarded a 2-year contract by the Khalda Petroleum Co. for 3-D seismic processing on the company's Khalda concession in Egypt's Western Desert. Khalda Petroleum is a joint venture between EGPC and Apache Corp. Geotrace also announced a volume purchase agreement with Cabot Oil & Gas for multiple time processing, depth imaging and reservoir services projects.

Mauritania survey set

Woodside Energy has awarded EMGS a contract to conduct seabed logging (SBL) surveys offshore Mauritania, West Africa. Separately, EMGS also has extended an exclusive charter with its SBL vessel the MV Geo Angler through April of 2008 to conduct SBL services for companies on a global basis.

Agreements and alliances

• ExxonMobil and Apache Corp. have signed an agreement to extend their successful development activities in the western Canadian province of Alberta, building on a broader program announced in 2004. Under the agreement Apache will drill and operate 145 new wells in both shallow and deep zones over a 3-year period with upside potential for further drilling.

• Fusion Geophysical and Arcis Corp. have formed a strategic alliance in the field of seismic analysis. The alliance will allow Arcis to provide Fusion's proprietary technologies to its clients in the Canadian market.

Luca studies Utah

Luca Technologies LLC researchers have confirmed the presence of a resident, methane-generating community of microorganisms ("microbial consortium") in substrate samples taken from the 110,000-acre Monument Butte field in northeastern Utah. This site represents the latest in a series of active "geobioreactors" that Luca has identified since its first demonstration of this phenomena in the Powder River Basin coalfields of Wyoming.

IRAM ramps up

Roxar's IRAM RMS 3-D reservoir modeling software is now tooled to operate on Linux 64-bit platforms to meet the large-scale data needs and price/performance expectations of the exploration and production industry. Benefits include increased data volumes, faster speeds and lower operating costs. In certain tests the software ran six times faster on the larger platforms.

Drilling contracts abound

Transocean of Houston announced many new offshore drilling contracts, ranging in length from 25 days to 5 years.

According to the company, these include:

• Deepwater Discovery, a fifth-generation drill ship capable or working in 10,000 ft (3,050 m) of water, has been awarded a one-well, 25-day, contract for drilling operations offshore Equatorial Guinea.

• Sedco 709, a deepwater semisubmersible rig capable of working in 5,000 ft (1,525 m) of water, has been contracted by Amerada Hess for 60 days to drill 2 wells offshore Gabon.

• Transocean Marianas, a high-specification moored semisubmersible capable of operating in 7,000 ft (2,135 m) of water, has been awarded a 340-day contract for drilling operations in the Gulf of Mexico.

• Transocean Leader, a deepwater semisubmersible capable of operating in 4,500 ft (1,373 m) of water, was awarded a 345-day contract for drilling operations offshore Norway.

• Sedco Energy, a dynamically positioned, ultradeepwater rig capable of working in 7,500 ft (2,288 m) of water, was awarded a 730-day contract in West Africa. The contract is expected to begin in October 2005 upon completion of its current project followed by rig modifications.

• Deepwater Horizon, a dynamically positioned semisubmersible capable of working in 10,000 ft (3,050 m) of water, has been awarded a 5-year contract by BP for drilling operations in the Gulf of Mexico. The contract is expected to start in September 2005.

Shtokman faces delay

Drilling of a seventh appraisal well in the Shtokman gas condensate field in the Russian Barents Sea may be delayed due to a tight deepwater drilling rig market. The well, which was originally to be drilled by Gazprom in August 2005, now may be postponed until sometime in 2006. Gazflot, Russia's national drilling company, and Petrolia Drilling of Norway are vying for the contract. Because of its deepwater drilling experience at Ormen Lange, Norsk Hydro has been appointed as technical advisor for this well.

The results of this appraisal well may be key in determining the timing and makeup of the Shtokman development project.

Tank-cleaning made easier

A new, automatic system for cleaning mud tanks on board mobile drilling rigs, platforms and supply vessels has been introduced for vessels currently working in the Gulf of Mexico.

The Automatic Tank Cleaning (ATC), by MI-Swaco of Houston, consists of a tank-cleaning machine positioned inside the tank, which is connected to a portable skid powered by feed pumps. A cleaning mixture is pumped into the tank and powerful jets clean the tanks surface. After washing is complete, the solids are separated from the water, and the water is reused until it is highly contaminated with fine solids.

The system was designed to reduce cleaning time, cleaning manpower, and to minimize or maybe even eliminate confined space entry. According to the company, in one case, the system reduced tank cleaning personnel by 40%, cleaning time by 50% and confined space entry by 90%.

Moving to one desktop

Microsoft and Schlumberger have announced a strategic initiative to align and integrate technical oil and gas applications with the enterprise desktop, Windows platform. A key technology foundation for the alliance is Microsoft's .NET platform, a set of technologies based on the IT industry standard, Extensible Markup Language (XML).

The two companies will work together to facilitate the development of SIS applications on the .NET platform and to leverage full potential of Ocean, the SIS open development framework that will allow third-parties to customize and create add-ons to SIS product offerings such as Petrel and Avocet.

The key business driver is the integration of exploration and production (E&P) technical applications with the business-decision tools and processes of the enterprise desktop. Also it is expected that E&P customers can move to a single IT environment, helping to reduce complexity and cost.

Varel acquired by KRG

KRG Capital Partners aquired Varel Iinternational. Key to the deal is no executive management change at Varel.

Jim Nixon, president and CEO of Varel International since 1998 when the company was purchased from the Varel family, will remain at the helm and said, "With KRG's support we will be able to continue our position as one of the fastest growing drill bit manufacturers in the world. Our new partner will allow us to remain committed to investment in new projects and equipment, while continuing to deliver high-performance products to our customers in the global oil and gas and mining/industrial drilling industries."

Varel's world headquarters will also remain in Carrolton, Texas, and its existing manufacturing facilities in Carrolton and Houston, Matamoros, Mexico, and Tarbes, France, will continue in their current capacities. New sales offices are expected to be opened in new geographic regions to support the emerging oil and gas drilling markets.

KRG financed the deal with equity from the US $450 million KRG Capital Fund II in conjunction with debt provided by Royal Bank of Scotland (Agent), Freeport Financial and Ares Capital Management and marks the 20th platform investment for KRG. Simmons & Company International acted as financial advisor on behalf of Varel.

Operators shut in sick wells

Some 6,000 older wells in the North Sea suffer from structural integrity problems and similar problems afflict every offshore basin in the world. Approximately 960 of those ailing North Sea wells have been shut in or suspended because of the severity of their problems, said Kevin Burton, vice president of conductor systems and personnel services for Acteon Group. Acteon commissioned the study that reached those conclusions through Douglas Westwood Ltd. and released the findings during the Offshore Technology Conference in Houston. Problems include annulus pressure, well subsidence, conductor wear, connection failures, vortex shedding and corrosion, he said. Mitigation includes monitoring, cementing, retrofitting parts, adding vortex suppression devices and using high-density grout for corrosion repairs. Operators have been so good about prolonging the lives of fields that the wells have exceeded their design lives in some cases. In other cases, well records and maintenance schedules were lost during ownership changes. Some companies just didn't invest enough to keep the wells healthy, and some of the well materials are just fatigued with age. He said 30% of the wells are 30 years old or older. The North Sea study forces a conclusion that similar problems exist in other parts of the world, added Paul Alcock, vice president of group marketing for Acteon, "But the North Sea is a difficult environment, and you can't draw direct conclusions on age."

Venezuela stirs the pot

Venezuelan authorities commenced a witch hunt for oil and gas companies that owe back taxes, and the companies that don't pay up will have to leave, President Hugo Chavez said through the ABN government news agency. "I have given the order for PdVSA and the Seniat (the state tax authority) to calculate, retroactively, all that is due to us and the corresponding interest that (companies) haven't paid," he said on his weekly television show. "It can't be that an oil company that doesn't pay any taxes and pays 1% royalties reports losses. Don't tell me that tale," he added, according to a Business News America report. Oil companies pay a 50% tax, and Venezuela recently raised the royalty rate on Orinoco Belt crude to 16.7% from 1%. Those tax hikes would increase tax payment by oil companies by US $1.5 billion a year on 600,000 b/d of production. PdVSA also has started negotiations with foreign operators to change 32 operating agreements to joint ventures with PdVSA holding a 51% share of each. The companies have 6 months to make the change before PdVSA terminates existing contracts. The change should force $260 million more in taxes out of foreign investors. Ideally, PdVSA would like to pay its share of the joint ventures in produced oil, not cash. While all this is going on, PdVSA terminated thousands of workers it had hired to fill employment gaps during its dismantling of the old PdVSA operations team. The company had said earlier that it would keep the best of those employees. At the same time, it sent in army guards to protect oil and gas production operations from sabotage.

Bolivia passes tax hike

A new tax that would cost oil and gas producers US $650 million a year passed the Bolivian legislature and stayed on the books as the nation's president declined to sign the bill, effectively allowing the legislation to stand while not supporting the vote. The tax sets an 18% royalty and a 32% tax on production. According to an AFX report, at least one foreign operator, Petrobras, will reduce its investment in the country because of the higher tax. Meanwhile, thousands of miners and Indians protested for even higher taxes, and oil and gas companies are pressuring the government to stand by the original contracts.

UK invokes stewardship

The UK Department of Trade & Industry, regulator of oil and gas operations, has introduced a stewardship program to encourage operators to develop existing fields in the UK sector of the North Sea. According to the group, the program should add significant incremental reserves to the area.

Timor Sea pact reached

After months of talks and jockeying for position, Australia and East Timor almost have agreed on offshore boundaries and splits for oil and gas revenues in territory between the two countries. The treaty hadn't been signed at press deadline, but the countries had reached substantial agreement on all the major issues, according to an Asia Pulse report. The agreement would give the recently created East Timor an additional US $3.9 billion in addition to the 90% of revenues it already gets from a joint development area in the Timor Sea.

Indonesia plans tender

Indonesia, in an effort to kick its daily production back up to the OPEC-limit 1.1 million b/d, will put 22 oil fields up for bids. The fields are in East and West Java, north and south Sumatra, east Kalimantan, Lampung, central Sulawesi and Papua. In recent years, the country's reserves have dropped to 9.5 billion bbl and production has dropped below 1 million b/d.

Conventional oil, gas sold

Canada's EnCana has agreed to sell its conventional oil and gas reserves to StarPoint Energy Trust for US $326 million as the company concentrates exploration and production on long-lasting, resource plays and unconventional reserves. The company said those unconventional reserves represent longer-lasting production as slower rates and an opportunity for the company to use the learning curve and economies of scale to make the properties more profitable. The StarPoint deal is EnCana's third divestiture of conventional oil and gas properties with total income of some $6 billion. Included in the sales were North Sea and Gulf of Mexico properties.

Petrosur moves forward

Brazil, Venezuela and Argentina have established Petrosur, an intergovernmental committee that will coordinate energy policies and work on joint venture projects, according to Business News Americas. The first three projects on the agenda involve oil exploration on the Orinoco Belt in Venezuela, a heavy-crude refinery in northeastern Brazil and exploration in new areas in Argentina.

Groups study reserves

Following sharp write-downs in reserve numbers by several large oil and gas companies, and calls for reform from government and private groups, the American Association of Petroleum Geologists and the Society of Petroleum Evaluation Engineers will decide this year whether to propose working standards for the industry. Reserve evaluation also is a priority for the Society of Petroleum Engineers. The organizations first will decide on the feasibility of a standards program and then move toward a business plan and budgeting. Earlier studies found companies lacked a uniform standard for evaluating reserve levels.

Oxy buys Permian wells

Occidental Petroleum bought ExxonMobil interests in producing oil and gas wells in the West Texas side of the Permian Basin for approximately US $972 million. Fields include Salt Creek, Sharon Ridge and Dollarhide. Those purchases, combined with properties still under negotiation, and two smaller acquisitions in the first quarter should add 130 million boe to Oxy's reserves. According to the company, the purchase will immediately add to earnings through the sale of some 26,000 boe/d.

Shell won't meet deadline

Shell said it wouldn't meet Nigeria's 2008 deadline to stop flaring natural gas from its operations in that country. A note in the company's annual environmental and social report said, "We now expect to stop continuous flaring during 2009, as we complete construction of the final gas-gathering facilities." The anti-flaring effort is behind, the company added, because of underfunding by the government partner and delays by Shell Petroleum Development Co. of Nigeria Ltd. in implementing the projects. It will shut in 17 low-producing fields in 2008, because it hasn't found a way to handle the associated gas without flaring. Shell already has invested US $2 billion to meet the deadline and plans to spend another $1.85 billion.

Brunei contract awarded

Brunei Shell Petroleum Sdn Bhd gave WellDynamics a 5-year, multi-well contract for intelligent completions offshore Brunei in the Champion West field Phase 3 oil and gas development. Shell will drill and complete the wells from the CPDP-01 platform. After completion, the platform will be unmanned and the downhole and surface production functions will be handled remotely.

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