Exploration

Veritas plans Caspian shoot
Veritas DGC Ltd., via its joint venture company Veritas Caspian LLP, has concluded an exclusive agreement with the Ministry of Energy and Mineral Resources of Kazakhstan for the acquisition of non-exclusive seismic data over the entire open acreage of the Kazakh sector of the Caspian Sea. Acquisition will begin this year and will be coordinated with a series of forthcoming licensing rounds.
The parent company also announced that it had completed more than 100 multicomponent seismic surveys. This was achieved through acquisition projects for customers in Canada, the United States, Europe and the Middle East.
Veritas also announced that it has entered into an agreement with Eidesvik Offshore ASA to charter a seismic research vessel that is to be newly constructed. The charter is for 8 years, with options of up to 10 more years. The vessel will have the capacity to tow up to 12 long streamers.

Nanotech draws scrutiny
The US-based Pacific Research Institute (PRI) has released a statement arguing against a report released by the Woodrow Wilson International Center claiming that US laws and regulations can't adequately protect the public against the "risks" of nanotechnology. Sonia Arrison, director of technology at PRI, said, "Nanotechnology, the manipulation of matter at the level of individual atoms and molecules, offers the greatest benefits for society if left to grow through modest regulation, civilian research, and an emphasis on self-regulation and responsible professional culture."

Product simplifies browsing
IHS' Enerdeq, now commercially available, allows energy professionals to browse, map and analyze geographic data on-demand over the Internet in a single integrated view. Subscribers can access more than 3 million wells and 2 million production entities, including the most current data available; get proactive e-mail notification of new data in the area of interest; and retrieve and report on well and production data in an integrated fashion using both text-based and interactive spatial queries. For more information, visit www.ihsenergy.com.

Shell, EMGS sign agreement
Shell International Exploration and Production BV has signed a 1-year agreement with Electromagnetic Geoservices AS (EMGS) to collaborate on expanding the capabilities of EMGS' proprietary marine electromagnetic surveying technique, known as seabed logging. Under the terms of the agreement, EMGS will receive funding for conducting research, testing concepts and developing software. Shell's backing will secure access to the software resources and computers along with the participation from the EMGS organization and the key individuals needed to achieve common objectives. In addition, Shell will fund exclusive seabed logging surveys. Both parties will conduct parallel in-house development of the method.

Blocks hit auction
Uzbekneftegaz, Ubbekistan's state oil and gas agency, plans to put 12 exploration blocks up for licensing this year. The company said the blocks contain probable recoverable reserves of more than 53 Tcf of gas and 2.6 billion bbl of oil and condensate.

Drilling

Well spending climbs
Spending on offshore wells is on the way up even though the number of wells may continue to decline, according to a new report titled "World Offshore Drilling Spend Forecast 2006-2010" from Douglas-Westwood. "Due to a lack of opportunity, exploratory spending has been on a declining trend since 1997, and this trend is forecast to continue through 2010, albeit with a modest oil price-led resurgence in later years. Even deepwater drilling, which grew rapidly in 2001, has been rather flat due to a shortage of new areas to exploit," according to Dr. Michael R. Smith of Energyfiles, the data collection company for the report. Shallowwater development drilling declined from 1999 through 2004 and stabilized last year, but it should continue its decline. Deepwater development drilling will make up for that decline. Operators spent US $160 billion on shallowwater drilling in the past 5 years, or 83% of all drilling expenditures. Deepwater drilling accounted for another $33 billion. The companies forecast $195 billion in spending for shallowwater drilling in the next 5 years and $65 billion in deepwater drilling expenditures. Breaking down costs, the company said that rigs represent the biggest single-cost item at 26% of the total well cost. Engineering services account for 42%, support for 25% and 7% for geoscience.
Among engineering services costs, rents and materials account for 26% of the package, followed by testing, completion and abandonment at 22% and casing and cementing at 19%. Drill bits account for only 5% of the engineering cost. Backing up his statement about the lack of shallowwater opportunities, Smith said, "There is no reason why the international oil industry, beyond the limited ambitions of national oil companies, would put capital into expensive, technologically demanding deepwater projects if cheaper, conventional shallowwater ones could offer the same profitability. This is not a government-driven shortage resulting from poor investment terms. There are simply fewer and smaller undiscovered or undeveloped oil and gas fields in shallow waters."
The industry has increased deepwater spending substantially compared with shallowwater spending. Spending in shallow water is due mainly to increasing costs for equipment and services, while spending in deep water represents an increase in activity. That trend will increase after 2007. In 1991 nearly all of the deepwater drilling took place offshore Brazil, and it accounted for only 2% of global offshore drilling expenditures. By 2001, deepwater had taken a 19% share of the world market, and that number should reach 30% by 2010.

Saudis rig for growth
Saudi Aramco approved its 2006 operating plan calling for a doubling of its drilling rig fleet from the end of 2004 and a 61% increase in the number of development wells it will drill in 2006 compared with 2005.

Shell drops rig plan
In the wake of the UK government's plan to double the corporation tax on producers to 20%, Shell Exploration & Production Co., canceled one of the three rigs it had planned for its 2006 UK North Sea campaign. Shell called
it the result of an investment review and indicated more trims could follow. At the same time, the company said
it would continue to invest in the
North Sea.

Q4000 will drill wells
Cal Dive will modify its Q4000 intervention vessel to add drilling capability at a cost of US $30 million. The company has chosen a hybrid slimbore technology for the rig as the better choice for exploratory and appraisal wells in deep water, but the rig also
will be able to drill completable wells. The new capability will allow the company to become operator on select projects.
Baker Hughes acquires Nova
Baker Hughes Inc. has acquired Nova Technology Corp. of Broussard, La., for approximately US $70 million in cash and assumed debt. Nova is a leading supplier of permanent monitoring, chemical injection systems, and multiline services for deepwater and subsea oil and gas well applications and has contracts in the Gulf of Mexico, West Africa, Sakhalin Island and Brazil.

KCA Deutag to build rigs
KCA Deutag has been awarded a contract by TNK-BP to build four HR-5000 hybrid development drilling rigs to support TNK-BP's operations in the Uvat region, Tyumen Oblast, Western Siberia.
Three of the rigs will be built by Bentec in Germany. Two rigs will be delivered in Q4 2006, and the third shortly thereafter. The fourth rig, currently under construction, will be delivered to Tyumen, West Siberia, during Q1 2006, where it will be used for training before field use in early 2007. The Bentec design is a high-capacity, winterized unit developed for the Russian market.
The company also has been awarded a contract by a major operator for a new, 200-ton capacity land drilling rig for use in Western Siberia. With these contracts, the company will be operating nine modern, high-capacity, winterized rigs for major clients in Russia by the end of 2007.

New semisubmersible
A wholly owned subsidiary of Ensco International Inc. has entered into a drilling contract with two large independent oil companies to provide a new ultradeepwater semisubmersible drilling rig, to be named Ensco 8501. The drilling contract with Nexen Petroleum USA Inc., a subsidiary of Nexen Inc., and with Noble Energy Inc. is for a firm 31¼2-year primary term, with four 1-year extension options at mutually agreed day rates.
Keppel Fels Ltd. in Singapore will construct Ensco 8501. The total project cost of Ensco 8501 is expected to be approximately US $338 million, with mobilization to the Gulf of Mexico anticipated by the second quarter of 2009. Ensco 8501 is the second in the 8500 Series and the company's third deepwater semisubmersible rig.
The Ensco 8500 Series deepwater semisubmersibles are an enhanced version of the Ensco 7500. The 8500 Series rigs will be capable of drilling in up to 8,500 ft (2,592.5 m) of water and can readily be upgraded to 10,000-ft
(3,050-m) water-depth capability if required. Enhancements include a 2 million-lb quad derrick, offline pipe handling capability, increased drilling capacity, greater variable deck load and improved automatic station keeping ability.

PRODUCTION

PKN widens oil search
PKN Orlen, the biggest fuel company in Poland, plans to break into upstream oil and gas with a US $2.6 billion investment to reach a production rate of 4.3 million tonnes of oil a year by 2015. In the first stage, ending in 2009, the company will act as a participant in joint ventures while others take the role of operator. That stage should costs $130 million a year. In the second stage, the company will spend $438 million a year for 5 years and act as operator on its properties. Initial operations will target Kazakhstan, Iraq and Russia and may expand to other areas.

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