At the recent American Association of Petroleum Geologists (AAPG) meeting, Andrew Latham, vice president of upstream consultancy for Wood Mackenzie, presented "Recent Exploration Performance - Evidence of a Downturn?" Latham suggested that, though it's too early to call an "end to exploration," companies can no longer afford to view traditional exploration in isolation. "Life is getting harder for explorers," he said, "hit by both rising finding costs and falling quality (i.e. value) of discovered resources." Deep water remains the most important source of new field reserves and is the main driver of value creation for much of the exploration industry.
Q-Marine goes global
The Western Regent is the most recent WesternGeco vessel to receive a Q-Marine upgrade, bringing the total fleet number to five. Q-Marine is now being used extensively in Asia, South America, the Black Sea and Canada in addition to its traditional markets in the North Sea, the Gulf of Mexico and West Africa.
Seismic crews increasing
Several US companies have been deploying new crews. Tidelands Geophysical Co., Lockhart Geophysical and Dawson Geophysical have all added an additional crew, citing an upsurge in demand as the cause.
Surveys
• TatArka LLP, a wholly owned subsidiary of EMPS Corp. of Salt Lake City, Utah, has been awarded a contract to provide 3-D seismic acquisition services to PetroKazakhstan Inc., a Canada-based company. The surveys will be conducted on Karavanchy and North Kumkol fields in Kazakhstan.
• PGS is expanding, refreshing and upgrading its North Sea MegaSurvey, already the world's largest seismic survey. The survey contains fully migrated 3-D seismic coverage over the prospective areas of the United Kingdom, Norway, Denmark, Germany and The Netherlands.
• TGS-Nopec Geophysical Co. ASA, in collaboration with Aberdeen-based OHM, has begun work on a multiclient controlled-source electromagnetic survey in the Norwegian Barents Sea.
• CGG has been awarded a High-Productivity Vibroseis Acquisition (HPVA) survey by SIPETROL in Egypt. This award marks the first full 3-D survey to be performed with the technique, which allows 50% more data to be acquired at the same cost.
New releases
• Roxar has launched FracPerm, enabling geologists and reservoir engineers to incorporate fracture modeling into their mainstream 3-D modeling and simulation activities. Using its IRAP RMS software, Roxar is the first company to integrate fracture modeling into a standard modeling workflow. Roxar has also incorporated RMSwellstrat, its new well correlation module, into IRAP RMS.
• Paradigm has teamed with IFP to commercialize a new reservoir imaging solution developed by IFP. The software extends traditional seismic inversion methods by simultaneously and globally determining the critical elastic properties of the reservoir while integrating "soft" constraints (geologic data and interpretative knowledge) and data uncertainties into the process.
Jet drilling ventured
Biogenerics Limited, a Nevada-based investment firm, and Hydroslotter Corp., of Toronto, Canada, have entered into a joint venture to drill a gas well using Hydroslotter's proprietary abrasive hydrojet perforation (or "hydroslotting") technology.
Hydroslotting is a proprietary completion process that increases permeability near the well bore by transferring near-wellbore compressive stresses away from the well bore and into the formation, thereby increasing production flow. The process consists of two steps. In the first step, two 180?-phased slots are cut through the casing, cement and deep into the formation.
In the second step, a proprietary remedial chemical reagent is pumped through the slots throughout the near wellbore zone.
The project well for the joint venture is located in the West Grimes field, in the Sacramento Basin, in Colusa County, Calif. The well, now shut-in, was originally drilled in 1986 and encountered gas pay in one of many intervals in the Forbes formation, originally producing 380 MMcf from only one zone. Analysis has shown that large quantities of gas remain behind some of the five different zones where Biogenerics will focus its attention.
Russia seeks operators
In efforts to promote development of oil and natural gas on its continental shelf, Russia's Natural Resource Minister Yury Trutenev announced financial incentives, which include eliminating taxes associated with conducting geological research and reducing import duties for imported equipment.
According to Dow Jones Newswire, Trutenev's announcement confirmed speculation of the return of the production-sharing agreement - an arrangement viewed by operators and investors as assurance of stable tax rates over the lifetime of oil and gas development projects. However, some in Russia would argue that these agreements may be unfavorable to Russia's own economic interest.
Truteney also proposed creation of a state oil company to oversee research and development on the continental shelf. This idea was opposed by liberal economists who want less government involvement in the economy and suggest there are other ways to monitor development.
As a result of these updated plans by the Natural Resource Ministry, oil production is expected to increase from the current 73 milion bbl (10 million tons) a year to 696 million bbl (95 million tons) in 2020 and gas production to rise from 31.05 Tcf to 11.3 Tcf (30 Bcm to 320 Bcm).
Horizontal well lauded
The Far East Energy Corp. of Houston celebrated the start of drilling the first of two horizontal coalbed methane (CBM) wells, FCC-HZ1, that the company will drill in Shouyang block in Shanxi Province of its 1,057,650-acre CBM project. The project is the result of a farmout agreement from ConocoPhillips.
The ceremony was held at the well site and attended by many Chinese government officials as well as senior officials from China United Coalbed Methane Ltd., the Chinese partner of Far East Energy for the Shanxi project. The event featured speeches from Far East executives highlighting the growing demand for natural gas in China and how a successful drilling program would contribute to meeting those demands and accelerate the development of CBM.
Michael R. McElwarth, chief executive officer and president of Far East Energy, said, "We believe that commencement of drilling of our first horizontal well in China represents a significant milestone in bringing commercial levels of CMB gas to the surface in an innovative manner that has the potential to generate substantial quantities of gas for the strong market in China."
UK operators collaborate
Increased energy demand means increased drilling and exploration activity, which in turn means shortages of rigs and equipment. This can be especially problematic for smaller, independent operators with smaller projects and less resources.
The Peak Group's Well Management team is helping operators on the United Kingdom Continental Shelf (UKCS) address this situation through its co-operative multi-well program. This year, Peak, with offices in London and Aberdeen, is managing some 20 exploration and production wells located in Southern, Central and Northern sectors of the North Sea and some in the Irish Sea, for several different operators. These operations include four drilling rigs, both jack-ups and semi-submersibles, operating out of supply bases in Aberdeen, Great Yarmouth and Heysham.
In addition to its experience and safety record drilling and well management programs, Peak sees the advantage of increased negotiating power of combining multiple small projects into a larger project in terms of scheduling rigs and ordering materials. Another benefit is the improved communication as drilling contractors and other service providers work with the Peak management team instead of representatives from many different operators.
Data handling improved
Petris Technology, Inc. has entered into an agreement to acquire the RECALL well log storage and analysis software from Baker Atlas, a division of Baker Hughes incorporated. According to Petris, it will assume worldwide responsibility for the development, sales service and future development of RECALL.
The combination of RECALL with Petris products, such as PetrisWind Enterprise, its data management product, and Software-as-Service (SaS), its service that allows "rental" of software over the internet, will give existing RECALL customers the most open data management solution for well bore data management and expand the possibilities for use of RECALL.
Hammer it home!
BJ Tubular Services of Aberdeen announced it recently completely a complex hammering operation. It drove a 72-in. custom-welded conductor with 21/2-in. wall thickness to 376 ft (114 m) below the mudline for a Gulf of Mexico well that is expected to reach a total depth of 32,000 ft (9,760 m). The well is located in South Timbalier 168 and the Ship Shoal regions offshore Louisiana.
The operation began before the arrival of the Scooter Yeargain jackup drilling rig, from lift boats in 72 ft (22 m) of water using the BJ S-200 Hydroslammer, a state-of-the-art hydraulic pile-driving system with a capacity of 147,500 ft/lbs, which achieved a maximun of 479 blows per foot at 147 kips.
According to a company spokesperson, this conductor was critical to the this project because some very long, heavy casing strings will eventually hang from the conductor, and it is critical to protect it for the projected life of the project. In support of that goal, BJ Tubular Services also created new welding procedures exclusively for this operation. Every welder then had to be certified in the procedure before working on this operation.
Operators edgy in Venezuela
Operators in Venezuela keep waiting for the Hugo Chavez government to settle on a fiscal regime for oil and gas activity, but confusion is more the rule than the exception. They know the government wants them to switch from the current system under which PdVSA buys oil at a West Texas Intermediate price to a joint venture arrangement, and 32 operators know Venezuela wants US $2 billion in back taxes it claims the companies owe. Recently, the nation decided to stop making those oil payments in US dollars for local expenses. A few days later, an energy official said the nation would pay some of the costs in dollars. After calling the old oil contracts illegal, President Chavez said he wanted state oil company PdVSA to own 51% of any new venture. A short time later, a Venezuelan commission said it wanted PdVSA to own 60% of the ventures. Meanwhile, the Harvest-Vinccler subsidiary of Harvest Natural Resources, which is negotiating a transition agreement to the new system, said PdVSA will pay no more then two-thirds of market value for oil delivered by Harvest-Vinccler to PdVSA.
Weatherford wants Precision
Weatherford International Ltd. has agreed to buy Precision Drilling Corp.'s Energy Services Division and Contract Drilling Division for $US2.28 billion in cash and Weatherford stock. Weatherford will absorb the Canadian company's wireline services, drilling and evaluation services and production services into its own similar operations. Both companies have strong underbalanced drilling services operations. The acquisition will put Weatherford in the contract drilling business with Precision's 48 land drilling rigs, mainly in the Middle East and North Africa. The companies expect to sign the final deal in the third quarter.
Kovykta stirs action
TNK-BP's 70 Tcf Kovykta field is about to get moving, one way or another. TNK-BP's directors approved a US $136 early development plan for the field in eastern Siberia about 280 miles (450 km) north of Irkutsk. The early development would deliver gas to regional customers as far away as Irkutsk. Later phases contemplate pipelines to move the gas to the east coast and China. Russian officials hope development at Kovykta will start a gas infrastructure to serve more of eastern Siberia. At the same time, the Russia government said it would review the TNK-BP license, because the company hasn't stuck by its development timetable for Kovykta. One problem has been an impasse over shipping gas through government-owned Gazprom pipelines. The government could discipline both companies to get the project moving.
Brazil sets bid timing
Brazil will take bids on the 1,134 blocks in its seventh licensing round on Oct. 18 and 19, according to Dilma Rousseff, energy and mines minister. The nation will call for bids in August and plans to sign final contracts in February next year, said a Business News Americas report.
Denmark plans bid round
The Danish Energy Authority has opened its sixth licensing round for offshore properties in its segment of the North Sea's Central Graben and will take bids until Nov. 1 this year. Under Danish rules, the government will be a 20% partner in new licenses, and the government has established a new organization that will get involved in exploration and take percentages of revenues from production.
India raises lease interest
Big gas discoveries off India's east coast and oil discoveries in western states have increased international interest in India's oil and gas licenses. The government offered 20 bids for its New Exploration Licensing Program fifth round (NELP-V) and got 69 bids for the tracts. Among the bidders were major BP and national oil companies Petronas of Malaysia, Petrobras of Brazil and Eni of Italy. In view of the Reliance Industries 10-Tcf deepwater discovery in the Krishna Godavari Basin off the east coast, interest should have been high for deepwater tracts, but the six deepwater blocks generated only 18 of the bids. There was more competition - seven bids for two blocks - on the shallowwater offerings and still more competition - 44 offers for 12 blocks - for the onshore properties. Among returning international operators were BG, Niko Resources, Cairn Energy and Hardy Oil. India hopes to sign contracts for the properties by the end of September.
Indonesia sweetens deal
Indonesia, anxious to replenish fading gas supplies to its fertilizer plants in the northern Sumatra province of Aceh, will offer ConocoPhillips a bigger share of gas revenues from its properties if it routes some of that gas to the plants. Currently, the operator gets 30% of the revenues and the new deal would raise that share to 48%, according to a Dow Jones Commodities News report. In addition, the government will guarantee interest and cost recovery from operations.
Russia pushes operators
Russia isn't letting domestic mineral license holders sit on those licenses. The Natural Resources Ministry warned eight operators to start working their licenses within 3 months or they could face revocation of those licenses, according to the Tass news agency.
Argentina proposes incentives
Argentina's administration has sent an incentive package for oil and gas production to the nation's legislative body. The nation's fiscal problems forced it to clamp down on oil and gas prices and exports and the harsh terms cut oil and gas production. The incentive measures include the elimination of sales taxes on investments in infrastructure, faster amortization of investments and lower income taxes, according to Business News Americas. The proposal also would exempt tariffs on equipment imported for exploration and production, as long as that equipment was not locally available. The incentives are good for 10 years on new exploration on existing licenses and for 15 years on new concessions.
More oil on Slope-USGS
The central North Slope of Alaska contains 4 billion bbl of oil, 37.5 Tcf of gas and 478 million bbl of gas liquids that haven't yet been discovered and could be recovered with available technology, according to a US Geological Survey assessment. Most of Alaska's current production comes from that area. In addition, the National Petroleum Reserve Alaska holds some 10.6 billion bbl of undiscovered oil and the Arctic National Wildlife Refuge - currently off limits to exploration - holds another 10.4 billion bbl of reserves. Most of the central North Slope gas reserves will be found south of the main North Slope fields along the Brooks Range of mountains, the report said. This is an area in which Anadarko Petroleum has been assembling land for some time. Those gas reserves should be accessible to the proposed North Slope gas pipeline, when it is built.
Pemex suspends MSCs
Mexican oil company Pemex, following a recommendation by the legislature's accounting office, has suspended its multiple service contracts (MSCs) that allow outside investors to develop and produce Mexican gas under contract. Pemex already has awarded eight contracts, while two have gone unclaimed, according to Business News Americas. Some legislators claim the contracts violate a constitutional provision that prohibits any company but Pemex from owning Mexican reserves.

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