Oil and gas production in UK waters ‘on the rise’

_84099156_zm00p4sc

Oil and gas production in UK waters is set to rise for the first time in 15 years this year.

Industry body Oil and Gas UK said provisional figures showed production for the first six months of the year could be up 2.5% on the same period last year.

The Golden Eagle field, which started producing in November, is thought to have played a part.

Increased efficiency from existing assets is also being highlighted.

Deirdre Michie, chief executive of Oil and Gas UK, said: “It’s still early days, but initial indications suggest that production could increase this year for the first time in 15 years.

“Clearly the oil price – which has more than halved since this time last year – continues to really challenge the industry.

“However, this positive news can indeed be attributed to the effort and investment industry has put into improving the integrity and performance of assets.”

Analysis by Douglas Fraser, BBC Scotland business and economy editor

The rise in oil and gas output – of about 40,000 barrels per day – is not, perhaps, what you would expect when the price has been falling and the industry has been slashing at costs and investment.

It reflects less downtime for maintenance, and the industry points to its efficiency measures working.

But it mainly reflects previous years of investment. More than £30bn in the past few years has secured a second wind for the North Sea and new projects west of Shetland.

And with output at around two-thirds of its peak level at the turn of the century, only one field can make a big difference. The Golden Eagle field, 40 miles north-east of Aberdeen and operated by Chinese-owned Nexen, can pump up to 70,000 barrels per day and only started production last November.

It has been forecast that output will remain at a slightly higher level for the rest of this decade, before returning to long-term decline as fields deplete.

Does this mean a rise in offshore tax revenue? No. With 3% more oil and 2.5% more gas, revenue may be slightly more than the low forecasts, but as tax is based on profit rather than production, and taxable profits are reduced by the low oil price and by investment allowances, the tax take is still going to be a long way down on recent years.

The global downturn in oil industry investment this year can be expected to have an effect later this decade. Without replacement supplies for depleting fields, we could see a constraint on supply, which can be expected lead to more price volatility to the upside.

The original source for this post can be found here.

Top 15 Oilpro Videos Of 2014

1. Huge Explosion At Saudi Aramco Refinery

The news of the explosion of an oil pipeline belonging to Saudi Aramco near Sudair caused an immediate $2 spike in WTI crude oil prices as traders knee-jerk reacted to the news.

2. $10 Crude? Wall Street Pundit Claims “Crude Oil The New Whale Oil”

On CNBC, Dennis Gartman stated that crude oil is set to go “the way of whale oil,” which went obsolete when crude came on the scene in the early-20th century.

http://player.theplatform.com/p/gZWlPC/cnbc_global?byGuid=3000324916&size=530_298

3. Watch This Huge Wave Hit North Sea Rig

Here is a short video that shows the dangers of working offshore in unpredictable, and often violent, weather. These huge waves hit the Dunbar in the North Sea.

4. Seeing Is Believing: Fracing Process From Start To Finish

Marathon Oil produced this video detailing the fracing process from start to finish.

5. Deepwater Drilling In Under 8 Minutes

This video on deepwater drilling is short, to the point, and comprehensive.

6. Oceaneering ROV Records Sea Monster In Deepwater

Oceaneering ROV cameras appear to have recorded a massive sea creature moving around riser in deepwater. The video looks to have been recorded in 2012, but the clip below was posted on Youtube about one week ago. Hoax or real?

7. Hear HAL CEO Talk Deal, Jobs & Oil Prices In 1st TV Interview Since Baker Purchase

Halliburton CEO Dave Lesar was interviewed by CNBC’s Squawk on the Street crew – one of his first public speaking engagements since the deal between Halliburton and Baker Hughes became official.

8. It’s Hurricane Season: Watch This Oil Rig In A Tropical Storm

This is a video from an offshore rig in the Gulf of Mexico during Tropical Storm Hanna (which later became Hurricane Hanna) in 2008. Hurricane season poses many risks for offshore workers who bravely weather the storms year after year.

9. Meet The New BOSS- Tour The Latest Pad Drilling Rig

Unit Drilling Company has a new, high-tech rig known as the BOSS. The new drilling gear is known as a BOSS rig, which is short for a box-on-box self-stacking rig.

10. How Low Can You Go? Oil Well Downhole Camera

A very interesting video, detailing what drillers can see, identify and diagnose using a downhole camera.

11. Watching A Dreamliner Fly Like A Stunt Plane Sparks A Look At Airline Oil Usage

The rare sight of a Dreamliner behaving like a stunt plane got me thinking about the fact that the airline industry is one of the biggest consumers of the product our industry creates and made me wonder exactly how much of our product is used to power the aviation industry.

12. Understand The Ukraine Crisis In 5 Minutes

This short video is very helpful in understanding the ongoing crisis in Ukraine. Although released prior to the mobilization of Putin’s Russian military in the Crimea, it’s very helpful in giving a historical context to the current conflict.

13. When Anchovies Are Mistaken For Oil Slicks

Have you ever seen a desert mirage? Well take a look at this video of what one person thought was a massive oil slick near Scripps Pier off La Jolla, California (in San Diego county).

14. This State Has More Oil Than Saudi Arabia, & Other Facts You Might Not Know

This Inno-Versity Inno-Mation was adapted from Stephen Moore’s talk on America’s Energy Boom: How It Will Save U.S. Manufacturing and Recharge The U.S. Economy. Some unknown or forgotten fascinating facts about the US energy renaissance here.

15. Crane Operator Prevents OSV From Capsizing

In this video, an OSV offshore Brazil is heavily listing to its port side and almost capsizes. An offshore crane operator may have saved the day by acting quickly to pick off some of the shifting cargo.

The original source for this post can be found here.

TPAO Özelleşiyor!

tpao-turkiye-petrolleri-anonim-ortakligi-logo

Enerji Bakanı Taner Yıldız, TPAO’yu da THY modelinde olduğu gibi bir bölümünü halka arz ederek özelleştirmeyi düşündüklerini açıkladı.”TPAO acınacak halde değil” diyen Yıldız, şirketin karlılıkta geçen yıl Türkiye üçüncüsü olduğuna dikkati çekti.

Yıldız, tasarıyla ruhsat alanlarının daha netleşeceğini, 180’den fazla ruhsat alanı alamayan TPAO’yu uluslararası şirket haline getirecek yapılanmaya gittiklerini ifade etti.

Daha önce 18’e ayrılan petrol arama bölgelerinin tasarıyla kara ve deniz olmak üzere 2 temel bölgeye ayrılacağını belirten Yıldız, denizlerdeki alanların da kara suları içi ve dışı olarak iki bölüm olacağını söyledi. Karadeniz’deki 7 ruhsat alanını 33’e çıkaracaklarını bildiren Yıldız, yerli şirketlerin gerek kendileri, gerekse uluslararası sermaye ile birlikte Karadeniz’de faaliyette bulunmasını istediklerini kaydetti.

Yıldız, ruhsat alanlarını da en az bin 693, en fazla 6 bin 23’e çıkaracaklarını bildirdi.

Haberin kaynağı için tıklayın.

New Oil Sands Technology Debuts in Utah

 

In the northeastern desert of Utah, a new type of oil sands extraction technology has been born. The company behind it claims the process is the most cost-effective and environmentally sound way to develop oil sands.

“Nothing goes out onto the ground, nothing goes up into the air, and there is no water involved,” said Gerald Bailey, the chief executive officer of MCW Energy Group. “We finish up with 99.9% clean sand that you can just lay out on the ground.”

Bailey said the efficiency of the technology is backed up by permits issued by the US Environmental Protection Agency allowing MCW to reintroduce the sands to the source area. Oil sands surface mining has become a controversial extraction method because it results in large quantities of hydrocarbon and chemical-laced tailing ponds that can take decades to remediate. Another method, steam-assisted gravity drainage does not come with the environmental drawbacks of surface mining, but it does require large volumes of water and energy, usually from natural gas, to generate steam for the in-situ production process.

The key to the emerging technology is MCW’s solvent that acts as a surfactant. Made from a strain of common organic alcohols, Bailey said the solvent strips more than 99% of the hydrocarbons from the oil sands, which have an original content of 12% oil. The quality of Utah’s oil sands is approximately 22° API, considered the upper limit of heavy oil by the US Energy Information Administration.

MCW’s also says it extraction technology requires no water for the process, emits no greenhouse gases, and does not require high pressures or temperatures to separate the hydrocarbons from the oil sands. The process is continuous but it can be turned off and on with the flick of a switch.  “There is no decline curve. It is not a well depletes,” Bailey said. “You are just taking a raw material, putting it in a chemical, and getting oil.”

The company is currently raising USD 80 million to build a 5,000 B/D facility with two 2,500 B/D contact towers and separation units. Located 5 miles from the pilot facility, the company is buying a 3,000-acre oil sands lease for USD 10 million for a new facility, which would eliminate hauling costs. The prospective area contains 70 million bbl in proven reserves, Bailey said, adding that he hopes to break ground in the first quarter of the year and have the facility achieve first oil in 2016.

Companies have tried for years to profit off the abundant oil sands in Utah, where an estimated 55% of the total US deposits are found, according to the Utah Mining Association, but with little success. The owners of the lease that MCW is looking to acquire use the oil sands as an asphalt feedstock for paving roads. Bailey said the accumulation of large piles of the feedstock will mean that the company will not have to mine it out for some time. Utah’s oil sands run as deep as 300 ft.

Bailey, who holds a doctorate in chemistry and spent much of his 52-year career in the oil and gas industry as the president of Exxon Arabian Gulf, said he took the helm of MCW about 3 years ago after realizing the potential of the technology that the company had acquired. Its core business has been distributing gasoline to gas stations in southern California, but that business is now being spun off so the company can focus on its future in oil sands, he said.

The solvent was invented in Russia by a scientist looking for ways to clean up oil-polluted soils on the outskirts of Moscow. When Russian companies took a pass on the remediation technology, the rights and patents were sold to Glendale, California-based MCW. Bailey said the composition of solvent was altered to optimize it for the Utah oil sands, which differ from Canada’s oil sands in that they are hydrocarbon wet as opposed to water wet.

The extraction method begins with the scooping up of oil sands from the surface using a front-loader tractor that loads the oil sands into a truck. Once the sands are delivered to the facility, it is placed onto a conveyer belt and fed into what MCW calls a contact tower.

The oil sands are then heated into a slurry at a temperature of approximately 130°F and introduced to the solvent. With the help of a mechanical agitator, the oil is released from the sand and placed into a separation tank. About 95% of the solvent is separated and recycled into the system and the rest is left in the oil to facilitate its transportation to refineries.

The production costs are around USD 38 per bbl, which includes trucking in the oil sands and USD 3 per bbl of the solvent. MCW’s current oil sands lease has an estimated 50 million bbl of oil reserves.

In an ironic twist, some of the newfound interest in the technology has come from Russia. Interest has also been sparked in China, believed to have the most oil sands in the world, along with a host of other oil sands-bearing nations, including Canada, Kazakhstan, the Dominican Republic, Trinidad, and Namibia. If coupled with a crushing stage, the technology could also be used to process oil shale.

Bailey believes that the technology can also be used to clean up tailing ponds, which contain leftover hydrocarbons, in Canada. “We could dewater a lot of that stuff and treat it with our chemical and our process,” he said.

With only one pilot plant in operation, Bailey said that MCW is unable yet to export the nascent technology to so many places at once. Nonetheless, he said the technology is scalable.

“It is like a Lego set,” he said. “You just build more towers.”

The original source for this post can be found here.

Halliburton In Talks To Buy Baker Hughes In A $75 Billion Combination

This afternoon, the financial press is reporting that Halliburton (HAL) is in talks to buy Baker Hughes (BHI) in what would arguably be the most significant combination in the history of oil service and drilling.

The deal would combine the world’s second and third largest oil service contractors, and the combined market cap would be in range of $75bn. Halliburton currently employs 80,000 people and Baker Hughes employs 61,000 (two of the highest totals in the entire O&G industry).

The Wall Street Journal cited people close to the deal as saying that the talks are moving quickly. An Oilpro member has told us that Halliburton is attending an investor conference this week, and they cancelled 1×1 meetings following their group presentation – an indication that there is fire under the smoke here.

Shares of Baker Hughes soared on the news and were halted in afternoon trading. In after hours trading, Baker shares were bid above $60 per share, up 26% from levels early today (near $49) as traders buy this news.

enter image description here

With A $75 Billion Market Cap, The Combined Company Would Turn Competitive Dynamics Upside Down In Oilfield Services

This Deal Would Turn The Big 4 Into The Big 2
Based on current market values, the combined entity’s market cap would approach $75bn, still well below Schlumberger’s $124bn, but a lot closer. HAL’s market value today stands at $45bn and BHI’s is $25bn, and the deal would likely include a significant premium for BHI. By combining together, Baker and Halliburton would have the scale to challenge Schlumberger’s market leadership, which has been built through smaller acquisitions and internal investments in technology and organic growth.

With Weatherford at a market cap of about $12bn, this deal would effectively mean that the Big 4 service firms would become the Big 2 as the new HAL and SLB would be far larger than WFT once the deal is consummated.

Additional Consolidation Could Follow
Because of the drastic implications for competitive dynamics here, this deal could set off a round of oil service sector consolidation as companies look to build scale to improve competitiveness. Beyond the Big 4, there are basically no true diversified mid-cap service companies any longer – Superior Energy Services is probably the closest with a market cap of $3.6bn. Smaller companies may be forced to consolidate to offer a diverse package of services to compete with the integrated platforms of the Big 2 in this scenario.

Regulatory Approval Will Be A Big Hurdle For This Deal
Given the business overlap, particularly in the US onshore market, this deal will also likely receive some pretty serious scrutiny under the Hart-Scott-Rodino Act (HSR). The HSR act is anti-trust legislation designed to enable the Federal Trade Commission and the Department of Justice prevent business combinations that would create unfair competitive dynamics. A review process will be held before the deal is approved.

Interesting Timing

Should this deal move forward, one of the most interesting aspects is the timing. The oil service sector is arguably within reach of a multi-decade cyclical high.

Sure, shares of both Baker and Halliburton are down about 30% from recent highs due to the oil and broader equity market sell-off, but as shown below, shares are well above historical norms, as are most operating metrics.

enter image description here

Historically, consolidation in the sector has been more prevalent (and successful) around cyclical lows rather than cyclical highs. And based on the oil price downdraft and commentary from operators, it would appear that the industry is on the verge of cyclical decline.

The timing also begs the question of how this deal would get done in the current market. Halliburton has an enterprise value of around $51bn. With just $2bn of cash, they will probably need to use a combination of equity and debt to finance the deal (Baker has an enterprise value of $29bn and an equity value of $25bn). The markets are skittish right now, and it will be interesting to see what sort of financing Halliburton decides to use to fund the deal. The consideration paid to Baker will likely be a combination of cash and shares in the combined entity, allowing Baker shareholders to continue to participate in the upside of the ongoing business.

The original source for this post can be found here.

A Solution to Fracking’s Water Problems?

Hydraulic fracturing, or fracking has helped spark U.S. oil and gas output in the past five years, but the practice also uses massive amounts of fresh water. Millions of gallons of water are needed to frack just one well. A lack of water can easily hinder fracking, which would in turn slow oil and gas output.

To ensure a continuous water supply for fracking, some drillers – especially drillers in parts of the country affected by droughts and water shortages — are exploring the use of recycled water. Drought has become an issue in Texas over the last few years, and although the recycling practices are slow to catch on there, some of these new methods are proving to be very beneficial.

What is Fracking?

The Apache Solution

Apache Corporation has more wells in the Permian Basin of West Texas than any other drilling company. In fact, in the Permian Basin’s Wolfcamp shale play, Apache is a water recycling pioneer. The production manager for Apache says that the company recycles 100% of “produced” water, a byproduct of oil and natural gas drilling. Moreover, the company recycles “flowback” water, the water that is pushed out of the well during the fracking process.

In addition to the recycled, produced and flowback water, Apache uses brackish water from the Santa Rosa aquifer, and has completely eliminated the need for a fresh water supply from at least one of its oil wells in Wolfcamp.

Apache treats produced and flowback water with chemicals to remove bacteria and unwanted minerals such as iron. Once treated, the water is stored above ground and piped to a well to use in fracking. Recycling has turned out to be an economical solution for Apache: treating flowback water costs an average of 29 cents a barrel. If the flowback water isn’t recycled, Apache has to pay $2.50 per barrel for a third-party company to dispose of it.

Slowly Catching On

Despite Apache’s successes with reusing water, recycling has been slow to catch on in most of Texas. Although a recent drought caused a shortage of water, in general, fresh groundwater is low cost and plentiful. Furthermore, waste disposal is relatively easy in Texas compared to other states. For example, in the Marcellus shale play in Pennsylvania, operators must drive their waste to Ohio because the geography around the play doesn’t allow for disposal wells.

Although slowly, water recycling is catching on in the Lone Star State and Apache isn’t the only company to reuse fracking water. For example, Fasken Oil and Ranch, operating near Midland, recycles close to half of the water it uses for fracking. However, unlike Apache, which has saved money by recycling, Fasken says that recycling is actually adding to their cost—about $70,000 for each hydraulic fracture. In this specific case, recycling is costly for Fasken because access to fresh groundwater from the 165,000 acres owned by the company bears almost no cost.

Permit applications show further evidence that water recycling is catching on in Texas: Applications for oil field water recycling have gone up from just one or two per year to 9 so far in 2013, and 13 last year. However, there may be more even more recycling going on because the state does not require “mobile recyclers,” which recycle water on or near a fracking site, to get permits.

Disposal of Fracking Waste

Conclusion: The Future of Water Recycling

Although water recycling hasn’t eliminated the demand for fresh water in fracking, there has been a shift in attitudes in recent years. Because of factors like droughts and community concern over water usage, companies are beginning to see produced water as an asset instead of waste that needs to be disposed of. If water recycling becomes fully adopted by oil and gas companies, then it’s likely that more money will go into future development. The possibilities go beyond fracking, too – water is already used for other purposes, such as cooling water in power plants. If water recyclers can get water clean enough that it can be used for drinking and household purposes, we could see considerable value.

The original source for this post can be found here.

The five issues worrying oil executives in the North Sea

On the 50th anniversary of the issuing of the first licenses for the extraction of oil and gas from the UK continental shelf (UKCS), we asked oil executives what their main concerns were in an increasingly challenging period in the sector’s turbulent history.The consensus was that the industry needs to learn to collaborate if it is to survive these challenges.

Issue 1: Operating expenditure is going up while production forecasts are going down

Production from assets fell by 38 per cent between 2010 and 2013, equating to a drop of around 500 million barrels of oil equivalent (boe) and a drop in tax receipts of approximately £6 billion.In exploration, just 15 wells were drilled on the UKCS last year, compared to 44 in 2008, while operating expenditure rose to a record level of £8.9 billion, and is expected to increase further to about £9.6 billion this year. But there are reasons for optimism: while approximately 42 billion boe have been produced from the UKCS to date, it is estimated that a further 24 billion boe could remain.

Energy Inforgraphic - operating-expenditure-is-going-up-while-production-forecasts-are-going-down

Issue 2: The contracting model is failing from the cost base perspective

Attendees at an executive briefing noted that the supply chain had received little mention in the Wood Review. Significant sums were being spent on ‘low value-high volume’ work, leading the executives to consider the question: is there a genuine appetite within the industry to look at a transitional approach to costs in terms of fixed price agreements? One executive commented “We’re not talking about the 2009 solution of going in and saying rates have gone down by 10%. That’s not going to work. We have got to see cleverer business models. That may include more remote location working not just in Manchester … but going much further, to India or China for example, to try and get services from there.”

Issue 3: The industry is not planning for decommissioning

Oil executives in the North Sea recognise that the industry needs to plan more effectively now for end of life assets, or face potentially catastrophic consequences down the line. “The industry is not planning for decommissioning, we are just hoping (an incident) won’t happen, then when something does we will cope with the crisis and everybody will jump into action. But nobody is willing to take that first step,” the head of one company said. It has been suggested that decommissioning costs should be included in the design stage to offset their impact.

Issue 4: A new regulator will not change anything

While the Wood Review’s approach to regulation is welcomed, many executives are questioning what we can expect to be different this time around.  “Why should we expect a new nirvana with the Regulator?” asked one operator, while others expressed doubt as to whether the Regulator would be able to push back against future treasury demands.

Issue 5: The industry is facing a knowledge shortage, not a skills shortage

While much has been made about the shortage of skilled people in the oil and gas industry, not enough is made of the importance of knowledge transfer, which requires greater collaboration within the industry.  “Working on a brownfield site can give you the ability to learn the skills to work on a greenfield site, but you need to have gained that experience beforehand to make that change,” said one director. All these issues require collaboration in an industry in which, as one operator said, “competition is bred into you”. These concerns are just some of the key points raised at an executive briefing we held with executives from across the industry.

The original source for this post can be found here.