Thursday, February 24, 2011

CNPC and KazMunaiGaz boost strategic partnership. Urikhtau field to provide additional gas supply for Kazakhstan-China pipeline.

CNPC and KazMunaiGaz have signed co-operation agreement to jointly develop the Urikhtau natural gas field located near Kenkiyak in the Aktyubinsk region of western Kazakhstan. CNPC and KazMunaiGaz will hold 50:50 interest in a joint venture to explore and develop the Urikhtau gas field which was tapped during the Soviet era, but has not been developed since Kazakh independence. According to earlier estimates by KazMunaiGaz, Urikhtau's reserves are estimated at ~40 billion cubic meters (1,413 Bcf), and the field has an estimated potential to produce 1.5-2 Bcm/year (52-71 Bcf/year).
The field's gas output is expected to be one of the sources for Kazakhstan's Beineu-Shymkent pipeline, which is a 1,500 km pipeline linking several existing trunk lines in Central Asia, including the Center, Bukhara-Ural, BGR-TBA and Kazakhstan-China pipelines. Construction of the pipeline started in late December and is expected to be completed by 2012.

The 10 Bcm/year pipeline is the second phase of the Kazakhstan-China gas pipeline and will go from near the Caspian Sea to a linkup with the first phase of the pipeline in south-central Kazakhstan. The first phase, which brings gas from Turkmenistan to China via Kazakhstan, was launched in December 2010 with a capacity of 30 Bcm/year and may be increased to 40 Bcm/year.
With the completion of the pipeline construction and development of the Urikhtau gas field, additional gas volumes will be available to export along the Kazakhstan-China gas pipeline. Also, China is seeking greater access to natural resources in Central Asia to fuel its fast-growing economy. This Kazakh co-operation will help China meet the growing demand to an extent.

Democratic fireball goes rolling in Libya; disrupts oil and gas operations

The growing unrest  in Libya since past few weeks has decreased Afica’s oil output by 6% and has sent Brent oil prices skyrocketing above  $105 per barrel. With Muammar Gaddafi’s orders to his security forces to sabotage the country’s oil facilities, many international oil and gas companies have already suspended their operations.

Wintershall turns off the tap…..
  • Wintershall holds eight onshore fields around 1,000 kilometers southeast of Tripoli and 350 kilometers southwest of Benghazi in the Libyan Desert. It also holds  interest in the Al Jurf offshore field in the Mediterranean Sea off the Libyan coast.
  • Following the unrest, Wintershall has shut down its production of much as 100,000 barrels per day.
Repsol follows suit…..
  • Spain's Repsol has halted output in Libya due to unrest. A pipeline bringing Libyan natural gas to Italy was closed.
BP and Shell suspend drilling…..
  • Shell holds five exploration licenses in the Sirte Basin off Libya. It has has temporarily relocated the dependents of expatriate staff outside the country.
  •   BP which does not produce oil or gas in Libya but has been readying an onshore rig to start drilling in the Ghadames basin, has suspended operations.

  • Italian power giant Eni S.p.A (ENI) has a historically large involvement in Libya, which constituted 14% of oil and gas production in 2009. ENI also produces significant natural gas from Libya and pipes over to the continent via the Greenstream pipeline.
  •  It said that its operations and facilities in Libya haven't been affected by the political unrest in the country and production continues as normal. The company is in the process of evacuating non-essential personnel.

Libyan oil and natural gas fields and pipelines

For information about companies with operations in Libya, please click here:

Permian Basin continues to lead the market for mature assets in US

The Permian Basin received the highest production multiples, $80,000-$110,000 per flowing barrel equivalent. The metrics reflect the premium buyers were willing to pay for oil reserves; future drilling opportunities, behind pipe potential and reserve quality.

Deepwater GoM saw the highest reserve metrics as a result of BP’s acquisition of Shell’s mature GOM assets in Dorado and Marlin.

Gassy plays such as the Barnett, Fayetteville and CBM received low metrics due to the low gas price environment.

Oxy paid a premium for Shell’s conventional South Texas gas assets with part of the price driven by liquids content and low operating costs.  

For more details on Permian companies

Deepwater GoM a hard sell, but sellers continue to track

As 2011 sets sail, there are at least five sizeable property sale packages being floated in the Gulf of Mexico. One of them, a set of 22 shelf leases with 27 MMcfe/d of production and17 MMboe of reserves offered by EOG Resources, is rumored to have a tentative buyer. Net present value of the EOG properties has been said to be upwards of $200 million, with about $34MM a year in operating cash flow. Unknown is how much of EOG’s half-billion-dollars of plugging and abandonment liabilities is allocated against them.

Deepwater sale properties are facing a rougher market, however. Plains Exploration and Production announced last year it wants to exit its holdings far offshore in the Gulf and opened a data room in December in hopes of finding a buyer. With apparently a dearth of bids, however, CEO James Flores has extended the marketing effort into the first quarter. Said Flores: “The additional time is an important step in securing the optimum value for PXP shareholders.” Other sale packages being marketed include about 7 MMcfe/d of production by Sojitz Energy and others at WC 168, operated by Linder Oil. Also for sale is Leed Petroleum with ~1,200 boe/d of Gulf shelf output and an package of Merit Energy properties producing ~8,400 boe/d. Tristone is handling the Leed and Merit sales. PLS and Burks are offering the Linder package and Randall & Dewey has the PXP deepwater sale. R&D is also agent for ConocoPhillips, which is trying to sell offshore stakes at Green Canyon, Eugene Island and the Europa Field. The major said February 7 it closed the sale of six regional packages for over $1.2 billion but did not mention the offshore assets. Randall & Dewey did not respond to inquiries. Statoil, which took a big plunge into the Gulf in recent years by acquiring stakes in some 400 offshore blocks, now is trying to sell down many of those interests to reduce risk and spread big capital costs.

Major deepwater packages available

Statoil offeringStatoil ASA is planning to sell stakes in GoM exploration licenses where the company has 100% ownership to reduce risk and raise funds for projects.                                                                  

Statoil has interests in more than 400 leases in the Gulf of Mexico. In 2009, Statoil became the operator for an extensive drilling programme with two rigs in the Gulf of Mexico. In March 2010, Statoil was the highest bidder on 21 leases in the Central lease sale 213. These leases are in deepwater and predominantly in high quality Miocene sand.

ConocoPhillips offering                                                                                                 
ConocoPhillips has retained Jefferies & Co Inc to sell certain assets in the Gulf of Mexico. The package includes Green Canyon 563 (K-2 Unit) with 12.4% non-operated interest in 4,000 foot depths. Production is 22,000 BOE/d (2,400 BOE/d net) from eight wells targeting Middle and Lower Miocene turbidites.

Plains E&P offering                                                                                                                               
Plains Exploration & Production Company is in the process of marketing the company’s Gulf of Mexico deepwater assets. Plains has engaged Barclays Capital and Jefferies & Company to assist in executing this sale process.                                                                                                             

The deepwater portfolio is anchored by Friesian and Lucius, two high-quality oil discoveries, and a comprehensive exploration portfolio with interests in 107 blocks, 9 well defined prospects and an additional 22 prospects or leads in Pliocene, Miocene and Lower Tertiary reservoirs. The data room process is underway with final bids expected in late-October to mid-November. PXP expects the transaction to close by year-end 2010.  

On 20-Sep-2010, Plains E&P divested the Gulf of Mexico shallow water properties to McMoRan Exploration for $818 million. Current production from these properties is approximately 45 MMcfe/d of natural gas net to PXP. The properties include estimated Proved (1P) and Proved plus Probable Reserves (2P) of approximately 60 Bcfe (Gas- 85%) and 80 Bcfe, respectively.


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