Will ExxonMobil’s Polish Failure have a ripple effect on European Shale Operators?

Poland has the largest shale exploration potential in Europe by virtue of its attractive geology and by the Polish Government offering lucrative fiscal terms to prospectors. International majors, including ExxonMobil, Marathon Oil Corp, Chevron Corp and Talisman Energy Inc, are probing Poland’s shale deposits to ascertain if drilling techniques that revolutionized US gas production can unleash reserves big enough to supply Polish demand for more than three centuries. Continue reading here..

Shell, Chevron and other large oil companies Arctic-ing towards Pole position

Major companies such as Shell, Chevron, Total, Repsol, Statoil, Novatek and Cairn, amongst others have been expanding their exploration activities in and around the Arctic Sea. Continue reading here..

Chevron plans on investing $26 billion in 2011, with 87 percent of that amount expected to fund upstream activities

Chevron Corp, the second-largest U.S. oil company plans to take a measured approach to shale gas development despite a flurry of deals in the past year and the industry's huge ambitions for the emerging resource.

View Chevron’s major projects startups:

"You're not going to see Chevron -- I can't speak for others -- just shift the whole business into shale, and let other things go," Bobby Ryan, Chevron's vice president for global exploration, said at the Reuters Global Energy and Climate Summit in Houston on Wednesday. Ryan reiterated that Chevron's focus areas remained the Gulf of Mexico, West Africa and Western Australia, which were all part of a "balanced portfolio" approach to exploration.

Like Exxon and others, Chevron is exploring shale acreage in Eastern Europe, and will drill its first well in Poland this year. In the U.S. Gulf, Chevron recently got clearance for a few wells already under development, and its program includes 10 development and exploration plans and 15 drilling permit applications in various stages of approval or preparation.

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Chevron is set to drill 16 development wells and two exploratory wells at Jalalabad, Moulvibazar and Bibiyana gas fields in Bangladesh for the next one year. According to Petrobangla, Chevron submitted a US$ 350 million capital budget to carry out the plan. "To conduct the drilling operations we need one year as we have to construct concrete drilling pit, mobilize drilling rig and associated equipment, management and treatment of waste and decommissioning of rig and materials", Chevron official said.

Chevron has added 14 million acres to its portfolio, including the acquisition of Atlas Energy in the northeast United States, and deepwater opportunities in Liberia and China. Chevron’s queue of major capital projects, including Gorgon and Wheatstone in Australia. Over the next three years, 25 projects with a Chevron share of more than $250 million each are scheduled to start production, nine of which have a net Chevron share that exceeds $1 billion. Chevron has four major capital projects planned to start up in 2011.

Additionally, over the next three years, the company expects to make final investment decisions on 13 more projects, each with a Chevron share in excess of $1 billion. Construction on the Gorgon project is nearly 25 percent complete, with startup expected in 2014, and Chevron remains on schedule to reach a final investment decision this year on the Wheatstone project, with startup planned for 2016.

Chevron CEO, John Watson told, “Disruption fears are pushing up oil prices and chevron has $26 billion in capital expenditures slated for this year. When it comes to acquisition, it's all about the right opportunity. We are spending almost 90% of our capital dollars on the upstring, exploring and producing oil and gas, where we'll emphasize our growth and we have growth to add over the next five to seven years.”

Check this Video - Chevron CEO John Watson discusses 2011 Capital Expenditure Plan with CNBC:

US O&G Majors' Presentations in May - June 2011

BP:
China's Energy Future

ConocoPhillips:
Investor Update - June 2011
UBS Energy Conference

Chevron:
Australasia Overview - June 2011

Anadarko:
2011 Energy Capital Markets Energy & Power Conference

Devon Energy:
Annual Meeting - June 2011

Shell:

Credit Suisse European Oil & Gas Conference

Chesapeake:
June 2011 Investor Presentation

2011 Annual Meeting of Shareholders

Occidental Petroleum:
2011 UBS Global Oil & Gas Conference

Liberia on course to prove oil riches in 2011. Companies that stand to gain..

Liberia  is a country on the west coast of Africa, bordered by Sierra Leone on the West,Guinea on the north, Côte d'Ivoire on the east, and the Atlantic Ocean on the south. The potential for significant oil and gas discoveries in Liberia is huge, given some recent exploratory success in the region, especially Anadarko’s Mercury and Venus discoveries in neighbouring Sierra Leone’s waters. No commercial deposits have so far been found in Liberia and therefore there is no production or field development. However, this might soon change, as companies are looking to drill different plays than the old conventional structural traps. Here are the companies active in Liberia and looking to drill in 2011 and 2012. 


Material has been sourced from Derrick Petroleum's exhaustive data on exploration and deals. The Derrick Petroleum Planned Exploration Wells Database is an extremely useful research tool to keep track of exploratory drilling of companies by region, year, etc. It will also be useful to E&P companies for identifying farm-in opportunities and to oil field services companies for identifying sales opportunities.

Table showing companies looking to drill in Liberia. Source: Derrick Petroleum Planned Exploration Wells Database.

Anadarko operates blocks LB 15, LB 16 and 17 which cover an area of 3400, 3225, and 3150 sq km respectively. In 2008, Anadarko acquired a 4700-sq kms of 3D-seismic survey on these blocks. The 3D was used to develop deepwater Cretaceous fan prospects. A key target called Montserrado (Cobalt) in Block 15 is planned to be drilled in H2 2011. The prospective resources for the Cobalt prospect is estimated to be about 1.2 bbls. Anadarko holds 57.5% interest along with Tullow Oil (25%) and Repsol YPF (17.5%)

Map showing location of Liberian Blocks along with their operators. Source: Modified from Simba Energy.

Simba Energy has a 100% interest in the onshore NR-001 licence which covers an area of 1,366 square kilometers within the Roberts and Bassa Basins of south coastal Liberia. An Application to convert its current Hydrocarbon Reconnaissance Licence NR-001 into a Production Sharing Agreement (PSA) has been submitted to the Liberian government. The company carried out an oil seep survey on its property in 2010 using a team of 25 geology students. Reportedly, oil seeps were found on all their traverses. Evaluation of the oil associated with the seeps indicates it is economically desirable ‘mature oil.’

Chevron operates blocks LB-11, LB-12 & LB-14 which together cover an area of ~9,600 sq km. Two wells are scheduled to be drilled on these blocks in 2011 and 1 in 2012. Cheveron has a 70% interest in the blocks while Oranto Petroleum has 30%.

African Petroleum Corporation Ltd (APCL) has a 100% interest in 2 blocks: LB-8 and LB-9. The company has completed the acquisition and interpretation of about 5,100 sq km of 3D seismic over these blocks. About 40 leads and prospects have been identified s in the Upper Cretaceous section, some of which have been said to be similar Anadarko’s recent discoveries at Mercury and Venus, immediately to the north west. The Company has contracted the ultra deepwater semisubmersible, Maersk Deliverer to drill two exploration wells over the blocks with the first well in June 2011 as part of a two-well programme. 

In all 5 wells are scheduled to be drilled in 2011. The potential is enormous!

For more information of discoveries and exploration plans for the following West African countries, click on the following links. Cote D’ivoire; Ghana discoveries; Ghana Exploration in 2011, Exploration in Mauritania, Benin & Togo; Angola; Sierra Leone; Sengal; List of West African discoveries in 2010 – 2011.

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Chevron acquires Marcellus acreage from Chief Oil and Tug Hill. Cost may be between $7,000-$11,000/acre!

Chevron has agreed to acquire oil and gas assets, primarily 228,000 net leasehold acres, in the Marcellus Shale from Chief Oil & Gas LLC and Tug Hill Inc. The acreage, which is principally located in southern Pennsylvania, will give Chevron an estimated five trillion cubic feet of additional natural gas resources in its Marcellus Shale operations.


Chief's spokeswoman Kristi Gittins said the sale involves all of Chief’s interests in Cambria, Somerset, Bedford and Blair counties. "After the sale of these properties, Chief and Tug Hill will have approximately 125,000 acres of Marcellus leasehold, focused in the Bradford, Susquehanna, Tioga, Sullivan and Wyoming counties of northeastern Pennsylvania" said Trevor Rees-Jones, president and CEO of Chief.

Below is the map showing Chevron’s position in Marcellus

Source: Chevron 2011Credit Suisse Energy Summit Presentation

The following table shows the acreage metrics of Marcellus deals

Source: Derrick Petroleum- E&P Transactions Database

How much did Chevron pay for the Marcellus acreage??

Though the financial terms of the transaction were not disclosed, the assets could be valued as follows…

• Method-1: The average metrics for Marcellus Shale acreage run between $7,000-$11,000/acre which leaves the transaction value between $1.6-$2.5 billion.
• Method-2: It is disclosed that this transaction includes 5 TCF (~833 mmboe) of resources. The past transactions in the Marcellus Shale have valued the resources in the range of $2-$3/BOE. Applying the same metris for the resources that Chevron have acquired, the transaction is valued between $1.6-$2.5 billion.

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Shell acquires ~A$2 billion worth stake in Wheatstone LNG project from Chevron!

Chevron has signed agreements with Shell regarding the A$30 billion Wheatstone Project as a natural gas supplier and equity participant. Under the unitization agreement with Chevron's Australian subsidiaries, Shell will assume an 8% participating interest in the Wheatstone and Iago natural gas fields in the Chevron-operated permits WA-253-P, WA-17-R and WA-16-R, located offshore northwest Australia. The Wheatstone and Iago gas fields will supply Trains 1 and 2 of the Wheatstone Project, located onshore at Ashburton North in Western Australia. Shell will also assume a 6.4% participating interest in the project facilities, with Chevron remaining project operator with 73.6% stake. Financial terms weren’t disclosed. However, the media sources are estimating the value of the stake to be around A$2 billion.

Source: Chevron Mar 2011 PPT

The front-end engineering and design activity on the Wheatstone Project is nearing completion. A final investment decision is expected in the second half of this year once environmental approvals and other associated agreements are finalized with various levels of government. The first phase of the Wheatstone Project consists of two LNG processing trains with a combined capacity of 8.9 MTPA and a domestic gas plant. The project is expected to come online in 2016.

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Asian customers for Wheatstone LNG!!

Apache and KUFPEC hold 13% and 7% stake, respectively, in the project. Chevron Australia managing director Roy Kryzwosinski said Chevron planned to divest more equity in Wheatstone to its foundation customers, including KOGAS and TEPCO, but its interest would never fall below 50%. Chevron is in negotiations with its Wheatstone customers TEPCO, KOGAS and Kyushu Electric, which are also set to take equity stakes in the project, said Chevron's spokeswoman. The three Asian LNG buyers have inked deals to lift 4.1 million mt/year, 1.5 million mt/year and 700,000 mt/year of Wheatstone LNG respectively.

Asians hunger for LNG will continue!!

The Asian spot LNG prices settled at $11.6/MMBtu in the last week of March 2011. Approximately 60% of the global LNG is delivered to the Asian markets. The Wheatstone project notably has three Asian customers (nearly 80% equity LNG under contract). With the high LNG prices and strong Asian market conditions, the project is in a robust state!! In addition, Shell's entry into the project will speed up the project's development pace. 

The following snapshot shows the LNG deals of 2010-

Source: Derrick Petroleum E&P Transactions Database

Chevron Rosneft project in problem

Chevron Corp.'s plans to drill for oil in the Black Sea in a partnership with OAO Rosneft have run into trouble, people familiar with the matter say, in a new sign that Russia's push to attract foreign partners into its energy sector may not be going as smoothly as it hoped.

Last year, Chevron teamed up with Rosneft to jointly explore and develop the Val Shatsky field in Russia's Black Sea, a deepwater region thought to contain more than 6 billion barrels of oil.

The Chevron deal was the first in a series of high-profile transactions involving ExxonMobil, BP PLC  and Total SA

But some of those deals have faced obstacles.

A $16 billion share swap and Arctic exploration project between BP and Rosneft, announced in January, was blocked by a London court after a legal challenge by BP's partners in its Russian joint venture, TNK-BP, who argue it violates the TNK-BP shareholder agreement.

And now, the Chevron-Rosneft tie-up is facing problems.

Reason for pull out

Chevron had identified some technical risks associated with the Val Shatsky field since the deal was signed last summer, and that the field's reserves may not be as large as Chevron initially thought. The field is also seen as geologically difficult, which could entail high costs.

Some of the media reports suggest, Chevron is pulling out of the project as wasn't happy about being offered just 33% in the joint venture that would develop Val Shatsky, while having to carry the full exploration costs of $1 billion.

Greenland – A frontier “giant” yet to be awakened!

Greenland is one of the few frontier regions left in the world where there are still large unexplored areas with giant structures and documented prospects. The latest hunt began in July, when the drillship West Navion spudded a well for Statoil and three partners about 145 kilometers offshore of Greenland's capital, Nuuk. The Qulleq-1, a name derived from the Greenlandic word for "oil lamp," marks the first drilling in the region since the 1970s.

Detailed geochemical studies undertaken by the Geological Survey of Denmark and Greenland (GEUS) have recognised five distinct oil types. The most significant of these is the “Itilli” type, which originates from a marine (Type II) oil prone Cenomanian-Turonian source rock.

These findings, in combination with the interpretation of an extensive modern seismic grid have revealed all the required ingredients for a potential “World Class” petroleum basin. As a result there has been significant renewed industry interest in the petroleum prospectivity of offshore West Greenland.

Cairn Energy currently has an interest in 11 areas (blocks) offshore Greenland, covering an area of approximately 81,000 sq km. Cairn has operated interests offshore Greenland at Sigguk, Eqqua, Lady Franklin, Atammik, Sallit, Kingittoq, Saqqamiut, and Uummannarsuaq.

In July 2010, Cairn in July commenced drilling operations on the Alpha prospect (Alpha-1) and T8 exploration prospects in the Sigguk Block, approximately 108 miles (175 km) offshore Disko Island, west Greenland. The  well discovered oil in it. Cairn's West Disko program includes two Sigguk exploration wells and the acquisition of around 2,000 kilometers (1,242 miles) of 2D seismic in Eqqua.

As per an article in the Business Day, Cairn will spend more than $1 billion over the next three years drilling up to 10 wells off Greenland.

Other producers with exploration interests offshore Greenland include Husky Energy, which recently has been interpreting seismic data from its three Greenland exploration licenses.

PA Resources AB on July 15 2010 completed a seismic survey of Block 8 offshore West Greenland. The seismic survey, initiated on June 6, was completed 10 days ahead of schedule. Data processing is now underway.

ExxonMobil and Chevron also hold rights off Greenland and are interpreting their own seismic data to identify potential drilling locations. ''Any exploration drilling campaign is unlikely before 2014,'' said Chevron, which holds 29 per cent equity in Block 4 off western Greenland with the operator Dong Energy.

Scott Kerr, the chief executive at the Norwegian Energy Company, said: ''We believe that with the estimated size of resources in Greenland it would be economic to develop at over $US75-a-barrel oil prices, but this depends on the reservoir quality, the field's size, and distance from shore. There are big differences in the size of resources because little exploration has been done.''

The energy consultancy IHS Cera estimates that technically recoverable undiscovered resources in Greenland could be equivalent to 50 billion barrels of oil.

Challenges….
The basic challenges that Greenland is currently facing at its oil and gas exploration front are the high costs necessary to pay for infrastructure, icy winter conditions which limit the time window for drilling operations and also opposition from different environmentalist groups.

What next?

Amid all these challenges and controversies, Greenlanders believe that an increase in its oil and gas exploration and production efforts will establish political independence from Denmark. If Greenland is successful in generating income from its mineral resources it will decrease its reliance on £500 million ($819 million) a year in subsidies from Denmark by 50 percent. 



.... the battle for a new oil frontier is on!!!!!!