Encana to sell U.S. LNG assets to Stabilis Energy

Stabilis Energy has signed a definitive agreement to purchase substantially all of the U.S. based assets of Encana Natural Gas Inc. (ENGI).

Denver-based ENGI is a leading distributor of LNG fuel to domestic high horsepower engine operators in the oilfield, mining, rail, marine, over the road transportation, and industrial sectors. ENGI is a subsidiary of Encana Corporation. The transaction is scheduled to close on April 30, 2014.

"We are proud to announce the addition of Encana Natural Gas Inc.' s people, assets, and customer relationships to Stabilis Energy," said Casey Crenshaw, President and CEO of Stabilis Energy.

In addition to adding ENGI' s staff, Stabilis has agreed to purchase its fleet of cryogenic rolling stock assets including storage and regasification trailers, mobile fueling units, and other related equipment. Stabilis will fulfill all of ENGI' s existing customer obligations including its existing contracts, subject to customer consent.

Stabilis plans to open its first LNG production facility in George West, Texas, in January 2015 to service oilfield customers in the Eagle Ford shale. The facility is being built as part of a previously announced venture with Flint Hills Resources LLC to build up to five LNG production facilities that target oilfield customers.

The George West facility is under construction now and will be able to produce approximately 100,000 LNG gallons per day when complete. Other targeted LNG liquefaction plant locations include West Texas, North Dakota, and other major oilfield regions. Stabilis also will continue to source fuel from ENGI' s large existing third-party supply network.

"Encana is pleased that Stabilis Energy will carry on the outstanding LNG business that our Natural Gas team has worked hard to build over the past several years," said David Hill, executive V.P. of Encana Corporation. "Encana believes that natural gas has a bright future as a domestic fuel source for high horsepower engines and that LNG will be an important part of this value chain." Encana will remain a customer of Stabilis Energy for LNG.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Tolfem Investments Limited, online.

AGR wins NCS frame agreement with Premier Oil

AGR has been assigned by Premier Oil to deliver a range of services within the Norwegian Continental Shelf (NCS).

The contract period is for five years plus an additional three years. The scope of the agreement covers well management and well planning services for exploration drilling and field developments. The work scope will encompass delivery of resources, competence and methodology by AGR’s well management team in Norway.
 
Sjur Talstad, AGR’s E.V.P, Norway and Russia, said: “We are pleased to continue the close working relationship with Premier Oil on the Norwegian Continental Shelf (NCS). The activity will be carried out from our fast growing Stavanger office which has an excellent track record of delivering well management and operational HSE support."
 
AGR recently celebrated drilling over 500 well projects in 25 countries for 106 clients - an average of one drilling project commenced every 10 days since 2000. On the NCS, the company has managed over 80 drilling projects on 14 rigs on behalf of 21 operators. Last year, AGR’s Norway team was involved in 15% of exploration wells drilled on the NCS.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Tolfem Investments Limited, online.

CEPSA acquires a 30% stake in an exploratory block in Liberia

CEPSA has acquired a 30% stake in a hydrocarbon exploration block off the Liberian coast in West Africa. Block LB-10 is operated by Anadarko Liberia Block 10 Company, a wholly-owned subsidiary of Anadarko Petroleum headquartered in The Woodlands, Texas.

The farmout agreement provides, in part, that CEPSA will participate in the drilling of two exploratory wells before August 2016. The block is in a deepwater area, with depths of approximately between 1,000 and 2,000 m. Anadarko has extensive experience as an operator in this basin. Other companies with participation in the block are the London-based company Liberia Japan Petroleum and Spanish integrated Repsol.

This acquisition has enabled CEPSA to add to its offshore portfolio, which already includes two exploratory blocks in Brazil and one in Suriname and exploration and production blocks in Thailand and Malaysia.

The operation is part of CEPSA' s expansion strategy in exploration and production. It will also be an opportunity to increase our technical capacities in the high potential offshore area in West Africa.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Tolfem Investments Limited, online.

Delineation of the 6407/1-6 S gas/condensate discovery near in the Norwegian Sea

Wintershall Norge, operator of production licence 475, has concluded the drilling of appraisal wells 6407/1-7 and 6407/1-7 A.

The wells were drilled about 8 km northeast of the Tyrihans field and 5 km northeast of the 6407/1-6 S gas condensate discovery in production licence 475. The reservoir in this discovery consists of thin sandstone layers from the Lange formation in the Lower Cretaceous. The discovery was made in January 2013. The resource estimate for the discovery was then between 3 and 20 million standard cubic meter of recoverable oil equivalents.

The objective of well 6407/1-7 was to delineate the 6407/1-6 gas/condensate discovery higher up in the structure. A new appraisal well, 6407/1-7 A, was therefore drilled downflank to investigate reservoir thickness and lithology.

Well 6407/1-7 proved gas/condensate in two sandstone intervals with a net vertical thickness of 12 m and a gross reservoir thickness of 16 m. Well 6407/1-7 A proved gas/condensate in two sandstone intervals with a vertical thickness of 7 m and a gross reservoir thickness of 13 m.

The difference in pressure measurements between wells 6407/1-7, 6407/1-7 A and the discovery well 6407/1-6 S indicates that there is no communication between the appraisal wells and the 6407/1-6 S discovery. Well 6407/1-7 has therefore proven a separate discovery, and will be reclassified as a wildcat well.

Preliminary estimates of the size of the new gas/condensate discovery range from 1 to 4 million standard cubic meter of recoverable oil equivalents.

The resource estimate for the 6407/1-6 S gas/condensate discovery has now been downgraded to between 1 and 6 million standard cubic meter of recoverable oil equivalents. The licensees will consider the discoveries in conjunction with other nearby discoveries as regards future development.

This is the second and third exploration well in production licence 475. The production licence was awarded on 29 February 2008 (APA 2007).

Wells 6407/1-7 and 6407/1-7 A were drilled to vertical depths of 3,345 and 3,311 m, respectively, below the sea surface, the latter with a measured depth of 3,571 m. Both wells were terminated in the Lange formation in the Early Cretaceous. Water depth at the site is 280 m. The well has been permanently plugged and abandoned.

Wells 6407/1-7 and 6407/1-7 A were drilled by the Borgland Dolphin drilling facility, which will now proceed to production licence 550 in the northern part of the North Sea to drill wildcat well  31/2-21 S, where Tullow Oil Norge is the operator.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Tolfem Investments Limited, online.

Total launches Kaombo ultra-deep project offshore Angola

Total and its JV partners have made the final investment decision to develop the ultra-deep offshore Kaombo project in Angola. With a production capacity of 230,000 bpd, Kaombo will develop estimated reserves of 650 MMbbl. Following an intensive optimization exercise, the project’s capital expenditure to reach full capacity was reduced by $4 bn to $16 bn, with an expected start-up in 2017.

“With the launch of Kaombo, the upcoming start-up of CLOV and three exploration wells planned in the Kwanza basin this year, Angola remains a priority country for Total,” outlined Yves-Louis Darricarrere, President Total Upstream. “While continuing our commitment to develop the Angolan oil industry, Total has significantly optimized the project’s design and contracting strategy in recent months. Kaombo illustrates both the Group’s capital discipline and objective to reduce capex.”

Located approximately 260 km offshore Luanda in water depths ranging from 1,400 to 1,900 m, the Kaombo project will develop six of the 12 discoveries already made on Block 32. The six fields (Gengibre, Gindungo, Caril, Canela, Mostarda and Louro) cover an area of 800 sq km in the central and southeast part of the block.

The Kaombo development scheme includes 59 subsea wells connected through around 300 km of subsea lines to two FPSOs, each with a production capacity of 115,000 bpd. The two FPSOs will be based on conversions of very large crude carriers (VLCCs) into production units. Associated gas will be exported to the onshore Angola LNG plant.

The Kaombo development includes a substantial level of local content. Over 14 mn man-hours of fabrication and construction works will be performed locally in Angolan yards which will be used for equipment fabrication and assembly.

Total is the operator of Block 32, with a 30% stake, alongside Sonangol P&P (30%), Sonangol Sinopec International (20%), Esso Exploration and Production Angola (Overseas) (15%) and Galp Energia (5%).

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Tolfem Investments Limited, online.

Antero Resources tumbles after slashing Utica gas estimate

Antero Resources Corp. fell the most ever after cutting its production estimate for a section of its Utica shale holdings.

Antero dropped 3.8% to $60.81 at 11:25 a.m. in New York. The shares earlier tumbled as much as 11%, the most intraday since Oct. 10. Prior to today, shares gained 44% since the Denver based-company’s public offering on Oct. 9.

Antero reduced its estimate for how much gas one section of its Utica holdings will yield by 34%, according to a statement today. Another section’s production forecast was cut by 31%. The company’s oil and gas holdings are located in West Virginia, Ohio and Pennsylvania.

Antero has 12 buy recommendations and five holds from analysts, according to data compiled by Bloomberg. The company spent $2.1 bn to find and develop new fields in 2013 and has untapped reserves large enough to sustain output for four decades.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Tolfem Investments Limited, online.

Age of gas seen as sideshow as producers look to oil

The “golden age of gas” that the International Energy Agency foresees as a result of the U.S. energy boom is hardly the future being embraced by industry executives.

At least based on comments from company officials presenting at the Independent Petroleum Association of America’s conference in New York yesterday. For them, oil is still the prize. Gas is almost an afterthought.

Abraxas Petroleum Corp. CEO Bob Watson boasted about how much of his company’s proved reserves are oil and liquids rather than gas (74%). PDC Energy Inc. said it’s sitting on huge leases in gas fields that aren’t worth drilling. Whiting Petroleum Corp. Chairman and CEO James Volker explained why: oil sells for three times as much as the equivalent amount of natural gas.

That’s no knock against the producers for chasing oil - the commodity that makes the best return for their shareholders. Still, at a time when President Barack Obama is saying natural gas will be a bridge for the U.S. economy from fossil fuels to clean energy, the industry’s views put some realism into the discussion about what energy resources get unlocked by fracing shale rocks.

U.S. natural gas futures have plunged 72% from their 2005 peak to $4.476 as supply expanded to a record. Even after the coldest winter in decades drained stockpiles, the fuel costs about half as much as in Europe. Crude oil, by contrast, is stuck at around $100 a barrel. Even as the growth of U.S. oil supplies has brought the domestic price below the international benchmark, it’s still 7.6% higher than a year ago.

The U.S. is still very much addicted to oil. Consumption will inch up to 19 MMbbl a day this year, more than Europe and China combined, the IEA estimates. Even as expanding domestic supplies reduce imports, they haven’t curbed reliance on oil outright.

If natural gas is to be a bridge fuel, the transition can’t depend on supply alone.

Now that natural gas is so abundant, it needs more uses. While power plants are switching to gas, the U.S. still gets more electricity from coal.

Billionaire T. Boone Pickens wants trucks and buses to run on natural gas. The chemical industry is investing more than $100 bn in expansion projects spurred by cheap shale gas, according to the American Chemistry Council in Washington. And the Energy Department has approved seven projects to export about 9.3 Bcf a day of natural gas in liquid form.

In the time it takes for those new demand sources to develop, making natural gas more valuable in its own right, its role as a byproduct of oil drilling is contributing to more pollution. In North Dakota, drillers pumping oil in the Bakken shale formation are burning off about $1.4 million worth of natural gas every day.

While politicians and industry may pay lip service to natural gas as the clean fuel of the future, the companies out exploiting America’s oil fields leave no doubt that they’re interested in the same fuel as 100 years ago.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Tolfem Investments Limited, online.