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    Wood Mackenzie assesses key issues for UK oil +amp; gas sector (Thursday, 18 September 2014)

    1 Jan 1970, 12:00 am
    As Scotland is voting today either to break free from the three centuries old union or stay in it, read below a report titled :”Key considerations for the UK Oil & Gas industry and Scottish Independence Referendum,” compiled by a consultancy group Wood Mackenzie.Wood Mackenzie assesses the key issues for the UK North Sea oil and gas sector in the event of constitutional change in Scotland in light of the Scottish Independence referendum on  Thursday 18th September 2014, with the future of the oil and gas sector continuing to be a  key issue in the debate. Wood Mackenzie says the issues to be addressed in the event of a ‘Yes’ vote include fiscal (un)certainty, the offshore boundary and regulatory change.Wood Mackenzie says that oil and gas companies will be closely following the result of the referendum, and the potential issues which might arise in the event of a ‘Yes’ vote, but of more pressing concern to the industry is the underperformance of exploration and production on the UK Continental Shelf (UKCS).The key facts are:Production- Following record levels of investment, the UKCS’ long term production decline is expected to be temporarily arrested with production increasing to 1.46 million barrels of oil equivalent per day (mmboe/d) in 2018, from the current level of 1.43 mmboe in 2014.-  Post 2018, decline is forecast to set in once more with production dipping below 1 million  barrels of oil equivalent per day (boe/d) by 2023, less than a quarter of the 1999 peak according to Wood Mackenzie.- Operational issues continue to impact UKCS production levels. Although production decline rates slowed in 2013 compared to the two previous years, they were still higher than expected.  The factors contributing to this underperformance were unscheduled maintenance, project delays and poorer than expected recovery.  If these issues persist, even the temporary recovery forecast to 2018 could be at risk.Exploration activity- In 2013, 53 exploration and appraisal (E&A) wells were spudded and only 19 exploration wells have been spudded to date in 2014. Volumes discovered have also been disappointing with less than 330 mmboe of reserves discovered since the beginning of 2011, compared to around 2,540 mmboe which has been produced over the same period.- The consequence of this low level of discovered reserves combined with the cost challenges facing operators mean that, notwithstanding the total level of reserves that can be produced over the life of the North Sea, future Scottish production is under pressure.Future investment- Despite the current North Sea investment boom, there is an uncertain project pipeline with two principal factors contributing to this situation. The current high cost environment has led to projects being put on hold or deferred, such as Rosebank and Bressay, and poor exploration success has resulted in fewer discoveries, and therefore fewer new projects.In the event of a ‘Yes’ vote Wood Mackenzie highlights several issues for the country’s oil & gas sector that an independent Scottish Government would need to address:• Fiscal certainty- Fiscal uncertainty is a chief concern of oil and gas companies in the UKCS and there is an ongoing review of the industry’s fiscal terms.  Regardless of which government is in charge of the industry, companies will seek stability and simplicity around existing fiscal terms as well as tax incentives for harder to produce reserves.  Industry engagement will be paramount to maximising value for both government and companies.- We estimate that by 2030 nearly US$9 billion of tax relief will be claimed in respect of decommissioning spend on Scottish fields. This relief has been guaranteed through the Decommissioning Relief Deeds (DRDs) that exist between licence holders and the UK Government. The Scottish Government has stated that it will provide similar contractual certainty on decommissioning tax relief in the event of independence.• The offshore boundary- A border for oil and gas activities would need to be negotiated. A prolonged dispute could cause uncertainty and negatively impact the investment plans of companies active in the disputed area.- Wood Mackenzie forecasts that the bulk of UK oil and gas reserves lie in Scottish waters, and forecasts that an independent Scotland would control the vast majority of production as well as the most prospective acreage.  In terms of remaining reserves, Wood Mackenzie estimates that circa 15.3 billion barrels of oil equivalent remain in the UK.  This comprises reserves which are being produced, yet to be produced and yet to be found:  the Scottish portion of commercial reserves is 84%.• Regulation - The creation of a new regulator, the Oil and Gas Authority (OGA), was announced in June 2014.  Based in Aberdeen, this new regulator is expected to take a more active role in the stewardship of the UKCS than DECC does currently.  The Scottish Government would take on the regulatory and stewardship responsibilities of the Upstream industry and companies will want consistency and a seamless transition to ensure that delays, and an additional administrative burden, do not creep into the approvals process for upcoming projects and existing developments.The polling places have been opened from 7 a.m. local time today, where 4.2 million registered voters will decide on their country’s future by simply answering Yes or No to the question: “Should Scotland be an independent country?”. Voting polls close at 10 p.m., when the counting begins. Final results of the referendum will be revealed around 7.30 a.m. Friday, September 19.Source: www.offshoreenergytoday.com

    Earnings from Scottish Oil Wealth Fund Worth Same As Oil Revenues (Wednesday, 17 September 2014)

    1 Jan 1970, 12:00 am
    A new economic analysis of a potential Scottish Oil or Sovereign Wealth Fund has found that in 24 years Scotland could earn the same annual revenue from an oil fund as current revenues from North Sea oil and gas tax receipts.The new economic outlook, undertaken by economists for oilandgaspeople.com, the world’s largest oil and gas jobs board, found that Scotland could have amassed a fund worth between £73.64 billion and £147.28 billion in 24 years, the same time as the Norwegian Oil Fund has been running.The economic analysis found that the Scottish Oil Fund would bring in an annual income of between £2.9 billion and £5.8 billion per year respectively in today’s prices, the same amount as current estimated tax receipts from North Sea oil and gas revenues.The calculations were based on current estimates for tax receipts from oil and gas revenues from the North Sea, which are estimated at between £6.4 and £7.8 billion annually. The economists allowed £5 billion of these receipts to be invested back into the Scottish economy in order to ‘balance the books’, leaving between £1.4bn and £2.8bn to be invested into a wealth fund each year.The annual compound interested was calculated using figures provided by the Government Pension Fund of Norway, or Norway’s Oil Sovereign Wealth Fund, which grows at 5.7% a year.The economic outlook found that if only £1.2 billion was invested each year into an oil fund and delivered similar growth to the Norwegian Fund, then Scotland could expect a fund worth £73.64 billion in 24 years.If the fund was run similar to the Norwegian Fund, then only up to 4% of this figure, or £2.9 billion, could be reinvested back into the Scottish economy each year. If the fund grew to the higher estimate of £147.28 billion, then £5.8 billion could be reinvested back into the Scottish economy annually.The fund would also continue to grow year on year with revenues from the North Sea and investment returns reinvested.Kevin Forbes, CEO of oilandgaspeople.com, said: “For a only a small annual investment of oil and gas tax revenues each year, Scotland could create for itself an Oil Fund which provides earnings similar to current oil and gas tax receipts.“The significance of this shouldn’t be underestimated. If Scotland invests now for the future, it could find itself with a never-ending supply of funds derived from North Sea oil and gas. In other words, the oil and gas money will never run out.“It took a lot of courage for the politicians of Norway to invest its oil and gas receipts into a fund for the future. At the time, every other oil nation was spending its oil money today, without thinking of what the future might bring. Now we know. While the rest of the oil nations of Europe are in deficit, Norway is able to ride out financial instability thanks to its courageous forward planning.“North Sea oil and gas won’t last forever, but the tax receipts it produces can if Scotland invests now in a Scottish oil fund.” www.oilandgaspeople.com Is the leading source for Oil and Gas News daily.Follow this discussion on twitter #oilandgaspeople   

    Ithaca+apos;s Stella field exceeds expectations (Tuesday, 16 September 2014)

    1 Jan 1970, 12:00 am
    Ithaca Energy Inc. has announced the successful completion of flow test operations on the fourth development well on the Stella field, in the UK North Sea, with the well achieving a flow rate of 12,005 barrels of oil equivalent per day (“boepd”).Well 30/6a-B2Z (“B2”) is the fourth development well drilled on the Stella field. The well was drilled to a total measured depth subsea of 14,461 feet, with a 2,396 foot gross horizontal reservoir section completed in the Palaeocene Andrew sandstone reservoir. The well intersected high quality sands across a net reservoir interval of 1,658 feet, equating to 69% net pay.As with the previous three Stella development wells, a clean-up flow test was performed on the B2 well in order to effectively remove the drilling fluids used to complete the well. As part of the testing programme the well was flowed at various rates over approximately a 38-hour flowing period in order to obtain additional data and fluid samples from its location on the crest of the structure to assist with reservoir management planning for the field. A maximum flow test was completed during the period, with the well flowing at a rate of 12,005 boepd on a 48/64-inch choke. This rate comprised 5,901 barrels of oil per day and 36.6 million standard cubic feet per day of gas. Fluid samples show that the oil is approximately 47° API.The B2 well is currently in the process of being suspended, with operations scheduled to be completed by the end of the month. The suspension configuration is such that the well can be brought on to production without the requirement for any further well intervention activity once the “FPF-1” floating production facility is on location and hooked up.Upon completion of operations on the B2 well the ENSCO 100 will be moved approximately three kilometres to the Main Drill Centre to drill a fifth well on the field, in the Stella Ekofisk reservoir that underlies the main Stella Andrew reservoir.The Ekofisk well is targeting light oil production in a chalk formation. The characteristics of the formation mean that initial production rates are likely to be lower than those displayed by the wells in the Andrew sandstone reservoir. Completion of the fifth well, which is expected to be in early 2015, will mark the end of the planned Stella development drilling campaign.Following completion of the B2 well suspension operations, four Stella Andrew reservoir development wells will have been completed, with the combined maximum clean-up flow test results achieved by the wells being in excess of 45,000 boepd. This well production capacity significantly de-risks the initial annualised production forecast for the Greater Stella Area hub of approximately 30,000 boepd (100%), 16,000 boepd net to Ithaca.Les Thomas, Chief Executive Officer, commented:“We are very pleased to have delivered another successful flow test on this the fourth Stella field development well. The combined results of the four completed wells represent a major step forward in underpinning and realising the full value of the Stella field development.”Source: www.offshoreenergytoday.com

    Norwegian Oil and Gas production up currently by 2% from 2013 (Tuesday, 16 September 2014)

    1 Jan 1970, 12:00 am
    The Norwegian Petroleum Directorate has informed that preliminary production figures for August 2014 indicate an average daily production of about 1 842 000 barrels of oil, NGL and condensate.Total gas sales were about 7.3 billion Sm3, which is 0.7 GSm3 less than the previous month.The average daily liquid production in August was: 1 485 000 barrels of oil, 301 000 barrels of NGL and 56 000 barrels of condensate. The oil production is 10 percent above the NPD’s prognosis for August and 1.0 percent above the oil production in August last year.The Fram, Skuld and Troll fields had reduced production in August due to maintenance and technical problems.So far this year the oil production is about 2 percent above the NPD’s prognosis.The total petroleum production for the first eight months in 2014 is about 141.7 million standard cubic meters oil equivalents. (MSm3 o.e.), broken down as follows: about 57.2 MSm3 o.e. of oil, about 15.2 MSm3 o.e. of NGL and condensate and about 69.3 MSm3 o.e. of gas for sale. The total oil volume is 0.4 MSm3 o.e., about 1.0 percent higher than for the same period in 2013.Final production figures from July 2014 show an average daily production of about 1.508 million barrels of oil, 0.412 million barrels of NGL and condensate and a total of 8.0 billion Sm3 saleable gas production.Source: www.offshoreenergytoday.com

    Scottish Oil and Gas Investigation Reveals New Reserves (Monday, 15 September 2014)

    1 Jan 1970, 12:00 am
    Scotland could be sitting on larger oil and gas reserves in the Scottish Firths than currently predicted, a new independent industry investigation has found. The investigation was undertaken by oilandgaspeople.com, the world’s largest oil and gas industry jobs board, and independent North Sea oil and gas industry experts. The investigation included interviews with industry experts and collated seismic and expert evidence from a range of independent sources such as the British Geological Survey, DECC, oil and gas companies, the Institute of Petroleum Engineering and the Energy Institute.  The investigation shows that the geology of the majority of Scotland’s estuaries or Firths are oil and gas bearing.  In some instances, oil and gas exploration drills and licences by the oil majors were prevented and overturned by the Ministry of Defence, such as in the Firth of Clyde due to the Trident Submarine base despite the presence of oil bearing late Paloeozoic strata. The investigation found that the Scottish Solway Basin has commercially recoverable oil and gas geology. The sea (in the Scottish Solway Basin) is in the same strata as Morecambe Bay, which has the second largest gas field in Britain’s continental shelf. The investigation also found that the Moray Firth is being used by industry experts as a model for other estuaries reserves. The Moray Firth, on the east coast of Scotland, is now a proven area for commercially recoverable oil and gas. If this is replicated across Scottish Firths, oil and gas reserves would rise considerably, the investigation found.  The investigation also found that the Firth of Tay and Cromarty Firth’s are likely to yield an oil and gas return similar to the Moray Firth Basin. The investigation discovered that the Firth of Forth also has oil and gas geology, such as Crossgatehall Anticline Complex (CAC); the Mid-Forth Anticline (MFA); the Burntisland Anticline (BA); and the Barmule Anticline (BEA).  Experts at the British Geological Survey reported that exploration has started for oil and gas in the Solway Firth, with its Carboniferous to Triassic Fill, and the nearby Irish Sea Basin, where Westphalian Coal Measures are the source of the gas in the Triassic sandstone reservoir of the Morecambe Bay field.  The investigation also found that exploration licences have been issued for the area in and around Mull as well as Pentland Firth, Stronsay Firth, Westray Firth, and North Ronaldsay Firth, in Orkney.  Kevin Forbes, CEO of www.oilandgaspeople.com, the world’s largest independent oil and gas jobs board, said: “The Firths of Scotland have long been overlooked in terms of their potential for oil and gas exploration. Yet the geology in many of these estuaries is the same as other high yielding areas with commercial oil and gas reserves,” he said.  Petroleum Engineering expert, Professor Derrick Stow, Head of the Institute of Petroleum Engineering, Heriot Watt University, Edinburgh, who stated, ``There are sedimentary successions (that help produce and then reservoir the oil and gas) in some of the western islands, the Moray Firth and the Firth of Forth``.  Dr Phil Richards, Manager, Hydrocarbons, BGS, Edinburgh, said, “Many of the Scottish Firths are underlain by sedimentary rocks potentially capable of generating or trapping hydrocarbons……there have been discoveries in the Inner Moray Firth, the Beatrice oil-field for example”. Oil and Gas People is the leading source for breaking oil and gas news stories. 

    Centrica discovers gas at Pegasus West (UK) (Monday, 15 September 2014)

    1 Jan 1970, 12:00 am
    A gas discovery has been made at the Pegasus West well, offshore UK, Atlantic Petroleum, an exploration company based in Faroe Islands, has informed.The company, which is a partner in the Centrica-operated licence, said that drilling, Logging While Drilling (LWD) and wireline logging information indicated the presence of gas in the 43/13b-7 well. Following the analysis of cores and all other available data, the P1724 joint venture has decided to drill stem test the well.The well is being drilled with the Paragon 391 jack-up rig in a water depth of about 95 feet and approximately 7 km WSW of the 43/13b-6Z Pegasus North discovery well.The Pegasus West well lies in the Southern North Sea, close to the producing Cavendish Field, and had a Carboniferous gas objective.The well is operated by Centrica Energy who holds a 55% interest in the licence. Atlantic Petroleum holds 10% equity and the remaining equity 35% is held by Third Energy Offshore.Ben Arabo, Atlantic Petroleum CEO, commented: “We are excited with the results of the well so far and looking forward to the results of the drill stem test. If testing is successful, this will help to de-risk a future Pegasus development. This well is part of a programme that we have matured and built up over the last years. We are now unlocking the potential of our UK Southern Gas Basin acreage and will be adding further wells in the area 2015.”Source: www.offshoreenergytoday.com

    Statoil agrees $1.3 billion Wintershall deal (Friday, 12 September 2014)

    1 Jan 1970, 12:00 am
    Statoil has agreed to sell off stakes in the Aasta Hansteen spar development, the Polarled pipeline, and a discovery neighboring Aasta Hansteen to Germany’s Wintershall in a US$1.3 billion deal. As part of the deal, Statoil will also exit the Vega and Gjøa fields and farm down in four exploration licenses in the Vøring area. Statoil will retain 51% interest in the Aasta Hansteen spar development project. The move follows a string of recent “portfolio optimization activity,” which has included divestments internationally as well as on the Norwegian Continental Shelf. Last year Statoil divested its holdings in two West of Shetlands fields, Rosebank and Schiehallion. The same transaction also included shares in Gullfaks and Gudrun.Including today’s (September 12) deal with Wintershall, total proceeds of around $20 billion have been realized through divestments since 2010, says Statoil. The Aasta Hansteen field, in the Norwegian Sea, is being developed using spar technology. It will be the first spar development on the Norwegian Continental Shelf (NCS) and will set a depth record, being the deepest field development and export pipeline. The spar’s hull, which is being constructed alongside the topside by Hyundai Heavy Industries in Korea, will be fitted with storage for condensate, which will be loaded to shuttle tankers. Gas will be exported by Polarled, a new 480km gas pipeline from Aasta Hansteen to Hyhamma on the Norwegian coastline. First gas is due to start production in 3Q 2017, Statoil said recently. Statoil said the investment in Aasta Hansteen and Polarled total $9.2 billion. Today’s deal also included the Asterix find. Asterix was discovered in 2009 in the Vøring basin, in 1335m water depth. According to the Norwegian Petroleum Directorate, the most likely development solution for Asterix is a subsea template tied to the Aasta Hansteen spar. "We realize significant value, created through successful asset development. The transaction increases our flexibility to further strengthen our portfolio," says Arne Sigve Nylund, president for Development and Production Norway in Statoil.Statoil says it will invest about $20 billion annually in 2014-2016. This includes NCS project Gudrun, which started up April this year, while Valemon will come on stream towards the end of year. In addition projects like Aasta Hansteen and Gina Krogh are in the execution phase, while Johan Sverdrup and Johan Castberg are under planning.  Exploration activity remains high with 50 exploration wells planned globally for 2014, added Statoil.On completion, Statoil will retain 51% in Aasta Hansteen (75% before the deal), 51% in Asterix (70% before), 37.1% in Polarled (50.3% before). Statoil is selling its entire stakes in GDF Suez-operated Gjoa (5%) and Vega (24.525%), which Wintershall will take over as operator, and divesting 10% stakes each in exploration licenses 602, 603, 528, and 528 B, leaving it with 30% in 602 and 25% in the rest. 528 and 528 B are operated by Centrica. Source: www.oedigital.com

    West of the Shetland Solan field facilities successfully installed (Thursday, 11 September 2014)

    1 Jan 1970, 12:00 am
    Premier Oil, a UK-based independent oil and gas company, has announced that the Solan subsea oil storage tank, jacket and topsides have been successfully installed.The offshore hook up and commissioning programme will now start, but the precise timing of first oil from the Solan field will depend upon the progress of this next phase, Premier said in the release.Tony Durrant, CEO, commented:“We are very pleased to have successfully installed the Solan facilities within two and a half years of receiving approval from the UK government. This achievement was only made possible by the co-operation and skills of the teams and contractors involved.”The Premier-operated Solan oil field is located west of the Shetlands in the North Sea and it is expected that it will produce approximately 40 million barrels of oil with an estimated initial production rate of 24,000 barrels of oil per day starting in the fourth quarter of 2014.The project will entail the drilling of four subsea wells (two producers and two water injectors) tied back to a processing deck supported by a jacket. It is planned that the facilities will not be permanently manned after one year of operations. Oil will be stored in a subsea tank prior to being offloaded to shuttle tankers.Premier is the operator and 60 percent owner of the Solan oil field.Source: www.offshoreenergytoday.com

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