Wood Group opens HSE, technical competency center in Eagle Ford

Wood Group has opened a 16,000 sq ft training facility in Kenedy, Texas, where educational programs for Eagle Ford shale workers will focus on health, safety, and environment (HSE) and technical competency. The center includes a 300-person capacity training room, an instrumentation and electrical (I&E) lab, a computer-based training (CBT) lab and a board room. The facility also has an outside pad with a tank battery and an area with buried pipe for pipeline finding; both will be instrumental for hands-on training.

The center is operated by Wood Group PSN, which provides high-integrity services to design and construct facilities, optimize performance, maintain production, reduce operating costs, ensure asset integrity, and extend the operating life of oil and gas fields. It is this knowledge and expertise that Wood Group PSN will provide via a combination of classroom, hands-on and API-certified computer-based training.

The training curriculum levels range from basic production operations for entry-level personnel to the essentials of managing oil & gas contract obligations for experienced lease operators. HSE-specific classes include SafeLand, Department of Transportation operator qualification (DOT OQ), H2S training and defensive driving. The combination of structured, industry-proven processes and a strong focus on safety and regulatory compliance serves as the foundation for developing safe, competent workers for the Eagle Ford region.

Class instructors are oil & gas industry veterans with a minimum of 20 years of experience onshore and offshore, in the U.S. or international. They are experienced in operations, engineering and major project management.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By O'Niel Petroserve Nigeria Ltd, online.

Oxy drops after California drilling ban

Occidental Petroleum Corp. fell the most in seven months after a Los Angeles-area city imposed a moratorium on new drilling.

The unanimous vote by the Carson, California, city council on March 18 imposed a 45-day hold on oil and gas activity and also halted negotiations on development of about 200 wells until Los Angeles-based Occidental completes the spinoff. Carson is the third local government in the state since September to seek restrictions on drilling.

Occidental fell 3.9% to $91.44 as of 12:25 p.m. in New York after earlier sliding the most on an intraday basis since July. It was the worst performer on the Standard & Poor’s 500 Index.

“There are too many unknowns and too much of a chance of something bad happening if the city allows fracing or other similar techniques,” Albert Robles, the Carson council member who proposed the moratorium, said yesterday in a telephone interview. “I don’t think these techniques have ever gotten enough scrutiny.”

California Governor Jerry Brown has introduced new regulations to govern the practice of hydraulic fracturing. The Democrat has stopped short of a statewide ban.

Occidental in 2011 filed applications to build a production facility that would consist of as many as 202 wells pinpointing oil reservoirs at depths of as much as 13,500 ft, according to a March 18 report to the Carson city council.

The company assured city officials in a March 10 email that it would not use fracing in the project or any techniques commonly used to stimulate production in old wells. Occidental also said that establishing a broad moratorium would run afoul of state law. An Occidental spokeswoman didn’t return a call and email seeking comment.

The Los Angeles City Council last month unanimously approved a motion to impose a moratorium on fracing that will still require a final vote to go into effect. Santa Cruz County approved a temporary moratorium on fracing in September.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By O'Niel Petroserve Nigeria Ltd, online.

Chesapeake, Encana plead not guilty in Michigan lease case

Chesapeake Energy Corp. and the U.S. unit of Encana Corp., rivals in developing American oil and gas resources, pleaded not guilty to conspiring to avoid competing for leases in Michigan. Company representatives entered the pleas Wednesday before a state court judge in Cheboygan, Michigan.

Michigan Attorney General Bill Schuette said March 5 that the companies violated state antitrust laws by agreeing in which counties each would bid before a May 2010 auction for exploration rights. Each company faces a charge of conspiring to restrain trade, punishable by a fine of as much as $1 million, and an attempted-conspiracy count that carries a $1,000 penalty.

Chesapeake, which spent $400 million on exploration of Michigan’s Collingwood shale formation, has since withdrawn from the state. Calgary-based Encana has invested $230 million in Michigan in the past five years, Doug Hock, a company spokesman, said today.

Schuette said the alleged agreement may have been a key factor in the decline of lease prices from $1,510 an acre at the May 2010 sale to less than $40 an acre five months later. The companies cite results of internal investigations in 2012 in maintaining they didn’t violate Michigan law.

“When all of the evidence is viewed by the courts, we believe the conclusion will be clear that Encana did not breach any antitrust laws,” Hock said in an emailed statement confirming the company’s plea. “Written evidence received from third parties since the completion of the board investigation clearly shows that Encana and Chesapeake remained fiercely competitive the entire time the two companies were active in purchasing leases in the state of Michigan.”

Gordon Pennoyer, a spokesman for Chesapeake, said today the state’s action has no merit and that the Oklahoma City-based Company also pleaded not guilty.

Judge Maria Barton at the state court in Cheboygan, on the northern edge of Michigan’s lower peninsula, scheduled a May 5 hearing where the companies can challenge whether prosecutors had probable cause to bring the charges.

The internal investigations of Michigan bidding practices were prompted by a 2012 Reuters report citing emails among executives from both companies, including then-Chesapeake CEO Aubrey McClendon and an Encana vice president.

In one exchange, McClendon said his company needed to “smoke a peace pipe” with Encana to avoid a bidding war, Reuters said, without saying where it obtained the emails.

Schuette cited the Reuters investigation in announcing the charges.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By O'Niel Petroserve Nigeria Ltd, online.

Wood Group, Talisman Sinopec Energy renew contract

Wood Group has been awarded its first major contract in the UK in 2014. The five-year contract extension from Talisman Sinopec Energy is valued at $500 million and includes an option for two additional, two year extensions.

Effective immediately, this award enables WGPSN to retain approximately 550 jobs onshore and offshore in the UK. This is one of two major contracts WGPSN has with Talisman Sinopec Energy. The other is for the provision of operations and maintenance services to the same 12 assets.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By O'Niel Petroserve Nigeria Ltd, online.

Pioneer Natural Resources to triple shale drilling, double output

Pioneer Natural Resources is tripling drilling in shale fields as international energy explorers five times its size recoil from losses on the U.S. oil renaissance.

Pioneer is expanding its fleet of drilling rigs in the northern part of Texas’ Spraberry field to 16 from five this quarter after striking reservoirs so rich that some wells are expected to pump as much as 1 MMbbl of crude during their lifespans. Pioneer’s wildcatting bucks the trend among bigger explorers including Royal Dutch Shell Plc that are writing down U.S. shale assets and shrinking their footprints after drilling money-losing wells.

Pioneer plans to double crude and natural gas output by the end of 2018 by exploiting deep layers of shale beneath a Texas oilfield that has been in production for more than six decades. Pioneer amassed those assets in the 1990s from international companies that didn’t foresee the shale-drilling revolution and were fleeing what they regarded as a withering oil province in favor of the Gulf of Mexico and Africa.

“The technology changed,” Timothy Dove, Pioneer’s president and COO, said in a telephone interview on March 7. “What we’re doing is going back into a large, already-discovered oilfield.”

Pioneer has risen 6.5% this year after surging 73% in 2013 as production climbed to an eight-year high and Texas crude prices averaged above $90 a barrel.

International explorers who were late to the land rush for U.S. shale fields during the past decade haven’t been able to mimic Pioneer’s success.

For Shell, the world’s second-largest oil producer by market value, the dwindling value of its U.S. shale prospects contributed to a $2.7 billion writedown of its oil and gas portfolio announced in January.

The Hague-based company said it would scale back drilling in those fields because of disappointing results. Shell’s global output dropped 1.9% last year to the lowest since 2009, according to data compiled by Bloomberg.

BP Plc announced a restructuring of its onshore U.S. business last week to improve results. That was after the London-based company’s global, full-year 2013 production tumbled 32% to the smallest in at least 15 years.

Energy companies also are contending with soaring costs for everything from rig crews to the sand used in mixtures that fracture oil-soaked rocks deep underground, industry executives including Chevron Corp. Chairman and CEO John Watson said during the IHS CERAWeek conference in Houston last week.

Escalating costs are creating a “squeeze” on the biggest oil producers that is eroding profitability, Watson said.

Pioneer’s lack of exposure to the costliest and riskiest international projects, such as LNG complexes and ultra-deepwater oil platforms, shields it from some of the pressures impacting larger peers. Pioneer’s cost to extract the equivalent of a barrel of crude declined 4.8% during the final three months of 2013 to $13.36.

Pioneer is spending about $8 million a well to drill sideways through the Spraberry field, Dove said. Some of those wells probably will gush 1 MMbbl or more before they peter out decades from now, according to a presentation published on the Irving, Texas-based company’s website on March 7.

Those wells cost four times as much as traditional, $2 million vertical wells that typically yield 140,000 to 170,000 bbl over their lifetimes, Dove said. The higher costs and risks of drilling horizontally are justified because the return on each dollar invested is so much greater, he said.

At an oil price of $95 a barrel, an $8 million, million-barrel well would yield an average of $11.88 for each $1 of initial investment, based on Bloomberg calculations. That’s 61% above the $7.36 earned per dollar spent at the midpoint production estimate for the $2 million vertical well.

Pioneer plans to drill 250 horizontal wells in the Spraberry and other nearby fields in the Permian basin that straddles the Texas-New Mexico border, Dove said. That’s in addition to 200 vertical wells planned for the area in 2013.

Pioneer is selling fields in Alaska and the Barnett shale in north Texas after quitting African exploration in 2011 and 2012 to focus on its most-promising domestic prospects.

In its 2013 annual report, Pioneer identified the Spraberry field and the Eagle Ford shale in the southern part of the state as its main growth areas. The company also produces oil, gas and byproducts such as propane in Kansas, Colorado and the Texas panhandle.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By O'Niel Petroserve Nigeria Ltd, online.

Mexco Energy Corp. announces drilling of properties, acquisition

Mexco Energy Corporation has announced the drilling of certain properties in the Permian basin of West Texas and the acquisition of producing properties in four states.

Mexco Energy Corporation is participating as a working interest owner in a JV drilling four vertical development wells to a depth of 11,000 ft on 160 acre spacing in the Dean, Wolfcamp, Cline and Atoka formations on 640 acres in Reagan County, Texas.  Initial per day production rates from two of these wells respectively are 128 bbl of oil and 110,000 cubic feet of natural gas and 94 bbl of oil and 179,000 cubic feet of natural gas.  Mexco' s working interest in this JV is .3% (.24% net revenue interest).

These wells will hold the deep rights for further development by horizontal drilling.  The Wolfcamp formation in this area is an approximately 1,700 ft thick section consisting of interbedded organic shales and carbonates and includes two reservoir units, the "A" and "B" benches that have both been successfully developed with horizontal wells.  These four vertical wells in Reagan County, Texas, are in addition to two horizontal wells in which Mexco is also participating in Reagan County, Texas.

Also, Mexco has acquired for $450,000, a package of non-operated producing properties consisting of 10 oil wells and 1 gas well located in Webster Parish, Louisiana; Eddy County, New Mexico; Billings County, North Dakota; and, Nolan and Smith Counties, Texas.  The purchase price was funded from the company' s $4.9 million bank credit facility.

This purchase, effective March 1, 2014, includes working interests ranging from 27.5% to .13% (net revenue interests of 24.06% - .11%) adding estimated net proved reserves of approximately 35,000 boe at a cost of $12.86 per bbl.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By O'Niel Petroserve Nigeria Ltd, online.

News from IHS CERAWeek 2014: BHP sees world lagging U.S. in shale for foreseeable future

BHP Billiton expects the U.S. to maintain its lead in shale development for some time. “The shale-gas revolution is unlikely to go global quickly,” CEO Andrew Mackenzie said at the IHS CERAWeek energy conference in Houston. “We are unlikely to see gas replace coal globally at the scale and pace seen here in the U.S.”

Hydraulic fracturing and horizontal drilling have unlocked shale deposits of oil across the U.S., and drilling efficiency has helped boost rig yields to record volumes from the Permian to the Bakken play. The U.S. met 86% of its energy needs in the first 11 months of 2013, the highest level since 1986, data from the Energy Information Administration show.

Too many unknown factors make it “impossible to forecast” when the rest of the world will catch up to shale development in the U.S., Mackenzie said in an interview after his presentation.

“You don’t have anything like the complex gathering and distribution systems” in the U.S, he said. “It’s kind of tough to think how you could transport that to a part of the world which has not had a gas industry before.”

BHP holds more than 1.5 million acres in the Eagle Ford Shale and the Permian Basin of Texas, the Haynesville Shale of Louisiana and the Fayetteville Shale of Arkansas, according to a Dec. 10 presentation.

The U.S. holds the world’s second-largest amount of recoverable shale oil and the fourth-largest of shale gas, according to the EIA.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By O'Niel Petroserve Nigeria Ltd, online.

U.S. Water appoints Jon Amdursky to media relations team

U.S. Water Services, Inc., a producer of integrated solutions for water treatment, has named Jon Amdursky to its marketing team, focusing on media relations.

Amdursky comes to U.S. Water from BWA Water Additives, where he held similar responsibilities. He served previously as global director of marketing communications for Chemtura Corporation, and, prior to that, managed marketing communications for ISP, Bayer and Dow Chemical.

Amdursky is a graduate of Princeton University, and the Woodrow Wilson School of Public and International Affairs. He also attended the MBA program at Rochester Institute of Technology.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By O'Niel Petroserve Nigeria Ltd, online.

Uncertainty clouds investment in Ukraine shale exploration

The world’s largest oil companies from Royal Dutch Shell to Exxon Mobil are likely to reassess deals to drill in Ukraine where political crisis is threatening a promising source of new profits as well as the country’s drive for energy independence.

Shell and Chevron signed agreements last year to drill unexplored shale formations in Ukraine, offering the chance to upgrade the country’s energy infrastructure and boost domestic production, thus reducing the amount of gas imported from Russia. Before the crisis erupted last year, Exxon, the largest U.S. oil company, was also close to signing a pact to explore the Black Sea.

While the oil companies can spend their money in other countries, the investment, which could eventually be worth more than $10 billion, is vital to Ukraine’s quest to pull away from Russian control and revive an economy on the verge of collapse after three months of violent protest.

“Ukraine is a no-go area for any investment from any foreign investor right now,” said Chris Weafer, senior partner at Macro Advisory in Moscow. “Investors need two critical conditions to invest in any emerging economy: political stability and economic predictability.”

At the moment Ukraine has neither. Parliament delayed a vote today on.

Shell and Chevron Corp. signed agreements last year to drill unexplored shale formations in Ukraine, offering the chance to upgrade the country’s energy infrastructure and boost domestic production, thus reducing the amount of gas imported from Russia. Before the crisis erupted last year, Exxon, the largest U.S. oil company, was also close to signing a pact to explore the Black Sea.

While the oil companies can spend their money in other countries, the investment, which could eventually be worth more than $10 billion, is vital to Ukraine’s quest to pull away from Russian control and revive an economy on the verge of collapse after three months of violent protest.

“Ukraine is a no-go area for any investment from any foreign investor right now,” said Chris Weafer, senior partner at Macro Advisory in Moscow. “Investors need two critical conditions to invest in any emerging economy: political stability and economic predictability.”

At the moment Ukraine has neither. Parliament delayed a vote today on appointing a government of national unity to fill the void left by President Viktor Yanukovych’s exit. Its first priority will be to negotiate an economic aid package to fend off default, replacing cash Russia had promised the old regime.

If Ukraine achieves a measure of political stability, a new government will want to pursue gas drilling given Russia’s negative reaction to Yanukovych’s overthrow, said Andrew Neff, an analyst at IHS Energy in Moscow.

“Ukraine will have to engage productively with foreign energy companies going forward if it has any hope of reducing that dependence on Russian gas,” he said.

The Hague-based Shell plans to drill as many as 15 wells over the next five years to appraise the potential of the Yuzivska field, spread over 3,100 sq mi of eastern Ukraine. Spending on the project could rise to $10 billion if it reaches production, the government said last year.

The company said in a statement that operations haven’t been affected by the unrest.

Chevron, the second-largest U.S. oil company, has a similar agreement for the Oleska shale formation, where it pledged to spend $400 million on drilling. The San Ramon, California-based company said in a statement that it’s closely monitoring the situation in Kiev and has taken appropriate precautions to ensure the safety of staff and their families.

Exxon was close to signing an agreement to drill exploration wells in the Skifska area of Ukraine’s part of the Black Sea before the current crisis erupted. The deal, which would have seen Exxon commit $735 million to drill just two offshore wells, remains in limbo.

Even if drilling continues, production on a significant scale will take several years and the threat remains that Russia will use energy to maintain its influence over Ukraine - its goal since protests first started in Kiev last year, when Yanukovych ditched a deal to strengthen ties with the EU.

“Ukraine is still very reliant on energy from Russia,” said Leslie Holmes, professor of political science at the University of Melbourne. “So Russia still has a trump card up its sleeve.”

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By O'Niel Petroserve Nigeria Ltd, online.