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l1IENERAI,dNTJ:RE'Sr; QUICK TAKES The purchase includes all of EORl's rights, title, and inter­ est in the St. Johns dome and certain related assets in Apache Feds delay Ohio forest lease sale to study fracing County, Ariz., and Catron County, NM. The US Department of Agriculture Forest Service has post·· On closing, targeted for Dec. 1, KMEP agreed to amend the paned a sale of mineral leases scheduled for the sprawling CO gas sale and purchase agreement with EORl, originally an- /' " 2 Wayne National Forest in eastern Ohio for at least 6 months to nounced Apr. 20,2010, modifying the dales o[ pipeline connec-~ study surface affects reInted to hydraulic fracturing. tion and the date of first deliveries and eliminating the termina­ I The sale, formerly set for Dec. 7 at the Bureau of land Man­ tion fee. The companies anticipated a pipeline link to Permian agement office in Springfield, Va., was to have made available basin oil fields. for bids 3,300 acres on five parcels in Athens, Gallia, and Perry EORI said S1.Johns "offered tremendous long-term potential counties, southeastern Ohio. for the right company, (but) the capital financing risks includ­ Studies have indicated that the emerging unconventional ing our cost of capital and continuing associated carrying costs Utica shale play could generate as many as 200,000 jobs within were considered ro be too onerous on a company of our size." 3 years compared with the 13,000 existing jobs that the petro·· Proceeds from the sale will accelerate EORl's infill oil de­ leum industry supports in Ohio, the Ohio Oil & Gas Associa·· velopment on 27,000 acres in New Mexico and help finance its planned San Andres CO flood at 5,000-acre Milnesand field tion has reported. 2 \Vayne National Forest covers 241,000 acres in three largE: and potentially at the adjacent 20,000-acre Chaveroo field. elements, one near Nelsonville and two along the Ohio River Ln EORI and predecessor Ridgeway Arizona Oil Corp. had aH~ been appraising the St. Johns CO -helium producing properties southern and eastern Ohio. Nearly 1,300 oil and gas wells 2 in operation on forest land, mostly in Washingron and Monroe since the early 1990s COGJ. May 28, 2007, p. 41). counties in the eastern unit. Sinopec to gain stake in Galp's Brazilian acreage Stone Energy to buy stake in gulf assets from BP China's Sinopec Group, aiming to increase its presence in Bra­ Srone Energy Corp., lafayette, La., agreed to acquire BP PlCs zil, agreed to acquire a 30% stake in the Brazilian unit of Galp 75% operated working interest Ln the deepwater Pompano field Energia SGPS SA for $5.18 billion. and other assets for a lOtal of $204 million. In addition, Stone Galp subsidiaries Petrogal Brasil and Galp Brazil Services plans to acquire a 51% operated working interest in the adjacent will issue new shares equivalenL to 30% of the enlarged share­ Mississippi Canyon Block 29, a 50% nonoperated working in·· holder base, which Sinopec will purchase for $4.8 billion. The rerest in Mica field that ties back to the Pompano platform, and state firm will pay an additional $390 million to cover debt. interests in deepwater exploration leases near Pompano field. Galp's primary assets in Brazil include four deepwater Pompano platform is a four-leg, 12-pile fixed structure in blocks: BM-S-ii, BM-S-24, BM-S-8 and BM-S-2I in the Santos 1,300 ft of water with 23 producing wells and production ca·· basin, Sinopec said. pacity of 60,000 bid of oil and 135 MMcfd of gas. Analyst Juliet Kerr of IHS Global Insight said the partner­ The acquisition is subject to preferential rights, due dili­ ship with Sinopec will help Galp Energia finance its share of gence and other customary closing conditions, and is expected development costs related to the Tupi, Cernambi, and lara pre­ to close by early 2012. salt projects in Brazil in which it participates. But Kerr noted that the agreement will mark a "significant" boost to Sinopec's standing in Brazil's oil and gas industry, especially following Kinder Morgan to buy CO2-helium assets A unit of Kinder Morgan Energy Partners lP (KMEP) will buy its earlier purchase of stakes in the sector from Repsol YPF SA. carbon dioxide and helium holdings on the St. Johns dome in The agreement marks the latest Ln a series of purchases by Arizona and New Mexico from Enhanced Oil Resources Inc. Chinese firms in Brazil's offshore oil fields. (EROI), Houston, for $30 million. Sinopec paid $7.1 billion for a stake in Repsol's Brazilian

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please contact us at www.star-communlcations.us US INDUSTRY SCOREBOARD -11/28

4 wk. 4 wk. avg. Change, YTD YTD avg. Change, Latest week 11/11 average year ago! % average 1 year ago! % Product supplied, .1,000 bid

Motor gasoline 8,579 9,095 -5.7 8,972 9,106 -1.5 Distillate 4,294 4,086 5.1 3,828 3,768 1.6 Jet fuel 1,481 1,407 5.3 1,441 1,407 2.4 Residual 265 385 -31.2. 485 486 -D.2 Other products 4,599 4,317 6.5 4,360 4,436 -1.7 TOfAL PRODUCT SUPPLIED 19,218 19,290 -D.4 19,086 19,203 -D.6 SupplJ~ 1,000 bid Crude production 5,859 5,582 5.0 5,613 5,486 2.3 NGL produetion 2 2,197 1,987 10.6 2,111 2,078 1.6 Crude imports 8,878 8,499 4.5 8,895 9,192 -3.2 Product imports 2,039 2,441 -16.5 2,343 2,575 -9.0 Other 5upply2 3 2,220 1,978 12.2 2,284 1,977 15.5 TOTAL SUPPLY 21,193 20,487 3.4 21,246 21,308 -D.3 Refining, 1,000 bid Crude runs to slills 14,592 14,250 2.4 14,703 14,639 0.4 Input to crude stills 14,962 14,719 1.7 15,108 15,060 0.3 % utilization 84.4 83.7 - 85.4 85.6 Latest Previous Same week Change, Latest week 11/11 week weeki Change year ago! Change %

Stocks, 1.000 bbl ! Crude oil 337,0'34 338,090 -1,056 357,596 -20,562 -5.8 Motor gasoline 205,159 204,167 992 207,679 -2,520 -1.2 Distillate 135,869 -2,136 158,792 -25,059 -15.8 Jet fuel-kerosine 12~:j~2 44,643 -1,919 44,817 -2,093 -4.7 Residual 36,~61 36,148 713 41,211 -4,350 -10.6 Stock cover (days/'- Change, % Change, % , Crude 23.1 23.3 -D.9 25.4 -9.1 Molar gasoline 23.9 23.8 0.4 22.8 4.8 Distillate 31.2 31.7 -1.6 38,9 -19.8 Propane 52.8 57.4 -<3.0 62.6 -15.7 5 Futures prices 11/18 ! Chan.lle Chanle % Light sweet crude ($/bbl) 99.b 96.97 2.30 86.86 12.41 14.3 Natural gas, $IMMbtu 3.'39 3.67 -D.28 4.01 -D.63 -15.6

I lBased on revised figure:;. lOGJ estimates. llncludes other liquids, refiner~ processing gain, and unaccounted for crude oil. 4Stocks divided by average daily product supplied for the prior 4 weeks. IWeekl~ average of daily closing futures prices. Source: Energy information Administration, Wall iStreel Journal

I

I BAKER HUGHES INTERNATIONAL RIG COUNT, TOTAL WO RlO !TOTAL ONSHOREI TOTAL 0FFSHORE 3,900.1 3,722

3,6UO ::::::::::=:":':';~;':::=::=J3~;373 ~~::' ~=::::=..' ....j.. '~. "'--­ :. . 1,4UI1' . 1,IUU 1,81111 1.51111 ... i .. 349 JUij"'"­, , O~I. 10 Nov. 10 Oe~. 10 Jan. If Feb. /I Mar. II Apr. /I May. /I Jun. /I Jul. II Aug. II Sept. II OU.II Note: Monthly average count I , BAKER HUGHES RIG COUNT, US I CANADA 1,1110 _•..•_ .1._. ...g,.oJ!./.... 1,000··· 1,800 .•..•..•.....•.- ...... •..•..•..•.....•..········-····.. ·····-····1;611···· ',6110··~·································· ....······_···.

___...: '."· · · ··;:;4·j.8"·· ···················487"··

4UU"~~ 11111 ...... •...:.....•...... ;... ',~~,~":--"':-,,c"·:-~"~n~"~':-'''':=,,~,,:-,~''''~,,~''~'-'''-M-'~''''''--, -"':-"'~,'--~'~~'~n~'~''''':':-..~,~, -'~"'~"~n~'~'~'n~'n:-' ~- 9110//0 '1124110 /(1/8/10 I0/2JnO 1//5/10 1f//9110 M1II1 9/23/11 /0/1/11 lonllll 11/4111 11//8111

Nole: End 01 week average count I

I

I · '... Human Eriergy­ , "," ,i_" " , I . ,

assets. Sinochem's acquired a $3.1 billion stake in Peregrino oil the country. Shell said the primary market for the gas will be field from Statoil. mill Iraq, hut any surplus can potentially be exported. Some 700 MMsefd of gas is currently burned off in southern Ih!J!:R~Q'RA':FIQij'f:'&:\1l-:tVRQiIME~T:1 QUIC K TA K ES Iraq. At current prices, the gas is worth about $1.8 billion/year. Turkey's move also comes after Cyprus' government, which Colombia Putumayo subsalt exploratory well cased is not recognized by Ankara, struck a deal with Noble Energy Pacific Rubiales Energy Corp., Toronto, has set casing to test for gas exploration off the southern coast of the divided island. the Yaraqui-IX exploratory well on a subsalt prospect on the In September, Turkey sent a ship of its own, the Piri Reis, to Topoyaco block in the Putumayo basin foothills in Colombia. the region after signing an accord for gas exploration with the Drilling and logging provide encouraging indications of the breakaway Turkish Republic of Northem Cypms, which only potential of the subthrust play, a new exploration horizon for Ankara recognizes. the company, Pacific Rubiales said. Turkey says the Greek-speaking Cyprus government has The well drilled through Tertiary and Cretaceous and pen­ no right to conduct offshore energy exploration while United etrated 61 ft of Precretaceous basement before reaching a total Nations-backed talks on reunifying the island continue. depth of 10,651 ft measured depth. The well was drilled direc­ Noble Energy recently said it has identified 12 more pros­ tionally with a southeast-northwest orientati.on in a subthrusl pects with more than 20 tef of gross unrisked resource poten­ monocline structure,referred to as structure D, that covers tial in the eastern Mediterranean that target sands equivalent 4,500 acres. 10 those it discovered at Tamar off Israel (OGJ Online, Nov. 15'G"

Petrophysical evaluation of the logs indicates that the well 2001) I encountered 142 ft of potential hydrocarbon-bearing sand­ stones distributed among the base of the Rumiyaco formation Anadarko, Noble tout Niobrara resource potential and in the Villeta and Caballos formations, all of which have Two key operators have provided positive assessments of hori­ proven to be commercial reservoirs elsewhere in the basin. zontal drilling results in the emerging Niobrara play in giant In the Rumiyaco formation, the Arena Neme sandstone unit Wattenberg field in the Denver-Julesburg basin. was encountered at 9,714 ft MD, 8,801 ft TVD with 20 ft of nel Anadarko Petroleum Corp. said its well results in the Niobr­ oil sandstones with 10% porosity. In the Villeta formation, the ara and Codell formations indicate excellent economics and a pay units were found at 9,748 ft MD, 8,828 ft TVD, with a [Qui net resource of 0.5-1.5 billion boe, and Noble Energy Inc. said of 120 ft of potential oil pay, 10 ft in the M2 sandstones encoun­ its Niobrara activities have revealed an estimated net risked re­ tered at 10,110 ft MD, 9,126 ft TVD, 40 ft in the U sandstones source of 1.3 billion boe, up more than 60% from 2010. that starl at 10,202 ft MD, 9,201 ft TVD, and 70 ft in the "T" Anadarko, producing from only 11 horizontal wells with­ sandstones, found at 10,354 ft MD, 9,327 ft TVD. in field boundaries, said the company has 1,200-2,700 fu­ The U sands have porosities of 10% while the "T" sands have ture drilling locations with estimated ultimate recoveries of porosities in the order of 11%. In the Caballos formation, found 300,000-600,000 boe/well, 70% liquids. It put costs at $4-5 at 10,510 ft MD, 9,458 ft TVD, a total of 2 ft of potential hydro­ million/wel1. Initial well rates have averaged 800 boe/d. carbon sandstones was found with porosities of 11%. Initial rate at Anadarko's best horizontal well to date, the Dolph 27-IHZ, was 1,100 bid of oil and more than 2.4 MMcfd Turkey, Shell to sign exploration agreement of gas. The well paid out in less than 4 months, and EUR ex­ Turkey's Energy Minister Taner Yildiz, eyeing recent develop­ ceeds 600,000 boe. The play should become self-funding in ments in neighboring Iraq and Cyprus, said his country will short order because payouts are expected to average 10 months, sign a contract with Royal Dutch Shell PiC for offshore oil and Anadarko said. gas exploration. The minister did not say where the exploration At more than 70,000 boe/d, Anadarko is the largest net pro­ would be conducted. ducerin the basin. It holds more than 350,000 net acres in Wat­ Turkey's move follows an announcement that Iraq's govern­ tenberg and operates more than 5,200 wells with an average ment approved an agreement with Shell and Mitsubishi Corp., 96% working interest and 88% net revenue interest. Anadarko forming ajoint venture to gather gas from three major oil fields. will run extensive tests to define the optimum spacing and lat­ The JV, Basrah Gas Co., is comprised oflraq's South Gas Co. eral lengths for the Niobrara and Codell. It plans to be run­ (51%), Shell (44%), and Mitsubishi (5%), and will gather raw ning seven rigs drilling Wattenberg horizontal wells by yearend gas that is currently being flared. 2012 and drill 160 horizontal wells compared with 40 in 201l. Shell said it will provide project management and technical Anadarko said it is exploring other liquids-riCh horizontal expertise aimed at facilitating the learning and development of opportunities on its 550,000 net acres in the greater OJ basin Iraqi staff to progressively assume key positions in the manage­ outside Wattenberg and 360,000 net acres in the Powder River ment of the company. basin. Both prospective for the horizontal Niobrara and "other TheJV will collect and process gas from the Rumaila, Zubair : horizons that we will evaluate over time." and West Qurna 1, and Majnoon fields in the southern part of , Noble Energy said it holds more than 840,000 net acres in

the DJ basin and expects to double its 2011 net production of GKP sees 40,000 bId in Iraq by end-2012 67,000 boeld, 54% liquids, by 2016. Gulf Keystone Petroleum Ltd. CGKP) plans to build and up­ Niobrara horizontal drilling, Noble Energy said, has de·· grade facilities that will make it possible to produce and export risked the legacy portions of Wattenberg and has expanded the 20,000 bid of oil by mid-2012 and 40,000 bid by the end of economic limits of the field by 67%. The company's 58 hori­ the year from Shaikan, which it calls one of the three major oil zontal wells in the Niobrara are yielding 14,000 boeld of net fields in Iraqi Kurdistan. production, up more than 20% since Sept. 30. GKP has conducted nine well tests in all target formations "Strong returns continue to improve with recent produc·· in the Triassic and Jurassic that tested a combined 18,900 bid tion performance exceeding previous results. The company's of oil at the Shaikan~2 appraisal well 9 km southeast of the most recent 18 wells are expected to achieve an average EUR of discovery well. 355,000 boe, which is a 22% improvement over an average EUR. In anticipation of equally positive results from the Shai­ of 290,000 boe from 23 early wells," Noble Energy said. kan-4 appraisal well, the company plans to design and build Within 2 years, Noble Energy plans to double its horizontal an additional testing and production facility for Shaikan-2 with Niobrara rig count and well completions. a minimum capacity of 20,000 bid of oil. Upgrading of the existing Shaikan-l and Shaikan-3 early well test facilities will Cairn finds more gas, some liquids off Sri Lanka lead to initial production of 20,000 bid to export specifications Cairn India Ltd. said its second exploratory well off Sri Lanka by mid-20l2, and the Shaikan-2 facility will increase this to is an apparent gas discovery in three zones with some liquid 40,000 bid hyyearend 2012. hydrocarbon potential. The rig is moving to drill the Shaikan-6 appraisal well, 9 Cairn Lanka (Pvt,) Ltd., a subsidiary of Cairn India Ltd., has km east of Shaikan-2, to 3,800 m. Shaikan has independently notified appropriate government authorities in Sri Lanka of a audited volumes of 8-13.4 billion bbl of oil in place. gas discovery in the CLPL-Barracuda-lG/l well in the SL 2007­ 01-001 block in the Mannar basin. Noble group starts Aseng output in Douala basin The well went to 4,741 m in 1,509 m of water and inter·· A group led by Noble Energy Inc. has started up Aseng oil and sected 24m of hydrocarbon-bearing sandstone in three zones gas-condensate field in the Douala basin east of Equatorial between 4,067 m and 4,206 m. The reservoirs are mainly gas Guinea's Bioko Island 13% under budget and 7 months ahead bearing with some liquids potential. of the original schedule COG] Online,]uly 22,2009). Cairn will evaluate the well results and work with the au~ Four subsea wells at Aseng on Block 1 are making 50,000 thorities to determine the discovery's commercial potential. bid into a floating production, storage and offloading vessel. CLPL-Barracuda-lGIl is 38 km west of the CLPL-Dorado~ The first lifting from the Aseng FPSO is expected in December. 91H/lz discovery well and 68 km from the Sri Lanka coast. An Production at the Alen project on Block 0 remains on sched­ update on the well results will be provided after the end of the ule for start-up in late 2013 at 37,000 bid. program, which is expected to be complete by early next year. Meanwhile, the company and its partners have made an oil Cairn's first well, 175 km north-northwest of Colombo, cut discovery on Block 0 at the Carla prospect, which is estimated 25 m of gas pay with liquids potential in a sandstone at 3,043.8­ to contain 35-100 million boe gross resources, 80% liquids. 3,068.7 m COG] Online, Oct. 3, 2011). IiIi'!I The Carla well, which went to 11,500 ft in 1,900 ft of water, encountered 26 net ft of oil pay in high-quality Upper Oligo­ ijil~:IU!ll~GI8<'1g!i!i!tiJJ,~j][li~! QUIC K TA KE5 cene sands under Alen field. Noble is Carla operator with 51% working interest. Perdido well sets subsea producer water-depth record A second exploratory well testi.ng the Bwabe prospect on A completed suhsea well in the Gulf of Mexico's Tobago field the sprawling Tilapia block off Cameroon reached total depth set a producing well water depth record of 9,627 ft, according and did not find commercial hydrocarbons. Noble has identi­ to Shell Oil Co. Tobago is one of the three Lower Tertiary fields fied the Bouma prospect off Cameroon with a 95~400 million producing to the Perdido drilling and production spar, moored boe gross unrisked resource and 35% probahility of geologic in about 8,000 ft of water on Alaminos Canyon Block 857. To­ success. bago field lies about 8 miles from Mexican waters. Recent appraisal work at Diega, a 2008 discovery on Block Shell said the previous water depth record of 9,356 ft was 0, has confirmed a gross resource range of 45-110 million boe, held by a Silvertip well also producing to the Perdido spar. 60% liquids. Noble anticipates developing Carla and Diega Great Whi.te is the third field producing to the Perdido spar, through Aseng or Alen facilities. which has a capacity to handle 100,000 bold and 200 MMscfd. In development the area's liquids resources, Noble noted Perdido accesses the Great White, Tobago, and Silvertip oil that the three blocks cover a combined 1.5 million underex­ and gas fields with subsea completed wells directly below the plored acres and that the discovered fields have 4 tef of gross facility and from wells up 1.0 7 miles away. gas resources remaining to be monetized. IiI!I Production to Perdido started on Mar. 31, 2010. r~~O:&~Sslij&1 QUICK TAKES TransCanada expects the pipeline to be in sen'ice by mid-2013. The Canadian Association of Petroleum Producers esti­ FTC allows ConocoPhillips, Holly to modify order mated US demand for Western Canadian crude in 2015 as at The US Federal Trade Commission approved ConocoPhillips's least 380,000 bid based on contractual commitments to Trans­ request 1O reopen and modify a final order settling the agency's Canada's Keystone XL pipeline. The Seaway reversal and con­ competition concerns arising from CanoeD Inc.'s 2002 merger struction of Cushing MarketLink will not only help meet some with Phillips Petroleum Co. FTC also approved a change to of this demand while Keystone XL awaits approval from the ConocoPhillips's agreement with refiner-marketer Holly Corp. US Department of State, but will also make other volumes cur­ FTC's 2002 order required ConocoPhillips to sell to Holly a rently bottlenecked in the Midcontinent more readily available Phillips refinery at Woods Cross, Utah, with a lO-year license on the Gulf Coast. to use "Phillips," "Phillips 66," and related brands for 10 years Increased pipeline capacity into Cushing, and limited ability at retail outlets in Utah, Idaho, Wyoming, and Montana. Cono­ to move the arriving crude out, has resulted in more oil flowing coPhillips sold the 25,000-b/d refinery to Holly in compliance into the Midcontinent than the refinery system there can han­ wi.th the order, and the current agreements between the two dle, holding prLces for West Texas Intermediate crude at per­ companies include the required exclusive rights, FTC said. sistent discounts to Brent and other comparable global crudes. The application indicated that ConocoPhillips and Holly have negotiated an extended agreement that continues the li­ Cooper basin Western Flank oil line back in service cense agreement for 7 years in the four states on a nonexclusive Santos Ltd. has returned its Tantanna to Gidgealpa crude oil " basis, FTC said. The companies have entered into an amended pipeline in Australia's Cooper basin to service at 5,500 hid of agreement as part of these negmiations that would convert throughput, reported Beach Energy Ltd., Adelaide. Holly's FTC-ordered license in Wyoming and Montana from an The Beach-operated, 6,000 bid PEL 92 crude oil pipeline exclusive to a nonexclusive license for the current license term's from Callawonga field to Tantanna has remained fully opera­ remaining 2 years. It said ConocoPhillips asked FTC to reopen tional while the Tantanna-Gidgealpa pipeline was out of ser­ and modify the order to match the new agreement's terms by vice, Beach noted. removing the Montana and Wyoming exclusivity provision. In addition to the Tantanna pipeline, Beach is considering Holly supporled the application, which FTC has approved. Im!I trucking early in 2012 to maximize oil production from its Western Flank operations. This will be underpinned by com­ pletion of the Parsons-3, 4, 5, Butlers-2, 3, 4, Gennein-l, and Elliston-l wells in corning months and the new Butlers facility, Cushing MarketLink oil line moving forward expected to corne on line in December. TransCanada Corp. still plans to build its Cushing MarketLink The growth of oil production from the Western Flank of the crude oil pipeline between Cushing, Okla., and the Texas Gulf Cooper Basin is a key focus for Beach. To this end, Beach is Coast, despite plans to reverse the Seaway pipeline to deliver in the process of planning the construction of a 50-km, 8,000 crude along a similar route. Enbridge (US) Inc. and Enterprise bid oil pipeline f~om Growler field, operated by Senex Energy Products Partners LP, meanwhile, are evaluating plans for the Ltd. and in which Beach has 40% interest, to LYcLum that will 800,000 bid newbuild Wrangler pipeline in the wake of the tie into a new 15,000 bid trunk line from Lycium to Moomba. reversal decision. Enbridge hought ConocoPhillips's share of Seaway earlier Contract let for Sabine Pass LNG liquefaction trains this week, joining with EPP in its ownership and jointly an­ Cheniere Energy Partners LP selected Bechtel to provide engi­ nouncing that its flow would be reversed to deliver crude from neering, procurement, and construction servkes for Lwo liq­ Cushing to the Gulf Coast (OGJ Online, Nov. 16,2011) Initial uefaction trains at the Sabine Pass LNG terminal ~n Cameron capacity of the reversed pipeline will be 150,000 bid, but will Parish, La. The project builds on Bechtel's previous work at Sa­ reach 400,000 bid by early 2013, according to EPP. bine Pass where the company designed, built, and expanded EPP also said the companies plan to expand Seaway beyond the LNG receiving facility. the 400,000 bid mark, and will start an open season in January Bechtel will design, construct, and commission the two 2012 to gauge shipper interest in the additional capacity, believ­ liquefaction trains using ConocoPhillips's Optimized Cascade ing the 400,000 bid will be fully subscribed. technology. The trains will be built next to the existing facilities EPP stopped short, however, of saying it had cancelled the at the Sabine Pass terminal, which include five tanks with stor~ 800,000 bid Wrangler pipeline outright, saying only that its age capacity of 16.9 bcf, two docks that can handle vessels up "plans for bringing crude down form Cushing had obviously to 265,000 cu m and vaporizers with regasification capacity of changed." 4 bcfd. Bechtel expects to begin construction in 2012. TransCanada held an open season for its 150,000 bid Cush­ Cheniere signed its first LNG sale and purchase agreement ing MarketLink pipeline earlier this year, and told OGJ that the for production from the Sabine Pass facility in October with BG Seaway reversal would not affect its plans to build the pipeline. Group (OGJ Online, Oct. 26, 20ll). Iili!I [JOJ1~lD1HV(tfl,-CA~t~!iARJ------

Denotes new listing or 20th World Petroleum Summit, Houston, (877) 927·1563 (fax), wraconferencescom 857-4722, (202) 857· a change in previously Congress, Doha, +974 (416) 214·1707, (416) e·maii customerser· Jan. 29·Feb. 1. 4799 (fax), website, published information. 44491373,97444 214-3403 (fax), e- vice@canadianinstitute. www.ipaa.org. 2-3. 291080 Ifax), e·mail, mail: laurence.allen@ com, website: www. Middle East and North [email protected], wtgevents.com, web- canadianinstilute. Africa Energy Confer- UT Energy Forum, .tiQ1EfI!BJ:JlJJ!,U~ website: www.20wpc. site, www.pipetecila· com/2012/318/8th· ence, London, +44 Austin, (512) 471-8839, com. 4-8. mericas.com/prograrn. annual-shale-gas-and- (0)2079575753, +44 e-mail: info@UTEner- Optimal Hydrocarbons 18·19. oil·symposium.24·25. (0)2073212045 (fax). avForum.com, website, logistics, A. Coruna, Gas Arabia Summit, website: www.c'natham- www.utenergyforum. +3491 700 1271, Muscat, +44 (20) 7067 International Forum Annual Chem-Petro- house.org/mena2012. com. 2-3. e-mail: jlopez@iirspain. 1800, +44 (20) 7242 Process Analytical chem and Refining 30-31. com, website: http:// 2673 Ifax), e·mail, Technology (IFPAC) Asset Management SPE Hydraulic Fractur­ www.iirspain.com/ wra@theenergyex­ Annual Meeting, Balti- Conference, Houston, Global Tight Oil Summit, ing Technology Confer­ programas/C FOI67.pdf. change.co.uk, website: more, (847) 543·6800, (312) 540·3000 ext. Houston, +44 (0) 20 ence, The Woodiands, 29·30. www.theenergyex­ (847) 548·1811, fax, 6754, (312) 894·6304 7067 1800, +44 (0) Texas, (972) 952·9393, change. co. uk. 11·14. e·mail, info@ifpacnet. (fax), e·mail, iindseysi@ 2072422673 (fax), (972) 952 9435 (fax), Global Tight Oil Summit, org, website: www.ifpac.marcusevansch.com. e-mail: marketing@ e-mail: spedal@spe. Denver, +44 (20) 7067 PIRA Natural Gas Mar· com. 22-25. website: www.marcu- theenergyexchange. org, website: www.spe. 1800,+44(20)7242 kets Conference, New sevans.com.24-26. co.uk, website: www. org.6-8. 2673 Ifax), e·mail, York, (212) 686·6808, Flow Assurance Forum, theenergyexchange. _ z. na th an@theenergyex­ (212) 686·6628 Ifax), Aberdeen, +44 (0) 20 Offshore West co.uk. Jan. 31-Feb. 1. Pipeline Pigging & 0 change.co.uk, website: e-mail: [email protected]. 73689300, e-mail: Africa Conference & Integrity Management www.theenergyex­ website: www.pira.com. [email protected], Exhibition, Abuja, (918) Topsides Conference Conference, Houston, change.co.uk. Nov. 12·13. website, www.fiowas· 831·9160, (918) 831 & Exhibition, New Or· (713) 521·5929. (402) 29·0e,. 1. surance.org/event. 9161 (fax), e·mail, leans, (918) 831·9161, 557·5723 (fax), e·maiL PIRA Undersfanding 23-24. registration@pennwell. e-mail: registration@ [email protected], Refining and Petro­ Global Oil Markets com, website: www. pennwell.com, website: website: www.c1arion. chemicals in Russia Conference, New York, SPE Middle East Un- offshorewestafrica.coml www.topsidesevent. org.6-9. and The CIS Countries (212) 686·6808, conventional Gas Con- index.htm!. 24-26. com. Jan. 31-Feb. 2. Annual Roundtable, (212) 686·6628 (fax), ference and Exhibition, ARC World Industry Geneva, +44 (0) 207 e-mail: [email protected]. Abu Dhabi, (972) 952· European Gas Confer· Brazil Gas Congress, Forum, Orlando, (781) 067 1818, +44 (0) website: www.pira.com. 9393, (972) 952 943!i ence, Vienna, +44 (20) Sao Paulo, +55 11 472·1000, e·mail, info@ 207 430 0552, e·mail, 14·15. Ifax), e·mail, spedal@ 7067 1800, +44 (20) 31645600, e·maiL arcweb.com, website, j.sundaralingam@ spe.org, website: www. 72422673 (fax), e-mail: [email protected], www.arcweb.com/ theenergyexchange. PIRA Coal and spe.org.23·25. wra@theenergyex- website: www.brazilgas- events. 6-9. co.uk, website: www. Emissions Markets change.co.uk, website: congress.com/event. wraconferences .com. Conference, New York, APi Exploration and www.theenergyex- Jan. 31-Feb.2. IADC Health Safety Nov. 29·0e,. 2. (212) 686·6808, Production Winter change.co.uk.24-27. Environment and Train­ (212) 686·6628 (fax), Standards Meeting, Fort • Shutdowns and Turn- ing Conference and e-mail: [email protected]. Worth, Texas, (202) API/AGA Joint Commit- arounds Conference, Exhibition, Houston, DEC!1!!BER2DJL website: www.pira.com. 682·8195, e·mail, reg· tee on Pipeline Welding Houston, +44 (0)121 (713) 292·1945, (713) 14·15. [email protected],website:Practices,FortWorth,200 3810, e-mail: info@292-1946(faX),e-mail:()/" DEA(e) Technical Oii www.api.org.23-27.Texas.(202)682-8195.tacook.com. website: [email protected], website: & Gas Conference e-mail: registrar@api. www.tacook.coml www.iadc.org. 7-8. on Downhole drilling 2Dll~ JANUARY IPAA Private Capital org, website: www.api. ta2012. Jan. 31-Feb. 2. Technology, Aber~ Conference, Houston, org. 25-26. Carbon Management deen, +44 (0) 1483 Pipe Tech Ameri- (201) 857·4722, (202) Technology Conference, 598000, e-mail, dawn. cas Annual Offshore 857-4799 (fax), web· Gas Transport & Storage FEBRUARt2D12~ Or~ndo, (972) 952· [email protected], Production Technology Summit, london, +44 site, www.ipaa.org. 24. Summit, Berlin, +44 9393, (972) 952·9435 website: www.dea­ (0)20 7202 7574, +44 (0)2072027690, +44 Global Pipeiine inspec· (fax), e·mail, registra· europe.com. 1-2. (0)207202 7600 (fax) AAPG GTW Deepwater (0)2072027600 (fax), tion and Integrity Fo· [email protected], ASTM International e-mail: hejke.coetzee@ Reservoirs Multi-Disci- website: www.gtsevent. rum, Amsterdam, +44 website: www.carbon- Committee D02 on wtgevents.com. Web- plinary Exploration and com. 26·27. (0)2030022371, +44 mgmt.org.7·9. Petroleum Products and site: www.offshore­ Development Confer· (0)203002 3003 (fax), lubricants, NewOr~ summit.com.16-18. ence, Houston, (918) Plant Maintenance e-mail: olas@marcu- International Petroleum 560·2650, (918) 560· and HSE Middie East sevansuk.com, website, Technoiogy Confer· leans, (610) 832·9681, World Future Energy 2678 9(fax), website: Annual Meeting, Abu www.marcusevans. ence, Bangkok, +60 e-mail: dbradley@astm. Summit, Abu Dhabi, www.aapg.org.24·25. Dhabi, +9712401 com. 1·3 322881233, +603 org,website: www.astm +97124446113, +9712 2932, +971 2401 1928 2282 1220 (fax), e· org/COMMIT/D02.htm. 4443768 (fax), website: Annual Shale Gas & Oil (fax), e-mail: s.mehta@ OGIS Florida Meeting, mail: iptc@iptcneLorg, 4·6. www.worldfutureener- Symposium, Calgary, theenergyexchange. Palm Beach, Fla., (202) website: www.iptcnel. gysummit.com.16·19. Alta., (877) 927·7936, co.uk, website, www. org.7·9.

/2 Oil & Cas Journal Nov. 28, 2011 ------2011-2012 EVENTCALENOAR

Middle East Technology Africa Pipeline Summit, NAPE, Expo, Hous­ Shutdowns and www.ibcenergy.com/ (281) 228-6200, (281) Forum (METECH)- Johannesburg, +9714 ton, (202) 857-4722, Turnarounds Forum, FKA22440GJ.6-7. 228-6300 (fax), e-mail, Dubai, +6039058 364 2975, e-mail, en- (202) 857-4799 (fax), P,berdeen, +971 4364 fi [email protected], 2211, +6039057 3811 [email protected], website, website: www.ipaa.org/ 2975, e-mail: enquiry@ APPEX Expo, London, website: www.events. (fax), e-mail: Enquiries@ www.oilandgasiq.coml meetings. 22~24. iqpc.ae, website: www. +44 (0) 207 434 1399. nace.org. 11-15. Europetro.com, website: events. 20-21. oilandgasiq.com/events. +44 (0) 207 434 1386 www.europetro.com. (fax), website: www.ap­ Unconventional Gas 14-15. Australasian Oil & Gas 27-29. North Africa Technical Exhibition & Confer­ pexlondon.com. 6~8. Forum, Barcelona, +44 Conference and Exhibi­ ence (AOG), Perth, Jl.rctic Region Oil & Gas (0) 20 7202 7727, e- SPE International Sym­ tion, Cairo, (972) 952­ mail: sarah.brzezicki@ posium and Exhibition +61 39261 4500, +61 Conference, Stavan­ API Conference & Exhi~ 9393, (972) 952 9435 wtgevents.com, web- on Formation Damage 39261 4545 (fax), ger, +44 (0) 20 7596 bition, Singapore, (202) (fax), e-mail, spedal@ site: www.unconven­ Control, Lafayette, e-mail: aog@divexhibi­ 5173, e-mail: oilgas@ 682-8195, e-mail, reg­ spe.org, website: www. tionalgasforum.com. (972) 952-9393, (972) tion.com.au. website: ile -exhi bitions .com, istrar@apLorg, website: spe.org. 20-22. 13-14. 9529435 (fax), e­ www.aogexpo.com.au. website: www.ar-oilgas. www.api.org. 6~8. mail: [email protected], com. 28-29. International 22-24. European Fuels Confer­ website: www.spe.org. Subsea Tieback Forum 15-17. Nitrogen+Syngas ence, Paris, +44 (0) Conference & Exhibi­ GPA Europe Technical ftPRA Security Confer­ & Exhibition, Galveston, 207 067 1800, +44 Meeting, Antwerp, +44 ence & Exhibition, Texas, (713) 963-6256, MTB Oil & Gas Confer­ tion, Athens, +44 (0) (0) 207 430 9513 (fax), (713) 963 6212 (fax), ence, Dubai, 01276 20 7903 2444, +44 (0) 1252 625542, web­ Houston, (202) 457­ e-mail: e.hulban@ 682898, 0127663736 (0) 20 7903 2432 Ifax), site: www.gpaeurope. 0480, (202) 457-0486 e-mail: sneighbors@ theenergyexchange. () (fax), e~mail: info@ e-mail: conferences@ com/events. 22-25. (fax), e-mail: info@npra. pennwell.com, website: co.uk, website www. copla ndevents.com, crugroup.com, website: org, website: www.npra. www.subseatiebackfo­ wra .conferences.com. website: wWW.cop- www.crugroup.com. Deepwater Technol­ org.28-29. rum.com. 6~8. 13-16. la ndevents .com/event. 20-23. ogy Asia Conference, php?id=21. 15-18. Jakarta, 656222 3422, ~IARCH 2012. iADC/SPE Drilling Con­ IADC Dual Gradient Nigeria Oil & Gas Stra- e-mail: zaman@safan. I . I G ference and Exhibition, Drilling Seminar, Milan, . & CIS E t" . . nternatlOna as Pro­ Russla. xecu Ive, teglc Conference and com, website: www. . . San Diego, (713) 292­ (713) 292-1945, (713) Dow~strean: Summit 011 Exhibition, Abuja, 44 20 safan.com/conferences! cesslng Symposium, 1945, (713) 292-1946 292-1946 (fax), e-mail, & Gas, Dubal, Dubal, 7978 0000, e-mail, en- dwtal2/dwtacallf- Doha, +9744403 (fax), e-mail: info@iadc. [email protected], website: +6039058 2211, +603 quiries@thecwcgroup. pI2htm.23-24. 4373, +9744403 org, website: www.iadc. www.iadc.org/confer­ 905?3811 (fax), e mail. com, website, www. 4371 (fax), e-mail, org/conferences. 6~8. ences. 19. Enqulrles@,Europetro. africa -energy.com/html/ [email protected]. am b t Flow Assurance and C ,we SI e: www. Public/events.htm!. qa, website: www. SPE UK Oil & Gas europetro.com.16-17. 20-23. Integrated Production gasprocessingcenter. Annual Petcoke Confer­ Technology Conference, ence, Olando, Fla., Environmental Semi­ International Petroleum Abu Dhabi, +971 4364 com. 4-7. (832) 351-7828, (832) nar, London, 07736 Offshore Asia Confer­ 070066, e-maii, Geophysics Conference 2975, e-mail: enquiry@ 351-7887 (fax), e-mail, ence & Exhibition, Middle East Geosci­ [email protected], & Exposition, Hyd re­ iqpc.ae, website: www. [email protected], Kuala Lumpur, (918) ences Conference & website: www.spe-uk. rabad, Andhra Pradesh, oilandgasiq.com/events. website: www.petcokes. +91 135 2795536, 831-9160, (918) 831 Exhibition, Manama, org.19. 26-29. com. 9-10. e-mail: spgindia@ 9161 Ifax), e-mail, +44 (0) 20 7840 2136, rediffmail.com, website: registration@pennwetl. +44 (0) 20 7840 2119 CIPPE China Inter­ com, website: www. Laurance Reid Gas NPRA Annuai Meeting, n www.member.seg.org. (fax), e~mail: aridg­ national Petroleum & Conditioning Confer­ San Diego, (202) 457­ , / 16-18. offsh 0 reas iaeven t.com / [email protected], Petrochemical Tech­ ence, Norman, Okla., 0480, (202) 457-0486 index.html. 21-23. website: www.geo20l2. nology & Equipment Downstream Tech­ 14051 325-3136, (fax), e-mail: info@npra. com. 4-7. Exhibition, Beijing, +91 nology Conference, Pipe Line Contractors e-mail: [email protected], org, website: www.npra. 9654436426, e·mail, Fahaheel, +971 4364 Association Annual website: www.engr. org.II-13. Annual International biztradeshows@hotmail. 2975, e-mail: enquiry@ Convention, Carlsbad, ou treach.ou .edu/lrgcc. com, website: www. LPG Seminar, The iqpc.ae, website: www. Calif., 12(4) 969-2700, 26-29. Annual Asset Integrity biztradeshows.coml down strea mtech n01 ogy. Woodlands, Texas, e-mail: [email protected], Management Confer­ trade-events/cippe. com/event. 19~22. (713) 331-4000, (713) website: www.plca.org/ International Pipeline ence Week, Abu Dhabi, html. 19-21. 236-8490 (fax), web­ convention. 21-25. Coating Conference, +971 43642975, Annual Production site: www.purvingertz. Vienna, +44 (0) 117 e~mail: enquiry@iqpc. Practices in Pipeline Optimization Middle SPE European Artificial com. 5-7. East Summit, Fahaheel, 9249442, +44 (0) ae, website: www. Operations and Integrity Lift Forum, Aberdeen, +971 43642975, 117 989 2128 (fax), oilandgasiq.com/events. Management Confer­ +44 20 7299 3300, Offshore Pipeline e-mail: enquiry@iqpc. e-mail: info@amiplas­ 11-15. ences & Exhibition, Ma­ +4420 7299 3309 Technology Conference, ae, website: wWW.pro­ tics.com, website: nama, (713) 521-5929. (fax), e-mail: spelon@ Amsterdam, +44 (0)20 ductionoptim izationme. www.2amiplastics.com/ NACE International (402) 557-5723 (fax), spe.org, website: www. 70175518, e-mail, com/event. 19~22. events. 27~29. Corrosion Conference e-mail: [email protected], spe.org/events. 22~23. energycustserv@ & Expo, Salt Lake City, website: www.c1arion. informa.com, website: org.19-21.

Oil & Gas Journal I Nov. 28, 2011 13 Il._-'--JOURNAIll'{'JSPEAKfffo!...._c.. ~~ .•.• ""~·~ .•'-",.__..'_~ .. _c. .--"'."-__ •. _....1

Information cancelled

One of the small but satisfying administrative tasks so valuable. Presumably the other organizations I've had as pipeline editor at Oil &: Gas Journal is that submitted data to the Abstract will continue to providing the US Department of Commerce with do so as well. But what gave the Abstract its unique data for its annual 'Statistical Abstract of the United value was its compiling of a vast array of data in States.' It felt good be part of an organization trust­ one place. ed enough to provide this infonnation and also to The 2012 edition features more than 1,400 ta­ know that at least one small piece of OG]'5 annual bles and graphs covering nearly every educational, Pipeline Economics report would be available to judicial, meteorological, governmental, business,u the larger world. cultural, agriculatural, and medical characteristic The final satisfaction each year would come of the US. And just in case the reader can't find when a copy of the finished book arrived in the what he or she is looking for in its pages, the Ab­ mail. Aside from information on the character­ stract also features a guide to other statistical infor­ istics of petroleum pipelines, each new edition mation both in print and on the internet. CHRISTOPHER E. SMITH contained data regarding national health expen­ On a positive note, Adobe Acrobat versions of Pipeline Editor ditures, criminal victimizations and victimization all 131 editions can be found at www.census.gov/ rates, employer costs per hour worked for state compendia/statab/' as well as spreadsheet files for and local governments, and on and on, with cate­ each table. But from this point forward the docu­ gories added and deleted each year to stay current. ment will remain static, purely historical. The Commerce Deparunent, however, has al­ ready published the Abstract's 2012 edition. A Cuts necessary green, bookmark-shaped note accompanied it. Cuts to the US government's budget are necessary. The note read: "Due to the proposed elimination Much has been made from both ends of the politi­ of the Statistical Abstract program from the Presi­ cal spectrum regarding the need to prioritize these dem's FY 2012 budget, we worked on an expe­ cuts. Conversations attempting to reach agreement dited production schedule to bring you the 2012 on these priorities have repeatedly broken down edition 3 months ahead of schedule. There are into rancor and gridlock. ~ . currently no plans to continue the program, either Evidently, however, both the left and the light U in print or on-line. Thank you for your support in agreed that the Abstract program was ripe for the the production of the Statistical Abstract through cutting. The cut might have been expedient. It the years. Your assistance has been most valuable might have been easy. That either or both of these to us. The Statistical Abstract Staff." were the case is telling. The government of a free country that would Some bad news readily reduce its people's access to information As someone who has worked gathering, analyzing, leaves itself susceptible to doubt regarding how and publishing infonnation for my entire profes­ much information it really wants the people to have. sional life-and enjoys these acts on a leisure basis That most of the population seems more interested as well-1 took the Abstract's cancellation as very in sound bites and muck-raking than actual infor­ bad news; the more so when 1 noted that this was mation might have helped cutting the Abstract go its 131st edition. The industrial revolution hadn't unnoticed. But it also increases the importance of even occurred the first time the Statistical Abstract making information readily available to those who was published, and now, it would not be published would seek it out. anymore. Apparently this job now lies entirely in the pri­ To be sure, OGJ will continue publishing the vate sector. 1m!] data both its readers and the industry at large find

14 Oil & Cas Journal I Nov. 28, 2011 t~!llIDf~~ i Regulation and jobs

An insidious fallacy of contemporary policy-making tunity cost. Money spent to comply with regulation holds that regulation creates jobs. The argument: isn't investment and isn't available for investment; Regulation necessitates investment, and investment it's a cost of participation. Investment is the expen­ breeds jobs. Adherents to this view support their diture of capital in hope of earning a profit. Money case by citing expenditure on projects instigated by spent complying with regulations seldom boosts new regulation and pointing to consequent hiring. profits and can't be invested in projects that might. To call that job creation ignores much, including Investment creates jobs; cost doesn't. costs elsewhere in the economy and the ephemeral Funhermore, operators of many plants hit by nature of employment unaffiliated with profit. new EPA rules won't spend capital unprofitably on The fallacy welters in a study purporting to upgrades; they'll close the facilities. As the Ceres­ support claims that two new rules of the US En­ ICAC study appeared, Fitch Ratings was estimat- 0 vironmental Protection Agency will create nearly ing effects of EPA regulations, mainly CSAPR and I.S million jobs. MATS, on generators of electric power. Fitch looked at coal-fired power-generation units 'Jobs will be created' smaller than 400 Mw and more than 40 years old "As companies invest in upgrades to their older, needing new or substantial enhancement to emis­ less efficient power plants to comply with EPA air sions-control equipment for compliance with new pollution rules, jobs will be created at suppliers' EPA requirements. On that basis, Fitch saw 83 Gw manufacturing centers all the way down the supply of generation capacity placed at risk for retirement chain to the actual construction sites," said Mindy by toughened EPA regulations. Arithmetic suggests Lubber, president of the environmental coalition at least 200 power plants might be closed by EPA Ceres, which produced the study with the Institute initiatives such as CSAPR and MATS. People work of Clean Air Companies (iCAC). at those plants. They will lose their jobs if the plants Her comment appeared in a press release cit­ close. In terms of effects on national employment, ing two factors in the research. One is a Bureau the losses offset jobs related to toughened environ­ of Labor Statistics estimate that every $1 million mental regulations-worker by worker. invested in a construction project fosters 11 new jobs. The other is an estimate by EPA "and others" Ignoring costs that $94 billion in "investment" will be needed for To ignore those effects-those costs-in service to compliance with EPA's Cross-State Air Pollution rosy claims about a link between job creation and 0 Rule (CSAPR) and Mercury and Air Taxies Stan­ environmental regulation is indefensible. The lapse dards Ruie (MATS). should not guide public policy. "There is an unprecedented amount of capital The Ceres-iCAC study eagerly asserts "ripple sitting on the sidelines of the economy," said ICAC effects" of employment related to increased en­ Executive Director David Foener. "There's also a vironmental regulation-but not of costs. Share­ large pool of skilled labor not being utilized. Elimi­ holders of affected companies will need to recoup nating the uncenainty around these rules will con­ what they can of the $98 billion diverted to un­ nect those two dots." profitable use from-guess who!-energy users. By this way of thinking, there's no distinction to Higher energy costs thus will propagate through be made between spending $94 billion on environ­ the economy, lowering profits and investment and mental compliance and investing it in profitable ac­ exterminating jobs in ripple effects of the costly tivity. Ali that capital has been "sitting on the side­ kind. Policy-making must not ignore these effects, lines" not because investors feared overregulation either. but Simply because they didn't, until now, know the Employment doesn't grow because of regul ation. rules. With details now clear, investment will flow It grO\vs because of profitable enterprise. Regula­ like rainwater down a bank's roof. tion, by raising costs, works against job creation. It That view is thoroughly wrong. It ignores oppor­ always has. it always will. I!li!J

16 Oil & Cas Journal I Nov. 28, 20ll ";~;~~;,:~it)!E;~~:-'-~-:-l----'-'~~'---'-'~----~~"'- ~~·~zc':~;~~J~::rD~';;;:~ .' ':<;:i,.,.-::--;~::~0;i;M~i:i~¥:;~:~:i~;~;;~~,

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Owned and Produced By: Presented By: Supported By: Deep Offshore Technology® - www.deepoffshoretechnology.com GENERAL INTEREST I Salazar defends proposed 5-year OCS pla11 before l-Iouse panel

Nick Snow Washington Editor

The US Department of the Interior proposed a 5-year Outer from its governor and most of its congressional delegation Cominental Shelf program that concentrates on tbe central because the US Department of Defense raised significant and western Gulf of Mexico after the 2010 Macondo well questions about possible conflicts with military operations incident showed tbe oil and gas industry could not effective·· in the area. More time also is needed to evaluate potentialO ly handle a major incident and spill, Interior Secretary Ken resources along the Mid-Atlantic OCS with modern tech­ Salazar told a US House committee on Nov. 16. nology, he added. "We believe running seismic will help us "It's important for this committee, Congress, and the develop informadon in an area when there's been a dearth," United States not to have amnesia about the Deepwater Ho­ he said. rizon incident," he told the Natural Resources Committee, Committee member Robert Wittman (R-Va.) urged Sala­ adding that the central and western gulf are the best-known zar to move more quickly to resolve coordination issues OCS areas with the most systems. DOD raised. "It seems to me these issues can be taken up DOl kept working on a 2012-17 proposal amid calls to Ln a fairly timely manner and not spread out over the next 5 completely shut down OCS oil and gas activity following the years," he told the secretary. "1 have spoken to US Navy of­ 2010 accident that took 11 lives and set off a massive oil ficials who say they would like to get moving on it." spill, Salazar said lacer in the hearing. Salazar said in his prepared testimony that while most "At the end of the day, we know [hat developing oil and of the proposed 5-year OCS program's lease sales are in gas in the world's oceans is not a risk-free activity. That's the gulf, cwo have been proposed in the Arctic, "where we why we've led the nation's largest overhaul of its offshore oil must proceed cautiously, safely, and based on the best sci­ and gas development regulations," the secretary said. "Some ence available." The sales would not take place until late in members on my staff have worked 18 hr/day, 6 days/week, the progr

18 Oil & Gas Journal I Nov. 28, 201 1 it to satisfy BOEM that its spill response capabilities would references to strong activity in the gulf ignored the fact de­ be adequate in any season. cisions in previous administrations made it possible. "The Deputy US Interior Sec. David J. Hayes also is overseeing average time period from a lease sale to first production is a multiagency effort coordinating governmental agencies' re­ 9.5 years," said Bill Flores (R-Tex.). "For this administration views of Shell's drilling plans, BOEM's director said. "There to take credit for current activity is remarkable." are challenging circumstances there," he 0 bserved. "The reg­ Salazar responded that oil and gas industry response to I ulations set a very high bar to spill response. Close attention previous OCS lease sales also should not be overlooked. "It's must be paid to challenges in the Arctic," a shared accomplishment. The oil and gas production we're Other Republicans on the committee questioned whether seeing in the gulf is largely dependent on the discoveries companies would be willi.ng to fund seismic research of ar­ the industry has made," he said. "We see robust production eas presently not part of the proposed 5-year OCS program going on in the gulf today. Our expectation is with 12 addi­ if lease sales aren't scheduled. They also said that Saiazar's tionallease sales there in the next 5 years, more production will come on line." 1m!)

Potential oil, products exports drive nTexas Gulf Coast terminal projects

Christopher E. Smith tial phase includes building 52 storage tanks with a com­ Pipeline Editor bined capacity of 6.6 miiiion bbl of residual fuel and other black oils. Kinder Morgan Energy Partners LP, Oiltanking Partners LP, Bostco has received a required Texas Commission on En­ and GT Logistics LLC (GTL) all announced new liquids ter­ vironmental Quality air permit and necessary Port of Hous­ minal projects on the Texas Gulf Coast, with GTL expiicitiy ton permits, and anticipates being fully permitted by the citing possible crude oil exports in describing its facility. end of November. Construction of the tanks will begin this GTL is installing rail lines at its Port Arthur, Tex., Om­ year pending completion of binding customer agreements. niPort. GTL expects OmniPort to open in January 2012 as a Bostco will be at mile marker 43 on the HSC and will initial­ multimodal terminal for oil and other products transported ly be a water-in and water-out facility, able to handle sbips via rail, ship, barge, and truck. with drafts up to 45 ft. OmniPort's rail terminal, served by Union Pacific, in­ KMEP expects Bostco's first phase to enter service in cludes 300 acres of on-site rail car storage and will be able third-quarter 2013. The company said future phases would to receive unit-train traffic. The rail terminal also features a be tied into its other Houston-market assets. n multibarge receiving dock on Taylor's Bayou. Bostco has executed initial terminal service agreements , GTL also owns and operates a 20-acre deepwater dock and letters of intent with customers for nearly all of the and receiving facility on the Sabine Neches Navigation Dis­ $400-million project's capacity. trict Channel with more than 900 ft of steel bulkhead im­ KMEP announced plans in May to build a 300,000 bid provements and 1,700 ft of waterfront access to the 42-ft crude-condensate pipeline to move Petrohawk Energy Corp. deep channel. The deepwater dock is 2.2 miles from the new Eagle Ford shale production to the HSC (OG] Oniine, May industrial rail park and terminal, connected by both Union 5, 2011). Pacific rail line and highway. GTL is designing pipeline con­ nectivity between the sites and will call the combined facil­ OiItanking pipelines, storage ity GT OmniPort. Oiltanking, meanwhile, approved expansion projects to GTL cited the potential for both crude and products ex­ construct two oil pipelines in the HSC and about 1 million ports in describing the $95 million project. bbl of oil storage capacity at its Houston terminaling facility. The project includes: Bosteo terminal • Reversal of an existing 24-in. OD pipeline from Oilt­ KMEP wiii participate in Battleground Oil Specialty Termi­ anking Houston to multiple HSC refineries. nal Co. LLC (Bostco), a joint venture with TransMontaigne • Extension of the reversed pipeline to connect to Genoa Partners LP, to construct, own, and operate a fuel-oil export junction, on the south side of the HSC. terminal on the Houston Ship Channei (HSC). Bostco's ini- • Construction of a 30-in. OD pipeline from Oiltank­

Oil & Gas Journal] Nov. 28, 2011 79 GENERAL INTEREST ------.

ing Houston along the HSC to the area refineries previously ing for any Peak oil will be a demand rather than supply phenomenon, The Fitch analysis identified 83 Gw of coal-fired power says a UK engLneering, management, and automotive con­ generation capacity placed at risk for retirement in the next sultancy. 5-10 years by new Environmental Protection Agency rules. Ricardo PLC says multiclient research its Rkardo Strate­ The at-risk capacity is in plants smaller than 400 Mw and gic Consulting unit began last June Lndicates global oil de­ older than 40 years operating without equipment to control mand will peak before 2020 at no more than 4% above 2010 sulfur oxide emissions or needing "substantial" investment levels. The International Energy Agency estimates average or enhancement to meet proposed limits. 2010 oil demand at 88.2 million bid. The EPA measures likely to have the greatest effect on lEA and most other market observers project growth in power plants, according to Fitch, are Mercury and Air Toxic oil demand to extend well beyond 2020, although growth Standards (MATS), Cross-State Air Pollution Rule (CSAPR), rates differ. New Source Review and Tailoring Rule related to emissions The Ricardo projection puts oil demand at 3% below 2010 of greenhouse gases, Clean Water Act provisions addressing U levels in 2035. Accelerated increases in the use of first-gener­ use of "once-through cooling," and coal combustLon residual ation biofuels could lower oil demand in 2035 to 10% below disposal regulations. 2010 levels, the study says. Fitch noted that MATS and CSAPR were released only "Ricardo believes that there has been a general under­ recently and remain subject to changes and legal challenges. estimation of the future impact of government policies to improve fuel efficiency and promote alternatives to oil," the Compliance measures firm said in a press statement. 'This will be the case ev­ As new rules take effect, likely near-term compliance mea­ erywhere, including, very importantly, in China, where al­ sures are fuel-switching to low-sulfur coal followed by re­ though demand is projected to grow by nearly 60% in the duced dispatch of coal-fired units. meantime, the study assesses that a peak could be reached "The projected retirements of coal-fired generation could as early as 2027 before starting to faU back thereafter." materially increase the amount of power genermion derived Despite continued growth in the global vehicle fleet, "effi­ from natur

20 ai/ & Gas Journal I Nov. 28, 2011 WATCHING GOVERNMENT by units projected for retirement is re­ placed by slightly higher production from remaining coal-fired units, new units fueled by renewable energy, and existing or new combined-cycle natu­ ral gas plants. With 83 Gw of coal capacity retired, coal's share of total US power genera­ tion falls to 38% from 45%, while the natural gfls share increases to 30% from 24%, Fitch said. vVith 51 Gw of coal capacity retired, Aiming ;at a litigation loophole the new shares are coal 41% and gas 28% The gas-use increase implied by The US House of Representatives' Judi­ ping energy development," said Kathleen that share increase over 2010 data is ciary Commitlee approved HR 1996, Ihe Sgamma, the Denver-based independent 3.5 bcfd. lili!J Government Litigation Savings Act, on producers association's government af­ Nov. 17 by 19 to 14 votes. fairs director. Chairman Lamar Smith (R-Tex.) said eJ-----­ the 1980 Equal Access to Justice Act Slowing development (EAJA), which HR 1996 would amend, "Any time a decision is made to proceed EAGC2011: Europe's was originally designed to help individu­ with oil and gas development. there is an gas industry struggles als and small businesses recover some environmental group, funded by taxpayer of their iegal costs when they success­ money, that is trying to stop that develop­ to secure supply, fully sued the federal government. ment," Sgamma told OGJ on Nov. 18. rational regulation "Whether the act is still mainly serv­ She said, "Litigation, or the threat of ing its original, legitimate purpose is in litigation, is slowing down oil and gas Warren R. True dOUbt," Smith said, adding, "Certain development in the West on a regular Chief Technology Editor­ frequent litigants-particularly 50l(c) basis, and preventing jobs and economic LNG/Gas Processing (3) corporalions that enjoy the additional growth." benefit of being exempt from [EAJA's] The committee amended HR 1996 Regulatory and supply uncertainties net worth limitation--are financing their by expanding the eligibility requirement continue to plague Europe's natural lawsuits with large awards of atlorney's to ensure that all individuals, small gas industry, as made clear by presen­ fees paid under the act." businesses, veterans and social security tations and discussion Nov. 15 at the Smith contended that US taxpayers claimants can file for EAJA reimburse­ opening of the annual European Au­ should not be forced to pay legal fees ment as long as they are underneath tumn GflS Conference in Paris. when awards are made in ideologically the statutory cap of a net worth of $7 (~ The world's (mgest market for im­ driven lawsuits by organizations trying to million for organizations and $2 million , ,'ported natural gas has seen its security advance their policy preferences through for individuals. of LNG supply threatened this year by litigalion. Reimbursements would be limited the effects ofjapan's Fukushima nucle­ Rep. Cynthia Lummis (R-Wyo.), HR to $200,000 In any single legal action, <"Ir reactor catastrophe in Mmch. At the 1996's sponsor, applauded the commit­ or to three lawsuits initiated in a single same time, Europe continues to strug­ tee's action. "The use of taxpayer dollars calendar year in most cases. gle to establish a dependable network to fund the ever-growing list of proce­ HR 1996 also would restore EAJA's of pipeline-supplied natural gas. dural lawsuits must be pul to a stop," original requirement, which Congress Overriding these logistical issues she said. removed in 1994, for an annual report of is an uncertainty over the nature and "EAJA was never intended to support awards, claims, and any other informa­ predictability of governmental regula­ the work of multimillion dollar organiza­ tion that might help federal lawmakers tions, mainly in terms of the region's tions with In-house litigation shops. evaluate their scope and impact. The efforts to reduce carbon dioxide emis­ Instead, it was supposed 10 help those report also would be publicly available sions. That uncertainty is only aggra­ wilh no litigation shop at all." online. vated by the European Union's current The Western Energy Alliance strongly The measure now heads to the fixation on solving its sovereign debt supports the bill. "We feel that litigation House floor, where it might pass. Senate problems. funded by the taxpayer is preventing consideration is unlikely, however. I!lD jobs, stifling economic growth, and stop­

Oil & Gas Journal I Nov. 28, 201 1 21 GENERAL INTEREST ------­

After Japan Georgia and initially via Turkey's Botas existing pipeline Among several speakers, many referred to a "post-Fukushi­ into southern and southeastern Europe will signal the open­ ma world," in which]apan-already the world's largest LNG ing of Europe's long-awaited Southern Corridor. importer-soaks up yet morc LNG available from newly All speakers agreed, however, that unconventional gas, commissioned projects. especially rrom shale, will not play much or a role in supply­ I Europe's nuclear power industry has been effectively de­ ing the region if any at all. France, one noted, has banned railed, as such countries as France and Germany phase oul hydraulic rracturing. nuclear power and turn towards renewables and, reluctantly, Several speakers noted uncertainties created by the regu­ natural gas. In this context, Europe's natural gas industry is latory environment, especially the European Union's com­ anxious to solidify its gas supply from all available sources. mitment to "decarbonization" of energy supply. Clare Spott­ Earlier this year, it saw the start-up of Gate LNG in the swoode of the UK's Independent Commission on Banking Netherlands (OG] Online, Sept. 23, 2011), with a number or noted governments' historical reluctance to allow markets new terminals set to open in the next 18-24 months. to work. Acknowledging the maturation or the global LNG indus­ Han-Peter Floren, a member of E.On Rhurgas's manage­ try, Jean-Marie Dauger, executive vice-president for global ment board, pointed out that gas supply in the medium term gas and LNG, said LNG is no longer a "niche supply" source. appeared ample but, because of regulatory uncertainties, Pipeline supply or gas was addressed by Alasdair Cook, uncertain in the long term. . vice-president or BP PLCs $20 billion Shah Deniz II devel­ In this context, many speakers said, development ofC) opment offshore the Caspian Sea. He reported that hrst ga:. transportation infrastructure is vital, yet financing remains will How rrom the project in 2017 with 16 billion cu m/year scare and expensive. Complicating the future is the worsen­ or gas and 100,000 bid or oil. ing economic crisis in Europe that undermines energy de­ The pipelines to bring the gas across Azerbaijan and mand in traditional growth markets. For private investors, the climate is discou raglng. I:m!I

EAGC201l: Shale gas development to be slow in coming, speakers warn

Warren R. True affected communities and stakeholders." What's happened Chief Technology Editor-LNG/Gas Processing in the US, he sald, is as "much about the science of human behavior as it is about the science of technology." European production of unconventional gas, especially He believes responSible energy development can be done, shale, may someday contribute a large portion of the region's bUl industry must reduce Lts surface footprint by, for exam­ overall natural gas supply, but that time is a long way orr and ple, employing multiple wells rrom a single well pad. will be slow in coming, according to several speakers at this "Sound regulation builds public confidence," he added. C) week's European Autumn Gas Conference in Paris. "We cannot let an information vacuum exist; it will be filled Much of the blame for those prospects lies at the feet of with fa Ise information." how the industry has handled shale gas development in the DuCharme said ExxonMobil supports full transparency US, they said. in shale gas development and has pledged to disclose all in­ Unda DuCharme, ExxonMobil Gas & Power Marketing's gredients in hydraulic fracturing flUids. "Europe's depen­ director for Europe, Russia, and the Caspian, captured the dence on imports makes it necessary [for the region to turn sentiment best: "The furor [over US shale gas development] to unconventional], but industry must address both public has gotten to Europe before the promise [or its technology]." and governmental concerns." GTl's Trevor Smith summarized how opponents of shale In discussing his company's early efforts at assessing the gas development in the US managed to capture heacllines fol­ shale gas resource in Europe, Peter Hagen, general manager lowing industry's dismissive and secretive reactions to early for gas commercialization for Chevron, said his company concerns. also supports "voluntary disclosure of fracking chemicals." In Europe, he said, industry must work for societal accep-· He also noted that the "launching point Iror shale gas de­ tance of unconventional gas. It must "separate fact from fico. velopment] in Europe will be dirrerent rrom the US" and that tion to prepare Europe for shale gas. Industry [cannot] dis­ such development is hindered by the relative lack of connec­ miss criticism and downplay concerns." tivity among Europe's pipeline system and the mu ltitude of Early in its US development, "industry did not involve regulatory bodies.

22 Oil & Gas Journal I Nov. 28, 2011 WATCHING THE WORLD "To be successful in Europe," he said, "industry must use besl practic­ es, adapt to the European business en­ Vlronmem, and address all concerns. "As an industry, it is our obliga­ tion to apply the highest possible standards. At Chevron our vision is [that] the economic benefit of shale gas should not come at a cost to people or the environment." Im!I Wind mongers be gone!

The oil and gas industry has long that Britons have made an unpleasant Turkey to end joint oil been accustomed to criticism, but discovery lust as belts are being tight­ exploration in Syria these days renewable energy is being ened in the current era of austerity. pilloried around the globe-especially In this new time, says Aslet, n Eric Watkins in the UK. Britons have discovered that green , Oil Diplomacy Editor "The politicians who foisted them energy has bloated the country's upon us should be put in the stocks:' bills by a whopping £7.1 billion-a Turkey, alarmed by attacks on its dip­ said a UK commentator last week, fact ascribed to Lord Marland of the lomatic missions in Damascus and referring to the numerous wind farms Department of Energy and Climate other cities in neighboring Syria, has that now dot the countryside. Change. cancelled plans for oil exploration in The writer was Clive Aslet, editor­ "Think how many libraries that the Middle Eastern country. at-large of Britain's Country Life would keep open:' said Aslet. But Energy Minister Taner Yildiz said magazine-an august publication de­ £7.1 billion is just the beginning, and Turkey had shelved plans for its state­ voted to portraying tile nation's stately things are due to get worse. owned TPAO to jointly explore for oil homes, their grand interiors, and their with Syria's state oil company in six lush countryside setlings. Blown investments wells. "Wind farms are Blairism incar­ "According to the Renewable Energy Turkey also might have to reconsid­ nate," Aslet said, referring to former Foundation, whose sums have so far er its exports of electric power to Syria, Prime Minister Tony Blair. "Want­ proved accurate, that figure will have Yildiz said, noting the course taken by ing to look big on the international risen to some £40 billion by 2020­ Damascus in dealing with criticism stage, he committed Britain to some that's between £6 billion and £8 from abroad over its handling of civil preposterously over-ambitious targets billion a year; nearly all of it taken by unrest. for reducing our greenhouse gas wind," Aslet said. n Ylldiz's words followed attacks on emissions." Worse, Britain's wind farms aren't , the Turkish embassy in Damascus and even accomplishing their intended consulates in Aleppo and Latakia car­ Nuclear power aim. ried out by supporters of Syria's em­ Aslet says that Blair decided on wind "However many turbines bristle on battled President Bashar AI-Assad. farms instead of having to confront Welsh mountain tops or pylons stride Al-Assad's supporters tried to break a decision that might have incurred through the Great Glen, we'll only be into the Turkish missions to denounce short-term unpopularity, but is all but tickling the nose of our energy crisis:' a decision by the Arab League (0 sus­ inevitable for the UK's future energy said Aslet, adding, "We're missing pend Syria's membership over its vio­ security: nuclear power stations. those targets to reduce emissions by lent crackdown on the 8-momh-long "Of course, in the boom times, a country mile." uprising. when the economy was growing, this Nor is Aslet long-winded when he Although Turkey is not a member green indulgence might have been comes to the future of the UK policy of the Arab League, its diplomatic fa­ like that extra chocolate you shouldn't makers who are foisting wind on an cilities were attacked after Ankara wel­ have; nobody would notice it when unsuspecting populace; "Throw them comed the group's deciSion against the suit had been let out," says Aslet. out. Throw out the windmonger-in­ Syria. But he also notes; "We have chief, Energy Sec. Chris Huhne, and Turkish Prime Minister Recep now found that the waistband isn't leave it to the money men." Iil!!I Tayyip Erdogan, who earlier criticized infinitely elastic." He goes on to note

Oil & Gas Journal I Nov. 28, 201 1 23 GENERAL INTEREST ------­

AI-Assad for his handling of civil unrest, repeated that criti­ he will have to step down in one form or another," Al- Faisal cism after the attacks on Turkey's diplomatic facilities. said. I!Ii!I Erdogan said his coumry no longer has confidence in the Syrian regime, and he warned AI-Assad that his brutal crackdown on opponents threatens to place him on a list of EXPLORATION/OEVELOPMENT BRIEFS I leaders who "feed on blood." Turkish Foreign Minister Ahmet Davutoglu added to the EJ!J'Qt criticism of the AI-Assad regime, saying that Turkey was "determined to implement the most effective sanctions thaI TransGlobe Energy Corp., Calgary, plans to appraise [he Bo­ will not harm the people of Syria." raq oil and gas discovery and further explore the 558,120­ US Deputy National Security Advisor Ben Rhodes said acre South Alamein concession in Egypt'S Western Desert Washington welcomed Turkey's pOSition and its decision to after it receives regulatory approval to close the acquisition impose energy sanctions on Syria, saying that AI-Assad has of a 50% interest from Cepsa Egypt. been isolated. The Boraq-2X well tested a combined 1,700 bid of 38­ "We very much welcome the strong stance that Turkey 40° gravity oil from twO Cretaceous zones. The concession, has taken and believe it sends a critical message to President which covers parts of the Alamein and Tiba basins, is fully Assad thaL he cannot crack down and oppress the aspira­ covered by 3D seismic from which a number of well-defined tions of his people," Rhodes said. prospects have been identified. El Paso South Alamein holds() Meanwhile, Total SA said that Syria's government has the other 50% interest in the concession. stopped paying for oil the French firm produces in the Mid­ TransGlobe plans to submit a revised budget and Boraq dle Eastern country, which is the target of a ban by the Eu­ development plan after the transaction closes. Appraisal and ropean Union on oil exports. development includes drilling at least two appraisal wells "We are no longer being paid," said a Total spokesman, and readying the Boraq-2X well for production. adding that the French firm was continuing to produce oil and gas in the country, though at a reduced rate since Sep­ Ethiopia-Kenya tember when the EU decided to ban crude oil imports from Syria. Tullow Oil PLC said full tensor gravity gradiometry sur­ Syria's Oil Minister Sufian Allaw earlier this month ac­ veys have been completed across all Kenyan and Ethiopian knowledged [hat sanctions recently imposed by the US and blocks. The results provide excellent quality data that will European Union have reduced his country's production 01" enable interpretation of fault blocks similar to those seen in oil to 270,000 bid or less from its normal rate of 380,000 bid Uganda, the company said. COG] Online, Nov. 4, 20ll). The first 2D seismic has already been shot in Ethiopia, The 27-nation EU bloc buys 95% of Syria's oil exports, and the program continues across the remaining blocks. which yields a third of the hard currency earnings of the Al­ In Kenya, the Ngamia-I exploratory well in Block IOBB is Assad regime. Analysts said the ban on oil purchases would expected to spUd in December 20ll, and the location of the cost AI-Assad €9 millionlday in lost trade. next well, Paipai-I in Block lOA, has been selected. Tullow The ban on oil purchases came into effect this week, coin­ completed its farm-in to offshore Block L8 in Kenya at 15% U ciding with an additional set of sanctions imposed by the EU interest with the option to increase this to 20% on comple­ on 18 Syrians accused of organizing violence against dem­ tion of the first well. onstrators. Dutch foreign minister Uri Rosenthal said that the Al­ French Guiana Assad regime has entered its endgame: "We are hearing al­ ready that the Syrians are running out of cash, so the sanc­ A group led by Tullow Oil PLC is nearly finished drilling a tions are going to work." sidetrack to recover reservoir cores from its Zaedyus deep­ Saudi Arabia's Prince Turki Al-Faisal agreed, saying that water discovery off French Guiana and expects to complete it is "inevitable" that the AI-Assad regime is bound to fall operations in mid-November. after failing to keep its commitment to stop the violence The partners anticipate that the 2012 program in the against its opponents. Guyana basin will include 3D seismic and two wells. Zaedy­ "Inevitably, I think, the lack of response of Mr. Assad to us found 72 m of net oil pay in two turbidite fans and proved all the efforts made to end the fighting in Syria means that that the company's Jubilee playoff Ghana is mirrored across he's taken the view of not accepting these matters," AI-FaisaJ the Atlantic COG] Online, Sept. 9, 20ll). said. Shell France is expected to take over operatorship of the "In that context, there will be growing popular opposi­ block from Tullow in early 2012, subject to government and tion to him, and killing every day. I think it's inevitable that joint venture approval.

24 Oil & Gas Journal I Nov. 28, 2011 ------GENERAL INTEREST

(From the Subscribers Only area of www.ogj.com) Interests in the Guyane Maritime point of view" in a middle to late Mio­ license are Shell France 45%, Tullow cene section. 27.5%, Total 25%, and Northpet In­ The state-owned oil company, op­ Drug tunnels give vestments 2.5%. erator with 100% interest in the block, border issues new Meanwhile in Guyana, the Jaguar conducted straddle packer open hole well is due to spud in mid-December modular dynamic formation tests in reason for alarm once the Atwood Beacon rig completes five zones, all of which yielded gas. by Bob Tippee, Editor current operations. In Suriname, prep­ The earlier discoveries were on aration and planning continues [0­ blocks designated MN-OSN-2002/I National obsessions blocking work vital to wards a 2,500 sq km 3D seismic pro­ and MN-DWN-98/3. US energy supply apply just as logically to struggles against crime on the US-Mexico gram in the second quarter of 2012. border. It's just a matter ofspreading fear. Indonesia State officials in California, Adzona, Greenland New Mexico, and Texas complain of Statoil has been awarded operator­ federal indifference to the entanglement of illegal immigration with deadly drug trade. Cairn Energy PLC said it has encoun­ ship with 80% working interest in In Mexico, violence among drug gangs tered hydrocarbon shows at two wells the Halmahera 11 frontier exploration has claimed an estimated 45,000 lives on the Atammik block off western block covering more than 8,000 sq k111 since 2006. Inevitably, the nastiness has n Greenland and will contlnue opera­ in eastern Indonesia. seeped into the US. But concern about il­ legal immigration diminishes exponentially J lions through November. Niko Resources will hold the re­ as distance from the border increases. The AT?-I well in 909 m of water maining 20%. No drilling has oc­ Washington is a long way from Matamoros. in the South Ungava area 202 km off curred near the license, the award of News from the Califomia-Mexico border Nuuk encountered a 113-m gross in­ which is subject to final approval. suggests a way to end the complacency. terval with 50 m of reservoir quality Halmahera 11 is Statoil's sixth newly It raises issues like those that have turned los norteamericanos in large numbers sands of Cretaceous age. Mud losses accessed license in Indonesia in 2011 against hydraulic fracturing and a pipeline and poor hole conditions have ham­ and brings the number of licenses with linking Alberta's oil sands with refineries pered the full evaluation of this inter­ StatoH interest in Indonesia to eight. in Texas. val, WhlCh is of potential interest be­ Halmahera II is adjacent to the Obi Police recently uncovered a 400-km long tunnel connecting warehouses in Ti­ cause of oil and gas shows. Part of the and Halmahera-Kofiau licenses. juana and San Diego. They confiscated 14 interval is behind casing. Statoil has been in Indonesia since tons of manjuana. The tunnel has structural Cairn is running intermediate logs 2007 when it was awarded operator­ supports, electdcity, and ventilation. It's one across the cased and open hole sec­ ship of the Karama license and took of dozens authorities have found recently. tions before deepening the well to total partnership with ConocoPhillips in Outside border states, these conduits for wickedness won't arouse much passion. depth. A cased-hole modular dynamic the Kuma license, both in the Makas­ But what if people considered the test program is planned to attempt to sar Straits. Stawil farmed into the environmental effects? If drilling gas wells bring fluid samples to surface. Halmahera-Kofiau, North Makassar, and laying pipelines threaten drinking TheAn-1 well, fifth in the 20I1 and West Papua IV licenses in May. water, then digging tunnels must do so, too. Already, dope probably has leaked n program, is being logged after en­ into water supplies and made innocent , countering minor hydrocarbon shows. Morocco thirst-slakers act silly. And digging creates Total depth is 4,847 m in Cretaceous seismic events. Earthquakes! In California, sediments. The well is in 1,045 m of Pura Vida Energy NL, Perth, has ac­ no less! And the marijuana was destined to do-what? Go up in smoke-that's what. water 180 km off Nuuk and 46 km quired a 75% interest and is operator Global warming! from An-I. of the Mazagan block in the Atlantic Forget the mockery of immigration law. off Essaouira, Morocco. Forget the bloodshed. Forget the danger India The block covers nearly 11,000 sq to innocent people on both sides of the km separated from shore by a block border. Those are local problems. But tiny environmental risks rally Americans every­ Oil &: Natural Gas Corp. of India re­ held by Kosmos Energy Co. The main where when made to seem more threaten­ ported a deepwater gas discovery on prospect, Toubkal, is in deep waler ing than they really are. NELP Block NEC-DWN-2002/2 off 100 km offshore. More than 3,500 sq Here's the pattern, with a recent twist: northeastern India near earlier discov­ km of 3D seismic has been shot and Pressure groups start a propaganda cam­ paign. The EPA announces new regulations eries COGj Online, july 25, 2007). several prospects and leads identified. on tunnels. And the State Department The MDW No. 13 well, drilled to The company plans to list on the delays all decisions about immigration and 4,904 m TD in 1,171 m of water, en­ Australian Securities Exchange in De­ drugs until after next year's elections. countered what ONGC described as cember. IiliIl "sands interesting from hydrocarbon ONLINE NOV.1B, 20ll I [email protected]

Oil & Ga:; Journal I Nov. 28, 201 1 [~lm~MI~Ilt$'ilI1W§[~jTh!HjfERAJQ~,El

NEW ANALYSIS KIT FOR HYORAULIC FRAC WATER USE This new hydraulic fracturing water analysis kit offers on-site results in an easy-to-use, rugged, portable case. It covers parameters critical to water analysis in oil and gas uses, including source water, fracturing fluid, flowback water, produced water, drilling fluids, and enhanced oil recovery. The company's team of chemists has developed, tested, and published step­ by-step procedures designed specifically for samples encountered in hydraulic The kit includes a DR/890 colorime­ conductivity, hardness, iron, pH, and u fracturing water applications with ex­ ter, HQ40d digital meter, a digital titrator, sulfate. Additional parameters such as tended concentration ranges for critical and reagents for critical parameters­ boron may be added as needed. parameters. These methods outline alkalinity, bacteria, barium, chloride, everything users need to perform each Source: Hach Co., Box 389, Loveland, CO test either in the field or in the lab. 80539-0389.

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26 Oil & Gas Journal I Nov. 28, 2011 Additional analysis of market trends is available 1".1 IMPDRTS OF CRUDE AND PRODUCTS through OGJ Online, 011 & Gas Journal's electronic - Districts 1-4­ - District 5 - ---Total US --- information source, at http://W.v\..N.ogj.com. 11-11 11·4 11-11 11·4 11-11 11-4 11-12* 2011 2011 2011 2011 2011 2011 2010 1,000 bid 0I1&GASJOURNAL research center. Total motor gasoline ...... 713 710 49 40 762 750 562 638 574 49 40 687 614 518 ~i~til1;t~..~.I ~~~. ~ ~~..~.~.~~ ~.:" 77 102 5 0 82 102 88 Residual ...... 317 216 0 8 317 224 433 Jet fuel-kerosine ...... 20 32 37 85 57 117 32 I:il OGJ CRACK SPREAD Propane-propylene ...... 78 95 (6) (37) 72 58 127 Other ...... (102) (42) (36) 196 (138) 154 563 11·18·11 * 11·19·10* Change Change, ------$/bbl % Total products ....•..•..•..•...... 1,741 1,687 98 332 1,839 2,019 2,323 SPOT PRICES Total crude...... 7,774 7,431 791 1,188 8,565 8,619 7,863 Product value 117.29 95.96 21.33 22.2 Brent crude 110.55 84.58 25.97 30.7 Total imports ...... 9,515 9,118 889 1,520 10,404 10,638 10,186 Crack spread 6.74 11.38 -4.64 -40.8 .ReVised. FUTURES MARKET PRICES Source: US Energy Information Administration One month Data available at PennEnergy Research Center. Product value 116.54 93.75 22.79 24.3 Light sweet crude 99.27 82.20 17.07 20.8 Crack spread 17.27 11.55 5.73 49.6 Six month Product value 119.86 95.99 23.87 24.9 ~ PURVIN & GERTZ LNG NETBACKS-NOV. 11, 2011 Light sweet crude 99.02 84.59 14.43 17.1 -::----,-----:-:--,----,------::::-Liquefaction plant------Crack spread 20.84 11.40 9.44 82.8 f'\.. Receiving Algeria Malaysia Nigeria AU$lr. NW Shelf Qatar Trinidad \ ,I terminal $IMMbtu *Average for week endin~. Source: Oil & Gas Journa Barcelona 11.95 9.58 11.15 9.46 10.34 11.06 Data available at Penn Energy Research Center. Everett 2.90 0.54 2.47 0.62 1.15 3.22 Isle of Grain 9.45 6.78 8.63 6.68 7.50 8.66 Lake Charles 0.95 -1.15 0.68 -D.94 -D.7D 1.65 Sodegaura 8.24 10.97 8.45 10.60 9.67 7.32 Zeebrugge 10.56 7.82 9.70 7.70 8.59 9.79 Defm'rtions, see OGJ Apr, 9, 2007, p. 57. Source: Purvin & Gertz Inc. Data available at PennEnergy Research Center. NOTE: No new data at press time.

~ CRUDE AND PRODUCT STOCKS - Motor gasoline ­ Blending Jet fuel, Fuel oils Propane· Crude oil Tolal comp.! kerosine Distillate Residual propylene District 1,000 bbl PADD 1 ...... 10,850 51,332 42,329 10,205 56,679 11,921 6,395 PADD 2 ...... 91,458 46,396 25,450 23,632 1,366 25,103 PADD 3 ..... 162,712 72,932 57,306 1~;Y~ 39,748 18,768 25,993 PADD4 ... ,.... ,...... 16,244 2,005 668 2,632 211 12,185 PADD 5 .. 55,769 2~:g~ 24,161 9,091 11,042 4,595

Noy.11,2011 ...... 337,033 205,158 151,251 42,723 133,733 36,861 59,676 Noy. 4, 2011 ...... 338,090 204,167 150,656 44,644 135,869 36,148 60,191 NoY. 12, 2010~ ..•.•...... •.•...... 357,596 207,680 139,235 44,817 156,791 41,211 64,776 Iinciudes PADD 5. 2Revised. r\ Source: US Energy Information Administration \ ,I Data available at PennEnergy Research Center.

!:ill REFINERY REPORT-NOV. 11, 2011 REFINERY REFINERY OUTPUT --OPERATIONS-­ Total Gross Crude oil motor Jet fuel, --Fuel oils --- Propane- inputs inputs gasoline kerosine Distillate Residual propylene District 1,000 bid 1,000 bid

PADO 1 . 1,171 1,191 2,932 72 424 58 69 PADD 2 3,272 3,252 2,222 216 977 46 267 PADD 3 . 7,696 7,510 2,064 682 2,638 263 757 PADD 4 . 543 541 292 26 189 10 1104 PAOD 5 . 2,354 2,185 1,506 342 521 103 Noy.11,2011 . 15,036 14,879 9,016 1,338 4,749 480 1,197 Noy. 4, 2011 . 14,647 14,334 8,899 1,328 4,312 507 1,179 Noy. 12,20102 •••••••••••••••••••••••••••••••••••• 14,771 14,275 8,992 1,375 4,311 418 1,006

17,736 Operable capacity 84.8% utilization rate llncludes PADD 5. 2Revised. Source: US Energy Information Administration Data available at Penn Energy Research Center.

Oil & Gas Journal I Nov. 28, 2011 27 ~)'}Tilb'T:II~i

[J OGJ GASOLINE PRICES !] BAKER HUGHIES RIG COUNT E'.l OGJ PRODUCTION REPORT Price Pump Pump 11-18-11 11-19-10 111-18-11 111-19-10 ex tax price" price 1,IIDO bId 11-16-11 11-16-11 11-11-10 Alabama... 4 7 (Crude oil and lease condensate) ¢/gal Alaska 6 8 Alabama... 21 11 Arkansas...... 35 37 IApprox. prices for self-service unleaded gasoline) Alaska.. .. 622 609 California.. 44 36 California 610 60' Atlanla.. 296.1 343.7 279.1 Land...... 44 36 Colorado.. 88 86 Baltimore.. 302.8 344.7 283.7 Offshore 0 o Boston... 301.4 343.3 278.1 Florida 5 5 Colorado.... 80 69 Illinois..... 26 l' Buffalo.... 272.1 341.2 292.6 Florida... 2 1 Kansas 116 111 Miami... 291.5 344.3 294.0 Illinois... 1 1 Louisiana 1,515 1,541 Newark...... 303.3 336.2 287.6 Indiana... 1 1 Michigan 16 18 New York... 286.1 355.2 300.8 Kansas... 34 17 Mississippi.. 67 65 Nortolk... 287.6 326.2 277.7 Kentucky... 8 5 Monlana 71 70 Philadelphia 293.1 343.8 281.7 Louisiana 159 177 186 Pittsburgh ... 285.0 335.7 292.5 New Mexico . 188 N.Land...... 82 115 North Dakota.. 430 35' Wash., DC... 302.8 344.7 294.0 S. Inland waters... 20 16 Oklahoma 197 193 PAD Iavg... 292.9 341.7 287.5 S. Land...... 25 17 Texas.. . 1,630 1,383 Offshore.... 32 19 Utah 69 70 Chicago... 324.6 393.6 322.7 Maryland 0 o Wyoming 155 148 Cleveland.. 282.8 329.2 286.0 Michigan..... I o AU others -.-lQ. Des Moines 293.8 334.2 187.0 Mississippi... 11 7 --l1 Delroit... 273.1 335.2 295.B Montana.... 9 9 Tolal...... 5,896 5,5611 Indianapolis..... 270.8 332.8 197.6 Nebraska... 1 3 lOG] estimate. IRevised. Kansas City... 283.5 319.2 176.9 New Mexico. 79 68 Source: Oil & Gas Journal. louisville...... 293.3 334.2 286.1 New York _... 0 1 Oala availabla at PennEnergy Research Center. Memphis 294.8 334.6 187.1 North Dakota... IB5 139 Milwaukee... 285.9 337.2 190.7 Ohio... 13 8 Minn.-SI. Paul.. 298.0 343.6 292.2 Oklahoma.. 192 132 ~ US CRUDE PRICES Oklahoma City... 28U 316.5 169.6 Pennsylvania ,...... 109 99 11-18-11 U' Omaha... 278.5 324.2 180.9 South Dakota...... 2 1 $ibbl* SI. Louis...... 288.8 324.5 282.6 Texas.. 914 741 Tulsa.. 285.8 Alaska-North Slope 27" 108.88 322.2 273.8 Offshore...... 3 4 South Louisiana Sweet...... 123.25 Wichila...... 280.2 323.6 284.8 Inland waters 0 4 PAD II avg.. 287.7 333.7 287.6 California-Midway Sunset 13" ..... 112.60 Dist. 1. 120 61 Lost Hills 3D".. 120.25 Oist.2 78 50 Wyoming Sweet ..... 90.91 Albuquerque... 283.8 311.0 166.6 Oist. 3... . 47 40 Birmingham.. 2&4.7 East Texas Sweet...... 97.25 324.0 272.9 Dist.4...... 52 41 West Texas Sour 34" 88.75 Dallas-FortWorth.... 270.5 309.0 271.4 Oist.5.. 53 71 Houston... 274.5 313.0 169.6 West Texas Intermediate... 93.75 oist.6... 53 51 Oklahoma SweeL...... 93.75 Little Rock... 288.8 329_0 272.8 Dist. 7B.... 13 10 New Orleans .. 283.6 322.0 269.8 Texas Upper Gulf Coast..... 86.75 Oist. 7C 77 58 Michigan Sour.. . 85.75 San Antonio..... 282.5 321.0 273.8 oist. 8.... 286 166 PAD III avg... 281.2 319.8 271.3 Kansas Common 93.00 Dist. M... 44 30 North Dakota Swee1 ..•.•. .••••.. 88.75 Oist.9...... 25 39 Cheyenne... 300.3 332.7 273.4 Dist. to...... 53 75 *Currenl majol renn~r's posl~d prices elcept Nortll Slope lags Denver...... 306.4 346.B 281.9 Utah... 27 18 2months. 40" gravity crude unless differing gravity is shown. Sall Lake Cily... 3011 346.0 285.4 West Virginia 27 10 Source: Oil &Gas Journal. PAD IV avg. 303.3 341.8 280.2 Wyoming...... 53 43 Data available at PennEnergy Research Center. Others-NV-l; OR-I; TN-I; VA-I..... __4 __9 Los Angeles... 322.5 391.4 309.3 Total US...... 2,001 1,677 PhoeniL.. 313.5 350.9 289.3 ~ I'i1Ij WORLD CRUDE PRICES Portland ..... 331.0 380.4 298.3 Tolal Canada...... ---lJ.! NOlI: Ha new data at press time San Diego... 303.0 371.9 320.3 Grand lolal...... 2,488 2,095 $/bbl' 11-4·11 San Francisco.... 333.5 402.4 329.3 US Oil ri~s.. 1,125 731 Seattle...... 316.0 371.9 315.3 US Gas figs 871 936 United Kingdom-Brent 38".. 109.22 PAD Vavg.. 319.9 378.1 310.3 Tolal US ollshore...... 36 13 Russia-Urals 32" 108.85 1,518 Saudi light 34<>...... 108.06 Week's avg...... 293.7 340.4 287.6 Tolal US cum. avg. YID...... 1.852 Dubai Fateh 32<>...... 1D5.13 Del. avg. 296.4 343.1 279.6 Rotary rigs from spudding in to total depth. Algeria Saharan 44<>. 110.30 Sepl. 8Vg...... 313.3 360.0 269.6 Definitions, see Dill Sept. 18, 2006. p. 42. Nigeria-Bonny Light 37° .. 111.34 2011 10 dale 307.6 353.4 Indonesia-Minas 34° .. 114.66 / . 2010todale...... 230.2 275.1 Source: Baker Hughes Inc. Venezuela-Tia Juana Ligh131°.. 108.74 U Mexico-Isthmus 33° 108.63 'Includes state and federal motor fuel taxes and slale Data available al PennEnergy Research Center. sales fax. Local governments may impose additional taxes. OPEC basket..... 108.91 Source: Oil &Gas lournal. TotaIOPEC1.. 108.39 Data available at PennEnergy Research Center. Total non-OPW 107.24 tBl SMITH RIG COUNT Total world1 107.92 11-18-11 ll-19-10 US imports) 104.35 Proposed deplh, Rig Percent Rig Percent JEslimated contract prices.1Average price (FOB) weighted by [] REFINED PRODUCT PRICES II caunl 'aalage· count foolage* estimated export volume. JAverage price (FOB) weigh led by estimated import volume. 11-11-11 11-11-11 0-2,500 225 1.7 191 3.1 ¢/gal ¢/gal 2,501-5,000 79 49.3 54 5l.8 Source: DOE Weekly Petroleum Status Report. 5,001-7,500 134 25.3 137 19.7 Data available at PennEnergy Research Center. Spot markel producl prices 7,501-10,000 327 3.0 292 2.7 10,001-12,500 '61 6.9 335 10.1 ['J US NATURAL GAS STORAGE1 Motor gasoline· No. 2Distillale 12,501-15,000 305 0.9 157 2.7 (Convent iona I·regular) Low sulfur diesel fuel 15,001-17,500 166 - 151 11-11-11 11-11-11 11-12-10 Change, New York Harbor...... 265.10 New York Harbor...... 321.80 17,501-20,000 ll6 - 139 bel % Gulf Coast ...... 255.50 Gulf Coast ...... 317.30 20,001-over 86 '6 Producing region ... 1,246 1,235 1,237 0.7 Los Angeles ...... J25.30 Tolal 1,904 6.4 1,615 '.8 Consuming region eas1 ... 2,094 2,085 2,080 0.7 Molor gasoline Consuming region wes1... .. 510 2.!. ~ -1.5 (RBoB·regular) Kerosine jel fuel INLAND 10 17 Total US ...... 3,850 3,831 3,83~ 0.4 New York Harbor...... 272.80 Gulf Coast...... 317.80 LAIIO 1,847 1,581 Change, OFFSIIORE 37 15 Aug. 11 Aug.10 % No.2 heating oil Propane Total US' ...... -. -4.1 New York Harbor... . 317.50 MI. Belvieu.. 149.90 *Rigsemployed underfo01age conlracts. 3,020 3,150 Definitions, see OGJ Sept. 18, 2005, p. 42. lWorking gas. IAI end of period. Source: Smith International Inc. Source: Energy In1ormalion Adminislration Source: DOE Weekly Petroleum Status Report. Data available at PennEnergy Research Center. Data available at PennEnerti Research Center. Data available al PennEnergy Research Center.

28 Oil &- Gas Journal I Nov. 28, 2011 [mJTS1nBS~ [;2 WORLD OIL BALANCE [J OECD TOTAL NET OIL IMPORTS --2011- 2010 Chg. vs. 2nd lsI 4ili 3rd 2nd lsI previous IIlr. IIlr. qlr. qlr, qlr. qlr. June May Apr. June --year- Million bId 2011 2011 2011 2010 Volume % MiUion bId DEMAND DECO Canada '" -1,662 -1,595 -1,592 -1,376 -286 20.8 US &Territories .•• 19.00 19.31 19,49 19.69 19.43 19.08 US .. 9,187 9,028 8,689 10,140 -953 -9.4 Canada ... 2.16 2.25 225 2.26 2.17 2.15 Mexico ... -1,029 -932 -846 -724 -305 42.1 Mexico... 2.05 2.03 2.07 2.05 2.10 2.01 France ... 1,700 1,656 1,697 1,644 56 3.4 Japan .. 3.92 4.86 4.57 4.36 4.07 4.82 Germany... 1,913 2,067 2,194 2,113 -200 -9.5 South Korea •. 204 2.36 2.35 2.16 218 2.31 lIaly... 1.232 1,126 1,308 1,394 -162 -11.6 France... 1.79 1.85 1.86 L87 1.82 1.90 Netherlands... 1,165 to58 606 1,097 68 6.2 Italy _, 1.47 1.43 1.56 1.58 LSD 1.47 Spain... 1,190 1,294 1,302 1,338 -148 -11.1 Other importers .. 3,898 3,581 3,416 3,864 34 0.9 United Kingdom .... L61 1.62 1.60 1.63 1.61 1.64 -17.2 Germany ..... 2.34 2.35 2.53 2.65 2.40 2.40 Norway ... -1,510 -1,4BI -2,009 -1,824 314 OlherOECD United Kingdom ... 267 309 339 153 114 74.5 Tolal DECO Europe...... 9,855 8,G10 8,853 9,779 76 0.8 Europe ..... 6.93 6.92 7.27 7.20 5.92 6.90 -187 -<.8 Australia & New Japan ...... 3,693 3,682 4,725 3,880 1.48 1.42 1.40 South Korea ... 2,205 1,971 2,114 2,163 42 1.9 Zealand ...... 1.46 1.44 1.39 other DECO ... 1,037 1,044 1,246 -50 -<.0 Tolal DECO ...... 44.78 46.44 46.99 46-88 45.60 46.13 1,196 22,801 -1,663 -6,6 NON-DECO Tolal DECO ...... 23,445 22,987 25,108 China .... 9.99 9.28 9.79 9.04 9.lB 8.74 Source: US Energy Information Administration FSU •.•••... 4.40 4.47 4.40 4.39 4.16 4.21 Data available at PennEnerg)' Research Center. Nole: No new dala at press lime. Non-DECO Europe ... 0.75 0,74 0.75 0.73 0.73 0.72 Other Asia ...... 10.40 10.21 10.08 9.68 10.08 9.89 Other non-DECO.... 17.01 16.J5 16.55 17.13 16.57 15.84 TQtal nan-DECO ...... 42.55 40.85 41.57 40.97 40.72 39.40 III OECD* TOTAL GROSS IMPORTS FROM OPEC o TOTAL DEMAMD ...... 87.33 87.29 88.56 87.85 86.32 85.53 Chg. vs. previous SUPPLY June May Apr. June --year-­ DECO 2011 2011 2011 2910 VlIlume % US ...... 9.98 9.77 9.89 9.70 9.58 9.58 Million bId Canada ... 3.41 3.63 3.54 3.49 3.49 3.31 Mexico...... 2.98 2.99 2.95 2.97 2.99 3.02 Canada .. 323 482 414 533 -210 -39.4 North Sea ... 3.33 3.60 3.75 3.35 3.73 4.07 US ... 4,883 4.572 4,509 5,263 -380 -7.2 OLher DECO ... 1.47 1.48 1.53 ],56 1.54 1.57 Mexico .... 38 25 10 7 31 442.9 Tolal DECO ...... 21.17 21.47 21.76 21.07 21.33 21.55 france ... 585 496 504 645 -"0 -93 NON-nECO Germany... 282 368 275 317 -35 -11.0 FSU ... 13.33 13.28 13.31 13.18 13.15 13.11 Italy...... 734 542 662 1,172 -<38 -37.4 China .. 4.33 4.36 4.39 4.31 4.23 4.16 Netherlands... 649 600 378 506 143 28.3 other non-OECIL. 12.62 12.98 12.91 12.96 12.91 12.84 Spain...... 701 566 613 756 -55 -7.3 Tolal non·OECO, Other importers .. [,324 962 804 1,144 180 15.7 non-OPEC ...... 30.28 30.62 30.61 30.45 30.29 30.11 United Kingdom ... 255 166 123 272 -17 -".3 OPEC"...... "..... 34.66 35.31 35.34 35.49 34.93 34.44 Tolal DECO Europe ...... 4,530 3,700 3,359 4,812 -282 -5.9 roYAl SUPPLy...... 86.11 87.40 87.71 87.01 86.55 86.10 Japan ...... 3,083 lI29 3,478 3,153 -70 -2.2 Stock change ...... -1.22 0.11 -0.85 -0,84 -1.29 -ll.22 Sou1h Korea ... 2,715 2,518 2,630 2,313 402 17 .4

"Includes Angola. other DECO .. 541 426 439 730 -189 -25.9 Source: US Energy Information Administration Data available a1 PennEnergy Research Center. Tolal DECO ...... 16,113 14,852 14,&39 16,811 -"98 -<.2 ·Organization lor Economic Cooperation and Development. Source; US Energy Inlormation Administration Data available a1 PennEnergy Research Cenler. !'J!-J US PETROLEUM IMPORTS FROM SOURCE COUNTRY Chg. V5. 1i3TI OIL STOCKS IN OECD COUNTRIES* Average previllui July June -YID- --year- Chg. vs. 2011 2011 2011 2010 Volume % previoui 1,000 bId June May Apr. June --year­ 2011 2011 2011 2010 Volume % Algeria ..... 354 293 425 500 -75 -15.0 Million bbl Angola 407 373 340 414 -74 -17.9 Kuwait ... 228 238 168 204 -36 -17.6 France...... 167 168 163 170 -3 -1.8 Nigeria 884 853 915 1,045 -131 -12.5 Germany...... 291 292 295 280 II 3.9 Saudi Arabia 1,325 1,169 1,162 1,079 83 7.7 Haly...... 132 131 133 133 -I -<1.8 Venezuela ...... 943 1,077 1,015 1.005 10 1.0 United Kingdom ...... 86 90 93 96 -10 -10.4 OLher OPEC ... 786 880 671 783 -112 -14.3 Other OECD Europe...... 684 685 677 726 -<2 -5.8 Tolal OPEC "...... 4,928 4,883 4,696 5,031 -335 -<;.7 Tolal DECO Europe ...... 1,360 1,3H6 1,361 1,405 -<5 -3.2 Canada ...... 2,626 2,524 2,652 2,552 100 39 Canada 186 189 190 178 8 4.5 Mexico ...... l,197 1,222 1,257 1,238 19 1.5 US. 1,808 1,805 1,776 1,842 -34 -1.8 Norway ... 58 93 104 106 -2 -1.9 United Kingdom ...... 175 146 173 293 -120 -<1.0 japan ...... 593 599 601 597 -< -<1.7 Virgin Islands..... 192 151 lB9 1'9 -"0 -24.1 South Korea. 175 170 173 167 8 4.8 Other non-OPEC .. 2,491 2,775 2,481 2,528 -<7 -1.9 Other OECD ...... 107 110 109 109 -2 -1.8 Tatal non·OPEC ...... S,739 6,911 6,85H 6,966 -110 -1.6 -<;0 TOTAL IMPORTS ...... 11,667 11,794 11,552 11,997 -<45 -3.7 Total DECO ...... 4,229 4,139 4,210 4,309 -1.9 Source: US Energy Information Adminis1ralion "End of period. Data available at Penn Energy Research Center. Source: US Energy Information Administration Data available at PennEnergy Research Center. Note: No new dala at press time.

Oil & Cas Journal I Nov. 28, 201 1 29 [MAJIK~Ipl~c:Ej

DEADLINE for MARKETPLACE ADVERTISING is 10 A.M. Tuesday preced­ UNDISPLAYEO MARKETPLACE $4.00 per word per issile. 10% discounl lor Ihree or ing date of publication. Address advertising inquiries to MARKETPLACE more CONSECUTIVE issues. $80.00 minimum charge per insertion. Charge for SALES, 1-800-331-4463 ext. 6301, 918-832-9301, fax 918-832-9201, blind box service is $60.00 No agency commission, no 2% cash discount. email: [email protected]. CenlerediBold heading, $12.00 exira. COMPANY LOGO, Available with undisplayed ad lor $85.00. Logo will be cenlered • DISPLAY MARKETPLACE: $390 per column inch, one iS5ue.lO% discount three or above copy with a maximum height of 3}8 inch . more CONSECUTIVE issues. No extra charge for blind box in care. NO SPECIAL POSITION AVAILABLE IN MARKETPLACE SECTION. Subject to agency commission. No 2% cash discount. • PAYMENT MUST ACCOMPANY ORDER FOR MARKETPLACE AD.

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30 Oil & Cas Journal I Nov. 28, 2011 ADVERTISING SALES US Sales OGl Mike Moss, (713) 963-6221, nnkem([lpcnnwc11. C0111. h1ark Gales, (713) 963-6237, markg@Pennwell. com. Stan TClT)~ (713) 963-6208, sla.lll@Pennweil. Penn Well, Houston office Penn Well, Tulsa office com. Marlene Breedlove, (713) 963-6293, marleneb@ 1455 West Loop South, Suite 400, Houston, TX 1421 S, Sherid Andreas Caterham. UK Sicking Michael Lynch Strategic Energy & &:onomic Research Inc .. Amherst, Mass. Subscriber Service India Tom Miesner Pipeline Knowledge & Development, P.O. Box 2002, Tulsa OK 74101 R~an Sharma, Imerads limiteu, 2, Padmini. Enclave, Houston Tel 1.800.633.1656/918.831.9423/ Fax Hau2 Khas, New Delhi-110 016, Inoia; Tel: +91.11. Ralph Neumann US Infrastructure, Houston 918.831.9482 628301&'19, Fax: +91.11.6228928; E-mail: Kent F. Perry Gas Technology Institute, [email protected] I1ljan®intemdsindia.com Oes Plaines, III. Circulation Manager Tommie Grigg, Italy Ignacio Quintero Chevron Pipe Une Co., Houston [email protected] Femlcdo Silvera, Viale Monza, 2'1 20127 MIlANO Ital}'; John A. Sheffield John M. Campbell & Co., Tel:+02.28.46 716; E-mail: info®silvem.it Lechlade, UK Bill Schlesing Booz & Co., Houston Penn Well Corporate Headquarters Japan Andrew 1. Slaughter Shell Upstream Americas, 1421 S. Sheridan Rd., Tulsa, OK 74112 express sales division, rcs Con\-emion Design Inc. Houslon 6F, Chiyocla BIdg., 1-5-18 Sarugakucho, Chi}"od:l-ku, John Thorogood Drilling Global ConsultanL LLP, Tokyo 101-8449,Japan, Tel: +81.3.3219.36-1'1, Fax: Insch, Scolland 81.3.3219_3628; Kimie Takemura, Email: takemura­ Sleven Tobias South Bay Resources, HousLon [email protected]; Masaki Mori, E-mail: masaki.mori@ Colin Woodward Woodward InlernationaILLd., ics·ine.co.jp Ourham, UK Singapore I Australia I Asia·Pacific P.C.l.1: 194, Fax:: 219.56],2023: Cuslomer Relalions Department at 978-750-8400 prior to copying. ReQuesls lor bulk orders should be addressed Lo the Editor. Oil & Gas lournal 4295 Ohio Stteet, Michigan Cil}; IN 46360; (ISSN 1944-9151) is published 12x per year - monthly the first MDnday of each mDnlh in print and other Monday:; in digilal form by PennWell [email protected]. \w,w.fostetpriming.coln Corp~{atian, 1421 S. Shetidan Rd., TUlsa, Okla., Box 1260, 74101. Periodicals postage paid at TUlsa, Okla., and at additional mailing offices. Oil & Gas Journal and OGJ are registered trademarks 01 PennWel1 corporatKln. POSTMASTER: send address dtanges, letters aooul sub~criptKln service, PennWel1 or subscriptioo orders to P.O. Box 3497, Northbrook, IL 60065, or telephone (800) 633·1656. Change of address notices should be senl Promplly 1455 West Loop South, Houston, TX 77a2.7 with old as well as new addrm and wilh ZIP tode or poslalzone. Allow 30 days for change of address. Oil & Gas Journal is available for eleclronic \V\V\v,ogl.eom relrieval on Oil & Gas Journal Online (WoIW.ogi.t:omJ or lhe NEXIS® Service, Box 933, Dayton, Ohi045401, (937) B65-6800. SUBSCRIPTION RATES in the US: 1~r. $8S; latin America and Canada: I yr. $!l4; Russia and republicsolthe former USSR, 1yr. 2,200rubles.; all olherwJnlries: I yr. $12S, I yr. premium digital $59 wDfldwide. These rales app~ only to individuals holding res[KInsible positions in the petroleum industry. Single copies are $J 0each except for IOOth Ar,~iversatY issue which is $20. Publisher reserves the tight to refuse nan-qua~fied subscriptions. Oil & Gas Journal is available on the Internel al httpJIw.vw.agi.com.(VaL LOS, No. 18b) Printed in lhe US. G$TNo. 126813153. Publil;alions Mail Agreement Number 602914. Relurn Undetiverable Canadian Addres~s 10' P.O. Box 1632, Windsor, ON N9A 7CS.

Nov. 21, 2011

Internationa I l\Jews For up-to-the-minute news, Newsletter for oil and gas professionals visit www.ogjonline.com

11Th~~IlcAl~IijjE1fEsfi Q U [CK TAKES Eagle Oil has dedicated production from its acreage in the Bossier-Haynesville shale North Toledo Bend Project for trans­ Chevron says oil seep has decreased off Brazil port on Wildcat. Chevron Corp. reported that successful well-control operations significantly reduced an oil seep believed to be coming [rom an Nigeria moving to end fuel subsidies _~appraisal well in Frade field offshore Brazil. The government of Nigeria, Africa's largest oil producer and , • Upon receiving approval from the Brazilian National Agency a member of the Organization of Petroleum Exporting Coun­ of Petroleum (ANP) on Nov. 13, Chevron Brazil immediately tries, is taking the politically sensitive step of moving to end commenced plugging and abandonment activities. fuel subsidies. "The amount of oil observed coming from nearby seep lines President Goodluck Jonathan says the government will use on the ocean floor has decreased significantly," Chevron said, money saved by ending subsidies, which otherwise would cost adding that it continues to monitor activities that will culmi­ an estimated $7.5 billion next year, on infrastructure and social nate in final cementing of the well. programs. Chevron estimates the sheen volume at 400-650 bbl. Six Nigeria recently has been producing about 2.3 million bid of vessels are y..'orking in pairs to comain and recover the oil while oil and consuming about 280,000 bid. Its productive offshore two vessels are working on mechanical dispersion. continues to yield discoveries (OGJ Online, Nov. 7, 2011). The sheen is 120 km offshore and mo·ving southeasterly Because utilization is low at the country's four refineries, away from the Brazilian coast. The Frade project is in 3,800 ft which have total capacity of 445,000 bid, Nigeria imports oil of water some 370 km northeast of Rio de Janeiro. products. Chevron, which has 51.74% interest, started production at Subsidies keep domestic oil prices at about 40¢/1. Frade field in 2009 COGJ Online, June 23, 2009). Trade unions have threatened to strike if subsidies end next Partners in the field are Petroleo Brasileiro SA 30%, and year as proposed. FradeJapao Petroleo Uda., a joint venture of Inpex Corp., SOjitz Corp., and Japan Oil, Gas & Metals Corp. 18.26%. ConocoPhillips to name downstream firm Phillips 66 ConocoPhillips plans to name its emerging new independent " j USI acquires Bossier-Haynesville gas gathering downstream company Phillips 66, which will be based in us Infrastructure Holdings LLC (USl) will acquire the V'lildcat Houston, ConocoPhillips said. The corporate repositioning re­ Sabine natural gas gathering system in the BOSSier-Haynesville mains subject to market conditions, regulatory approvals, and shale and expand it to nearby interstate carriers. The 28-mile final corporate board approvaL pipeline lies along the Texas-Louisiana border in the northwest In July ConocoPhillips announced plans to separate its up­

corner of Sabine Parish, La., and transports gas for producers stream and downstream businesses into (',1,'0 stand-alone, pub­ such as Eagle Oil &: Gas Co. licly traded corporations via a tax-free spinoff of the refining

USI will build a 20-mile extension and expansion at its and marketing business (0 ConocoPhillips shareholders (OGJ southern end, providing direct access to markets served by Online. July 14. 20ll). Gulf South Pipeline Co. LP and Tennessee Gas Pipeline. The Phillips 66 will be involved in refining, marketing, mid­ expansion, expected to be complete by mid-20l2, will bring stream, and chemicals. Greg Garland, designated chairman Wildcat's takeaway capaciLy La 400 MMcfd. and chief executive officer, noted the name has strong brand Wildcat currently has takeaway capacity of 200 MMcfd and in­ recognition and provides a link with corporate history. cludes treating and compression facilities. The system already inter­ ConocoPhillips, which will be a pure-play exploration and connects with four regional gathering systems: Enterprise Products' production company after lhe reposilioning, will continue to be State Une GatheringSystem, KinderHawk's Gas Services, Producers based in Houston. Banlesville, Okla., will be the global center Gas Transmission, and Tristate Sabine Gathering System. for the Phillips 66 technology organization. The ConocoPhil­ US INDUSTRY SCOREBOARD - 11/21

4wk. 4 wk. a'g. Change, YTD YTD avg. Change. latest week 11/4 average year ago! % average! year ago! % Product supplied, 1,000 bid Motor gasoline 8.572 9,080 -5.6 8,980 9.110 -1.4 Distillate 4,292 4,130 3.9 3,820 3,768 1.4 Jet fuel 1,434- 1,346 6.5 1,437 1,405 2.3 Residual 280 385 -27.3 490 489 0.2 Other products 4,395 4.290 2.4 4,353 4,438 -1.9 TOTAL PRODUCT SUPPLIED 18,973 19,231 -1.3 19,080 19,210 -0.7 Supply, 1,000 bid Crude production 5,858 5.566 5.2 5,606 5,484 2.2 NGL producllon 2 2,195 1,967 11.6 2,109 2,078 1.5 Crude imports 8,717 8,583 0.4 8,903 9,222 -3.5 Product imports 1,932 2,474 -21.9 2,355 2,581 -"l.8 Other supply23 2,178 2,010 8.4 2,285 1,983 15.2 TOTAL SUPPLY 20,880 20,700 0.9 21,258 21,348 -0.4 Refining, 1,000 b/d Crude runs to stills 14,524 14,091 3.1 14,704 14,639 0.4 Input to crude stills 14,886 14,550 2.3 15,110 15,060 0.3 % utilization 84.0 82.7 - 85.5 85.6 latest Previous Same week Change, latest week 11/4 week weekI Change year ago l Change % Stocks, 1,000 bbl Crude oil 338,090 339,460 -1,370 364,882 -26,792 -7.3 Molor gasoline 204,167 206,274 -2,107 210,336 -6,169 -2.9 Distillate 135,869 141,889 -6,020 159,902 -24,033 -15.0 Jet fuel-kerosine 44,643 45,759 -1,116 45,940 -1,297 -2.8 Residual 36,148 36,264 -116 40,403 -4,255 -10.5 Stock cover (days)-1 Change, % Change, %

Crude 23.3 23.3 0.0 26.0 -10.4 Motor gasoline 23.8 23.8 0.0 23.2 2.6 Distillate 31.7 33.6 -5.7 38.7 -18.1 Propane 57.4 58.6 -2.0 58.3 -1.5 Futures prices5 11/11 Change Change % Light sweet crude ($/bbl) 96.97 93.24 3.73 84.98 11.99 14.1 Natural gas, $/Mlvlbtu 3.67 3.81 -0.14 3.87 -0.20 -5.2

IBased on revised figures. lOG) estimates. Jlncludes other liquids. refinery processing gain, and unaccounted for crude oil. 4Stocks divided by average daily product supplied for the prior 4 weeks. !Weekly average of daily closing fuLures prices. Source: Energy Information Administration, Wall Street Journal

BAKER HUGHES I!ITERNATIONAL RIG COUNT: TOTAL WORLO/TOTAL ONSHO RE/TOTAL 0FFSHORE

3,900 ~22' 3,600· !/!',3 3,300 ...... - -- - ~ .~ 3,OOO~~' 1,100 --- MOO 1,roO· 1,800 JdJ!JL' . 1i1'/r-' '" o O~I. 10 No~. 10 De~. 10 J~n. II Fell. 11 M~r. /I Apr. If May. II JUD.11 Jul. 11 Aug. , / Sep'. 1/ O~,. 1/ Note: Monthly average count

BAKER HUGHES RIG COUNT: US/ CANAOA

2,016 1,000·..1,100" ._=""_--'--'-----...... , ..­ 1,800" ··························7;'685··· /,600 .. ­ 1,400·· ~ :: ··············································"429···· ····························500···

400.·~,~·:··· zoo -...-..--.._-.. . _. o . 913/70 91/7/10 1011110 10115110 [0/29110 17//2110 9/2/11 9/18/11 9130117 70114/11 10128/11 11/11/11 8127/10 9/10110 8124/10 10/8//0 /0/221/0 11/5110 8126/11 9/9/1/ 9/23111 lOfllll 10127/1/ /7/4/1/ Note: End 01 week average count Why dig around? Extract exactly ''''hat you need. lips exploration and production technology organization will field, a recently sanctioned development project is expected to be based in Houston. The repositioning of ConocoPhillips is add 100 MMcfd of deliverability in mid 2012, partly offsetting expected to be completed in second-quarter 2012. Im!I amicipated depletion at Mari-B. Meamvhile in deep water, appraisal work has increased the lEXprQIfAjjjQtflil0_~\\(EUj~M~~]l QUICK TAKE5 gross resource estimate of Noble's Tamar discovery to 9 td from 8.4 tcL The Tamar development project is on schedule for com­ ~xxonMobil eyes deepwater block off Liberia missioning in late 2012. The platform jacket, deck fabrication, ExxonMobil Corp. will acquire a 70% interest in the produc­ and pipeline installation are 50% complete, and onshore facility tion-sharing contract governing Block lB-13 off Liberia follow­ expansion is under way ing Canadian Overseas Petroleum ltd.'s acquisition of a 100ofi, Noble is in final stages of sales contract negotiations with interest from the current owner. Israel Electric Corp. and is in active discussions with existing ExxonMobil will pay COPL's Bermuda unit $55 million plus and new customers. Israel gas demand remains robust, and an­ the uniL's portion of the first well to be drilled to a maximum ticipated base growth is lO%/year throughout the decade. of $36 million. If less than $36 million is spent on the unit's proportionate cost for the first well, the balance will be applied West Newfoundland onshore light oil deposit cored towards the unit's costs of a second well if drilled. Vulcan Minerals Inc., St.John's, NewL, said a core hole program ExxonMobil also will pay the unit's share of joint venture has indicated that the Flat Bay shallow light oil deposit under­ . , costs of $6 million up to the completion of the first well. The lies an estimated 8-10 sq km in southwestern Newfoundland. U unit's eqUity interest in the block will be 30% upon closing, and The dark brown, 34-36° gravity oil with less than 1% sulfur ExxonMobil will be the block's deSignated operator. is primarily in low-permeability conglomerates and sandstones National Oil Co. of Liberia's approval is required for both in the Ship Cove and Fischell's Brook formations. The oil has a transactions. COPl and its Bermuda unit have agreed with the pour point of 9°, which exceeds the reservoir temperature at the current owner, subject to certain conditions being satisfied or shallow depths currently intersected, 50 the oil does not flow. waived, to pay $85 million for a 100% interest in lB-13, includ­ A qualified reservoir engineering group will review results ing $45-50 million in cash and the rest common shares. from the core drilling program in order to formulate a pilot The 2,400 sq km block has an 8-year teml that began in May project to extract the oil. A total of 14 core holes have been 2007, divided into three phases of 4,2, and2 years. The second drilled in the general area south of the Port au Port peninsula. phase commenced in May. An input of energy will be required to stimulate flow, said In 2010, 2,200 sq km of long-offset 3D seismic was shot Vulcan, which shares interests in the project 50-50 with Invest­ to evaluate the oil potential of Cretaceous sands analogous to can Energy Corp. the recent deepwater oil discoveries off Ghana and Sierra le­ The most recent core drilling involved six holes with a com­ one. Reviews of the seismic have identified the potential for a bined 1,673 m, and the target reservoirs were oil bearing in number of Cretaceous turbidite sand stratigraphic traps on the three of the six. Rig capacity limited hole depth, and as a result block that possess strong seismic AVO anomalies and other di­ it was not possible to penetrate the reservoirs completely. rect hydrocarbon indicators that possibly suggest the presence The gross thickness of the oil-bearing Fischell's Brook for­ of hydrocarbons. mation in the Flat Bay-l discovery well was 100 m. The formations were deeper than expected and beyond the Noble sees East Mediterranean oil, gas potential rig's depth capacity at core hole 5, but minor live oil shows were Noble Energy Inc. said it has identified 12 more prospects with encountered in a sandy lense ill an anhydrite that overlies the more than 20 tef of gross unrisked resource potential in the unpenetrated target formations. eastern Mediterranean that target sands equivalent to those it Holes 4 and 9 were drilled updip of the find and encoun­ discovered at Tamar off Israel. tered shallow basement without any oil-bearing target inter­ The company said its acreage also has total gross unrisked vals, though both found live oil shows in hasement fractures. deep oil potential of 3.7 billion bbl, and it plans to reenter the leviathan discovery well to test the concept by early 2012. Cris-R hydrocarbons logged at ultradeep shelf well Noble is drilling the Cyprus A prospect, which has an esti­ McMoRan Exploration Co. will apply to deepen its lafitte ul­ mated gross mean resource range of 3 to 9 tef and a 60% prob­ tradeep prospect well on the Gulf of Mexico shelf to 32,000 ft ability of geologic success. It continues to appraise leviathan to evaluate deeper Miocene and Oligocene objectives after wjre­ with the drilling of the third well while evaluating field devel­ line logs indicated 56 net ft of hydrocarbon-bearing sand with opment concepts and commerCialization options. good porosity in a 58-ft gross lower Miocene Cris-R section. Noble-operated Mari-B field off Israel has achieved record McMoRan has drilled the lafitte well, in 140 ft of water on levels of production this year and since 2004 has lowered Is­ Eugene Island Block 223, to 29,756 ft and run wireline logs to rael's energy costs by more than $7 billion and reduced carbon 29,740 ft. Row testing will be needed 1O confirm the flow ca­ dioxide emissions by 17 million metric tons. At nearby Noa pacity of the Cris-R section, which is full to base.

The Cris-R interval brings the well's total possible produc­ for Brynhild field (formerly called Nemo) to the Norwegian tive net sands to 171 ft when combined with the 115 ft of po­ Ministry of Petroleum and Energy in mid-20n (OG], Aug. 8, tential net pay encountered previously. New Orleans-based 2011, Newsletter). McMoRan controls 15,000 gross acres in the immediate area. The scope of work under the contract with Aker Solutions McMoRan said the Lafitte results enhance the potential of includes the delivery of one template-manifold structure, one its other acreage in the area, including its Barataria and Captain riser base, three subsea trees, three wellhead systems, control Blood ultradeep prospects. Barataria covers 10,000 gross acres system, a tie-in system, 38 krn of umbilicals, high-pressure west-southwest of Lafitte, and Captain Blood takes in 10,000 riser, and rental tooling. The contract contains several options gross acres just south of Lafitte. for additional eqUipment, including other field developments. McMoRan has a 72% working interest and a 58.3% net rev­ Aker Solutions will primarily perform the management, enue interest in Lafitte. Other owners include Energy XXI (Ber­ engineering, and procurement of the subsea production sys­ muda) Ltd. 18% and Moncrief Offshore LLC 10%. IiI!!I tem from Oslo. It plans to fabricate the subsea treesin Tranby, Norway, the template-manifolds in Egersund, Norway, the um­ rjjRmJ.J.~lil~l&~J:Illl!)~illlgN] QU ICK TAKES bilical in Moss, Norway, and deliver the wellhead systems from Aberdeen. Its service base in Aagotnes, Norway, will handle the Nexen signs North Sea drilling contract installatio~ and commissioning work. Aker Solutions expects Nexen Petroleum signed a drilling contract with Ensco PLC to to make final deliveries in second-quarter 2013. hire the Ensco 120, a harsh-environment jack up rig that Nexen will use on its Golden Eagle development in the central North Petronas, Shell plan EOR projects off Malaysia Sea to drill at least 10 wells. Petronas Carigali Sdn. Bhd. and Shell Malaysia signed an The estimated initial contract is $120 million. The contract agreement for two 3D-year production-sharing contracts for en­ is expected to start during fourth-quarter 2013 following sys­ hanced oil recovery projects offshore Sarawak and Sabah. tems integration testing and mobilization. Terms allow Nexen Shell estimates [he EOR projects will increase recovery fac­ to extend the contract through 11 one-well options, potentially tors to 50% from 36% in the Baram Delta (BDO) and North Sa­ increasing the comract value by an estimated $140 million. bah fields. It expects to produce an additional 90,000-100,000 The Ensco 120, now under construction at Keppel FELS boeld from the projects and estimates that the projects will ex­ shipyard in Singapore, will be capable of operating in up to 400 tend field hfe beyond 2040. ft of water. The jack up design enables large, multiwell platform The technology planned for the Nonh Sabah fields could programs, ultradeep gas programs, and up to 40,000 ft total potencially lead to the first field-scale offshore chemical EOR d rHUng depth. project in the world, according to Shell. The rig will feature high-temperature, high-pressure equip­ The new agreement builds on the existing BOO and North ment, a proprietary Ensco high-capacity design cantilever Sabah PSCs. envelope, 2.5 million lb quad derrick, automated hands-free Petronas Carigali holds a 60% interest in the BOO produc­ offline pipe handling systems, ultra-high capacity jacking and tion sharing contract (expiry 2018) and is operator while Shell fixation systems, ISO-person quarters, and strict noise and er­ holds the remaining 40%. gonomic standards. The North Sabah PSC (expiry 2019) is Shell operated with The Ensco 120 is the first in a series of three such newbuild each company holding an equal 50% share. I!II!I L. jack ups. The Ensco 121 and Ensco 122 are scheduled for deli\'­ eryin fourth-quarter 2013 and third-quarter 2014, respectively. ?Pif®~S:Sl[lil QUI CK TA K ES

Lundin lets contract for Brynhild development IDe plans new refineries, major expansion A unit of Lundin Petroleum AB signed a 700 million kroner Indian Oil Corp. Ltd., India's largest refiner, plans to raise its contract with Aker Solutions for the engineering, procurement, total refining capacity to 2.46 million bid by 2020-21 with two and construction of a subsea production system for the Bryn­ new refineries and a major expansion. hild project, offshore Norway. At a meeting in Vadodara, Gujarat, Rajkumar Ghosh, di­ Brynhild, discovered in 1992. is in about 80 m of water on reClor (refineries), disclosed early plans for construction of a Block 7/7 in production license 148, adjacent to the Norwegian­ 300,000 bid refinery in the western pan of the country. UK border. Lundin plans to develop the field with three subsea He also said the 274,000 bid Gujarat Refinery at Koyah, Va­ wells tied back to the Shell-operated Pierce [loating, produc­ dodara, would be expanded to 360,000 bid by 2016-17 and tion, and of[}oading vessel on Blocks 23/22a and 23/27 in the 460,000 bid by 2020-21. UK North Sea. Under construction by the state-owned company now is the Lundin estimates that Brynhild holds about 20 million boe 300,000 bid Paradip Refinery in Orissa (OGJ, Nov. 22, 2010). and plans to produce the field at rates up to 12,000 boe/d. The Ministry of Petroleum and Natural Gas estimates the refin­ The company submitted a development and operation plan ery will start up in first-quarter 2013. The company will have 10 refineries when the grassroots shareholders in Colonial. ConocoPhillips described the sales as projects are complete. part of an ongoing effort to divest noncore assets. ConocoPhillips sold the Seaway Products Pipeline Co. to CVR Energy plans to buy refinery in Oklahoma DCP Midstream in June. DCP will convert the line to NGL ser­ CVR Energy Inc. plans to buy Gary-Williams Energy Corp. vice COGJ Online,June 13, 2011). and its Wynnewood, Okla., refinery and related assets for $S2S million in a transaction expected to close by yearend. Closing FERC reports on Marcellus shale projects remains subject to regulatory approvals. Four projects to transport Marcellus shale gas went into service CVR Energy said acquisition of the S2,SOO-bled v..'yn­ during October as two more were announced, the US Federal newood refinery will increase the scale and diversity of CVR Energy Regulatory Commission said on Nov. 14 as its energy Energy's refining operations. projects office released its latest monthly update. Based in Sugar Land, Tex., CVR Energy already owns It said National Fuel Gas Co.'s pipeline and storage division 120,000 bled refinery in Coffeyvllle, Kan. Gary-Williams En­ placed its Line N replacement and Lines R and I expansion ergy is based in Denver with marketing and operations in Okla­ projects into service on its Line N system in western Pennsyl­ homa. I!Ii!I vania. The projects will provide ISO MMcfd of firm Marcellus shale gas transportation to Texas Eastern Transmission LP's ITR~NsJfQijJATrjjiji QUICK TAKES pipeline in Greene County, Pa., FERC said. Tennessee Gas Pipeline Co., meanwhile, placed its Line 300 :1ConocoPhillips sells Seaway pipeline stake expansion project into service, FERC said. The EI Paso Corp. ConocoPhillips has entered into agreements to sell its interests subsidiary's system will provide 360 MMcfd of firm transpor­ in two US pipeline companies for $2 billion. In its first sale, tation, include Marcellus shale gas, with increased reliability. ConocoPhillips will divest its interest in Seaway Crude Pipe­ FERC said NFGC and TGP received approval to construct line Co. to Enbridge Holdings (Seaway) LLC, a subsidiary of and operate their Northern Access and Station 230C projects, Enbridge (US) Inc., which will reverse its flow La bring crude which will provide 320 MMcfd of transportation capacity for fonn Cushing, Okla., to the US Gulf Coast. Marcellus shale gas in Pennsylvania and New York. Enbridge Inc. and Enterprise Products Partners LP (EPP) The report also mentioned two projects outside the US agreed to reverse the direction of oil flows on Seaway with an Northeast shale gas region. It said Northern Border Pipeline Co. initial capacity of lSO,OOO bId in second-quarter 2012. Follow­ placed into service its nearly 9-mile Princeton Lateral project in ing pump station additions and modifications, anticipated to be Illinois into service to provide 120 MMcfd of firm gas for Cen­ completed by early 2013, the capacity of the reversed Seaway tral Illinois Light CO.'s plant near Princeton, Ill. It also said El Pipeline will reach 400,000 bid. Paso Natural Gas Co. applied to construct and operate a project The companies expect the reversed Seaway to be fully con­ to increase capaCity of\Vi1cox Lateral in Cochise County, Ariz., tracted and will conduct an open season to validate shipper by 185 MMcfd. support for an expansion of Seaway, through looping or twin­ ning. The 670-mile Seaway system includes the 500-mile, 30­ Pembina to expand Montney shale line capacity in. OD Freeport, Tex., to Cushing, Okla., long-haul system, and Pembina Pipeline Corp. will install five new pump stations and the Texas City Terminal and Distribution System, serving refin­ upgrade five existing pump stations to expand NGL through­

I eries in the Houston and Texas City areas. SCPC also includes put capacity on its Peace and Northern Pipelines (together the 6.8 million bbL of crude oil tankage on the Texas Gulf CO<1st and Northern NGL System) by 55,000 bid to accommodate in­ four import docks at two sites. creased field liquids extraction by producers in the Western Enbridge and EPP also plan to build a 4S-mile pipeline link­ Canadian Sedimentary Basin. ing Seaway directly to EPP's ECHO crude oil storage terminal Pembina expects to bring 20,000 bId of the expansion into southeast of Houston. The joint-venture partners estimate costs service by yearend 2012 and tbe remaining 35,000 bId by year­ to reverse the line and construct supporting lateral and related end 2013, subject to commerciaL arrangements and regulatory facilities at roughly $300 million. approvals. Enbridge bought ConocoPhilHps's 50% imerest in Seaway The WCSB includes the Deep basin, Montney, Cardium, and for $1.1S billion. EPP will continue to operate the pipeline sys­ Duvernay shales. The Northern NGL System's current capacity tem and storage facilities. Enbridge and ConocoPbillips expect is 115,000 bid with average volumes of 88,000 bId. Pembina the transaction to close in December or early 2012, subject to expects this to rise to 100,000 bId by yearend due to commis­ customary approvals. sioning of its Edson pipeline expansion and the Musreau Deep Separately, ConocoPhillips also will sell a 16.5S% interest Cut facility. in Colonial Pipeline Co. and Colonial Ventures LLC to Caisse Pembina has secured commercial agreements for 55% of the de depot et placement du Quebec. ConocoPhillips expects the expanded system's 170,000 bId capacity and expects irs expan­ transaction to close first-quarter 2012 following approval by sion to cost about $100 million.1il!I 12Ql1~Pl1rl[(NIIALEJillAR.]------

• Denotes new listing or Technology, Aber- !A.ttY~mJtlL,," IPAA Private Capital org, website: www.api. (0)20 3002 2371, -+44 a change in previously deen, +44 (0) 1483 Conference, Houston, org.25'26. (0)20 3002 3003 (faxl. pUblished information. 598000, e-mail: dawn. Pipe Tech Ameri- (201) 857-4722, (202) e-mail: olas@marcu­ dukes@otmneLcom, cas Annual Offshore 857-4799 (fax), web- Gas Transport & Storage sevansuk.com, website: website: www.dea- Production Technology site: www.ipaa.org. 24. Summit, Berlin, +44 www.marcusevans. tiQ'lE._M~~~R)Ul~ europe.com. 1-2. Summit, London, +44 (0)207202 7690, +44 com. 1-3 (0)2072027574, +44 AAPG GTW Deepwater (0)207202 7600 Ifax), (0)2072027600 (fax) lADe Critical Issues ASTM International Reservoirs Multi-Disci- website: www.gtsevent. OGIS Florida Meeting, e-mail: hejke.coetzee@ Asia Pacific Confer- Committee 002 on plinary Exploration and com. 26·27. Palm Beach, Fla., (202) ence & Exhibition, Petroleum Products and wtgevents.com. Web- Development Confer- 857-4722, (202) 857­ Kuala Lumpur, (713) Lubricants, New Or- site: w.ww.offshore- ence, Houston, (918) Plant Maintenance 4799 (lax), website, 292-1945, (713) 292- leans, (610) 832-9681, summltcom.16-18. 560-2650, (918) 560- and HSE Middle East www.ipaa.org. 2-3. 1946 (fax), e-mail: e-mail: dbradley@astm. 26789(fax) website: Annual Meeting Abu [email protected]. org website' wwwastm World ~uture Energ,Y www.aapg.;rg. 24·25. Dhabi +971 2401 UT Energy Forum, bt . d I ' . . . Summit Abu Dhabi '. we SI e, www.la.c.org org/COMMIT/D02.htm. " 2932, +971 2401 1928 Austin, (512) 471-8839, conferences/CntrcaUs- 4.8 +9712 4446113, +9~12 Annual Shafe Gas & Oil (fax), e-mail: s.mehta@ e-mail: info@UTEner­ sues.ME.2011.23-24. . 4443768 (fax), webSite S . C I th h avForum com website' wwwworldfutureener- ymposlum, a gary, eenergyexc ange. .,' . AI' (877) 9277936 k b·t· www.utenergyforum. AGM and Technical 20th World Petroleum gysummit.com.16-HI.,a., -, co.u, we Sl e. www. com.2-3. M r L d 44 Congress Doha +974 18771927-1563 Ifaxl, wraconferences.com. ee lng, on on, + . " Summit, Houston, e-mail: customerser. Jan. 29-FelJ. 1. 1252625542, e-mail, 44491373,97444 (416) 214 1707 (4f6) . @ ". SPE Hydraulic Fractur­ . @ 2 1 (f)' -, Vice canadlanlnstltute. l'-J admln gpaeurope. 9 080 ax, e-mail: 214-3403 (fax) e- . . ing Technology Confer­ com, website: www. [email protected], . ' com, ~e~slt~: www. MI~dle East and North It/ mall: laurence.allen@ canadlanlnstltute Africa Energy Confer- ence, The Woodlands, gpaeurope.com even s website: www.20wpc. wtgevents com web- /2012/318/8th L d 44 Texas (972) 952-9393 event/201. 24. . '.' com - ence, on on, + ' , com. 4-8. Site, www.plpelecha- annual-shale-gas-and- (0)2079575753, +44 1972) 9529435 (fax), Optimal Hydrocarbons A' . mericas.com/program. oil-symposium. 24-25. (0)207321 2045 (fax). e-mail: sp.edal@spe. L .. A C Gas rabra Summit, 18-19. webs't h th m org, webSite: www.spe. Oglstlcs oruna I e: www.c a a - 6 8 +34917001271, ' Muscat, +44 (20) 7067. Annual Chem-Petro- house.org/mena2012. org. - . e-mail: jlopez@iirspain. 1800, +44 (20) 7242 International Forum chem and Refining 30-31. . . .. com website' http'!l 2673 (fax), e-mail: Process Analytical Asset Management Pipeline Pigging & wW~.iirspain.~omr" wra@theenergyex- Technology (!FPAC). Conference, Houston, Global Tight Oil Summit, Integrity Management programas/CF0167.pdf. change.co.uk, website: Annual Meeting, Baltl- (312) 540-3000 ext. Houston, +44 (0) 20 Conference, Houston, 29-30. www.theenergyex- more, (847) 543-6800, 6754, (312) 894-6304 7067 1800, +44 10J 17131521-5929. (402) change.co.uk. 11-14. (847) 548-1811, fax, (fax) e-mail, Iindseysi@ 2072422673 (fax) 557-5723 (fax), e-mail, . . . l' f @'f t ' , info@c1arlon org Global Tight 011 Summit, e-mal. in 0 I pacne. marcusevansch.com e-mail: marketing@ ." . Denver, +44 (20) 7067 PIRA Natural Gas Mar- org, website: www.ifpac. website: www.marcu~ theenergyexchange. webSite: www.c1anon. 1800 , + 44 (2017242 kets Conference, New com ..22-25 sevans.com.24-26. co.uk, website: www. org. 6-9. 2673 (fax), e-mail, York (212) 686-6808 theenergyexchange. z.nathan@theenergyex-' , Flow Assurance Forum, ARC World Industry . (212) 686-6628 (fax), Ab 44 (0) 20 Offshore Wesf co.uk. Jan. 31-Feb. I. Forum Orlando (781) change.co.uk, webSite: . . erdeen, + Af' C f & ' , h _ e-mail: [email protected], 73689300 _I' rica on erence 472-1000 e-mail: info@ www.t eenergyex .. , e mal. E h'bT Ab' (918) T 'd C f ' h k N webSite: www.plra.com. . @' k x I I lon, uJa, OPSI es on erence arcweb com website' c ange.co.u . OV. enquire IqpC.CO.u, 831 9160 (918) 831 & E h'bl NO" . 29-0 ec. 1 . 12-13. we bSl't e.. www. fI owas _ -,, . X I lion, ew r- www.arcweb.com/ /J surance.org/event. 91~l (fa.x), e-mail: leans: (91~) 83~-9161, events. 6-9. "- Refining and Petro- PIRA Understanding 23-24. reglstratlon.@pennwell. e-mail: reglstratlon@. chemicals in Russia Global Oil Markets com, webSite: www. pennwell.com, webSite: .IADC Health Safely and The CIS Countries Conference, New York, SPE Middle East Un- ?ffshorewestafrica.com/ www.topsidesevent. Environment and Train- Annual Roundtable, (212) 686-6808, conventionai Gas Con- Index.html. 24-26. com. Jan. 31-FelJ. 2. ing Conference and Geneva, +44 (0) 207 (212) 686-6628 (fax), ference and Exhibition, . Exhibition, Houston, 067 1818 , +44 (0) e-mal:'1 sa Ies @.prra.com, Abu Dhabi ' (972) 952 -European . Gas Confer- BraZil Gas Congress, (713) 292-1945 ' (713) 2074300552, e-mail, '. . 9393,197219529435 ence, Vienna, +441201 Sao Paulo, +55 II 292-1946 (fax), e-mail, j.sundaralingam@ webSite. www.plra.com. (fax) e-mail: spedal@ 7067 1800, +44 (20) 31645600, e-mail: [email protected], website: theenergyexchange. 14-15. spe.;rg, website: www. 72422673 (fax), e-mail: [email protected], www.iadc.org. 7-8, co.uk, website: www. spe.org.23-25. wra@theenergyex- website: www.brazilgas­ wraconferences.com. PIRA Coal and change.co.uk, website: congress.com/event. Carbon Management NOll. 29-Dec. 2. EmiSSions Markets API Exploration and www.theenergyex- Jan. 31-FelJ.2. Technology Conference, Conference, New York, Production Winter change.co.uk.24-27. Orlando, (972) 952­ (2121686-6808, Standards Meeting, Fort 9393, (972) 952-9435 PJ:H_MB~VJLU (212) 686-6628 (fax), Worth, Texas, (202) API/AGA Joinf Commit- f~~R~~_~'l.~Q12.,_~ (fax), e-mail registra- DEA(e) Technical Oil e-mail: [email protected], 682-8195, e-mail: reg- tee on Pipeline Welding [email protected], & Gas Conference website: www.pira.com. istrar@apLorg, website: Practices, Fort Worth, Global Pipeline Inspec- website: www.carbon­ on Downhole drilling 14-15. www.api.org. 23-27. Texas, (202) 682-8195, lion and I'ntegrity Fo- mgmLorg.7-9. e-mail: registrar@api. rum, Amsterdam, +44

12 Oil & Gas Journal I Nov. 21, 2011 ------2011-2012 EVENT CALENDAR

• International downstreamtech nology. Calif, (214) 969-2700, International Pipeline Offshore Pipeline NACE International Petroleum Technology com/event. . 19-22. e-mail: [email protected], Coating Conference, Technology Conference, Corrosion Conference Conference, Bangkok, website: www.plca.orgl Vienna, +44 (0) 117 Amsterdam, +44 (0)20 & Expo, Salt Lake City, +603 2288 1233, +60 • Annual Production convention. 21·25. 9249442, +44 (0) 70175518, e-mail, (281) 228-6200, (281) 322821220Ifax), Optimizalion Middle 1179892128 (lax), energycuslserv@ 228-6300 (lax), e-mail, e-mail: [email protected], East Summit, Fahaheel, SPE European Artificial e-mail: info@amiplas­ informa.com, website: [email protected], website, www.iptcnet. +971 4364 2975, Lift Forum, Aberdeen, tics .com, websi te: www.ibcenergy.com/ website: www.events. arg.7-9. e-mail: enquiry@iqpc. +44 20 7299 3300, www.2amiplastics.com/ FKA22440GJ. 6-7. nace.org. 11-15. ae, website: www.pro­ +44 20 7299 3309 events. 27-29. (fax), e-mail: spelon@ Middle East Technology ductionoptimizationme. APPEX Expo, London, Unconventional Gas com/event. 19~22. spe.org, website: www. IIShutdowns and +44 (0) 207 434 1399. Forum (METECH)­ Forum, Barcelona, +44 spe.org/events. 22~23. Turnarounds Forum, +44 (0) 207 434 1386 Oubai, +603 9058 101 20 7202 7727, e­ Aberdeen, +971 4364 (fax), website: www.ap­ 2211, +6039057 3811 • Africa Pipeline Sum­ mail: sarah.brzezicki@ (fax), e-mail: Enquiries@ mit, Johannesburg, NAPE, Expo, Hous­ 2975, e-mail: enquiry@ pexlondon.com.6-8. wtgevents .com, web­ Europetro.com, website: +971 43642975, ton, (202) 857-4722, iqpc.ae, website: www. site: www.unconven~ www.europetro.com. e~mail: enquiry@iqpc. 12021 857-4799 Ifax), oilandgasiq.com/events. API Conference & Exhi­ tionatgasforum.com. 14-15. ae, website: www. website: www.ipaa.orgl 27-29. bition, Singapore, (202) oilandgasiq.com/events. meetings. 22-24. 682-8195, e-mail, reg­ 13-14. Arctic Region Oil & Gas SPE International Sym~ 20-21. istrar@apLorg, website: Australasian Oil & Gas Conference, Stavan~ European Fuels Confer­ posium and Exhibition www.api.org. 6-8. Exhibition & Confer­ g,,,, +44 101 207596 ence, Paris, +44 (0) on Formation Damage North Africa Technical () ence (AOGI, Perth, 5173, e-mail: oilgas@ Control, Lafayette, Conference and Exhibi~ Subsea Tieback Forum 207 067 1800, +44 tion, Cairo, (972) 952­ +61 39261 4500, +61 ite-exhibitions .com, & Exhibition, Galveston, (0) 207 430 9513 Ifaxl, (972) 952-9393, (972) website: www.ar-oilgas. 9393, (972) 952 9435 39261 4545 Ifax), Texas, (713) 963-6256, e-mail: e.hulban@ 9529435 (fax), e­ e-mail: aog@divexhibi­ com. 28-29. Ifax), e-mail, spedal@ (7\3) 963 62t2 (fax), theenergyexcha nge. mail: [email protected], tion.com.au. website: spe.org, website: www. e-mail: sneighbors@ co.uk, website www. website: www.spe.org. www.aogexpo.com.a u. NPRA Security Confer­ spe.org. 20-22. pennwell.com, website: wra .conferences.com. 15-17. 22-24. ence & Exhibition, www.subseatiebackfo­ Houston, (202) 457­ 13-16. International rum.com. 6-8. MTB Oil & Gas Confer­ GPA Europe Technical 0480, (202) 457-0486 Nitrogen+Syngas ence, Dubai, 01276 Meeting, Antwerp, +44 (fax), e-mail: info@npra. IADC Dual Gradient Conference & Exhibi­ IAOC/SPE Drilling Con­ 682898, 0127663736 101 t252 625542, web­ org, website: www.npra. Drilling Seminar, Milan, tion, Alhens, +44 (0) ference and Exhibition, (fax), e-mail: info@ site: www.gpaeurope. org.28-29. (713) 292-1945, (713) 207903 2444, +44 San Oiego, (713) 292­ coplandevents.com, com/events. 22~25. 292-1946 Ifaxl, e-mail, website: www.cop- (01 20 7903 2432 (faxl, t945, (713) 292-1946 info©iadc.org, website: e-mail: conferences@ (fax), e-mail: info@iadc. la ndeven ts.C omle ve nt. Pro~ www.iadc.o rg/confer ~ b't Deepwater Technol- International Gas org, website: www.iadc. php?id=21. 15-18. crugroup.com, we Sl e: ogy Asia Conference, ences. 19. www.crugroup.com. cessing Symposium, org/conferences.6-8. 20-23. Jakarta, 6562223422, Doha, +9744403 Russia & CIS Executive e~mail; za~an@safan. 4373, +9744403 SPE UK Oil & Gas Annual Petcoke Confer~ Summit Downstream Oil com, webSite: www. 4371 (fax), e~mail: Environmental Semi­ & Gas, Dubal, Dubal, Nigeria 011 & Gas Stra~ safan.com/conferences/ . ence, Olando, Fla., nar, London, 07736 +60390582211 +603 teglc Conference and dwta12/dwlacallf- aaroussl~qu.edu. (832) 35t-7828, (8321 90573811 Ifax), e-mail, Exhibition, Abu)a, 44 20 pI2htm.23-24. qa, webSite, www. 351-7887 (tax), e-mail, 070066, e-mail. 79780000 e-mail' en- gi3sprocesslngcenter. 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Oil & GasJourna/j Nov. 21, 2011 13 tfO>QRNAIJf~fEAK!H~J

TV ignores energy news

As an old newspaper reporter, 1 acknowledge my line. You can decide who's got their act together." prejudice against television news with its "if it After throwing money at now-bankrupt alter­ bleeds, it leads" mentality. native energy companies in pretense of reducing TV is great [or showing floods, fires, and ter­ US dependence on unfriendly foreign oil suppli­ rorist attacks. I once saw a TV cameraman at the ers, the US government apparently torpedoed a , site of an auto accident give the wheel of an over­ private project that would increase oil supplies0· turned car a spin by hand and then film it to im­ from the biggest, friendliest source outside our part a sense of immediacy to his coverage of the own borders. wreck. But without lurid bits of film, TV news is At KBC Energy Economics, a division of KBC terrible at reporting subjects such as economics, Advanced Technologies PLC, analysts said, "The and it has reduced debate of complicated political US move to put off a decision on TransCanada SAM FLETCHER Senior Writer issues to simple sound-bites. Corp.'s proposed $7 billion Keystone XL pipeline I long ago gave up watching TV news. Bm now for 18 months is a significant blow for Ottawa, that 1 work from home, I often hear the news re­ which had strongly backed the project, and its fu­ ports and talk shows less-picky family members ture is now uncertain. Canada curremly exports are watching in the next room as I'm filing reports about 2 million bid of oil, almost all of it to the US. on the energy market. And what sticks out like a The Keystone project is one of two that oil sands sore thumb is the lack of US TV coverage of the producers have been counting on to deliver oil economic crisis that is shaking Europe. European from Alberta's oil sands to markets other than the economies teeter, governments fall, all with major oversupplied US Mid·west." lessons for and poten tial damage to ou r own gov­ KBC analysts reponed, ''At this stage, it is un­ ernment and economy. Yet US residents who rely certain who the main beneficiary of the US de­ on TV for news hear practically nothing about it. cision to delay the project will be, but there is certainly the possibility that Ottawa will focus its KeyslDne XL delayed efforts on marketing its oil in Asia, denying yet(~) Even a major backyard event such as the adminis­ another source of supply to Europe and the US." tration's recent decision to postpone past next year's Raymond James analysts said, "Given that presidemial election any action on the Keystone Xl TransCanada has supply contracts for volume pipelLne that would carry crude from Albena to commitments due to expire in 2012 and 2013, the Texas got little mention on TV or even in general delay could mean the end of XL." print media in this country. They also pointed out, "There are several proj­ Analysts in the Houston office of Raymond ects under way that would undercut Xl, includ­ James &: Associates Inc. described it best: "It is ing Enbridge Inc.'s Northern Gateway project and often said that America acts while Europe dithers. the proposed Wrangler pipeline-a possible ]V Recent events are proving the oppOSite," they said. between Enbridge and Enterprise Products Part­ "After the leaders of Germany and France decided ners IF. Further, with the recent completion of the that Greece needs a new government, i.t took less Bakken Oil Express and several other rail projects than a week.. '. By contrast, the White House is under way, the delay could be a boon for the North pUShing out its decision on the Keystone Xl pipe­ American railroad industry. In short, we expect line until after the 2012 election. To recap: one more Canadian crude to move east and the Cush­ week to remove the elected leader of a G-7 coun­ ing, Okla., glut, which is driving the Brent-West try, and several years to make a decision on a pipe­ Texas Intermediate disconnect, to persist." rim)

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Follow us on: (Ji~m.v-..rww.offshoreoilevents.com l~JlJlIlRlAE1 Big profits, big work

Anyone bothered by scale and wanting to be taken sidies. In a Nov. 2 press release, he called them seriously should avoid talking about energy. It's a "super subsidies." big subject, an imporrant subject, a subject that The tax changes come from the budget Presi­ raises big questions about the future. It's also a dent Barack Obama has proposed in each of his subject encompassing enormous amounts of mon­ three years in office but hasn't been able to push ey-capital invested, costs incurred, profits earned, through Congress. Of the six, only percentage losses suffered. The money relates to need. Seven depletion can be considered a subsidy, and then billion people in an industrializing world need lots only to the extent depletion charges exceed a of energy. property's cost basis. The five companies whose This won't change. The numbers won't shrink. taxes Menendez hopes to raise don't fit that condiO tion. They, like all integrated oil and gas compa­ Investment needs nies, haven't been able to use percentage depletion The International Energy Agency recently pro­ since 1975. jected 30% growth in global demand for energy in To call the other tax measures subsidies strains the next 25 years. Other projections put demand credibility. Where's the subsidy in charging im­ growth over that period nearer to 50%. lEA says mediately to expense costs incurred during the meeting the need it sees requires investment of $38 drilling and stimulation of wells for materials and (rUlian. services that leave behind nothing of salvageable If that much investment is to occur, if energy value? Where's the subsidy in a deduction available demand is to be mel, people and instimtions risk­ at a greater rate to companies in other industries? ing the capital must be able to expect competitive Where's the subsidy in a tax credit designed to rates of return. They must have the chance to earn prevent double taxation of profits earned abroad? profits, sometimes very large profits. Any imposed limit on expectations for energy profits limits hope Alarming failure for meeting energy demand at predicted levels. In his press release, Menendez combined dema­ US Sen. Robert Menendez (D-NJ) proposes goguery over "subsidies" with his tilting at the prof­ such a limiL it windmill, relating the $21 billion he claims his In support of discriminatory taxat.ion of the tax measure would generate over 10 years to the five largest oil and gas companies active in the US, $100.5 billion the five targeted companies eamedO Menendez points to recent profits. Those profits together in the first three quarrers this year. "'We are big. The companies are big. They do big work. should not be spending 21 billion taxpayer dollars Menendez was lead sponsor of the Close Big to unfairly reward their tremendous success," he Oil Tax Loophole Act, the latest version of which said. The statement might have meant somerhing died May 17 after failing to win enough votes to if the companies' effective income tax rate fell be­ avoid a filibuster. The senator has revived his pop­ low industry averages. It doesn't. According to the ulist antics by calling on the secretive Joint Select American Petroleum Institute, the oil and gas in­ Committee on Deficit Reduction to do what open dustry's effect tax rate is 41.1 %; that of other indus­ democracy would noL That group, better known trial companies is 26.5%. as "the super committee," faces a Nov. 23 deadline Raising taxes preferentially on big oil and gas for a plan to trim the federal budget deficit by $1.2 companies because they earn big profits would trillion. Failure would trigger automatic spending be unfair. The proposal to do so should alarm all cuts. companies in all industries. It also reveals appall­ Menendez wants to deny the five companies ing failure to appreciate how much work humanity whose profits he so regrets access to six tax mea­ needs big companies to perform on energy. Failure sures he persistently mischaracterizes as sub­ on that scale by elected officials should alarm all Americans. Im!I

16 Oi1& Gas}ouma/l Nov. 21, 2011 Owned & Produced by Presented by Go to www.OffshoreOiIEvents.com to si~Jn up now! ~. GENERAL INTEREST I Senate committee ponders risks, benefits of LNG exports

Nick Snow Washington Editor

Abundant shale gas resources in tbe US tbat have turned tbe outside tbe chemical industry, and more than $132 billion natural gas supply outlook from a shortage to a surplus also in US economic output-all associated with the shale gas are stimulating proposals to export-instead of import-­ revolution," Slaughter said. LNG. Policies to encourage such projects should be carefully Global markets likely will determine how many US LNGO considered, witnesses told the US Senate Energy and Natu­ export projects actually go ahead, one federal official indi­ ral Resources Committee on Nov. 8. cated. "As we're now considering applications with about 6.6 Higher prices resulting from possibly tighter supplies are bcfd of total exporting capacity, the department decided that the most obvious risk, they suggested. Five LNG export ap­ more detailed examination of a broad range of impacts was plications have been filed with the US Department of En­ warranted," said Christopher A. Smith, deputy assistant US ergy, said Jim Collins, underground utilities director for the energy secretary for oil and gas in DOE's fossil energy office. city government in Hamilton, Ohio, who testified on the Criteria include US gas needs; adequacy of supplies; US American Public Gas Association's behalf. energy security; impacts on the US economy, consumers, "Just the volumes enumerated in these few applications and industries; job creation, the US balance of trade; inter­ would make the United States the second-largest exporter national considerations; environmental considerations; and of LNG in the world," he noted. "These five applications, if consistency with DOE's long-standing policy of promoting granted by DOE, would permit the export ofjust under 3 tcf market competition through free negotiation of trade ar­ of natural gas, which represents over 10% of our consump­ rangements, he said in his written testimony. tion bn an annual basis. This level of export would have seri­ A second federal official-Jeff C. Wright, energy projects 0us adverse implications not only for domestic consumers.. office director at the US Federal Energy Regulatory Commis­ but also for US national security." sion-noted that switching an existing terminal from im­ One committee member, Christopher A. Coons CD-Del.), ports to exports primarily would involve installing refriger­ asked if it would be a better long-term strategy to expon ant pumps. Building one from scratch would take 3-4 years, goods manufactured from plants fueled with US gas instead with storage tank construction the most imponant pan of0 of LNG. Another, John Hoeven CR-ND), said producers in his the process, he told the committee. . state would prefer selling gas associated with oil recovered Committee member Ronald L. Wyden CD-Ore.) said from the Bakken fomation to flaring it, as many do now. FERC approved an application to construct an LNG import Abundant US supplies not only could provide a reliable terminal in Oregon over state and local protests, adding that source of less-polluting fuel to generate electricity, but also the project's sponsor now wants to configure it for exports. might help revive the country's chemical manufacturing, ob­ Wright said the new application would be subject to rigor­ served Andrew Slaughter, upstream Americas business en­ ous conditions and, if the project is authorized, mitigation vironment advisor, for Shell Exploration &. Production Co. measures would be identified and implemented before con­ in Houston. Shell recently announced that it is considering struction could begin. building a gas-to-chemicals plant in the Marcellus shale re­ gion, and seven other companies also have reported plans Possible directions for similar facilities, he said. us markets will continue to improve as more storage is con­ structed to reduce price volatility, Wright continued. More Shale-associated jobs natural gas vehicles also could be introduced, particularly "A recent study by the American Chemistry Council noted in fleets, while gas demand to generate electricity continues the potential for 17,000 new knowledge-intensive, high-pay­ to grow, Wright said. "In terms of getting infrastructure in Lng jobs in the US chemical industry, another 400,000 jobs place to move gas away from producing fields to markets,

18 Oil & Gas Journal I Nov. 21 J 2011 FERC has tried to move expeditiously," he sald. arbitrage opportunities. Commercial interest in markets will vVyden also raised the issue of impacts on price in the determine where US gas is consumed, he suggested. US. He noted that spot gas prices are significantly higher DOE also is working with other countries to export tech­ in Asia and asked if US CUSlOmers would need to compete nology as well as LNG, but is not considering natural gas liq­ with overseas consumers for gas produced domestically. uid exports, Smith said. "We're looking at ways to increase Smith said DOE already considers price consequences as it opportunities for American companies to increase LNG sup­ I reviews each LNG expon application, adding that US gas plies worldwide," he told the committee. "The department prices are volatile but primarily driven by Nonh American also values the sanctity of contracts. As we do our work, demand. Gas prices also are significantly less fungible than we'll make certain they stand up to Natural Gas Act obliga­ crude oil's since there are about 11,000-12,000 crude tank­ tions. If the situation changes, DOE has the authority to re­ ers in the global fleet, compared to a fleet "somewhere in the visit agreements for national security reasons." hundreds" for LNG tankers, he added. "Certainly, outside of North America, shale gas forma­ Another witness-Kenneth B. Medlock Ill, deputy direc­ tions exist," said Medlock. "Whether technologies can be tor of the energy forum at Rice University's Baker Institute for transferred abroad is not as great a factor as access for a Public Policy in Houston, said direct comparisons of US and wide range of operators. Governments control more of the Asian gas prices don't always consider that overseas sales are resources abroad. Smaller producers in the US were able to not in dollars, and that the US currency's direction creates develop resources here that would not always be available overseas." l!I!!I

State Department delays Keystone XL oil sands pipeline decision until 2013

In a move that will delay a decision on the Keystone XL pipe­ State's decision line until at least the first quarter of 2013, the US Depart­ In its announcement about the delay, the State Department said ment of State will study an alternate route for the important that during public hearings it heard consistent expreSSions of project to connect the oil sancls region of Alberta with high­ concem about the proposed tmnsit of Nebraska's SfJnd Hills conversion refineries on the Texas Gulf Coast. arefJ, which includes wetlands and shallow aquifers. In August, the department accepted a final environ­ The department noted that the Nebraska legislature has mental impact statement CEIS) saying the project posed no scheduled a special session to study the project. major environmental threat. But environmental groups op­ "State law primarily governs routes for interstate petro­ posing the project have increased pressure on the Obama leum pipelines," it said. "However, Nebmska currently has administration, which faces an election in November 2012. no such law or regulatory framework authorizing slate or lo­ The possibility of a delay increased on Nov. 9 when the cal authorities to determine where a pipeline goes. n State Department inspector general said it would inves­ "Taken together with the national concern about the , tigate the department's handling of the EIS COG] Online, pipeline's route, the department has determined it is neces­ Nov. 9, 2011). sary to examine in-depth alternative routes that would avoid TransCanada, which made its proposal to build the the Sand Hills in Nebraska in order to move forward with a 1,661-mile, 36-in. expansion of the existing Keystone sys­ national interest determination for the presidential permit," tem in 2008, said it remained confident about ultimate ap­ which is necessary because the pipeline would cross an in­ proval but warned of harm from the delay. ternational border. "This project is too important to the US economy, the "It is reasonable to expect that this process including a Canadian economy, and the national interest of the United public comment period on a supplement to the final EIS States for it not to proceed," said Russ Girling, TransCanada consistent with NEPA (National Environmental Protec­ president and chief executive officer. tion Act) could be completed as early as the first quarter The new delay, he said, could hurt shippers and US refin­ of 2013." ers. The department said it then would consult with eight "Supplies of heavy cmde from Venezuela and Mexico to US other agencies to decide "whether the proposed pipeline was refineries will soon end," he said. "If Keystone XL is continu­ in the national interest, considering all of the relevant issues ally delayed, these refiners may have to look for other ways together. Among the relevant issues that would be consid­ of getting the oil they need. Oil sands producer face the same ered are environmental concerns (including climate change), dilemma-how to get their crude oU to the Gulf Coast." energy security, economic impacts, and foreign policy."

Oil & Gas Journal I Nov. 21, 2011 19 GENERAL INTEREST ------­

IHS CERA: State Department's Keystone XL delay creates new uncertainties

Nick Snow Washington Editor Enbridge's plans I In its Nov. 9 report of financial results for the third quarter The US Department of State's Nov. 10 decision to delay a and 9 months ended Sept. 30, Enbridge said expansion of final recommendation on the proposed Keystone XL crude Enbridge Energy Partners LP's Line 5 and reversal of the oil pipeline's cross-border permit application so alternative segment of Enbridge's Line 9 from Sarnia to Westover, an­ routes can be considered will create new uncertainties for nounced in early October, would provide increased access Canadian heavy oil producers as well as US refiners, an IHS to US Upper Midwest and Ontario refineries Canada for light CERA specialist said. crude produced in western Canada and the US. "In the next few years, existing US Midwestern markets It said Wrangler, which it announced in late September for Canadian oil sands will reach the saturation point," Jackie as a proposed joint venture with Enterprise Product Part­ Forrest, oil sands dialogue senior director at IHS CERA, said ners, wouid transport crude from the Cushing, Okla., hub to on Nov. 11. "By 2015, without new pipeline solutions to Texas Gulf Coast refineries. Enbridge is also developing the bring oil sands barrels to markets outside the Midwest (such proposed Flanagan South Project to add capacity to Cushing as the US Gulf Coast), oil sands production growth could from its Flanagan, III., terminal, Enbridge said. ~ stall for iack of new demand." "Potentially, all iegs of this project could be in service by The State Department said the delay effectively post­ 2014," Forrest said. "Even in this scenario, oil sands produc­ pones Into early 2013 any approval or rejection of Trans­ ers would face steeper price discounts for their crudes, a full Canada Corp.'s application, which President Barack Obama year longer than a scenario where the decision on Keystone previously said he would handle personally. Forrest said it XL is not being postponed." would take about 2 years to build the. $7 billion project and Pipeline capacity also is needed to move light crude put it into service if it's approved. produced from North Dakota's Bakken formation and other "However, in the 2 years leading up to the in-service date US Midcontinent tight oil formations, she continued. "Based of the pipeline, oil sands producers would continue to face on our view of growth in Canadian oil sands and tight oil steeper and steeper price discounts for their crudes, as oil production, over the next 5 years North America will need sands production growth will outstrip new demand in exist­ both the Keystone XL and the Enbridge projects in order to ing markets," she said. create enough takeaway capacity to prevent bottlenecks," Keystone X~s permit delay increases the possibility that Forrest said. other projects to transport oil recovered from Alberta's oil sands "If no pipeline solutions occur in the next few years, we to US Gulf Coast refiners will move forward, Forrest continued. are likely to see a very significant build out of rail capac­ The most prominent is Enbridge Inc.'s proposed Wrangler ity, which has higher transportation cost than pipelines, to pipeline which, combined with the Calgary company's Flanagan bring Canadian oil sands and Midcontinent tight oil to new South project and existing Alberta Clipper pipeline, could serve markets," she added. ______a function similar to Keystone X~s, she said. . ~Ic..)

Industry reaction dent's camp in November 2012." us oil industry and general business trade associations National Petrochemical & Refiners Association Pres. lashed out at the decision. Charles 1. Drevna said the decision "will strike a blow American Petroleum Institute Pres. and Chief Executive against American workers who need jobs, against American Officer Jack Gerard complained about a political dimension consumers who need energy, and against American econom­ of the decision. ic and national security." "Whether it will help the president retain his job is unclear, Drevna said, "Turning our back on our good friend and but it will cost thousands of shovel-ready opportunities for ally Canada will exponentially increase the odds that Ca­ American workers" he said. "There is no real issue about -the nadian oil is shipped to China and other countries overseas environment that requires further investigation, as the presi­ and will harm American fuel manufacturers and their em­ dent's own State Department has recently concluded after ex­ ployees." tensive.project reviews that go back more than 3 years. US Chamber of Commerce Pres. and Chief Executive Of­ "This is about politics and keeping a radical constituency ficer Thomas]. Donohue said, "Politics has trumped jobs in opposed to any and all oil and gas development in [he presi- this decision, and we can only wonder if the administration's

20 Oil & Gas Journal I Nov. 21, 2011 ------GENERAL INTEREST

delay wLll cause Canada to turn their pipeline west and ship Executive Officer Jay Timmons, citing what he estimated to their energy and American jobs elsewhere." be 118,000 JObs at stake, called on the administration to re­ National Association of Manufacturers Pres. and Chief verse a decision he described as "outrageous." IlIi!I I Nebraska pipeline siting bill would not apply to Keystone XL

Nick Snow atop the Ogallala AqUifer, the state's primary underground Washington Editor drinking water source. Gov. Dave Heineman (R) called the legislature into special session to consider pipeline siting is­ Nebraska's unicameral legislature gave first-round approval sues after environmental organizations and citizens along to a bill that would establish authority for the state to regu­ the proposed route raised concerns. late oil pipeline routes within its borders, but the measure would not apply to TransCanada Corp.'s proposed Keystone 'Positive conversations' (1XL crude oil pipeline project if it becomes law. Senators vot­ Alex Pourbaix, president of TransCanada's oil and pipelines . ed 44-0 to schedule LB-l for select rile debate. division, announced on Nov. 14 that the Calgary transmis­ TransCanada agreed a day earlier to work with Nebraska's sion company would work with the state to find a different state government on a revised route for the Keystone project, route, and that Nebraskans would play an important role. and the Senate's Natural Resources Committee unanimously "1 am pleased to tell you that the positive conversations we approved an amendment on Nov. 15 specifying that the new have had with Nebraska leaders have resulted in legislation authority would not apply to any pipeline project that had that respects the concerns of Nebraskans and supports the applied to the US Depanment of State for a cross-border per­ development of the Keystone XL pipeline," he said follOWing mit before the bill's effective date. meetings in Lincoln. State Sen. Annette Dubas, who sponsored the bill, said In Nebraska's senate, meanwhUe, speaker Mike Flood it limits the state's authority to siting because states do not told lawmakers that TransCanada had volunteered to move have jurisdiction over safety issues. The measure would the project's route out of the Sandhills, and that DOS con­ give Nebraska authority to impose conditions in the public firmed that the stale could conduct a supplemental environ­ interest, based on a proposed pipeline's impact on natural mental impacl study of any proposed route. The amendment resources in the state and evidence of methods to mitigate before the Natural Resources on Nov. 15 gave Nebraska's those impacts, she said. EVldence of a carrier's efforts to en­ Department of Environmental Quality amhority to conduct sure the welfare of residents along a proposed route and the such a state, which Flood said would take about 6 months views of local governments also would be included in the to complete. determination, Dubas said. During Nov. 15 debate on LB-l, Sen. Ken Haar said the n The bill would make Nebraska's public service commis­ bilt would give Nebraskans a voice in determine routes of fu­ , sion responsible for evaluating and approving proposed ture pipelines after feeling excluded from discussions about pipeline routes, and hotding public hearings. Applicants Keystone XLs path. The measure would require the PSC to would pay for hearings and state investigations and would decide on a route application within 8 months of receiving not receive eminent domain rights until the project was ap­ it, although an extension of up to 18 months would be per­ proved. They would be required to include a statement of mitted. No extension would be allowed more than 8 months reasons for selecting a proposed route, evidence that oth­ beyond a presidential permit being issued for a pipeline, er routes were considered, workforce estimates during the however. project's construction and operation, and a list of locations Sen. Tom Carlson said the bill's application approval along the proposed route in proximity to unusually sensitive time frame was too long and that too many agencies would groundwater areas. need to be involved. Sen. Dennis Hastings said that it would DOS announced on Nov. 10 that it would defer a deci­ require unnecessary information unrelated to siting such as sion on TransCanada's permit application for the Keystone the number of workers which would be involved. XL pipeline project to provide more time to consider alterna­ Dubas said that senators' concerns would be addressed tives to its proposed route across Nebraska's Sandhills area before setect file debate begins. "By no means is this the end product," she said. I1li!I

Oil &- Gas Journal \ Nov. 21, 2011 21 WATCHING GOVERNMENT Bromwich pledges N1CK careful, 11leasured enforcement for I n W contractors I'I l.'\'. WasSN0hington Editor I BlDg at www,ogJ,rom Nick Snow Washington Editor

Interim US Bureau of Safety and En­ State regulators' reSOUII"CeS vironmental Enforcement Director Mi­ chael R. BromwLch said enforcement Some federal lawmakers still want the Producers seeking gas from deeper will be careful and measured as he de­ US Environmental Protection Agency shales must take precautions or their fended extending the US Department to take a bigger role in regulating sur­ well bores could be penetrated as they of the Interior's offshore oil and gas face activities connected with onshore drill through shallower, iess-productive regulatory reach to drilling contractors oil and gas exploration and develop­ formations, he explained, and service and supply companies. U ment Officials from two states with "We did not take this step lightly, significant energy resource potential In Ohio's favor nor did we take it before futty satisfy­ recently said their agencies have the Biddison noted that while Ohio's shale ing ourselves that we had the legal au­ authority and experience to continue gas production isn't as advanced as thority to do so," he said in a keynote doing the job, Pennsylvania's, it has more sophis­ address at the International Associa­ Scott Perry, acting deputy secretary ticated production faciiities, better tion of Drilling Contractors' 2011 an­ in the oil and gas management office gathering systems, adequate compres­ nual meeting in Austin. "But once we in Pennsylvania's Department of Envi­ sion and gas processing capacity, and concluded that we did, there was no ronmental Protection, and j, Michael several gas liquids fractionation plants. good reason not to do so." Biddison, deputy director of Ohio's It also has about 181 underground Bromwich said the fact that the US Department of Natural Resources, injection wells permitted and operat­ Minerals Management Service, BSEE's separately noted that each of their ing, he added. predecessor agency, unilaterally de­ states was prominent in early US oil This will be significant not only cided to exempt nonoperators "was a and gas industry history, in deveioping its relatively small part misguided act of administrative grace Consequently, each had regulated of the Marcellus shale, but also in rather than a result dictated by law or oil and gas production before technol­ tapping the Point Pleasant portion of good polley The fact that we had fol­ ogy made it possible to tap the Marcel­ the deeper Utica shale farther west, lowed a bad practice was not a suffi­ lus and other US shale formations, Biddison said. cient reason to continue it." they said during a Nov, 8 forum at the His department's challenge is He said he considered it inappro-U US Energy Association gearing up for more oil and gas de­ priate for BSEE to limit its regulatory Pennsylvania is one of the few velopment as Ohio confronts budget reach to offshore well operators when states that make producers get a per­ problems, When John R, Kasich (R) it had the authority to enforce rules mit to control erosion and sediment, became governor in January, he faced for all entities involved in oil and gas and its clean streams law is more strin­ an $8 billion deficit and proposed re­ exploration and production on the US gent than the federal Clean Water Act, ducing state payrolls to help eliminate Outer Conttnental Shelf, especiatty a[­ Perry said, As production grew from it. ter the 2010 Macondo deepwater wett the Marcellus shaie, which crosses the Consequently, Bieldison said, the accident and crude oil spilL state, disposal of produced and waste agency he leads doesn't have as many "I am convinced that we can fully water became a serious problem until inspeclors as he would like, but he preserve the principle of holding op­ the state specified that drinking water still has some time with only five shale erators fully responsible, and in most standards had to be met, he said. gas wells in production. "I can't say cases, solely responsible, without sac­ The state has a strong entorce­ we'd be prepared if 100 rigs moved in rificing the ability to pursue regulatory ment regime, he maintained, Three immediately," he continued. "But most actions against contractors for serious contaminated drinking water inci~ents producers I speak with say they're in violations," Bromwich maintained. occurred when gas well operators the evaluation stage and not ready to Regulators of other US industries didn't follow regulations, Perry said. drill." liI!ll and of other businesses operatLng 0[[­

22 Oil & Cas Journal I Nov. 21,2011 ------GENERAL INTEREST

shore have found it bizarre that DOl historically limited its three quarters of the estimated oil and gas resources available offshore regulatory reach to well operators, he told his IADC off US coasts. The Obama administration based this estimate audience. "As I have said many times, we will be careful and on data collected in the 19705 without giving the industry measured in applying our regulatory authority to contrac­ permission or an opportunity to do 3D seismic mapping in tors, but we will not hesitate when we determine it is appro­ OCS areas which were closed for 25 years, Milito said. priate and necessary," he said. I BroIllwich said it is also time to make the process by 'Substantially more' which BSEE imposes civil penalties mOTe rational and ef­ "We won't know what's there until we're actually out there ficient. "Under our current process, it can take up to a year and doing the tests and drilling," he said. "But our experi­ to determine whether civil penalties should be imposed after ence has shown us, particularly in the Gulf of Mexico, that the issuance of incidents of noncompliance," he said. "That is what we find once we do is substantially more than what entirely and unacceptably too long, and I have directed my was expected." staff to find a way to significantly reduce that time.'" He urged the administration to reconsider and schedule He also noted that he has repeatedly said that maximum lease sales in the eastern Gulf of Mexico, which is largely fines need to be increased. "I do not believe that

Oil & Cas Journal I Nov. 21, 2011 23 WATCHING THE WORLD Putin did not detail how his coun­ try would collaborate or even whether it planned to attend OPEC's next meet­ ing. Russia has long spoken of coordi­ nating wilh OPEC, often sending high­ I level delegations to attend its meetings as observers. In 2008, Russia sent its most se­ nior delegation in a decade to OPEC's Sept. 9 ministerial meeting in Vien­ na. There, Russian Vice-Premier Igor Iran's nuclear carrot Sechin proposed extensive coopera­ tion between Russia and OPEC to meet The Iranians, long known for advo­ ance against Syria, and trying to use gtohat energy needs. cating the use of the oil weapon, are their nuclear expertise as the bait. At the time, Qatar's Oil Minister now dangling the nuclear carrot in "Help us, and you'li go nuclear." Abdullah bin Hamad At-Attiyah even front of their neighbors in Turkey. That, of course, could be a temp­ expressed the hope of seeing Rus­ It makes you wonder what sort of tation to the Turks, who have nuclear sia one day become a full member 0U donkeys they take the Turks for. ambitions of their own. But the Turks OPEC as it woutd "add value" to the "Iran deveioped a very sophisti­ also know that, on this issue, they organization. cated nuclear science and techno­ have no need to succumb to the But AI-Attiyah atso noted the logical capability, which we are quite temptation of the Iranians. chances were slim of Russia joining ready to share wlth ...neighboring For starters, the Turks are getting OPEC: "So far the Russians support countries and friendly countries in ali the help they need from a variety cooperatton, but they don't lalk about the region," said Mohammad Javad of quarters. That emerged in October full membership," he said COGj On­ Larijani. when Japan asked Turkey to con­ tine, Oct. 27, 2008). "Turkey is for years trying to have tinue with talks on a nuclear power Putin's remarks coincided with a a nuclear power plant but no country plant deal. report by the International Energy In the West is wiliing to build that for Agency that Saudi Arabia will overtake them," said Larijani, before a vote by Help from Japan Russia as the world's largest producer the United Nations General Assem­ At the same time, Japan made sure of oil producer in about 2015. bly's human rights committee. to confirm with the US its plans to In its Wortd Energy Outlook, the Larijani wears many hats: he is strengthen technical cooperation lEA said that Saudi Arabia would over­ head of Iran's High Council for Hu­ on nuclear power with Turkey. That take Russia as output at new Russian man Rights, adviser to Iran's chief happened during talks among Japan, fields fatls to offset fast decline at ma­ justice, and head of a mathematics Turkey, and the US on the sidelines ture deposits. and physics institute. of a ministerial meeting of the Inter­ Russia passed Saudi Arabia as theU national Energy Agency. top producer of oil when OPEC cut Well connected In fact, Ankara has given two crude Output during the economic cri­ Larijani also is the brother of parlia­ Japanese companies-Toshiba Corp. sis in 2009. ment speaker Ali Larijani, making and Tokyo Electric Power Co.-prior­ But lEA said Russia's produc­ him well connected. His remarks ity rights to negotiate a deal to build a tion will level off at 10.5 million bid were timeiy, too, coming days after nuclear power plant in Turkey. in 2015, and that Saudi Arabia's will the International Atomic Energy Those talks are going ahead with­ match that. By 2035, lEA said, Saudi Agency said Iran is apparently at out any input from the Iranians. And production will hit 14 million bid. work on an atomic bomb. that brings us back to Mohammad "Russian fiscal poticy is a key de­ Larijani's remarks were timed Javad Larijani and his offer to help terminant of when and how quickly to coincide with support for Syria, Turkey along the nuclear track. Russian production will decline. Cur­ Iran's aliy in the region and the target Given Japan's role in Turkey's rent terms limit the incentive to invest of criticism from the US, the EU, nuclear development, along with its when prices rise; our projections as­ the Arab League and-yes-even clear US backing, Larijani's would­ sume sympathetic evolution of taxa­ Turkey, too. be nuclear carrot-in the eyes of tion," lEA said. The Iranians were aiming to woo Ankara's decision-makers-can only Saudi Arabia and Russia have been Turkey away from the growing alii­ iook decidedly wilted. lil1!I competing with each other [or in-

24 Oil & Gas Journal I Nov. 21, 2011 ------GENERAL INTEREST

creased market share in Asia Pacific, largely due to the onset and 90-day report will be forwarded to Chu following a of supplies via Russia's recently launched East Siberia-Pacific public comment period. SEAB planned to review the public Ocean pipeline. comments Nov. 14. Indeed, traders last year expected Saudi Arabia to lower The two reports reflect 6 months of deliberations among the prices of all its crude grades heading to Asia for August a group of industry experts, environmental advocates, aca­ on slow demand from regional refiners as well as the inten­ demics, and former state regulators. I sifying competition from Russia's ESPO crude. "Saudi Arabia is trying to secure demand in the Asia-Pa­ Industry's progress outlined cific region," said another trader, adding, "It is closely watch­ In its second report, the subcommittee noted operating ing ESPO activity (OGJ Online, July 19, 2010)." lill!I companies are considering ways to measure and disclose air emissions from shale gas wells. Discussions are under way regarding speCific information collection, appropriate in­ strumentation, and subsequent analysis and disclosure. Shale gas subcommittee The subcommittee recommended independent technical review of the methodology for measuring air emissions. reviews industry, API said it's interacting with the US Environmental Pro­ tection Agency on efforts to compile a more robust basis n government progress for emissions estimation methods for shale gas as part of a broader national greenhouse gas emissions inventory for the Paula Dittrick UN Framework Convention on Climate Change. Senior Staff Writer The Department of lmerior announced Oct. 31 that it in­ tends to require disclosure of the chemicals within hydraulic The US nalural gas industry is working to ensure shale gas is fracturing fluid used on federal land. 001 agrees with the produced in an environmentally safe manner and is working subcommittee's recommendations that disclosure should in­ to disclose information that can help minimize public op­ clude all chemicals. position toward shale development, an advisory committee DOl also agrees with the subcommittee that chemicals to government said. should be reported on a well-by-well basis on a publicly The Secretary of Energy Advisory Board Subcommittee available and searchable web site that can aggregate infor­ on Shale Gas Production (SEAB) issued its second 90-day mation. report on Nov. 10. It reviewed progress made on 20 recom~ "The Ground Water Protection Council and the Interstate mendations the subcommittee outlined in its Aug. 18 initial Oil & Gas Compact Commission have taken an important report. step in announcing their intent w require disclosure of all The subcommittee said in a Nov. 10 news release that it chemicals by operators who utilize their voluntary chemi­ was "gratified by the actions taken to date," but added that cal disclosure registry, FracFocus,'~ the subcommittee noted. '-the progress to date is less than what the subcommittee API noted that since FracFocus launched its web site in hoped." April, some 50 operators added information about more than n Separately, the American Petroleum Institute reported 5,543 wells. That nearly doubtes the volume of information , "many positive activities undertaken by industry and the that was reponed to the subcommittee lnjuly, API said. state regulatory authorities." API issued its own IO-page up­ "This site does more than just serve as a repository for date regarding how industry has responded to the subcom~ disclosure data," API said. "It also provides a wide array mittee's recommendations. of reference materials from federal, state, and independent John Deutch, subcommittee chairman and an MIT pro­ sources." fessor, called shale gas "one of the biggest energy innova­ Calling FracFocus a platform to address public concerns, tions, if not the biggest, in several decades....But to ensure API sald industry continues to work with the GWPC and the full benefits to the American people, environmental is­ 10GCC to discuss expanding the platform's capabilities and sues need to be addressed now, especially in term of waste develop a more sophisticated site. water, air quality, and community impact." Several states, including Texas, Louisiana, and Montana, The subcommittee said a loss of public confidence could have incorporated the use of FracFocus in recent legislative delay or swp anticipated expansion of shale gas production and regulatory initiatives. expected across the US. Some have forecast the drilling of One subcommittee recommendation advocated the fed­ 100,000 shale gas wells over the next several decades. eral government support research and development efforts Shale gas production already accounts for about 30% of on shale gas. The Office of tvIanagement and Budget is in US gas production. Sec. of Energy Steven Chu convened discussion with the 001, DOE, EPA, and the US Geological SEAB at the direction of President Barack Obama. The sec- Survey about unconventional gas R&D.

Oil & Casloumaf I Nov. 21, 2011 25 GENERAL INTEREST ------­

"As yet, there has been no agreemem with OMB on the wells in Saiwan East field on Block 4 and Farha South field scale and composition of a continuing unconventional gas on Block 3. Production is up, said Tethys Oil AB, which has R&D program," the subcommittee said in its latest report. a 30% interest in the blocks, and rates continue to vary de~ "Failure to provede adequate funding for R&D would be del­ pending on test program deSign and available capacity. eterious and undermine achieving the policy objectives ar­ CC Energy Development Oman branch is operator with I ticulated by the president." 50% interest, while Mitsui E&P Middle East BV has 20%. API said it shares the subcommittee's belief that industry and various levels of government must work together to de­ Poland velop shale gas in sustainable ways. [!mJ Talisman Energy Inc., Calgary, has completed drilling a shale gas exploratory well in the Baltic basin in Poland. EXPLORATION/DEVELOPMENT BRIEFS The Lewino IG-2 well, on the Gdansk W concession, went to 3,600 m and encountered continuous gas shows Kazakhstan over more than 1,000 m in middle and lower Silurian shales, Ordovician, and upper Cambrian, said partner San Leon Tethys Petroleum Ltd. reported a flow of more than 4,300 Energy PLC (OG], Nov. 7,2011, p. 36). Gas shows consist of bid of oil from a Cretaceous sandstone at the AKD06 Doris methane with small percentages of ethane, propane, butane, appraisal well in the North Ustyurt basin in Kazakhstan. and pentane. U The company gauged the well on a f>%4_in. choke at a rate More than 310 m of core were taken in the well to evalu­ of 4,304 bid of 45' gravity oil with 186 psi flowing tub­ ate the rock properties, and an extensive open hole logging ing head pressure from an interval at 2,165-70 m. Flow was program was also performed to further evaluate the poten­ restricted for safety reasons, and daw indicate an absolute tial of the area. Evaluation and interpretation of the core and open flow potential in excess of 6,000 bid. The well is tied logs is expected to take 3-4 months in preparation for con­ into test production facilities. tinued operations ~ater in 2012. Following completion of the well for potential future op­ Malta erations, Talisman will move the rig to the Braniewo conces­ sion to spud the Rogity-I well, to be followed hy a well on Mediterranean Oil & Gas PLC, through subsidiaries, has let the Szczawno concession. Future operations are expected to a contract to Fugro-Geoteam Pty. Ltd. to shoot 1,000 sq km include a long-offset horizontal and multistage frac. of long-offset 3D seismic in Area 4 in the Mediterranean orf The next step, San Leon Energy said, is to evaluate the Malta. Acquisition is expected to take about 30 days. Pro­ geological data in preparation for the next phase: to prove cessing is to start as soon as acquisition is complete, and the viability of commercially producing the huge quantity of results are to be in hand by the end of first-quarter 2012. gas from the Baltic basin. MOG holds blocks 4, 5, 6, and 7 in Area 4 totaling 5,700 sq km bordering Libya. Tunisia Area 4 is covered by various vintages of 2D seismic data and by a 3D survey over the western part of Block 7. Since Cooper Energy Ltd., Perth, expects to have processed dataU 2007, MOG has shot 1,012 sq km of 2D seismic and has re­ available frOlil the high-resolution 3D seismic survey on its processed in time and depth the existing 3D dataset. MOG Nabeul permit in the Gulf of Hammamet off Tnnisia avail­ reinterpreted the entire 2D and 3D package available in the able for interpretation in third-quarter 2012. PSC, confirming four prospects and five leads. CGGVeritas shot 600 sq km of full-fold data on the 3,352 The three most mature prospects are in Block 7, along the sq km permit in September through November. Survey ob­ ramp setting of the Melita-Medina graben, close to the Libya jectives were to mature the Alpha, Gamma, and Updip La Pelagic basin (see map, OG] Feb. 13, 2006, p. 37) Marsa leads in the western part of the permit adjacent to MOG, through its Malta Oil Pty. Ltd. and Phoenicia En­ Elrsa and Oudna oil fields. ergy Ltd. subsidiaries, holds a 90% operated working in tlie The permit lies 80-150 km off Tunisia in 270-1,200 m of Malta PSc. Leni Gas & Oil Investments Ltd. has 10%. water and borders Italian waters. The main exploration play is Miocene Birsa fonrlation sandstones. The 3D seismic is ex­ Oman pected to enable the location of a well to be drilled by 2013.

A group led by CC Energy Development SAL averaged 6,989 Alberta bid of oil in October from the early production system on Blocks 3 and 4 onshore Oman. Strategic Oil & Gas Ltd., Calgary, has completed its third Long-term production tests have been carried out on successful Keg River well in the North Marlowe oil pool at

26 Oil & Gas Journal I Nov. 21, 2011 ------GENERAL INTEREST

(From the Subscribers Onlyalea of www.ogj.com) Steen River, northwest Alberta, and Yoho anticipates it will apply to li­ plans to driH three more vertical Keg cense a 25 MMefd compressor stJ.lion River wells in first-quaner 2012. at Nig, construction of which will de­ Keystone XL delay The 100115-22-122-21w5m vertical pend on upcoming drilling resuhs. serves needs only well stabilized at 225-250 bid of clean oil with associated gas after 11 days on Louisiana of obstructionists production. It penetrated a dolomite by Bob Tippee, Editor zone with over 12 m or net oil pay and Leasing spurred hy the oil and gas po­ is structurally the highest well in the tential of the emerging Jurassic Lower By definition, only one item in a list of bad pool, on the northeastern dm of the Smackover Brown Dense limestone attributes can be the worst. Much about a setback to the proposed Keystone XL Steen River astrobleme. The well tested has spread to East and West Carroll pipeline is bad. So what's the worst? close to virgin reservoir pressure. parishes, together with St. Tammany It's bad that Department of State The $1.7 miHion well confirms the the state's only parishes without hy­ minions said neither the White House nor lateral extent of the oil pool and the drocarbon production. politics influenced a decision to study new routes for the pipeline until no sooner than porosity mapping derived from the 3D Mineral rights to more than 6,000 the first quarter of 2013. seismic. Strategic has a 100% work­ acres of state land were leased in Oc­ No one believes this. Everyone knows ing interest in the North Marlowe Keg tober in south-central East .Carroll President Barack Obama faces a dilemma. River pool. Parish, among the nation's poorest, A pipeline economically important to the n country needs his administration's ap­ netting more than $1.8 miHlon, said proval. But he needs support from pipeline British Columbia Louisiana Department of Natural Re­ opponents in his bid for reelection next sources Sec. Scott Angelle. Competi­ year. Yoho Resources Corp. and Progress tion pushed lease prices above $3001 So it's bad that the administration put Energy Resources Corp., both of Cal­ acre, uncommon in Louisiana outside politics before national needs, such as for investment, jobs, energy secudty, and solid gary, have gauged gas-condensate in the Haynesville shale play, Angelle relations with a friendly neighbor. Devonian Upper Montney tight sands noted. tt's also bad that the deiay forces at horizontal wells at Nig northwest of Private interests have nominated producers in the oil sands region of Alberta Dawson Creek, British Columbia. 3,000-plus acres of state water bottoms to consider alternative markets for bitumen and synthetic crude oil. The d-97-H/94-H-4 well, in the centering on the southwest quarter of It's bad, too, that refineries on the northern pan of Yoho's land block 8 East Carroll and pans of West Carroll Texas Gulf Coast will remain detached miles north of the first Yoho-operated and Richland parishes in the state's from an important source heavy feedstock, well at Nig, flowed up tubing from the northeast corner for bid in the Decem­ which they need to make best use of con­ horizontal section on clean-up at a rate ber sale. East Carroll Parish Clerk of version capacity. And it's bad that a permitting authority of 5.6 MMcfd with 700 psig on a '%,­ Court staff report that private mineral can't make a decision about a vital project in. choke with an average 56 bid of lease transfers have accelerated [0 a after more than 3 years of study. free condensate after a seven-stage frac rate unprecedented in recent years. What's worst about the Keystone XL using a plug and perf completion. Operators have drilled 125 wells delay is capitulation, yet again, to an ob­ structionist, antioil political agenda. Yo~o n estimates liquids production ever in East Carroll, and the 30-plus It's an agenda driven by fear and ad­ . to be m excess of 30 bbllMMcf, 40­ wells drilled since 1981 were all dry, vanced by delay. 50% condensate. Louisiana Office of Conservation re­ In their campaign against Keystone The company's first Yoho horizon­ cords show. XL, Obstructionists frightened people into thinking the pipeline would imperil subsur­ tal well at Nig, a-41-AI94-H-4, was Initial exploration of the Brown face ddnking water and aggravate global placed on production in November Dense began farther west in southern warming. through third-party facilities at initial Arkansas and Claiborne and More­ Despite facts about low chances of rates of 5 MMcfd. The d-97-H/94-H-4 house parishes, La. (OGJ Online, July real environmental harm, fear prevailed. It obliterated tolerance for risk and enabled well is expected to be on production 29, 2011). the administration to postpone its decision early in 2012. The Morehouse well was [he first until after elections next year. To obstruc­ Yoho .and Progress are drilling a permitted that parish in 3 years and tionists, the only thing better would have third horizontal well targeting the Up­ was quickly followed by two more, in­ been outright disapproval. per Montney. The area is also prospec­ cluding one by ExxonMobil subsidiary Delay achieved through fear limits too much supply of affordable energy in the tive for Lower Montney, which is ex­ XTO Energy. Drilling has started at US. The consequent costs are too high. pected to be tested in early 2012 with one of three other wells permitted in A country craving jobs and affordable the drilling of a founh well. Claiborne. lim energy should know better than to jump at Yoho has accumulated 40,751 gross every extremist shout of "Boo.l" (20,375 net) acres of land at Nig. ONLINE NOV. 11,2011 I [email protected]

Oil & Gas Journal I Nov. 21, 2011 27 "'E"_Q·Tu·"'I'nME~N"'"ITs'oTFT·"ti"A=RETI'j'fI'~"R-~AI--U--R'--E; 1"::' ,', :r,;:. .' :.;;: -,:, \"" ' t ::t:!1l: :J~'::';' ; ,i [~~'----~~'~":"'. ._..i...... ~-.:..~_~_~~~~_;._._... ~

help avoid motor overheating by detect­ These 15 in. or 19 in. monitors are ing below normal voltage conditions, and encased in a thin but rugged NEMA 4/4x detect voltage conditions that can stress stainless or painted steel siim housing or damage starter components. suited for Class I, Division 2 hazardous VTD voltage transducers can be used area installation. The enclosure design on circuits from 0-15 v DC to 0-600 v mitigates heat without the need for vent­ DC to satisfy a range of voltage monitor­ ing or cooling fans. Units feature a glove ing needs. Fully isolated and industry friendly touch screen and are available standard 4-20 mA loop-powered output in transflective models for clear outdoor makes use with existing controllers, data viewing. loggers, and SCADA equipment easy These work stations can be ordered and reliable, the firm says. Additionally, to meet the existing communication input and output circuitry is fully Isolated infrastructure of the application. The to maximize operational safety. standard connectivity provided is Cat 5 NEW HIGH PERFORMANCE or fiber-based KVM Monitors, Ethernet VOLTAGE TRANSDUCER Source: NKTechnologies, 3511 Charter Park remote network monitor, or full panel PC. Here's the new VTD Series high-perfor­ Drive, San Jose, CA 95136. Their adaptable design enables operator U mance voltage transducer. work stations throughout the processing Packaged in a compact and easy-to­ NEW OIL FIELD WORK STATIONS facility to have a consistent look and feel, install 35 mm wide DIN-rail enclosure, New VisuNet Industrial 900 Series op­ but with different functions. the VTO series senses voltage in a vari­ erator work stations are built to withstand etyof DC powered installations, including even the harshest oil field operating Source: Pepperl+Fuchs, 1600 Enterprise motors, battery chargers, and photovol­ conditions, including high shock and Parkway, Twinsburg, OH 44087. taic arrays. These voltage transducers vibration.

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28 Oil & Gas Journal INov. 21, 2011 L:J IMPORTS OF CRUDE AND PRODUCTS Additional analysis of market trends is available through OGJ Online, Oil & Gas Journal's electronic - Districts 1·4­ - District 5- ---Total US --- information source, at h"rtp:/Iwww.ogj.com. 11-4 10·28 11-4 10-28 11-4 10·28 11-5* 2011 2011 2011 2011 2011 2011 2010 1,000 bid OlIM:;<\S )OUlNAl. research center. ~ Total motor gasoline ... 710 781 40 a 750 781 802 574 752 40 a 614 752 711 ~i~iilr:t~..~.I~~~~~~.~.~.~~ ...... 102 122 a a 102 122 179 Residual ...... 216 261 8 127 224 388 336 Jet fuel-kerosine ...... 32 11 85 21 117 32 53 [J DGJ CRACK SPREAD Propane-propylene ...... 95 71 123) (13) 72 58 56 Other ...... 142) 128 182 30 140 158 229 11-11-11 *11-12-10* Change Change, ------$/bbl % Total products ...... 1,687 2,126 332 165 2,019 2,291 2,366 SPOT PRICES Total crude...... 7,431 7,957 1,188 998 8,619 8,955 8,089 Product value 121.23 97.20 24.03 24.7 Brent crude 114.79 87.90 26.89 30.6 Total impons ...... 9,118 10,083 1,520 1,163 10,638 11,248 10,455 Crack spread 6.44 9.30 -2.85 -30.7 .Revised. FUTURES MARKET PRICES Source: US Energy Information Administration One month Data available at PennEnergy Research Center. Product value 119.74 96.11 23.63 24.6 Light sweet crude 96.97 86.86 10.11 11.6 Crack scread 22.77 9.25 13.52 146.1 Six mon! Product value 121.80 99.95 21.85 21.9 U PURVIN & GERTZ LNG NETBACKS-NOV. 11, 2011 Light sweet crude 96,49 88.95 7.54 8.5 .,.,..-,----:-:--,---,------:c:-Uquefaction plant.::-:::-::----=--,------:---:.,...., Crack spread 25.30 11.00 14.30 130.0 ReceiYing Algeria Malaysia Nigeria Austr. NW Shelf nata' Trinidad n / tenninal $/MMbtu *Average for week ending. Source: 011 & Gas Journal Barcelona 11.95 9.5B 11.15 9,46 10.34 11.06 Everett 2.90 0.54 2,47 0.62 1.15 3.22 Data available at PennEnergy Research Center. Isle of Grain 9.45 6.78 8.63 6.68 7.50 B.66 Lake Charles 0.95 -1.15 0.68 -D.94 -D.70 1.65 Sodegaura 8.24 10.97 8,45 10.60 9.67 7.32 Zeebrugge 10.56 7.82 9.70 7.70 8.59 9.79 Definitions, see DGJ Apr. 9, 2007, p. 57. Source: Purvin & Gertz Inc. Data available at PennEnergy Research Center.

[J CRUDE AND PRODUCT STOCKS - Motor gasoline ­ Blendinl~ Jet fuel, - __--Fuel oils -,-__-- Propane­ Crude oil Total comp.! kerosine Oistillate Residual propylene District 1,000 bbl

PADD 1 9,991 51,101 42,459 11,010 56,367 11,758 6,454 PADD 2 .. 92,186 47,059 26,436 8,827 24.356 1,388 25,444 PADD3 163,986 71,743 55,495 14,672 41,448 18,345 26,130 PADD4 16,406 6,211 670 195 12,222 PADD 5 55.521 28,053 2aS~ 9,465 &~i 4,462

Nov. 4, 2011 .. 338,090 204,167 150,651) 44,644 135,869 36,148 60,250 Oct. 28, 2011 . 339,461 206,275 150,971) 45,759 141,888 36,263 80,283 1 Nov. 5,2010 .. 364,883 210,336 140,889 45,939 159,902 40,402 63,833

llncludes PADD 5. 2Revised. f\ Source: US Energy Information Administration , ) Data available at PennEnergy Research Center.

!J REFINERY REPORT-NOV. 4, 2011 REFINERY REFINERY DUTPUl' -­ OPERATIONS -- Tolal Gross Crude oil molor Jel fuel, --Fuel oils --­ Propane- inpuls inputs gasoline kerasine Distillate Residual propylene District --1,000 bid --­ 1,000 bid PADD 1...... 1,178 1,197 2,743 57 358 58 69 PADD 2 ...... 3,227 3.208 2,000 220 925 59 260 PADD 3 ...... 7,396 7,247 2,139 661 2,379 277 745 PADD 4 ...... 558 554 292 26 176 10 1105 PADD 5 ...... 2,288 2,128 1,525 364 474 103 Nov. 4, 2011 ...... 14,647 14,334 8,699 1,328 4,312 507 1,179 Ocl. 28, 2011 ...... 15,124 14,693 9,066 1,382 4,653 573 1,155 Nov. 5, 20102 ...... 14,505 14,058 9,021 1,338 4,242 464 1,004

17,736 Operable capacity 82.6% utilization rale

11nciudes PADD 5. lRevised. Source: US Energy Information Administration Data available at PennEnergy Research Center.

Oi/&Gas}ouma/l Nov.21,2011 29 IItAJIS;T1~S-] OGJ GASOLINE PRICES BAKER HUGHES RIG COUNT [j OGJ PRODUCTION REPORT Price Pump Pump 11-11-11 11-12-10 111-11-11 111-12-10 ex l2Ix pric!I* price --1,000 b/d-­ 11·9·11 11-9-11 11-10-10 Alabama... 5 7 (Crude oil and lease condensate) ¢/gal Alaska.. 8 8 Alabama... 21 20 Arkansas ...... 35 35 Alaska.. 520 512 (Approx. prices for self-serllice unleaded gasoline) California.. 45 l5 California.. 608 502 Atlanta.. 295.5 344.2 275.4 land 45 l5 Colorado 87 65 Baltimore ..... 303.3 345.2 219.4 Offshore.... 0 o Florida.. 5 5 Boslon... 302.3 344.2 274.4 Colorado... 79 57 Illinois 26 25 8uffa[0... 272.5 341.7 288.0 Florida. 1 1 Kansas lI5 110 Miami... . 292.2 345.0 290.1 Illinois..... 1 2 Louisiana.. 1.533 1,555 Newark.... 303.8 335.7 283.1 Indiana... I 3 Michigan . 16 18 New york.... 285.5 355.7 296.7 Kansas...... 34 23 Mississippi.. 56 55 Norfolk...... 288.1 325.7 273.4 Kentucky... . 8 5 Montana.. 70 70 Philadelphia... 294.0 344.7 277.11 Louisiana.. 150 182 New Mexico...... 191 184 Pittsburgh 285.5 335.2 281.7 N. Land. 84 130 North Dakota.. 394 351 Wash" DC 303.3 345.2 290.1 S.lnland wa1ers 19 17 Oklahoma.. 195 188 PAD Iavg... 293.5 342.3 283.2 S. Land 25 15 Texas 1.620 1,371 Offshore.. 32 20 Ulah. 58 '0 Chicago . 325.1 395.1 319.4 Maryland.. 0 o Wyoming...... 148 147 Cleveland .. 284.4 330.8 283.3 M!ch!ga.n... I o Allolhers.. ~ _,_, Des Moines . 295.4 335.8 284.3 MiSSiSSippI...... 12 7 Detroit . 274.7 335.8 293.7 Montana... 9 10 Tolal...... 5.853 5,561 Indianapolis .. 272.5 334.5 295.7 Nebraska.... I 3 10GJ estimate. 'Revised. KansasCi1y .... 274.8 285.1 320.8 New Mexico... 82 71 Source, Dil & GasJo~rnar. Louisville... 294.9 335.8 283.4 New york...... 0 2 Oala available at PennEnergy Research Cenler. Memphis .. 295.3 335.1 284.4 North Dak01a... 185 137 Milwaukee .. 287.5 338.8 288.4 Ohio 13 8 Minn.-Sl. Paul .. 299.5 345.1 289.8 Oklahoma...... 195 140 US CRUDE PRICES Oklahoma CiLy ... 282.4 317.8 257.6 Pennsylvania... 109 102 11-11-11 Omaha .. 280.1 325.8 278.8 South Dak01a 2 1 $/bbl' u 280.0 S!. Louis .. 290.1 325.8 Texas 915 732 Alaska-North Slope Z]O.. 108.88 Tulsa .. 288.4 323.8 27 L5 Offshore. . 4 l South Louisiana Sweet 125.00 Wichita .. 281.7 325.1 282.7 Inland wa1ers... 0 3 Calilornia-MidwaySunsetI3° 117.35 PAD II avg .. 289.3 335.2 285.2 Oist. 1.... 120 65 Lost Hills 30°... t24.50 Oi~.2_ 82 48 Albuquerque ... 323.1 255.5 Wyoming Sweet.. 92.49 285.9 Oisl.3...... 47 41 Easl Texas Sweet..... 99.00 Birmingham .. 285.9 325.2 259.0 Dis!. 4 51 41 West Texas Sour 34° .. 90.50 Dallas-Fort Worth .. 272.7 31Ll 258.3 Oisl. 5... 51 71 West Texas Intermediale. 95.50 Houslon ... 275.7 315.1 257.0 Oist.6... 53 52 Little Rock .. 290.9 331.1 270.5 Oklahoma Sweet... .. 95.50 Dis!. 7B 14 12 Texas Upper Gulf Coasl 88.50 New Orleans .... 285.7 324.1 257.7 Disl. 7C.... 77 55 271.7 Michigan Sour.. 87.50 San Antonio .. 284.7 323.1 Dis!. 8...... 285 18' Kansas Common .. 94.50 PADlllavg .. 283.4 322.0 258.7 Dis!. SA... 41 25 North Oakma Sweet. 89.00 OisI.9... 24 38 Cheyenne.... 304.0 335.4 273.4 Oist. 10... 55 74 *Currcnt major refiner's posted prices acep! North Slope lags Denver... 308.2 348.6 281.9 Ula~...... 27 29 2 month~. 40° gravity crude unless differing gravity i~ shown. Sail Lake City . 305.2 348.1 285.4 West Virginia 27 20 Source, Oil & Gas Journal. PAD IV avg . , 305.8 344.4 2802 Wyoming...... 52 45 Data available at PennEnergy Research Cenler. Olhers-NV-2; OR-I; TN-i; VA-I.. __5 __9 Los Angeles .. 322.5 391.4 305.0 Phoenix... 313.4 3508 285.0 Tolal US...... 2,016 1,685 [J WORLD CRUDE PRICES Portland .. 33LO 380.4 295.0 ToIal Canada...... --..2lli!. ~ San Diego .. 3030 371.9 317 .0 Grandtolal "...... 2,516 2,114 $lbbli 11-4-11 San Francisco . 333.5 402.4 326.0 US Oil rigs 1,133 720 Seattle . 315.0 371.9 312.0 US Gas rigs _ . 877 955 Uniled Kingdom-Brent 38°. 109.22 PAD Vavg .. 319.9 378.1 307.0 23 Rllssia-Urals32° 108.85 T01al US offshore 37 Saudi Light 34° 108.06 aY~ Total US cum. avg. YTD...... 1,859 1,514 Week's .· ·on ••• 295.0 341.7 284.7 Dilbai Fateh 32°. 100.13 Del. avg . 296.4 343.1 219.6 Rotary rigs from spudding in to total depth. Algeria Saharan 44° 110.30 Sell!. avg. . 313.3 360.0 269.6 Definitions, see OGJ Sept. 18, 2006, p. 42. Nigeria-Bonny Light 37° .. 111.34 201110 dale . 301.9 353.7 Indonesia-Minas 34°...... 114.55 . ZD10todale . 229.9 274.8 Source: Baker Hughes Inc. Venezuela·TIaJuanaLigh131° 108.74 U Mexico-Isthmus 33°.. 108.53 'Includes stale and federal motor fuel taxes and stale Data available a1 PennEnergy Researc~ Center. sales tax. local governments may impose addilionaltaxes. OPEC basket.. 108.91 Source: Qjl &Gas Journal. Total OPW.. 108.39 Oala available al PennEnergy Research Center. Total non-OPW..... 107.24 [J SMITH RIG COUNT Total world! 107.92 11-11-11 11·IZ·l0 US imports' 104.35 Proposed depth. Rig Percent Rig Percent IEstimated contract prices.1Average price (FOB) weighled by REFINED PRODUCT PRICES n count footage'" count foolage* estimated export volume. IAverage price (FOB) weighted by estimated import volume. 11.-4-11 11.-4·11 0'2500 235 L5 190 2.5 Source: DOE Weekly Petroleum Status Report. ¢/gal ¢/gal 2,501-5,000 75 51.3 58 53.4 5,001·7,500 123 27.6 153 17.5 Data available at PennEnergy Research Center. Spot market product prices 7,501-10,000 321 3.1 282 4.2 10,00],]2,500 457 7.4 352 9.0 [] US NATURAL GAS STORAGE' Molor gasoline 12,501-15,000 305 0.9 250 2.5 No.2 Distillate 11.-4-11 11-5-10 Cha~e, (C~nven 150 11.-4·11 Iiona I-regul ar) Low sulfur diesel fuel 15,001-17.500 153 - bcl New Y~rk Harbor...... 273.80 New York Harbor ...... 312.10 17,501-20,000 115 142 Gulf C~ast...... 265.80 Gull Coasl...... 307.70 20,001-over 87 43 Producing region ...... 1,235 1,220 1,231 0.3 Los Angeles...... 345.50 Tolal 1,884 6.5 ',640 5.9 Consuming region eas1 .. 2.085 2,059 2,087 -OJ Motor gasoline Consuming region wes1...... 511 ~~ -1.5 (RBOB-regular) Kernsine jet fuel INlAND 20 15 Tolal US ...... l,631 3,794 3,837 -O.Z New York Harbor...... 299.80 Gull Coast ...... 305.70 lAND 1,8Z6 1,609 Change. OFFSHORE 38 15 Aug. 11 Aug. 10 % No.2 heatinz oil . Propane Tolal US1..,...... 3.020 3,150 -4.1 New York Harbor 305.70 ML Belvieu . . 144.00 *Rigs employed under footage contracts. Oefinitions, see OGJ Sept. 18, Z005, p. 4Z. IWorking gas. IAt end of period. Source: Sm(jh fnlernationallnc. Source: Energy Informalion Administration Source: ODE Weekly Pelrofeum S1a1us Report. Data available al PennEnergy Research Center. Oata available at PennEnergy Research Center. Data available at PennEnergy Research Center.

30 Oil & Gas Journal I Nov. 21, 2011 ··INTERNATIONAL RIG COUNT CJ OIL IMPORT IFREIGHT COSTS* --Oct.2011-- Del.IO Rlgioh ~"d off. Total Talal Cargo Freight (Spot rate) WESTERN HEMISPHERE Source Dilchar.lle Car~o [,o~~~h[ worldstale $fbbl ~ ~ 51 ~te~~,:~.:::= 5 5 5 CaTibbea~ New York Olsl 100 Bralil•.. 35 49 72 Caribbean Homton Resid. 380 105 L26 Canada 505 1 508 3" Canbb~an Houston Resid. 501) 97 1.15 Chile.. 3 "3 4 N. Europe Newrork Oist 100 165 2.79 Colombia 68 6' 51 N. Europe Houston crude dOO 110 2.S8 Ecuador 15 15 11 W.Alrica Houston ClUde 91' B7 2.41 Ma:i~o. 79 15 104 14 !'ErSlan Gult Houston Crude 1.900 35 1.82 Peru 1 1 9 lO W. Afri~a N. Europe Crude 910 9l 1.89 Trinidad...... ••.•.. 1 1 4 1 PerSian Cull N. Europe Crude 1,900 34 1.30 United Stales o. J.982 35 2,017 1,568 Venuuela 66 11 11 Persian Gull Japan Crude 1,750 5& 1.68 Other..... 3 1 4 1 " 'Oeluber 2011 av~r~ge. ~ Sublotal •...... 2,836 121 2,963 2,443 Sour~e; IlrewryShipping Consul[anls lid. ASIA·PACIFIC Oala a~allatle at PennEnergyResear~h Cenl~r. Australia •. 1 14 15 Brunei ...... _. 4 4 5 China-offshore 11 11 14 India...... 88 30 118 100 Indonesia 41 13 ~ 61 Jap.n .... 1 1 3 Malaysia 7 11 i,YiJ WATERBORNE ENERGY INC. L;.:J PROPANE Myanmar ...... -, 1 1 New ZeaIMd ...... 4 4 5 3 3 4 US LNG IMPUIRTS PRICES ~~,f1~~rn: .~~.~~.~.~.::.:: ... 1 1 , Change Taiwan ...... _... Oel. Sept. O,L from a Se~t. Aug. Sept. Thailand 2011 2010 2010 11 16 11 2011 2011 2010 ~ear ago, Vietnam • 6 6 15 ---MM~t--- ¢/gal Other "I I Country % Sublotal. 153 105 259 11. ,,,,1 2.9311 2,950 ....7 Nigeria 2,370 Be[vi~u 152.80 m.oo 107.20 113.20 AfRICA ":Irway 2,930 5,730 --48.9 "'"'CtInway riA NA NA riA A'igeria 34 34 25 Non\lw~sl 5 P,ru - 3,230 Angola 7 Europ~ NA NA NA NA (I Congo. -, 5 1 Oat~1 9,050 4,550 4.540 99.3 Gabon 5 5 3 Trinidad and SOUrt~; W~el<.ly Kenya ... 1 1 Tobago ll.lOO a,690 15.230 _21.1 EIA Pe\raleulll Status Repon Dala a~ailable at PeonEnerg~ Research Cenler. Libya ...... _... 15 Yemen 8.910 a.700 Nigeria ...... -. 13 11 19 NOTE: No new dala at prus time• Soulh Alrica •. 21,940 Tunisia -. -. -. Total 34,920 34,050 2.5 Other I 5 5 • Sourte: Waterborne Energy Inc. Cent~r. Subtotal_ 51 B1 83 Dala available al PennEnergy Remfch MIDDLE EAST Abu Dhabi .... 13 '"9 11 Oubai. 1 1 1 Egypl...... 58 11 " 53 Iran ... " J~~ai1' ...... _..... Kuwait 35 35 13 MUSE, STANCIL & CO. REFINING MARGINS Oman 40 40 iSJ Pakislan .._:::... 14 I' 15 US us us us Marth- South· Qalar... w ...... 1 5 7 "8 Gull East Mid- West wMI east S.audi Arabia .. 51 11 73 Coa~t - toast Coast west hrope As[a Sudan ...... _...... $/~bl ~ia ..... 17 17 " 30 ~m~n .. 3 3 11 OIher 4 , 6 1 O~lober 2011 PrOOu~t revenues 120.55 121.51 118.68 132.60 122.58 m.38 Subtotal. 258 39 297 170 Fe~ds\ock cosls -1l3.41 -115.73 ~ =.J.lW d1.1QZ ~ EUROPE Croatia .. Gross margi~ 7.15 5.73 25.79 15.99 9.51 8.26 Denmark 3 Fi"Qld co~11 -2.24 -2.59 -2.52 -2.93 -2.52 -1.96 France ...... 1 Variable ~osls =1ll -l.08 --0.90 ~1.46 -1.49 ;;UZ Germany.. 4 4 lIungary._ ...... 1 1 C~:r:rneraling 1 , , 3.78 2.11 ILBO 5.50 4.43 ~i~·liTa~·ds:: ...... • 3 1 September2011 2.01 -I.7S 24.93 104 4.11 3.18 18 18• 10 YTO avg. S.74 0.22 "" 22.19 11.9S 4.32 3.15 ~glr:naJ ...... -... 9 9 1 2010 avg. 4,46 1.82 8.15 9.39 3.50 0.50 Romania 11 11 11 2009 avg. 3.04 L.12 5.23 10.30 2.01 -1.35 Turlley 14 1 11 200a avg. 9.09 3.04 1l.26 13.54 '.34 1.77 UK ..... 3 11 14 10 ...... ·w••• " OIher. 15 8 13 10 Sour~~; Muse, Slandl &Co. See OGJ, 1an. 15. 2001, p. 46 Dala available at Pennfnergy Research Center. (I Subtotal 75 47 112 95 TotaL 30313 349 3.722 3,165 Oefinition~. ~ee OCl Sept. 18.2005. p. 42. Sourt~; Baker Hughes Inc. Dala av~il~ble at PennEnergy Resear~h Cenler. [] MUSE, STANCIL & CO. LTI MUSE, STANCIL & CO. [J MUSE, STANCIL & CO. GASOLINE MARKETING MARGINS ETHYLENE MARGINS US GAS PROCESSING MARGINS L" Elh.:lne Propane Naphth.:l Gult Mid- Chicago· Ho~lan Angeles New York ----¢/Ib ethylent ----- Coa~l ~onlinenl September 2011 ~/131 OctDber21ltl ---$/~tf--- O~lober 21lt 1 Retail price 388.61 341.32 392.87 384.30 Product revenues 55.35 96.34 127.27 Gross revenue Taxes 62.85 38.40 65.32 55.12 Feedsloc~ cosls ~1 ~ -143.57 G" 3.42 3.05 Wholesale price 293.95 285.01 308.56 296.53 liquids 1.58 3.~ 304.02 267.12 287.81 280.11 Gross llIargin 19.12 12.59 -16.30 Gas purchase ~ost 3.81 4.10 S~~\~i1~argin 31.73 17.91 17.89 32.65 FiJ:8d ~osls -5.38 --6.36 -7.19 Operating costs 0.07 0.15 Wholesale margin -10.07 17.89 20.85 16.42 Variable I;osls =!.'!l -H8 :!li Cash operating margin 1.12 2.34 Grass marketing margIn 21.66 35.80 38.74 49.07 Auust2011 15.85 34.41 27.11 41.87 Cash opualing Seplember2011 J.l0 2,42 rID avg. 17.81 24.03 29.04 35.14 m~rll"ln 10:13 2.15 -28.04 YTD aVl. J.OO 2,42 2010avg. 18.43 20.23 29.53 33.25 2010 av~. 0.67 1.73 2009 avg. 23.46 21.99 26.60 30.61 ~glembli 2011 25.23 14.82 -7.50 2009 avg. 0.41 1.14 2008 avg. 33.11 32.15 27.22 41.81 'l'T avg. 27.28 21.83 -9.76 2008 avg. 0.45 1.61 2010 avg. 21.98 17.34 -5.24 Breakeven produoor pa\'ITent ·The wholesale 'p[lC~ shawn for Chicago is the RFC price utilized torlne 2009 avg. 12.~3 9.63 -13.72 % 01 liquids 17% 33% wholesale margin. The Chicago relall margin includes a weighted average 2008 avg. 21.00 22.89 -5.91 ~onvelltional wholesal~ pur~ha~es. of RFG and Sour~e; Muse, StanCil & Co. See Qru, May 21, 2001. p. 54. Source; Muse. Slan~11 & Co. See QGI, Od.15. 200[, p. 46. Sour~e: Muse. Siancil & Co. See 0;;1, Sep!. 15. 2002, p. 46. Oala avallabie a[ PennEnergy Research Center. Dala a~ailable at PennEnergy Re~ea[~h Ce~ler. Oala available al PennEnergy Researth Center. N~l~; Margins in~lude e[hanol ble~din~ in alllllarkeis.

GI'l & Gas Journal I Nov. 21, 2011 31 iM~llKE1l'];M'E i

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EMPLOYMENT AUCTION REAL ESTATE

The U. S. Department of Energy (DOE), Office of the Deputy Assistant Secretary for Petro­ Corporate House for Lease leum Reserves (FE-40) in Washington, DC is Beeville TX, Bee County sccldng a highly-qualificd candid.lle to serve 707 E. Inez, Beeville TX as Associate Depnty Assistant Secrctary. 3-4 bedrooms, large yard, fully rurnished, all bills paid 1-3-6-12 month lease options The prime responsibility and aUlhorily for plan­ Call David-713-828-4821 ning, management, implemenlation and adminis­ tmlion of all programs relaled lO the Strategic Pe~ lroleum Reserves (SPR) and the Northeasl Home CONSULTANTS He;lting Oil Reserves. nle Office is responsible for meeting the nalional objective of storing sufficient BRAZIL LEGAL & REAL 'I~ reserves of crude oil and healing oil to be used in Oil & GiI$l Energy & Renewilbles lhe evem of severe energy supply interruptions thal The gianl hilS i1wakened, and you need effective strategic c;ounseHng (0 cut inlo lhis new investment lhreaten the nation's energy security and economy frontier + quality technical advice from local, experienced specialisls. EXPETRO Niltural Resources Consultants The ideal candidale win have experience in manag­ Rio de Jilneiro & Niltal - Brazil ing petroleum operations (refinery, pipeline and/or ~):ito_~j "~~~k~lpi.~ce;;: !iii! RViu.IIS! I www.expelro.com.br slorage) with a high level of experlise ill Slorage and distribution systems. The ability lO provide executive level leadership and program manage­ mem is required. Experience deRling wilh high level officiRls in the petroleum industry and gov­ ernment is preft'rred. . ." For more infonnation concerning key require­ ments, major duties, technical qualifications, ben­ .c,')L efils, evaluation faclOrs and to apply visit USA]obs al hltr://....ww llsaiabs arm gov/

Cameron Internalional Corporation in Houston. TX seeks Engineer II. Qualified applicants will possess a Bachelor"s degree in Mechanical Engineering and two years offshore wellhead support experience. Email resume to DRvan.Doleisi@c-a-m com Resume must in­ CJ clude job code 29564BR.

Cameron Intcrnalional Corporati.on in Hous­ ton, TX sceks Project Quality Managcr. Quali­ fied appHcanls will possess a Master's degree in Mechanical or Industrial Engineering plus two years related experience in the oil and gas indus­ try. Email resume lO Davan Da1ejsi@c-a-m com. Resume must include job code 29233BR.

Canteron Intcrnational Corporation in Hous­ ton, TX seeks Product Engineer III. Qualified applicanls will possess a Master's Degree in Chem­ ical, Petroleum. or Mech

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of July 2012. They form the central plank of the government's commitment to cut carbon emissions by 5% of the 2000 levels API: US support strong for more Canadian crude by 2020. A survey found 79% of 924 US registered voters support im­ The new regime will begin with a $23 (Aus.)ltonne price on porting more crude oil from Canada, the American Petroleum carbon and will transform into an emissions trading scheme Institute announced. with a floating price in mid-201S. Harris Interactive, which conducted the survey for API Oct. Greens leader expressed his satisfaction with the result by 28-31, found 80% of respondents believe US government poli­ calling the vote a "green-letter day." cies should support use of Canadian crude in the US. Opposition MPs were less enthusiastic, saying the Labor API Executive Vice-Pres. Marty Durbin told reporters dur­ Party had sold its policy soul to the Greens for the sake of stay­ ing a Nov. 3 conference call that the finding was "consistent ing in power. They added that a Liberal/National Party coali­ with polling we've already done showing very broad support tion government would axe the tax when it was elected. among the American public for increased oil and gas produc­ tion here in North America." Bridas cancels deal to buy BP's stake in PAE When asked about Canadian oil sands, 65% of respondents BP PLC said Bridas Corp. has terminated its plans to buy BP's said they were unfamiliar with oil sands or the proposed Key­ 60% interest in Pan American Energy LLC (PAE) for $7 billion stone Xl pipeline project to bring crude recovered from oil because Bridas had not obtained Argentine antitrust approvals sands to US refiners, and Chinese regulatory approvals for the Argentina-based ex­ They nevertheless strongly agreed pipelines would be the ploration company COG] Online, Nov. 29, 2010). safest way to bring Canadian crude to the US. BP and Bridas are joint venture partners in PAE. Bridas al­ API released the survey's results as national environmental ready owns 40% of PAE, which explores, develops, and produc­ organizations called their members to Washington for a Nov. es oil and gas in the Southern Cone region of South America. 6 protest against possible approval by the administration of CNOOC Ltd. owns a stake in Bridas, which cited no specific President Barack Obama of the Keystone XL pipeline project's reason for calling off the transaction. permit application. PAE's main holdings are in Argentina. Argentina President "It's not surprising that as we come closer to a decision, we Cristina Fernandez de Kirchner on Oct. 7.6 ordered oil and gas are hearing more opposiLion," Durbin said. "BUl there also is companies to repatriate all future export revenue. Klrchner said strong approval among labor officials, Slate officials, and local the intent was to strengthen cemral bank controls on dollar officials along the pipeline route." purchases. Durbin said he was optimistic that the pipeline might be As a result of Bridas dropping plans to buy BP's stake in PAE, approved by yearend. BP will repay a $3.53 billion deposit received late last year. BP said it is no longer in discussion with Bridas about PAE. Australia's upper house passes carbon tax bills "PAE is a strong business," BP said. "BP is happy to return to The 18 so-called clean energy bills making up the Australian long-term ownership of these valuable assets, given the consid­ Labor Government's controversial carbon tax scheme have erable improvement in its own financial strength and circum­ been passed in the Australian Parliament's upper house with a stances, as well as the improved extenlal trading environment." vote of 36 to 32. Since June 2010, excluding the PAE assets, BP has agreed to The Australian Greens voted with the government to push asset sales wonh more than $19 billion. The sales came as BP the legislation unamended through and mark the end of 5 years paid expenses associated with the April 2010 Macondo well of mostly acrimonious debate. blowout and resulting oil spill in the Gulf of Mexico. The new laws will require Australia's top 500 polluting com­ In October, BP announced plans to extend its divestment panies to pay a price on carbon emissions from the beginning program to $45 billion by the end of 2013, saying the ongoing 111 the United States, Insurance coverages are underwritten by Individual member companies of Zurich in North America, Including Zurich American Insurance Company, Certain coverages are not available in all states. Some coverages may be written on a non-admitted basis through Licensed surplus lines brokers. Prior results do not guarantee a simLlar outcome. Risk engineering services are provided by Zurich Services Corporation. US INDUSTRY SCOREBOARD -11/14

4wk. 4 wk. avg. Change, YTD YTD avg. Change, Latest week 10128 average year ago 1 % average! year ago! % Product supplied, 1,000 b/d Molor gasoline 8,657 9,019 -4.0 8.987 9,111 -1.4 Distillate 4,219 3,957 6.6 3,807 3,753 1.4 Jet fuel 1,416 1,376 2.9 1,435 1,407 2.0 Residual 287 359 -20.1 494 490 0.8 Other products 4,069 4,296 -5.3 4.335 4,439 -2.3 TOTAL PRODUCT SUPPlIEO 18,648 19,007 -1.9 19,058 19,200 -'J.7 Supply, 1.000 bid Crude production 5,866 5,549 5.7 5,601 5,481 2.2 NGL production2 2,193 1,947 12.6 2,107 2,079 1.3 Crude imports 8,834 8,692 1.6 8,910 9,248 -3.7 Producl impons 1,916 2,461 -22.1 2,363 2,586 -

Crude runs to stills 14,575 14,467 0.8 14,713 14,578 09 Input to crude stills 14,959 14,453 35 15,121 14,991 0.9 % utilization 84.4 82.2 855 85.2 Latest Previous Same week Change, Latest week 10128 week week' Change year ago l Change % Stocks, 1,000 bbl Crude oil 339,460 337.634 1,826 358,156 -28,696 -7.8 Motor gasoline 206,274 204,918 1.356 212.253 -5,979 -2.8 Distillate 141,889 145,464 -3.575 164,874 -22.985 -13.9 Jet fuel-kerosine 45,759 46,525 -766 45.830 -71 -'J.2 Residual 36,264 33,934 2,330 40.638 -4,374 -10.8 Stock cover (days)'; Change, % Change, %

Crude 23.3 23.0 1.3 26.3 -11.4 Motor gasoline 23.8 23.4 1.7 23.5 1.3 Distillate 33.6 35.1 -4.3 41.7 -19.4 Propane 58.6 58.2 0.7 60.1 -2.5 Futures prices5 11f4 Change Change % Light sweet crude ($/bbll 93.24 92.38 086 82.12 11.12 13.5 Natural gas, $IMMbtu 3.81 3.66 0.15 3.58 0.23 6.3

IBased on revised ligures. IOGJ estimates. 'Includes other liquids, re1ineIY processing gain, and unar;counled for crude oil. 4Stocks divided by averace daily produr;t supplied for the prior 4 weeks. IWeekly ave raze of daily closing futures prices. Source; Energy Information Administration, Wall Street Journal

BAKER HUGHES INTERNATIONAL RIG COUNT: TO TAL WORLO ITOTAL ONSHOREI TO TAL OFFSHORE J,!JIJIJ . 3,SIJIJ . ~:;::.' ==::==-::::::::::::=' " ~ ~ 1,700 . 1,400 . 1,100· . 1,8/1/1 ~'======::======;~;'~'~ AUf. 10 Sept. D~c.IO J~u. F~b. 10 OCI.IO Nov. 10 If 1/ Mar.1/ Apr.1/ May.1I Juu.1/ Jul. II AUf. 11 Sept. II­ Note: Monthly average counl

BAKER HUGHES RIG COUNT: US I CANADA 1,100 .. . ·· ..·······:"2;1j26···

1,/100 .. . ·-~H·M l,fOO .: : " ·····················:···/;6113··· I,SOO -. 1,4/1/1" ~ sao.. . " ··· ·························4"j"j"·· ...... - ·:········· · ·4.,6·.. "'-----~~' 100·· ~~~"'~,~O~,,~JI<=O~~,,~,,:,,;~O~~'M~'~":;--,'~M~5n;::O:'-:''''~,~,~"~O-5n=,~"7,~9IV;::'~'-"':::,~"~,"-:"~'~M-:::-'-'::,,,,=,,7'="C-:'/Y2=,=,,7,-­ 81271/0 9/10/10 9/24110 10/8/f0 trJlZlIIO ll/~I/O 9/28//1 9/9//1 8123/f/ loom 101211H 11/4111 Note: End of week average counl divestment program involves the sale of nonstrategic assets anel Cretaceous Vaca Muerta shale on about 3.5% of its 12,000 sq is not driven by a requiremem to raise cash. km holdings in the Neuquen basin in Argentina. The company derived its estimates from the results of 15 Encana to sell Barnell shale assets for $975 million venical wells completed in the unconventional formation on Encana Corp. unit Encana Oil & Gas (USA) agreed to sell its 428 sq km on the Lorna La Lata None block. It said one other Barnett shale natural gas assets in the Fort Worth basin to vari~ well is already producing from Vaca Muerta in a separate 502 ous pannerships managed by EnerVest Ltd. for $975 million as sq km area in the basin. part of Encana's previously announced plans to divest up to $2 Repsol termed the 927 million hoe the company's largest oil billion in noncore assets by yearend. discovery and said the volume is similar to the existing reserves The properties produce 125 MMcfd equivalent of gas and of Argentina firm YPF, in which Repsol holds a 58% imeresl. include associated gathering pipelines on 50,000 net acres. Repsol noted that the Vaca Muerta formation underlies Encana said it wamed to sell the Barnett shale assets to take 30,000 sq km in the Neuquen basin and that Wood Mackenzie advantage of higher-value liquids plays (OG] Online, Aug. 25, consultams has identified the formation as "one of the world's 201l). best shale plays." The Barnett shale sale, expected to close yet this year, is Wood Mackenzie's evaluation, completed earlier in 20ll, subject to normal closing conditions and regulatory approvals. was based on numerous factors including development of the After closing of this transaction, Encana will have divested $1.7 hydrocarbons market, infrastructure, regulation, availability billion worth of assets. of water, fiscal terms, quality, comparative volume, potential Encana said the Barnett shale, which it entered through for enhanced recovery, and organization of the supply chain, a corporate acquisition in 2004, provided the company with Repsol said. foundational knowledge it has applied across its newer US and Repsol said the 15 vertical wells at Lorna La Lata None had Canadian resource plays. initial flow rates of a combined 5,000 bid of oil equivalent in­ cluding 40-45° gravity oil. Linn to buy Granite Wash assets for $600 million Meanwhile, the single well in the 502 sq km area is produc­ Linn Energy LLC agreed to acquire US Midcontinent oil and ing 400 bid of oil equivalent with 35° gravity oil. The 502 sq natural gas assets from Plains Exploration & Production Co. for km area "has significant potential for large volumes to be devel­ $600 million. The acquisition will double Linn's inventory of oped in the future once the appropriate studies and prelimLnary Granite Wash horizontal drilling sites in Texas and Oklahoma work to determine resources is completed," the company said. to more than 400. Separately, Plains also agreed to sell South Texas conven­ EPA announces final hydraulic frac research plan tional gas properties to another party for $185 million. Plains The US Environmental Protection Agency announced its final did not identify the South Texas buyer. Previously, Plains sold hydraulic fracturing research plan. It will look at the full cycle some Gulf of Mexico assets Ln an ongOing strategy to reduce of water in fracing, from its acquisition through its mixture debt (OG] Onhne, Sept. 20, 2010). with chemicals and actual fracing, to its postfracing stage, in­ Linn Energy expects its acqu isition from Plains to close cluding management of flowback and produced water as well as yearend, subject to meeting certain conditions. The deal, which its ultimate treatment and disposal, EPA said. involves more than 200 low-risk Lnfill drilling locations, covers Initial research results and study findings will be released to ,...... " 20,000 Granite Wash net acres and 75,000 net acres outside the the public in 2012, with the final report scheduled for delivery Granite Wash. in 2014, EPA said. It noted that it announced locations earlier Mark E. Ellis, Linn presidem and chief executive officer, this year of five retrospecttve and two prospective case studies. said, "We expect to yield significant operational efficiencies in Oil and gas industry associations immediately responded to the Granite Wash as we le\>erage our pad drilling techniques, EPA's Nov. 3 announcement. The American Petroleum Institute simultaneous-operations processes, and recently built gas gath­ said while it is still studying final details of the agency's final ering and water handling infrastructure." study plan, it is confident that a full examination of fracing will Linn is acquiring net prodllction of 80 MMcfd of gas equiva­ confirm that the process poses no significant risk to human lent and will boost its proved reserves significantly upon clos­ health, drinking water resources, or the environment. ing. Plains estimated proved reserves at Dec. 31, 2010, at 263 "The oil and gas industry has a key role to play in the fu­ bcf eqnivalent of which 90% was gas. m!I ture of American energy production," said Stephanie Meadows, API's upstream senior policy advisor. "The industry has taken IEX:lf[affAl'TdN:& QEVElOl{MfNTi QUICK TAKES the lead in working with state regulators to constantly improve operations, industry practices and guidelines, as well as im­ Repsol sees 927 million boe in Vaca Muerta so far prove communications with local communities." Repsol YPF said it has identified the existence of a recoverable Daniel Whitten, vice-president of strategic communications 927 million bbl of oil equivalent, 80% oil, in Late]nrassic-Eady at America's Natural Gas Alliance, said ANGA and its member Chevron

Human• Energy' companies "continue to support the congressional mandate that leum column of 58 net ft of presalt carbonate reservoir. the agency use 'a transparent, peer-reviewed process' that will The appraisal well is an "aggressive step-out" from the Itaipu 'ensure the validity and accuracy of the data.' This transparency discovery well, which lies 4 miles to the northwest, said Bob is critical to providing the public with confidence about the Daniels, senior vice-president, worldwide exploration, Anadar­ methodology and assumptions employed in the study." ko Petroleum Corp., which is a partner in the block (OGj ANGA is committed to being an active and vocal partici­ Online, Dec. 18, 2009). "The Itaipu-2 well established a fluid pant throughout the study process, Whitten continued. "We contact and appears to have successfully extended the accu­ remain confident that a scientific and data-d riven examination mulation 120 m downdip from the discovery. Accordingly, the will provide policymakers and the public with assurance of the appraisal well significantly increases the areal extent of the vast safety of the hydraulic fracturing process," he said. 1Laipu field, and we believe incorporating the data from both the appraisal well and the original discovery well will increase TNK-BP to join Brazil Solimoes basin exploration our previous resource estimates for the field," Daniels said. The Brazilian subsidiary of TNK-BP of Russia will become a BP operates Block BM-C-32 with a 40% working interest. 45% partner with a unit of HRT Petroleum, Rio de janeiro, in Anadarko, through a wholly owned subsidiary, holds a 33.3% 21 exploratory blocks in the Solimoes basin in northwestem interest, and Maersk Oil holds a 26.7% interest. Brazil. HRT will remain operator of the blocks. TNK-Brazil Explo­ Flow starts from small gas field off India ration &: Production Oil &' Gas Natural Uda. will acqUire its State~owned Oil &' Natural Gas Corp. of India has started pro­ interest after Brazil's National Petroleum Agency ANP approves duction of natural gas from the BS-13 satellite field in its B-22 transfer of the concession rights from Petra Energy SA. cluster project in Bassein oil and gas field in the Mumbai High Once the rights are transferred, HRT said it will receive $1 area offshore western India. billion from TNK-Brazil over 2 years. TNK-Brazil will also re­ The B5-I3A-2H well began production at the rate of200,000 imburse HRT past costs and make future payments of as much standard cu m/day through a 111M_in. choke. It's on a conven­ as $5 billion for 10 years from the approval of the transfer by the tional, four-leg fixed jacket platform powered by a solar system ANP, HRT said. The blocks, on which several exploratory wells and connected to the BPB process complex (OGj Online, jan. have encountered hydrocarbons, total 48,500 sq km (see map, 24,2011). The platform has four well slots. OG], Mar. 7, 2011, p. 54). ONGC estimates B·13 reserves at 1.7 billion cu m. TNK-Brazil will have the option, exercisable from 30 months The B-22 cluster project combines development of nuuginal from ANP's approval of the transfer, to acquire a further lOW) fields designaled 8-22, B5-12, B5-13, and B-149. interest in HRTs Solimoes concession rights at a consideration to be based on reserve and resource values. Niko signs deepwater drilling contract for Indonesia Niko Resources Ltd., Calgary, signed a drilling contract to use Cretaceous light oil find off Liberia noncommercial Diamond Offshore Drilling Inc.'s Ocean Monarch semisub­ The Montserrado-l exploratory well off Liberia is a noncom­ mersible, currently moored, offshore Indonesia. The contract merciallight oLl discovery that established a working hydrocar­ covers 4 years and has a I-year option. bon system in the Liberian basin. The Ocean Monarch is capable of operating in 10,000 ft of Operated by Anadarko Petroleum Corp., Momserrado went water with a drilled depth of up to 35,000 ft. With the option to 5,400 m in the LB-15 block and encoumered good-quality, year exercised, this contract is in excess of $700 million, Niko water-bearing sands in the main objective. It intersected 8 m of said. hydrocarbon pay in a deeper secondary objective and recovered Raymond James & Associates Inc. issued a Nov. 9 research a sample oflight oil. note saying, "Such strong contract terms are further evidence Anadarko will plug the well and move the drillship to Sierra that offshore markets (both floater and jack ups) continue to Leone to drill the Mercury-2 appraisal well and the jupiter ex­ improve." ploratory well on Block 5L-07B-II. Niko said the contract is expected to commence sometime Liberia Block LB-15 interests are Anadarko 47.5%, Repsol during june through August 2012 following completion of the 27.5%, and Tullow Oil PLC 25%. IiIi!I semi's current contract and a routine 5-year hull inspection. "This contract removes the risk of rig availability for the I-PRJ(([~jjj&)!!R1iDiJC'(TONl QUICK TAKES company's planned massive drilling campaign," Niko said Nov. 8, caliing the agreement the "largest deepwater exploration BP drills Itaipu-2 appraisal well off Brazil contract in the history of Indonesia." BP PLC and its partners reported the successful drilling of the Niko is Indonesia's largest deepwater acreage holder with in­ Itaipu-2 appraisal well on Block BM-C-32 in the presalt play terest in 16 production-sharing contracts. Niko has exploration offshore Brazil. The well was drilled to 16,000 ft total depth in and production assets in India, Bangladesh, Indonesia, the Kurd­ 4,660 [t of water in the Campos basin and found a gross petro­ istan region of Iraq, Trinidad, Pakistan, and Madagascar. Em Chevron

Human=== Energy· rl{RQGE:S§I~~i QUICK TAKES "ey, the coker has a capacity of 24,800 bled. Mongstad Refining is owned 79% by Statoil and 21% by East Texas plant's expansion complete Royal Dutch Shell PLC. IiJi!I Martin Midstream Partners LP, Kilgore, Tex" bas announced that its unit, Waskom Gas Processing Co., has completed ex­ CtBl"~S'P]R~W~ QUICK TAKES paneling gas processing capacity at its gas processing and NGL fractionation plant in \Vaskom, Tex. Chesapeake signs as anchor shipper on EPP line The new nameplate gas processing capacity is 320 MMcfd, Chesapeake Energy Corp. has signed a long-term contract as ~m Lllcrease of 35 MMcfd. The expansion was completed ahead anchor shipper on Enterprise Products Partners LP's proposed of schedule and. on its originally budgeted $13 million cost, the long-haul eth ane pipeline from the Marcellus and Utica shale comparq said. In addition, Marlin Midstream reported prog­ regions in Pennsylvania, West Virginia, and Ohio to the US ress on the NGL rail car loading also being built by Waskom Gulf Coast. The roughly 1,230-mile pipeline would have an Gas Processing to move NGL produced at Waskom to end us­ initial capacity of 125,000 bid and could be quickly expanded ers. This project is to be placed into service in late December. through a combination of additional pumping horsepower and Waskom Gas Processing is a Texas general partnership pipeline looping. equally owned by CenterPoint Energy Gas Processing Inc. and Chesapeake committed to supply 75,000 bid for the pipe­ Prism Gas Systems I LP. CenterPoint Energy is a wholly owned line's 5~year ramp-up period and can secure additional capacity subsidiary of CenterPoint Energy Inc.; Prism Gas operates the in the project. The company says it views this agreement as an Waskom Gas plant and is an indirect, wholly oWrLed unit of important step toward obtaining premium transportation pric~ Martin Miclstream. ing for the volumes it will produce in the region. Martin Midstream previously announced a project to con­ The project will use a combination of new and existing sys­ struct crude oil tanks and a martne terminal at the Port of Cor­ tems COGj Online, Oct. 11,2011). The binding open season for pus Christi, Tex. That project is "progressing according to plan," shippers to commit to the pipeline closed Nov. 10. The pipe­ said its announcement, and will be able to accept trucked-in line's committed shipper transportation rate would range 14.5­ crude oil by yearend. The terminal will be fully functional by 15.5¢/gal. the end of first-quarter 2012. Through connections at EPP's NGL complex in Mont Bel­ And MartirL Miclstream is building a $23-million vacuum vieu, Tex., ethane productiorL from the Marcellus and Utica tower at its Cross Oil lubricant processing plant irL Smackover, shales would have access to every ethylene plant in the US. En­ Ark. This project seeks to increase the plarLt's efficiency by re­ terprise anticipates the pipeline beginning commercial opera­ ducing how much non-lubricant residual oil it produces. Tbis tions as early as first-quarter 2014. project is to go on line in March 2012. DCP Midstream closes buy of Seaway Products Wood River refinery expansion nearly complete DCP Midstream has closed on its previously arLnounced acqui­ Cenovus Energy Inc., Calgary, says expansion of the 306,000 bl sition of the Seaway Products Pipeline Co. from ConocoPhil­ sd Wood River refinery at Roxana, IlL, is essentially finished as lips. start-up of the expanded coker approaches by mid-November. DCP will convert the rerLamed Southern Hills Pipeline to The $3.8 billion project will raise distillation capacity to NGL service, adding extensions to Mont Belvieu, Tex., and vari­ 356,000 blsd and gross coking capaCity by 65,000 blsd to ous US Midcontinent receipt points and associated gatherirLg 83,000 b/sd. When the project is complete, the refinery, owned systems, creating new NGL transportation capacity from the by a 50-50 venture of Cenovus and COrLocoPhillips, will be able MidcontirLent to the Texas Gulf Coast. DCP Midstream will add to run about 240,000 blsd of heavy crude oil. a nO-mile extension from the pipeline's current northern ter­ Cenovus acquired its 50% interest in the Wood Refinery minus to Conway, Kan., the 30-mile extension to Mont Belvieu, and a 50% Interest in a refinery at Borger, Tex., with capacity to and [Jump capacity and to the current 580-mile pipeline COG] process 146,000 bid of crude and 45,000 bid of NGLfrom Con­ Online, june 13, 2011). ocoPhillips in exchange for 50% interests in its Foster Creek The company anticipates Southern Hills having capacity to and Christina Lake steam-assisted gravity drainage heavy oil ship about 150,000 bid of Y-grade NGL and expects it to en­ projects in Alberta. Cenovus is raising production capacity of ter service as early as mid-20l3. DCP Midstream will operate both projects (OGj Online, june 7, 2011). Southern Hills as a common carrier pipeline, connected to sev­ eral DCP Midstream processing plants and anticipated third­ Mongstad refinery's delayed coker due revamp party NGL producers. Mongstad Refining has let a $39.8 million fabrication and con­ DCP reached a long-term anchor agreement with Targa Re­ struction contract to Kvaemer for a revamp of the delayed coker source Partners LLC in May for capacity at Targa's 100,000 bid at its 200,000-b/d refinery at Mongstad, Norway. fractionation expansion at Monl Belvieu COGj Online, May 10, According to Oil & Gas journal's Worldwide Refining Sur­ 2011). IiJi!I Why dig around? Extract exactly \I\fhat you need. Lonza

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• Denotes new listing or Hands-on Engineering PIRA Underslanding (212) 686-6808, Marcellus Summit, State com, website: www. a change in previously Management Training, Gas Markets Confer- (212) 686-6628 (fax), College, Pa" (405) 525- gpaeurope,comleventsl pubfished information. Paris, +331 4139 11 ence, Singapore, (212) e-mail: [email protected], 3556, ext. 117, e-mail: evenU201. 24. 80, e-mail: pl.ruei1@ 686-6808, (212) website: www.pira.com. Amy.childers@iogcc. ifptraining.com, website: 686-6628 (fax), e-mail: 15-16. state.ok.us, website: Optimal Hydrocarbons http://www.ifptraining. [email protected], web- http://www.outreach. Logistics, A. Coruna, /tPJIMDfR 20lL com/eng/flyers/dl/EP/6. site: www,pira.com. 15. Global Oil & Gas Health psu.edu/programs/ +34917001271, 0 EP_Hands-on-Engi- & Safety Summit, natural-gas/. 16-18. e-mail: jlopez@iirspain. PIRA Asia Pacific neering-Management- API/NPRA Fall Operat- Amsterdam, +44 (0) com, website: http:// Conference, Singapore, Training_20111114.pdf. ing Practices Sympo- 207 067 1818, +44 (0) IAOC Critical Issues www.iirspain.com/ (212) 686-6808, (212) 14-16. sium, Los Angeles, 207 430 9513 Ilax), Asia Pacific Confer* progra mas/CFOI67.pdf. 686-6628 (fax), e-mail, (202) 6828000, (202) e-mail: k.magnusson@ ence & Exhibition, 29-30. [email protected], web- latin America LPG 682-8222 (fax), web- theenergyexcha nge. Kuala Lumpur,I7l3) site: www.pira.com. 14. Seminar, Buenos Aires, site: www.api.org. 15. co.uk, website: www. 292-1945, (713) 292- Global Tight Oil Summit, (713) 331-4000, (713) wraconferences.com. 1946 (fax), e-mail, Oenver, +44 (201 7067 Global Rertning Strate- 236-8490 (fax), web- European Autumn G8S 15-17. co nferen [email protected]. 1800,+44(20)7242 gies Summit, Houston, site: www.purvingertz. Conference (EAGC), website: www.iadc.org/ 2673 Ifax), e-mail, (4161214-1707, (416) com. 14-16. Paris, +44 10) 203 lBO International Petroleum conferences/Critical_ls- z.nathan@theenergyex­ 214-3403 (fax), e-mail, 6570, e-mail: Iynnerob* Technology Confer- sues_ME_20l1. 23-24. change.co.uk, website: laurence.allen@wt- API Fall Refining and [email protected], ence, Bangkok, +60 www.theenergyex­ gevents.com, website: Equipment Standards website: www.theeagc. 322881233, +603 AGM and Technical change.co.uk. Nov. www.globalrefining- Meeting, Los Ange- com. 15-16. 2282 1220 (fax), e- Meeting, London, +44 29-0eo. 1. sum mi Lcom/program. les, (202) 6828000, mail: [email protected], 1252625542, e-mail, 14-16 (202) 682-8222 (fax), PIRA Understanding website: www.iptcnet. admin@gpaeurope. Refining and Petro­ website: www.api.org. Global Oil Markets org.15-17. chemicals in Russia 14·18. Conference, S.ingapore, and The CIS Countries

14 Oil & Gas Journal I Nov. 14, 201 1 ______2011-2012 EVENT CALENDAR

Annual Roundtable, (212) 686-6628 (fax), SPE Middle East Un­ ence, Houston, (918) Of{shore West Gas Transport & Storage Geneva, +44 (0) 207 e-mail: [email protected]. conventional Gas Con­ 560-2650, (918) 560­ Africa Conference & Summit, Berlin, +44 067 1818, +44 (0) website: www.pira.com. ference and Exhibition, 2678 9(1ax), website, Exhibition, Abuja, (918) (0)207202 7690, +44 207 430 0552, e-mail, 14-15. Abu Dhabi, (972) 952­ www.aapg.org. 24-25. 831-9160, (9181 831 (0)207202 7600 (fax), j.sundaralingam@ 9393, (972) 952 9435 9161 (fax), e-mail, website: www.gtsevent. theenergyexchange. PIRA Coal and (fax), e-mail: spedal@ Annual Shale Gas & Oil registration@pennwell. corn. 26-27. cD.uk, website: www. Emissions Markets spe.org, website: www. Symposium, Calgary, com, website: www. wraconferences .com. Conference, New York, spe.arg. 23-25. Alta., (8771927-7936, offshorewestafrica.coml Plant Maintenance Nov. 29-0eo. 2. (212) 686-6808, (8771927-1563 (fax), index.hlmL 24-26. and HSE Middle East (212) 686-6628 (fax), API Exploration and e-mail: customerser- Annual Meeting, Abu e-mai'l: [email protected], Production Winter vice@canadianinstitute. European Gas Confer- Dhabi, +971 2401 website: www.pira.com. Standards Meeting, Fort com, website: www. ence, Vienna, +44 (20) 2932, +971 2401 1928 14-15. Worth, Texas, (202) canadianinstitute. 7067 1800, +44 (20) (fax), e-mail, s.rnehla@ DEA(e) Technical Oil 682-8195, e-mail, reg- corn/2012/318/8th­ 7242 2673 (fax), e·mail, theenergyexchange. & Gas Conference [email protected], website: annual-shale-gas-and­ wra@theenergyex- co.uk, website: www. on Downhole drilling www.apLorg. 23-27. oil-symposium, 24-25. change.co.uk, website: wraconferences.com. Technology, Aber- www.theenergyex- Jan. 29·Feb. 1. deen, +44 (0) 1483 Pipe Tech Ameri- IPAA Private Capital Annual Chem-Petro­ change.co.uk.24-27. 598000, e-mail: dawn. cas Annual Offshore Conference, Houston, c11em and Refining Middle East and North [email protected], Production Technology (20lJ 857-4722, (202) Asset Management API/AGA Joint Commit­ Africa Energy Confer­ website: www.dea- Summ'rt, London, +44 857-4799 (fax), web­ Conference, Houston, tee on Pipeline Welding ence, London, +44 europe.com. 1-2. (0)2072027574, +44 site: www.ipaa.org. 24. (312) 540-3000 ext. Practices, Fort Worth, (0)207957 5753, +44 n (0)2072027600 (fax) 6754, (312) 894-6304 Texas, (202) 682-8195, (01207321 2045 (fax). ASTM International e-mail: hejke.coelzee@ AAPG GTW Deepwater (fax), e-mait: Iindseysi@ e-mail: registrar@api. website: www.chatham­ Committee 002 on wtgevents.com. Web- Reservoirs Multi-Disci­ ma rcusevansch.com, org, website: www.api. house.org/mena2012. Petroleum Products and site: www.offshore· plinary Exploration and website: www.marcu­ org. 25-26. 30-31. Lubricants, New Or- summit.com.16-18. Deveiopment Confer- sevans.com.24-26. leans, (610) 832-9681, e-mail: dbradley@astm. World Future Energy org,website: www.astm. Summit, Abu Dhabi, org/COMMIT/D02.htm. +97124446113, +9712 4-8. 4443768 (fax), website, www.worldfutureener­ 20th World Petroleum gysummit.com.16-19. Congress, Doha. +974 Summit, Houston, 44491373,97444 (416) 214-1707, (416) 291080 (fax), e-mail, 214-3403 (fax), e­ [email protected], mail: laurence.allen@ website: www.20wpc. wtgevents.com, web­ com. 4-8. site: www.pipetecha· mericas.com/program. Gas Arabia Summit, 18-19. Muscat, +44 (20) 7067 1800, +44 (20) 7242 n International Forum 2673 (fax), e-mail, Your Spec:ialist in metallurgically clad Pipes Process Analytical I I wra@theenergyex­ Technology (IFPAC) change.co.uk, website: Annual Meeting, Balti­ www.theenergyex­ For more than 230 years BUTTING has BUTTING more, (847) 543-6800, change.co.uk. 11-14. Germany· Belgium· (847) 548·1811, fax, been supporting the customers with BraziL· Canada· China e-mail: info@ifpacnet. its skill and innovations. Since the PIRA Natural Gas Mar­ Brigitte Blechinger org, website: www.ifpac. mid-eighties we have been producing kets Conference, New Sales Oil and Gas Upstream corn. 22-25. York, (212) 686-6808, longitudinally welded, metallurgically Phone; +49583450-230 (212) 686-6628 (fax), clad pipes and have delivered more than [email protected] • Flow Assurance e-mail: [email protected]. 6,500 tons of these pipes to customers WVr'W.butting.tom Forum, Aberdeen, +44 website: www.pira.com. world-wide. We produce them in Oo's (01 20 7368 9300, 12-13. e-mail: enquire@iqpc. from 114.3 mm 14"1 up to 1,219 mm [48"1 co.uk, website: www. in various material combinations. PIRA Understanding flowassurance,orgl Global Oil Markets event. 23-24. Progress by Tradition! @BUTTING Conference, New York, (212) 686-6808,

Oil & Gas Journal [ Nov. 14,2011 15 iJ lfU:If~~[J[$~:~_~Ili[~j

Again word power

For many years, until the internet came along, Oil of the monument's subject and his country. In &: Gas journal's pipeline editor traveled to Wash­ part: ington, DC, annually to gather data for OG]'s Pipe­ "Injustice anywhere is a threat to justice every­ line Economics Report. The research took most of where. We are caught in an inescapable network each day for an entire summer week of mutuality, tied in a single garment of destiny. The evenings, however, still light and a bit cool­ Whatever affects one directly, affects all indirect­ er, provided the chance to see some of the city's ly." And. . \ sights. And I did. And I wrote about them. "I have the audacity to believe that peoples .'J A column here in those days, almed somewhat everywhere can have three meals a day for their at readers less familiar with US history and its ma~ bodies, education and culture for their minds, and jor figures, focused on the memorials in Washing­ dignity, equality, and freedom for their spirits." ron to two of those figures-Thomas]efferson and WARREN R. TRUE And ... Chief Technology Edilor­ Franklm D. Roosevelt (OGj, Aug. 23,1999, p. 23). "Every nation must now develop an overriding LNG/Gas Processing The column called attention to their words, on loyalty to mankind as a whole in order to preserve which their memorials are organized and which the best in their individual societies." eloquently express much of what this nation has The sense and tenor of these and the 11 others aspired to. In 1999, I found both the physical sites echo one of FDR's, which I quoted back in 1999: and the language moving; I still do. "We must remember that any oppression, any in­ justice, any hatred, is a wedge deslgned to attack An addition our civilization." Last month, the US dedicated a third memorial, this time to someone many Americans remember Global effect well: Martin Luther King Jr. The memorial to the After that column published 12 years ago, a friend civil rights ac[ivist, assassinated in 1968, sits adja­ wrote to say he liked it but wondered how many cent FDR's memorial and directly across the Tidal of my readers shared my admiration for the ideas Basin from jefferson's. etched in those monuments. Perhaps that might be { 1 Like those other two, King's memorial im­ more true today. ~ presses with its Simplicity and dignity. Its web Growing up in the US South in the 1950s and site, www.mlkmemoria1.org, describes the design '60s, I rarefy heard Martin Luther Kingjr. praised. and its meaning: Two parted smnes form the entry (Roosevelt either, for [hat matter.) Today there re­ and lead to a larger stone that "appems to have main many who believe King's ideas and words been thrust into the plaza...." Text on lts side from are undercut by his failings as a man. Let's hope King's 1963 speech clarifies the relationship: "Out few of us have our own beliefs scrutinized in the of the mountain of despair a stone of hope." glare of how we have lived. From thal solitary Stone of Hope emerges a But then the recent protests and revolutions larger-than-life sculpture of a somber King, stand­ across much of the Arab-speaking oil and gas ing, arms crossed over his chest, staring over the world, what are they about if not dignity, hope, Tidal Basin towards the Jefferson Memorial. flar­ a desire to control one's future? Surely, some­ ing in a crescent from the entry stones to flank the where on the streets of Hams, or Tripoli, or Stone of Hope is a 450-ft granite wall engraved Manama, or Cairo, or Sanaa someone has heard with 14 of King's pronouncements. of Jefferson, Roosevelt, or King, or at least read like both nearby older memorials, it is those their words? Im!I quotations that convey the overarching principles

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For a government $15 trillion in debt running an needed more planning, organizational adjustment, annual budget deficit of $1.3 trillion, a government staffing, and training, Friedman said. "Despite a now witb a select committee of legislators meeting major effort in a high~pressure environment, tbe in secret to find $1.2 trillion in savings, $16 bil­ department struggled to obligate and expend re­ lion doesn't sound like much. As troubles in thal covery act funds on a timely basis." committee show, however, any move toward fiscal Friedman didn't fault DOE. He summarized Lhe health deserves consideration. problems not as misfeasance at the department but All the government has to do is cancel further as "massive funding, higb expectations, and inad­ spending on energy projects under the American equate infrastructure," resulting in, "at times, less Recovery and Reinvestment Act of 2009. This tban optimal performance." should not be difficult. Spending money on po­ Those problems are the work of Congress and litically preferred energy so far has proven to be the White House, committed as they were in 2009 a cballenge. Some call it wasteful. \Vhy not cm to spending the US out of recession and unem­ '0 losses? ployment and into energy bliss. Now the country has a government choking on debt, a sputtering Onerous chore economy, and stubborn joblessness. And after the Spending money should be easy, especially when high-profile bankruptcy of a California solar-panel the money, like all government money, comes from manufacturer named Solyndra, which had a federal the toil of others. Above a certain amount, though, loan guarantee worth half a billion dollars, new the chore becomes onerous. scrutiny has befallen outlays dedicated to uneco­ Spending billions apparently has proven espe­ nomic energy. cially difficult for the Department of Energy. Greg­ It's about time. Taxpayers are spending too ory H. Friedman, DOE inspector general, made much money on energy that can neither compete tbat clear in testimony Nov. 2 before the Subcom­ economically nor contribute enough to supply to mittee on Regulatory Affairs, Stimulus, Oversigbt, warrant the expenditure. Politics guides too many and Government Spending of the House Commit­ decisions about where the money goes. The distor~ tee on Oversigbt and Government Reform. tions create costs and make the agenda unsustain­ Friedman described problems DOE has had able. They might prematurely condemn energy spending funds allocated to it by the American Re­ forms that would have more hope if allowed to coveryand Reinvestment Act of 2009, the law that develop under the rigors of markets instead of the was supposed to rescue the economy \vith $840 pressures of politics. billion of federal largesse The law made DOE the u mechanism for distributing $35.2 billion in vari­ Broader lessons ous ways, from an expanded weatherization pro­ Broader lessons abound here. The government gram to loan guarantees for nonfossil energy. That can't solve national problems simply by heaving sum exceeded DOE's budget for fiscal LOll by $8 money at them. Friedman's testimony and fiascos billion. According to Friedman, the mission "over­ like Solyndra, which isn't alone, make failure of the whelmed" DOE and the state and local bureaucra­ approach dear at one federal depanment. Surely, cies downstream in the money sluice. the failure doesn't end there. Wasteful spending by IG investigations found the effort to use recov­ government hardly confines itself to energy. ery act money as economic stimulus to be "more The US can't afford this. Friedman said nearly challenging than many had originally envisioned," 45% of DOE's recovery act funds haven't been Friedman said in written testimony. "The concept spent. So not spending it would save $16 billion. of 'shovel-ready' projects became a recovery act Relieving an overwhelmed DOE of the need to symbol of expeditiously stimulating the economy spend the money would represent more than a and creating jobs. In reality, few 'shovel-ready' proj­ step. however small, toward fiscal health. Taking ects existed." Programs at DOE and aL sLate and lo­ that step \-\'ould be a welcome and important sign cal governments that received sudden new funding of responsibility. liliIl

18 Oil & Cas!ournal I Nov. 14,2011

GENERAL INTERESTJ I Industry officials attack latest call to raise oil, gas taxes

Nick Snow Washington Editor

Oil and gas industry association officials blasted a proposal of manufacturing and transporting products, and raising sent by several congressional Democrats to the deficit reduc­ the costs of operating businesses," National Petrochemical tion super committee on Nov. 2 to raise revenue by eliminat~ & Refiners Association Pres. Charles 1. Drevna said in a ing key provisions benefiting the industry. Congress and the statement. "They would make it harder for American oil and 0 super committee should take the necessary time to compre­ gas producers, and fuel and petrochemical manufacturers hensively address tax reform questions and resist apparently to compete with foreign rivals on a level playing field. This easy suggestions which actually would do more economic would wipe out jobs, weaken our economy, and increase damage, they said on Nov. 7 America's reliance on foreign oil, fuels, and petrochemicals." "Some of the proposals are just punitive to oil and gas as a Their responses came after several congressional Demo­ sector. Others are even more specifically selective and more crats urged the super committee to repeal federal tax pro· punitive by selecting just a handful of companies," American visions which directly benefit the oil and gas industry or Petroleum Institute Pres. Jack N. Gerard said in a teleconfer­ exclude the industry specifically from general corporate ence with reporters. ''All you have to do is look at corporate tax exemptions. "This is not class warfare. This is common earnings, and you'll find companies that make more but pay sense," declared Robert Menendez (Nj), a Senate Energy and a lower effective tax rate. No one is calling for higher tax Natural Resources Committee member, in a Nov. 2 press re­ rates for those companies, nor should they. We should be fo­ lease. "We want the oil companies and their shareholders to cused on creating jobs, not punishing a particular industry." do well, but we should not be spending 21 billion taxpayer Others questioned the wisdom of Congress trying to dollars to unfairly reward their tremendous success." make major tax policy reforms in such a short period. "Pro­ "I applaud the success of these companLes and believe posals to drop corporate rates into the 25% level will require that in the United States individuals should, through merit repealing significant depletion exemptions that are way be­ and hard work, be able to build wealth," Rep. James P. Mo­ yond our industry, such as eliminating accelerated depletion ran (Va.), ranking minority member on the House Interior and the manufacturers' tax deduction for every industry, not Appropriations Subcommittee, said in a commentary in theo JUSt ours," noted Lee O. Fuller, vice-president of government Nov. 3-9 Falls Church (Va.) News-Press. "But given their relations at the Independent Petroleum Association of Amer· profitability, it's clear that these companies do not need thei r ica. "When you start sweeping through it in that context, current tax breaks and the public subsLdies they receive. BLg we're a minor player." oil tax expenditures are, without doubt, wasteful spending In a separate interview, V. Bruce Thompson, president of of taxpayer dollars. Removing these tax breaks will not hurt the American Exploration & Production Council (AX PC), the oil and gas industry, nor will it affect the price of oil." said, "It's a blanket approach-just get rid of everything oil Gerard disputed such characterizations. Oil and gas pays and gas, and let the chips fall where they may. Our concern more in total corporate taxes than any other US industry, he is with the thinking on intangible drilling cost deductions, maintained. Its effective 2010 tax rate was an average 41.1%, which is clearly a tax code proVision which lets us recover, in compared with 26.5% for other businesses in Standard & the year of expenditure, any items that have no salvageable Poor's Industrial Index, and the tax provisions critics tar­ tax value, as with any company's research and development get are no di~ferent than normal business deductions and expenses." cost recovery mechanisms widely used throughout the US economy, he said. Negative impacts "These tax increases would hurt American consumers and Recurring stimulus employers by raising the costs of driving, raising the costs "And it doesn't end there," Gerard continued. "In 2010, we

20 Oil & Cas Journal [ Nov. 14, 2011 directly contributed more than $470 billion to the US econ­ ready has entered the 2012 election cycle and a lot is riding omy in spending, wfJges and dividends-more than half the on the outcome. Gerard said that the super committee's d is­ size of the 2009 stimulus package. But this stimulus hap­ cussions could matter more in the next few weeks, depend­ pens every year without an act of Congress and at no cost ing on whether it forms a framework for debate in 2012 or to taxpayers." An advertising campaign that API plans to simply delays it until after next year's elections. launch on Nov. 8 as part of its ongoing issues advocacy ef­ "It's fundamental to the debate that every person in the I forts recognizes four super committee members who have country is focused on jobs. That's where our industry can opposed higher energy taxes, he said. play such a critical role," Gerard said. "This summer, while The intangible drilling costs exemption is the biggest is­ job growth generally was anemic, our industry continued to sue for AXPC's members, Thompson [Old OGJ. "Our mem­ create jobs. Clearly, the public sees the issues the way we do: bers spend 95-110% of their cash flow each year drilling Let's put people back to work, let's put the economy back on wells," he said. "If their tax bills are materially increased, it track, and then let's focus on ways we can stay internation­ will reduce the number of wells drilled in the United States, ally competitive." which I don't think anybody wants." US oil and gas companies simply want the same tax treat­ Fuller said that for IPAA's member companies, ill-consid­ ment thal those in other industries receive so they can com­ ered general tax code changes could pose nearly as big a pete with foreign firms and continue to provide well-paying threat as efforts aimed specifically at oil and gas producers. domestic jobs, NPRA's Orevna said. "Instead of demonizing ''A lot of independent producers file as corporations, but oth­ and vilifying American manufacturers of proven and reli­ n ers, such as limited liability companies and master limited able fuels and petrochemicals-along with the workers who partnerships, file as individuals so they can reflect deduc­ make these vital products-policymakers should join us in tions in their individual returns," he said. "So if Congress working to best serve the American people and preserve and simply lowers the corporate tax rate without a pass-through create jobs," he said. [iJi!J for individuals, several independents would lose deductions but keep the higher rate because they weren't filing as cor­ porations." This interaction between tax rates and deductions is very Salazar unveils new significant, particularly for small business filing as individu­ als, he noted. This is why in the debate on tax reform, all proposed 5-year OCS the provisions need to be examined carefully. They can't be honestly assessed in a short period," Fuller told OGJ. "There leaSIng program were four years of VlgOroUS debate before Congress passed the 1986 tax bill. We have the issues of being isolated as an Nick Snow industry, and the broader issue of across-the-board propos­ Washington Editor als which have not being fully considered." Thompson said, "We're one of the few industries which is US Sec. of the Interior Ken Salazar announced a proposed actually creating jobs. It makes no sense to throw us under US Outer Continental Shelf program for 2012-17 with 15 the bus. This whole process needs to be conducted compre­ potential oil and gas lease sales, 12 in the Gulf of Mexico and n hensively, not over 6 weeks, if it's going to be done right. 3 off Alaska's coast. "This 5-year program will make avail­ There's no rhyme-or-reason to raise a company's taxes just able for development more than three-quarters of undiscov­ because it has oil and gas in its name. That's the frustrating ered oil and gas resources estimated on the OCS, induding part of it." frontier areas such as the Arctic, where we must proceed cautiously, safely and based on the best science available," May shape 2012 debate Salazar said on No\'. 8 as DOl's US Bureau of Ocean Energy The next few weeks could be Significant, Gerard suggested. Management released the tentative schedule. "There's been a lot of focus on the super committee related to A fact sheet about the proposed program-the second of revenue and taxes," he said during the teleconference. "The three that must be issued before a final 2012-17 program way that debate concludes will tell us what the game plan is established-said it included five annual area-wide sales will be going through 2012. We believe there will be con­ offering all unleased acreage in the western Gulf of Mexico versation around tax issues and corporate tax reform, but beginning in fall 2012; five more similar annual area-wide until the super committee concludes its deliberations, 1 don't sales in the central gulf beginning in spring 2013; and two think it's likely tbat anything will be resolved. I'm not cer­ sales in the eastern gulf, in 2014 and 2016, in areas not un­ tain if anything will be considered next year or before the der congressional moratorium. end of this Congress." The proposed schedule also included a sale in the Beau­ He said that some in Washington believe the country al- fort Sea in 2015 and one in the Chukchi Sea in 2016 off

Oil & Cas Journal I Nov. 14, 2011 21 GENERAL INTEREST ------­

Alaska. The schedule provides time to learn from interim Survival Team, said that the organization appreciated the exploration and further analyze environmental, subsistenCE: latest proposed 5-year oes plan with its 12 gulf and 3 use, and infrastructure issues so the sales can be tailored to Alaska offshore sales. "However, there continues to be tre­ address these issue. A special interest sale in Alaska's Cook mendous uncertainty within the industry as to the ability of Inlet, initially scheduled for 2013, might be delayed depend­ the government to timely approve the necessary plans and I ing on industry interest. permits to enable future projects to move forward," she con­ It did not include any lease sales off the US Atlantic CO

Association President Randall B. Luthi. "While today's de­ Investigators found that the three

22 Oil & Cas Journal I Nov. 14,2011

WATCHING GOVERNMENT However, many ocher large oil and gas producing states have no such re­ .".J.'rr , NICK quirements, it continued. Two major oil producing states, Texas and Okta­ c: ,r S OW homa, require fencing and warning ;; ! 'I'" I N signs for certain sites that have toxic J Washington Editor I Blog at wwwogj.com gas hazards but not for all sites with flammable storage tanks, according w CSB. Formal recommendations lessons from 1973 oil crisis Among the report's six formal safety recommendations, CSB urged that Can we learn from history? Hindsight price controls," he aclded. "Both sides state regulators require the use of flame gives us an advantage over those who of the aisle in both houses of Congress arrestors, pressure-vacuum vents, were involved in important policy deci­ clamored for them." When Nixon de­ floating roofs, vapor recovery systems, sions back then. But the people who cided to remove them in late-1973, he and other inherently safe tank design were there can still provide significant kept controls in place on oil because features. The safety measures, which 0 perspectives that could add authority those prices were shooting upward are simila r to those already used in re­ to current discussions. in the Arab oil embargo's wake, Tozzi fineries and other downstream storage That's what made the Nixon Legacy said. tanks, reduce emissions of flammable Forum's Oct. 19 program, "Respond­ vapor from the tanks or otherwise pre­ ing to the Energy Crisis," at the Center Broadened energy R&D vent an external flame from igniting for Strategic and International Studies Nixon had established a substan­ vapor inside the tank, it said. more than a group of "old hands" get­ tial energy policy legacy by then. The board also recommended that ting together to talk about what hap­ Schlesinger said the president the US Environmental Protection pened leading up, during, and after broadened energy research and Agency issue a safety bulletin warning the fall of 1973. development beyond nuclear power, of storage tanks' explosion hazards; Richard Fairbanks was associate di­ where it had been confined since the describe the importance of increased rector for energy and natural resources 19505, and formed an oil policy office security measures such as fencing, at the White House Domestic Council. in 1973. He eventually established the gates and signs; and recommend the James R. Schlesinger was chairman Energy Research and Development use of inherently safer storage tank de­ of the US Atomic Energy Commission. Administration, which was folded into sign. Similarly, the recommendations James J. Tozzi was environmental chief the new US Department of Energy in seek to add ress the current gaps in in the White House Office of Manage­ 1977. regulations and codes in Mississippi, ment and Budget. Fairbanks pointed out that Con­ Oklahoma, and Texas, CSB said. Their basic message was this: gress passed a one-sentence bill eSB's investigation also examined 0 Before you can understand why a authorizing construction of the Trans­ industry codes and standards, such decision was made, you have to recog­ A[aska Pipeline System about the as those from the American Petroleum nize the full range of events that were same time after Vice-President Spiro Institute and the National Fire Protec­ occurring at the time. T. Agnew broke a 49-49 tie with his tion Association. It said [he final re­ Tozzi noted that price controls vote for it. port recommends that both organiza­ did not begin with oil, for example. Congress clearly was responding tions adequately address hazards that A Congress controlled by Democrats to soaring oil prices in 1973. Thirty­ upstream oil and gas sites present to passed the Economic Stabilization Act eight years later, another Congress the publtc through amend mems to in 1971, never expecting a Republican responded to another oil price spike their existing codes or creation of ad­ president to use its authority, he said. by letting US Outer Continental Shelf ditional guidance. It was US Sec. of the Treasury John drilling moratoriums expire. An obvious Specifically, it recommended that B. Connelly who suggested that Nixon question is whether voters will demand API warn of the explosion hazards freeze prices as a way to stop inflation federal approval of the proposed Key­ presented by exploration and pro­ and, incidentally, help the president's stone XL pipeline project if oil prices duction sites, including requirements 1972 reelection campaign, Tozzi said. jump again in 2012. It's another e[ec­ for security measures such as fencing "You have to understand it wasn't tion year, after a[1. 1iI!!l gates and signs, recommendations for just the administration demanding inherently safer storage tank design,

24 Oif& Cas/Duma' I Nov. 14,2011 ------GENERAL INTEREST

and acknowledgment of the public safety issue presented by tional University's Cuban Research Institute, said the US has these sites. IiIi!J agreements of cooperation wtth Mexico and Canada regard­ ing an oil spill. Daniel j. Whittle, a senior attorney and Cuba program director at the Environmental Defense Fund, said a similar Witnesses discuss US bilateral agreement is urgently needed with Cuba and the I Bahamas. ability to respond Current US policies toward Cuba allow scientific, aca­ demic, and conservation groups to conduct on-the-ground to oil spill off Cuba research projects with Cuban partners and institutions, but these exchanges generally involve nongovernmental groups Nick Snow and institutions. Washington Editor "Most private companies are prohibited from doing busi­ ness in Cuba because of the embargo," Whittle told the sub­ The US is working with adjacent countries to develop effec­ committee. "There is a narrow exception for some private tive responses to offshore crude oil spills that could threaten entities, such as oil service companies, but they must first US coasts, a US Department of the Interior official told a US apply for specific approval from the US Treasury and Com­ House subcommittee. merce Departments to provide services and export equip­ n Other witnesses suggested that more needs to be done, ment to Cuba." particularly in regard to Cuba. Few oil service companies have requested specific licens w Michael R. Bromwich, interim director of the US Bureau es, probably because the process is complicated and time­ of Safety and Environmental Enforcement, told the House consuming, he said. Natural Resources Committee's Energy and Minerals Sub­ "In the event of an oil spill in Cuban waters, d1is licens­ committee that the US government is in close contact with ing process would cost precious time," Whittle said. "We are Repsol-YPF SA as it prepares to drill offshore Cuba. very naive to think that in the case of Cuba, a handful of The US government wilt use all appropriate resources and individual export licenses could prevent and contain a deep­ authority to respond to any spill in Cuban or other waters. water oil exploratory well blowout." "The administration has engaged state and local govern­ He advocated a general license to export and supply ments and private parties that might be affected by such a eqUipment, personnel, and services to international oil com­ spill to ensure awareness and mUlual cooperation and the panies operating in Cuba in the case of an emergency. adequacy of five different existing area contingency plans He also suggested US regulators have not yet considered covering Florida where models predict varying probabilities that Malaysian national oil com[Jany Petronas plans to drill of US shoreline impacts should a spill occur at the planned in Cuban waters using the same rig once Repsol finishes explorawry drilling locations in Cuban waters," he said in with it. IiIi!J written testimony for the subcommittee's Nov. 2 hearing. BSEE staff is working with the US Coast Guard's Miami office to develop an international offshore drilling response plan and will participate in a workshop about the plan, Sanctions, saboteurs take Bromwich continued. "We will continue with active support of these efforts to toll on Syria's oil industry ensure that appropriate plans and resources are in place to respond in a rapid and effective manner to an oil spill that Eric Walkins reaches US waters," he said. Oil Diplomacy Editor The US Departments of Commerce and Treasury also have a long-standing practice of providing licenses for US Syria's Oil Minister Sufian Allaw acknowledged that sanc­ companies to respond to environmental emergencies in tions recently imposed by the US and the European Union Cuban waters. BSEE is working closely with other federal have reduced his country's production of oil to 270,000 bid agencies on initiatives with other countries, including Cuba, or less from its normal rate of 380,000 bid. Mexico, the Bahamas, and]amaica, Bromwich said. "The imposed sanctions affected the exportation of crude oil and oil derivatives to Europe," said Allaw. In view of de­ More bilateral agreements pressed exports to the EU, Allaw expressed hope that Syria's More needs to be done in the way of bilateral agreements, government will be able to locate alternative markets for the two wltnesses testified. country's output. Jorge R. Pinon, visiting research fellow at Florida lnterna­ "Syria's oil productivity might lncrease according to the

Oil & Cas Journal I Nov. 14,2011 25 GENERAL INTEREST ------­

size of exports and storage capacity," Allaw said. Syria earns mestic needs are secured as "there is no modification in the 28% of its annual revenue from oil sales, with Europe buy­ all prices." ing about 95% of its output. However, protestors against the Assad regime are ham­ The US and EU imposed sanctions on senior Syrian offi­ pering the delivery of those oil supplies to the domestic mar­ dais and entities, and called on President Bashar aI-Assad to ket through attacks on pipelines within the country. I step down. In September, the EU banned investment in the Last month, the Syrian army reportedly dismantled an country's oil sector, and reinforced its earlier ban on imports explosive device placed on a crude pipeline in the Babo of Syria's oil. Amro area of Hams, the location of numerous clashes with In an effon to bypass the US and EU sanctions, Allaw said protestors. The device was said to be "carefully camouflaged that "there are ongoing talks with more than 50 companies and positioned" to cause maximum damage ro the pipeline. and traders to reach appropriate agreements on exporting In July, Syria's state media reported that saboteurs oil." bombed a crude oil pipeline linking the city of Homs and Syria has sent delegations to companies in India, Indone­ the Mediterranean pon of Tanous. sia, and Malaysia to market its oil, Allaw said. He said Syria Explosives were placed along the pipeline at Talkalakh has signed three new contracts to export oil as early as next near the border with Lebanon, causing a lO-m crater in the month, but he provided no details of the agreements. ground. There was no report of the amount of oil spilled or Allaw denied reports that foreign companies stopped how long repairs would take. their activities in the country's oil sector, a view partially AHaw said the oil ministry has taken "necessary measures contradicted by Croatia's INA, which cut its production of to prevent more attacks by armed terrorist groups on fuel u oil to 1,500 bid from the normal 3,000 bid. pipelines and repai r the damaged ones in Idleb and Hama." The cut in production came after Syria's government, eye­ Allaw said the pipelines carry fuel to the governorates ing the effect of the sanctions, ordered producers to reduce of Hama, Aleppo, IdIeb, and Raqqa. He said the ministry output as export cargoes were left without buyers and stor­ would continue its efforts to meet fuel needs in these gov­ age areas were full. ernorates through the use of tanker trucks and trains. [fig INA also said it could face difficulties obtaining payment for its continued production of oil and gas in Syria, espe­ cially if existing sanctions are tightened. "These restrictive measures might have additional adverse Rapidan Group sees effects, which could reflect through difficulties in collection of receivables coming from local production," INA said. oil price up by $175/bbl "INA cannot exclude the possibility of further tightening of the restrictive measures against Syria, which could have if Iran attacked further negative effects on Syrian revenues or production levels," the company said. Eric Walkins Traders also confirmed that Syria's state-owned Sytrol Oil Diplomacy Editor canceled a tender to sell 50,000 tonnes of naphtha, an indi­ cation that internatlonal firms have become more careful in Oil prices could spike by as much as $175/bbl according to the wake of the sanctions regimes. a new analysis of the impact on oil markets of an Israeli at- U "The Syrian tender has been canceled. They are keeping it tack on Iran and subsequem closure of the Strait of Hormuz. in their domestic gasoline pool," a London-based trader told "Concern is rising among officials in Washington and Je­ Reuters, adding, "We were told not to (buy)." rusalem that Israeli leaders increasingly favor unilateral mil­ Another oil-products trader active In the Middle East itary action to slow Iran's pursuit of a nuclear weapon," said said, "I don't do Syria anymore. Sanctions appeared tougher, Robert McNally, head of the Washington, DC-based Rapi­ so I gave up. The problem is getting a bank to finance it and dan Group. a ship owner to go there." Israeli leaders have said they favor a diplomatic solution, That view was confirmed by Allaw, who said Syria must but a spate of Israeli media reports on a possible strike have overcome a number of obstacles in its effort to find other appeared this week, accompanied by veiled threats from top export markets, mainly the need to find tankers and open politicians. credits at banks. In a speech to parliament this week, Israel's Prime Min­ The lack of export markets does mean that Syria faces ister Benjamin Newnyahu said a nuclear-armed Iran would little or no domestic shortfall in supplies. pose a "dire threat" to the world and "a grave, direct threac "We do not have any shortage of oil, and we have good on us, too." reserves of diesel fuel available," said AlIaw, who note~ that Meanwhile, according to McNally, press in Jerusalem and preparations are in hand for the coming winter and that do­ Washington is starting to get wind of the poss.ibility of an

26 Oil & Cas Journal I Nov. 14,2011 ...... _::: :::: ~~~±£~~i~:~~:~J~++ ~;: ~ j: ~:!: ~ ~:! ~ \: ~ ~ ~ ~ ~:: ~! ~ ~! ~:: ~(ieF::~ S:Hf ~R:::::E: - QATAR NATIONAL CONVENTION CENTRE :::::: :::::: ::: u:;: ::." :: u:: ... : DOHA, QATAR:::::::::::::: :::::: ::::: :::::::: : :: :::::::: • • M' :I: [I: :0.: U·: E::: :8' :A'::'S: I: : WWW.OFFSHOREMIDDLEEAST.COM ::::::::::. :::::::::::::::: : ::: ::: .::::.:: :'.:::: ...... -- --- ...... , ...... ,...... : : : : : : :: : :: :: : :: : :: : : : : ORGANIZED BY: 0l'lY:Jure

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UNDER THE PATRONAGE OF OFFSHORE H.E. Dr. Mohammed Bin Saleh A1-Sada Minister of Energy & Industry MATTERS

CALL FOR ABSTRACTS DEJ!\DLINE: 22 NOVEMBER 2011 The Advisory Committee of Offshore Middle East is now accepting abstracts for the Offshore Middle East 2013 Conference. We invite you to submit an abstract for Offshore Middle East 2013 and share your knowledge, experience and solutions with industry colleagues from around the world. Offshore Middle East. the regions premier technical conference within the Middle East region, will return to Doha, Qatar, on 21-23 January 2013. Providing a platform for technology exchange and new business development, Offshore Middle East has announced the Call for Papers NOW OPEN. With the theme, Investing in Offshore Matters, the 2013 Conference will for the first time include a Gas Industry Operations track, providing a comprehensive dual-track conference covering all aspects of natural gas and gas liquids as part of this technical track, parallel with the upstream and exploration emphasis, seen at previous Offshore Middle East events. To have your presentation considered for the technical session program, please submit ~Iour 150 - 400 word abstract on one or more of the technical focus areas listed at www.offshoremiddleeast.com by 22 November 2011,

For further information and to submit an abstract please visit: www.offshoremiddleeast.com

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28 Oil & Gas Journal I Nov. 14,2011 ______GENERAL INTEREST

Iran could be increased following a report by the Interna­ are subject to huge uncertainties." tional Atomic Energy Agency due next week, especially if it El Badri said, "Confidence is key," adding, "It would be a I confirms that Tehran is working [Q develop a nuclear weap­ damaging waste of resources to invest in capacity that is not on as Western powers believe. I!Ii!I needed." The OPEC figures on increased spare capacity are in Hne with predictions made by the International Monetary Fund in a report issued earlier this month. OPEC plans to double IMF said global production capaCity is expected to rise by 6.8 million bid by 2016, with about 2.6 million bid of the ca­ spare capacity pacity increase expected to come from non~OPEC counlries. "The remainder of the capacity expansion [of 4.2 million to 8 million bid by 2015 bid] is expected to come from OPEC producers, with the largest share coming from Iraq as oil facilities continue to Eric Watkins come back online," it said (OG] Online, Nov. 1,2011). Oil Diplomacy Editor Last month, a report by Deloitte Middle East estimated that national oil companies in the Middle East and North The Organization of Petroleum Exporting Countries said the Africa will invest $140 billion in the oil and gas sector this ~.. group's varying spare capacity is set to double in 4 years year, with more to follow in coming years. ( ! when it will reach 8 million bid. "The Iraqi opportunity itself is lucrative with the govern­ "In 2010, OPECs spare capacity stood at more than 5 mil­ ment expected to award EPC contracts worth more than lion bid," OPEC said in its most recent World Oil Outlook. $130 billion over the course of the next few years," the report "While this capacity fell to about 4 million bid during the said (OG] Online, Oct. 25, 2011). Iili!J second and third quarter of 20ll ... it is expected to stabilize at about 8 million bid over the medium term." The report continued, "Regardless of all the challenges and uncertainties, OPEC member countries continue to in­ EU and Russia vest in additional capacides." OPEC said its member states plan some 132 projects for launch controversial 2011-15 and thal exploration and production plans for that period could translate into an investment figure of close to Nord Stream gas pipeline $300 billion should all projects be realized. Member states must invest "an average of $30 billion an­ Eric Watkins nually over the medium term, rising towards $40 billion/ Oil Diplomacy Editor yem in the long term" to fulfill market needs for the addi~ tional capacity, OPEC said. Russia's President Dmitry Medvedev and German Chancel­ Through the $300 billion is almost twice as much as the lor Angela Merkel inaugurated the 1,200-km Nord Stream $155 billion worth of projects OPEC forecast over 5 years in natural gas pipeline that will initially supply the European o its previous report in 2010, it pointed out that the spend­ Union with 27.5 billion cu m/year of Siberian gas, and will ing forecasts could be adversely affected by the policies of later provide 10% of the bloc's annual gas needs. consumers. Nord Stream transports gas from Vyborg, near St. Pe~ "The energy and environmental policies of consu ming tersburg in TIonhern Russia, under the Baltic to Lubmin. countries...offer a hazy picture of their impact on future The new project, which bypasses an old pipeline network oil consumption, supply levels and overall energy demand," through Belarus and Ukraine, draws on 1 trillion cu m of gas said OPEC Sec.-Gen. Abdullah El-BadrL in the Yuzhno-Russkoye gas field in Siberia. OPEC often has said that carrying spme capacity repre­ The gas will flow to Europe through two pipelines, once sents huge financial risk, a point it stressed again in this the project comes to completion. The capacity of this first year's report. line, will double once the second line is completed sometime In a scenario examining a more rapid shift to hybrids and next year. About 800 km of the second line has been laid. electric cars, OPEC said world demand by 2035 would reach Merkel said the pipeline is a' "strategic project that is ex­ about 102 million bid, curbing the need for extra supplies emplary for the cooperation between the European Union from the group. and Russia" and she stressed that both sides will benefit "By 2035, the amount of OPEC crude needed will be less from the link: Europe by ensuring steady gas supply and than current levels" under that scenario, the report said. Russia with direct access to its biggest market. "This means that OPEC upstream investment requirements "We will be closely linked for decades," said Merkel of

Oil & Gas Journal I Nov. 14, 2011 29 GENERAL INTEREST ------­

the line that has bypassed the sometimes troublesome tran­ sit routes across Ukraine, Belarus, and Poland to establish European Union a direct link between Russian and European gas nerworks. Even now Ukraine is in a dispute with Russia over gas seeks unified policy prices, reigniting fears that supplies to western Europe I might be disrupted again as they were in 2006 and 2009. for offshore drilling Analysts Andrew Neff and Zoe Grainge of IHS Global In­ sight saw Gazprom as the main beneficiary of the new line. Eric Watkins "The formal inauguration of gas supplies to Europe via Oil Diplomacy Editor Nord Stream is a seminal event for Gazprorn as the manifes­ tation of its policy of improving the security and stability of European Union officials, eyeing the Deepwater Horizon in­ its Russian gas exports via investments in the diversification cident in the Gulf of Mexico last year, have proposed new of supply routes," they said. rules aimed at bringing offshore oil and gas drilling under a "Gazprom's redirection of gas volumes away from the common policy. Ukrainian transit system and into Nord Stream will reduce Most European oil and gas is produced offshore, often in the Russian finn's dependence on Ukraine and improve the harsh geographical and geological conditions, said EU En­ stability and security of its gas exports to Europe," the ana~ ergy Commissioner Guenther Oettinger. lysts said. "We need to prevent accidents.. .from hfJppening," he 'U' said. "Securing best industry practices in all our offshore op­ Nord Stream's opposition erations is an undisputable must. [This] proposal is a crucial 0pposltion to the new line has been voiced by the leaders of step forward towards safer offshore activities to the benefit of Ukraine, Belarus, and Poland, as well as by others in Europe our citizens and our environment." who fear too close a dependency on Russia as a supplier of According to Europe's environment chiefs, the likelihood the bloc's gas supplies. of a major offshore accident in European waters remains un­ "Nord Stream will boost security of supply but also in­ acceptably high, a point underlined by Environment Com­ crefJse dependency on Russia," the conservative German' missioner Janez Potocnik. daily Frankfurter Allgemeine Zeitung wrote this week. POlOcnik said the proposed regulation "will help us pre­ "Supply is too importfJnt to rely on one supplier-the vent such future crises from happening in all marine waters blend is what counts. The EU needs to promote supply proj­ which fall under EU member stfJtes' jurisdiction." ects which are not subject to Russian influence," the paper The draft regulation establishes rules to cover explomtion said. and production activities from deSign to the final removal of EU Energy Commissioner Guenther Oettinger, no cham­ an oil or gas installation. Under control of the member states' pion of Russia, told the opening ceremony that the EU is regulatory authorities, European industry will have to assess working to secure natural gas supplies from other countries, and further improve safety standards for offshore operations including several in the Caspian region that could be linked on a regular basis. to [he ED by the planned Nabucco pipeline. "This new approach will lead to a European risk assess­ Last month, Oettinger underlined his concerns about ment that upgrades continuously by taking into account new,' 1 Russia at the launch of the Trans-Adriatic Pipeline, say­ technOlogy, new know-how and new risks," the EU said. V ing that it WfJS part of the EU's Southern Corridor strategy, The proposed legislation introduces several key require­ which aims to bypass Russia and eswblish a direct link for ments for preventing and respondlng to a major accident: the transport of gas from Azerbaijan to the bloc. • Licensing. The licensing authorities in EU member "If for some reason Azerbaijani gas does not reach the states will have to make sure that only operators with suf­ western border of Turkey, TAP will need to transport Rus­ ficient technical and financial capacities necessary to control sian gas reaching Turkey via Blue Stream or via the Bulgar­ the safety of offshore activities and environmental protection ian transit pipeline," he said. are allowed to explore and produce in EU waters. "Don't get me wrong, this is not a bad thing," Oettinger • Independent verijlers. The technical solutions presented said. "But it would mean that TAP's comribution to Europe's by the operator that are critical [or safety on the installation security of supply would be less than it could be." need to be verHied by an independent third party before and Meanwhile, Russia is working to construct the South periodically after the installation. Stream gas pipeline which is meant to transport Russian gas • 01Jligatoly emergency planning. Companies will have to Europe under the Black Sea beginning in 2015. to prepare a major hazard report [or their installation, con­ OAO Gazprom holds 51% of Nord Stream, E.On Ruhrgas taining a risk assessment, and an emergency response plan AG and Wintershall AG each hold 15.5%, while Nederlandse before exploration or production begins. These reports will Gasunie NV and GDF Suez hold 9% each. Ii!!!I need to be submitted to national authorities.

30 Oil & Cas Journal I Nov. 14,2011 ------GENERAL INTEREST

(From the Subscribers Onlyama of IIWw.ogj.com) • Inspections. Independent national OPEC leaves demand authorities responsible for the safety of installations, who will verify safety outlook unchanged Setting clocks back provisions, environmental protection, recalls series of and emergency preparedness of rigs In its monthly Oil Market Report, the and platforms and the operations con­ Organization of Petroleum Export­ US energy mistakes ducted on them. If an operator does ing Countries made no changes to its by Bob Tippee, Editor not respect the minimum standards, 2011 and 2012 oil demand forecasts. the competem authority will take en­ OPEC expects worldwide oil demand As Ihe US swllches off Daylight Saving Time, Americans should wonder why Con­ forcement action or impose penalties. to rise by 880,000 bid this year to av­ gress in 2005 didn'l just fiddle wilh clocks An operator failing to comply could erage 87.81 million bid mld to rise by and call il a day. have to stop drilling or production. 1.2 million bid next year. On Nov. 6, Ihey sel clocks back by 1 hr • Transparency. Comparable infor­ Next year's oil demand growth is as their country makes its autumn transi­ tion to Standard Time. mation will be made available to citi­ expected [Q come from outside the Or­ Unli12007, Ihey would have made the zens via web sites about industry per­ ganization for Economic Cooperation change a week earlier. And the return to formance standards and the activities and Development, mainly China, In­ Daylight Saving Time nexI Mar. 12 would of the national authorities. dia, Middle East, and Latin America. have come 3 weeks later. That extra month of evening sun came • Emergency response. Companies North American oil demand is ex­ by way of Ihe Energy Policy Acl of 2005. o will prepare emerge11cy response plans pected to shrink by 110,000 bid in Lawmakers thought it would save energy. If based on their rig or platform risk as­ 2011, then rebound in 2012 by that only EPACT had slopped Ihere. sessments and keep response equip­ same amount. In OEeD Europe, OPEC Alas, the bill, marketed as "compre­ ment available. Member states will expects oil demand to contract by hensive energy legislation" and hailed as a triumph of bipartisanship, went way consider these plans when they com­ 140,000 bid this year and by another beyond chronological tinkering. pile national emergency plans. The 80,000 bid next year. It was so full of parochial favors for so plans will be periodically tested by the OECD Pacific oil consumption many special interests, inclUding parts industry and national authorities. will be mostly flat in 2011 and 2012, of the oil and gas industry, that its main effect received far too little notice. EPACT • Liability. Oil and gas companies with marginal declines of 20,000 bid reinstated centralized energy choice. will be fully liable for environmental and 40,000 bid, respectively. Howev­ It created subsidies for alternative damages caused [Q the protected ma­ er, projections are heavily dependent energy. rine species and natural habitat. For upon the speed of recovery in]apan. It expanded the list of renewable en­ damage to waters, the geographical Forecast economic growth in China ergy forms eligible for special favors. It created grants for biomass energy. zone will be extended to cover all ED is unchanged at 9% for 2011 and 8.5% And it set the first volumetric mandate marine waters including the exclusive for 2012. China's 2011 oil demand for sales of fuel-mainly ethanol-made economic zone (up to 370 km rrom the growth is pegged at 440.000 bid. In­ from biological material. coast) and the continental sheIr where dia is forecast to see economic growth The mischief didn't end In 2005. Bipartisanship vanished in 2007, when a the coastal Member State exercises of 7.6% in both 201 I and 2012, in line Democratic Congress enacted fuel-econo­ jurisdiction. For water damage, the with month-earlier expectations. my standards il couldn't win in 2005 and o present ED legal framework for envi­ Developing countries will combine expanded the biofuel mandate. ronmentalliability is restricted to ter­ for a 620,000 bid jump in this year's Then, in 2009, the Amen"can Recovery and Reinvestment Act amended EPACT to ritorial waters (22 km offshore). oil demand, which includes growth authorize loan guarantees for projects that • International. The European of 190,000 bid in the Middle East and reduce emissions ofgreenhouse gases. Commission will work with its inter­ 170,000 bid in Latin America. EPACT thus began an insidious na­ national partners to promote the im­ Demand for OPEC crude in 2011 tionalization of American energy markets. plementation of highest safety stan­ has been revised up by 100,000 bid Now requirements for biofuels are proving to be unachievable. Recipients of federal dards acrosS the world. from the previous assessment to swnd loan guarantees are going bust as projects • The EU. Offshore Authorities at 30 million bid. At this level, the designed to produce uneconomic energy Group Offshore Inspectors of member demand for OPEC crude is 300,000 prove to be-surprise!-uneconomic. states will work together to ensure ef­ bid above the previous year. In 2012, Promises about green jobs look increas­ ingiy lame. And Ihe bill for all Ihls grows fective sharing of best practices and demand for OPEC crude also is pro­ and grows-at the worst possible time in contribute to improved safety stan­ jected to average 30 million bid, about American history. dards. 100,000 bid higher than in the previ­ As energy policy, extension of Daylight The industry group Oil &: Gas UK ous report and unchanged from the Saving Time was a silly gesture. But silly beats senseless any time of day. opposes the proposals. I!l1!I current year.1m!I ONLINE NOV. 4, 2011 I [email protected]

Oil & Gas Journal I Nov. 14, 2011 31

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TIl 1.1- m,kx i.1 pnJ\"iJcJ a.1 rl sen'icc. The pub1Is!lel'docs nOl assume any IIClDlllty fill" elllJl'S or omi.lsIOIl.

Oil & Cas!ourna/l Nov. 14,2011 33 r-SlATIST:IC:S,]L •. __ -'---."__ " .. ~._"~~

Additional analysis of market trends is available r:; IMPORTS OF CRUDE AND PRODUCTS through OGJ Online, Oil & Gas Journal's electronic - Districts 14­ - District 5- ---Total US --­ information source, at http://www.ogj.com. 10-28 10-21 10·28 10·21 10-28 10·21 10-2S* 2011 2011 2011 2011 2011 2011 2010 0I1"GAS]OlJRNAL 1,000 bid research oenter. ~ Total motor gasoline ...... 781 658 0 17 781 675 871 752 616 0 15 752 631 732 ~~iirr:~· ..~~~~~~~.~ ..~_~.~~ ...... 122 142 0 5 122 147 92 Residual ...... 261 279 127 0 388 279 336 l~; Jet fuel-kerosine ...... 11 33 21 13 32 46 74 OGJ CRACK SPREAD Propane-propylene .. 71 71 I (131 72 58 77 Other ...... 128 110 16 59 144 169 183 11-4-11* 11·5·10" Change Change, ------$/b'1 % Tolal products .....•...... •.....• 2,126 1,909 165 96 2,291 2,005 2,365 SPOT PRICES Tolal crude••.••..•..•..•..•..••.....• 7,957 7,861 99B 1,512 13,955 9,373 8,578 Product value 118.95 93.71 25.24 26.9 Brent crude 110.29 86.23 24.06 27.9 Total impoJts ...... 10,083 9,770 1,163 1,608 1'1,246 11,378 10,943 Crack spread 8.67 7.48 1.19 15.9 Revised. FUTURES MARKET PRICES Source: Us Energy Information Administration One month Data available at PennEnergy Research Center. Product value 117.57 93.08 24.48 26.3 Llghtsweel crude 93.24 84.98 8.26 9.7 Crack sRread 24.32 8.11 16.21 200.0 Six mont Product value 118.56 98.20 U PURVIN & GERTZ LNG NETBACKS-NOV. 4, 2011 Light sweet crude 92.67 87.33 liquefaction plant (',,,,,.,It .on,,,,,,,,, 25.89 10.86 Receiving Algeria Malaysia Nigeria Austr. NW Shell Ilata, Trinidad terminal $IMMbtu Barcelona 11.95 9.58 10.87 9.46 10.34 10.77 Everett 3.01 0.64 2.58 0.73 1.26 3.34 ,Isle of Grain 9.35 6.69 8.53 6.58 7.40 8.57 Lake Charles 1.13 -1.02 0.86 -0.82 --0.56 1.83 Sodegaura 8.24 11.38 8.45 11.01 9.67 7.32 Zeebrugge 10.50 7.82 9.70 7.68 8.59 9.78 Definitions, see OGJ Apr. 9. 2007, p. 57. Source: Purvln & Gertz Inc. Data available at PennEnergy Research Center.

[] CRUDE AND PRODUCT STOCKS --Motor gasoline -­ 81ending Jel fuel, Fuel oils Propane- Crude oil Total comp.l kerosine Dislil~1e Residual propylene District 1,000 bbl PADO 1 .. 10,278 52,826 44,647 12,589 57.872 12,055 5,981 PADD 2 .. 93,218 47)40 25,979 9,283 25,180 1,416 25,758 PADD 3 . 166,362 72.512 55,052 13,819 44,676 18,034 25.743 PADD4 16,556 6,256 2,268 610 2,671 202 12,308 PADD 5 .. 53,047 26.941 23,024 9,458 11,489 4,556 ------Oct 28, 2011 .. 339,461 206,275 150,970 45,759 141,888 36,263 59,790 337,634 204,918 150,008 46,525 145,464 33,933 59,111 g~t ~~: ~816(:::::::::::::::::::::::::: 368,156 212,254 141,724 45,831 164,873 40,638 64,468 !Includes PADD 5.

[:' REFINERY REPORT-OCT. 28, 2011 REFINERY REFINERY OUTPUT --OPERATIONS-­ Tolal Gross Crude oil motor let fuel, ---Fuel oils --- Propane· inputs inputs gasoline kerosine Oistillate Residual propylene District 1,000 bid 1,000 bId

PADD 1 . 1,171 1,169 2,905 76 394 67 73 PADD 2 .. 3,462 3,371 2,243 215 1,000 68 256 PADD 3 . 7,573 7,400 2,145 695 2,527 317 719 PADD 4 . 534 527 252 19 188 11 1107 PADD 5 . . 2,384 2,226 1,523 --377 --544 --110 -- Oel. 28, 2011 . 15,124 14,693 9,068 1,382 4,653 573 1,155 Oct. 21, 2011 . 15,041 14,661 8,939 1,405 4,403 532 1,128 Oct. 29, 20102 .. 14,393 13,905 8,930 1,308 4,241 402 1,032

17,736 Operable capacity 85.3%utilizalion rale

Jincludes PADD 5.

34 Oil & Gas Journa/l Nov. 14,2011 l"SJAfl"SJa:cs! [J OGJ GASOLINE PRICES [J BAKER HUGHES RIG COUNT [J OGJ PRODUCTION REPORT Price Pump Pump 11-4-11 11·5·10 111-4-11 '11-5-10 ex lax price* price --l,IJOOb/d-­ 11·2·11 11-2-11 11-3-10 Alabama ...... 6 5 7 (Crude oil and lease condensate) tlgal Alaska 9 Afabama ... 10 20 Arkansas ... 35 36 Alaska .. 515 515 pri~es 45 37 (Approx. for sell-service unleaded gasoline) California California 607 599 Atlanta .... 298.3 345.9 274.3 Land .. 45 37 Colorado ... 87 86 Baltimore .. 304.9 346.8 276.3 Offshore . o o Fltll"ida .. 6 5 Boslon ...... 304.9 346.8 271.3 Colorado .. 80 57 Illinois ..... 25 25 BuHaJo ..... 274.2 343.3 284.3 Florida...... I L Kansas .. 113 110 Miami.... 294.5 347.3 288.5 Illinois .. I 2 Louisiana .. 1,529 1,590 Newark ..... 305.4 338.3 279.5 Indiana . I 3 Michigan . 15 18 New York... 288.2 357.3 294.3 Kansas .. 33 22 Mississippi . 66 65 Norlolk... 289.7 328.3 270.3 Kentucky . 8 5 Montana ... 70 7J Philadelphia ... 296.6 347.3 274.3 Louisiana .. 154 186 New Mexico... . . 190 183 Pitlshurgh .... 287.1 337.8 2aB N. Land ., .. Il4 131 17 17 North Oakota. 390 347 Wash., DC ..... 304.9 346.8 288.5 S.lnland waters . 193 186 PAD I avg 295.3 344.2 280.5 S. Land . 24 18 Oklahoma 29 20 Texas...... 1,597 t,358 Offshore . Utah ...... 68 71 Chicago... 330.4 399.4 309.5 Maryland .. o o I Wyoming 148 147 Cleveland ...... 289.2 335.6 275.2 Michigan ... o All others Des Moines... 300.2 340.6 276.2 Mississippi . 13 6 ---.lQ ---l! Detroit... 279.5 341.6 287.2 Montana . 8 10 Total . 5,810 5.567 Indianapolis ..... 277.6 339.6 289.2 Nebraska . I 2 lOG] estlmale.1Revised. Kansas City 290.0 325.7 268.5 New Mexico. 82 73 Louisville .. 299.8 340.7 275.5 New Ymk o 2 Source: Oil &Gas Journal. Memphis .. 300.8 340.6 276.5 North Dakota .. 189 138 Data a'Jaiiable at PennEnergy Research Cenler. Milwaukee 292.4 343.7 281.5 Ohio..... 13 9 Minn.-St. Paul 304.0 349.6 282.5 Oklahoma 195 142 f.@ US CRUDE PRICES [)\:.!ahoma City... 286.2 321.6 20U Pennsylvania , 112 99 11-4-11 () Omaha ...... 284.9 330.6 272.5 South Dakota. 2 I l/bbl' St. Louis ... 294.0 329.7 272.1 Texas .. 919 720 Alaska-North Slope 27°... 108.88 Tulsa .. 293.2 328.6 205.1 Offshore ..... 3 3 South Louisiana Sweet...... 120.25 Wichita ... 280.2 329.6 276.2 lnfand waters.... I I California-Midway Sunset 13° ... 115.80 PAO II avg .. 293.9 339.8 277.9 Dis!.!.. 119 63 Lost Hills 30° 121.35 Dist 2 80 41 WyOming Sweet "...... 87.76 Albuquerque... 292.4 329.6 265.1 Dist 3... 46 38 EastTexas Sweet 94.25 Birmingham .. 293.4 332.7 266.2 Dist. 4.. 51 41 West Texas Sour 34° 85.15 Dallas-fort Worth .. 279.2 317.6 266.2 Dist. 5... 52 72 West Texas Intermediate... 90.75 Houston ...... 283.2 321.6 265.3 Dist. 6.. 58 65 Oklahoma Sweet... 90.75 Little Rock ...... 297.4 337.6 269.1 Oist. 7B . 14 14 Texas UpperGul1 Coast...... 83.75 New Orleans ... 292.2 330.6 266.2 Oist. 7C . 75 63 Michigan Sour...... 82.15 San Antonio... 291.2 329.6 270.2 Dist. 8 .. 285 181 Kansas Common.. . . 89.75 PAD III avg ... 289.9 328.5 266.9 Dis1. SA 42 27 North Dakota Sweet.. 84.00 Dist. 9 . 24 36 Cheyenne...... 315.0 347.4 273.4 Dist. 10 . 67 75 ~CurrBnt major refiner's posted prim except North Slope lags Denver ...... 313.5 353.9 281.9 Utah . 25 30 2 months. 40° gravity crude unless differing gravity is shown. Salt Lake City.... 311.5 354.4 285.4 West Virginia . 27 24 Source: Oii & Gas Journai. PAD IV avg ... 313.4 351.9 280.2 Wynming... 58 '5 Data available al PennEnergy Research Center, Dthers-NV-3; OR-I; TN-I; VA-l __6 __10 Los Angeles 322.5 391.4 306.3 Tolal US H . 2,026 i'£j Ptloenix... 313.3 350.7 286.3 Tolal Canada . l'~H WORLD CRUDE PRICES Portland .. 330.9 380.3 295.2 ~ San Diego .... 302.9 371.8 317.3 Grand lotal 2.51l2 2,100 $lbbl l 10-28-11 San francis~o ... 333.5 402.4 326.2 US Oit rigs .. l,lJ2 718 United Kingdom-Brent 38° 111.54 Seattle...... 316.0 371.9 312.3 US Gas rigs .. 907 955 Russia-Urals 32° 110.36 PAD Vavg ..... 319.8 378.1 307.3 Total US offshore _ . 34 13 Saudi Light 34° 109.98 Week's avg...... 298.7 345.4 281.1 Total US cum. avg. YTD .. 1,856 1,510 Dubai fateh 32°.... 106.89 Dill avg...... 296.4 343.1 279.6 Rotary rigs from spudding in to total deplh. Algeria Saharan 44°...... 112.54 sept. a...g...... 313.3 360.0 269.6 Definitions, see OGJSept. 18, 2006. p. 42. Nigeria-Bonny Light 37° .. 113.27 2011 to dale ...... 308.2 354.0 Indonesia·Minas 34°... "...... 112.l6 2010 to dale_...... 229.7 274.6 Source; Baker Hughes Inc. Venezuela-Tia Juana Ugh131° 108.70 Mexico·lsthmus33°.. 108.59 'Includes state and lederal motor fuel taxes and state Da\a available at PennEnergy Research Center. sales tax.. Local governments may impose additional taxes. OPEC basket.. 110.28 Source: Oil &Gas Journal. Total OPW .,...... 109.15 Data available at PennEnergy Research Center. To\al non-OPW.. 107.63 is] SMITH RIG COUNT Totalworld1...... 108.89 US impoM 103.18 11-4-11 11-5-11J REFINED PRODUCT PRICES Proposed deplh, Rig Percent Rig Percenl IEstimated contract prices. lAverage price (FOB) weighted by II count footage" count foolage~ estimated export volume. lA...-erage price (FOB) weigh led by estimated import volume. 10·28·11 10-28-11 ¢/gal ¢/gal 0-2,500 240 2.0 193 2.5 Source; DOE Weekly Petroleum Status Report. 2.501-5,000 78 48.7 56 51.7 Data available at PennEnergy Research Center. Spot market product prices 5.001 H 7,500 122 28.5 J62 18.5 7,501-10,000 320 3.1 292 3.4 Motor gasoline No.2 Distillate 10,00t-12.500 '57 7.8 355 7.6 1kL~ US NATURAL GAS STORAGEI (Conventional·regular) Low sulfur diesel fuel 12,501-15.000 305 09 250 2.5 New York Harbor 273.20 New Yofl( Harbor 310.10 15,001-17.500 171 05 159 lIJ-28-11 10-21-11 1D-28-10 ChaRge, Gull CoasL. 263.70 17,501-20,000 112 L47 bel % Gulf Coast 306.20 20,OOl-over 81 38 los Angeles 322.90 Producing region .. 1,220 1,181 t,214 0.5 Motor gasoline Tolal 1,686 6.7 1,662 6.4 Consuming regien east._ .. 2,069 2.037 2,081 ..j).5 (RBOB-regular) Kerosine jet fuel Consuming region WBS!.. . ..2Q!: --.i.9! 516 New York Harbor ...... 295.20 Gull Coas!...... 305.10 INLMW 21 2D ...=U LANO 1,829 1.626 Tolal US .. 3.794 3.716 :1.811 ..j).' OFFSHORE 36 16 Change. Nil. 2 healing oil Propane Aug. 11 Aug. 10 % New York Harbor 306.40 MI.Belvieu 147.80 "Rigs employed under footage contracts. Total US, ....·....··· ..·..·...... ···· 3,02D 3.150 ....1 Definitions, see Dill Sept 18, 2006, p.42. IWorking gas. lAi end of period. Source; DOE Weekly Petroleum Status Report. Source: Smith International Inc. Source: Energy Intormation Administration Data available at PennEnergy Research Center. Data available al PennEnergy Research Center. Data available at PennEl\ergy Research Center.

Oil & Gas Journal) Nov. 14,2011 35 ~tAlIl~nU_"S:l U WORLDWIDE CRUDE 011. AND GAS PRODUCTIION

8 month average Change vs. July - production ­ - previous year- AUf" July Cum. 20AUf" 1 2011 2011 2010 Volume % 20 1 2011 2011 Crude, 1,000 bid Gas, bet Argentina ...... _...... 569 538 543 613 -70 -11.4 113.0 111.0 865.47 Bolivia...... 46 46 42 42 - -<)5 50.0 50.0 351.00 Brazil ...... 2,080 2,076 2,085 2,048 37 1.8 45.0 44.0 332.00 Canada ...... 3,028 2,898 2,821 2,705 117 4.3 405.2 398.7 3,413.60 Colombia ...... 950 940 906 772 135 17.5 35.0 35.0 257.00 Ecuador l ...... 490 490 496 464 33 7.0 1.0 1.0 8.00 Mexico...... 2,552 2,533 2,559 2,586 -27 -1.0 203.0 2030 1,625.00 Peru ...... :::::::.::::::...... 150 152 154 150 4 2.3 37.0 36.0 253.00 Trinidad ...... 90 90 94 103 -9 -

Algeria l ...... 1,280 1,280 1,269 1,249 20 1.6 225.0 225.0 1,820.00 Angola] ...... 1,690 1,670 1,600 1,831 -231 -12.6 3.0 3.0 21.00 Cameroon ...... 60 61 59 65 ..£ -9.2 Congo (former Zaire). 28 28 28 28 - Congo (Brazzaville) ...... 290 290 290 265 25 9.4 Egypt ...... 676 666 667 666 2 0.2 110.0 110.0 890.00 Equatorial Guinea ...... 255 255 255 255 - - 0.1 0.1 0.48 Gabon ...... 240 240 243 244 -I -<).5 0.3 0.3 2.43 0 60 480 1,546 -1,066 ..£9.0 - 2.0 118.00 ~~:r;ai: ...... ::::::·:::::::..:..... 2,280 2,320 2,220 2,021 199 9.8 75.0 BO.O 640.00 Sudan ...... 470 470 470 47B -

'OPEC memoor. 'Kuwail and Saudi Arabia ~oductlon each Include half 01 Neulral Zone. TOlals may not add due 10 rounding. Source: Oil & Gas Journal. [)ala available al PennEnergy Research Center.

36 Oil & Gas Journal I Nov. 14,2011 DEADLINE for MARKETPLACE ADVERTISING is 10 A.M. Tuesday preced­ • UNDlSPLAYED MARKETPLACE: $4.00 per word per issue. 10% discount for three or ing date of pUblication. Address advertising inquiries to MARKETPLACE more CONSECUTIVE issues. $80.00 minimum charge per insertion. Charge for SALES, 1-800-331-4463 exl. 6301, 918-832-9301, tax 918-832-9201, blind box selVice is $50.00 No agency commission, no2% cash discount. email: [email protected]. Centered/Bold heading, $12.00 extra. • COMPANY LOGO: Avaflable with undisplayed ad for $85.00. Logo will be centered • DlSPlJIY MARKETPLACE: $390 per column inch, one issue. 10% discount three or above copy with a maximum height of 3/8 inch. more CONSECUTIVE issues. No extra charge for blind box in care. • NO SPECIAL POSITION AVAILABLE IN MARKETPLACE SECTION. Subject to agency commission. No 2% cash discount. • PAYMENT MUST ACCOMPANY ORDER FOR MARKETPlACE AD.

EMPLOYMENT AUCTilON REAL ESTATE

MODEC Inlcrnalional, ]ne. seeks Principal Engineer La worl, in HousLon, Texas [0 identify, Corporate House for Lease assess, plan, and develop novel producl concept.s Beeville TX, Bee County and business models that build new producl or 707 E. Inez, Beeville TX system options. Bachelors degree in Mechanical 3-4 bedrooms, large yard, fully Engineering and relevant experience required. Ap­ furnished, all bills paid ply at wwwmQdec.com. Must PUL job code H­ 1-3-6-12 month lease options 0025 on resume. Call David-713-828-4821

CONSULTANTS ["lertek USA, Inc. secl{S Utility Economic An­ alyst in Sunnyvale, CA. Qualified applicants will possess a Masler's degree i.n I3usiness, Engineering, BRAZIL LEGAL & REAL Economics, Statistics, or related field and two Oil & Gas IEnergy & Renewables The giant has awakened, and you need effective years of experience with produclian cosL simula­ stralegic counseling 10 cut into Ihis new Investment tion models and electric production cosls model­ frontier + quality technical advice from local, ing and emerging technologies experience. Email experienced specialists. resume to Rafael [email protected]. Resume EXPETRQ Natural Resources Consultants Rio de Janeiro & Nalal - Brazil mUSl include job code 11V-002. www.expelro.com.br

M-] LLC aka M-I SWACO in Houston, "IX seeks Sr. Analyst - Markel Reporting Analy­ sis: Lead all design and implementation of an \0­ fonnation system for the Environmental Solutions (ES) product division. MUSL have Masters degree and 2 yrs. expo or Dachelor!> degree and 5 yrs. expo Mail resume lo: P Shah - Sr. HR Generalisl, at M-l LLC, 5950 North Course Dr., Houston, TX 77072. Equal employment opportunity employer: MlFNID. Must pUt job code MGMRII on resume.

GL Noble Denton, Inc. secl{S Principal Struc­ tural Engineer to work in Hous1.on, TX to oversee and manage fixed offshore platfonn developmem project.s. Bachelors degree and related experience required. Mail resume to: GL Noble Denton, Aun: Renae Duncan, HR Manager, 1155 Dairy Ashford, n / Suile 315, Houston, Texas, 77079. MUSl put job code PSE-GUOll on resume. Subject to Ihe auclion will be a complete set of 108 x Spur­ Gear Planetary Gears make FLENOER I SIEMENS, model Cameron lnternational Corporation in How· PLANUREX P2PA 21, new in 2007, to lift and down jack­ ton, "TX seeks Engineering Manager. Quali­ up I oil rigs, measures 2.300x2.200x1.600mm; weighI 5.640 fied applicants will possess a Masters degree in kg each; 2 planetary stages; Quill shaft; KIPS-eategory 440 Engineering plus three years relaled mechanical wilh nominal ratio of 6700; gear revolulions n1: 1.750 1Jmin. ! engineering experience and Installation work­ n2: 0,26 1Jmin.; drive torque T2; 54.800 nM; lubricalion chart: over control systems and hydraulic system de­ lube point 1/PG-oil VG 680/oil-qtg 225,00; lube point 2/PG·oil sign and Lroubleshooting. Email resume \0 VG 320!oil-qlg 53,00; number of grease fitting: SA 4288047; KarLDv50n@c-a-mcgm. Resume must include job temperature selling range: -20'C to 50'C code Bingoliv. Please note, that ONLY THE COMPLETE SET OF 108 PIECES will be sold! Sale agaInst the highest bidl The euctlon will be operated by Mr Michael Blum, MODEC lnler-naHonal, Inc. seeks HSEQ Su­ officially appointed auctioneer. pervisor to work in Houston, TX. Develop, audit, implement, and maintain HSEQ management sys­ tems and programs. Bachelors in HSEQ Manage­ mellI, Engineering, or related field plus relevant experience reqUired. Apply al www.modeccom MusL pUljob code 11-0024 on resume.

Oil & Gas Journal I Nov. 14,2011 31 MARKETPLACE ------.------­

EQUIPMENT FOR SALE

Hydrogen Plant for Sale 4 mm SCFD H2 Reforming Planl Start up: 2003; Shutdown: 2006 Hydro-Chem Design Disassembled and located in our Conference & Exhibition LaPorte, Texas facility 21 - 23 l=ebruary 2012 Contact: Stephen J. Rotenberg KLCC Convention Center Louisiana Chemical Equipment Co., L.L.e. Kuala Lumpur, Malaysia www.affshoreasjaeventcom Office: 225.923.3602 Cell: 713.412.0263 DEVELOPING Email: [email protected] ASIA'S ENERGY RESOURCES

PennWell's Offshore Asia Conference & Exhibition is in its 7th year of providing a forum for oil and gas Industry professionals to network and learn from each other's u experiences. In 2012, Offshore Asia proudly returns to Kuala Lumpur, Malaysia, where in 2010 it drew a record 5,025 attendees from 63 countries. Malaysia represents the hub of oil and gas operations in Southeast Asia. Industry there is evolVing to optimize production from its new and eXisting offshore fields to keep pace with the region's increasing demand for energy. Ofuhore Asia, in response, is building a program to address the region's technological needs and challenges. Topics expected to form an integral part ohhe conference program include: technolugy and techniques for enhanced oil recovery from new and maturing fields; marginal field development; production optimization; gas processing and transportation; safety in drilling and productIon; deepwater tech nologies; subsea boosting and processing; advanced installation and decommissioning techniques; well design and consrruaion; managing risk; regional challenges and sol utions; and training and development of young engineers; among others.

SUBSEA TECHNOLOGY TOPSIDES MULTIPHASE PUMPING CONSTRUCTION INSTALLATION DEEPWATER INTERVENTION DECOMMISSIONING FLOW LINES & PIPELINES RISK MANAGEMENT LNG FINANCE

Fordetailsabout C()I"i't're~)c", Managel participating at the Jenny Phillips conference contact 1 t44 (0) 1992 656 629 F: +44 (0) 19;12 656 700 [email protected]

For information on AslaPadnc -:\'::'-, exhibit sales and MichaelYee Jane8ailey Sue Neighbors sponsorships: T: +65 9616 8080 T:44 (0) 1992 656 651 1+17139636256 F:+656734 0655 F: +44 (0) 1992 656 700 F:+17139636212 [email protected] Ejanel:@pennv.relLcom [email protected]

CMoned and Produ~ed by· Presented by: Supported by· p~r Offshore' ~ IffinErergy. ) r&i. BAKER HUGHES

() Let's be clear. Making multimillion dollar decisions invoiving your reservoir As a key member of our new development plan or its drilling and completion programs is tough. And it's even Reservoir Software group, Bob tougher if you don't have complete confidence in your understanding of the reservoir. continuously monitors the needs That's why we've recently added a full suite of industry-leading reservoir software to of customers like you and delivers our capabilities. To give you all the tools you need for clear, confident decisions. solutions that will increase the Based on the taients and experience of the best minds in the business, Baker Hughes confidence of your reservoir decisions. reservoir software gives you abilities to model the reservoir, access it safely and efficiently, and design a stimulation treatment that maximizes your recovery.

Find out how at The benefit to your company? Quick adoption. Alignment with your workflows. Ease oruse. And clear, confident decisions you can count on. ~, . www.bakerhughes.com .,.-;j ~ I'lIIII ,Y".. © 2011 Bakl'r Hughell~[crporaled. All Rights Re'i~l'\'ed. 32370 ... 19 LW .lil!i '

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o

The best ideas never happen in a vacuum. They're the result of As part of our new Reservoir Development Services listening, understanding and getting to the heart of your challenge. group, George works with customers like you in

evaluating their unconventional hydrocarbon assets to From reservoir planning through every phase of recovery and help them improve efficiency and increase recovery. processing, we've found that working with the people we're working for is essential to crafting a fit-for-purpose solution and delivering learn about his model for shale resources at flawless performance. Because when we're all on the same team, we're pretty hard to beat. i www.bakerhughes.com ~(EJ1m ~ YGU © 2011 8aker Hugh~II~[~rporal.d_ All R191lL! RmlV~d_ 31&S1 1m