Noble Corp.’s Bingo 9000 Rig 3 semisubmersible hull has received a commitment for a four-year contract from Shell Exploration & Production Co. The unit is one of two ultra-deepwater Bingo 9000 semisubmersible hulls that Noble purchased in March 2002.
The Bingo 9000 Rig 3, which will be renamed the Noble Danny Adkins, will be completed as a dynamically positioned unit designed to operate in water depths up to 12,000 feet and drill to total depth of 35,000 feet, with living accommodations for 200 persons.
The commitment includes the completion of negotiations for a definitive drilling contract by the parties by February 9, 2006, unless extended by the mutual agreement of the parties, with a primary term of four years and with Shell having an option or options for the unit upon expiration of the initial four-year term upon mutually agreeable terms and conditions (including dayrate).
The Bingo 9000 Rig 3 will be renamed the Noble Danny Adkins and will drill to total depth of 35,000 feet. Photo courtesy of Noble Corp.
The company estimates the drilling contract value over the four-year primary term at between approximately $589 million and $594 million (exclusive of any mobilization costs agreed by Shell to be borne by it), based on assumed operations in the US Gulf of Mexico and depending on the final contract equipment configuration. The unit is currently located in Dalian, China, where Noble has maintained the unit since its purchase in 2002.
The company estimates that the construction time to complete the unit will be 32 to 36 months from execution of a shipyard construction contract. Noble has 62 mobile offshore drilling units located worldwide. This fleet consists of 13 semisubmersibles, three dynamically positioned drillships, 43 jackups, and three submersibles. Approximately 80 percent of the fleet is currently deployed in international markets, including the Middle East, Mexico, the North Sea, Brazil, West Africa, India, and the Mediterranean Sea.
Noble provides drilling-related products and labor contract drilling services, well site and project management services, and engineering services.
Pacific Marine signs terminal services agreement with ConocoPhillips
Pacific LA Marine Terminal LLC, a wholly-owned subsidiary of Pacific Energy Partners LP, has entered into a long-term terminal services agreement with ConocoPhillips in connection with Pacific Energy’s Pier 400 deep water marine terminal project. ConocoPhillips has agreed to a minimum throughput at Pier 400 of 90,000 bpd of crude oil and other partially processed feedstocks over a term of 20 years, with an option to extend for an additional 10 years.
Pacific Marine has agreed to provide up to 1.5 million barrels of throughput tankage and necessary pipeline connections to ConocoPhillips for the term of the agreement. The agreement is subject to required permits and approvals by the Port of Los Angeles and the City of Los Angeles for use of a berth area, land for the on-shore facilities, and pipeline rights of way.
The new deepwater berth is anticipated to be constructed in the Port of Los Angeles at Berth 408 on Pier 400, along with supporting throughput tankage on Pier 400 and Terminal Island. The terminal facilities will be connected by pipeline to Pacific Energy’s existing distribution system to various Los Angeles area refineries. With water depth of about 81 feet, the project will provide marine receipt facilities to handle some of the largest tankers in the world, and capacity to efficiently accommodate increasing volumes of waterborne imported crude oil and refinery feedstocks.
The environmental permitting process is underway. Pacific Energy expects the draft environmental impact study will be made available by the Port and the US Army Corps of Engineers for public review in the first quarter of 2006. Pacific Energy expects to receive all required permits by mid 2006.
Construction of the Pier 400 project is currently estimated to be completed in late 2007. The project will help fill a shortfall in petroleum import infrastructure needs in Los Angeles and Southern California. It is being designed to meet environmental and safety requirements. Consideration is being given to community, governmental, and regulatory needs and expectations in the Port area. The berth will be developed in a location remote from the San Pedro and Wilmington communities, on the southwest portion of Pier 400.
Supporting throughput tankage will be developed in the Pier 400 and Terminal Island areas. The pipeline will be underground and will connect to other pipelines in the Port area. No new pipelines will need to be developed in areas away from the Port.
“With the decline of crude oil production in California, more capacity is needed to offload waterborne crude oil. Given a projected growth in crude oil imports to Los Angeles of approximately 450,000 barrels per day over the next ten years, we expect the Pier 400 marine terminal to provide a substantial long-term growth component for our West Coast Business Unit,” said Irv Toole, president and CEO. “Through connections with our existing system of pipelines and storage facilities, the Pier 400 marine terminal can provide direct connections to refineries in the Los Angeles area.”
This 90,000 bpd commitment from ConocoPhillips represents about 36 percent of the capacity of the 250,000 bpd project. Pacific Energy’s current estimated capital cost of the project is about $250 million, including its predevelopment costs and capitalized interest during the construction period. The project cost has increased from the previous estimate of $185 million in part due to an increase from 2.5 million barrels of storage to 3.0 million barrels. Construction of the terminal facility would be financed through a combination of new equity and debt.
Pacific Energy Partners LP is a master limited partnership headquartered in Long Beach, Calif. The company is engaged in gathering, transporting, storing, and distributing crude oil, refined products, and other related products. Pacific Energy conducts its business through two business units, the West Coast Business Unit, which includes activities in California, and the Philadelphia area, and the Rocky Mountain Business Unit, which includes Alberta, Canada.
New gas storage project, exploration in Barents Sea on tap for Chevron
Chevron Global Gas, a division of Chevron USA Inc., has filed an application with the Federal Energy Regulatory Commission (FERC) to build an underground natural gas storage facility to provide critical infrastructure necessary to meet the growing demand for natural gas in the US.
The project, named Windy Hill, includes the construction and operation of an underground natural gas storage facility in northeastern Colorado near the town of Brush in Morgan County. Windy Hill will include four salt storage caverns with total working natural gas capacity of 6 billion cubic feet.
“As the first bedded-salt gas storage facility in Colorado, the Windy Hill project is strategically positioned to add critical high deliverability storage capacity for producers in the Rockies and to help maintain reliable supplies of natural gas for the growing Denver market,” said John Gass, president of Chevron Global Gas.
Chevron filed the Windy Hill application with the FERC on Nov. 2. Construction of the first two storage caverns is anticipated to start as early as 2006, or as soon as the project receives authorization from the FERC. The company anticipates providing service from the first two storage caverns beginning in 2008, and the third and fourth storage caverns in 2010.
In related news, Chevron Norge AS, part of Chevron Upstream Europe, and Statoil ASA have signed an AMI agreement regarding exploration in the Barents Sea. This agreement brings together Chevron’s global exploration experience and seismic imaging capability and Statoil’s regional knowledge of and long-term operational experience in the Barents Sea. The companies also have complementary competencies in LNG technology, with Statoil’s experience of Artic LNG development bringing potential benefits to the endeavor.
Chevron has more than 53,000 employees. Chevron subsidiaries conduct business in over 180 countries around the world, producing and transporting crude oil and natural gas, and refining, marketing and distributing fuels and other energy products. Chevron is based in San Ramon, Calif.
Chesapeake closes acquisition of Columbia Natural Resources
Chesapeake Energy Corp. has closed its previously announced acquisition of Columbia Natural Resources LLC and certain affiliated entities (CNR) from Triana Energy Holdings LLC. The purchase price was $2.95 billion, which consisted of $2.2 billion in cash and $0.75 billion in liabilities assumed at closing.
Through this transaction, Chesapeake acquired an internally estimated 2.5 trillion cubic feet of natural gas equivalent (tcfe) of proved, probable, and possible reserves, comprised of 1.1 tcfe of proved reserves and 1.4 tcfe of probable and possible reserves. The properties are principally located in West Virginia, Kentucky, Ohio, Pennsylvania, and New York.
After allocating $175 million of the purchase price to the extensive mid-stream natural gas assets being acquired (including over 6,500 miles of natural gas gathering lines) and $500 million to the unevaluated portion of the 4.1 million net leasehold acres being acquired (3.5 million net acres in the US and 0.6 million net acres in Canada),
Chesapeake’s acquisition cost for the 1.1 tcfe of internally estimated proved reserves was approximately $2.275 billion, or $2.20 per thousand cubic feet of natural gas equivalent (mcfe). Based on the company’s projected development plan, which includes approximately $4.1 billion of anticipated future drilling and development costs, Chesapeake estimates that its all-in cost of acquiring and developing the 2.5 tcfe of 3P reserves will be approximately $2.79 per mcfe.
Triana was formed in 2001 by management and executives of Metalmark Capital LLC as a Morgan Stanley Capital Partners portfolio company. Triana was advised in this transaction by Morgan Stanley & Co. Inc. and Credit Suisse First Boston LLC.
Chesapeake Energy Corp. is the second largest independent producer of natural gas in the US. Headquartered in Oklahoma City, the company’s operations are focused on exploratory and developmental drilling and property acquisitions in the Mid-Continent, Permian Basin, South Texas, Texas Gulf Coast, Barnett Shale, Ark-La-Tex, and Appalachian Basin regions of the US.
Swift Energy closes South Bearhead Creek acquisition
Swift Energy Co. has closed the previously announced acquisition of interests in South Bearhead Creek Field in Beauregard Parish, La. Swift Energy acquired a 100 percent working interest in the seller’s operated wells in the field and a 25% working interest in certain non-operated wells. South Bearhead Creek Field consists of approximately 5,800 gross acres located in the Toledo Bend area about 50 miles south of Swift Energy’s Masters Creek Field and 30 miles north of Lake Charles, La. The final purchase price of this acquisition is $24.3 million, subject to post-closing adjustments, and was funded with cash on hand. Swift Energy Co., founded in 1979 and headquartered in Houston, engages in developing, exploring, acquiring, and operating oil and gas properties, with a focus on onshore and inland waters oil and natural gas reserves in Louisiana and Texas and oil and natural gas reserves in New Zealand.
Kerr-McGee completes exit from North Sea
Kerr-McGee Corp. has completed the sale of 100 percent of the stock of Kerr-McGee (GB) Ltd. to Maersk Olie og Gas AS, a subsidiary of AP Moller - Maersk A/S, for $2.95 billion. This transaction, which was effective as of July 1, 2005, completes Kerr-McGee’s exit from the North Sea. The combination of this transaction and the previously closed sale of the non-operated portion of the company’s North Sea properties provides net after-tax proceeds of approximately $3.1 billion to Kerr-McGee. “The company now has closed approximately 75% of the expected $4.4 billion in net after-tax proceeds to be received this year, which enables us to continue our efforts to reduce leverage,” said Bob Wohleber, Kerr-McGee CFO. In addition, we currently are evaluating bids for our Gulf of Mexico shelf properties.” Kerr-McGee is an Oklahoma City-based oil and natural gas exploration and production company focused in the US onshore, deepwater Gulf of Mexico, and select proven world-class hydrocarbon basins.
Hydro invests in new geophysical technology
Hydro has invested in a Swiss company developing new geophysical technologies to determine whether promising geological formations contain oil or gas. Zurich-based Spectraseis Technologie AG provides surveys and data processing services using ultra-sensitive spectrometers and proprietary software to generate maps showing probable distributions of hydrocarbon deposits in a survey area, based on the analysis of passive, low frequency seismic data.
Schematic presentation of the HyMAS methodology. Photo courtesy of Hydro.
The technology is referred to as “Hydrocarbon Microtremor Analysis” or HyMAS. By positioning sensors in the ground, signals can be received from the earth’s interior. By listening to the signals emitted, a chart can be drawn up that reveals the probability of discovering hydrocarbons in an area. In this way it is possible to determine - without drilling - whether promising geological formations contain oil or gas.
Arne Frøiland, Technology Ventures’ investment manager says, “An important issue for new geophysical methods seeking commercialization is to conclusively show that the benefits of new information exceed the costs.”
Technology Ventures, which is wholly-owned by Hydro, has a fund capital of NOK 350 million. The company has acquired a NOK 20 million stake in Spectraseis Technologie AG and is the sole industrial owner. Hydro produces oil and gas in the North Sea and around the world.
Falcon Gas Storage activates facility near Dallas/Fort Worth
Houston-based Falcon Gas Storage Co. Inc. has activated its Worsham-Steed gas storage facility west of the Dallas/Fort Worth Metroplex in Jack County, Tex. The facility, with a working capacity of 12-14 bcf, began receiving gas for injection in November off the Energy Transfer pipeline system at rates of up to 50,000 Mcfd.
Once in full Phase I service, expected by late spring 2006, the facility will be capable of injecting at rates up to 80,000 Mcfd and withdrawing at rates up to 70,000 Mcfd. A planned Phase II expansion will increase injection and withdrawal capability at the facility to more than 300,000 Mcfd each.
“Our Hill-Lake gas storage facility in Eastland County is completely full right now,” said John M. Hopper, Falcon’s president and CEO. “With gas prices in the North Texas market area dropping precipitously over the last several weeks, this was an opportune time to start injecting gas into Worsham-Steed in preparation for full gas storage operations. If gas prices are as low at the end of the winter as they are right now, we should be able to commence full operations late next spring. As the Phase II expansion at our Hill-Lake facility nears completion, the addition of Worsham-Steed to our active portfolio of storage assets will bring our total gas storage capacity in North Texas to over 22 bcf, putting us in a great position to meet the growing demand for storage services in the Dallas/Fort Worth and North Texas markets.”
In addition to activating Worsham-Steed’s gas storage operations, Falcon plans to drill four pilot wells to confirm the viability of an enhanced oil recovery (EOR) project at the field.
“We have over 15,000 acres leased for both EOR and gas storage, about half of which is prospective for EOR operations,” Hopper explained. “We just completed an EOR feasibility study that confirmed there are more than 50 million barrels of crude oil remaining in the oil leg of the reservoir down-dip of the gas cap. As much as 15-20 percent or more likely is recoverable through EOR operations. Worsham-Steed has proven to be a unique asset that we intend to fully exploit in order to maximize its value in this unusually high energy commodity price environment.”
Falcon Gas Storage Co. is an independently owned developer and operator of high-deliverability, multi-cycle (HDMC) natural gas storage capacity with more than 22 bcf of working gas storage capacity at its Hill-Lake and Worsham-Steed gas storage facilities. Falcon also is developing the MoBay Storage Hub, an HDMC gas storage project in southwest Alabama that ultimately will have up to 50 bcf of working gas capacity available to serve markets in Florida and the southeast.
Storm Cat to acquire additional financing
Storm Cat Energy Corp. has entered into an agreement to augment its US private placement that closed on October 25, with a raise of an additional US $5 million from a single investor and existing shareholder. Such investor participated in the corporation’s October 25th financing, and this new financing will take place under the same terms and conditions. This placement will consist of the sale of 2,325,581 common shares at a price of $2.15 per share, resulting in gross proceeds to Storm Cat of $5 million.
In addition to the common shares, the investor will receive a common share warrant exercisable for three tenths of a common share, for each common share purchased each full warrant will be exercisable until October 25, 2007 at an exercise price of $2.52 per share. Storm Cat has agreed to pay placement agent fees in cash in the amount of $300,000. The closing of the financing is subject to the acceptance of the TSX Venture Exchange and satisfaction of customary terms and conditions.
Storm Cat will use the net proceeds from the financing to further develop its exploration and drilling program in the Powder River Basin, Wyo. where two drilling rigs are active, in Elk Valley, British Columbia, Canada where the second exploratory well is being drilled, and ongoing exploratory work in Saskatchewan, Canada and the Cook Inlet, Ala.
This private placement requires that Storm Cat file with the SEC a Registration Statement covering the common shares issued, including any common shares issued upon exercise of the warrants, by December 31. If the Registration Statement was not filed by December 31 or is not declared effective by the SEC by April 20, 2006, then Storm Cat will be liable to make pro-rata payments to each investor who is a party thereto in an amount equal to one percent of the aggregate amount invested by such investor for each 30-day period or pro-rata for any portion thereof following such deadlines.
The securities offered in the private placement have not been registered under the United States Securities Act of 1933 or any state securities laws, and unless so registered may not be offered or sold in the US, except pursuant to an exemption from, or in a transaction subject to, the registration requirements of the Securities Act of 1933 and applicable state securities laws.
Storm Cat Energy is an independent oil and gas company focused on exploration and development of large unconventional gas reserves from fractured shales, coal beds, and tight sand formations. It has producing properties in Wyoming’s Powder River Basin, exploitation and development acreage in Canada and Alaska, and high-risk, high-reward exploration acreage in Mongolia.
Teekay completes follow-on public offering, acquisition of three tankers
Teekay LNG Partners LP has completed its follow-on public offering of 4,000,000 common units at a price of $27.40 per unit. Gross proceeds from the offering were $109.6 million. The offering will increase to 4,600,000 common units if the underwriters exercise in full their over-allotment option.
With the closing of the offering, Teekay LNG completed its previously announced $180 million acquisition of three Suezmax class crude oil tankers and related long-term, fixed-rate time charter contracts from Teekay Shipping Corp. The acquisition was funded with the net proceeds from the offering, together with borrowings under Teekay LNG’s revolving credit facility and cash balances.
The book-running manager of the offering is Citigroup Corp. and Investment Banking. Other co-managers include AG Edwards, UBS Investment Bank, Wachovia Securities, Morgan Stanley, Raymond James, Deutsche Bank Securities, DnB NOR Markets, and HSBC.
Teekay LNG Partners LP is a Marshall Islands partnership formed by Teekay Shipping Corp. to expand operations in the LNG shipping sector. The company provides LNG and crude oil marine transportation services under long-term, fixed-rate time charter contracts with energy and utility companies through its fleet of seven LNG carriers and eight Suezmax class crude oil tankers.
