Upstream News

San Leon Energy uncovers new potential unconventional gas play evaluating Polish shale gas well

Europe and North Africa-focused San Leon Energy has completed the drilling and initial evaluation of another unconventional gas well in Poland and discovered a new potential unconventional gas play in the process.

San Leon has completed the drilling, initial evaluation, and has cased its Siciny-2 well in the SW Carboniferous Basin of Poland, which comprises of 880,000 acres held 100% by San Leon. The well is located in the company's 100% operated Gora Concession 70km to the southeast of the city of Zielona Gora.

The initial goal of collecting core and downhole geophysical data focused on understanding the unconventional gas potential of the Carboniferous section has been achieved. The Carboniferous is known to be the source rock for the significant gas production in the overlying Permian Rotliegendes formation in Poland.

The stratigraphic test well reached target depth of 3,520 meters after penetrating more than 1,000 meters of Carboniferous section. More than 265 meters of continuous core were collected across three prospective intervals identified in the Siciny-1 well. A previously unseen fourth potential Carboniferous shale section and a fractured tight gas sandstone was also encountered below 3,200 meters in the well.

Initial well results for the Siciny-2 are a positive marker for commercialization noted FoxDavies in a February 14 note to investors.

"These results underline not only management's understanding of the regional geology, but the prospectivity of the Polish gas shale play in general. While further testing will be required, the play is significantly derisked. 90p would be added to the fair value if our estimate of 3.5tcf is declared commercial," the analysts said.

Evaluation and interpretation of the core and logs is expected to take 3-4 months in preparation for future production testing operations, noted San Leon.

Oisin Fanning, chairman of San Leon commented: "We are encouraged by the initial results of the Siciny-2 well showing four potential zones for unconventional gas production, including a newly identified interval. In total we encountered more than 500 meters of potential reservoir for further analysis and possible testing. The complex nature of the Carboniferous source rock, including natural fracturing, shows real promise for gas production."

Completion

The Siciny-2 well comes on the heels of the Talisman Energy-operated Rogity-1 well drilled on the Braniewo S Concession in Poland where continuous gas shows were encountered over more than 1,600 feet of the Lower Silurian, Ordovician, and Middle Cambrian sections.

"The gas and liquids shows observed in the Rogity-1 and Siciny-2 would indicate that, in these areas at least, the geological risks are being systematically reduced, and there is permeability in the shale sequences. In the case of Siciny-2, the results are enhanced by the effective porosity and permeability of the fractured tight sandstone," said the analysts.

Managing completion risk is now key. "The differences between the wells also highlights that the completion strategy will not be a "one size fits all" approach, necessitating management to study the results carefully prior to selecting an appropriate completion methodology for each region," the analysts concluded.

Beach Energy wraps up acquisition in step with third Egyptian oil discovery

Adelaide, Australia-based Beach Energy Ltd. has made its third discovery at the Al Jahraa-1 exploration well in the Egyptian Abu Sennan concession. The Al Jahraa-1 well, located about nine miles west of the Al Ahmadi-1 and ZZ-4 discoveries, was the third well drilled as part of a six well exploration program.

Al Jahraa-1 reached total depth in the Kharita Formation at 12,139 feet, with initial testing flowing oil at a rate of 835 bpd from the Abu Roash "E" target zone. As this is an oil discovery with commercial flow rates, the operator, Kuwait Energy PLC, anticipates commercial production of the Al Jahraa-1 discovery as soon as all appropriate approvals are received from the regulatory authorities.

As previously announced, the El Salmiya-1 well, located approximately six miles east of the Al Ahmadi-1 and ZZ-4 discoveries, is currently running a testing program.

The final two wells of the six well program, Salwa-1 and Hawali-1, have recently spudded. These wells are further south in the concession and are expected to reach total depth over the coming weeks.

The joint venture equity interests in Abu Sennan are: Beach (via wholly owned subsidiary Beach Petroleum (Egypt) Ltd.) - 22%; Kuwait Energy PLC - 50% and operator; Dover Investments Ltd. - 28%.

Concurrent with the recent discovery, the company announced it has completed the acquisition of Adelaide Energy Ltd. Adelaide is an oil and gas exploration and production company headquartered in Adelaide, South Australia with a portfolio of exploration and production assets centered around the Otway and Cooper Basins in South Australia amassed since its listing on the ASX in June 2007.

Beach acquired a relevant interest in Adelaide Energy of approximately 97% during the takeover offer period and, as a result, was able to move to compulsorily acquire the outstanding shares in Adelaide Energy it did not own. The purchase of the remaining outstanding shares was completed February 10.

Noble makes gas discovery offshore Israel

Noble Energy Inc. made a natural gas discovery at the Tanin prospect offshore Israel, the company said February 6. The discovery well was drilled to a depth of 18,212 feet and encountered approximately 130 feet of gross natural gas pay in high-quality lower Miocene sands. The Tanin well is located in the Alon A license, approximately 13 miles northwest of the Tamar field, and in 5,100 feet of water. Discovered gross resources are estimated to range between 0.9 and 1.4 trillion cubic feet (Tcf) with a gross mean of 1.2 Tcf. This discovery de-risks other prospects located in the vicinity of Tanin.

The Tanin discovery is the sixth consecutive field discovery for Noble Energy and its partners in the Levant Basin. Four of the discovered fields have estimated gross mean resource sizes of over 1 Tcf. Including Tanin, total discovered gross mean resources in the Levant Basin are now estimated to be approximately 35 Tcf.

Noble Energy is the operator of the Alon A license with a 47.06% interest. Co-owners are Avner Oil and Delek Drilling each with a 26.47% interest.

Buccaneer Energy granted key offshore permits in Alaska

In early February, Buccaneer Energy Ltd. was granted two key permits for oil and gas exploration operations at the Southern Cross and Northwest Cook Inlet Units located offshore in the Cook Inlet, Alaska.

The Alaskan Department of Natural Resources (DNR), Division of Oil and Gas, has approved the Buccaneer Alaska Operations, LLC Unit Plan of Operation, Cook Inlet - Exploratory Drilling Program, which approval authorizes exploration activities in state waters in the Cook Inlet.

Additionally, pursuant to the Rivers and Harbours Act of 1899, the US Army Corps of Engineers has issued the required "Section 10 Permit" authorizing Buccaneer's use of a jack-up rig in the navigable waters of the Cook Inlet for the planned exploration activities. The company's Marine Mammal Monitoring and Mitigation Plan is incorporated in the Section 10 permit.

The company permitting plan was implemented approximately 18 months ago and is on schedule for completion prior to the arrival of the Endeavour-Spirit of Independence jack-up rig in Cook Inlet.

The company's 2012 and 2013 plans for offshore Cook Inlet exploration operations include drilling two wells at each of its Southern Cross Unit and North West Cook Inlet Unit.

Chevron adds color to Future Growth Project at Tengiz Field in Kazakhstan

Chevron Corp. recently released additional details on the future growth of its Tengiz Fields project in Kazakhstan.

The supermajor's affiliate, Tengizchevroil LLP (TCO), expects to enter front-end engineering and design (FEED) in 2012 for an expansion project to increase total daily production between 250,000 and 300,000 barrels.

The Future Growth Project (FGP) will utilize sour gas injection technology used in existing operations. An early estimate of the total project cost is in the $6 - $8 billion range. The upcoming FEED work will refine the estimate range.

TCO is also undertaking an ongoing drilling program and has entered FEED on a well head pressure management project to support current operations.

An early estimate of the total project cost for the trio of projects is in the $20 - $25 billion range.

Chevron has a 50% interest in Tengizchevroil. Other partners are KazMunaiGas, 20%; ExxonMobil Kazakhstan Ventures Inc., 25%; and LUKArco, 5%.

Chevron is Kazakhstan's largest private oil producer, holding important stakes in the nation's two biggest oil-producing projects—the Tengiz and Karachaganak fields.

Tengiz is the world's deepest operating super-giant oil field, with the top of the reservoir at about 12,000 feet deep. Chevron holds a 50% interest in Tengizchevroil , which operates the field. The partnership also is developing the nearby Korolev Field.

TCO completed a $7.4 billion expansion, referred to as the Sour Gas Injection and Second Generation Plant, in 2008. The integrated expansion projects increased TCO's crude oil production capacity by approximately 80%.

SEACOR Marine buys GOM-based liftboat fleet from Superior Energy for $134M

SEACOR Marine LLC, a subsidiary of SEACOR Holdings Inc., has reached an agreement with Superior Energy Services LLC to purchase 18 liftboats for $134 million plus working capital. The transaction is expected to close by the end of March 2012, subject to regulatory approvals. All of the liftboats are currently located in the US Gulf of Mexico.

Citing a wire service announcement, Global Hunter Securities noted February 23 the sale encompasses Superior's entire US Gulf of Mexico-based fleet of liftboats, which includes seven vessels of at least 230 feet, for an average price of just under $7.5 million per boat.

"The transaction would mark another step in the strategic repositioning of the combined SPN/CPX entity, which will ostensibly focus on establishing critical mass in the North American onshore market and exploiting diversified services growth opportunities internationally. Although the sale was consummated quicker than we would have anticipated, the management team is clearly committed to executing its game plan in an accelerated fashion. As such, we believe the announcement will have positive implications for SPN shares," the analysts continued.

SEACOR Marine operates a fleet of offshore marine support vessels, serving the global offshore oil and gas exploration and production industry worldwide with operations and infrastructure concentrated in the United States, Latin America, North Sea, West Africa, Southeast Asia, and the Middle East.

Baker Hughes opens UR research and technology center in Dhahran

Baker Hughes opened its Dhahran Research and Technology Center on Feb. 29 in Saudi Arabia. The facility will focus on research and development of new technologies to unlock the potential of unconventional resources. It is the result of years of planning and a partnership between Baker Hughes and Saudi Aramco that sets out to solve the challenges in world energy production, said Baker Hughes' President and CEO Martin Craighead.

The new research and technology center brings together the competencies of Baker Hughes' engineers and scientists with those from the oil and gas industry of the Kingdom of Saudi Arabia and the King Fahd University of Petroleum and Minerals to develop application-specific solutions. The center is located at the King Abdullah bin Abdulaziz Science Park at Dhahran Techno-Valley.

Offering state-of-the-art rock and fluids laboratories, the center provides the equipment required to further the understanding of the complex science and technology involved in developing unconventional resources.

Statoil awards Aker Solutions large contracts in Norwegian Continental Shelf, North Sea

Aker Solutions has recently been awarded two large contracts by Statoil. One contract calls for Aker to deliver six subsea trees and a tool package for Troll on the Norwegian Continental Shelf. The second is for the the replacement and upgrading of equipment and systems on the Snorre A platform in the North Sea.

The estimated contract value is $179 million (NOK 1 billion).

The Norwegian Continental Shelf contract has an estimated value is NOK 350 million (roughly US$62.8M).

Scope of work includes six subsea trees, with a possible option for nine further subsea trees, including control systems.

The Troll field is located in the northern part of the North Sea, approximately 65 kilometres west of Kollsnes, near Bergen in Norway. The field contains 40% of the total gas reserves on the Norwegian continental shelf and is also one of the largest oil fields on the continental shelf. Under this contract, Aker Solutions will deliver equipment to the oil section of Troll.

Aker has been involved in Statoil's Troll projects since 1996. The Troll field is the world's biggest subsea development with regards to the number of subsea wells. Last year, Aker Solutions reached a major milestone in delivering the 100th subsea tree to the Troll field.

Aker Solutions' contract party is Aker Subsea AS. Equipment deliveries will be made from 2012 to 2015.

In the second contract, awarded in late February, Aker Solutions will deliver replacement drilling equipment and systems on the Snorre A platform in the North Sea. The estimated contract value is $179 million (NOK 1 billion).

The main object of the project is to extend the technical lifetime up to 2040 and improve health, safety and environmental (HSE) factors while keeping the capacity and operational availability "as-is", said Aker. Scope of work will include engineering, procurement, construction, installation and commissioning assistance.

The project includes advanced technical solutions in addition to extensive onshore testing in a considerably larger scale than previously performed. The chosen solutions have been developed over many years through extensive studies with participation from Aker Solutions, Statoil and the drilling operator.

Refurbishment of existing drilling facilities like Snorre A is a growing market in the mature North Sea, and an area which Aker Solutions is targeting.

The Snorre A drilling contract scope will be performed by Aker Solutions' drilling technologies engineering team in Kristiansand and will be concluded by its integration competence centre in Bergen. Prefabrication will be performed at Aker Solutions' yard in Egersund.

Preparations have already started. A total of 100 engineering and management personnel at Aker Solutions' office in Bergen and Kristiansand plus up to 100 offshore installation personnel will work on the Snorre A Drilling contract for the next three years.