Statoil reports fire at Ohio wellsite

A fire reported on June 28 at Statoil’s onshore Eisenbarth well pad in Monroe County, Ohio has been extinguished but follow-up work is continuing.

The fire was limited to surface equipment; none of the wells have been on fire. A Statoil well inspection team on site reported yesterday, June 29, that all wells are secure and are shut-in.

All personnel working on the site were evacuated and remain safe. In addition, as a precautionary measure, residents living nearby were evacuated temporarily. There have been no reports of serious injuries to date associated with this incident.

Statoil continues to work with local, state and federal authorities to manage this incident.

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Former NATO commander returns to Balkans hunting for Albanian oil

Fifteen years after Wesley Clark led NATO’s bombing campaign against Serbia, the retired U.S. general is back in the Balkans - looking for oil.

Clark, who was also a presidential candidate in 2004, is a director of two Canadian explorers working in Albania, Bankers Petroleum Ltd. and Petromanas Energy Inc. They’re using modern drilling techniques to revive production in one of Europe’s poorest countries, where oil was first produced in the 1920s.

“Albania has an enormous economic significance for Europe as it has a robust supply of oil, and it should be a strong component of European energy policy,” Clark said in a telephone interview.

Oil exploration is part of Albania’s strategy to repair the damage of four decades of economic isolation under the communist regime of Enver Hoxha, who built more than 700,000 concrete military bunkers before he died in 1985. Albania’s economy, where per capita income remains the lowest in Europe after Bosnia, Ukraine and Moldova, has almost doubled in size in the last decade, according to the World Bank.

Clark, who’s been on Bankers’s board since 2008 and became a Petromanas Energy director last year, was NATO’s supreme allied commander in Europe when the alliance’s bombing campaign forced Serbia to withdraw from Kosovo, where ethnic Albanians make up the majority of the population.

Horizontal Drilling

Bankers, based in Calgary, is using horizontal drilling and water flooding to revive Patos-Marinza, first discovered in 1928 and once Europe’s largest producers. Output, which had dwindled to almost nothing in 2004, is now 20,000 bpd and Bankers plans to drill 170 wells a year to boost production to almost 50,000 bpd by 2020.

“Bankers is a lower risk investment alternative that provides predictable and growing production on a significant reserves and resource base,” Darren Engels, an analyst at FirstEnergy who rates the company a buy, said this month.

Petromanas Energy, also based in Calgary, is a partner with Europe’s largest oil company, Royal Dutch Shell Plc, to hunt for new oil fields in Albania, where the geology is similar to southern Italy, home to some of Europe’s largest onshore fields.

Two wells drilled by the companies have found about 375 MMbbl of oil, according to Petromanas, which holds a 25% stake in the venture. A third, called Molisht-1 is being drilled at the moment.

“What’s happening in Albania is representative of the fact that if price of oil stands at $100 a barrel, people are looking at new opportunities,” Clark said. “If the price stays there, it has changed the geography of oil; it is happening in Albania, it is happening elsewhere in Europe.”

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Tethys awarded 15-year extension to Kazakhstan gas contract

Tethys Petroleum, following the recently reported Kazakh State Reserves Committee (GKZ) approval, confirmed that it has received approval from the Ministry of Oil & Gas of the Republic of Kazakhstan (MOG) for the extension its Kyzyloi Production Contract for a further 15 years, to June 2029.

The contract area currently covers some 287 sq km, and the company is currently producing gas from the shallow Kyzyloi sandstone in this area. This contract extension will give Tethys significantly more time to produce natural gas from the area.

The reserves attributed to the Kyzyloi contract area, determined in accordance with National Instrument 51-101 of the Canadian Securities Administrators, are included in the company' s reserves evaluation for its oil and gas interests in Kazakhstan.

Tethys is focused on oil and gas exploration and production activities in Central Asia and the Caspian region, with activities currently in the Republics of Kazakhstan, Tajikistan and Georgia.

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Explorers see promise in Egypt oil, gas when subsidies eased

Explorers in Egypt expect constraints on domestic energy prices to loosen, prompting new investment in oil and natural gas fields.

Companies including Citadel Capital SAE, Circle Oil Plc and Petroceltic International Plc expect President Abdel-Fattah El-Sisi to make good on promises to reduce subsidies of more than $20 billion a year and ease demands that producers sell fuel on the domestic market well below international prices, they said at a conference in London on June 27.

The changes would allow the government to cut the budget deficit and pay suppliers money owed for fuel, said Mohamed Shoeib, a managing director at Cairo-based Citadel. It’s a necessary first step if Egypt wants to lure back investors driven from the country by recent turmoil as it tries to both increase exports and meet surging domestic energy demand.

The government “should tackle the problem and not escape it,” Shoeib, whose company has about $10 billion invested, mostly in Egyptian energy projects, said in an interview. “It should happen very soon.”

Egypt is poised to become a net fuel importer as authorities divert gas from export projects to meet local demand, sometimes failing to pay the suppliers. The practice prevented the UK’s BG Group Plc from meeting contracted LNG shipments this year. The company has been in talks with the government about guarantees for future exports, with receivables for gas still owed by Egypt doubling in a year to March 31.

Oil Minister

Egypt plans to pay at least $1.5 billion to energy suppliers before the end of the year, or about a quarter of its debt as of April, Reuters reported June 26, citing Oil Minister Sherif Ismail.

Egyptian General Petroleum Corp., the state energy company, “is doing the best it can” to pay off the debt, said Chris Green, CEO at Circle Oil. “The key thing is reducing subsidy.”

Sea Dragon Energy Inc. plans to acquire additional assets in the country, said CEO Paul Welch. “The time is great now to get involved in Egypt.”

Oil producers receive international prices for their products in Egypt, while gas suppliers are paid only a fraction of what they could earn from exports when they sell on the domestic market, Stephane Foucaud, a London-based analyst at FirstEnergy Capital Corp., said in an interview at the conference.

“The gas price simply has to increase” and that will “unlock exploration” because some fields are not economic to drill at the current tariff, said David Thomas, COO at Petroceltic. “The country is full of opportunity. My question is, when the race will start?”

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Sercel lands another order for 508XT system

CGG has announced that, in addition to the first two 508XT systems being delivered to the industry this month, Sercel has also sold a system to PanAmerican Geophysical for delivery in July.

The system' s X-Tech architecture allows it to combine the benefits of both cable and cable-free systems in a single platform.

Dave Pratt, Chairman, PanAmerican, said: “We are excited to be the first to deploy the 508XT in North America, having chosen the system based on its unique features which will allow us to achieve the highest levels of production while greatly reducing the number of batteries that need to be deployed and maintained.”

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C&J Energy forms fifth-largest fracturing fleet with $2.86 bn Nabors deal

Nabors Industries has signed a definitive agreement to combine its completion and production services businesses in the U.S. and Canada with C&J Energy Services, Inc.

The transaction will roughly triple the C&J stimulation fleet, which should then rank as the fifth-largest fleet in North America. The combined company will also operate the largest fluids management fleet and the second-largest workover/well-servicing fleet in North America. In addition, prospects for international expansion should be enhanced through a global alliance agreement with Nabors.

Following the completion of this transaction, Nabors will own approximately 53% percent of the combined company, which will be incorporated in Bermuda and listed on the NYSE as C&J Energy Services Ltd. In addition to the 62.54 million shares of the combined company, Nabors will also receive approximately $937 million cash, to be paid from proceeds of a public debt placement by the combined company.

The new C&J Energy Services Ltd. will be managed by the current C&J Energy Services management team, supplemented by Nabors' completion and production services workforce.

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Safe, efficient solar-powered wireless load cell introduced

Bright Automation, a designer and manufacturer of monitoring and control products, has introduced a fully solar-powered wireless load cell designed for use on pumping units. The Bright Wireless Load Cell has a fully solar-powered battery, transmitting data via a 2.4-GHz wireless digital communication protocol. Based on its unique wireless design, the Bright Load Cell provides easier, faster installation, according to the manufacturer, and reduces shutdowns associated with cable failure. The receiving module output generates a standard 4-20-mA or 0-10-mV signal, making it useful as a replacement of conventional load cells, the company said.

The load cell’s lack of wires and U-shaped structure provides for easy installation, repair and maintenance, while its durable outer shell allows it to withstand harsh environments, reported Bright.

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North Dakota crude oil production barrels past 1 MMbopd

North Dakota, which became just the fourth state to record oil production above 1 MMbopd, could see even stronger growth over the summer as improved weather makes life easier for drilling crews.

Output increased to 1,001,149 barrels a day in April, the state’s Department of Mineral Resources reported yesterday. Texas, California and Alaska have crossed the million-barrel mark. Only Texas remains above the state, at almost 3 MMbopd.

April oilfield work was hampered by heavy rain that shut roads and strong winds that closed down operations. Crews completed 200 wells during the month, and another 600 are already drilled and just waiting on hydraulic fracturing, or fracking. Better weather in the summer months should allow more new wells to start gushing oil.

“As the weather improves, operators should have full utilization of all their rigs, and possibly additional completion crews to whittle down the backlog,” Jonathan Garrett, an upstream analyst at Wood Mackenzie Ltd. in Houston, said in a phone interview today. “I wouldn’t be surprised to see quite a bit of production growth over the summer. It should be pretty impressive.”

Oil and gas from the Bakken and other shale formations helped the U.S. produce the equivalent of 87% of its energy needs in 2013, the highest level since 1985, according to data from the Energy Information Administration. The U.S. imported 7.7 MMbopd in 2013, the least since 1996.

Hydrocarbon-Rich

Most oil produced in North Dakota comes from the Bakken and Three Forks shale formations, layers of hydrocarbon-rich rock more than a mile beneath the Earth’s surface. High crude prices and improvements in drilling technology have helped companies like Continental Resources and Whiting Petroleum tap into the previously inaccessible shale.

Output from shale wells declines by 60% to 70% in the first year, according to Austin, Texas-based Drillinginfo Inc., faster than traditional wells. Because of the steep decline rate, companies need to finish new wells constantly. Bad weather can slow the completion process, curbing production growth.

Adverse Weather

In April, roads were shut for three days because of heavy rain, and there were nine to 11 days of wind blowing faster than 35 mph, too strong for completion work, Lynn Helms, the director of the state’s Department of Mineral Resources, said during a conference call with reporters yesterday. The weather in May and June has been much more benign.

“Permitting and drilling activity indicates that we’ll continue to see production grow and build well above 1 MMbopd,” he said.

Producers are also drilling better wells, Garrett said. They’re increasing horsepower and using more water and sand in the fracking process, which is helping to increase initial production and slow decline rates.

Bakken crude priced at Enbridge Inc.’s pipeline hub at Clearbrook, Minnesota, traded at a discount of $6.50 less than West Texas Intermediate in Cushing, Oklahoma, at 8:59 a.m. New York time, according to data compiled by Bloomberg.

About 30% of North Dakota’s oil left the state by pipeline and 63% by rail in April, according to the state’s pipeline authority. It’s the lowest percentage of rail transportation since September.

It costs $9 to $10 a barrel to transport oil by train to East Coast refineries, and $6 to $7 a barrel to rail crude to Washington plants, Tesoro Corp. said in a February presentation to investors.

The discount of Bakken crude priced at the wellhead to Brent crude, the benchmark for global waterborne crude, is about $20.71 a barrel, according to data compiled by Bloomberg.

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