www.upstreamonline.com http://www.upstreamonline.com/ www.upstreamonline.com WorleyParsons wins Woodside gig http://www.upstreamonline.com/live/1370886/WorleyParsons-wins-Woodside-gig EPCM contract win for Australian services provider bianca.bartucciotto@upstreamonline.com (Bianca Bartucciotto) http://www.upstreamonline.com/live/1370886/WorleyParsons-wins-Woodside-gig Mon, 28 Jul 2014 03:03:28 +0000 live The company won a contract under the brownfield EPCM services outline agreement for the North West Shelf project offshore Western Australia.

Under the agreement, WorleyParsons will deliver brownfield services for both onshore and offshore assets.

Work will be based out of the company’s Perth location, which has been managing similar services for the past two decades.

Woodside is planning to develop three fields on the shelf with a combined gas reserve of between 2 trillion cubic feet and 3 Tcf as feedstock for its liquefied natural gas facilities.

Persephone is the first field likely to be developed as a subsea development tied back to the North Rankin production platform.

The company indicated that Persephone contains a volume of 140 million barrels of oil equivalent, which equates to about 800 billion cubic feet of gas.

The second development is called Greater Western Flank phase two, and the third is called Lambert Deep West.

Greater Western Flank phase two will seek to monetise 1.7 Tcf of gas, while Lambert Deep West contains 200 billion cubic feet of gas.

Basis of design on the former is planned to begin in early 2014, with a transfer into FEED in the second half of next year. Lambert Deep West should get under way in 2015, said Woodside.

There are two major field developments already ongoing in the North West Shelf project area — the North Rankin B compression platform, and Greater Western Flank phase one.

The six equal-sharing project partners are Woodside, Shell, BP, Chevron, BHP Billiton and Japan LNG.

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Senex posts record figures http://www.upstreamonline.com/live/1370833/Senex-posts-record-figures Output and revenues hit new highs following successful drilling campaign in the Cooper basin Josh.Lewis@upstreamonline.com (Josh Lewis) http://www.upstreamonline.com/live/1370833/Senex-posts-record-figures Mon, 28 Jul 2014 00:28:41 +0000 live The company generated A$49.8 million (US$46.8 million) over the three months to 30 June, up on the A$33.1 million in turnover booked during the same period last year.

This came as quarterly production rose 48.3% to roughly 430,000 barrels, up from 290,000 barrels over the corresponding quarter a year ago.

Senex attributed the rise in production to increased output from its operated oilfields in South Australia as new wells were brought online, namely at the Spithfire, Mustang, Burruna and Acrasia fields.

The increased output also came as the company wrapped up its 30-well drilling programme in the South Australian Cooper basin which also led to an upgrade in the company’s oil reserves.

Senex upgraded its proved plus probable oil reserves on Monday by 4.5 million barrels to 13.3 million barrels, based on the results of the recent drilling campaign and the performance of existing fields.

Proved reserves were also increased by 2.1 million barrels, to 5.5 million barrels, while proved plus possible plus probable reserves were increased 4.5 million barrels to 13.3 million barrels.

As of 30 June, Senex was in a strong financial position, holding A$76.6 million in cash and no debt.

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Drillsearch seals Cooper farm-out http://www.upstreamonline.com/live/1370880/Drillsearch-seals-Cooper-farm-out Beach Energy will drill up to two exploration wells to earn a stake in onshore Queensland permit Josh.Lewis@upstreamonline.com (Josh Lewis) http://www.upstreamonline.com/live/1370880/Drillsearch-seals-Cooper-farm-out Mon, 28 Jul 2014 02:45:06 +0000 live Under the deal, Beach will initially earn a 45% farm-in option in the exploration permit by funding 150 square kilometres of recently acquired 3D seismic and the drilling of an exploration well on the Hurron prospect.

It can exercise the option to earn the 45% interest by drilling an additional exploration well and reimbursing Drillsearch for past costs.

The first well will target potential oil reservoirs in the Eromanga basin sediments in the Hurron prospect which Drillsearch estimates to hold 6.4 million barrels and 48.1 million barrels of prospective resource potential, with a best estimate of 18.7 million barrels.

It has also identified a deeper Hurron gas prospect which it estimates to hold a total unrisked prospective resource potential of between 12.3 billion cubic feet and 52.4 Bcf, with a best estimate of 27.9 Bcf.

Beach will operate the drilling of the two exploration wells on behalf of Drillsearch who will retain a 55% operated stake in the permit.

Drillsearch has not yet revealed where the second well of the farm-out deal will be drilled, however it has currently mapped six prospects and leads on the 2300 square kilometre permit.

To date only three wells have been drilled on ATP 924P which contains the Marengo South discovery which has been assessed to hold a best estimate contingent gas resource of 17.5 Bcf.

“We are delighted with the outcome of the ATP 924P farm-out process which has delivered a high quality partner in Beach and we look forward to working together to expedite the work programme we already have underway,” Drillsearch managing director Brad Lingo said.

“We have identified several drill targets in the permit and we are excited to pursue the prospectivity that we believe exists in this under-explored part of the Cooper basin.”

The farm-out builds on the existing relationship between Drillsearch and Beach who are already partnered on the western flank oil fairway of the Cooper basin where they produce oil from PEL 91 in and wet gas from PEL 106 in South Australia.

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Cairn resumes Senegal drilling http://www.upstreamonline.com/live/1370852/Cairn-resumes-Senegal-drilling Drilling of offshore wildcat resumes following rig maintenance Josh.Lewis@upstreamonline.com (Josh Lewis) http://www.upstreamonline.com/live/1370852/Cairn-resumes-Senegal-drilling Mon, 28 Jul 2014 01:15:53 +0000 live Joint venture partner Far revealed on Monday that the semi-submersible Cajun Express had resumed drilling the wildcat which is testing a fan structure estimated to hold 900 million barrels of oil.

Operations had been delayed after the drilling rig was required to undergo “essential maintenance” last month.

Cairn initially started drilling Fan-1 in April this year but moved the rig drill the tophole of a second deep-water well on its Senegal acreage, SNE-1, while ongoing maintenance was carried out.

At the time, Far said it was the most efficient way to utilise the rig, however last month,following the recent delays, it admitted costs were expected to jump as the closely watched drilling campaign takes longer than expected.

“These two wells offshore Senegal have the potential to radically alter the prevailing international view of the hydrocarbon potential of Senegal where no offshore wells have been drilled for more than 20 years,” Far managing director Cath Norman said on Monday.

“The two well programme in the Atlantic margin is being closely monitored by many international oil and gas players because of the large prospect sizes being drilled and the potential for numerous nearby follow up targets in the event of success.”

Fan-1 is currently at a depth of roughly 3000 metres and will be drilled to a total depth of about 5300 metres.

The prospects lie within the Rufisque, Sangomar and Sangomar Deep offshore production sharing contract where Cairn holds a 40% operated stake along with ConocoPhillips (35%), Far (15%) and state-owned oil company Petrosen (10%).

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LNG Ltd takes over Bear Head http://www.upstreamonline.com/live/1370841/LNG-Ltd-takes-over-Bear-Head US and Australian operators sign takeover agreement for Canadian project bianca.bartucciotto@upstreamonline.com (Bianca Bartucciotto) http://www.upstreamonline.com/live/1370841/LNG-Ltd-takes-over-Bear-Head Mon, 28 Jul 2014 00:50:09 +0000 live The project located in Nova Scotia, Canada, is part of the company’s expansion into the North American LNG sector.

LNG Ltd has signed an agreement to take 100% interest of the industrial-zoned land and the deep-water acreage.

Foundations are also in place at the site for two LNG tanks, with the land cleared, majority of site work completed, and roads construction.

The project rights of the previously-proposed LNG import terminal include all assets, rights and obligations associated with the project.

LNG Ltd plans to develop the Bear Head project into a 4 million tonne per annum LNG export facility with potential for future expansion.

Plans have already been drawn up for a gas supply plan and a transportation plan.

There is interest from several companies to enter into tolling agreements, using the same business model as the Magnolia LNG project.

Once the transaction closes, LNG Ltd will appoint John Godbold as chief operating office and project director of the project.

Ian Salmon will be appointed chief financial officer and chief commercial officer after the close.

LNG Ltd managing director Maurice Brand this project would de-risk the company’s asset base in the North America.

“We are particularly keen to secure opportunities where we can either replicate Magnolia LNG or substantially use all the Company’s technical, engineering, technology and development expertise,” he said.

“We have been undertaking due diligence on Bear Head since October 2013 so we are confident that we can hit the ground running and obtain all permits and approvals by mid‐2015, and during 2016, make a final investment decision.”

The deal is still subject to a number of closing conditions.

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Galp strikes out in Tao-1 formation http://www.upstreamonline.com/live/1370830/Galp-strikes-out-in-Tao-1-formation First intersected formation fails to provide hydrocarbon shows bianca.bartucciotto@upstreamonline.com (Bianca Bartucciotto) http://www.upstreamonline.com/live/1370830/Galp-strikes-out-in-Tao-1-formation Mon, 28 Jul 2014 00:04:13 +0000 live Australia-listed Tangiers Petroleum announced the Tao-1 intersected the shallowest and secondary objective, the Assaka formation, where it failed to find any hydrocarbon shows.

Galp will carry out a full petrophysical evaluation of the objective.

Drilling operations will continue down to the next two objectives, including the Trident, which is the primary objective of the well.

Tangiers said that it believes success at the Trident formation is not dependant on the results from Assaka.

Tangiers managing director David Wall told Upstream the Trident formation was the largest of the three objectives.

He added that if the well was unsuccessful there was another drill-ready prospect on the Tarfaya offshore block where the current well is also located.

If Tao-1 is successful, first production from the block could be expected in about six years.

Wall confirmed that if this well was successful it could be company-defining as a discovery in this area has the potential to tap into an infrastructure-ready market.

Galp has earnt a 50% stake in the Tarfaya Block by agreeing to spend $41 million, including $7.5 million in back costs, and fund the drilling of one well.

Following the completion of the farm-in Tangiers saw its interest reduced to 25% and Moroccan state oil company ONHYM holds the remaining 25% equity.

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Cadlao dispute reaches settlement http://www.upstreamonline.com/live/1370879/Cadlao-dispute-reaches-settlement Australian player resolves dispute regarding Philippine licence bianca.bartucciotto@upstreamonline.com (Bianca Bartucciotto) http://www.upstreamonline.com/live/1370879/Cadlao-dispute-reaches-settlement Mon, 28 Jul 2014 02:05:44 +0000 live The Cadlao redevelopment project in the Philippines is part owned by each of the companies.

Peak has a 50% interest in the project, while Cadco holds a 30% interest and VenturOil holds 20%.

Peak Oil & Gas had received notice from Cadco that the farm-in agreement between the two parties had been terminated because Cadco was not satisfied “as to the availability of funding for the Cadlao project” by Peak.

Peak said its lawyers had notified Cadco that the purported termination was “invalid and ineffective”.

Cadlao sits in Block SC6 in the NW Palawan basin, and has gross proven and probable reserves of more than 6 million barrels.

The arbitration process regarding the dispute with Cadco has been suspended at the mutual agreement of both parties.

Peak and Cadco have signed a conditional settlement deed which requires Peak to transfer its interest in Peak Royalties which holds overriding royalty rights pertaining to SC6.

Peak will also be required terminate the Cadlao agreement between the companies which releases any claim Peak has to director working interests in SC6 Cadlao and terminate the arbitration.

Cadco will then pay Peak about C$6.7 million to settle the agreement on 6 August.

Peak recently announced the Philippines Department of Energy announced that it had approved the SC6 Cadlao 2014 work programme, which would allow joint venture partners to move ahead with the project.

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Eni 'renews plans to sell Saipem stake' http://www.upstreamonline.com/live/1370816/Eni-renews-plans-to-sell-Saipem-stake New management reportedly plans to press on with sale in order to focus on exploration Luke.Johnson@upstreamonline.com (Luke Johnson) http://www.upstreamonline.com/live/1370816/Eni-renews-plans-to-sell-Saipem-stake Fri, 25 Jul 2014 22:53:46 +0000 live Former Eni chief executive Paolo Scaroni had plans to dispose of Saipem, Reuters reported, but they were put on hold when Italian Prime Minister Matteo Renzi drafted in new management to run the state-controlled oil giant.

Saipem became a liability for Eni last year when half its market value was wiped out by two profit warnings and a damaging investigation into alleged corruption in Algeria, which also engulfed Scaroni.

With oil and gas production compromised by conflict in Libya and unrest in Nigeria, along with project delays in Kashagan and Angola, Eni also needs to sell assets to fund increasingly costly upstream investments and maintain its dividend.

"Eni's new management is indeed ready to resume the sale of Saipem, though it first needs to cut its debt either via asset disposals or raising equity," a source close to the matter told Reuters.

Eni has a 43% stake in Saipem and fully consolidates it on its balance sheet, including €5.5 billion of debt. But it keeps it at arm's length and has no day-to-day influence over management because Saipem also works on some contracts awarded by Eni.

Claudio Descalzi, who took over the top spot at Eni in May, has yet to pronounce on plans for Saipem but is expected to flag his intentions at a strategy meeting next Thursday.

"Saipem has been under strategic review for a long while and Eni's new management is willing to go ahead," another source told the news wire.

"Options under review include a break-up of Saipem's distribution, production and transformation operations," the source said, adding that decisions about this might be taken in the second half of the year.

Eni did not comment.

Saipem, whose debt-to-equity ratio stands at a hefty 60% or so, borrows through Eni, whose A rating is higher than Italy's. But people close to the matter said Eni was taking steps to get Saipem on an independent footing.

A banker who works on funding with Saipem told Reuters that Eni was already calling on lenders to negotiate debt guarantees directly with Saipem.

"They're slowly weaning Saipem off Eni's milk," he said.

A break-up of Saipem would allow the firm to cut its debt pile without tapping the market for new equity, which some bankers say would have to be in the order of €2 billion to make the company appetising.

"Previously there was discussion about selling the onshore drilling business which could be worth around €1 billion and could find buyers because it's a steady cash generator," a banker who had been privy to Scaroni's plans said.

He said another option the former chief executive had been toying with was the issuance of a convertible bond by Saipem.

Saipem's onshore and offshore drilling business accounts for some 15% of the company's revenues which in 2013 stood at about €12 billion.

Reports earlier this year said Norway's Seadrill was interested in buying Saipem's offshore drilling business while Subsea 7 was interested in a stake in Saipem.

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RSP Permian adds Texas acreage http://www.upstreamonline.com/live/1370806/RSP-Permian-adds-Texas-acreage Pure-play operator shells out $259m for producing assets near existing leasehold Luke.Johnson@upstreamonline.com (Luke Johnson) http://www.upstreamonline.com/live/1370806/RSP-Permian-adds-Texas-acreage Fri, 25 Jul 2014 19:19:05 +0000 live The asset package includes 6652 net acres in Glasscock County on the Midland side of the Permian with net production of 1106 barrels of oil equivalent per day (74% liquids) from 13 vertical wellbores and proved reserves of 22 million boe.

RSP believes it can drill 156 horizontal wells and additional verticals as well on the acreage targeting the Lower Spraberry, Wolfcamp formations and possibly other stacked tight-oil targets.

"Our experience and strong relationships in the Permian basin enabled RSP to successfully negotiate the acquisition of these assets in the core of the Midland basin from multiple parties," chief executive Steve Gray said.

"The value of these acquisitions was principally in the undeveloped acreage as these assets have multiple horizontal targets and come with ample vertical inventory that will provide years of potential horizontal and vertical growth for the company."

There is currently one vertical rig drilling on the assets and RSP plans to keep that rig there into next year.

Sometime in 2015, RSP hopes to have better infrastructure in the area and to begin horizontal drilling.

Analysts cautioned that the purchase price looked high but said the number of potential drilling sites and the geographic location was worth the money.

"We like the acquisition as it adds meaningfully to RSP's core inventory (+20%), while keeping RSP's asset base concentrated and contiguous in prime real estate," Global Hunter Securities analyst Patrick Rigamer said in a note.

"Acquisition metrics imply acreage valuations of about $25,000 to $29,000 per net acre after backing out production at $60,000 to $80,000 per boepd, roughly in line with recent transactions by Diamondback Energy and Athlon Energy and below RSP Permian's current implied valuation of $47,000 per acre," Rigamer explained.

"While those acreage values may appear high, the numbers look much more palatable when compared against the potential drilling locations."

The deal, which is expected to close at the end of August, will be funded through existing credit facilities and possibly through equity markets.

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Brazil OKs Petrobras Marlim plan http://www.upstreamonline.com/live/1370817/Brazil-OKs-Petrobras-Marlim-plan Oil regulator ANP approves new development programme for Campos basin field Kathrine.Schmidt@upstreamonline.com (Kathrine Schmidt) http://www.upstreamonline.com/live/1370817/Brazil-OKs-Petrobras-Marlim-plan Fri, 25 Jul 2014 23:05:13 +0000 live Brazil's state-led oil company drew up the plan after the ANP told it about two years ago to come up with ways to limit declining output from several of the largest, but ageing, oil fields in the Campos Basin, Reuters reported.

The Campos Basin is an offshore region northeast of Rio de Janeiro that was responsible for 76% of Brazil's oil output in May, down from 85% four years earlier.

Output has stagnated as Petrobras has been unable to bring on new areas fast enough to make up for declines from older fields.

While the plan will require Petrobras to make substantial investments in Marlim, the ANP did not say how much Petrobras must spend on the upgrade, the ANP director, Florival Carvalho said.

"The ANP analyzed the plan from the point of view of increasing the capture of oil and they will have to make the investments to get this done," Carvalho said.

The new investments could further burden Petrobras, already the world's most indebted and least profitable major oil company, as it struggles to pay for a $221 billion, five-year investment plan, much of it over budget and behind schedule.

Stagnant production and the need to subsidise fuel imports have squeezed Petrobras for cash and caused its debt to soar.

Petrobras officials were not immediately available for comment to the news wire.

Last year, the ANP approved new development plans for the giant Roncador and Marlim Sul fields, also in the Campos Basin.

Roncador, Brazil's No 1 field, produced 278,000 barrels of oil and equivalent natural gas per day (boepd) a third less than the 359,000 barrels a day it produced four years earlier.

In addition to Marlim, Roncador and Marlim Sul, Petrobras will have to boost investment in the Albacora Leste, Jubarte, Albacora and Barracuda-Caratinga fields, all also in Campos.

As a condition of the approval, the ANP made a series of additional requests and ordered the company to complete a field recovery planning document with firm investment commitments by the end of this year.

The main requirements focus on the need to increase water injection into the field to capture residual oil and the application of technology and equipment to boost recovery of oil mixed with water and sediments. Petrobras will also have to drill new wells and perform new seismic studies.

Petrobras preferred shares, the company's most-traded class of stock, rose 1.08% in afternoon trading in Sao Paulo on Friday, on track for a second day of gains.

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Magnum Hunter bulks up in Marcellus, Utica http://www.upstreamonline.com/live/1370809/Magnum-Hunter-bulks-up-in-Marcellus-Utica US independent buys 1700 net acres of mineral rights for $22.7m Luke.Johnson@upstreamonline.com (Luke Johnson) http://www.upstreamonline.com/live/1370809/Magnum-Hunter-bulks-up-in-Marcellus-Utica Fri, 25 Jul 2014 21:24:48 +0000 live The properties are in Monroe County, Ohio and Wetzel County, West Virginia.

Magnum Hunter bought the package from the Ormet Corporation.

The deal will increase Magnum Hunter's net revenue interest on its existing 875-acre oil and gas lease located on the related acreage from approximately 86% to nearly 100% in the Marcellus shale formation only.

Under the same agreement, Magnum Hunter also acquired a 100% net revenue interest in the balance of the mineral rights to the acreage that also include the Utica shale formation.

The mineral interest acquisition adds to the company's large drilling inventory of potential Marcellus and Utica shale wells in the area.

Rick Farrell, senior vice president of land and business development, said the deal has been in the works for about a year "due to the complexities of dealing with a bankrupt estate".

"We have been highly encouraged with our Marcellus production results on this property," Farrell said. "With this purchase, we can now drill an additional five Marcellus wells. By owning the Utica mineral rights acquired, we also have a new opportunity to drill another seven new wells which appear to be geologically well situated."

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Pemex widens loss amid output slump http://www.upstreamonline.com/live/1370796/Pemex-widens-loss-amid-output-slump Mexico's Pemex fell to another quarterly loss on increasing costs, production slide amid reforms Kathrine.Schmidt@upstreamonline.com (Kathrine Schmidt) http://www.upstreamonline.com/live/1370796/Pemex-widens-loss-amid-output-slump Fri, 25 Jul 2014 16:32:08 +0000 live The state-led oil company posted a net loss of 53 billion pesos ($4.09 billion) in the three months to June. That compared with a loss of 49 billion pesos in the year-ago period.

The loss came despite a boost in revenue to 409.1 billion pesos, up 4% from the 2013 quarter.

Crude production, which has long struggled with declines, was down by 1.9% to 2.468 million barrels per day. The company also saw the costs of sales grow at a higher rate than sales increases.

The results are a "clear indication" of Pemex's challenges that will be addressed by ongoing energy reforms that will open the country's sector to private competition, chief financial officer Mario Beauregard said on a conference call.

Accordingly the company must redefine its role as an operator, not just a state entity, and expects to see its government take and budgetary flexibility increase from the changes, Beauregard said.

Mexico's Congress is presently working on laws to implement constitutional reforms passed last year which end Pemex's 75-year monopoly, with four packages of measures headed to the country's chamber of deputies after passage in the senate last week.

Pemex completed seven exploratory wells during the quarter, including a delineation well of the landmark Trion discovery in the deep-water Perdido fold-belt, exploration director Gustavo Hernandez said on the call.

The Trion-1DL, drilled in 2565 metres of water targeting Tertiary reserves, reported initial production of 2260 barrels per day.

The probe "confirmed the results yielded by the Trion-1 exploratory well and provide more certainty about the structure of the deposit."

On the production front, the company experienced greater-than-expected production declines in fields including Cantarell as well as maintenance delays at a floating production unit in the Ku-Maloob-Zaap area.

The company is in the process of reworking its output estimates, Hernandez said, but expects to see production continue to decline with 2.441 million bpd expected by year's end.

Much of the company's path forward depends on the results of the so-called Round Zero process in which regulators determine what of its acreage Pemex will be allowed to keep, a decision due on 17 September.

Beauregard expects the reforms will slowly begin to allow for more investment by Pemex, with capital spending targeted for $29 billion for 2015 up from $27 billion this year.

"More flexibility for Pemex is really very good news," he said.

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New energy envoy for US State Department http://www.upstreamonline.com/live/1370804/New-energy-envoy-for-US-State-Department Amos Hochstein to take over as co-ordinator for international energy affairs at key time for oil and gas politics Luke.Johnson@upstreamonline.com (Luke Johnson) http://www.upstreamonline.com/live/1370804/New-energy-envoy-for-US-State-Department Fri, 25 Jul 2014 17:08:06 +0000 live The appointment comes at a key time for global energy politics, as the US re-asserts itself as an energy powerhouse amid international crises in oil and gas centres in the Middle East and Russia.

Hochstein will lead the State Department's Bureau of Energy Resources, according to the Wall Street Journal. The Department has not publicly announced the appointment and did not comment on the report.

The bureau has been working closely with European nations to help them become less dependent on Russian natural gas as conflict churns in Ukraine.

Hochstein is replacing special envoy Carlos Pascual, effective 1 August. Pascual announced in June he was stepping down to join the Center on Global Energy Policy, a research group.

Hochstein, a Democrat, has served as the bureau's deputy assistant secretary for energy diplomacy since 2011, according to his bio on the State Department website.

In that role, he has overseen the Office of Middle East & Asia and the Office of Europe, the Western Hemisphere & Africa. He has focused on "promoting US interests to ensure energy resources are used to increase economic opportunity, stability and prosperity around the world".

At a congressional hearing this week, Hochstein said that the "overall sea change in US energy balances has had significant international energy market implications as vast quantities of imported energy once destined for the United States are now consumed elsewhere in the world markets".

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US rig count up by 12 http://www.upstreamonline.com/live/1370805/US-rig-count-up-by-12 Baker Hughes puts total number of oil gas units working at 1883 this week Luke.Johnson@upstreamonline.com (Luke Johnson) http://www.upstreamonline.com/live/1370805/US-rig-count-up-by-12 Fri, 25 Jul 2014 17:38:10 +0000 live Rig counts for both oil and gas rigs were up. Oil-directed units gained eight for a total of 1562 and gas-directed rigs were up three for a total of 318.

Louisiana saw the biggest leap in rigs this week, gaining six units for a total of 119.

New Mexico, Oklahoma and California also saw significant jumps, each adding four rigs for respective totals of 94, 204 and 46.

Alaska was the big loser, shedding three rigs for five.

Pennsylvania and Texas each lost a pair for totals of 53 and 886, respectively.

On a basin-by-basin basis, the week was pretty quiet. Only the Mississippian showed a change of more than one rig. It added two for 81.

The Permian lost a rig for 555, though that is still up 93 on the year. The Eagle Ford also lost one, for 211.

The Utica and Marcellus each lost a rig for totals of 45 and 78, respectively.

The Williston basin was flat on 184.

There were 59 rigs drilling in the Gulf of Mexico, up two from last week and up five from last year.

Canada gained 14 rigs for a total of 395.

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EU moves closer on tough Russia sanctions http://www.upstreamonline.com/live/1370797/EU-moves-closer-on-tough-Russia-sanctions Brussels considering blocking upstream technology from export to Moscow Bill.Lehane@upstreamonline.com (Bill Lehane) http://www.upstreamonline.com/live/1370797/EU-moves-closer-on-tough-Russia-sanctions Fri, 25 Jul 2014 15:47:18 +0000 live The EU is said to be moving closer to agreeing new sanctions that could block Russia from accessing its capital markets, arms and energy technology.

The plans that emerged in recent days for wide-ranging new sanctions are being considered in an escalation of the bloc’s response to the Ukraine crisis in the wake of the fatal downing of flight MH17.

Ambassadors from the 28 member states discussed proposals for new sanctions on Thursday and Friday, Brussels-based news service EurActiv reported.

The plans are due to go to national governments in draft form over the weekend and could be adopted as soon as Tuesday if agreement is forthcoming, the report said.

Fifteeen individuals and 18 companies and other organisations are meanwhile set to be added to the EU’s current asset freeze list in an announcement expected late on Friday.

The European Union would target state-owned Russian banks vital to financing Moscow's faltering economy, in the most serious sanctions so far over the Ukraine crisis, under proposals considered by EU governments yesterday (24 July).

Ideas put forward for new sanctions include restricting exports to Russia of technology for deep-sea Arctic drilling and shale exploration, diplomats were quoted as saying.

The officials said the proposals could impact both Russia’s proposed South Stream gas pipeline to south-east Europe and its Yamal liquefied natural gas project by barring access to specialist pipe equipment.

Wider plans could see European investors banned from buying debts from Russian state-owned banks, an arms embargo.

The largest banks with state ownership of more than 50% are Sberbank, VTB, Russian Agriculture Bank (Rosselkhozbank) and VEB.

Diplomats said the trio of energy, defence and financial sanctions were aimed at spreading the burden of the measures among the main EU powers as they would affect German technology, Britain's financial centre and French defence sales.

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Gail, Sumitomo in energy MoU http://www.upstreamonline.com/live/1370777/Gail-Sumitomo-in-energy-MoU Indian and Japanese players in upstream and downstream tie-up, with Cove Point LNG a focus Eoin.Ocinneide@upstreamonline.com (Eoin O'Cinneide) http://www.upstreamonline.com/live/1370777/Gail-Sumitomo-in-energy-MoU Fri, 25 Jul 2014 12:54:02 +0000 live The companies, which are partners in the proposed Cove Point LNG liquefaction facility in the US, will also co-operate on petrochemicals, pipelines and gas purchases under the memorandum of understanding revealed on Friday.

Gail said the deal would see the pair “pursue business opportunities in natural gas and LNG value chain business globally”.

Particular mention was made of the Cove Point plant, which received environmental clearance from the US Federal Energy Regulatory Commission (Ferc) in mid-May. Sumitomo and compatriot Tokyo Gas have committed to take 2.3 million tonnes per annum of liquefaction capacity, and India's Gail has committed to 2.3 million tpa of capacity from the facility.

“Both parties view US market as a growth area for their line of businesses and would co-operate on businesses ranging from upstream to downstream,” Gail said on Friday.

The Cove Point facility will consist of two liquefaction trains with a nameplate capacity of about 5.75 million tpa at a rate of 770 million cubic feet per day of gas. It would be built on the site of the existing Cove Point LNG import terminal on the coast of Maryland.

IHI and Kiewit have already completed front-end engineering and design for the liquefaction terminal, and hope to complete building by 2017, if Ferc approves the plans.

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Kenya in $50m World Bank oil loan http://www.upstreamonline.com/live/1370787/Kenya-in-50m-World-Bank-oil-loan Money set to increase capacity to handle emerging hydrocarbons industry in East African country Eoin.Ocinneide@upstreamonline.com (Eoin O'Cinneide) http://www.upstreamonline.com/live/1370787/Kenya-in-50m-World-Bank-oil-loan Fri, 25 Jul 2014 13:52:26 +0000 live The loan from the bank’s International Development Association would support the Kenya Petroleum Technical Assistance Project, Reuters reported, citing a statement from the bank.

The Kenyan project aims to attract private investment as well, while also building up capacity within government to deal with the country’s emerging hydrocarbons industry, the news wire reported.

Kenya has had a number of discoveries, the vast majority onshore, but trails behind regional neighbours Tanzania, Mozambique and Uganda in terms of high-impact discoveries made so far.

Tullow Oil has had some notable onshore successes, but one of the most notable recently was BG Group’s oil discovery at the offshore Sunbird-1 wildcat on licence L10A in the Lamu basin. The UK major hit 9.2 metres of oil pay overlying a 28.3-metre gas column in a Miocene Limestone reservoir last month.

Kenya is also set to play host to a pipeline linking its fields and those in Uganda and Rwanda to the Kenyan Indian Ocean port of Lamu. The governments of the three countries are currently on the hunt for a contractor to carry out a feasibility study and early engineering work on the $4.5 billion, 1300-kilometre oil export pipeline.

The huge pipeline will be developed as a single project but split into two segments. The first segment would run from Hoima to the Uganda-Kenya border, while the second would run from the border to Lamu via Lokichar.

A later stage of the line would link Hoima with Rwanda — and maybe even Burundi — but it is unclear if this would be an option under this contract’s scope of work. The pipeline will be buried and heated to handle the waxy and viscous crude discovered in both Uganda and Kenya.

First oil could flow along the main pipeline to Lamu by 2018 at the earliest, although a 2019 to 2020 timeframe is believed to be more likely.

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Colorado puts fracking to the vote http://www.upstreamonline.com/live/1370794/Colorado-puts-fracking-to-the-vote Democratic governor, bi-partisan group of business vow to defeat initiatives to limit completion practice Luke.Johnson@upstreamonline.com (Luke Johnson) http://www.upstreamonline.com/live/1370794/Colorado-puts-fracking-to-the-vote Fri, 25 Jul 2014 15:36:33 +0000 live Read all the details in this week's edition of Upstream newspaper.

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KMG EP in buyout talks http://www.upstreamonline.com/live/1370772/KMG-EP-in-buyout-talks State player and largest shareholder NC KMG may bid for full control of Kazakhstani company Eoin.Ocinneide@upstreamonline.com (Eoin O'Cinneide) http://www.upstreamonline.com/live/1370772/KMG-EP-in-buyout-talks Fri, 25 Jul 2014 12:11:09 +0000 live The state-owned outfit has made “a proposal to make an offer” for the shares in London-listed KMG EP that it does not already own.

KMG EP had notified the market earlier on Friday that it had received “a highly preliminary approach” from NC KMG, already its largest shareholder.

NC KMG went further to say that any offer that may materialise would be at $18.5 per share, some 15% above the would-be target company’s share price on 21 July.

“NC KMG believes that this price is fair and fully values KMG EP, offering an opportunity for minority shareholders of KMG EP to realise a premium in cash,” it said.

“NC KMG respects the independence of KMG EP and its minority shareholders and NC KMG's objective was and remains to engage with the independent directors of KMG EP in order to consummate a recommended transaction.

“Given the preliminary nature of discussions, there can be no certainty that an offer will be made, nor as to the terms on which any such offer might be made. A further announcement will be made in due course.”

NC KMG owns 57.9% of KMG EP, which has 31.1% of its ordinary shares in free float. Treasury shares account for 8.1% with 2.8% of preference shares also in free float.

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Rosneft profit booms in Q2 http://www.upstreamonline.com/live/1370731/Rosneft-profit-booms-in-Q2 Igor Sechin says company working to 'minimise' sanctions impact as output growth drives bottom line Eoin.Ocinneide@upstreamonline.com (Eoin O'Cinneide) http://www.upstreamonline.com/live/1370731/Rosneft-profit-booms-in-Q2 Fri, 25 Jul 2014 07:54:30 +0000 live The Russian oil behemoth also said it is "working on a plan" to minimise the effect of sanctions recently imposed upon it by the US over Russia's annexation of Crimea from Ukraine.

Net profit for the three months to the end of June was 172 billion Russian rubles ($4.9 billion) as compared with 35 billion rubles a year earlier.

For the half year, net profit shot from 137 billion rubles to 260 billion rubles.

Revenues for the second quarter were up 22% from 1.18 trillion rubles to 1.44 trillion rubles. For the half year they went up 41% from 1.99 trillion rubles to 2.81 trillion rubles.

The reason behind the stronger top and bottom lines in the second quarter was a 4.6% jump in total production from 4.79 million barrels of oil equivalent per day to 5.01 million boepd.

Of this, 4.16 million barrels per day was oil and natural gas liquids, while Rosneft also produced 13.5 billion cubic metres of gas per day in the quarter - a 45% year-on-year increase.

Total production was also up 4.6% for the whole of the first half.

Higher upstream operational efficiencies meant the capital expenditure unit cost per barrel of oil equivalent slipped in the first half from $5.5 to $4.

Despite the strong results, shares in Rosneft were down around 1% at 10am in London on Friday.

As the US and European Union continue to increase sanctions on Russian companies and individuals over the destabilisation of Ukraine, Rosneft said its free cash flow was 112 billion rubles in the second quarter - three times higher than a year earlier.

Company chairman Igor Sechin has not only been himself sanctioned by the US, but has in the past fortnight seen Rosneft itself added to the list of companies barred from receiving fresh access to US capital, as the West looks to put the squeeze on President Vladimir Putin.

Sechin remained defiant on Friday, however, stressing in the results statement: "Together with our partners - the world's leading oil companies - we are working on a plan to minimise the consequences of including Rosneft on the sanction lists."

However, credit ratings agency Moody's said this week that Rosneft and fellow Russian energy giant Gazprom are set to face significant debt refinancing challenges next year, with new sanctions making it even more difficult for them to tap Western financial markets.

The pair are among Russian companies with debts totalling $112 billion due to mature over the next four years, with a peak maturity wall in 2015, Moody’s Investor Service stated in a report cited by Reuters.

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Statoil books improved profit http://www.upstreamonline.com/live/1370726/Statoil-books-improved-profit Three hundred jobs cut as Statoil looks to further improve its bottom line bianca.bartucciotto@upstreamonline.com (Bianca Bartucciotto) http://www.upstreamonline.com/live/1370726/Statoil-books-improved-profit Fri, 25 Jul 2014 06:29:14 +0000 live The company posted a net profit of Nkr12 billion ($1.9 billion) for the second quarter, an increase of Nkr4.3 billion from the same period in 2013.

Earnings for the quarter dropped 15%, with the company taking in Nkr32.3 billion during the second quarter.

Statoil chief executive Helge Lund said quarterly earnings were impacted by divestments, seasonal effects and lower gas prices.

“For the first half of the year, earnings were around the same level as in the same period last year,” Lund said.

The company booked an Nkr4.3 billion impairment against its onshore US business, which was partially offset by a gain of Nkr3.6 billion from a farm-down of Shah Deniz and the South Caucasus pipeline.

Statoil delivered strong production, but did not make the cut when compared to the second quarter of last year.

Production totalled 1.7 billion barrels of oil equivalent per day, down 9% when compared to the second quarter of 2013.

The company is starting the ramp-up of new fields such as Skarv in Norway, Marcellus and Eagle Ford in the US and PSVM and CLOV in Angola.

This increase was offset by the divestments and redeterminations, expected natural decline, seasonal effects and optimisation of gas production.

During the quarter, Statoil made a high-impact discovery in Tanzania, which brings the total of gas-in-place in Block 2 up to about 20 trillion cubic feet.

Lund said as part of its cost-cutting initiatives it was set to slash between 1100 and 1400 jobs. The company has already axed about 1000 jobs.

“We have also established six specific high-impact projects addressing technical efficiency across the company, and we are now executing the first wave,” he said.

“We are on track, and will provide an updated status when we report our results for the full year.”

Statoil is reported to be preparing to make further cuts in capital investment, operating expenses and manpower to generate an additional $5 billion in annual cash flow by 2020.

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Tokyo Gas buys Cameron LNG volumes http://www.upstreamonline.com/live/1370768/Tokyo-Gas-buys-Cameron-LNG-volumes Japanese utility buying 520,00 tpa from compatriot Mitsui Bill.Lehane@upstreamonline.com (Bill Lehane) http://www.upstreamonline.com/live/1370768/Tokyo-Gas-buys-Cameron-LNG-volumes Fri, 25 Jul 2014 10:54:12 +0000 live Tokyo Gas is buying the volumes from Mitsui, which is handling four million tonnes or a third of the three-train facility’s planned capacity of 12 mtpa and also holds a 16.6% stake in the project.

The agreement is for eight cargoes a year starting in 2020 and running for 20 years.

The Japanese utility said it was gaining more supply stability with the deal, which follows its purchase last year of 1.4 mtpa from Dominion's Cove Point terminal, as well as gaining access to more volumes at Henry Hub prices.

Mitsui has already sold 300,000 tpa from the project to Toho Gas, while compatriot Tohuku Electric Power Company bought 270,000 tpa from the terminal via France's GDF Suez.

The $10 billion export terminal project, which gained export approval from US regulator Ferc last month, is due to see its first train come online in 2017.

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Study to create UK upstream job map http://www.upstreamonline.com/live/1370749/Study-to-create-UK-upstream-job-map EY hired by government and industry for labour and skills overview Bill.Lehane@upstreamonline.com (Bill Lehane) http://www.upstreamonline.com/live/1370749/Study-to-create-UK-upstream-job-map Fri, 25 Jul 2014 08:31:11 +0000 live The study, which is the first of its kind, is being commissioned by industry group Oil & Gas UK, skills organisation OPITO and the Department of Business.

Energy & Business Minister Matthew Hancock said the project’s aim was to “clearly outline the skills that the oil & gas industries will need in the years to come and help ensure both our economic and energy security”.

Oil & Gas UK business development director Stephen Marcos Jones said the idea was to identify how to build “a world-class talent pipeline” for both operators and the supply chain.

EY said it planned a series of interviews with organisations in 32 sub-sectors as part of its review, which is due to be published in November.

The oil & gas industry is estimated to employ around 400,000 people, contributing £35 billion to the economy.

Earlier this year EY completed a study on the UK’s oil & gas supply chain for Oil & Gas UK and the government that found the industry contributed £35 billion to the UK economy and sustained around 400,000 jobs.

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Seplat sees profits dip http://www.upstreamonline.com/live/1370729/Seplat-sees-profits-dip Lower liquids production hits revenues as higher costs also chip away at the bottom line Josh.Lewis@upstreamonline.com (Josh Lewis) http://www.upstreamonline.com/live/1370729/Seplat-sees-profits-dip Fri, 25 Jul 2014 07:26:15 +0000 live The company posted an after tax profit of nearly $166 million for the six months to 30 June, down from a profit of almost $303.3 million during the same period last year.

Seplat attributed the decline to deferred tax liabilities of $92.7 million in the first half of 2013 and lower revenue over the first half of 2014.

The company generated $388.2 million during the first half of the year, down 7% on the $419.4 million in revenue it generated over the same period a year earlier.

This came as revenue from crude sales fell 8%, to $378.6 million, which Seplat blamed on 45 days of unplanned downtime of the Trans Forcados system.

This was partially offset by a 54% increase in gas revenue during the first half of the year, to $9.6 million, mainly due to increased production from work-over wells and finalisation of the upgrade works on the Oben gas plant and higher offtake from the Sapele gas plant.

The increase in gas production helped ensure overall output during the first half of 2014 averaged about 27,375 barrels of oil equivalent per day, up from 27,183 boepd during the first half of 2013.

“Although production in the period was impacted by the shutdown of third party infrastructure, we continue to drive growth - excluding the shut-in days, our gross daily average production from OMLs 4, 38 and 41 was over 60,000 barrels,” Seplat chief executive Austin Avuru said.

“We plan to have up to seven drilling rigs actively engaged, and are progressing plans at a fast pace to develop our oil and gas reserves and increase production, aiming to build momentum through the second half and into 2015.”

Also hitting the company’s bottom line during the first half of 2014 was a rise in general and administration expenses, which totalled $83.4 million, up from $28.9 million a year ago.

Seplat attributed the increase to commitment and arrangement fees paid to banks for a new loan facility, higher staff costs,  as well as a regulatory payment of $14 million, costs related to accounting and procurement system changes and new business development costs for evaluating the prospects of new ventures.

The company also booked an increase in finance costs, from $10.7 million to $21.6 million, due to the drawdown of the remaining $215 million of its $550 million loan and an additional new loan of $200 million.

Seplat forecasts full year average working interest production to be between 29,000 and 33,000 boepd and said it was on target to achieve a liquids exit rate from OMLs 4, 38, 41 of 72,500 bpd gross.

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Four bid for Maersk's Culzean prize http://www.upstreamonline.com/live/1370727/Four-bid-for-Maersks-Culzean-prize European yards enter race for wellhead jacket platform for Dane's UK project Eoin.Ocinneide@upstreamonline.com (Eoin O'Cinneide) http://www.upstreamonline.com/live/1370727/Four-bid-for-Maersks-Culzean-prize Fri, 25 Jul 2014 07:08:26 +0000 live Read the full story in Friday's issue of Upstream.

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Cairn India ready to drill http://www.upstreamonline.com/live/1370712/Cairn-India-ready-to-drill Indian player looking to add more to its production capacity (Russell Searancke) http://www.upstreamonline.com/live/1370712/Cairn-India-ready-to-drill Fri, 25 Jul 2014 01:44:51 +0000 live The company believes there is a large potential gas resource in the Rajasthan play, and has been working up gas project for some time.

Interim chief executive Sudhir Mathur said in Cairn India's latest results: “With multi-Tcf potential, we expect gas to be a significant contributor in our product mix. Before end of financial year 2015, we anticipate doubling of gas production from Rajasthan."

Current gas production is about 8 million cubic feet per day.

The company said it is currently testing an important offset well to the Raageshwari Deep gas (RDG) field and has an additional six-well programme of exploration-appraisal drilling and testing over the remainder of the financial year.

The plan is to double gas output from the RDG field through an existing pipeline by the end of March 2015 by installing additional compressors.

Meanwhile, tendering processes are under way for front-end engineering and the construction of production facilities for its so-called Rajasthan gas development, with awards planned by March 2015.

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Brent holds above $107 http://www.upstreamonline.com/live/1370725/Brent-holds-above-107 Oil prices flattens as conflicts seem to calm over the week (News Wires) http://www.upstreamonline.com/live/1370725/Brent-holds-above-107 Fri, 25 Jul 2014 05:10:28 +0000 live Oil prices have traded in a tight range this week with robust economic data from the US, China and the euro zone also failing to push prices higher.

"It is very unusual that big geopolitical events such as Iraq, Ukraine and Gaza, which normally are very sensitive to the price of oil, almost haven't affected prices," Ayers Alliance chief investment officer Jonathan Barrett told Reuters, noting that trading volumes have dropped off.

"The only conclusion we can draw is that the world is awash with oil," he said.

Brent crude for September delivery traded 10 cents higher at $107.17 per barrel by Friday morning. The contract had closed $0.96 lower on Thursday.

US crude for September delivery was down $0.05 cents at $102.02 per barrel, after settling $1.05 lower.

Conflicts in Ukraine, Gaza and Iraq raged on, but failed to push prices higher as global supplies remained ample.

In Libya, oil production has risen to 500,000 barrels per day, but there is no progress on reopening Brega oil port after an agreement to end a protest there, a spokesman for state-run National Oil Corporation said.

Gazan authorities said Israeli forces shelled a shelter at a UN-run school on Thursday, killing at least 15 people as the Palestinian death toll in the conflict climbed higher than 760 and attempts at a truce remained elusive.

Members of the European Union on Thursday also considered proposals targeting state-owned Russian banks vital to Moscow's faltering economy in what would be the most serious sanctions so far over the Ukraine crisis.

Further supporting oil prices, US Labor Department unemployment data suggested that the economic recovery remained on track, with initial weekly jobless claims falling to their lowest since February 2006.

"The market seems to be quite happy to be in a range," Barrett said. "None of the big players are pushing [the market] around. And if you don't have the volume in the market, it doesn't create the opportunity for large movements."

Oil inventories in Cushing, Oklahoma, fell another 163,000 barrels over the four days to 22 July data from Genscape Inc showed on Thursday, deepening a slump that has already dragged stockpiles to their lowest in six years.

Drawdowns at Cushing - delivery point for West Texas Intermediate contracts - have dropped stocks there to near what traders consider to be minimum operating levels, fuelling a sharp rise in prompt US crude oil prices.

The gap between US oil futures and Brent narrowed to as little as $4.47 this week, near a three-month low, although it widened again to $5.15 on Friday.

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PTTEP ready to strike in Myanmar http://www.upstreamonline.com/live/1370713/PTTEP-ready-to-strike-in-Myanmar Thai player to start exploration and appraisal programme offshore (Russell Searancke) http://www.upstreamonline.com/live/1370713/PTTEP-ready-to-strike-in-Myanmar Fri, 25 Jul 2014 02:00:16 +0000 live At the producing offshore Zawtika field, 10 appraisal wells will be drilled starting in August 2014 in a bid to increase petroleum reserves and support long-term production levels, PTTEP said in its latest results.

Zawtika is producing at an average rate of 55 million cubic feet per day, with output forecast to climb to 240 MMcfd by the third quarter of 2014.

In the M3 offshore block, PTTEP is preparing to drill six exploration and appraisal wells, with the first scheduled to begin in the fourth quarter of 2014.

In the onshore PSC-G and EP2 permits, four exploration wells are planned, with the first getting under way in July 2014.

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Tlou hits more problems in Botswana http://www.upstreamonline.com/live/1370710/Tlou-hits-more-problems-in-Botswana Pumping at second pilot pod halted to carry out remediation work at CBM project Josh.Lewis@upstreamonline.com (Josh Lewis) http://www.upstreamonline.com/live/1370710/Tlou-hits-more-problems-in-Botswana Fri, 25 Jul 2014 01:00:34 +0000 live Tlou revealed on Friday that the observed gas pressure within the Selemo pod had plateaued due to a casing integrity issue.

“With ongoing pumping operations following critical gas desorption, the gas pressure inside the casing continued to increase on a consistent upward trend,” Tlou explained in a statement to the Australian Securities Exchange.

“However, more recently the observed gas pressure has plateaued due to a casing integrity issue. Therefore pumping operations will be temporarily discontinued on the Selemo pod to remediate the issue which is currently preventing the continued build-up of gas pressure.”

The company acknowledged the remediation work would result in delays to the expected flow testing and flaring of gas at the Selemo pod, but added that it remained “very encouraged” by the rate of gas pressure build-up at the pod to date.

The Selemo pilot pod is one of two pods at the Lesedi CBM project where Tlou has previously said it hoped to start gas production testing at the project during the current quarter.

Last month the company temporarily discontinued pumping at the Lesedi pod to carry out remediation work after a recent increase in pump lift capacity did not led to the expected drawdown of water levels “due to an anomalous water influx”.

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Gulf Island and Bechtel team up http://www.upstreamonline.com/live/1370724/Gulf-Island-and-Bechtel-team-up Pair to join forces to deliver fixed, floating and subsea facilities Josh.Lewis@upstreamonline.com (Josh Lewis) http://www.upstreamonline.com/live/1370724/Gulf-Island-and-Bechtel-team-up Fri, 25 Jul 2014 04:45:07 +0000 live Gulf Island said its fabrication experience, infrastructure, and skilled labour combined with Bechtel’s engineering, project management, and direct-hire construction capabilities would create “a strong” engineering, procurement and construction provider.

“With the expansion of the demand for energy around the world, oil companies continue to expand and develop larger and more complex offshore projects, and will need reliable contractors to deliver them,” general manager of Bechtel’s offshore business, Joe Gebara, said.

“The agreement between Bechtel and Gulf Island Fabrication creates a team that can deliver them successfully.”

The pair plans to work together on delivering fixed, floating and subsea facilities to the market.

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Judge rebuffs Colorado city frac ban http://www.upstreamonline.com/live/1370699/Judge-rebuffs-Colorado-city-frac-ban Longmont ban considered incongruent with state law, but will stay in place temporarily Kathrine.Schmidt@upstreamonline.com (Kathrine Schmidt) http://www.upstreamonline.com/live/1370699/Judge-rebuffs-Colorado-city-frac-ban Thu, 24 Jul 2014 22:01:38 +0000 live Judge Dolores Mallard ruled that Longmont's ban, which was passed in 2012, contradicts Colorado oil and gas law, and struck it down.

In her ruling, Mallard acknowledged the concern Longmont citizens have for the impacts of fracturing in urban areas but said that concern did not supersede the state's interest in developing oil and gas reserves.

She also shot down Longmont's claims that the Colorado Oil & Gas Conservation Commission did not adequately regulate fracking.

"Longmont complains that the Commission does not issue permits to frack, it does not tell operators whether to frack a well, it does not tell operators how often to frack a well, it does not tell operators how much fracking fluid to use in a well, etc. Instead, these decisions are left to the operators and the professionals who advise them," Mallard wrote in her decision.

"The Court does not see a problem with this arrangement.

The purpose of the agency is to provide oversight of the industry, not to micromanage it."

However, she granted a stay of her opinion while the city of Longmont considers its legal options.

"In other words, there shall be no hydraulic fracturing activity in the City of Longmont until further order of Court, either from this Court or a higher court," Mallard wrote.

Longmont's ban had been challenged by both the state of Colorado and by the industry groups that both argued that the state has sole control over oil and gas regulation, while Longmont was supported in court by a number of environmental groups.

"The law regarding preemption of local oil and gas regulation by the Colorado Oil and Gas Conservation Act is clear and the court got it right," Colorado attorney general John Suthers said in response to the decision. "Under the current law, local governments can't ban fracking."

However, environmental groups have already vowed to appeal the ruling, saying they disagree with the court's final decision.

 “It’s tragic that the judge views the current law in Colorado is one in which fracking is more important than public health; reversing that backwards priority is a long-term battle that we’re determined to continue," president of Our Health, Our Future, Our Longmont, Kaye Fissinger, said.

A handful of other cities along Colorado's Front Range north of Denver passed bans limiting or banning fracturing last year during the November elections as well.

The Longmont case is widely expected to serve as the precedent that will determine with those measures are allowed to stand.

The case is one of a series of legal challenges to fracturing regulations in Colorado, where a series of ballot initiatives in the fall are expected to allow citizens to vote on the role of local governments in regulating oil and gas activity within their borders as well as the proper setbacks between homes and drilling operations.

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