www.upstreamonline.com http://www.upstreamonline.com/ www.upstreamonline.com Premier makes second Falklands find http://www.upstreamonline.com/live/1401320/premier-makes-second-falklands-find Operator confirms second exploration well has hit oil in the North Falkland basin Josh.Lewis@upstreamonline.com (Josh Lewis) http://www.upstreamonline.com/live/1401320/premier-makes-second-falklands-find Thu, 28 May 2015 06:37:35 +0000 live Premier revealed on Thursday the Isobel Deep exploration well had reached a depth of 8289 feet, with the bottom 75 feet of the well consisting of oil bearing F3 sands.

It added the F3 sands were at a higher than expected reservoir pressure which resulted in an influx of fluid into the well.

Premier undertook operations to remove the influx, during which it recovered oil which it said appeared similar in nature to the crude found at the Sea Lion discovery.

"This is an important play opening discovery in the previously unexplored southern area of licence PL004,” Premier exploration director Andrew Lodge said.

"The well has successfully demonstrated a trapping mechanism and the presence of moveable oil in the Elaine/Isobel fan complex."

The company is now considering the optimal appraisal programme for the Elaine/Isobel complex in the licence area.

Isobel Deep is the second of four prospects being drilled by Premier in its current Falklands campaign, with the first well on the Zebedee prospect hitting 25 metres of net oil pay in the Zebedee sand, along with 17.5 metres of net gas pay in the Hector sand.

Premier said Thursday it now planned suspend operations at Isobel Deep and release the semi-submersible Eirik Raude to drill in the South Falkland basin, with the rig expected to return to the North Falkland basin in August.

Premier is sharing the rig with US company Noble Energy which will use the Eirik Raude to drill two prospects in the South and East Falklands basins.

Noble is expected to use the rig to drill the Humpback prospect for its first well which is estimated to hold a gross unrisked mid-case prospective resource of 510 million barrels.

Meanwhile, Premier still plans to use the semi-submersible to drill wells on the Chatham and Jayne East prospects.

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Rosneft mum on '$14bn Venezuela deal' http://www.upstreamonline.com/live/1401322/rosneft-mum-on-usd-14bn-venezuela-deal Russian oil giant silent on reports of investment agreement with South American producer Eoin.Ocinneide@upstreamonline.com (Eoin O'Cinneide) http://www.upstreamonline.com/live/1401322/rosneft-mum-on-usd-14bn-venezuela-deal Thu, 28 May 2015 07:28:24 +0000 live Nicolas Maduro, president of the major Opec nation, said in a televised address on Wednesday night that the pair had agreed an investment deal that would help the country in its efforts to double output.

State-controlled Rosneft has not, however, said anything of the deal.

A spokesman confirmed to Upstream on Thursday that company president Igor Sechin had indeed met with Maduro, but said the company was not in any position to confirm or deny reports of the investment agreement.

Reuters reported that Maduro met with Sechin along with Eulogio del Pino, president of Venezuelan state oil company PDVSA.

"We had a great meeting and agreed on investment of over $14 billion," the news wire quoted Maduro as saying during a televised address.

Rosneft and other Russian companies are increasingly turning to the Latin American market for foreign investment opportunities as US and European sanctions hamper their expansion efforts at home and elsewhere.

In late April, Russian gas giant Gazprom and Argentine state player YPF signed an agreement that sets out plans to jointly explore for, produce and transport hydrocarbons in the shale gas-rich South American nation and elsewhere.

Last year an Argentine industry minister spoke out about a potential $1 billion shale deal with Gazprom in the works, a report later denied by YPF.

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Seadrill profit despite slump http://www.upstreamonline.com/live/1401323/seadrill-profit-despite-slump Cost-cutting and strong rig utilisation bolster first-quarter result for drilling contractor Steve.Marshall@upstreamonline.com (Steve Marshall) http://www.upstreamonline.com/live/1401323/seadrill-profit-despite-slump Thu, 28 May 2015 07:50:47 +0000 live The contractor, backed by shipping and offshore billionaire John Fredriksen, reported a quarterly net profit of  $448 million, which was down significantly on the $3.1 billion earned a year ago although the latter figure included a $2.4 billion gain on the deconsolidation of Seadrill Partners.

Operating revenue increased 2% over the year to $1.25 billion while operating costs were down 5% at $731 million, leaving the company with operating income of $703 million versus $890 million a year earlier.

Negative financial items of $197 million, due largely to derivatives losses, also had an impact on its bottom line.

“Seadrill continues to be focused on operational excellence and financial flexibility in order to manage through this downturn and thrive when the market recovers,” Seadrill Management chief executive Per Wulff stated.

Seadrill benefited from strong economic utilisation of 93% for its owned 20-vessel floater fleet of drillships and semi-submersible rigs and 98% for its 19 owned jack-ups, all of which are operating globally.

The company also has 15 rigs under construction, comprised of four drillships, three semisubs and eight jack-ups, with remaining yard instalments of around $4.3 billion, but warned “some deliveries likely can be postponed” amid the market doldrums caused by low oil prices.

Seadrill’s current order backlog stands at $8.9 billion, comprising $7.3 billion for the floater fleet and $1.7 billion for jack-ups, with an average contract duration of 25 and 14 months for the respective tonnage.

The overall backlog for the Seadrill Group – including North Atlantic Drilling Ltd, Sevan Drilling, Seadrill Partners and SeaMex joint venture – stood at $15.4 billion.

These figures exclude backlog related to Rosneft contracts that remain stalled amid Western sanctions on Russia, pipelay vessels and newbuild drillships for Sete Brasil.

It stated there has been a dearth of chartering activity during the quarter with new contracts being fixed at “significantly lower dayrates”, while clients are also looking to renegotiate existing deals.

One such renegotiated charter resulted in a $23 million backlog reduction for Seadrill in the latest quarter.

It entered into only one new contract during the period – a one-year deal worth at least $35 million with Coastal Energy for jack-up West Cressida.

The contractor has also agreed to cut the dayrate for four jack-ups contracted with Saudi Aramco for a one-year period.

It also warned continued spending caution by oil companies, given low oil prices, is likely to lead to significantly lower demand in the ultra-deepwater market.

“The outlook for activity beyond 2015 is difficult to judge but most oil companies are not looking towards adding rig capacity at this point,” the company stated.

“It is likely that capacity utilisation will drift lower as the year progresses and a significant number of ultra-deepwater rigs are likely to be stacked by the end of 2015.”

Seadrill sees an increasing number of rig scrappings over the next few years to tackle a global oversupply of units that has hit dayrates, with 89 units currently under construction – including 19 newbuilds for Sete Brasil – and about 70 existing rigs rolling off contracts.

It said there is a “high likelihood” many of the latter rigs will be retired as they are due for classification surveys between now and 2017.

The level of scrappings since last year has already reached a total of 26 units, representing the highest tally since the early 1990s, and “is likely to accelerate over the next two years”, according to the Oslo and London-listed contractor.

“The industry continues to face challenging times and while the first-quarter performance has been solid we are not immune from the wider industry challenges,” Wulff said.

“Indications suggest the remainder of 2015 will see subdued market conditions and the challenging market continuing into 2016.”

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Citic flows Lofin gas http://www.upstreamonline.com/live/1401313/citic-flows-lofin-gas Testing of Indonesian appraisal well continues as joint venture works on forward plan Josh.Lewis@upstreamonline.com (Josh Lewis) http://www.upstreamonline.com/live/1401313/citic-flows-lofin-gas Thu, 28 May 2015 00:14:43 +0000 live Well partner Lion Energy revealed the well was flowing at a rate of up to 17.8 million cubic feet per day during the ongoing test of an open hole section in the Manusela limestone.

It added the well was also producing about 2634 barrels per day of water and completion fluid, along with roughly 54 bpd of 34.9 degree API oil.

Lion noted the water was interpreted to be from the lower part of well below the substantial gas column.

“The test results confirm the significant gas potential in the Lofin feature,” Lion chief executive Kim Morrison said.

“Valuable data has been obtained and we look forward to working with the operator in the evaluation and integration of well results on this material discovery for Lion.”

Citic will continue its multi-rate test to provide further reservoir engineering data, while a forward plan for the Lofin discovery is still under discussion between the joint venture partners.

Citic encountered oil and gas shows throughout drilling of the Lofin-2 appraisal well and pressure testing indicated a potential hydrocarbon column in the well of at least 761 metres.

The well is appraising the Lofin-1 discovery made in 2012, which flowed 15.7 million cubic feet of gas per day and 171 barrels per day of oil and condensate from the fractured Manusela formation.

Citic operates the Seram (non Bula) PSC with a 51% stake and is partnered by Kufpec (30%), Gulf Petroleum Investment (16.5%) and Lion (2.5%).

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Petrobras drops Santos basin block http://www.upstreamonline.com/live/1401316/petrobras-drops-santos-basin-block Operator returns ultra-deepwater block where it made the 2007 Caramba pre-salt light oil find fabio.palmigiani@upstreamonline.com (Fabio Palmigiani) http://www.upstreamonline.com/live/1401316/petrobras-drops-santos-basin-block Thu, 28 May 2015 04:03:29 +0000 live Brazil's Petrobras has opted to return Block BM-S-21 to market regulator ANP, giving up exploration rights to a promising discovery in the ultra-deepwater section of the Santos basin pre-salt province.

Petrobras drilled a single well in the licence in September 2007 and made the Caramba pre-salt light oil find with the Diamond Offshore semi-submersible rig Ocean Clipper in 2239 metres of water.

Caramba remained dormant for more than seven years, as Petrobras worked to appraise other nearby discoveries in the pre-salt cluster that led to the declaration of commerciality of giant fields such as Lula, Buzios and Sapinhoa.

Petrobras and project partner Galp Energia have mapped additional prospects in BM-S-21 and, at one point, had plans to spud a well in the southern portion of the block.

Drilling of the Caramba South appraisal well was first eyed for 2013 and later postponed when the ANP granted Petrobras some extra time to formulate a development plan for BM-S-21.

Petrobras had until April 2015 to come up with a decision to move forward with additional drilling in BM-S-21, but after a careful analysis, the oil company decided it was best to simply quit Caramba and not inject any more resources in the play.

BM-S-21 was adjacent to Block BM-S-22, where ExxonMobil made the Azulao pre-salt discovery in 2008. That licence was later relinquished by the US supermajor in 2012 after several failed attempts to prove the existence of commercial quantities of hydrocarbons.

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Cosco extends PSV delivery dates http://www.upstreamonline.com/live/1401317/cosco-extends-psv-delivery-dates Extension comes despite vessels being "significantly completed" Josh.Lewis@upstreamonline.com (Josh Lewis) http://www.upstreamonline.com/live/1401317/cosco-extends-psv-delivery-dates Thu, 28 May 2015 04:49:20 +0000 live The PSVs are the remaining vessels on a US$105 million four-vessel order that was made in March 2012, with the first two units being delivered in December 2014 and February 2015, respectively.

Cosco said Thursday it had agreed with the shipowner to extend the delivery dates of the remaining two vessels until 30 June 2016.

It added construction the two remaining PSVs had been largely completed and the shipowner could elect to take delivery at any time prior to the 2016 delivery deadline.

Cosco did not name the client, however it is understood to be US company Tidewater Marine which placed an order for four PSVs with the vessel builder.

Cosco said it did not expect the rescheduling to have a material effect on the net tangible assets and earnings per share of the company for the current financial year, which ends 31 December.

 

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Plains hit with clean-up order http://www.upstreamonline.com/live/1401315/plains-hit-with-clean-up-order Pipeline operator given deadline to submit response plan for Californian oil spill Josh.Lewis@upstreamonline.com (Josh Lewis) http://www.upstreamonline.com/live/1401315/plains-hit-with-clean-up-order Thu, 28 May 2015 03:31:48 +0000 live The EPA said the order would ensure the clean-up of crude that has leaked from Line 901 near Refugio State Beach, in Santa Barbara County. It is the largest coastal oil spill in California in 25 years.

The order, issued under the under the Clean Water Act, requires Plains to continue its clean-up work inland, beachside, and in the ocean, to contain the oil and prevent further shoreline contamination.

It also requires it to submit a written work plan for response activities by 6 June, including plans for sampling and analysing air, water, rocks and soil.

“Our action today is to make sure the oil response work continues until the Santa Barbara County coastline is restored,” the EPA's regional administrator for the Pacific South-West, Jared Blumenfeld, said.

“Working closely with our local, state and federal partners, we will see this cleanup through to the end.”

The 24-inch pipeline ruptured on 19 May spilling an estimated 2500 barrels of oil into a nearby culvert that emptied into the ocean.

As of Tuesday, officials said crews had removed about 238 barrels of oily water mixture from the affected area, as well as 237 cubic metres of oiled vegetation, 581 cubic metres of oiled sand and 1996 cubic metres of oiled soil.

Line 901 was carrying crude from Plains' Las Flores Canyon oil and gas facility to the the main pipeline system at Gaviota, according to information from Santa Barbara County. It has a capacity of 150,000 barrels per day.

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Tornado hits Texas rig http://www.upstreamonline.com/live/1401318/tornado-hits-texas-rig At least three injured, with two transported to hospital Josh.Lewis@upstreamonline.com (Josh Lewis) http://www.upstreamonline.com/live/1401318/tornado-hits-texas-rig Thu, 28 May 2015 06:26:09 +0000 live One victim sustained minor injuries, the second had non-life-threatening injuries to the face, and the third suffered "an impalement to the abdomen," Reuters quoted Hemphill County Sheriff James Pearson as saying.

Two of the more seriously injured were transported to a hospital in Amarillo and one was treated at Hemphill County Hospital in Canadian, Hemphill Hospital chief executive Christy Francis told the news agency.

The patient who remained at Hemphill County Hospital was in stable condition, she added.

The drilling rig is near Canadian, a town of nearly 3000 residents that is about 100 miles north-east of Amarillo in the Texas panhandle.

Pearson said highways were closed due to debris from downed trees and flooding.

There was no word on the rig's operations but Pearson said there was "extensive damage to the doghouses," the general-purpose rooms adjacent to the rig floor.

Storms have battered Texas this week, killing at least 15 people in weather-related incidents, including six in Houston.

The death toll in the state was expected to rise, with about a dozen people still missing and a new round of thunderstorms pelting the already flooded cities of Houston and Austin.

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US regulator to report on failed Kulluk tow http://www.upstreamonline.com/live/1401312/us-regulator-to-report-on-failed-kulluk-tow National Transportation Safety Board to release findings of investigation on Thursday amid high scrutiny for Shell Luke.Johnson@upstreamonline.com (Luke Johnson) http://www.upstreamonline.com/live/1401312/us-regulator-to-report-on-failed-kulluk-tow Wed, 27 May 2015 23:18:18 +0000 live NTSB confirmed that the report and a slew of supporting documents will come out at 10 am East Coast US time on Thursday. The agency declined to provide any further details about what its investigation involved or what the findings were.

The report comes at a time of high scrutiny for Shell, which is preparing to begin its next foray in the little-explored waters of the Chukchi Sea.

Shell's operations at its port base in Seattle have been the target of strong opposition.

Protesters in kayaks blocked the path of semi-submersible Transocean Polar Pioneer as it came into port last week. More recently, two activists opposed to Shell's Arctic drilling plans chained themselves to the rig. They have since been unchained.

Polar Pioneer is the replacement rig for the Kulluk cylindrical drilling rig, which broke its tow lines and ran aground during a storm on New Year's Eve 2012 as it was being towed from Alaska to Seattle.

In a report released in 2014, the US Coast Guard lambasted Shell for its failure to carry out proper risk assessments for the rig move in the face of harsh winter weather conditions.

The agency said Shell's decision to tow the rig was made in an attempt to avoid new state taxes that were to come due if the rig stayed in Alaska through 1 January 2013.

The NTSB also participated in the Coast Guard's report.

Shell has previously said that it has "implemented lessons learned from our internal review of our 2012 operations".

The company plans to drill up to six exploration wells at its Burger prospect in the short summer drilling window this year. Assuming it obtains all necessary clearance, drilling is set to begin in July.

Polar Pioneer will be joined by drillship Noble Discoverer.

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Uncertainty over new Alberta energy minister http://www.upstreamonline.com/live/1401309/uncertainty-over-new-alberta-energy-minister Marg McCuaig-Boyd said to be lacking experience, as Canadian Natural delays release of spending details Luke.Johnson@upstreamonline.com (Luke Johnson) http://www.upstreamonline.com/live/1401309/uncertainty-over-new-alberta-energy-minister Wed, 27 May 2015 21:41:29 +0000 live Some industry watchers in the Canadian province have expressed concern over the tack taken by new Premier Rachel Notley and her New Democratic Party.

The appointment on Sunday of Marg McCauig-Boyd - a one-time teacher with a master's degree in administration and leadership - as energy minister has many analysts and executives asking questions.

"She really has absolutely no experience," Sonny Mottahed, chief executive of Black Spruce Merchant Capital, told Reuters. "You would think you'd need someone with a background (in energy), just because it's such an intricate and detailed monstrosity of a business."

At the top of the list of McCauig-Boyd's priorities is a review of the royalties producers pay to the province. The new government must also find a replacement for the current C$15-per-tonne levy on oil-sands producers and other major carbon emitters, which expires in June.

It is the lack of clarity on how those issues will be resolved that made Canadian Natural Resources - Canada's top independent producer - delay its plan to detail future spending plans.

"Due to the current uncertainty surrounding the Government of Alberta’s review of royalty, taxation, environmental and greenhouse gas policies, detailed future capital allocation plans for each of the company’s assets cannot be finalised at this time," Canadian Natural said in a statement on Wednesday.

The company had planned to hold an investor meeting on 17 June to detail the spending plans. However, the meeting will now take the form of a conference call for investors and analysts, in which the company will outline its strategy and plan for a "low commodity-price environment".

"The company will defer the detailed Open House until greater clarity can be attained," it said.

Notley and her New Democratic Party swept to power earlier this month, ending 44 years of Progressive Conservative party rule.

"It's going to be a steep learning curve," Michael Dunn, an analyst at FirstEnergy Capital, told Reuters. "It's hard to imagine (the new government) being able to do enough due diligence to do something quickly."

For its part, the Canadian Association of Petroleum Producers said it "can work with the minister" and has formed a working group to offer her policy advice.

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Oil dips on soaring dollar http://www.upstreamonline.com/live/1401311/oil-dips-on-soaring-dollar Oil prices fall by up to 3% as dollar strengthens on interest rate hike speculation caroline.evans@upstreamonline.com (Caroline Evans) http://www.upstreamonline.com/live/1401311/oil-dips-on-soaring-dollar Wed, 27 May 2015 23:00:23 +0000 live Gasoline and heating oil fell more than 2% each, extending the slide across the fuels complex, on bets that US refineries will be operating at full swing with the end of maintenance season.

The dollar soared against major currencies on speculation about the first US interest rate hike in years. A stronger greenback makes dollar-denominated commodities, including oil, less affordable in other currencies.

Other factors held little sway, including France's warning to Iran that it was ready to block a final deal on Tehran's nuclear program unless Iran provided full access to inspectors. Iran needs the nuclear deal to unlock sanctions on its crude exports.

Brent crude settled down $1.66, or 2.6%, at $62.06 a barrel.

US crude settled at $57.51, down 52 cents, or 1%.

Brent's premium to US crude narrowed to a mid-April low of $4.50.

A Reuters poll of nine analysts showed a crude stock drawdown of 900,000 barrels on average last week, marking a fourth consecutive week in inventory declines.

But some traders think crude stocks may have actually risen last week even as demand for gasoline accelerated in the run-up to Monday's Memorial Day holiday, which marks the start of heavy road travel across America often lasting through the summer.

"If you're looking for a catalyst for price recovery from this data, you may not really get it, and that's why the dollar's been exerting its strength over oil," said John Kilduff, partner at New York-based commodities fund Again Capital.

Jim Ritterbusch of market advisory Ritterbusch & Associates in Chicago, agreed. "We are still viewing dollar gains as a requisite for additional price slippage toward our $49 and $54 targets per WTI and Brent respectively," he said.

Kilduff said he expects crude stocks to have risen by about half a million barrels last week in spite of a 2-million-barrel draw in gasoline.

Ritterbusch expects a crude build of nearly 2 million barrels and a gasoline draw of 0.8 million barrels. Citi Futures forecasts a 2.5 million barrel draw in crude and a 1 million barrel build in gasoline.

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Transocean CFO steps down http://www.upstreamonline.com/live/1401310/transocean-cfo-steps-down Company appoints former Atwood executive to finance role caroline.evans@upstreamonline.com (Caroline Evans) http://www.upstreamonline.com/live/1401310/transocean-cfo-steps-down Wed, 27 May 2015 22:05:08 +0000 live Ikaheimonen also resigned from his positions as the company's executive vice president and chairman of the board of directors of a subsidiary.

He will be succeeded by former Atwood Oceanics finance chief Mark Mey, who will assume his new role Thursday. Mey also takes on the role of executive vice president.

Ikaheimonen worked at Transocean for nearly three years.

Mey served as executive vice president and chief financial officer of Atwood Oceanics for about five years. He has more than 28 years of experience in the energy and financial services industries in both the United States and South Africa.

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Gulf Island to lay off 554 http://www.upstreamonline.com/live/1401305/gulf-island-to-lay-off-554 US fabricator to let workers go from Aransas Pass facility in Texas Kathrine.Schmidt@upstreamonline.com (Kathrine Schmidt) http://www.upstreamonline.com/live/1401305/gulf-island-to-lay-off-554 Wed, 27 May 2015 21:01:30 +0000 live The Houston-headquartered company filed a Warn Notice regulatory disclosure with the Texas Workforce Commission ahead of the planned reductions, often seen in the case of mass layoff.

The cutbacks are scheduled to take effect from 20 July, according to the state.

Gulf Island did not immediately respond to a request for comment.

The global oil industry, including equipment providers, have seen massive cutbacks in the wake of low oil prices.

Gulf Island disclosed in earnings earlier this year that the company was facing a tough outlook for oil and gas projects, though turning to maritime and wind power work in the meantime.

As of 31 March the company had 1570 full-time employees and 170 contract workers.

That figure was already down from 1700 employees and 247 contract workers as of year-end 2014.

Work has been leaner in south Texas since the company shipped out the Gulfstar 1 spar to the Hess-operated Tubular Bells field late last year.

Gulf Island built the hull and integrated topsides built in Houma, Louisiana at the Texas facility, which boasts a massive graving dock for large-scale projects.

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Cyclone Drilling fined in rig worker death http://www.upstreamonline.com/live/1401299/cyclone-drilling-fined-in-rig-worker-death Company has been involved in multiple safety violations in recent years caroline.evans@upstreamonline.com (Caroline Evans) http://www.upstreamonline.com/live/1401299/cyclone-drilling-fined-in-rig-worker-death Wed, 27 May 2015 20:25:52 +0000 live The US Occupational Safety & Health Administration (Osha), which issued the fines, found that, in the time leading up to the accident, Cyclone "did not furnish employment and a place of employment which were free from recognised hazards that were causing or likely to cause death or serious physical harm to employees".

The accident occurred in October on a rig contracted by WPX Energy, which was drilling outside the town of Parachute, Colorado.

Cyclone did not ensure a fitting was sufficiently tightened and could withstand high pressure, according to documents on the Osha website.

As a result, a fill line valve "violently" separated from a pipe nipple, fatally striking the worker, 34-year-old Shane Hill.

According to the Garfield County coroner, Hill was hit in the back of the head and was killed instantly.

Cyclone has been involved in a number of safety violations in recent years.

In 2012, Osha cited the driller for two repeat and five serious safety and health standard violations in North Dakota, including fall, electrical and fire hazards.

The company was fined $65,600. It ended up paying $27,400 under a settlement as several of the citations were dropped.

A Cyclone rig was also involved in a well fire while working for Continental Resources in North Dakota. That incident injured three people.

Calls to Cyclone Drilling seeking comment were not immediately returned.

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Mexico extends Round 1 comment period http://www.upstreamonline.com/live/1401300/mexico-extends-round-1-comment-period Companies get until 9 June to offer feedback on proposed contracts, terms Kathrine.Schmidt@upstreamonline.com (Kathrine Schmidt) http://www.upstreamonline.com/live/1401300/mexico-extends-round-1-comment-period Wed, 27 May 2015 20:32:08 +0000 live The country's National Hydrocarbons Commission (CNH) was initially due to release the final version of the bidding details on 29 May after a second round of industry comments.

But as industry sources indicated major ongoing major differences of opinion, the CNH elected this week to move that deadline back to 9 June.

Among those points of contention: A long list of reasons for which regulators can cancel contracts, offering little recourse to remedy problems; the question of whether seismic data must be destroyed on blocks if bidders do not win, as well as a long list of concerns on tax provisions and rates of return.

Such issues had threatened to keep some major players on the sidelines of the round despite having signed up for data packets and pre-qualification, Upstream understands.

Companies are gearing up to compete for 14 shallow-water exploration blocks that will see bids opened on 15 July, the first phase of a process that will open Mexico's energy sector to private participation for the first time in 76 years following energy reforms last year.

Regulators have vowed to listen to industry and work through the issues despite the ongoing push and pull over the details,

But they remain under pressure from the country's finance ministry to maximise returns to federal coffers and ensure new private entrants to the market deliver financial benefits for Mexicans.

Despite the concern on terms, the first phase of the inaugural bid offering has attracted strong interest from top global industry players, with 26 parties, seven consortia and 19 individual companies, pre-qualifying for the event, according to information released this week.

The latest terms are for only the first stage of the ongoing bid round, which is expected to offer shallow-water exploitation, mature-field and deep-water acreage this year.

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YPF hits in Rio Negro http://www.upstreamonline.com/live/1401177/ypf-hits-in-rio-negro Argentina company reports conventional discovery in Los Caldenes block Kathrine.Schmidt@upstreamonline.com (Kathrine Schmidt) http://www.upstreamonline.com/live/1401177/ypf-hits-in-rio-negro Wed, 27 May 2015 19:18:28 +0000 live The state-led company said the Manzano Grande x-1, the second well on the block, was drilled to a final depth of 3057 metres with an estimated resource of 40 million barrels.

An initial probe had made an estimated find of 15 million barrels.

"With this information, and deepening seismic studies in this area, we were able to arrive at this new discovery which expands the horizon of resources at this block," said Carlos Colo, executive director of exploration at YPF.

The 115-square kilometre block is north of the Cinco Saltos area.

YPF initially was awarded the block in 2001 and recently saw the concession extended through 2036.

The Argentine state-led company has been ramping up exploratory efforts to help reverse declining production in the country.

While much of the effort is focussed on the Vaca Muerta shale the company has also continued with a push to expand output from conventional resources.

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Emerald pulls out of Permian deal http://www.upstreamonline.com/live/1401176/emerald-pulls-out-of-permian-deal Bakken pure-play balks at Permian expansion, share sale plans Noah.Brenner@nhst.no (Noah Brenner) http://www.upstreamonline.com/live/1401176/emerald-pulls-out-of-permian-deal Wed, 27 May 2015 18:43:51 +0000 live Denver-based Emerald said it was bowing to “the current market environment and associated dilution to existing shareholders” in calling off the deals.

The company had announced the agreement to buy 10,700 acres in New Mexico from privately held Yates Petroleum earlier this month.

Instead, Emerald will continue to focus all its attention on its roughly 120,000-acre position in the Bakken tight oil play, where it plans to spend about $65 million total in its 2015 capital budget.

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California oil spill clean-up continues http://www.upstreamonline.com/live/1401173/california-oil-spill-clean-up-continues Hundreds of people working in support of response effort as oil takes toll on wildlife caroline.evans@upstreamonline.com (Caroline Evans) http://www.upstreamonline.com/live/1401173/california-oil-spill-clean-up-continues Wed, 27 May 2015 17:57:16 +0000 live As of Tuesday, crews had removed about 238 barrels of oily water mixture from the affected area in Santa Barbara County, officials said.

Plains All American, the Texas-based company that owns and operates the ruptured pipeline, said that nearly all the visible oil had been removed from the water.

In addition, crews had removed 237 cubic metres of oiled vegetation, 581 cubic metres of oiled sand and 1996 cubic metres of oiled soil.

About 956 people and 16 boats were working in support of the response, which covered 7.8 miles of coastline.

Despite the efforts, the spill has taken a toll on wildlife in the area. Of 25 live birds found affected by the oil spill, 13 have died since the response began, officials said Tuesday. In addition, of 18 marine mammals that have so far been affected, eight have died.

It's been estimated the clean-up effort could take months to complete.

Two popular beaches, Refugio and El Capitan, were closed to the public Tuesday and would remain closed until further notice. Fisheries were also closed offshore until further notice.

Plains began work to remove the damaged part of the pipeline, known as Line 901, Tuesday morning, but did not yet have a timeline for when it would finish.

"The affected section of pipe will be sent to an independent, third-party laboratory for metallurgical testing to aid in the investigation into the cause or causes of this unfortunate accidental release," Plains said. The final report could take weeks or months to complete.

The spill was reported May 19 after Line 901 ruptured. Oil flowed into a nearby culvert that emptied into the ocean, causing oil to spill into the water and onto beaches. The latest estimates indicate 2400 barrels of oil escaped, enough for California Jerry Brown to declare a state of emergency in the county.

A few days later, the US Department of Transportation ordered Plains to halt operations on Line 901 pending improvements to the pipeline and approval from the Pipeline and Hazardous Materials Safety Administration.

Line 901 was carrying crude from Plains All American's Las Flores Canyon oil and gas facility to the the main pipeline system at Gaviota, according to information from Santa Barbara County. It has a capacity of 150,000 barrels per day.

The pipeline was designed to transport crude oil produced by ExxonMobil and Arguello from the Hondo, Pescado, Sacate, and Point Arguello oilfields offshore Santa Barbara County.

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Tullow gets active at Zumba http://www.upstreamonline.com/incoming/1401129/tullow-gets-active-at-zumba Anglo-Irish explorer gets to work with semisub Leiv Eiriksson in Norwegian Sea (Anamaria Deduleasa) http://www.upstreamonline.com/incoming/1401129/tullow-gets-active-at-zumba Wed, 27 May 2015 15:01:09 +0000 live Well 6507/11-11 is being drilled by the semi-submersible Leiv Eiriksson to a total depth of 3000 metres, with operations expected to be completed in 60 days, according to North Energy.

The Anglo-Irish explorer on Wednesday spudded the probe in its operated production licence 591, located in the Haltenbanken area of the Norwegian Sea, approximately 14 kilometres south-east of the Heidrun field.

“The objective of the well is to detect hydrocarbons in the upper Jurassic sandstones,” project partner North Energy said in a statement.

Earlier this week Tullow cleared the final bureaucratic hurdle to drilling after gaining a well permit from the authorities.

Tullow is operator of the well with a 60% share, together with partners Lime Petroleum (25%) and North Energy (15%).

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Progress fined over duck deaths http://www.upstreamonline.com/live/1401165/progress-fined-over-duck-deaths Shale producer must pay a total of C$250,000 after pleading guilty to allowing birds to fly into open storage tanks in 2012 Luke.Johnson@upstreamonline.com (Luke Johnson) http://www.upstreamonline.com/live/1401165/progress-fined-over-duck-deaths Wed, 27 May 2015 16:46:37 +0000 live Progress, a wholly-owned subsidiary of Malaysia's Petronas, was charged under the federal Migratory Birds Convention Act following the May 2012 incident. Environment Canada said the ducks died after being exposed to condensate.

An investigation determined Progress had no deterrents in place to ward off access.

Progress' total penalty included a C$5000 fine, a C$122,500 payment to the Environmental Damages Fund, and C$122,500 to three charities.

The company's name will also be added to the federal Environmental Offender's Registry.

Progress pleaded guilty 20 May - the same day chief executive Michael Culbert signed a benefits agreement with the British Columbia government on behalf of Pacific NorthWest LNG to advance the C$36 billion proposed liquefied natural gas export project on Lelu Island.

The agreement came a week after the majority of members of the Lax Kw'alaams First Nation voted against a C$1 billion cash offer from Petronas made to garner support for the PNW LNG project.

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Aibel wins Oseberg Future FEED http://www.upstreamonline.com/live/1401017/aibel-wins-oseberg-future-feed Norwegian contractor to carry out study on the topsides for unmanned platform Josh.Lewis@upstreamonline.com (Josh Lewis) http://www.upstreamonline.com/live/1401017/aibel-wins-oseberg-future-feed Wed, 27 May 2015 07:06:28 +0000 live Aibel will carry out a FEED study in relation to the Oseberg Future brownfield topside and said the contract also gave it the opening for the subsequent engineering, procurement, construction and installation contract.

The Oseberg Future project involves connecting a new unmanned wellhead platform to the Oseberg B platform, as well as linking it to Oseberg A, which will supply it with power, control and chemical injection.

It also involves the modification of the Oseberg field centre for the connection of Kappa wells to Oseberg via the existing Vestflanken pipeline.

Aibel's deal involves examining how the new welhead platform will be connected to Oseberg A and B, as well as looking at the brownfield modifications requirements on the existing facilities for tying in the new facility.

Aibel's vice president for modifications Jan Stale Skar said the company was hoping its work on the FEED, as well as previous modification contracts at Oseberg, would give the company the edge in the EPCI contract.

“By delivering a good and thorough study, we will prove that we are the best partner for the implementation of the EPCI project as well,” Skar said.

Aibel will begin work on the FEED study immediately and expects to have it completed by October, with the EPCI contract expected to start at the turn of the year and run until the end of 2017.

The award comes after Upstream reported last week that four contractors – Kvaerner, Heerema Fabrication Group, Dragados Offshore and Saipem – are currently fighting it out in a separate FEED workscope contest to offer the main development solution for the minimum facilities platform planned for the novel scheme.

The Oseberg field came on stream in 1988 and now has three main platforms that have been upgraded in recent years. Statoil is hoping to keep the facilities there pumping oil and gas until at least 2040.

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Lundin gets Alta well approval http://www.upstreamonline.com/live/1401087/lundin-gets-alta-well-approval Swedish player set to use semisub Island Innovator on second appraisal probe at Barents Sea find Eoin.Ocinneide@upstreamonline.com (Eoin O'Cinneide) http://www.upstreamonline.com/live/1401087/lundin-gets-alta-well-approval Wed, 27 May 2015 13:02:02 +0000 live Lundin Petroleum has won approval to drill another appraisal well at its Alta discovery in the Barents Sea off Norway.

The Swedish independent was given the green light by the Norwegian Petroleum Directorate to sink well 7702/11-3 on production licence 609 using the semi-submersible Island Innovator.

Drilling of the probe in the prospective Loppa High play is scheduled to start next month and has an estimated duration of 56 days, contingent on a discovery, according to Norway’s Petroleum Safety Authority.

It is intended to confirm the reservoir model for the Alta structure and test hydrocarbon potential to the east of the find, which currently has estimated gross contingent resources of between 125 million and 400 million barrels of oil equivalent.

The well will be drilled to a total vertical depth of 2103 metres in a water depth of 397 metres, with up to two tests planned as well as a possible sidetrack that could extend the drilling operation to 110 days.

The same rig is currently drilling a sidetrack at the first appraisal, with keenly-awaited results expected shortly.

Lundin holds a 40% stake in PL609, with partners Idemitsu Petroleum and RWE Dea on 30% apiece.

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Halliburton Nigeria strike ‘over’ http://www.upstreamonline.com/incoming/1401094/halliburton-nigeria-strike-over Local oil union calls off nationwide action over job cuts: report (Anamaria Deduleasa) http://www.upstreamonline.com/incoming/1401094/halliburton-nigeria-strike-over Wed, 27 May 2015 14:05:05 +0000 live A spokesman for the Natural Gas Association of Nigeria told Reuters on Wednesday that the strike was now over after a dispute involving job cuts led to a 24-hour halt on production.

Local Nigerian staff at Halliburton closed operations on Tuesday, saying they opposed the company's decision to lay off 46 local employees.

Earlier in the year, Halliburton said it expected to cut more than 6000 jobs from its operations around the world as a result of low oil prices.

Meanwhile, one of the Nigeria Agip Oil facilities - a subsidiary of Italy’s Eni - shut down production on Tuesday evening following a dispute with a local community group.

The dispute reportedly involves the lack of jobs in the area for locals.

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Gail sells some US LNG to Shell http://www.upstreamonline.com/live/1401146/gail-sells-some-us-lng-to-shell Company also plans to issue an LNG swap tender to cut transport costs caroline.evans@upstreamonline.com (Caroline Evans) http://www.upstreamonline.com/live/1401146/gail-sells-some-us-lng-to-shell Wed, 27 May 2015 15:45:42 +0000 live Gail has a deal to buy 3.5 million tonnes per annum of LNG for 20 years from US-based Cheniere Energy and has also booked capacity for another 2.3 mtpa at Dominion Energy's Cove Point liquefaction plant.

Tripathi refused to elaborate on the volumes, pricing and duration of the deal with Shell, but a trade source said Gail has sold at least 0.5 mtpa LNG to Shell, Reuters reported.

Gail would also issue an LNG swap tender in two months to cut transport costs for supplies to India, he said, adding 0.5 million tonnes of its US LNG has already been booked by local clients while talks were ongoing with domestic and foreign firms for more such deals.

Gail was keen to swap about 2 mtpa of its LNG, Tripathi had said in January 2014.

India's gas demand is set to rise as the federal government has approved policies to boost power and fertiliser production using imported gas.

Gas demand in the world's second most populous nation, however, declined in the quarter ending in April as alternative fuel like furnace oil turned cheaper due to rout in global oil markets.

Also, prices of gas sourced under a long-term deal with Qatar have turned costly, tapering the demand for the cleaner fuel.

He said India has used a 10% reduction permissible under a 25-year contract with Qatar's RasGas to import up to 7.5 mtpa the super cooled fuel.

This is the first time India has exercised its right to lift fewer volumes since the start of contract in 2004.

Gail has rights to sell about 60% of the gas volumes sourced under the long-term deal with Qatar.

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'Talks leverage' on Leviathan http://www.upstreamonline.com/live/1401103/talks-leverage-on-leviathan Partner Delek sees progress in discussions to get derailed Israeli gas project back on track Steve.Marshall@upstreamonline.com (Steve Marshall) http://www.upstreamonline.com/live/1401103/talks-leverage-on-leviathan Wed, 27 May 2015 14:22:51 +0000 live Delek and US partner Noble Energy have put the brakes on development of Leviathan, as well as planned expansion of the producing Tamar field, after Anti-trust Commissioner David Gilo ruled the pair may hold a monopoly position in Israel’s energy sector and threatened to force them to sell off their interests in either of the fields.

Gilo has rejected a proposed agreement whereby Noble and Delek would sell off their stakes in the Karish and Tanin discoveries in return for retaining their shares in Tamar and Leviathan.

The regulator has though since announced his resignation, with recently re-elected Prime Minister Benjamin Nethanyahu pledging to push for exploitation of Israel’s gas resources.

Announcing Delek’s first-quarter results on Wednesday, group chief executive Asaf Bartfeld expressed optimism over reaching a resolution in ongoing talks with government ministries that he said were “moving in a promising direction”.

“We hope an eventual agreement will create the regulatory certainty that is necessary to carry out investments by the partnerships. Specifically, to accelerate the development plans of Leviathan and expansion of the Tamar project, after receiving the required approvals,” he said in a statement.

Operator Noble is looking to exploit Leviathan’s estimated 22 trillion cubic feet of natural gas resources but earlier this year decided to suspend investments on developing the world’s biggest offshore gas discovery in the past decade due to the anti-trust issue.

The field partners had been planning to use a gas floating production, storage and offloading vessel based on a converted tanker supplied by BW Offshore.

Delek meanwhile earned a quarterly net profit of 210 million shekels ($54.1 million), reversing a year-earlier loss of 195 million shekels, on higher gas sales from Tamar as well as an improved performance from its oil and gas exploration business.

In addition, the group benefited from a 115 million-shekel gain on the sale of shares in its US subsidiary and a 39 million-shekel reversal of an impairment on its investment in insurer Phoenix Holdings, where it is looking to sell its 52.3% controlling interest to China's Fosun International.

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Crescent Point nabs Legacy in $1.23bn deal http://www.upstreamonline.com/live/1401108/crescent-point-nabs-legacy-in-usd-123bn-deal Canadian player taking over compatriot junior to land light oil assets in shares and debt agreement Eoin.Ocinneide@upstreamonline.com (Eoin O'Cinneide) http://www.upstreamonline.com/live/1401108/crescent-point-nabs-legacy-in-usd-123bn-deal Wed, 27 May 2015 14:42:07 +0000 live The Canadian intermediate is acquiring all the issued and outstanding shares of Legacy at an exchange ratio of 0.095 Crescent Point common shares for each Legacy share. In addition it will assume about C$967 million of Legacy's net debt.

The deal includes about 22,000 barrels of oil equivalent per day of light production from Legacy, of which more than 15,000 boepd is from conventional and unconventional plays located near Crescent Point's existing operations.

There are also 1000 net sections of land included in the transaction, of which 525 net sections are in south-east Saskatchewan – 200 in the Midale play.

About 940 drilling locations were internally identified - half in the Midale.

"The Legacy acquisition is aligned with our strategy of acquiring large oil-in-place pools with low current recovery factors," said Crescent Point's chief executive Scott Saxberg.

"The low-cost, high-return Midale assets add yet another layer of top-quartile locations to our drilling inventory and provide us with additional operational flexibility."

As a result of the acquisition – expected to close by 30 June – Crescent Point has increased its 2015 production guidance by 6.6% to an average of 162,500 boepd from 152,500 boepd, based on the addition of 20,000 boepd in the second half of the year from Legacy.

It also increased its capital expenditures by C$100 million to C$1.55 billion. In a statement the company said 65% of spending will be directed towards drilling and completions. It will revisit its capital budget in the third quarter.

BMO Capital Markets is acting as financial advisor to Crescent Point and Macquarie Capital Markets Canada as strategic advisor for Legacy.

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North Sea costs 'set for 20% fall' http://www.upstreamonline.com/live/1401053/north-sea-costs-set-for-20-percent-fall WoodMac predicts big capex benefits for operators ahead of field development decisions Steve.Marshall@upstreamonline.com (Steve Marshall) http://www.upstreamonline.com/live/1401053/north-sea-costs-set-for-20-percent-fall Wed, 27 May 2015 10:54:22 +0000 live The expected cost deflation in the UK and Norway is likely to be welcomed by regional operators after suffering more than a decade of spiralling costs that have slashed returns on investments.

Severe cost-cutting by oil companies such as Statoil and Shell, fuelled by an oil price plunge, has led to a sharp drop in North Sea exploration and field development activity, resulting in increased price competition among oilfield service and drilling contractors for a growing scarcity of work.

This has led some operators to carry out hard bargaining with contractors to capture supply chain cost reductions ahead of making final investment decisions (FIDs) on new fields.

As a result, WoodMac said near-term pre-FID schemes “are expected to be best placed to benefit from reductions and development costs for these projects could fall 10% to 20%”, with forecast cuts of 18% and 11% in the UK and Norway, respectively.

Its principal North Sea analyst Malcolm Dickson said a “gradual decrease” in capital and operating costs is expected this year and in 2016 in Norway and the UK, although with a divergent deflation rate between both countries due to differentiated rig and labour markets, and varying activity levels.

Although costs are expected to fall less in Norway than in the UK in local currencies, depreciation of the Norwegian kroner will mean that some costs will drop further in dollar terms, according to the Edinburgh-based firm.

Dickson expects the most significant cuts to come in drilling costs as rig and vessel dayrates have dropped due to oversupply and lack of demand – with a reduction of up to 20% for new rig contracts signed this year.

He stated that 40% of mobile rigs in the UK and 23% in Norway are either currently off contract or due to be off-hire by the end of this year, “giving scope for high reductions in future contract renewals”.

The analyst said: “The drop in oil prices has accelerated the need for lower costs as companies adjust to protect their cash flows, and changes are now required to correct the industry's cost base.”

However, the outlook for costs beyond 2016 is less clear and hinges largely on oil price developments, with the firm expecting the Brent crude price to flatten out at $85 per barrel from 2018 onwards, according to Dickson.

“Assuming the oil price rises as we think it will, the lower cost base achieved over this year and next can only be sustained through fundamental changes in practice and increased collaboration between the operators and the service sector,” he said.

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Eidesvik in PSV deal http://www.upstreamonline.com/live/1401117/eidesvik-in-psv-deal Chevron takes vessel on longer-term charter for work in UK North Sea Steve.Marshall@upstreamonline.com (Steve Marshall) http://www.upstreamonline.com/live/1401117/eidesvik-in-psv-deal Wed, 27 May 2015 14:38:11 +0000 live The US supermajor has taken the vessel on a firm 19-month contract, with four optional six-month extensions, that is due to kick off at the turn of June and July.

The Oslo-listed offshore vessel owner did not disclose the value of the deal but said in a statement it was agreed at “current market terms”.

However, dayrates have plunged for offshore vessels as utilisation has been hit by a sharp decline in activity due to exploration and development cutbacks by oil companies amid low crude prices, resulting in an increasing number of vessel lay-ups.

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Protesters ‘shut’ Eni Nigeria facility http://www.upstreamonline.com/incoming/1401073/protesters-shut-eni-nigeria-facility Community group close Italian subsidiary’s operation in Bayelsa following dispute: report (Anamaria Deduleasa) http://www.upstreamonline.com/incoming/1401073/protesters-shut-eni-nigeria-facility Wed, 27 May 2015 12:17:12 +0000 live The group, calling itself the Agrisaba Oil & Gas Committee, reportedly shut down production on Tuesday evening at the Nembe 5 onshore facility, located in Bayelsa state.

The alleged dispute followed failed discussions between the company and the local community in the Niger Delta, including over the provision of jobs for locals, Reuters reported.

"The community has therefore decided that the facility be shut down till further notice, until such a time that all these knotty issues have been resolved," the group was quoted by Reuters as saying.

Italy-based Eni, the operator of the facility, was unavailable for immediate comment when contacted by Upstream.

Agip is a 20% shareholder in a joint venture operating the area, together with the Nigerian National Petroleum Corporation (60%) and ConocoPhillips (20%), with concessions lying within Bayelsa, Delta, Imo and Rivers States.

The concession covers a total area of 5313 square kilometres comprising four blocks - OML 60, 61, 62 & 63.

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CNOOC Ltd hits oil in South China Sea http://www.upstreamonline.com/incoming/1401052/cnooc-ltd-hits-oil-in-south-china-sea State-owned company strikes pay zones at latest wildcat in Liuhua fields (Anamaria Deduleasa) http://www.upstreamonline.com/incoming/1401052/cnooc-ltd-hits-oil-in-south-china-sea Wed, 27 May 2015 11:00:59 +0000 live The LH20-2-1 discovery well was drilled and completed at a depth of about 2970 meters and encountered “oil pay zones with a total thickness of 35.2 meters,” it said.

“The oil production of the well tested around 8000 barrels per day and the crude oil density is approximately 0.75,” the company added.

The Liuhua 20-2 structure is located in northern Slope Belt of Baiyun Sag in the Pearl River Mouth basin in average water depths of about 390 meters.

Earlier in the year, the Chinese giant kicked off production at the Kenli 10-1 oilfield in Bohai, where it expects to hit peak production of some 36,000 bpd from 70 producing wells in 2016.

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Ukraine hands over gas cash http://www.upstreamonline.com/live/1401092/ukraine-hands-over-gas-cash Naftogaz makes additional $30m payment to secure supplies under new latest pact: report Steve.Marshall@upstreamonline.com (Steve Marshall), (News Wires) http://www.upstreamonline.com/live/1401092/ukraine-hands-over-gas-cash Wed, 27 May 2015 13:27:07 +0000 live The latest payment, reported by Reuters, brings the total sum of prepayments to the Russian supplier to $132 million under a recently agreed deal to secure gas deliveries for the cash-strapped country.

It comes amid an ongoing wrangle between the two countries over the price of gas supplies that has been fuelled by political tensions over Russia’s alleged military aggression in Ukraine.

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