Wood Group Mustang announces Mark Brett director of business development for its Process Plants & Industrial Business Unit for its Martinez, Calif. location.  Brett will oversee the company's West Coast business development, expanding brand presence and strategic direction for the California and Pacific Northwest regions.

Brett brings 25 years of oil & gas expertise with concentrations in the upstream and downstream sectors to Wood Group Mustang.  His success includes operations management, business development, sales and marketing, and revenue and profit optimization.

Wood Group Mustang President, Process Plants & Industrial Curt Watson said, "Mark brings a wealth of knowledge to Wood Group Mustang's Process Plants & Industrial Business Unit, and I look forward to him taking our current and future West coast relationships to the next level."

NYC-based PIRA Energy Group believes that burgeoning momentum to own oil seems poised to push oil prices higher for now. On the week, U.S commercial stocks built led by crude, while Japanese crude stocks drew strongly. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:

Bullish Oil Prices

It is hard not to be bullish oil prices with the global economy gradually improving, tight physical oil markets and MENA turmoil, which is already substantially reducing global oil supplies and has the potential to reduce supplies further. Current positioning and likely September deflationary type headlines, due in part to a challenging calendar, but also the startup of Iranian nuclear negotiations, pose downside risks to oil prices. Yet, the burgeoning momentum to own oil seems poised to push oil prices higher for now with SPR chatter somewhat limiting the upside.

U.S. Commercial Stocks Build Led by Crude

Overall U.S. commercial oil inventories increased for the week ending August 23 according to the latest weekly DOE data with the entire build occurring in crude, while product inventories declined. Overall U.S. oil inventories are in the upper end of their historic range, in part because of high "other" products. Crude and the four major products stocks (gasoline, distillate, jet and resid) are at the average of their historic range, although crude stocks are indeed relatively high. The stock increase for the same week last year was higher, thereby narrowing the year-on-year stock excess. Nearly the entire excess is in gasoline.  

Strong Crude Stock Draw in Japan, Refinery Margins Very Weak

Crude runs were little changed, but a very low crude import figure drew stocks strongly. Gasoline demand remained strong and gasoil demand rebounded from abnormally low levels. The kerosene stock build rate moderated. Refinery margins collapsed to very weak levels as all cracks gave ground. While cracking margins are weak, topping margins are even worse. 

Withdrawal of Half of Libya’s Oil From the Market

Crude oil trade flows have been significantly altered in 3Q13 by the withdrawal of nearly half of Libya’s 1.4 MMB/D of oil from the market and the subsequent increase in production from Saudi Arabia to record levels to compensate for these losses and to accommodate growing global demand over the second half of the year. Tanker markets are adjusting with more West African crude staying in the Atlantic Basin, which is shifting tonnage demand to smaller vessels. More sour crude production has also benefited ship operators by lowering bunker prices, which have risen less than crude. 

LPG Market Appears Tight

The slow pace of propane stock building has pushed prices higher and will keep prices supported as crop drying and winter heating demand are approaching.  Gasoline blending season is starting, increasing the pull on butanes. Prompt European LPG markets are relatively tight given low arrivals in August and North Sea maintenance. More imports will be attracted from the USGC and West Africa.

Ethanol Output Drops to 21-Week Low

Ethanol output fell to a 21-week low of 820 MB/D the week ending August 30 from 844 MB/D in the preceding week, while imports dropped to 4 MB/D from 19 MB/D over the same period.  Inventories decreased by 232 thousand barrels to 16.3 million barrels as PADD II stocks fell below 5.0 million barrels for the first time since the DOE began reporting weekly ethanol data in June 2010. 

The information above is part of PIRA Energy Group's weekly Energy Market Recap, which alerts readers to PIRA’s current analysis of energy markets around the world as well as the key economic and political factors driving those markets.

Statoil has made a third discovery of crude oil in the Flemish Pass Basin, offshore Newfoundland.

“The success of Bay du Nord is the result of an ambitious and targeted drilling campaign in the Flemish Pass Basin,” says Statoil Exploration executive vice president Tim Dodson. “This discovery is very encouraging.” 

Dodson explains that as the volumes of both the Bay du Nord and Harpoon wells continue to be evaluated, Statoil is developing a greater understanding of the geology and potential of the basin.

“The Flemish Pass Basin is a strategic part of Statoil’s global exploration portfolio. We are now planning to return to the area for further appraisal drilling in the future,” says Dodson.

“The success of Bay du Nord is the result of an ambitious and targeted drilling campaign in the Flemish Pass Basin,” says Statoil Exploration executive vice president Tim Dodson. “This discovery is very encouraging.” 

Dodson explains that as the volumes of both the Bay du Nord and Harpoon wells continue to be evaluated, Statoil is developing a greater understanding of the geology and potential of the basin.

“The Flemish Pass Basin is a strategic part of Statoil’s global exploration portfolio. We are now planning to return to the area for further appraisal drilling in the future,” says Dodson.

The Bay du Nord and Harpoon wells were drilled by the semi-submersible rig West Aquarius, both in approximately 1,100 metres of water. 

Bay du Nord is located about 20 kilometres south of Statoil’s Mizzen discovery. The Mizzen discovery, announced in 2010, is estimated to hold between 100-200 million barrels of oil.

Statoil is the operator of Bay du Nord and Harpoon with a 65% interest. Husky Energy has a 35% interest.

Bechtel, the global engineering, construction, and project management company, has created a revolutionary design for ports that could transform shipping in Africa. The Multi-User Offshore Hub is designed for two or more users and consists of an offshore, smart terminal arrangement and docking system that can accommodate oceangoing vessels and barges. The Multi-User Offshore Hub has the potential to open new market opportunities for African ports by significantly increasing capacity and substantially reducing port construction and operation costs.

"As existing African ports become more and more congested, increased capacity is an urgent need for both the import of consumer goods and the export of minerals. Each requires out-of-the-box solutions to handle as many containers as efficiently as possible and to speed the provision of new mineral export facilities to enable the region to develop its economy," said Marco Pluijm, Bechtel's senior ports specialist, who unveiled the Multi-User Offshore Hub concept today at the African Ports Evolution 2013 Forum in Cape Town. "This solution could provide a reduction of up to 40 percent in port infrastructure construction costs compared with building a traditional port and up to 50 percent in operational cost savings as the hub can handle much larger Capesize and Valemax vessels, which result in economies of scale."

The Multi-User Offshore Hub concept combines a country's existing transport modes, such as rail and river barges, to provide the most efficient and sustainable logistics possible. Bechtel is currently identifying suitable sites for a Multi-User Offshore Hub in countries in both East and West Africa.

The Multi-User Offshore Hub concept builds on Bechtel's ongoing commitment to improve shipping capabilities in Africa. The company is also leading a three-year joint-industry research project to improve the safety of mooring large cargo ships off the coast of West Africa. Both initiatives are instrumental in upgrading and expanding port infrastructure needs in Africa. The two initiatives are part of Bechtel’s longstanding work in Africa, which spans more than 70 years.

Bechtel is a global leader in the research, design, and construction of port and marine projects. The company has successfully completed more than 80 port and marine projects across the world, 28 in the last decade. These include Jubail Port development (part of Jubail Industrial City) and Khalifa port and Kizad, which has the first semiautomated container terminal in the Middle East.

A standard program template for UK offshore decommissioning projects has been credited with heralding a step-change for the industry after being formally endorsed by the UK regulators and successfully trialled by three international operators for different types of asset.

Decommissioning industry body Decom North Sea (DNS) developed the template in partnership with the Department of Energy and Climate Change (DECC).  The new template will help streamline and standardize the format for decommissioning programmes throughout the UKCS whilst still fully satisfying regulatory requirements.

The template is already allowing industry to compile decommissioning programs more quickly and easily by presenting information in a consistent and standardised format, reducing time spent on redrafts, improving efficiency and reducing costs.

First to trial the template was BP with the Schiehallion Decommissioning Programme, whilst CNRI is currently trialling it to set out its plans for the Murchison Platform (Photo). Perenco is also using the template for the Thames Project. All of the operators had positive feedback on the template, noting significant changes and a reduced number of drafts.

An initial draft of the workgroup’s template was circulated to government departments, industry and other stakeholders via DNS members, Oil & Gas UK and DECC. More than 50 responses were received and the comments were collated into a final draft document by DECC and DNS, which was reviewed again by the workgroup before being finalised.

The resulting template allows future decommissioning programs to be prepared and assessed in a more consistent fashion. Operators are being encouraged to trial it during 2013 and feedback from those users will be used to further improve the template.  It is hoped that the template’s use for non-derogation cases will become mandatory in 2014. A streamlined template for derogation cases is also under development.

DNS Chief Executive Brian Nixon said: “We are delighted to have been instrumental in such a major project and the rapid uptake of the template by operators shows very clearly that the approach taken by DNS and partners was a success. We are now building on the collaborative working model to tackle other key industry challenges.

“The members of the working group gave generously of their time to design and deliver the template and this has been an excellent early example of DNS members working collaboratively with Government to deliver a substantial piece of work already showing significant demonstrable benefits. Ultimately, it will reduce costs to the public purse whilst maintaining the integrity and transparency of the decommissioning process.”

A DECC spokesman said: “This is a great example of DECC and industry working together on a project with the potential to achieve considerable savings and efficiencies to operators, the regulator, consultants and contractors.’’

Alistair Corbett, BP’s Decommissioning Projects Manager, said: “The Schiehallion Decommissioning Program was approved in June by DECC, using the new Standard Decommissioning Programme Template. Though it was only officially issued for use in January 2013, we were given permission in December 2012 to trial it.

“That meant seven months from initiation to approval, compared to up to three years in the case of Miller – also the document ended up only 42 pages in length. This equates to a major saving in man-hours and project delivery schedule and demonstrates the success of a joint oil industry and Governmental co-operation project.”

Roy Aspden, Decommissioning Projects Manager, CNRI, said:  “We are delighted to have been part of the team responsible for producing the standard decommissioning template as well as pioneering its use. 

“The template’s format has enabled us to set out our proposals for the Murchison platform clearly and concisely, making the decommissioning programme easily accessible to our stakeholders and significantly reducing the reading burden without compromising essential information.  It has also provided a helpful focus for CNRI’s meetings with the regulator during the development of the program.

“Overall, the initiative to develop the new template is a great example of what can be achieved through teamwork.  It represents a step-change in the simplification and standardisation of data vital to those considering and commenting upon decommissioning programs and augurs well for the future development of the decommissioning capability and cooperation across the range of interested parties.”

Perenco’s Operations Manager Keith Tucker, added: “Perenco's experience of a recent submission of a draft decommissioning program on the standard template has proven very successful. It demonstrates a significant step change improvement on the previous process, achieved jointly by DNS and DECC collaboration.”

It is hoped that, in time, the template could also be adopted for use in other European countries (albeit with some minor alterations perhaps being needed), helping operators and contractors alike to standardise their efforts across the North Sea.

Building on the success, DNS has established a projects sub-committee looking to move forward similar projects. They are currently canvassing ideas from the membership.

The forum is also continuing its focus on synergy and knowledge share at its annual Offshore Decommissioning Conference, in partnership with Oil & Gas UK, at St. Andrews from 1-3 October. With a number of panel discussions and networking opportunities, the event will focus on collaboration and promoting knowledge share and best practices among decommissioning operators and supply chain members. 

FoundOcean, the largest dedicated offshore construction grouting company in the world, today announced the opening of its newest office in Houston, Texas to support its expansion overseas.


"Houston is recognized as the energy capital of the world, with almost half of its economic activity driven by the energy industry - particularly oil & gas. It provides a perfect base for FoundOcean to continue with its growing activities in the Americas," says Managing Director Jim Bell. 



FoundOcean has completed more than 100 offshore projects in US and Canadian waters for world-class installation contractors including McDermott, Cal Dive, Heerema, Saipem, Subsea 7, and Technip. These range from compliant tower foundation grouting, to record-breaking deep-water fabric formwork deployments for pipeline repair installations. 



The DNV-accredited company has invested heavily in its grout mixing technology to ensure fast, efficient, and safe offshore operations. 



Amir R. Mirza, International Business Development Manager, will be based at the Houston site supporting the organization’s clients in the region and developing business opportunities in the North, Central and South American oil & gas markets.

Anadarko Petroleum Corporation (NYSE: APC) has announced it has entered into a definitive agreement with ONGC Videsh Ltd. (OVL), a wholly owned subsidiary of Oil and Natural Gas Corporation Limited, to sell a 10-percent interest in Mozambique's Offshore Area 1 (Area 1) for $2.64 billion in cash. Anadarko will remain the operator of Area 1 with a working interest of 26.5 percent.

"This transaction demonstrates our continuing ability to create substantial value through exploration and to again accelerate the value of our longer-dated projects through attractive monetizations and third-party capital," Anadarko Chairman, President and CEO Al Walker said. "Mozambique LNG is a premier global energy project, and we look forward to working with our partners and the government to advance this world-class development.

"As the operator of Area 1, we are very pleased to have reached this agreement with OVL, which values our pre-transaction interest at more than $9.6 billion. We expect to use the net proceeds from this transaction to further accelerate the short- and intermediate-term oil and liquids opportunities we have in the Wattenberg field, Eagleford Shale, Permian and Powder River basins, as well as the Gulf of Mexico and other evolving plays in our portfolio. Our objective with this allocation of capital will be to further increase our cash-flow growth with attractive wellhead margins, while providing additional value to our shareholders as evidenced by our recent dividend increase and continued portfolio-management activities."

The transaction is expected to close around the end of 2013, and is subject to existing preferential rights, governmental approvals and other customary closing conditions.

Area 1 is operated by Anadarko Moçambique Area 1 Limitada (a wholly owned indirect subsidiary of Anadarko) and is located in Mozambique's deepwater Rovuma Basin. The block contains the Prosperidade and Golfinho/Atum natural gas complexes that combined hold an estimated 35 to 65-plus trillion cubic feet (Tcf) of recoverable natural gas resources. In cooperation with the Government of Mozambique, Anadarko, its partners, and Eni (as the operator of the adjacent Area 4 block) continue to advance the development of an LNG park with first LNG cargoes expected in 2018.

Anadarko's partners in Area 1 include Mitsui E&P Mozambique Area 1, Limited (20 percent), BPRL Ventures Mozambique B.V. (10 percent), Videocon Mozambique Rovuma 1 Limited (10 percent) and PTT Exploration & Production Plc (8.5 percent). Empresa Nacional de Hidrocarbonetos, E.P.'s (ENH) 15-percent interest is carried through the exploration phase.

Saipem, Fairmount’s client, was very pleased with their performance. “The execution of the complex operations demonstrates sound engineering methodology, good preparations, strong teamwork and 110 percent commitment of all involved,’’ stated Saipem management.

Mr. Albertde Heer, CEO of Fairmount, is happy with the achievement of the entire team. "We are delighted to have been so closely involved in this truly unique assignment,’’Mr. De Heer says. “Once again the Fairmount team demonstrated its supreme professionalism in successfully completing this complex, high value project. We hope it’s the first of many to come."

Statoil has started the build-up of its Aberdeen operating organization and reported at SPE Offshore Europe 2013 that the company and its partners are on track with the Mariner field development project.

The Mariner heavy oil field was discovered in 1981. Statoil entered the license as operator in 2007 with the aim of finally unlocking the resources.

 The company and its partners took the final investment decision in December 2012 and the UK government's Department of Energy and Climate Change announced their approval of the field development plan in February 2013.

"This is the largest new offshore field development in the UK in over a decade. It has been 30 years in the making, and now we are on track developing the field and preparing for 30 years of production," says Lars Christian Bacher, Statoil's executive vice president for Development and Production International.

Statoil expects to start production from Mariner in 2017. The average production is estimated at around 55,000 barrels of oil per day over the plateau period from 2017 to 2020.   Expected recoverable oil volumes are estimated to more than 250 million barrels.

 Statoil has started the build-up of its local organization in Aberdeen and is planning to have a new operations center in place by 2016.

"The project will lead to substantial job creation in the region with more than 700 long-term, full-time positions," Bacher says.

Statoil aims to recruit most of these positions locally, and is now launching a branding campaign in Aberdeen to support recruitment efforts.

"We started the year with one employee in Aberdeen and expect to have a 75-person strong organization by year end," Bacher says.

Statoil has utilized its extensive heavy oil experience from Norway, Brazil and Canada in its efforts to find a viable development solution for the Mariner heavy oil field.

The field will be developed with a production, drilling and quarters platform based on a steel jacket with 50 active well slots, and a floating storage unit of 850,000 barrels capacity. In addition a jack-up drilling rig will be used to assist the drilling for the first four to five years.

The UK and global supplier industry will play a central role in the development of the Mariner project. The majority of facility contracts have been awarded, in addition to the contracts for drilling from the fixed platform and the jack-up rig.

Contracts within operations and maintenance, drilling and well services, and business support will be tendered from 2013 to 2016.

The majority of suppliers within these areas will be based in the UK, generating many long-term, UK-based jobs with contractors. Statoil has established an Aberdeen procurement organization, and is actively informing UK suppliers of its plans and activities.

Following the award of the major facilities contracts Statoil is currently ramping up activities at the construction yards. Offshore installation of the platform jacket is scheduled for mid-2015, followed by topsides during 2016.

Statoil is also the operator for the Bressay heavy oil field on the UK continental shelf where expected recoverable oil volume is 200-300 million barrels.

"We have chosen a stepwise approach starting with Mariner to ensure experience transfer and learning before we move forward with Bressay. The Bressay field's reservoir characteristics make it even more challenging than Mariner. Our focus is now on making the required preparations for project decision and execution, including necessary preparations for authority approval," says Bacher.

Statoil and its partners have selected a development concept with clear similarities to the Mariner project, but with some differences due to subsurface characteristics. The Mariner contracts include options for Bressay, and execution planning is in progress.

The Bureau of Safety and Environmental Enforcement (BSEE) and the Department of Energy (DOE) Office of Fossil Energy signed a Memorandum of Collaboration this week that will coordinate the ongoing efforts of the two agencies on offshore research and technological improvement projects. Through this collaboration, BSEE and DOE will continue to work together to ensure safe, sustainable offshore production of oil and natural gas.

“This Memorandum of Collaboration will ensure that the ongoing activities of our two agencies will continue to be appropriately coordinated,” said BSEE Director James Watson. “We will continue to prevent duplication and increase the effectiveness of our ability to create a regulatory environment that fosters the safe and responsible development of the Nation’s energy resources.”

“This Memorandum of Collaboration formalizes the interaction between our two agencies, and will help ensure that research and development executed by the Department of Energy is directly relevant to BSEE’s regulatory challenges.” said DOE Assistant Secretary Christopher Smith. “This is research that makes offshore oil and gas operations safer and environmentally sustainable while promoting our Nation’s energy security.”

The lead office within DOE that will work with BSEE is the Office of Fossil Energy, which supports research and development to ensure the Nation can continue to rely on clean, affordable energy from traditional fuel sources.

The agencies will continue to collaborate in support of three primary objectives: building safety through technological improvements; supporting research and development for offshore operations; and working together to support the implementation of recommendations arising from various investigations and studies related to Deepwater Horizon tragedy.

BSEE and the Office of Fossil Energy will engage in quarterly meetings to share near-term goals and track key milestones. Each year, the two agencies will prepare a joint progress report summarizing ongoing collaboration.

Click here for a copy of the Memorandum of Collaboration.

Technip was awarded by Shell Offshore Inc. (“Shell”) an important engineering, procurement and installation contract for the development of subsea infrastructure for the Stones field. This field is located in the Walker Ridge area in the US Gulf of Mexico, at a water depth of approximately 2,900 meters (9,500 feet). This development will host the deepest floating, production, storage and offloading (FPSO) unit in the world and will be Shell’s first FPSO in the Gulf of Mexico⁽¹⁾.

Technip will be in charge of installation of the subsea production system and Stones lateral gas pipeline⁽²⁾, inclusive of associated project management, engineering and stalk fabrication.

Technip's operating center in Houston, Texas will perform the overall project management. The flowlines⁽³⁾ and risers⁽⁴⁾ will be welded at Technip’s spoolbase in Mobile, Alabama. The offshore installation is expected to be performed in the second half of 2014 by the Deep Blue (photo), Technip’s deepwater pipelay vessel.

David Dickson, Technip’s Senior Vice President, North America Region, has declared: “With greater depths come greater challenges for our clients and we are delighted to help Shell push back subsea frontiers by laying the deepest gas pipeline worldwide. With the award of this high-profile project, Technip confirms its subsea leadership and keeps differentiating itself through innovation to remain at the forefront of frontier projects.”

1. This will be the second FPSO in the Gulf of Mexico, for which Technip installed the riser.
2. The production system is comprised of dual 8-inch insulated flowlines associated with pipeline end termination (PLET), and dual 8-inch steel lazy wave riser (SLWR). The Stones lateral gas pipeline is comprised of a single 8-inch gas pipeline associated with PLET, in-line sled, and a single 8-inch SLWR.
3. Flowline: a flexible or rigid pipe, laid on the seabed, which allows the transportation of oil/gas production or injection of fluids. Its length can vary from a few hundred meters to several kilometers.
4. Riser: a pipe or assembly of pipes used to transfer produced fluids from the seabed to the surface facilities or to transfer injection fluids, control fluids or lift gas from the surface facilities and the seabed.

Offshore accommodation and workspace specialists HB Rentals has officially opened its new eastern hemisphere headquarters in the North East of Scotland.

The purpose built £1 million facility, located in Sauchen, was officially opened by the Provost of Aberdeenshire, Councillor Jill Webster, in a ceremony attended by HB Rentals’ clients, suppliers, employees and senior management.

Provost Webster said: “HB Rentals' new facility represents a significant investment in Aberdeenshire and we welcome this boost to the local economy through employment opportunities and increased business activity in the area.

The facility is ideally located at the centre of the North East oil and gas industry in Aberdeenshire benefitting from being located in an area consistently judged to have the highest quality of life in Scotland as well as being an ideal base for HB's international growth plans."

With over 500sqm of covered workshop area and employing a multi-disciplined workforce of around 46 people, the new premises will handle all manufacturing for the company’s eastern hemisphere and allow it to build and consolidate the fleet of A60 accommodation units it currently supplies as well as handling any custom build projects the firm receives.

The base is seen as crucial to HB Rentals’ ambitious growth targets for its key operations in the region which include Europe, West Africa, the Caspian and Middle East.

Eastern hemisphere business unit director Norman Porter said: “The opening of this new purpose-built facility places us in the ideal position to capitalise on business opportunities in an increasingly competitive market and will allow us to fulfill our ambitious growth targets.  The North East of Scotland remains one of the world’s major energy centres and these facilities will allow us to better fulfill our customer’s orders in this region as well as the rest of the eastern hemisphere with the provision of offshore accommodation and workspace solutions.”

The official opening comes after a period of sustained success for the company, which has won several contracts recently.

Sales and marketing manager for the eastern hemisphere Brad Hirst added: “It has been an exciting time for the company recently with several large projects on-going.  Increasingly customers are coming to us requiring custom built or tailored accommodation solutions and the investment in these facilities will mean we are able to offer the full range of services needed to fulfill their requirements and deliver projects to exact specification, on time and within budget. ”

The move to the new premises comes five years after the company first began operating in the North East of Scotland.

HB Rentals operates a fleet of more than 400 A60 units comprising a wide variety of 2 to 12 man accommodation cabins, galleys, laundry, recreation and mess rooms, gymnasiums, heliports, offices, laboratories, MWD, mudlogging and well-support cabins as well as other custom fit-outs as specified by its worldwide customer base.

A large number of recent offshore natural gas discoveries in Israel have led to significant changes to the country’s fiscal terms, including the introduction of a windfall tax, and now a court decision could potentially add months to the current period of uncertainty surrounding authorization of gas exports, says a new report from research and consulting firm GlobalData.

According to the company’s  latest report*, the new roadblock to natural gas exports, caused by the High Court of Justices decision to freeze the Israeli cabinet’s agreement on the revised export policy, will have serious implications for Israel’s upstream operators.

Following the report of the Tzemach Committee in September 2012, which suggested capping exports at 53% of proven and probable (2P) reserves, the Israeli cabinet made the decision in late June to set the cap at just 40% in order to ensure domestic supply for the next 25 years.

However, as many parties, including environmentalist groups, dispute the calculations on which such supply projections are based and wish to retain a higher percentage for domestic use, challenges have been brought against the policy on the basis that it was only decided upon by the cabinet, not the full Knesset (Israel’s parliament). The High Court of Justice took the decision on 1 August to freeze the Israeli cabinet’s decision, pending a Supreme Court hearing which will commence on 17 September.

Rabie Khellafi, GlobalData's Lead Analyst for the MENA region, says: “This ruling is a blow both to the government and to operators, such as Noble Energy Inc., which have made significant discoveries in Israel’s offshore waters.”

The analyst continues: Although some fields, such as Tamar, have already commenced production, others, including Leviathan the largest discovery in the area are still having development plans finalized. The export regulations will have a significant bearing on these plans and the deals which relate to them. For instance, Woodside Petroleum Ltd has agreed in principle to acquire a share in the Leviathan field, but the details of the final agreement depend on export plans.”

In addition to these recent decisions, the Supreme Court could potentially rule that the Knesset will be responsible for approving any future decisions regarding the country’s  natural gas export policy a move which Khellafi anticipates would cause further uncertainty within the sector.

Not only is Israel’s export policy not yet finalized, but if the court rules that final decisions on natural gas exports must lie with the Knesset, then further delays will ensue. Given the complications of projecting the country’s supply needs, renewed debate on the subject could be a lengthy process, and although export policy will probably be finalized within the next year, we can expect a considerably high level of uncertainty to remain within the sector for months to come,” the analyst concludes.

*Israel Upstream Fiscal and Regulatory Report

As part of President Obama’s all-of-the-above energy strategy to continue to expand safe and responsible domestic energy production, the Department of the Interior’s Bureau of Ocean Energy Management on Wednesday held Western Gulf of Mexico Lease Sale 233, which offered 20.7 million acres and attracted $102,351,712 in high bids for 53 tracts covering 301,006 acres on the U.S. Outer Continental Shelf (OCS) offshore Texas. A total of 12 offshore energy companies submitted 61 bids.

The Western Gulf of Mexico Lease Sale builds on the first two auctions in the current Five Year Program – a 39-million-acre Central Gulf offering held in March, which netted almost $1.2 billion high bids and a 20-million-acre Western Gulf offering held last November that netted nearly $134 million.

“This offshore oil and gas lease sale supports continued growth in safe and responsible domestic oil and gas production,” said Acting Assistant Secretary for Land and Minerals Management and BOEM Director Tommy P. Beaudreau. “Over the past fourteen months, the offshore oil and gas industry has invested well over $3 billion in new federal leases in the Gulf of Mexico.”

Today’s sale offered all unleased and non-protected areas in the Western Gulf of Mexico planning area, including 3,864 tracts from nine to more than 250 miles off the coast, in depths ranging from 16 to more than 10,975 feet (five to 3,346 meters). BOEM estimates the lease sale could result in the production of 116 to 200 million barrels of oil and 538 to 938 billion cubic feet of natural gas.

Sale 233 was the third held under the Administration’s Outer Continental Shelf Oil and Gas Leasing Program for 2012–2017 (Five Year Program), which makes available for exploration and development all of the offshore areas with the highest conventional resource potential that together include more than 75 percent of the Nation’s undiscovered, technically recoverable offshore oil and gas resources.

Domestic oil and gas production has grown each year the President has been in office, with domestic oil production currently higher than any time in two decades; natural gas production at its highest level ever; and renewable electricity generation from wind, solar, and geothermal sources having doubled. Combined with recent declines in oil consumption, foreign oil imports now account for less than 40 percent of the oil consumed in America – the lowest level since 1988.

Today’s highest bid on a single tract was $30,583,560 submitted by ConocoPhillips Company for Alaminos Canyon Block 475. ConocoPhilips Company also submitted the highest total amount in bonus bids, totaling $50,323,180 on 29 tracts.

BOEM received at least one bid within the three statute mile boundary area north of the continental shelf boundary between the United States and Mexico. Any bids submitted on blocks in the area will not be opened until on or before 30 days following the approval by the U.S. Congress of the agreement between the U.S. and Mexico or February 28, 2014, at which time the Secretary of the Interior may determine whether it is in the best interest of the United States either to open any such bids or to return the bid unopened.

BOEM established the terms for this sale after extensive environmental analysis, public comment and consideration of the best scientific information available. These terms include measures to protect the environment, such as stipulations requiring that operators protect biologically sensitive features and provide trained observers to monitor marine mammals and sea turtles to ensure compliance and restrict operations when conditions warrant.

The terms also continue a range of incentives to encourage diligent development and ensure a fair return to taxpayers, including an increased minimum bid for deepwater tracts, escalating rental rates and tiered durational terms with relatively short base periods followed by additional time under the same lease if the operator drills a well during the initial period.

Following the sale, each bid will now go through a strict evaluation process within BOEM to ensure the public receives fair market value before a lease is awarded. Sale statistics for Sale 233 are available at:  http://www.boem.gov/Sale-233.

The Caspian Sea region is one of the oldest oil-producing areas in the world and is quickly growing as a natural gas production hub.

The Caspian Sea region is one of the oldest oil-producing areas in the world and is an increasingly important source of global energy production. The area has significant oil and natural gas reserves from both offshore deposits in the Caspian Sea itself and onshore fields in the Caspian basin. Traditionally an oil-producing area, the Caspian area's importance as a natural gas producer is growing quickly.

This report analyzes oil and natural gas in the Caspian region, focusing primarily on the littoral (coastal) countries of the Caspian Sea (Russia, Azerbaijan, Kazakhstan, Turkmenistan, and Iran). A discussion ofUzbekistanis also included. While not a Caspian coastal state, a considerable amount of Uzbekistan's territory, along with its energy resources, lies in the geological Caspian basins.

Aside from Azerbaijan's oil production, the Caspian Sea largely was untapped until the collapse of the Soviet Union. With several newly independent countries gaining access to valuable hydrocarbon deposits, the different countries have taken diverging approaches to developing the energy resources of the area. At the same time, the lack of regional cooperation between the countries' governments and few export options for Caspian hydrocarbon resources have slowed the development of Caspian oil and natural gas resources.

The combination of foreign investment and rising energy prices allowed the coastal countries to shift from diverting oil extraction for local use to supplying both regional and world oil markets. The ability of countries to export greater volumes of Caspian crude oil and natural gas will depend on how quickly domestic energy demand rises in those countries, how quickly they can build additional export infrastructure to global markets, and whether expensive projects to develop Caspian resources can attract sufficient investment.

Image credit: EIA

NYC-based PIRA Energy Group reports that global Asian oil markets remain supported on a global basis. On the week, U.S. stocks fell, split about equally between crude and products.  In Japan, crude stocks drew on higher runs and contained imports. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following: 

Asian Oil Markets Remain Supported on a Global Basis

Oil prices remain at the top of their trading range with firmness being supported by tightened crude balances which are being fueled by supply losses from producers such as Libya and Iraq and ongoing outages from Syria and Nigeria. All told, the market is currently at its maximum point of physical strength, with high runs, supply losses and crude stock declines. 

Overall Commercial Inventories Decline

U.S. stocks fell for the week ending August 16, split about equally between crude and products and matching last year's inventory decline for the same week. This left the inventory excess 1.9% above year ago levels. The bulk of the excess inventory is in gasoline. Overall adjusted oil demand growth is now running just 0.9% above year ago levels. This is the second week in a row that demand growth was no higher than 1% after three earlier weeks of near 3% growth. Some of PIRA's other energy indicators of economic growth (e.g. electricity demand) have also been weakening, which is not a good sign for the economy. 

Two Weeks of Japanese S/D Data

Two weeks of data were reported this past week due to the mid-August hiatus. Crude stocks drew on higher runs and contained imports. Gasoline demand was expectedly strong. Conversely, gasoil demand eased sharply due to the typical mid-August vacation impacts and stocks built, even with higher exports. Kerosene stocks continued to build seasonally, with the average build rate over the last two weeks being relatively high. 

Slow U.S. Stock Building

U.S. propane storage is building rather slowly pushing its price higher going into the crop drying and heating seasons. Butane demand will gain for gasoline blending while ethane continues to be impacted by steam cracker outages. 

Ethanol Prices Advance

U.S. ethanol prices rose the week ending August 16 due to higher corn costs and a tighter market with lower inventories. Prices were also supported by concerns that output will decrease prior to the next harvest because of plant maintenance and corn shortages. RIN prices rebounded after falling to a three-month low in the previous week.

Ethanol Output Decreases

U.S. ethanol production declined to 844 MB/D the week ending August 16, the second lowest level since April, and down from 857 MB/D in the preceding week. Due to dwindling supplies, some ethanol producers have contracted to barge in corn from as far south as Louisiana, where the 2013/2014 harvest has already started. 

The information above is part of PIRA Energy Group's weekly Energy Market Recap, which alerts readers to PIRA’s current analysis of energy markets around the world as well as the key economic and political factors driving those markets.