Offshore East Africa: Deep Water Natural Gas Bonanza

Offshore reports the trend of continued success in locating gas in the deep waters off East Africa: Mozambique, Tanzania emerging as prolific deepwater gas plays. How big? Anadarko's Chairman says:

“This could be one of the most important natural gas fields discovered in the last ten years,with significant long-term benefits for Mozambique.”

Benefits? From the Offshore report:

Mozambique's government was anxious for work on the project to start, he said, both for the incoming tax revenue in the longer term and for the near-term impact on jobs creation in the area. At peak, he forecast that construction of the initial LNG plant would involve 7,000 workers, with more employment opportunities for the second train.

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Following meetings with local villagers, fishermen and farmers, Anadarko has filed an application for land to build the onshore reception and process facilities. The port of Ofungi is the chosen site for the LNG plant. "The nearby city of Palma only just received electric power for the first time last year, so there is potential for this project to change the area significantly," Vardeman observed. "Also, an aircraft landing strip will be built of sufficient size to land a 747 at least." At the coastal location, materials offloading and LNG loading facilities will be constructed. The proposed beach front site is large enough to accommodate LNG carriers turning, he said, although when the tide goes out a large area of flat sand appears.

Assuming the final investment decision is taken toward the end of 2013, first gas could flow in 2018. But this is a very competitive market, Vardeman noted, "and we must convince buyers that this will be a reliable source of LNG. Also, this will be our first LNG plant, so they need to count on us to be there a long time." On the other hand, Vardeman explained, having Bharat Petroleum, Videocon, and Mitsui as partners was helpful for marketing the Area 1 gas to India and Japan. "It's an optimal location, close to India, and the distance to Japan is the same as to Europe," Vardeman said.

Oh, those horrible oil and gas companies, applying their technology in such a way as to benefit the poor of Africa.

LNG for Japan and Europe.

Another blow to the former gas monopolists in Russia.

Too bad the world is running out of energy . . . not.

Of course, there are those Somali pirates to deal with.



All illustrations credit Anadarko.

Offshore Safety

Nice piece by Dennis Bryant on Offshore Oil Spills and A Culture of Complacency:

It is incumbent upon the offshore oil and gas industry and its regulators to not only take the steps necessary to prevent another Deepwater Horizon casualty, but to adopt wholeheartedly a safety culture that will root out complacency. We are smart enough to develop technologies and processes that will significantly reduce risk. Only time will tell if we are smart enough to overcome the human fallacy of complacency in the face of those risks.

It's short and well worth the read.

I handled too many cases in which the following of proper safety procedures would have either prevented or mitigated the resulting harm.

There is a reason for checklists - they prevent "errors of complacency."

Italy and Malta Tussle Over Eastern Mediterranean Energy Search

As you may recall, Israel has a big offshore natural gas find in the Eastern Mediterranean as set out here, which has created a row with its neighbor, Lebanon (some suggest Iran's hand is involved in this). In addition, drilling off Cyprus has Turkey doing its own "exploration" under armed naval escort. Tension is up, ugly words are spoken. Billions of dollars are at stake.

See Saturn 5's coverage at Bosphorus Naval News here and the links therein for more on the Turkey and Cyprus issue.

Greece also is looking at issuing exploration permits in its offshore areas, and,
well, now, there are new sparring partners, as little Malta issues permits for offshore exploration and Italy jumps in claiming rights to some of the same undersea zones. See here:

Interest in Mediterranean exploration has fostered great hopes but has also led to increased tensions in the region. US independent Noble Energy's large gas discoveries offshore Israel, have shed light on the potential of offshore acreage in the region. Investors are now looking to Cyprus, while Lebanon is planning its first offshore licensing round in 2012. On October 6, Greece also announced that it will put three blocks in the Adriatic on offer for exploration in 2012. Previously, Greece's development minister, Kostis Hatzidakis, said that the government had plans to start exploration for oil in the Aegean Sea.

However, this has proved to be a poisoned chalice with regard to diplomatic ties in the region. Turkey's relationship with Israel has disintegrated and it has opposed Noble's drilling plans off Cyprus, as it has yet to formally agree its maritime borders with the island-state. It has also threatened to place military vessels in the Mediterranean Sea to impede what it considers to be provocative exploration. In addition, the long feud between Greece and Turkey over maritime borders could make the situation worse, particularly in terms of exploration in the Aegean. Lebanon and Israel have similarly yet to agree on a maritime border.

In the case of Italy, tensions with Malta have risen following the island's publication of a tender for oil exploration in the Ionian Sea - in areas claimed by Italy. Meanwhile, Malta is also in dispute with Libya over its southern maritime borders. Furthermore, environmental concerns over a possible oil spill in the Mediterranean's closed sea could also hamper upstream activity in the region.

With recent discoveries in the eastern Mediterranean and further ongoing exploration already taking place offshore Italy, Albania, Croatia, Montenegro (and possibly Greece in the near future), we believe that exploration on Italy's side of the Ionian Sea is likely to attract significant interest. Nevertheless, this raises political tensions and a great deal of diplomacy will be required if serious disputes are to be resolved or avoided.

Oh, Libya, too.

Nice turf war you got there, fellas.

There's an element of The Treasure of the Sierra Madre in all this. Mixed in with international threats, of course.

Greed kills.

The Eastern Mediterranean: Much Ado About Gas

So, Turkey has been shaking the war stick at Israel, making big noise over the Israeli blockade of Gaza that last year resulted in the stopping of Turkish ship and the violence that followed. In addition, Turkey is most unhappy with the discovery of large amounts of natural gas beneath the waters off Israel and Cyprus.

First, about the discovery:

The above map from Nobel Energy sets forth some discoveries made by that company, as described below:

Noble Energy has been operating in the Mediterranean Sea, offshore Israel, since 1998. We have a 47 percent interest in the Mari-B field, the first offshore natural gas production facility in Israel. Production from Mari-B began in 2004 and sales volumes have increased as Israel’s power demand and pipeline infrastructure have expanded tremendously. Significant new exploration discoveries at Tamar, Dalit, and Leviathan will help meet Israel's energy needs and drive new potential for natural gas in the future.

The Company has recently completed two additional development wells at Mari-B. Combined with additional compression work in 2011, these new wells will support near-term gas deliverability and serve as injection wells for storage in the future.

We have a 36 percent operated working interest at Tamar, with gross mean resources of 8.4 trillion cubic feet (Tcf) of natural gas. Tamar was the largest deepwater natural gas discovery in the world in 2009. Sanctioned by the Company in September 2010, initial expectations target commissioning first gas from Tamar at the end of 2012. Development drilling at Tamar is underway, and the Company is continuing discussion with a growing number of parties to deliver reliable and clean energy resources to customers.

Leviathan represents the largest exploration success in the Company's history, with gross mean resources of 16 Tcf of natural gas. We are actively studying multiple export options, including both LNG and pipeline scenarios. The Company anticipates returning to appraisal drilling at Leviathan in mid 2011. Supported by 3D seismic acquisitions in 2009 and 2010, Noble Energy has identified a number of additional prospects and leads on our significant acreage position offshore Israel and Cyprus, with plans to drill three to four exploration / appraisal wells in 2011.

This discovery has major implications for Israel and Cyprus. With specific reference to Cyprus, this piece notes:

For Cypriots who always had an Arab-envy, seeing their neighbors drawn in oil while they have to import every drop of it, has been frustrating if not intoxicating. Loren Steffy, the business columnist for the Houston Chronicle, reports: “Just as the Israeli discoveries may transform that country from an energy importer to an exporter, a similar find off the coast of Cyprus could turn the island nation into a major European energy hub”.
Terry Gerhart, the Vice President for international operations of Houston-based Noble Energy declares: “Cyprus could be on the verge of a natural gas revolution. Gas will strengthen the Cypriot economy for decades to come. Cyprus will become the Mediterranean’s energy hub”.

Well, maybe - both Cyprus and Israel are going to have some serious challenges - as noted her:

From Israel, there is good news and bad news.

Offshore Drilling: New Tools for Emergency Well Capping

Industry responds to the Macondo/Gulf of Mexico well blowout with new tools to cap such a blown out well, as reported at After Macondo: Emergency Well Capping:

In the wake of the spill, the industry and the wider world has switched on to the possibility of a similar disaster occurring again. Particularly given the increasing depths at which deepwater platforms are now operating, the logistics behind capping a leaking well are mind-boggling.

As a result, a number of emergency well capping devices are concurrently in development or under construction now. Some are intended and tailored for use in particular offshore regions, while others are being offered to oil companies as a kind of global insurance policy against any future disasters.

See the home page of the Marine Well Containment Company (source of the illustration above). It is reported the system MWCC has works down to 10,000 feet. There's a video at that site that shows how the system is supposed to work.

MWCC's start up was funded by ExxonMobil, Chevron, Shell and ConocoPhillips. Membership today has expanded:

The MWCC member companies are now Chevron, ConocoPhillips, ExxonMobil, Shell, BP, Apache, Anadarko, BHP Billiton, Statoil and Hess. These 10 companies operated approximately 70 percent of deepwater wells drilled in the U.S. Gulf of Mexico between 2007 through 2009.

As full disclosure, I am a former Chevron employee, looking forward to small retirement check from them in the future.

Australia Looks North and Thinks Defense

Reported as Australia Plans Deploying Assault Ships to Protect its NW Shelf Oil and Gas Assets:

Australia is looking to boost its military power in the northwest to protect its booming offshore oil and gas sector and counter new challenges from China and the Indian Ocean, Defence Minister Stephen Smith said on Wednesday.

Carnarvon Basin OIl Field Off Western Australia Map from Oil and Gas Journal

The shift, being considered in a defence posture review, could see new amphibious assault ships and the planned Joint Strike Fighters based across Australia’s sprawling north and western coastlines, where resource companies have invested billions in offshore oil and gas projects.

The posture review would also consider strategic challenges from the Indian Ocean rim and reflect the growth of military power in the Asia Pacific, although Smith said the shift was not focused on China’s rising muscle.

“We are confident China will emerge as … a responsible stakeholder. As the Chinese would say, into a harmonious environment. We are confident of that,” Smith said. “There is more than one country in the Asia Pacific.”

RAN Hobart Class Destroyer

The United States, Australia’s top strategic ally, also plans to increase its Asia Pacific presence. Smith said Australia’s review would complement a similar review under way in Washington.
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Australia is considering building up to 12 new long-range submarines and has committed $7.6 billion for three powerful air warfare destroyers, due in service from 2015.

F-35A

Australia is also aiming to buy 100 Lockheed Martin (LMT.N) F-35 Joint Strike Fighters, to complement the fleet of

F/A-18 Hornets and Super Hornets, currently based in Queensland, New South Wales and the remote Northern Territory.

The boom resource state of Western Australia has a major navy base near the capital Perth, and is home to the country’s elite Special Air Service forces, but there are no major military bases in the state’s north, facing Asia.

An Explanation of the Jones Act

Dennis L. Bryant of Bryant’s Maritime Consulting and Bryant’s Maritime Blog was recently interviewed about the Jones Act and its impact on the Deep Horizon Oil Accident, which interview is available at this post about which Mr. Bryant writes:

The interview took over 20 minutes and the radio broadcast condensed that down to about two minutes, so numerous details relating to cabotage have been glossed over or omitted.

A portion of the interview:

Some lawmakers say they’ve heard the Jones Act is stopping foreign oil skimmers from helping with the oil spill cleanup. But Bryant says the law probably isn’t to blame. "The impediment, if there is one, has been that there hasn’t been a valid offer for a foreign response vessel," he notes.

Bryant adds that many foreign oil skimmers may not be willing or able to leave their current jobs yet to help with the spill cleanup. "The vessels over there are probably gainfully employed doing other things, and they would then have to get them out of whatever contract they’re under now," says Bryant. "The amount of oil spill response vessels in the world is not that great."

Bryant also points out that, since the strictest provisions of the Jones Act only apply within 3 miles of the US coast, it’s easier for foreign ships to help with cleanup operations farther out in the Gulf, near the Deepwater Horizon well itself.

You can listen to the report here.


Map from NOAA.

Drilling Rig Blows Up in Gulf of Mexico -11 still missing

Reported here:

Transocean Corp. said 11 people are still missing from a drilling rig that experienced an explosion and fire late Tuesday night about 40 miles off the Louisiana coast in the Gulf of Mexico.

In a news conference today, officials said they still do not know for sure the cause of the accident, but it appears to have been a blowout, where hydrocarbons travel up the subsea piping to the rig in an uncontrolled manner.

Adrian Rose, Vice President of Quality, Health, Safety and Environment for Transocean, said the rig had stopped drilling and was in the process of getting the 18,000-foot-deep well ready for production. It appears hydrocarbons were able to travel up the drilling riser — a pipe that carries mud and other drilling fluids back to the rig on the surface — and ignite.

“So this was a blowout?” asked a reporter.

“Basically, yes,” said Rose. “But we still don't have all the facts and this is just an assumption we're making.”

Firefighters continued to battle the oil-fueled blaze aboard the Deepwater Horizon this afternoon. The fire has ebbed and flowed throughout the day on the rig, which appears to be listing at about a 10 degree angle, Rose said.

Of the 126 workers onboard, 17 were injured and flown by helicopter to onshore hospitals. Seven were considered critical. One is in a burn unit at The University of South Alabama Medical Center in Mobile while nine have been released from that facility and others. The location of the remaining seven is unclear.

U.S. Coast Guard photo.Caption:

NEW ORLEANS - Fire boat response crews battle the blazing remnants of the off shore oil rig Deepwater Horizon April 21, 2010. A Coast Guard MH-65C dolphin rescue helicopter and crew document the fire aboard the mobile offshore drilling unit Deepwater Horizon, while searching for survivors April 21, 2010. Multiple Coast Guard helicopters, planes and cutters responded to rescue the Deepwater Horizon's 126 person crew.

Gulf of Mexico: Deep Oil and Gas Drilling

Reported at MarineLink - Transocean Drills Deepest Oil and Gas Well:

. . . Transocean crews on the Deepwater Horizon drilled the well to 35,050 vertical depth and 35,055 feet measured depth (MD), or more than six miles, while operating in 4,130 feet of water.
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Transocean also holds the current world water-depth record of operating in 10,011 feet of water set while working for Chevron in the U.S. Gulf of Mexico.

The Deepwater Horizon, placed into service in 2001, is a dynamically positioned ultra-deepwater semisubmersible rig capable of working in water depths of up to 10,000 feet.

More of the rig here

More on the discovery here:

BP PLC has reported a giant Gulf of Mexico Lower Tertiary deepwater discovery that is also one of the world’s deepest wells.

Named Tiber, the well went to a total depth of 35,055 ft on Keathley Canyon Block 102 and found oil in multiple Lower Tertiary (Paleogene) reservoirs, BP said. The company didn’t disclose the depth or thickness of the oil column.

The company said Tiber, after appraisal to determine its size, should be larger than the 3 billion boe that BP expects to recover from its 2006 Kaskida discovery 45 miles to the southeast.