Aramco CEO Assures Employees of Company’s Strength

Saudi Aramco is well prepared to face the steep drop in oil prices in the short and medium term, and it has made some adjustments in light of the price fall, according to CEO Khalid A. Al-Falih.
Al-Falih said in a memo published in the company’s internal Arabic weekly magazineQafilah that he understands that the current market situation has created ambiguity among company employees and their families about the company's ability to cope with sharply lower oil prices. “That’s why I am here confirming to you that we have strengthened our position when oil prices were high, as we expected this scenario to happen,” Al-Falih said in the memo. “We are able to maintain our long-term commitments, and we will continue our work with high flexibility, efficiency, and wisdom.”

Despite the recent drop in oil prices, Saudi Aramco CEO Khalid A. Al-Falih said the company will "maintain [its] long-term commitments."

The current situation offers an opportunity for Saudi Aramco, he said. “For example, amid these circumstances, we will be able to execute our projects at lower prices because others will be obliged to postpone their projects. This will lead service providers to slash their prices in order to get work,” he said.
Al-Falih said he expects many oil and gas companies will lay off employees, which may offer an opportunity for Saudi Aramco. “We will be able to hire talented people and experts we need to keep our investments going on,” he said.
Meanwhile, Al-Falih said that his company made eight discoveries in 2014, which will help boost the company’s overall reserves. “In addition, our gas production capacity has hit historic levels at 8 billion cubic feet per day,” he said.
By: Abdelghani Henni is the Middle East Editor for the Journal of Petroleum Technology

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Schlumberger to cut 9,000 employees, including in Houston

HOUSTON – Oil field giant Schlumberger said Thursday it will cut approximately 9,000 employees – around 7.5 percent of its workforce around the globe – as both petroleum prices and oil-company spending nosedive.

Schlumberger’s profits fell 82 percent in the fourth quarter as it wrote down $1.7 billion in assets. It said it recorded a $296 million charge related to its headcount reduction.

Robert Drummond, President of Schlumberger North America (left) and Jeremy Aumaugher, South Division Operations Manager (Tom Reel/ San Antonio Express-News)

“It’s very unfortunate, but this is definitely not going to be the last headcount reduction in 2015 in the energy space,” said Rob Desai, an analyst with Edward Jones. “The goal is to position the company to come out of this downturn stronger.”

The oil-tool maker banked $302 million, or 23 cents a share, in net income in the October-December period, compared to $1.66 billion, or $1.26 a share, in the same period in 2013. Its revenues were up from $11.9 billion to $12.6 billion.

The job reductions began in the fourth quarter and are expected to be completed later this year, Schlumberger spokesman Stephen Harris said in an email.

“These global reductions encompass many geographic regions in which we operate, including the Houston area,” Harris said. The company is “not releasing any details on exactly how many and where these reductions are coming from, however.”
The company took an $800 million impairment charge when it retired some of the seismic vessels from its fleet. Schlumberger also took a $472 million devaluation charge on the devaluation of Venezuela’s currency against the U.S. dollar. And it saw $199 million impairment charge as the value of an investment in the Eagle Ford Shale sunk.
Traders reversed a large portion of Wednesday’s rally in crude oil. Futures for international Brent crude fell $1.02 to $47.67 per barrel on London’s ICE Futures Europe market. U.S. benchmark West Texas Intermediate fell $2.23 to $46.25 a barrel on the New York Mercantile Exchange.

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Oil and gas firms in UK expect jobs growth

Companies in the UK oil and gas sector expect to create up to 39,000 jobs over the next two years.

A survey of 100 companies, commissioned by the Bank of Scotland, found expectations of employment growth had increased since last year.
A clear majority (69%) of executives in the companies were optimistic about their growth prospects in 2014/2015.
A total of 38% of those responding said a shortage of skilled workers would be their greatest challenge.
International expansion was cited as a priority by 64% of those taking part. Key areas for investment were Africa, North America and the Middle East.

Half of the companies said they were already planning to use their expertise by investing abroad

'Expand internationally'

The survey found 46% of companies were already planning further growth in foreign markets over the next 24 months.

The research was carried out by BDRC Continental and companies were chosen to reflect a range of size, location and service type.

A similar study carried out last year indicated companies in the sector would recruit an additional 34,000 people over two years.

Bank of Scotland commercial area director Stuart White, said: "The findings of this report are excellent news for the economy, demonstrating the employment-generating nature of the oil and gas industry now and in the future.

"With most of the UK's oil and gas firms clustered in Aberdeen and the north-east, Scotland should reap the largest share of these new jobs, however other parts of the UK will benefit from expansion plans.

"The report also highlights the growing challenges posed by the lack of a skilled workforce."

Mr White said new specialist apprenticeship schemes could help address the shortfall.

"The results also demonstrate the global nature of the industry as more firms look to expand internationally and tap into the markets with the largest levels of recoverable reserves," he explained.

"With 44% of income already generated internationally, this is not a new trend, and reflects the reach UK firms have as the industry benefits from the expertise gained in the challenging North Sea environment."

'Key strength'

A Scottish government spokesman said: "This is an increase of 5,000 on the estimate made only last year.

"It is also very encouraging to see a strengthening of the international expansion of these companies, and this is a trend which is expected to continue.

"The skills and knowledge developed in Scotland as a result of the development of the North Sea are a key strength for Scotland.

"We are committed to working with the oil and gas sector to maintain competitiveness, facilitate the transfer of skills and knowledge to other sectors and utilise Scottish-based skills in world markets."

The Labour MP for Aberdeen North, Frank Doran, said that, while the report was good news for the industry and Scotland, there were long-term issues facing the sector, including price volatility.

Speaking on BBC Radio's Good Morning Scotland programme, he questioned whether an independent Scottish government would have the expertise and resources to run the industry efficiently.

He added: "I don't know where the Scottish government is going to get the talent, particularly given the wages and the salaries which are paid in the oil and gas industry, which are way beyond what the public sector is prepared to pay,

"That is one of the unanswered questions - where are the civil servants going to come from?"

Source : BBC News

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'Door To Hell': Turkmenistan Crater Has Been On Fire For Over 40 Years

In 1971, the Soviets opened the Door to Hell, and 42 years later that door is still open. A natural gas field in Derweze, Turkmenistan, the Door to Hell is the site of a former Soviet oil operation that went wrong when a rig collapsed into a large crater. Soviet geologists decided the best thing to do was light the crater on fire to burn off its poisonous methane gas, but things didn't go as planned, and the fire still burns today.

The "Door to Hell" in Turkmenistan has been burning since 1971. Soviet geologists lit it on fire and thought it would only burn for a few days. (Photo: Wikimedia Commons)

Locals in Derweze, a village of about 350 souls, took to calling the site the Door to Hell, and its blaze can be seen from miles away. Located in Turkmenestan's Karakum Desert--a vast, sandy region with only one person per 2.5 square miles--the Door to Hell has become something of an unlikely tourist destination. One firsthand account of a visit to the Door to Hell comes from a 57-year-old Scotsman named Will Keeping.

"During daylight, I was initially not impressed as it looked like a hole in a vast desert," Keeping told The Daily Star. "As we got nearer and the glow from inside the carter became evident, though, and I started to notice the size of the crater and wondered how it could continually glow like that." Keeping added that as night came on, "the location slowly transformed from a large, isolated furnace in the middle of the desert into the center of attention that dominated the surrounding area--the glow became more intense and lit up the area including the sky above."

Another visitor to the the 200-foot wide, 70-foot-deep crater was Gurbanguly Berdimuhamedow, the president of of Turkmenistan. In 2010, Berdimuhamedow swung by the Door to Hell and ordered that the fiery crater be closed, but this hasn't happened.

While the 42-year Door to Hell fire is impressive, it pales in comparison to an American fire that has been going for more than half a century. On May 17, 1962, the fire department of the coal-mining town of Centralia, Penn., tried to clean up the town landfill by setting its contents on fire. The blaze ignited a coal seam and spread throughout the town's mines, releasing poisonous gasses and creating dangerous sinkholes. The town was condemned, and 1,400 Centralia residents left; a handful who remained were recently granted permission by the courts to keep their homes until their deaths.

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Texas-Drilling Rig Hits Gas Pipeline Then Explodes

November 14th, 2013 MILFORD, Texas -Hundreds of people in Ellis County were evacuated and others were asked to stay away from the area where a gas pipeline caught fire Thursday morning.

It happened at about 9:30 a.m. November 14th, 2013 near the intersection of Highway 77 and FM 308 in Milford.
Ellis County spokesman James Saulter said a Chevron crew had been conducting a type of drilling when the explosion happened.
Video from SKY4 showed heavy flames rising from what appeared to a rig in a rural field. It was surrounded by several charred work trucks. The large plum of black smoke was visible from Interstate 35E.
No one was hurt and there were no reports of damage to any nearby homes or businesses, Saulter said.
However, officials are still concerned about the fire spreading to other pipelines in the area.
The whole city of Milford, which has a population of about 800, was evacuated. Students were moved to schools in the nearby town of Italy.
Traffic on FM 308 was rerouted between Highways 22 and 77. Motorists in the area were asked to use I-35E as an alternative to Hwy. 77.
Chevron will let the pipeline burn itself out, which is expect to take about 24 hours, Saulter said.
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Offshore Pioneers - Brown & Root and history of offshore oil and gas

Brown & Root, a Houston-based engineering and construction firm, built the platform from which Kerr-McGee Oil Industries drilled the first producing well beyond the sight of land in the Gulf of Mexico. The well came in on November 14, 1947, a date that marks the birth of the modem offshore oil and gas industry. Before 1947, companies had extracted oil from underwater fields, but these deposits were located primarily in protected inland waters. Oil had been produced offshore in the Gulf of Mexico before 1947, but always in sight of land. Kerr- McGee's well, in eighteen feet of water, ten and a half miles from the Louisiana shore, went a step beyond those previous developments. The Kermac 16 stood in the open waters of the Gulf, exposed to the fury of waves and wind. The success of this platform in producing oil from beyond the horizon heralded a new era of technological innovation that subsequently spread to offshore provinces throughout the world.

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Another Bad Oilfield Incident – Drill collar in drillers shack

We don’t really know much about the detail of this incident. If you know, please feel free to share with us so other people will learn from this event.

 Drill Collar laid across the rig floor

 Drill shack was totally damaged.

 I hope the driller did not get hurt.

 The drill collar was dropped inside the driller shack.

 This was another view which was pretty scary.

 The broken glass was everywhere.

 The panel and joy stick were damaged.

 The drill collar was dropped into the shack.

 Everything in the room was ruin.

 Look at the derrick. Two drill collars laid across the derrick.

 The drill collar, bit, wear bushing, etc on the rig floor.

 Few more pictures are below.

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Blowout at EOG site in Eagle Ford Shale – Nabors Rig Blows Out

A drilling rig owned by Nabors Drilling USA blew out and caught fire Wednesday evening just before 7pm while drilling an Eagle Ford Shale horizontal well for EOG Resources in Lavaca County, Texas.
The well control incident occurred at Farm to Market 966 and State Highway 111 near Petersville, Texas. No injuries were reported.
Well control specialists from Houston have been called to put out the rig fire and conduct an investigation according to Shiner Volunteer Fire department Chief Mark Panus.
A nearby resident, who asked not to be identified, said her husband was in the front yard with their 4 year-old son at the time of the explosion and saw workers running. When he asked workers what happened the workers kept running so he too grabbed their son and ran, she said.

Facebook Speculation:

Facebook posts by workers in the area indicate the drilling rig was Nabors Rig F38 and that Halliburton was on location at the time of blow out possibly indicating they may have been cementing at the time of loss of well control.

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BP’s $1Billion Battle On ‘Absurd’ Oil Rig Blast Claims As Total Bill For Disaster Hits £27.7Billion

BP is to appeal $1billion of compensation payments for its Gulf of Mexico oil spill, after lashing out at ‘absurd’ claims by US law firms cashing in on the disaster.
The British oil giant yesterday increased its estimate of the total bill for the 2010 disaster to an eye-watering £27.7billion.
Some £6.3billion of the total is made up of claims by people who say the accident cost them money, many of them fishermen, hoteliers and restaurant owners.
But BP is set to battle ‘fictitious’ claims by ‘greedy’ lawyers looking to use the oil company as a cash machine.

 The explosion happened on 20 April 2010 triggering the worst oil spill in US history. BP says it will fight fanciful legal claims over the accident

‘No company would agree to a settlement that pays businesses that suffered no losses,’ said chief executive Bob Dudley.
‘We want everyone to know that we are digging in and are well-prepared for the long haul on legal matters.’
Mr Dudley took the reins at BP in 2010 after an explosion ripped through its Deepwater Horizon rig in the Gulf of Mexico, killing 11 people and triggering the worst oil spill in U.S. history.
He replaced gaffe-prone predecessor Tony Hayward, who infamously enraged Americans as the disaster unfolded by declaring: ‘I’d like my life back.’

And Mr Dudley has proved a far more popular figure in the US, particularly given his roots in the Gulf Coast state of Mississippi.

 Many of the claims are from businesses directly affected by the accident

But the American sought to show he was no pushover, warning that BP would take its appeal against ‘absurd’ claims all the way to the Supreme Court if necessary.
He pointed out his duty to protect the interests of investors in BP, a major component of the pension funds that will help millions of Britons through their retirement.
‘BP shareholders, of which there are many in the UK – and the dividends from this company are so important here – should be unhappy, just as they should be in the US,’ he said.Mr Dudley added that the Gulf of Mexico compensation process was ‘curious and somewhat out of control’.
He lashed out at America’s litigation culture, saying that inflated claims against BP were a symptom of a wider problem.
He cited a claim by residents of Oklahoma against weathermen who failed to predict the devastating tornado that ripped through the US state earlier this year, killing 23 people and injuring 377 more.
And he said he was recently invited to join a £15million lawsuit against Southwest Airlines over its failure to provide free drinks coupons that it had advertised.
‘There’s something wrong with this system,’ he said.
‘The precedent is not good for America.’
Mr Dudley’s comments have been spurred by a sudden surge in claims by law firms winning compensation not just for their clients, but for themselves.
The compensation fund is administered by a judge, meaning BP has no control over who is deemed eligible for a payment.
Since BP agreed to settle, administrators of the settlement fund have paid an average £527,000 to more than 300 law firms, adding up to more than £160million in total.
But in the past week the average claim by a law firm has spiralled to nearly £1million, while one firm secured a £10million payment for itself.
The cash windfalls come on top of any fees charged to ordinary claimants such as shrimp farmers and hoteliers, who typically forfeit up to 25 per cent of their payouts to lawyers acting on their behalf.

A dam erected at Grand Isle, Louisiana, to protect the island’s beaches from oil that washes ashore from the Deepwater Horizon oil rig explosion and spill in the Gulf of Mexico
The rough ride given to BP contrasts with the treatment of US construction giant Halliburton, which made the cement on the British firm’s doomed well.
Halliburton has agreed to pay a fine of just $200,000 after it was found to have destroyed evidence from tests it performed on the quality of the cement used in the well.
But the financial hit is dwarfed by BP’s own costs, which it has warned could rise beyond the £27.7billion it has set aside.
BP has previously warned it faces a ‘feeding frenzy’ of lawyers, while the firm’s US head of communications last week said the firm’s efforts to meet its obligations were being exploited.
‘The Deepwater Horizon settlement could have been a model for resolving lawsuits after industrial accidents,’ said Geoff Morrell.
‘Instead it’s running into a monument to plaintiffs’ lawyers’ greed.’
BP intends to appeal against some £650million of payouts in total, with claims by law firms believed to make up nearly half of the total.

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BP agrees to record criminal penalties for US oil spill

(Reuters) - BP Plc (BP.L) will pay $4.5 billion in penalties and plead guilty to criminal misconduct in the Deepwater Horizon disaster, which caused the worst U.S. offshore oil spill ever.

U.S. Attorney General Eric Holder called the deal a "critical step forward" but was adamant that it did not end the criminal investigation of the 2010 spill.

The settlement announced on Thursday includes a $1.256 billion criminal fine, the largest such levy in U.S. history. It was not, however, the "global" settlement some had hoped for, which would have also resolved the considerable federal civil claims against the company at the same time.

"BP lied to me. They lied to the people of the Gulf. And they lied to their shareholders, and they lied to all Americans," said Representative Ed Markey, the top Democrat on the House Natural Resources Committee who led investigations at the time of the spill.

The government also indicted the two highest-ranking BP supervisors aboard the Deepwater Horizon during the disaster, charging them with 23 criminal counts including manslaughter. One man's lawyer said his client was being turned into a scapegoat for the disaster.

The April 2010 explosion on the rig in the Gulf of Mexico killed 11 workers. The mile-deep (1.6 km) Macondo oil well then spewed 4.9 million barrels of oil into the Gulf over 87 days, fouling shorelines from Texas to Florida and eclipsing in severity the 1989 Exxon Valdez spill in Alaska.

The company said it would plead guilty to 11 felony counts related to the workers' deaths, a felony related to obstruction of Congress and two misdemeanors. It also faces five years' probation and the imposition of two monitors who will oversee its safety and ethics for the next four years.

Wall Street analysts said the deal will allow BP to focus again on oil production, while one U.S. senator from Louisiana said he hoped the settlement would not prevent his state and others from collecting civil penalties.

Investors shrugged off the news, and BP shares listed in New York and London were little changed on the day.

"It certainly is an encouraging step," said Pavel Molchanov, oil company analyst with Raymond James. "By eliminating the overhang of the criminal litigation, it is another step in clearing up BP's legal framework as it relates to Macondo."

The disaster has dragged BP from second to a distant fourth in the ranking of top Western oil companies by value.

'CRIMINAL SCALP'

"With these unprecedented criminal penalties assessed, I urge the Obama administration to be equally aggressive in securing civil monies that can help save our Louisiana coast" through other avenues, Louisiana Senator David Vitter said in a statement. "I certainly hope they didn't trade any of those monies away just to nail this criminal scalp to the wall."

Larry Schweiger, president of the National Wildlife Federation, called the settlement a "good down payment" on what BP should ultimately pay, which the environmental group argues is tens of billions of dollars more.

BP said the payments would be spread over six years, and that it expected to be able to handle the payments "within BP's current financial framework."

The company has sold $35 billion worth of assets to fund the costs of the spill. Matching that, it has paid $23 billion already in clean-up costs and claims, and has a further $12 billion earmarked for payment in its spill trust fund.

The oil company said it has not been advised of any government authority that intends to debar BP from federal contracting activities as a result of the deal.

'RECKLESS MANAGEMENT'

The lawyers for Bob Kaluza, the BP well manager aboard the rig who faces manslaughter charges, condemned the case against the four-decade oilfield veteran.

"Bob was not an executive or high-level BP official. He was a dedicated rig worker who mourns his fallen co-workers every day," Shaun Clarke and David Gerger said in a statement.

Kaluza faces two kinds of charges related to the workers' deaths: Involuntary manslaughter, a broad statute covering individuals whose reckless disregard leads directly to loss of life; and seaman's manslaughter, reserved for those employed on ships whose misconduct results in death.

"No one should take any satisfaction in this indictment of an innocent man. This is not justice," Kaluza's lawyers said.

As for BP, its settlement does not resolve civil litigation brought by the U.S. government and U.S. Gulf Coast states, which could be considered when the case convenes in February 2013.

Alabama Attorney General Luther Strange, who represents other spill-hit states in the case, said he intends to prove that BP's actions were grossly negligent - a charge that would bring billions of dollars in extra liability if upheld. Louisiana Governor Bobby Jindal agreed in a statement.

"The majority of BP's liability remains outstanding and we will hold them fully accountable," he said.

Holder said at a news conference to discuss the criminal settlement that while the government and BP had held talks to resolve the civil claims, the sides had not been able to agree on a "satisfactory" number. He said a deal was still possible but the government was moving ahead to the February trial.

Negligence is a key issue. A gross negligence finding could nearly quadruple civil damages owed by BP under the Clean Water Act to $21 billion.

Chief Financial Officer Brian Gilvary said the company's provisions should be enough to cover liabilities, provided it avoids a conviction for gross negligence, and that it had shareholder support to fight the case should that happen.

"I can boldly defend where we are in the provisions today. If something were to happen in the trial that read across to gross negligence ... then we would certainly take that to appeal," he said on a conference call with analysts.

Still unresolved is potential liability faced by Swiss-based Transocean Ltd (RIG.N), owner of the Deepwater Horizon vessel, and Halliburton Co (HAL.N), which provided cementing work on the well that U.S. investigators say was flawed.

Halliburton said it "remains confident that all the work it performed with respect to the Macondo well was completed in accordance with BP's specifications for its well construction plan and instructions. Halliburton has cooperated with the DOJ's investigation." Transocean was not available for comment.

According to the Justice Department, errors made by BP and Transocean in deciphering a pressure test of the Macondo well are a clear indication of gross negligence.

Transocean disclosed in September that it is in discussions with the Justice Department to pay $1.5 billion to resolve civil and criminal claims.

BP has already announced an uncapped class-action settlement with private plaintiffs that the company estimates will cost $7.8 billion to resolve litigation brought by over 100,000 individuals and businesses claiming economic and medical damages from the spill.

(Additional reporting by Chris Baltimore and Anna Driver in Houston, Braden Reddall in San Francisco, Roberta Rampton in Washington, Verna Gates in Birmingham, Ala. and Andrew Callus in London; writing by Ben Berkowitz; editing by Edward Tobin, David Gregorio, Richard Chang, Tim Dobbyn and Philippa Fletcher)

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OILympics: Golden Moments in O&G Development

As the 2012 Olympic Games wind down this weekend in London, Rigzone looks back at the 'golden moments' in technological development in the oil and gas industry that has allowed the industry to break new boundaries in exploration and production.

The race to find and produce additional oil and gas resources has become more technologically challenging in recent years, as the world's remaining oil and gas reserves have either been in remote areas or not accessible with exploration and production technology available at the time.

As a result, the industry is pushing the frontiers of exploration and production in challenging downhole and surface environments, deepwater, high pressure and temperatures, and drilling in environments such as the Arctic.

In the spirit of Olympic achievement, Rigzone celebrates five golden moments in the oil and gas industry:

George Mitchell and the Shale Boom

The U.S. shale boom is a tale not only of technology, but the perseverance of George Mitchell, founder of Mitchell Energy. Mitchell was the first to figure out the right combination of technology to successfully exploit the shale natural gas resources of the Barnett shale.

While Mitchell Energy had been drilling for natural gas in the Barnett field in North Texas, Mitchell became concerned in the late 1970s about future gas production. Mitchell then decided to try fracturing the Barnett formation. It took experimentation with mixes of fracking fluids.

Mitchell's ultimate success resulted in the U.S. shale gas boom, turning the nation from a destination for liquefied natural gas (LNG) imports to an LNG exporter. The ample supply of shale gas now available has spurred a renaissance in the nation's petrochemical chemistry and offers an alternative fuel solution. The U.S. shale boom has also resulted in shale gas exploration efforts worldwide.

Floating LNG Technology

Shell's plan to develop the Prelude and Concerto natural gas fields offshore the northwest coast of Western Australia involves building and mooring offshore what will likely be the world's first floating LNG (FLNG) facility.

The Prelude LNG facility will provide market access to Australia's estimated 140 trillion cubic feet of 'stranded' natural gas assets. These resources would be considered uneconomic for development via an onshore plant because they are too small or remote.

The Prelude FLNG facility – which will be 1,601 feet long and 242 feet wide and weigh around 600,000 tonnes, about six times as much as the world's largest aircraft carrier – will be moored in 820 feet of water for 25 years. Shell anticipates the facility will produce at least 3.6 million tones of LNG per year as well as liquid petroleum gas and condensate for export.

Lula and Brazil's Pre-Salt Reserves

The discovery of Brazil's Tupi field in the Santos Basin – later renamed Lula after popular president Luiz Inacio Lula da Silva, is not only one of oil's most "golden" moments, but also a "passport to the future" for Brazil, as current President Dilma Rousseff said.

"As Brazil's first major pre-salt discovery and the largest oil discovery in the Western Hemisphere in three decades, the lessons learned here will help the country to develop a huge network of pre-salt fields clustered between the Campos and Santos Basins, which are estimated to hold between 50 billion and 100 billion barrels of oil," said Peter Silva, global media analyst at BrightWire.

Pilot production activity began at the Lula and Guara fields in 2010 and 2011, according to a February 2012 report by the U.S. Energy Information Administration. While the potential impact of the discoveries is vast, industry faces challenges in accessing reserves and in the scale of the proposed expansion production. Successfully meeting these challenges would definitely be considered a golden moment for the oil and gas industry.

Independence Hub

The $2 billion Independence Hub project, which began production in 2007, pushed the boundaries in technological and operational achievement when it was developed to produce natural gas from the ultra-deepwater eastern Gulf. The facility can process up to 1 billion cubic feet of natural gas production from 10 anchor fields, with excess payload capacity to tie back up to nine additional subsea flowlines.

The oil and gas industry's successful development of deepwater Gulf of Mexico fields in recent years as a whole can be classified as a golden moment for oil and gas as advances in deepwater production infrastructure allow access to the deepwater Gulf's oil and gas reserves.

The roster of deepwater Gulf fields under development in recent years includes Atlantis, Na Kika, Perdido, Jack/St. Malo. These fields are examples of advanced field development technology, including moored semisubmersible platforms and production spars, which have allowed the industry to set records. Shell set a record for the world's deepest subsea well in November 2011 when it began producing oil from the Perdido development.

The oil and gas industry continues to add new production from the deepwater Gulf. In June, BP reported it had commenced production from the Isabela, Santiago and Santa Cruz fields – part of the Galapagos deepwater Gulf development. The fields will be connected to the Na Kika host platform.

IT Software

The oil and gas industry in a relatively short time has seen incredible milestones thanks to advances in IT – particularly software – and the ability to access and analyze data in new ways, from new sources, said Gene Minnich, vice president of Landmark Software and Services.

"Before Landmark launched the first interactive workstation for seismic interpretation in 1984, we were a pencil and paper industry reliant on flat visual interpretation," Minnich commented. "With this breakthrough, engineers got their first taste of 3D data analysis and visualization through machines."

This would spur a chain of milestones, including development of the first commercial rig site morning reporting system in 1986 by Munro Engineering, which was acquired by Landmark in 1994.

"While the ability transmit data from rig to office seems like an 'of-course' for today, using VHF "push-to-talk" radios was revolutionary at the time," Minnich said. "What's more exciting is that I think we've barely tapped the surface of the types of data we can explore, the places we can reach into, and the methods through which we can access it."

"With tablets, mobile phones and cloud technology still maturing in O&G – I think there are several golden moments in store in the next five years," Minnich added.

Technology Torchbearers

The oil and gas industry has been thinking outside the box in recent years, seeking to apply technologies used in other industries to enhance production and reduce cost.

Nanotechnology, the study of manipulating matter on an atomic or molecular scale and developing materials, devices or structures possessing nanomaterials, has been used in the medical, aerospace and textile industries, is now being applied to the oil and gas industry.

While efforts are underway to access new oil and gas resources have been underway for some time, the oil and gas industry also has been seeking ways to enhance oil recovery. One recent example of technological innovation to enhance oil recovery is a new process that uses antenna heat to enhance oil sands recovery.

Oil and gas operators worldwide are increasingly turning to technology to better monitor and enhance hydrocarbons recovery, including swellable packers with elastomers.

The use of radio-frequency identification (RFID) technology, in which radio waves are used to transfer data from an electronic tag, attached to an object through a reader to identify and track an object – also is beginning to grow. While it has been primarily used to track inventory,RFID also is being deployed in drilling.

As we look back and celebrate the athletic achievements of participants in the 2012 Summer Games, we can also take stock of the achievements made by the oil and gas industry. And we can guarantee that the industry will continue to surpass new frontiers in exploration and production as the race to find new oil and gas resources continues.

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approved BSEE gives OK to Shell’s oil spill response contingency plan for Beaufort Sea

In another step toward opening the gate to Shell’s long planned Alaska Arctic drilling program, the U.S. Department of the Interior’s Bureau of Safety and Environmental Enforcement, or BSEE, has approved Shell’s oil spill response plan for the company’s planned exploratory drilling in the Beaufort Sea.

“We have conducted an exhaustive review of Shell’s response plan for the Beaufort Sea,” said BSEE Director James Watson on March 28 when announcing the response plan approval. “Our focus moving forward will be to hold Shell accountable and to follow-up with exercises, reviews and inspections to ensure that all personnel and equipment are positioned and ready.”

In February the agency approved a similar spill response plan for Shell’s planned exploration drilling in the Chukchi Sea. The company wants to drill up to two wells in the Beaufort Sea and up to three wells in the Chukchi Sea during this year’s summer and fall Arctic open water season.

Shell is assembling a large spill response fleet, to support its drilling operations, including on-site oil spill response vessels and a new well capping and containment system for emergency use.

Plan upgrades

BSEE says that Shell’s latest Beaufort Sea response plan includes major upgrades to previous plans, including a three-fold increase in the size of the worst case spill scenario that the plan must accommodate; the extension over a longer timeframe of the oil trajectory mapping of a worst case scenario; the identification of equipment for dispersant application and in-situ burning; and a more detailed logistical plan for obtaining out-of-region spill response equipment.

“Approval of Shell’s Beaufort Sea Oil Spill Response Plan (OSRP), on the heels of the recent approval of our Chukchi Sea oil spill response plan, is another major milestone achieved,” Shell spokesman Curtis Smith told Petroleum News in a March 28 email. “It further reinforces that Shell’s approach to Arctic exploration is aligned with the high standards the Department of Interior expects from an offshore leader and adds to our confidence that drilling will finally commence in the shallow waters off Alaska this summer.”

Political support

Members of Alaska’s Congressional delegation expressed their support for Shell’s plans.

“Today’s approval by Interior marks one of the last major hurdles that Shell must overcome to explore for oil in Alaska’s northern waters this summer,” said Sen. Lisa Murkowski. “This is good news for Alaska and the nation, which needs the energy, jobs and economic activity, responsible exploration and, ultimately, production will bring … As the commandant of the U.S. Coast Guard has testified, the homework is done and we are ready and waiting to move forward with safe and responsible exploration of our huge energy resources.”

“As we continue to push the White House to develop Alaska’s vast energy potential, approval of this oil spill response plan affirms that we are moving in the right direction toward opening the Arctic and helping to achieve America’s national and economic security while creating thousands of much-needed jobs,” said Sen. Mark Begich.

Opposition

But the company faces vehement opposition to its drilling plans from environmental organizations and some Native groups who are concerned about the risk of marine pollution from an oil spill, and who say the too little is known about the Arctic offshore environment to risk the potential impacts of offshore drilling. Oral arguments in an appeal in the U.S. Court of Appeals for the 9th Circuit against the Bureau of Ocean Energy Management’s approval of Shell’s Beaufort Sea exploration plan are scheduled for May 15.

Those opposed to Arctic offshore drilling say that the oil industry has not demonstrated the feasibility of cleaning up an oil spill in Arctic conditions using available equipment, and that Arctic response plans have more to do with theory than with practice.

“It’s deeply disappointing that President Obama is choosing to ignore the enormous risks of opening the Arctic Ocean to oil drilling,” said Miyoko Sakashita, oceans director at the Center for Biological Diversity. “All signs point to environmental disaster if an oil spill were to occur in the harsh Arctic waters — it’s just absurd that Shell’s unproven response plan got the green light.”

“There is no viable way to clean up an oil spill in the extreme conditions of America’s Arctic Ocean, yet the Obama administration continues to give the green light to Shell Oil’s plans for drilling this summer,” said Cindy Shogan, executive director of the Alaska Wilderness League. “The Arctic Ocean is prone to hurricane-force storms, 20-foot swells, sea ice up to 25 feet thick, subzero temperatures and months-long darkness. What’s more, the Arctic has extremely limited infrastructure.”

Pre-emptive action

Shell maintains that its contingency arrangements are adequate to deal with any well control issue that might arise. And, as a pre-emptive action against possible last-minute litigation against the approval of its Chukchi Sea spill response plan, the company has asked the federal District Court in Alaska to verify that BSEE had properly approved the Chukchi Sea plan.

“We maintain that the unprecedented amount of time, technology and resources we have dedicated to preparing for an extremely unlikely worst-case scenario makes Shell’s oil spill response plan second to none in the world,” Smith said in his March 28 email. “That plan includes the assembly of a 24/7 on-site, near shore and onshore Arctic-class oil spill response fleet, collaboration with the U.S. Coast Guard and a newly engineered Arctic capping system.”

Shell is waiting on the outcome of an appeal in the Environmental Appeals Board against the Environmental Protection Agency air quality permit for the Kulluk, the floating drilling platform that the company plans to use in the Beaufort Sea. And before it can commence drilling the company still needs to obtain well-specific drilling permits from BSEE and approvals from the appropriate government agencies for the unintended disturbance of marine mammals.

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