August 22nd, 2006:

But eventually Canada’s oil seniors will be swept up by consolidation trend 

Claudia Cattaneo, Financial Post
Published: Tuesday, August 22, 2006

Big, scrappy deals in Canada’s mining sector are giving oil investors a bad case of takeover envy.

The same forces that are driving consolidation in mining — a global scarcity of commodities — exist in energy today. Yet Canada’s oil and gas industry hasn’t seen a major deal since January, 2002, when Alberta Energy Co. joined PanCanadian Energy Corp. to form EnCana Corp. read more

22 August 2006
 
WASHINGTON -(Dow Jones)- The discovery of severe corrosion in BP PLC’s (BP) Prudhoe Bay pipeline system doesn’t warrant the introduction of new U.S. regulations, Royal Dutch Shell PLC’s (RDSB.LN) top U.S. executive said Tuesday.

BP earlier this month shut off about half of crude oil production from Alaska’s Prudhoe Bay, the largest producing field in the U.S., after finding a small oil spill caused by unexpectedly worn-out pipelines.

“The regulations are appropriate,” said Shell Oil Co. President John Hofmeister while speaking at an infrastructure security conference here. “The judgment of the methodology and technology relied upon was not sufficient, but I don’t think its warrants a complete review of regulatory authority. We have a robust system.” read more

EXTRACT: The gunfight broke out when the group, having taken possession of the hostage – an employee of Royal Dutch Shell – ran into a heavily armed convoy escorting supplies to an oilfield in the Brass Creek area of Bayelsa state.

ARTICLE

Tuesday 22 August 2006, 10:00 Makka Time, 7:00 GMT   

The Movement for the Emancipation of the Niger Delta (MEND) said that 10 of its fighters were killed during a botched hostage release in Nigeria late on Sunday. 

The members of MEND – a coalition of groups that have staged a series of kidnappings and attacks on the oil industry in recent months – were involved in the release of a hostage when they claim that they came under fire from government troops. read more

By Sheila McNulty in Houston

US environmental investigators are examining allegations by employees that BP manipulated inspection data to avoid replacing pipelines at Prudhoe Bay, its 30-year-old Alaskan field, the Financial Times has learned. BP denies the allegations.

At the same time, in a separate move, Alaska’s attorney-general, David Marquez, has issued subpoenas to BP, as operator and an owner of the field, and its co-owners, “to preserve all documents that may be relevant to corrosion at Prudhoe Bay”, to conduct an investigation. read more

Associated Press

Report says EPA probing allegations by employees of energy giant

LONDON – British oil company BP on Monday denied allegations that it manipulated data from inspections of Alaska pipelines that were partially shut down earlier this month because of corrosion problems.
 
The Financial Times reported that the U.S. Environmental Protection Agency was probing allegations by BP workers that the company manipulated data to avoid replacing pipelines in the Prudhoe Bay, Alaska, oil field. read more

By Upstream staff

UK explorer JKX Oil & Gas has agreed to sell at least 8.75 billion cubic feet of gas over 12 months to a Shell unit in Ukraine.

The company said supplies would start this month following an initial delivery in August.

JKX said a statement that the gas sales pact had provisions to raise the amount of gas delivered and the time period allowed.

The agreement was made between JKX’s wholly owned Ukranian arm, Poltava Petroleum Company, and Shell Energy Ukraine, the company said. read more

By Upstream staff
Photo by AFP

Oil prices held steady at over $72 this morning after a two-day rally, as Iran vowed to press ahead with its nuclear programme, raising the prospect of sanctions.

US crude was 1 cent up at $72.46 a barrel by 0227 GMT, after surging $2.39 in the past two trading days. London Brent crude rose 10 cents to $73.48 a barrel.

Iran is due to give its reply today to a package on incentives by world powers that aims to end a nuclear standoff with the West, but Supreme Leader Ayatollah Ali Khamenei vowed yesterday that Iran would continue its path on nuclear energy. read more

EXTRACT: Shell has been having major problems with cost increases in a number of their projects around the world. For instance, in the Sakhalin LNG project earlier in the year they had to revise their costs from $10bn to $20bn.

THE TRANSCRIPT

Answers by Adrian Jackson, Energy Analyst, Investec 

Q.
Why do you think the super majors are facing some rather unfavourable news flow at the present time?

A.
The thing is now with the majors is that obviously with high oil prices it’s very much in the mind of the public. They go to the petrol pump they see very high prices. They have high energy prices, gas and electricity prices at home. So these high prices are very much in their minds and they relate that back to the majors because that’s the public face of these high energy prices. So if you look at any adverse news coming out, immediately the press and the public will look at the super majors. read more

IAIN ESAU in Stavanger

Six companies were handed frontier exploration licences in a recent round covering the Slyne, Erris and Donegal basins off western Ireland, the Irish government confirmed.

In the round, major players Statoil and Shell were awarded licences including blocks 19/9 and 19/13 as well as part of Block 19/17 close to their Corrib gasfield in Quadrant 18.

Toronto-based Serica Energy landed 100% stakes in blocks 27/4, 27/9 and part of Block 27/5 in the Slyne Basin. Serica said it would reprocess about 300 square kilometres of 3D seismic data from the properties. If it opts to proceed to the second phase of the licence, it will drill at least one exploration well, it said. read more

By Upstream staff

Western Oil Sands is reported to have added brokerage Jardine Lloyd Thompson Canada (JLT) to its lawsuit over losses incurred during construction of the Athabasca Oil Sands project.

The lawsuit also names parent company JLT Risk Solutions, a leading insurance and reinsurance broker that operates in more than 30 countries, the Canadian Press reported.

The move is part of Western’s efforts to claim insurance arising from losses during the initial construction of the Athabasca project. read more

By Upstream staff

The US Interior Department said today it had sold almost 8.6 million barrels of crude oil the government collects from energy companies as royalties for drilling in federal offshore waters.

The crude should arrive in time to boost available US heating oil supplies this winter and may also help offset some of the crude that will be lost after BP shut down part of its giant Prudhoe Bay oil field in Alaska for pipeline repairs.

The oil, which will be delivered to seven energy companies at an average rate of 47,000 barrels per day over a six-month period beginning in October, will be processed into more than 350 million gallons of gasoline, diesel fuel, heating oil, jet fuel and other petroleum products, the department said. read more

Published: Aug 22, 2006

HIGH oil and gas prices and increasing interest in deepwater exploration led to robust bidding on the latest Gulf of Mexico lease sale, writes Martyn Wingrove.

The US Minerals Management Service secured $340m in high bids from 62 companies for oil and gas leases in federal waters in the 200th sale of this kind.

The agency received 541 bids for 381 exploration tracts in the Western Gulf lease sale 200 with the total value of bids 38% higher than last year at $462.7m.

‘Sale 200 is the best western sale in terms of the number of bids in the past nine years and the best in eight years for the amount of money bid,’ said MMS’ Gulf of Mexico regional director Chris Oynes. read more

Published: Aug 22, 2006

OIL companies are gaining new exploration licences for offshore Australia after the country opened up new frontiers for hydrocarbon exploration.

Chevron and Shell have gained a large deepwater permit on the Exmouth plateau offshore Western Australia, where they secured three permits last year.

The two oil majors intend to shoot 930 miles of 2D seismic surveys over the 1,390 sq mile block over the next six years in search of large gas prospects.

The area is already home of the North West Shelf and Greater Gorgon gas complexes and lies close to the new oil fields coming on stream in the Exmouth sub-basin. read more

By: Christine Newman,
Published: Aug 22, 2006

Shell E&P Ireland has said that 5 million worth of services and work on the controversial Corrib Gas project in Co Mayo will be open to tender for local businesses.

Work has been suspended on the proposed terminal at Bellanaboy for almost a year. The company has indicated that it will begin work at the site next month despite the pledge by the Shell to Sea campaign group to continue protests which have been maintained at the site since last year.

Yesterday, Shell said it was seeking “expressions of interest” from local businesses to tender for services and work at the terminal to the value of 5 million. read more

Published: Aug 22, 2006

SHELL has started the first wells on its Pohokura project in New Zealand as it commissions the processing station and installs an offshore platform.

The Anglo-Dutch oil firm has started selling gas to local North Island markets and will begin to ship condensates to refineries soon after starting the onshore wells of New Zealand’s second largest field.

‘This is a significant step to deliver gas to meet New Zealand’s energy needs. Pohokura is one of the key projects we have coming on stream before the end of 2008,’ said Dominique Gardy, Shell’s head of exploration and production in Asia Pacific. read more

EXTRACT: Royal Dutch Shell, once regarded as a beacon of ethical solidity, fiddled its production reserve figures.

THE ARTICLE

By John Plender and Avinash Persaud
Published: August 22 2006 03:00 | Last updated: August 22 2006 03:00

The extraordinary expansion of company legislation and corporate governance codes across the world since the collapse of Enron, the energy trader, has had many unintended consequences. One of the more paradoxical is the damage that has been done to business ethics.

The attempt to legislate and regulate people into good behaviour has spawned a compliance culture rather than an ethical culture. Too many boards have outsourced the task of ethics to ethics officers, who have turned to consultants to define the company’s values. Ethics have become something that “other people” in the organisation worry about, leaving everyone else unfettered by such concerns. Does it matter? And if it does, what can be done about it? read more

By Dino Mahtani in Lagos

Published: August 22 2006 03:00 | Last updated: August 22 2006 03:00

A security crackdown in Nigeria’s oil producing delta region has heightened fears of further attacks against facilities as oil security analysts question the government’s methods.

At the weekend Nigerian security forces arrested about 100 people in operations in the country’s eastern delta oil hub of Port Harcourt. The operation, which a military spokesman said would be “the start of something bigger”, came in response to President Olusegun Obasanjo’s order to use “force for force” in response to a series of kidnappings of foreign oil workers during recent weeks. read more