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Oil - July 7

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Oil rigs leaving Gulf of Mexico

CNNMoney.com
Drilling companies are sending vital shallow-water rigs abroad, driving up domestic energy prices, according to a report.
--
il rigs are leaving the Gulf of Mexico in record numbers, threatening to put upward pressure on U.S. oil and natural gas prices, according to a report published Wednesday.

Drilling companies are increasingly signing long-term deals with oil firms to send their rigs to more promising drilling regions overseas, said the Wall Street Journal...

Many of the easily reached oil reserves in the Gulf of Mexico have already been drilled, while new prospects are being discovered off Africa, the Middle East and China.

Natural gas is mostly a local market, so decreased U.S. supplies won't be easily offset by international imports, said the Journal. Oil is a global commodity, so the impact of the departing rigs on American oil prices will be less.
(X July 2006)


Oil Companies Reluctant to Invest in Iraq

Jim Krane, Associated Press via SF Chronicle
In Iraq's peaceful north, a trio of foreign oil companies have begun classic wildcat exploration, hoping a gusher of black gold will bring them untold wealth.

But the companies are little-known outside the industry — something that's unlikely to change until security improves. And the deals they have cut with the Kurdish regional administration bypassing the central government leaves them in a murky legal situation.

More than three years after the U.S.-led invasion, no big oil company has stepped forward to spend the huge sums necessary to tap Iraq's giant oil reserves and get crude flowing and revenues pouring into Iraq's government to help pay for food, jobs and even medical care.
(6 July 2006)


Fox-hailed deepwater well a modest gas find

Editors, Oil & Gas Journal
HOUSTON -- Noxal-1, a deepwater Gulf of Mexico well trumpeted in March by Mexican President Vicente Fox as being a major oil discovery, appears to be a modest gas find.

Speaking on Mar. 14 from the drilling rig in 935 m of water 63 miles off Coatzacoalcos, Fox said the then as-yet-untested well had the potential to produce 10 billion bbl of oil (OGJ, Apr. 17, 2006, p. 35).

However, after the well operated by state-owned Petroleos Mexicanos reached a total depth of 4,000 m, the fourth interval tested has flowed 9 MMcfd of gas from a reserve estimated at 245 bcf, said IHS Energy, Houston.
(5 July 2006)


Costs explode at Shell Canadian venture

Carl Mortished, UK Times
Shell is facing a cost explosion in the expansion of the Athabasca Oil Sands Project, a mining venture that extracts oil from bitumen deposits in the Canadian province of Alberta.

The first phase of expansion, intended to add 100,000 barrels daily to the current 155,000 barrel per day output was budgeted at C$7.3 billion (£3.6 billion) only a year ago. It is now expected to cost as much as C$11 billion, according to estimates published by Western Oil Sands, Shell’s partner in the project.

...Shell admitted to “significant upward pressure on capital costs” but declined to confirm its partner’s prediction of a 50 per cent increase.

The Dutch oil giant is the leading player in an overheated market where the high price of steel, cement and a chronic shortage of skilled labour is weighing on investors. The tar-soaked sands of northern Alberta, reckoned to hold reserves as large as Saudi Arabia, are the oil industry’s hottest new property but the costs of operating in the harsh and remote environment of Northern Alberta are weighing on the industry.
(7 July 2006)
Submitter WesTexas says: "This is an estimated cost of about $100,000, US, per bpd of new tar sands production."

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