The Pyrenees Floating Production, Storage and Offloading facility, Western Australia, image courtesy BHP Billiton

SYDNEY (Dow Jones)–Australia’s government on Sunday said it has awarded 12 new petroleum exploration permits for off the coast of Western Australia and Victoria state. Among the eight companies to win the permits–the tender process received 46 bids–are BHP Billiton (BHP, BHP.AU), Bass Strait Oil Company, WHL Energy and Woodside Petroleum (WOPEY, WPL.AU).

“Liquefied natural gas exports are forecast to significantly expand in Australia over the next two decades,” said Martin Ferguson, resources minister in a release.

“With these new permits, we hope to see discovery of new oil and gas reserves, which could translate into more jobs and growth for our economy.”

The new permits are expected to spark some A$303 million in investment over the next three years, according to the government.

-By Enda Curran, Dow Jones Newswires

Sea Lion, as the field has been named, was first discovered in 2010 at a location just north of the Falklands, is expected to have a service life of over 20 years and an estimated reserve of eight billion barrels.

When oil starts flowing, and in whatever quantity, the Falkland Islands (which Argentina refers to as Las Malvinas) will contribute to the cost of its defense, which is currently paid for entirely by Britain, local assembly member Gavin Short said Thursday in a telephone interview.

“We have always said once we have found out what we have got and it started flowing, then it would be our intention to make contributions [to Britain],” Mr. Short, local assembly member Gavin Short said Thursday in a telephone interview with Reuters.

Under licences signed by the oil companies, all proceeds from the oil will flow to the Falkland Islands Government, Mr. Short and Britain’s Foreign Office both said.

Britain has since refused to start talks over sovereignty until the islanders, the majority of which are pro-British in sentiment and even sent a warship to the area to send a signal about it’s intentions.

But Argentina has pushed back.

President Cristina Fernández de Kirchner said earlier this month that Argentina would formally complain to the United Nations Security Council about Britain’s militarization of the South Atlantic and she accused British Prime Minister David Cameron of militarizing the area surrounding the South Atlantic archipelago, which Argentines claim the British stole from them nearly 180 years ago.

But the British contend that the extra revenue, counted in the billions of dollars, would serve the lives of the 3,000 people, mostly fishermen, currently living on the islands.  In 1994, the Falklands wrote to Britain offering to pay a proportion of any potential oil revenues toward the cost of defence, known as the “Battle Day Letter.” That intention has been reiterated by the Falkland Islands assembly members since, a spokesman for Britain’s Foreign Office said.

LONDON (Dow Jones)–The U.K. has awarded 46 new licenses to explore for oil and gas in the North Sea, the Department of Energy and Climate Change announced on its website Friday.

The awards, part of the country’s 26th offshore oil and gas licensing round, came as the U.K. handed out 144 licenses in total. Companies to snap up the new exploration blocks include Royal Dutch Shell PLC (RDSA.LN), Germany’s Wintershall AG and France’s GDF Suez SA (GSZ.FR).

“These further licenses have been subject to rigorous examination, and we are now satisfied that initial exploration can go ahead,” said Energy Minister Charles Hendry.

“These continued high levels of interest, and the award today of these licenses, gives me yet more reason to be optimistic for a prosperous 2012 for the U.K. oil and gas sector,” Hendry added.

-By Alexis Flynn, Dow Jones Newswires

The number of rigs aiming for oil in the U.S. is the highest since at least 1987, according to Baker Hughes. The 818 rigs tallied by the oilfield-service company last week are nearly double last year’s count and about 10 times the number in the late 1990s.

While the drilling surge is unlikely to yield enough crude to alter the global oil-supply picture, analysts predicted that the new activity, centered on so-called unconventional reservoirs, could greatly boost domestic oil production and help offset declining output in Alaska and the Gulf of Mexico.

These reservoirs, trapped in tight shale-rock formations, were deemed too hard to crack a decade ago. But in the past two years, breakthroughs in drilling technology, combined with high oil prices, have led companies like Chesapeake and Petrohawk to switch rigs formerly devoted to drilling for natural gas to emerging oilfields like the Eagle Ford shale formation, which stretches from the outskirts of Houston and San Antonio, Texas, south into Mexico.

In this sun-scorched cattle country, prolonged drought and financial strain gave way to prosperity when the oil-patch leasing agents began pouring into town three years ago. For struggling ranchers the proceeds from the subsequent land deals and royalties from the intense oil drilling that is now under way are “pennies from heaven,” says real-estate broker and oil-and-gas producer David Phillip. “All these newtrucks you see ranchers driving,” he says, “it wasn’t from cattle.”

The Eagle Ford experienced a more-than-tenfold increase in the number of wells drilled last year over the 94 completed in 2009 and is slated for even more development this year. And the trend is playing out nationally, in formations such as the Bakken Shale in North Dakota and the Monterey Shale in California.

Oil production from these sources is expected to reach 1.5 million barrels a day by 2015 from fewer than 500,000 barrels a day now, according to energy consultancy Wood Mackenzie. That is similar to the amount of crude produced in the offshore Gulf of Mexico, and the equivalent of nearly 30% of current U.S. production. That extra million barrels per day could help replace some expensive oil imports as conventional oilfields in the rest of the country decline.

To extract the rock-bound crude, explorers and producers will boost spending this year by an estimated 8.1% to $93.6 billion, according to a Barclays Capital survey of 210 companies.

CUERO (Dow Jones Newswires), Feb. 10, 2011

“Having completed a number of major investment projects over the last few years, Marathon’s 2011 budget has shifted toward an emphasis on more scalable and lower-risk activities, largely aimed at liquids rich opportunities such as the Bakken, Anadarko Woodford, Eagle Ford and Niobrara resource plays in the U.S.,” said Clarence P. Cazalot, Jr., Marathon president and CEO. “Oil projects make up more than 80 percent of our Upstream budget; and importantly, we continue to grow the percentage of Marathon-operated projects within our portfolio with roughly two-thirds of our 2011 spending being directed toward Company-operated activity, affording us greater control of outcomes and flexibility in changing conditions.

“Our total planned capital spending in the Upstream segments is approximately $3.7 billion or 71 percent of total spending for 2011. This Upstream program includes spending of $1.3 billion on base assets ($1 billion on E&P base and $300 million on Oil Sands Mining and Integrated Gas), $1.9 billion on growth assets such as liquids resource plays in the U.S., and $465 million specifically for impact exploration,” he said. “Our base and growth assets provide a solid platform for profitable returns, and our impact exploration prospects in the Gulf of Mexico, Indonesia, the Iraqi Kurdistan Region and Poland provide further upside potential.

“We estimate Downstream capital spending will be $1.2 billion in 2011, with the major component being the Detroit Heavy Oil Upgrading Project which is expected to progress significantly during the year,” Cazalot said.

Exploration and Production
Marathon’s 2011 worldwide Exploration and Production (E&P) budget of approximately $3.4 billion reflects an increase of 29 percent over 2010 capital spending. Marathon’s E&P strategy is based on three key elements: a solid portfolio of base assets, growth assets and impact exploration.

Base Assets: The Company plans to spend approximately $1 billion on its base E&P assets to provide stable production, income and free cash flow. These assets include production operations in the Gulf of Mexico, Norway, U.S. conventional oil plays, Equatorial Guinea and elsewhere. With a continued emphasis on high operational reliability, Marathon will implement a disciplined investment plan and competitive cost structure for its base assets. The increase in spending for base E&P assets, compared to 2010, is primarily due to additional activity on conventional oil assets in Norway and the U.S.

Growth Assets: Approximately $1.9 billion of the capital spending budget is allocated to E&P growth projects. Of that, nearly $1 billion is concentrated on three key North America liquids-rich resource plays: North Dakota’s Bakken play, the Eagle Ford Shale play in Texas, and the Anadarko Woodford Shale play in Oklahoma. In the Bakken Marathon plans to drill 70 – 75 operated wells and 50 – 70 outside operated wells. In the Anadarko Woodford, 20 – 25 operated wells and 25 – 50 outside-operated wells are planned. Other growth assets are offshore Angola, where advancement of the deepwater PSVM development for Block 31 is under way, and Alberta, Canada, where the Company is progressing in situ activity.

Impact Exploration: Marathon plans to spend $465 million selectively investing in a controlled high-impact exploration program. Activity will include conducting seismic surveys and drilling 10 – 15 high-potential prospects this year across the deepwater Gulf of Mexico, Indonesia, the Iraqi Kurdistan Region and Poland.

Marathon estimates 2011 production available for sale will be between 380,000 and 400,000 barrels of oil equivalent per day, excluding the effect of any future acquisitions, dispositions or exploration success, essentially flat with 2010 volumes. Increases in the Company’s U.S. unconventional production is expected to largely offset natural declines elsewhere, largely in North Sea assets.

Oil Sands Mining
Marathon has budgeted approximately $300 million for its Oil Sands Mining (OSM) segment – less than half of 2010 OSM spending. The decrease is due primarily to the completion of the construction of the Athabasca Oil Sands Project (AOSP) Expansion 1, while the ramp up to full capacity is ongoing in the first quarter of 2011. Marathon holds a 20 percent interest in the AOSP, a long-life project with a stable production profile and substantial production capacity upside through both debottlenecking activities and longer term future expansions.

Net synthetic crude production for 2011 is expected to be between 36,000 and 45,000 barrels per day.

Oilmen are optimists, by creed if not always by nature, and early last spring things looked, as those in the industry like to say, prospective. The deepwater rigs in the Gulf of Mexico were steadily drilling, with no suggestion of any impending calamity, and oil was flowing from the vast finds in offshore Brazil. Circumstances looked particularly prospective to a geophysicist named Jim Farnsworth, who works for Cobalt International Energy, a company that held a group of leases 50 miles from the mouth of Angola’s Cuanza River basin. It was at that site, he had come to believe, that an enormous basin of oil lay, beneath an obscuring layer of salt, in rocks deep below the bottom of the sea. The industry had been over this territory a decade earlier; a few scattered wells were drilled into the Cuanza basin, and then, having found little oil, the companies plugged them. In seismic images, you could still see the pipes, running through the sediment of the ocean floor.

What concerned Cobalt executives about Gold Dust was that the rock at these depths might have been too compressed — by the pressure of the overlying sediment — to make it a good reservoir for oil. Oil needs to find light, porous reservoir rock so that it has a place to collect. Currently, there is no way to examine the deep Angolan geology directly, but a former Cobalt geologist named Mike Lentini believed he had found a convincing analogy. Geologists know that the rocks on the Brazilian coast are close relatives to the deep Angolan rocks — these rocks were formed eons ago at the same time and in the same place. In 2002, Lentini was on the Brazilian coast, and he saw rock that was strikingly light and porous — the perfect reservoir for oil. If the relationship between the geologic history of Brazil and Angola was as precise as Lentini thought it was, then the Angolan rock that Cobalt hoped to drill into might still hold oil. It was a conditional, hopeful insight. But it was enough to get Cobalt into this region of Angola a little bit early and win the pick of prospects. Knowing the details of Brazil’s geology, Lentini told me, “was like having the Rosetta Stone.” It gave the industry license to dream; analysts soon speculated that the finds off Angola might compare with the giant ones off Brazil.

The possibility of a boom commands particular attention now, because the industry’s faith in a limitless future has begun to diminish. The International Energy Agency — which had until recently been optimistic about oil — concluded last fall that the world has very likely already passed its peak oil production.

“The deepwater was one of the last big exploration plays on the planet,” says Gerald Kepes, a partner and head of upstream and gas at PFC Energy, a consulting firm. “We’re now looking at the second half of the global deepwater play. You can see the end of it, maybe 25 years from now.”

Continue Reading…

Discoverer Americas – a 6th Generation Drillship

For Statoil and Transocean’s crew assigned to the Discoverer Americas, heading to Egypt had always been part of the long term plan, however in this case, the schedule got moved to the right by at least a year following the Deepwater Horizion disaster.

The Discoverer Americas left last night on a 30-day voyage to the waters north of the Nile River delta off Egypt.  For the next 3 to 6 months, they will be conducting ultra-deep exploratory drilling operations for Statoil, a highly experienced Norwegian energy company that for 35 years, has proven itself as a leader in harsh environment E&P operations.

One of Transocean’s newest 6th Generation Drillships, the Discoverer Americas is a technological marvel.  Designed to drill in water up to 12,000 feet to a measured depth of 40,000 feet, everything on her is built like a brick you-know-what.  At full load, her displacement of 101,ooo metric tons equals that of a Nimitz-class aircraft carrier, and she is 835 feet from bow to stern.  The dual-activity derrick rises 294 feet above the main deck at centerline while suspending (2) 240,000 pound modular derrick drilling machines over the rig floor.  Each of these capable of inflicting 150,000 foot-pounds of torque to any steel pipe lucky enough to be attached to it.

Six Rolls-Royce diesel-electric 7,000 HP azipod thrusters are precisely controlled by a state-of-the-art Kongsberg dynamic positioning system keeping her within a foot or two of location in most conditions.  Six MAN B&W 14V engines provide up to 40,000 kW of electrical power to the thrusters, drilling package, and all auxiliary systems.

Without a doubt however, the most impressive aspect of the Americas is her crew.  While working on board for the past year I got to know many of them and I was impressed on a daily basis by their technical ability, initiative, and their personal efforts to promote a safety culture on board.

Have a safe passage and come back soon fellas.

The award was presented today to Stig Antonsen, VP Marine in Aker Solutions, by Rikke Lind, state secretary of the Norwegian Ministry for Trade and Industry, at the SMM 2010 trade show in Hamburg, Germany.

Skandi Aker is the most advanced vessel of its kind. It is a multi-purpose vessel designed to perform riser-based well intervention services – along with subsea construction and installation activities – at water depths up to 3000 metres. Other existing well intervention vessels are limited to operations at approximately 800 metres water depth.

“Essentially, Skandi Aker is able to perform deepwater well intervention services that oil companies previously needed drilling rigs to conduct. More importantly we do it quicker and at a fraction of the cost. This, in turn, enables us to free up scarce and expensive rig time, which allows the rigs to perform more drilling operations while we carry out the intervention work,” says Karl Erik Kjelstad, EVP Oilfield Services & Marine, Aker Solutions.

“We are proud to receive the Ship of the Year-award. It is a prestigious award which is an excellent recognition of Skandi Aker’s unique deepwater well intervention system and capabilities as well as the ship itself.”

Skandi Aker is the first intervention vessels to classified according to DNV.s WELL-Notation, meaning the vessel is able to take oil on board. As a result, the vessel can perform well-testing and clean-up, flaring off hydrocarbons through a flare at the stern. The vessel can also perform through-tube rotary drilling with coil and downhole motor, and managed-pressure drilling.

The 157 metre long ship is the largest monohull subsea well intervention vessel built, boasting a large deck space, heavy capacity subsea cranes, excellent sea-keeping performance, all interventions using dynamic positioning system, and 18 knots transit speed. She is equipped with a module handling system and a 400-ton AHC crane.

“A unique feature about Skandi Aker is her multi-functionality. When she is not performing well intervention work she can perform subsea installation and construction work, handling 225-ton structures down to 3000 metres water depth,” adds Kjelstad. Skandi Aker is currently performing subsea construction and installation work offshore West Africa.

Skandi Aker has been built at STX Norway Offshore’s yard in Søviknes, Norway. The vessel is owned by Norwegian company DOFCON ASA.

The prestigeous Ship of the Year-award is instituted by the major Nordic shipping magazine Skipsrevyen. Prize candidates are nominated by the readers of the magazine, but the final election is the responsibility of a jury consisting of the former managing director of the Norwegian Shipowners’ Association, Mr. Rolf Sæther, the managing director of the sales and marketing organisation Norwegian Shipyards, Mr. Birger Skår, and publisher of Skipsrevyen, Mr. Asle B. Strønen.

[Source: Aker Solutions, Image Source: offshore-mag.com]

This weeks interesting ships are none other than the Blue Dolphin and HOS Centerline, the two vessels used to supply drilling mud to the Q4000 as part of the Static Kill procedure to secure the blown out Macondo well.  The two vessels and their crew were challenged with an extraordinary task but performed just as they were built and trained to do.  We would like to extend our thanks and gratitude to them and all the mariners working around the clock to put an end to (and cleanup) this catastrophe.

Keep reading after the jump for some details on these two exceptional vessels.

HOS Centerline:

Hornbeck Offshore Services HOS Centerline is the world’s largest and most capable supply vessel.  The Jones Act qualified 370′ multi-purpose support vessel (MPSV), designed with an 8,000+ deadweight-ton capacit,y represents the largest and most diverse DP-2 classed offshore supply vessel available today. The HOS Centerline is the only vessel in the world to have received certifications by the United States Coast Guard allowing operations as a supply vessel, industrial/construction vessel and as a petroleum and chemical tanker.

Added to Hornbeck’s fleet in February 2009, the HOS Centerline has the capacity to transport more than 30,000 barrels of liquid drilling mud and fuel to and from exploration, development and production projects. Positive displacement pumping systems allow the vessels to provide a consistent transfer of product even at installations with large air gaps. The HOS Centerline boasts a self-contained mixing and cleaning system that significantly reduces the risk of drilling fluid collapse as well as reduces the time necessary to clean storage tanks, which is a cost normally borne by its customers. Mud mixers utilize low inertia paddles to reduce the fall-out of the mud and provide for a consistent mix. The vessel’s significant size, 8,400 kw of available propulsion, power and DP-2 capability allows it to continue cargo transfer operations during sea and weather conditions that prevent smaller vessels from working.

• Keep Reading about HOS Centerline
• Vessel Specifications (PDF)
  

Blue Dolphin

BJ Services Company’s Blue Dolphin is an ABS® class-certified, dynamically positioned (DP-2) well stimulation vessel capable of servicing a variety of deepwater and ultra-deepwater operations throughout the Gulf of Mexico, including multizone single-trip fracturing, acidizing and sand control projects.

The vessel is equipped with eight state-of-the-art Gorilla™ pumping units that provide 23,000 hydraulic horsepower; 20,000-psi pumps and service iron; and three Coflexip* treating lines that allow up to 80 bbl/min pumping rates. Advanced instrumentation and control systems with broadband satellite communications are also available to allow real-time, remote data transmission.

• Keep reading about Blue Dolphin
• Take the Blue Dolphin Virtual Tour

Life on an Oil Rig in the Gulf of Mexico
“Just Another Day at Work”

By Captain Ben Dinsmore

For the last 5 years I have served as Chief Mate (First Mate) on board an oil rig in the Gulf of Mexico. Similar to ocean going merchant ships, the rig that I work on is self propelled (meaning that it can sail under its own power from location to location without being towed) and is required to have Coast Guard licensed Merchant Mariners on board.

During my undergraduate studies at Maine Maritime Academy, I studied for a more traditional career in the marine industry as a ship’s officer on an ocean going cargo ship.

As graduation day approached, I interviewed with several such companies until a recruiter lured me into a position in the offshore oil and gas industry. 10 years later I still have no regrets.

For those of you not familiar with the management organization on a merchant vessel, the chief mate (sometimes referred to as the first mate, or “mate”) is second in command of the vessel under the captain.

The chief mate is responsible for all lifesaving equipment on board the vessel, and is the chief of both the fire and emergency teams.

The chief mate helps ensures that the rig is operated in a safe and controlled condition, and is compliant with all company and governmental rules and regulations.

In regards to the well drilling operation, the chief mate ensures the position of the rig remains precisely over the oil well that is being drilled thousands of feet below on the ocean floor.

Finally, and the responsibility that I take the most pride in, is helping to ensure that the rig’s impact on the environment is as minimal possible. The company, rig, and it’s crew all take great pride in our environmental record.

Click here to view the embedded video.

My day actually begins in the early afternoon when I wake up from my daily slumber. As I mentioned in the first post in this series, I work the night shift, 12 hours straight, from 6:00pm to 6:00am.

By 2:00pm I am usually out of bed and wandering around the accommodations looking for the freshest pot of coffee. Once I get some caffeine I begin checking my email, or catching up on the latest news headlines.

If I am in the mood, this is the time when I do most of my writing for Trees Full of Money. The few hours before work are split between any overtime opportunities, writing for my blog, the occasional trip to the gym, reading, watching TV, and eating dinner. There is only so much you can do for fun when you are isolated in the middle of the ocean!

After dinner (which is actually breakfast for me), I meet up with the captain in his office to go over the events day and plan any tasks that need to be carried out for the night.

At night the chief mate supervises the night seaman, as well as three to four operators on the vessel’s bridge who control the position of the vessel and monitor the rigs power generation and safety equipment control panels.

My first order of business is a walk around the rig to inspect different areas, double check various pieces of safety equipment, and get an overall sense of what operations are ongoing on the rig. On any given night there is a variety of operations going on including well drilling, machinery maintenance, and the constant movement of deck cranes unloading and repositioning supplies from supply boats.

Between 7:00pm and 9:00pm I either catch up on any maintenance items that may be due or work on any special projects that may have been requested by the captain. There is always work to be done, and each night brings something a little different.

I relieve the control room operators (DPO’s) on the bridge at 9:00pm so that they can get a quick bite to eat or get a fresh cup of coffee. This is the time that I usually call home (yes we have phones out here) and by 10:30 I am heading to the galley for lunch.

After dinner I begin gathering information for the marine report which is review of the day’s activities, operational events, and weather conditions that is then submitted to the corporate computer servers on land.

As part of this report I conduct a survey of all movable equipment on deck which I use to calculate the stability of the rig. If weight is not properly distributed on the rig, there is a chance that it will become unstable and risk capsizing.

Most nights I finish the marine report between 01:00am and 02:00am which allows me an hour or two to catch up on any other paperwork or outstanding projects before I relieve the operators on the bridge for the 3:00 am coffee break.

The final hour of my work day is spent wrapping up any projects or paperwork, and finishes with a morning meeting with the captain to bring him up to speed on the night’s happenings.

By 06:00 am I am ready to call it a day (or night). After a quick shower I am usually fast asleep by 06:30am, resting up for the day that lies ahead. That’s it!

After repeating this schedule 21 times I get to go back home for 21 days of vacation reversing the itinerary outlined in my first post about commuting to the rig!

I hope that you enjoyed a look into the working life of this personal finance blogger, there isn’t much money management insight here, but hopefully I’ve satisfied some of your curiosities on what my day (er..night) job is like!

__________________________

Capt. Ben Dinsmore is an Master Mariner currently sailing as chief mate on an oil exploration vessel in the Gulf of Mexico.  He is also editor of the personal finance/environmental website Trees Full Of Money.