Canada needs to push harder on Gateway pipeline, Alberta minister says

Canada’s federal government isn’t doing enough to build support for Enbridge Inc.’s proposed pipeline to ship crude from the oil sands to the nation’s Pacific coast, said Alberta Finance Minister Doug Horner.

“The federal government needs to step up here a little bit” to convince aboriginal groups and the general public that the Northern Gateway pipeline is in the nation’s interest, Horner said in an interview at Bloomberg headquarters in New York. “We’ve suggested to them that they may want to get involved.”

Opposition by aboriginal groups and environmentalists is clouding Canada’s plans to develop Alberta’s oil sands, home to the world’s third-largest recoverable crude reserves. Producers such as Royal Dutch Shell Plc and Total SA are counting on projects such as Northern Gateway and TransCanada Corp.’s Keystone XL to ease a transportation bottleneck that has suppressed the price of Canada’s heavy crude, costing the economy C$50 million ($46 million) a day, according to the Canadian Chamber of Commerce.

The federal government should make it clear the pipeline is of national economic importance, said Horner. “You have to remember that a lot of what we do in western Canada creates economic activity and jobs in eastern Canada,” he said.

Harper’s government must decide whether to approve Northern Gateway by June. A regulatory panel said in December the project could move ahead under certain conditions.

British Columbia, the country’s westernmost province, has said it will only back the project if it meets five conditions, including greater engagement with aboriginals and increased financial benefits for the province. Local communities say there’s too much risk and too little benefit to having an oil pipeline cross their region.

Canadian Finance Minister Joe Oliver, who was the country’s natural resources minister until last month, told reporters today the government is constrained in what it can say until the cabinet issues its decision.

Horner’s comments followed a speech by former Canadian prime minister Brian Mulroney in which he called for a “strong national commitment” to export the nation’s natural resources to markets around the world, in particular Asia.

“We cannot sit back, contemplating our collective navel and expect customers to knock on our door,” Mulroney said yesterday. “We have to demonstrate convincingly that we are capable of doing what is required to earn their confidence that we are a reliable, efficient source of supply.”

Horner said he’s “cautiously optimistic” the U.S. will approve TransCanada Corp.’s Keystone XL pipeline, which would link the oil sands to refineries along the Gulf Coast.

President Barack Obama’s administration is reviewing the route, which was first proposed in 2008.

“We are not just focused on Keystone,” Horner said. “We are looking at all three of the opportunities that are there today -- that’s east coast, west coast and to the south.”

Horner also said he is “seriously considering” running to succeed Alison Redford as leader of Alberta’s ruling Progressive Conservative Party. Redford stepped down last month amid questions about her expenses and leadership.

Horner is also speaking today to the Canadian Association of New York.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Blockline and Associate Ltd Nigeria Ltd, online.

South Sudan's Unity State oil production to restart by July

South Sudan plans to resume crude output in Unity state by July after conflict in the world’s newest nation caused the northern region to freeze production.

Oil fields in Unity will gradually raise output toward the 50,000 bpd they produced before the December shutdown, Petroleum Ministry spokesman Nicodemus Ajak Bior said in an interview in the capital, Juba. A new refinery built by Russian and South Sudanese companies near the state capital, Bentiu, will begin producing 3,000 bpd of diesel in July, he said.

“In the beginning there will be a challenge to bring back production to the pre-shutdown levels,” Bior said. “People are working day and night to see to it that production has restarted.”

South Sudan’s oil output has fallen by about a third since fighting erupted on Dec. 15 between factions loyal to President Salva Kiir and his former deputy Riek Machar. Violence has left thousands of people dead and forced more than a million to flee their homes, according to the United Nations.

The country is currently producing about 160,000 bpd from Upper Nile, the only state still pumping crude, Bior said. Machar has vowed to seize key oil installations in a bid to starve the military of revenue.

Government forces retook Bentiu from rebels on Jan. 26 and the Juba-based Sudd Petroleum Operating Co. has assessed damage to the facilities, Bior said. China National Petroleum Corp., India’s Oil & Natural Gas Corp. and Petroliam Nasional Bhd., the main producers of South Sudan’s oil, evacuated employees from the country due to the fighting.

Construction is finished on Bentiu’s refinery, a JV by Russia’s Safinat and the state-owned Nile Petroleum Corp., Bior said. A later expansion will raise output to 5,000 bpd, he said, without specifying a timescale.

“The refinery is ready, however commissioning will commence once the oil field in Unity state resumes production,” Bior said.

Construction of a 10,000 bpd refinery in Melut county, Upper Nile state, has halted due to the conflict, Bior said. Texas-based Ventech Engineers International LLC was building the facility which is set to produce diesel, kerosene and fuel oil, he said.

South Sudan, which gained independence from Sudan in July 2011, has sub-Saharan Africa’s third-biggest oil reserves, according to BP Plc data.

The country’s low-sulfur crude is prized by Japanese buyers as a cleaner-burning fuel for power generation. The country has the capacity to produce as much as 350,000 to 400,000 bpd, Foreign Minister Barnaba Marial Benjamin said on Feb. 11.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Blockline and Associate Ltd Nigeria Ltd, online.

Oil India said to study purchase of Shell's Nigerian oil blocks

Oil India Ltd. is studying an acquisition of Nigerian oil and gas assets owned by Royal Dutch Shell Plc, according to people familiar with the matter.

Oil India is weighing a bid for stakes Shell holds in some onshore blocks, valued at as much as $2 billion, the people said. It will partner with India’s Sandesara Group on the potential purchase, according to the people, who asked not to be identified as the deliberations are private.

The explorer joins Dangote Group, controlled by Africa’s richest man, and Seplat Petroleum Development Co. in seeking to acquire Nigerian assets being sold by Western rivals. Shell and Chevron Corp. are divesting fields in the country amid persistent violence and crude theft in the oil-rich Niger River delta.

India’s government-run oil companies are building on their record $5.5 billion of acquisitions last year to secure supplies for Asia’s second-biggest energy consumer. Oil India, which had 124.9 billion rupees of cash at the end of September, has purchased stakes in gas fields in Mozambique and shale assets in the U.S. over the past two years.

Oil India Chairman S.K. Srivastava and finance director Rupshikha Saikia Borah didn’t answer two calls each to their mobile phones seeking comment. Sandesara Group Chairman Nitin Sandesara didn’t immediately respond to an email and phone call to his office.

Sterling Energy & Exploration Production Ltd., a unit of Sandesara Group, has more than 250 MMbbl of certified oil reserves and 1 Tcf of natural gas reserves in the Niger Delta, according to its website. Nigeria pumped about 2.1 MMbpd last month, data compiled by Bloomberg show.

Shell said in October divestments in India have been deferred to 2014. The Anglo-Dutch company’s earnings in the country were curbed by almost $1 billion last year because of oil theft and a LNG export blockade by the government, CFO Simon Henry said March 13.

Earlier this year, Oil & Natural Gas Corp. and Oil India paid $2.5 billion for a 10% stake in a Mozambique natural gas field. Securing fuel supplies is crucial for Prime Minister Manmohan Singh as India relies on imports to meet about three-quarters of its oil requirements.

Seplat Petroleum, based in Lagos, and its partners are bidding for two Nigerian oil and gas permits Shell is selling, Chairman A.B.C. Orjiako said March 11. Dangote Group is in talks to purchase onshore oil blocks in the country as international companies sell assets, Group Executive Director said in January.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Blockline and Associate Ltd Nigeria Ltd, online.

Energen to sell gas utility to Laclede for $1.28 bn

Energen agreed to sell its Alabama natural gas utility to the Laclede Group for $1.28 bn in cash, becoming the latest energy company to shed assets to raise money for exploration and production.

The sale of Alabama Gas is valued at $1.6 bn in total, including about $320 mn of debt, according to a statement from Birmingham, Alabama-based Energen.Energen’s after-tax proceeds are estimated to be $1.1 bn after drilling costs.

Energen will use cash from the deal to reduce short-term debt, allowing it to accelerate drilling in West Texas’ Permian basin. The purchase gives St.Louis-based Laclede, a utility owner that serves 1.13 mn customers in Missouri, the largest gas distributor in Alabama.

The deal “allows Energen to clarify its corporate structure by becoming a pure exploration and production company, a trend being rewarded by the financial markets,” James McManus, Energen’s Chairman and CEO, said in the statement.

The unit, known as Alagasco, serves 422,000 homes and businesses, according to Energen’s website.

Laclede, in a separate statement, said the effective purchase price is $1.34 bn, after taking into account the present value, amounting to approximately $260 mn, of tax benefits from the transaction.

Energen fell 1.4% to $80.37 at the close in New York.Laclede dropped 2.4% to $45.11, the biggest decline since June 20.

The deal is expected to close this year.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Blockline and Associate Ltd Nigeria Ltd, online.

ROC farms in to PSC offshore Malaysia

Roc Oil Co. reported the farm in to a Production Sharing Contract (PSC), which includes three fields D35, D21 and J4, located offshore Malaysia in water depths of approximately 50 m.

The fields are currently 100% owned and operated by Petronas Carigali and ROC has farmed into a 50% participating interest. The fields are in production with a combined daily oil rate of approximately 10,000 bopd and gas sales of approximately 17 MMscfd gross working interest. ROC’s economic interest (50%) of the 2P reserves from the Fields is 8.7 MMboe.

Roc Oil Co’s CEO Alan Linn said: “The farm in is an excellent fit for our business and in line with our Asian development strategy, we expect the fields to become cornerstone development assets within our growing regional portfolio. The fields, particularly D35, contain material in place oil and gas volumes, and overall field recovery is expected to benefit significantly from the introduction of secondary and tertiary recovery technologies. The fields provide a portfolio of immediately bookable reserves plus contingent and prospective resources, which combined materially add to and extend the reserves and resources life of ROC.

"The farm in agreement includes amendments to the existing PSC, effective from January 1, 2014, until December 2034.The PSC terms are designed for field redevelopment and enhanced oil recovery (EOR) to commercially encourage progressive incremental oil development over the full life of the PSC. ROC’s experience in the redevelopment of the Zhao Dong fields, offshore Bohai Bay, China, is a good analogy for the redevelopment potential of the fields.

"Since 2006, ROC has doubled the recoverable reserves in Zhao Dong with a combination of reservoir development optimisation, facilities debottlenecking, capacity enhancement and the introduction of low cost drilling for production and injection wells designed to maximise recovery from compartmentalised reservoirs. Petronas Carigali and ROC will work together to unlock the Fields’ redevelopment potential and our track record has been key in bringing this significant redevelopment opportunity to ROC.”

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Blockline and Associate Ltd Nigeria Ltd, online.

Gazprom Neft selects contractor for Badra oil field

Gazprom Neft, operator of the Badra oilfield development project, has appointed a contractor to lay the pipeline connecting the field to the power station in Zubaidiah, Wasit Province. The tender was won by Pakistani company Techno Engineering Services (Pvt.) Ltd.

In line with the contract, Techno Engineering Services will produce the designs, supply the equipment and materials, and carry out construction of the pipeline. The pipeline - which will be nearly 100-km long and have a daily capacity of 4.4 million cubic meters (circa 1.6 Bcm per year) - is scheduled to begin operations in 2015.

Under Gazprom Neft’s contract with the Iraqi government for the development of the Badra oil field, investors are to be compensated for costs related to infrastructure construction.

Gas supply from the Badra oil field will enhance the Zubaidiah power station’s daily power output and provide a 24-hour power supply to the city of Kut, which currently has electricity supplied for only 16 hours per day. Some of the extracted gas will be used to provide electricity to the Badra oil fields themselves.

In March, Gazprom Neft completed testing on a second well at Badra. The laying and testing of the oil pipeline to the Gharraf oilfield was completed in February, connecting the section to Iraq’s main pipeline system. The construction of the first phase of a central gathering station point with a capacity of 60,000 bpd is nearing completion. Work has also started on a gas treatment plant with the capacity to process 1.5 Bcm per year.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Blockline and Associate Ltd Nigeria Ltd, online.