Houston-based international drilling contractor GlobalSantaFe reports that declines in the Gulf of Mexico’s Summary of Current Offshore Rig Economics, or SCORE, “have slowed considerably,” with the international SCORE near its highest level since early 1999. Overall, the SCORE for February 2002 was down from January by 1.1%. “The improving U.S. economy, which has strengthened U.S. natural gas prices, bodes well for the outlook in the Gulf of Mexico jackup market — the source of significant weakness over the last six to eight months,” said Sted Garber, GlobalSantaFe CEO. According to the latest data, the Gulf of Mexico SCORE for February was 29.7, down from 29.9 the month earlier. For the year, the SCORE is off 41.2%, and is down 45.5% over the past five years. Worldwide, the February SCORE was 44.7, down from 45.2 in January and 0.9% off from a year earlier. SCORE compares the profitability of current mobile offshore drilling rig dayrates to the profitability of dayrates in the 1980-81 peak of the offshore drilling cycle. In the 1980-81 period, when SCORE averaged 100%, new contract dayrates equaled the sum of daily cash operating costs plus approximately $700/day/million dollars invested. SCORE calculates the jackup and semisubmersible rig rates in the Gulf, the North Sea, West Africa and Southeast Asia.

Mexico’s state-owned oil company expects its natural gas production to rise slightly this year, about 0.3% over 2001, to average 4.526 Bcf/d — a small but hopeful sign for a country expecting to see its gas use grow 20% this year. Despite the small gains, Petroleos Mexicanos, also known as Pemex, said U.S. gas imports for 2002 will more than double to 673,000 Mcf/d, up from 292,200 Mcf/d a year earlier. In its annual report recently released, Pemex said it also expects to reduce the amount of gas its industrial facilities use this year, thus sending another 207 MMcf/d to processing plants. Pemex drilled 60% more oil and gas wells last year than a year earlier and almost as many wells as all those drilled between 1996-1998, according to the annual report. Pemex also reported that it drilled a record 53 exploratory wells last year, with 24 successful natural gas wells and four crude oil successes. Development wells also were on the rise, with Pemex completing 406 development wells, more than double from the year before. Of those, 330 produced natural gas and 34 produced oil for a 91% success rate.

Dallas-based Halliburton Co., the number two energy services company, said Tuesday it will become two independent subsidiaries by midyear. CEO David Lesar told employees in an e-mail Monday that the changes will make it easier for investors to understand Halliburton’s business, and should end the slide in the company’s stock because of asbestos liability issues. The changes are expected to include layoffs. In the e-mail message, Lesar said Halliburton would separate Energy Services Group from Kellogg Brown & Root, its engineering and construction unit. Each would become a wholly-owned subsidiary of Halliburton. A company team, said Lesar, spent several months looking at several “structural alternatives for Halliburton,” including how it could simplify the company’s business, reduce costs, and handle the asbestos problem. He said the company’s separation would be difficult, but expects the business operations impact to be minimal. As part of the plan, Halliburton will eliminate an administrative level that served both energy and construction. Halliburton has taken hits to its stock price in recent months because of asbestos-related claims worth more than $150 million. Earlier this month, the company said it expected to write off $80 million in the first quarter after losing an appeal of a Delaware state court asbestos ruling. Lesar is expected to remain chairman, president and CEO of both units. CFO Doug Foshee and general counsel Les Coleman would also serve both units. Edgar Ortiz will become CEO of the energy group and Randy Harl will become CEO of the construction group.

Canada’s National Energy Board (NEB) said it would hold a public hearing June 5 in Chetwynd, BC on an application by Westcoast Energy Inc. to extend its Grizzly Raw Gas Transmission System and to construct the Weejay Lateral in British Columbia and Alberta. The Grizzly extension would include 67 miles of 16-inch diameter pipeline extending from a point in northeast British Columbia about 19 miles southeast of Tumbler Ridge to a proposed receipt point in Alberta 68 miles southwest of Grande Prairie. Westcoast also proposes to construct four miles of 10-inch diameter pipeline from a well site in British Columbia to a tie-in point on the proposed Grizzly Extension Pipeline. The proposed facilities will permit Westcoast to connect additional gas reserves in the Ojay/Weejay area of British Columbia and the Narraway area of Alberta. The estimated cost of the proposed facilities is C$64.5 million. The public hearing will be held June 25 at the Chetwynd and District Recreation Complex, 4552 North Access in Chetwynd. Written interventions must be filed with the board by April 8. The hearing order, GH-2-2002, is available on the board’s web site at https://www.neb-one.gc.ca.

The NEB is seeking public input on new approaches to dispute resolution. The objective is to develop effective options for preventing and managing conflict as an addition to NEB’s current regulatory approach. “We believe individuals, groups and companies who have had experience with the NEB’s decision-making process can provide us with valuable input in designing new approaches to preventing or dealing with disputes among parties,” said Chairman Ken Vollman. Last year, the board consulted the public on the development of a mediation process for resolving disputes among landowners and companies during detailed route hearings for oil and natural gas pipelines. The result was a Mediation Practice Direction that was adopted and is now available upon request. This year, the board successfully used a multi-party conference to resolve complex issues related to deactivation of pipeline facilities. The NEB will have initial discussions with various parties and will use the input received to develop new options for dealing with disputes. Anyone else interested in participating can contact the NEB at (800) 899-1265.

The National Energy Board released a memorandum of guidance detailing variations to its rules on electronic filings. On Feb. 18, the board launched the electronic filing system that enables parties to file and retrieve documents electronically. Electronic filing reduces the number of paper copies required to be filed, provides quicker access to documents and provides users with increased search and retrieval capabilities. A guide to electronic filing is located on the board’s web site: www.neb-one.gc.ca. Final amendments to rules on electronic filing are expected to be finalized and issued shortly.

Progress Ventures Inc., a subsidiary of Progress Energy, closed on a $440 million generation project portfolio financing that will supported 2,500 MW of natural gas-fired generation in Georgia, Florida and the Carolinas. “This was an outstanding accomplishment in a very tentative market,” said Tom Kilgore, president of Progress Ventures. “Our ability to raise capital is indicative of the confidence the market has in our growth plans for Progress Ventures.” J.P. Morgan Chase was the lead institution in the financing, which consisted of eleven other lenders.

Murphy Oil Corp.‘s E&P subsidiary has awarded a contract to J. Ray McDermott Inc. to construct a Floating Production System for the Front Runner Project, designed to handle 60,000 bbl/d and 110 MMcf/d from the Gulf of Mexico. Murphy operates the project and owns 37.5% with partners Dominion Exploration & Production Inc., (37.5%), and Spinnaker Exploration Co., (25%). The Front Runner partners have approved a plan for the development of the area utilizing a Truss Spar type Floating Production System. They continue to evaluate export pipeline options. Targeted first production for the project is the first half of 2004. SparTEC Inc., a wholly owned subsidiary of McDermott, will be the general contractor responsible for the engineering, procurement, construction and installation of the Spar. The Front Runner Project is located in 3,500 feet of water on Green Canyon Blocks 338 and 339 in the Central Gulf, approximately 135 miles south-southeast of Houma, LA. The initial discovery well reached a total depth of 22,925 feet in March 2001.

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