A subsidiary of Royal Dutch Shell plc has signed a letter of intent (LOI) with Noble Corp. to secure a drilling rig for the Gulf of Mexico (GOM) deepwater. Under the LOI, Noble agreed to provide the Noble Jim Day, a 12,000-foot ultra-deepwater semisubmersible to operate in the GOM effective Feb. 15 through Jan. 31, 2012. The LOI rates depend on whether Shell is able to secure offshore drilling permits under the revamped requirements enacted by the Interior Department‘s Bureau of Ocean Energy Management, Regulation and Enforcement, which are being challenged in court (see NGI, Feb. 21). Beginning Aug. 1, or sooner if Shell secures the required federal drilling permit, the operating dayrate for the Noble semisubmersible would be $485,000/day. If Shell is unable to secure the required federal permit, Noble would receive a standby rate of $156,000/day from Feb. 15 through May 31; and $242,000/day from June 1 through July 31, according to the LOI.
Corridor Resources Inc. has begun the approval process to drill an exploration well on the Old Harry prospect in the Laurentian Channel, the Halifax, NS-based junior resource company said. A project description filed last week with the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) is the first step in a regulatory process that could lead to drilling of the offshore well between mid-2012 and early 2014. Quebec last year said it was working on a plan that would allow it to develop its portion of the Old Harry formation (see NGI, Nov. 1, 2010). The C-NLOPB previously approved a Corridor permit to develop 127,948 acres of Newfoundland’s portion of Old Harry with a minimum work commitment of C$1.52 million to be conducted over a five-year initial term. Old Harry, which straddles the province’s offshore border with Newfoundland, may hold 5 Tcf of gas and 2 billion bbl of oil.
Texas natural gas producers would be required to add a “tracer” liquid to help identify the fluids they use in hydraulic fracturing (fracking) operations under a bill filed in the state legislature recently. The measure (SB 772) is intended by the bill’s author, Sen Wendy Davis (D-Fort Worth), as a protection for energy companies in cases where they are accused of contaminating area water supplies with their fracking activities. The tracer would also help “answer questions for landowners about possible contamination in the same manner that DNA evidence is used in proving guilt or exonerating defendants in criminal court cases,” Davis’ office said.
Portland, OR-based NW Natural has signed a $250 million deal with a unit of Calgary-based Encana Corp. for the joint venture (JV) development of natural gas reserves in Wyoming. NW Natural has filed with the Oregon Public Utility Commission (PUC) for approval of the deal, which would affect the utility customers in that state. NW Natural agreed to pay $45-55 million annually for a five-year period, or a total of $250 million to cover expected drilling costs, in exchange for working interests in specific Encana-owned sections of Wyoming’s Jonah Field, including both future and currently producing wells. The Wyoming gas reserves should save Oregon customers more than $50 million on a net present value basis over the life of the agreement, according to NW Natural’s estimates. During the first 10 years of the JV, NW Natural said it expects the volume of gas produced to provide about 8-10% of its average annual supply requirements for its Oregon-Washington customer base. The JV is expected to be approved by the Oregon PUC effective May 1.
Plains Exploration & Production Co. (PXP) said it grew its average daily oil and gas sales volumes and proved reserves in 2010, while also posting net income of $103.3 million (73 cents/share) on revenues of $1.5 billion. The Houston-based company said average daily barrel of oil equivalent (boe) sales increased 7% year over year. Proved reserves totaled 416.1 million boe, of which 54% was oil and 46% was natural gas; 57% was developed versus 43% undeveloped. PXP added 98.5 million boe to its total proved reserves in 2010, replacing 302% of 2010 production at a cost of $17.69/boe. Finding and development costs, minus acquisition costs, totaled $11.15/boe. CEO James Flores said the company has reevaluated its Gulf of Mexico operations because of the continuing de facto moratorium and has begun shifting its development to the U.S. onshore.
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