A Gulf of Mexico (GOM) lease sale that was delayed by the Macondo well blowout is back on the calendar for December, the head of the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) said. During a House Natural Resources Committee hearing on July 15 BOEM Director Michael Bromwich said the federal agency was “working very hard to do a lease sale in the western Gulf before the end of the year.” If it is delayed, “it would only slip a very little bit” to January. “We’ve been pushing very hard because we know how important it is to get that lease sale.” The western leasing area of the GOM generally is viewed as less attractive commercially to oil and gas operators than tracts in the central GOM, where the Macondo well was being drilled. A sale of central GOM leases remains on track to be completed before June 30, when the current five-year leasing plan is scheduled to expire, the BOEM chief said.

Anadarko Petroleum Corp., ExxonMobil Corp. and their partners have finalized a unitization agreement to jointly develop a portion of the prospective Lucius field in the deepwater Gulf of Mexico (GOM). The agreement, which has been in the works for months (see NGI, June 27), covers portions of Keathley Canyon (KC) in blocks 874, 875, 918 and 919. The project is expected to be sanctioned later this year with first production in 2014. ExxonMobil operates and has a half-interest in KC 918 and KC 919. Petrobras America Inc. holds the remaining stake in KC 918. Eni Petroleum US LLC and Petrobras each hold a one-quarter stake in KC 919. Anadarko’s Lucius discovery, in which it holds a half stake, is in KC 875; Plains Exploration & Production Co. (PXP) and Apache Corp. also are stakeholders (see NGI, Dec. 14, 2009). Under the unitization agreement Anadarko operate and hold a 35% stake, ExxonMobil would have a 15% interest, PXP (23.3%), Apache Deepwater LLC (11.7%), Petrobras (9.6%) and Eni (5.4%).

The trend to increase crude oil drilling continued to rise throughout the second quarter, the American Petroleum Institute (API) reported. An estimated 6,595 oil wells were completed in the uarter, up 32% from the 4,982 oil wells completed in the same period a year ago, according to API, which represents major oil producers. Natural gas well completions rose by 17 wells from a year ago to 3,477. Dry gas well completions fell 26% to 867 in the second quarter from 1,171 in the comparable period a year ago. The gap between oil well completions and gas well completions widened from the first quarter, when the API reported that oil well completions outnumbered gas well completions by 5,718 to 3,860. It estimated that overall drilling activity in the second quarter — 10,939 oil wells, gas wells and dry holes — was up 14% from 2010’s second quarter and up 46% from 2009’s second quarter. The level of overall drilling has increased by about 5% over the 10,431 oil and gas wells and dry holes that were completed in the first quarter.

Chevron Corp. is selling a package of Alaska oil and natural gas assets in Cook Inlet to a subsidiary of privately held Hilcorp Energy Co. Financial details were not disclosed for the transaction, which, pending regulatory review, is expected to be completed by the end of the year. Chevron subsidiary Unocal Corp. is selling the contracts and interests in the Granite Point, Middle Ground Shoals, Trading Bay and MacArthur fields, as well as stakes in 10 offshore platforms. The Ninilchik and Beluga River gas field units and two gas storage facilities are included in the package. Current net production from the properties to be sold to Hilcorp is about 85 MMcf/d and 3,900 b/d of oil, or 4,410 boe/d, Chevron said.

Chesapeake Energy Corp. said one of its conventional natural gas wells in Oklahoma is only the sixth in the state’s history to reach 60 Bcf of cumulative production. The Buffalo Creek 1-17 well in Beckham County is operated by the company, which has an 82.6% working interest and a 65.8% net revenue interest. Chesapeake spudded the well in May 2002 and reached total depth of 21,000 feet in the Cunningham Sand of the Deep Springer formation with first sales commencing in December 2002. The well averaged 41 MMcf/d for the first two years of production and is still producing approximately 8 MMcf/d, Chesapeake said.

Cheniere Energy expects to begin construction of long-discussed natural gas liquefaction and export facilities at its existing Sabine Pass import terminal in Cameron Parish, LA, early next year. The company said it will spend $6 billion to expand the facility to allow the liquefaction and export of domestic natural gas, particularly that from shale plays. In recent months Cheniere has touted talks with a number of parties that it said have expressed interest in capacity in the project (see NGI, Feb. 21). Customer contracts are necessary for the project to move forward. The company did not respond to an inquiry about the status of customer negotiations.

SM Energy Co. has agreed to sell its Marcellus Shale assets in Pennsylvania, including its entire 42,000-acre leasehold and associated pipeline assets in McKean and Potter counties, to a subsidiary of Houston-based Endeavour International Corp. for approximately $80 million. The transaction would provide Endeavour with significant production and reserve potential on acreage that is adjacent to its existing Marcellus acreage along with 100% ownership of Potato Creek LLC, which owns a midstream gathering system and related facilities in McKean County, including a 10-mile 16-inch diameter trunkline connected and flowing to Tennessee Gas Pipeline‘s 24-inch diameter mainline. Folsom, NJ-based South Jersey Industries said one of its subsidiaries had agreed to sell its 30% ownership in Potato Creek to Endeavour for $9 million.

Central New York Oil and Gas Co.’s (CNYOG) proposed MARC-I Hub Line Project, which would deliver additional Marcellus Shale and Trenton Black River natural gas to Northeast markets, may not be needed, according to the U.S. Environmental Protection Agency (EPA). A favorable environmental assessment of the MARC-I Hub Line Project recently issued by the Federal Energy Regulatory Commission (FERC) (see Shale Daily, June 2) “does not clearly explain to the public why the existing gas pipeline distribution network is not sufficient for providing access to interstate markets for Marcellus Shale natural gas, and why a new pipeline on new alignment through largely undeveloped and forested land needs to be constructed,” EPA said in a recent filing with FERC [CP10-480].

McMoRan Exploration Co. said soaring costs from an unproductive well and impairment expenses ate into its revenues in the second quarter, sending the company to a loss for the sixth straight quarter. The company lost $50.2 million (minus 32 cents/share) from April through June, versus a loss of $21.7 million (minus 23 cents) in the year-ago period. Co-Chairmen Richard Adkerson and Jim Bob Moffett, who also is CEO, acknowledged that the drilling to date hasn’t paid off yet — but delineation results soon should prove positive for some of the big discoveries, including the prospective Davy Jones formation. Flow testing on the first Davy Jones well is scheduled to begin by the end of the year; a second well is set for testing in early 2012.

The Interior Department’s Bureau of Land Management (BLM) announced that it received nearly $66.3 million from the sale of oil and gas leases on parcels in North and South Dakota. On July 12 the BLM had offered up 87 parcels in North Dakota totaling 19,392.64 acres, and 24 parcels in South Dakota totaling 12,788.05 acres. The highest bids were made for two North Dakota parcels at $8,800 per acre by Irish Oil and Gas of Bismarck, ND, and Continental Resources of Williston, ND. The highest single-parcel bid, nearly $6.22 million, was made by Hess Corp. for a 723-acre parcel in North Dakota.

Temple University said three faculty members will investigate the source of methane gas that has contaminated water wells near Marcellus Shale drilling sites in Susquehanna County, PA, and wstudy how the debate over hydraulic fracturing is affecting public policy. The study is being funded through a one-year, $66,000 grant from the William Penn Foundation. Temple’s study will follow a controversial one completed by Duke University in May (see NGI, May 16). Former and current secretaries of the Pennsylvania Department of Environmental Protection (DEP) condemned the Duke study and questioned the university’s credibility for not sharing its data and sample locations with the DEP (see NGI, June 13).

The town council of Caroline, NY, has reportedly voted against its own resolution that would have prevented a future ban on hydraulic fracturing in the community, located in Tompkins County in the Marcellus Shale play. The Ithaca Journal reported the town council nixed the resolution on July 12 by a 4-0 vote with one abstention.

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