David Paganie • Houston
Rig executive cautions industry
Daniel McNease, chairman & CEO of Rowan, presented his company’s perspective on jackup migration out of the GoM at the Lehman Brothers CEO/Energy Power Conference in New York. “The Gulf has a real problem,” he said. “We think the migration of jackups out of the GoM will continue, unless something changes.”
McNease said that 23 rigs have migrated out of the GoM since Rowan voiced their forecast on the subject back in September of 2003. “We could see an additional 15 to 20 rigs migrate out of the Gulf, and that’s being conservative,” he said.
“I don’t think anyone realizes that there are a lot of international bids out right now, and there are a lot of people bidding on them. And they are all for high-end rigs, and they will be leaving the Gulf. It’s not just going to be Rowan, it’s going to be a lot of other people as well,” he said. “You want to get back replacement value for a premium rig, which is around $115-$120,000/day,” he said. “If the GoM doesn’t come up to this range, then we’ll continue to see rigs leave.”
New legislation may boost GoM production
On Aug. 8, 2005, President Bush signed into law the first national energy plan in more than a decade. According to White House officials, “The President’s national energy plan will encourage energy efficiency and conservation, promote alternative and renewable energy sources, reduce our dependence on foreign sources of energy, increase domestic production, modernize the electricity grid, and encourage the expansion of nuclear energy.”
So, what does this mean for the offshore oil and gas industry? Well, according to the MMS, who manages over 1.76 billon acres of the OCS, “The Energy Policy will encourage increased domestic production of oil and natural gas.”
The regulatory agency says that the new legislation calls for the MMS to conduct a comprehensive inventory of the estimated oil and natural gas resources on the OCS within six months from the time that the policy was signed. The legislation also provides additional royalty relief on existing non-producing OCS leases offshore Alaska and for deepwater and ultra deep gas production in the GoM.
In addition, the policy includes provisions which offer impact assistance from OCS revenues to be shared among eligible states, grants the MMS new authority to regulate alternative energy uses of the OCS, including wind, wave, and solar energy, and includes changes to the valuation and fee structure for geothermal energy.
Two weeks after the new legislation was signed into law, the MMS announced that it was seeking public comment on the drafting of its 2007-2012 five-year leasing plan for energy development on the OCS and accompanying environmental impact statement. The MMS says that it will take about two years to develop the leasing plan.
“The OCS contains billions of barrels of oil and trillions of cubic feet of natural gas that can be safely produced,” said Gale Norton, Interior secretary. “With our reliance on imports of foreign oil climbing each year, we would be irresponsible if we did not consider how we might develop these abundant domestic resources.”
US independent appeal
Australia-based Woodside Petroleum, US-based Forest Oil Corp., and Norway-based Hydro unveiled plans to grow their presence in the GoM through asset transactions with US-based independent oil and gas companies.
Woodside Energy (USA) Inc., a wholly owned subsidiary of Woodside Petroleum Ltd., was the first of the group to publicize its plans to expand its interests in the GoM through corporate collaboration with a US-based independent oil company. The operator says it has acquired the Houston-based Gryphon Exploration Co. for $296.9 million, after taking into account Gryphon’s net debt.
Gryphon, a private oil and gas company, has interests in 118 leases in the Gulf, 95 of which are operated by the company. The acquisition delivers Woodside immediate production from 15 fields, 11 of which are operated by Gryphon. Furthermore, the company has identified 15 high-quality prospects from Gryphon’s exploration portfolio; four of them will be drilled by the end of the year. An additional 65 prospects in Gryphon’s portfolio are being evaluated.
Don Voelte, Woodside’s CEO, commented on the acquisition, “The acquisition built on the company’s existing GoM interests, giving it a diverse portfolio across the shelf and deepwater. This delivers Woodside a significant expansion of our exploration portfolio in the Gulf, and also provides us with existing production.”
Forest Oil and Mariner Energy Inc. plan expand their respective interests through a corporate-level transaction. The companies announced that they have agreed to a transaction in which Forest will spin-off its GoM operation and merge it with a wholly owned subsidiary of Houston-based independent oil and gas company, Mariner, in a stock-for-stock transaction.
Craig Clark, Forest’s president & CEO, commented on the merger, “Forest will be a well-capitalized, long-lived onshore resource company with a significant exploitation inventory and a proven acquire and exploit track record in North America. Mariner will be a well-capitalized, GoM explorer with an excellent track record, strong cash flow attributes, and broad exposure to deepwater, shelf and deep shelf opportunities.”
Scott Josey, Mariner’s chairman & CEO, weighed in, “This transaction will increase our scale in the GoM, provide a strong financial platform for our successful exploration efforts, and enlarge our stockholder base for greater liquidity. The transaction provides us the unique opportunity to more than double our asset base and emerge as a leading player in the GoM, with the scale and the financial strength to pursue shelf, deep shelf, and deepwater opportunities.”
The transaction is subject to regulatory and stockholder approvals, and consent from Forest’s bondholders.
Hydro also disclosed plans to grow its GoM interests through acquisition of a US-based independent oil and gas company. The operator indicated that it plans to acquire Spinnaker Exploration Co. in an all-cash transaction for $2.45 billion. The company says that the acquisition will substantially boost Hydro’s presence and growth potential in the GoM.
“The acquisition is an important breakthrough in Hydro’s international growth strategy,” said Eiving Reiten, Hydro president and CEO. “We believe that the deepwater potential in the Gulf is considerable. Hydro’s industry-leading expertise in deepwater exploration and production, combined with Spinnaker’s unique skills and acreage position in the region, will enable us to develop these prospects profitably in a stable and attractive fiscal environment.”
The acquisition is expected to be completed in the fourth quarter.
Chevron issues Tahiti contracts
Chevron has issued contracts associated with its Tahiti project, located in Green Canyon blocks 596, 597, 640 and 641 in 4,200 ft of water, approximately 190 mi southwest of New Orleans.
Technip won the EPC contract to supply a spar hull and mooring system, and topside modules for installation on the Chevron-operated Tahiti field.
The Tahiti facility will be equipped withcapacity to produce 125,000 b/d, 70 MMcf/d and 120 b/d of water. The topsides facility will be comprised of a 9,950-ton production module, 6,500-ton utility module and a 2,500-ton module support frame. The spar’s 26,455-ton hull will measure approximately 558 ft long by 128 ft wide.
The hull and moorings’ detailed design, procurement and fabrication will be carried out by Technip’s yard in Pori, Finland. The fabrication of the floater’s topsides by Gulf Marine Fabricators’ yard in Corpus Christi, Texas, is scheduled to begin in 4Q 2005.•
