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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Tomas who wrote (22120)	5/1/2003 11:16:35 PM
From: Tomas	Read Replies (1) \| Respond to of 206319

All to play for in the challenging US Gulf Upstream, Friday May 2 By Terry Macalister Delegates arrive at the Offshore Technology Conference in Houston this coming week in mixed mood. Executives from the major oil companies are basking in the glow of record profits on the back of first-quarter crude prices gushing skywards. Some drillers are optimistic after a good few months on the international circuit but US Gulf players are much more sombre. Meanwhile, some of the service providers that depend entirely on the waters off Louisiana and Texas are deeply frustrated. How come, they argue, there is meant to be more investment for the offshore waters of the US Gulf than any other oil and gas region in the world -- with the exception of West Africa -- and yet we are starved of orders? Take the latest rig counts. This time last year was not good for rig operators and yet the number of units drilling off the US coast this March was 104, six less than in February and 10 less than 12 months ago. The answer in part -- of course -- is that many of the oil and gas companies are drilling much fewer but more expensive wells. Many are concentrating on very deep gas pockets some 15,000 feet into the earth's core in shallow waters or searching for oil in water depths of 10,000 feet. All of this requires specialist equipment, excellent for those rig owners and supply companies that know about this kind of thing but terrible for the others. Explorers have also become more conservative. Costs have rocketed from around $7 million for a conventional well to anything between $10 million and $80 million. Oil companies have turned away from the 'growth at any price' mentality that partly drove the mega-mergers of the 1990s towards a concentration on what analysts call 'balance-sheet integrity'. In fact, that is just what the number-crunchers on Wall Street want to see and, furthermore, they applaud those mountains of free cash developed during the sustained period of higher crude prices being spent on share buy-backs and paying down debt. The corporate tie-ups have played their part in making life tougher for service providers, however. There are nearly 25% fewer operating companies in the US Gulf than there were in 1996, says the National Ocean Industries Association. The external environment over the past 12 months has not been helpful to anyone, either. The terrorist attacks on the twin towers in 2001 triggered a long train of events that led to the just-concluded war in Iraq. The stock markets and economic indicators have been knocked sideways just as production was slowing and consumer confidence dipping in America and other major countries. Commodity prices have soared over that period, partly because of uncertainty over Iraq but compounded by political turbulence in Venezuela and labour unrest in Nigeria. But equity prices for oil and service companies have generally been subdued with investors convinced that crude prices could not be sustained at high levels. Over the whole period there have been doom-mongers warning that a post-Saddam Iraq would turn on the taps, leading to a supply glut and a return to the nightmare scenario of $10 oil. The world's biggest oil company, supermajor ExxonMobil, more than tripled its earnings in the first quarter to $7 billion. In Europe, British supermajor BP also worked up record earnings, which more than doubled to $3.7 billion. By contrast, the oilfield services sector was given another jolt two weeks ago when Baker Hughes issued a profit warning. Ongoing weakness of demand in the US Gulf was only one of a number of issues that knocked it off course. Driller Diamond Offshore has just recorded a net loss of $21.6 million, citing poor markets, while Rowan produced its worst quarter for eight years. By contrast Transocean, with its wide international exposure, came bouncing back from loss. However, it is certainly not all doom and gloom in the US Gulf. There are swathes of huge projects heading towards first production with BP's Thunder Horse and Atlantis plus Shell's Na Kika among them. The Anglo-Dutch group has also started to lay the groundwork for development of its Great White discovery while ChevronTexaco has been making good progress with appraisal wells on its Tahiti field in the deep-water Gulf. There has been a dearth of new really sizeable discoveries in deep water, which has pointed up the limitations of even the newest visualisation and seismic technology. But that patch, and the deep gas pockets of the shallow-water Gulf, should be considered immature areas. There is still all to play for in the US Gulf and the hordes of delegates going to OTC will be chomping at the bit to take up the challenge.

To: Tomas who wrote (22120)	5/2/2003 6:51:34 PM
From: Tomas	Read Replies (1) \| Respond to of 206319

US hunting ground off-limits to drillers Upstream, Friday May 2 By Dann Rogers Two years after the release of a US national energy strategy designed to boost domestic production, the industry still complains about restricted access to federal lands while environmentalists counter that a "for sale" sign covers most of the western states. About one-third of the land in the US is controlled by the federal government and most of that is located in the west. The National Petroleum Council estimates that 63% of future natural gas resources in the west are under government lands. "The intent of the federal government was clearly to use executive orders to streamline the well permit application process," says Lee Fuller, vice president of government relations for the Independent Petroleum Association of America. "That hasn't happened because of a well-orchestrated litigation campaign by anti-development groups on resource management plans and environmental impact statements. "We've heard that in some Bureau of Land Management (BLM) regional offices, up to 50% of their funding has been redirected from hiring more personnel to handle permits and put toward litigation support." According to the American Gas Association (AGA), the increases in gas reserve estimates have not been matched by growth in ability to access those supplies and deliver them to consumers. "It makes no sense for laws and regulations to promote greater use of natural gas for increased national energy independence and environmental reasons, while at the same time conflicting regulations hamper the ability of producers to bring enough supply to market to meet this growing demand," says AGA president David Parker. One of the main battlegrounds is the Powder River basin in Wyoming and Montana, which is thought to hold up to 45 trillion cubic feet of coalbed methane gas. The Department of Energy analysed activity on 29 million acres of land in the area, 16 million of which are owned by the federal government. The study found that 1% of the resources were off-limits because they were under national parks and wilderness areas that are closed by statute. Another 29% are completely off-limits due to administrative actions by federal agencies. Some 38% of the gas resource is available, but with various types of leasing stipulations that prevent access during various lengths of time of the year. The remaining 32% is available with standard lease terms, which still contain numerous environmental requirements. The administration of President George W. Bush had forecast the drilling of 75,000 coalbed methane wells over the coming decade but a moratorium was imposed last year pending completion of another environmental impact statement (EIS). "The EIS was completed on 18 February, but no decision has yet been announced," says Dru Bower of the Petroleum Association of Wyoming. "We expect that result anytime, but under our rules if some group already challenged the EIS they have the right to contest it further in federal court. "I expect a legal challenge if the EIS is approved." Opposition to drilling is being spearheaded by a coalition of environmentalists and ranchers who say they want to protect private property rights. "The Bush administration has welcomed energy companies with open arms -- offering speedier drilling proposals, easier access to oil and gas deposits on public lands, reduced royalty payments and environmental restrictions," says a report by the National Resources Defence Council. An official from the Energy Department says the issue has become bogged down because different groups interpret the various studies on federal access differently. "This isn't Iraq. We can't just impose the federal will on the states. "The smoking gun to open these lands to production is probably a clear cut, credible study showing the amount of resources and restrictions on them. "It will allow Washington to pressure the states into allowing more drilling."