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September 2011 Issue

Advocacy Group Calls for Directional Drilling in ANWR
Directional drilling techniques should be tested as the next step for tapping into the estimated 10.4 billion barrels of oil in the nonwilderness portion of the Arctic National Wildlife Refuge (ANWR), according to a report released in August by advocacy organization Securing America's Energy Future.

In 1980, Congress passed the Alaska National Interest Lands Conservation Act, which designated the 1002 area of ANWR for oil and gas exploration. In early 2010, Exxon Mobil (Irving, Texas) drilled and cased its first development well adjacent to this area on the Point Thompson project.

The 1002 area has yielded exploratory drilling and seismic data that are promising for drilling, as well as strong industry interest, the report said. The U.S. Geological Survey estimates there are 5.7 billion to 16 billion barrels of technically recoverable oil, with a mean estimate of 10.4 billion barrels.

"The existence of the Point Thompson project so close to the 1002 area provides an opportunity for the industry to use extended reach drilling to develop ANWR oil without establishing a surface presence in ANWR itself and without necessarily adding substantially to the existing industry footprint on state lands," the report stated.

Sen. Lisa Murkowski (R-Alaska), ranking member on the U.S. Senate Energy and Natural Resources Committee, commended the report.

"This is a concept that I have long offered as a reasonable alternative to those who oppose conventional development of the 1002 area," Murkowski said. "While I still favor responsible production within the coastal plain, this compromise allows us to access much of the resource without the same environmental risk, making it a common-sense solution that everyone should be able to embrace."

Murkowski in February introduced two measures to open ANWR for production. One bill would allow companies to drill within the coastal plain of ANWR, while the other would allow for only directional drilling. Neither bill has made it out of committee. For more information, visit http://secureenergy.org.

Noble Corp. Orders Two More Newbuild JU3000N Jackup Rigs
Noble Corp. (Baar, Switzerland) announced in August that it had exercised approximately $490 million in contract options with Sembcorp Marine's (Singapore) subsidiary Jurong Shipyard (Singapore) for the construction of two more JU3000N jackup drilling rigs. With the order, Noble Corp. now has six newbuild jackup rigs under construction with Jurong.

Able to operate in water depths up to 400 feet and drill to depths of 30,000 feet, the two jackup rigs will be delivered during the third and fourth quarters of 2014, after which they will be mobilized and submitted to acceptance testing by future customers. Including project management, spares and start-up costs, the cost is approximately $245 million per rig.

The JU3000N, designed by Friede & Goldman Ltd. (Houston, Texas), builds on the JU2000E and has greater capabilities than most existing units, Noble said. The rigs, which are approximately 231 feet long and 270 feet wide, will each have a 75-foot cantilever, 2.5 million pounds of hook load capacity, a high-capacity mud circulating system and a 15,000-pounds-per-square-inch blowout preventer system. The rigs are capable of offline pipe handling and have accommodations for up to 150 people.

In addition to the six newbuild jackups, Noble has seven ultradeepwater drillships under construction, three of which are scheduled to be delivered later this year. For more information, visit www.noblecorp.com.

ConocoPhillips to Split Into Two Standalone Companies
ConocoPhillips (Houston, Texas) plans to spin off its refining and marketing business from its exploration and production activities, splitting the company into two standalone, publicly traded corporations, ConocoPhillips announced in August.

The proposed separation is expected to be completed by the first half of 2012, after which ConocoPhillips will become a "pure play" exploration and production company. The spin-off does not require a shareholder vote, ConocoPhillips said, and is subject to market conditions, customary regulatory approvals, an affirmative Internal Revenue Service ruling, the execution of separation and intercompany agreements, and final board approval.

"Consistent with our strategy to create industry-leading shareholder value, we have concluded that two independent companies focused on their respective industries will be better positioned to pursue their individually focused business strategies," said Jim Mulva, ConocoPhillips chairman and CEO.

The spin-off prompted analysts from JP Morgan, UBS and Bank of America to urge a similar move from BP plc (London, England). For more information, visit www.conocophillips.com.

Report: Second Quarter Drilling Falls 52 Percent Across UK Shelf
North Sea offshore drilling activity in the second quarter of 2011 has fallen 52 percent compared to the same period last year, according to industry figures released in July by Deloitte.

The North West Europe Review, which documents drilling and licensing on the U.K. Continental Shelf, revealed a 43 percent decrease over the first six months of this year compared to 2010, with a total of 20 exploration and appraisal wells spudded in the U.K. sector between January 1 and June 30, compared to a total of 35 during the same period in 2010.

Despite a 19 percent increase in wells spudded in the first and the second quarters of 2011, the mid-year total sits at its lowest rate since 2002.

Deloitte analysts said while it was important to stress the small number of wells involved, activity was lower than expected when oil averaged above $100 per barrel.

This negative trend was not reflected everywhere on the U.K. Continental Shelf, with Norway recording a 10 percent increase on its second-quarter average for the past decade. The Netherlands also reported consistent drilling levels for the year to date compared to 2010. For more information, visit www.psg.deloitte.com.


2012:  JAN | FEB | MARCH | APRIL | MAY | JUNE | JULY | AUG | SEPT | OCT | NOV | DEC
2011:  JAN | FEB | MARCH | APRIL | MAY | JUNE | JULY | AUG | SEPT | OCT | NOV | DEC

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