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September 2012 Issue

CNOOC to Acquire Nexen
CNOOC Ltd. (Hong Kong) in July proposed to buy Nexen Inc. (Calgary, Canada) for approximately $15.1 billion at $27.50 per Nexen common share, or around 60 percent more than the company’s closing stock price. The transaction is expected to close in the fourth quarter of 2012.

The acquisition expands CNOOC’s presence in Canada, Nigeria, the U.S. Gulf of Mexico and the U.K. North Sea. CNOOC plans to retain Nexen’s management team and employers, and will establish Calgary as its North and Central American headquarters.

Members of U.S. Congress expressed concern about the deal. Rep. Ed Markey (D-Mass.) urged U.S. Department of the Treasury Secretary Timothy Geithner to block the deal until parties agree to pay royalties to the U.S.

“Nexen is a major beneficiary of Deep Water Royalty Relief Act, having produced 32 million barrels of oil and 34 billion cubic feet of natural gas in the Gulf of Mexico through May 2012 without paying royalties,” Markey wrote in a letter. “If CNOOC takes over Nexen’s Gulf of Mexico assets and operations, this giveaway of American resources could be extended to a Chinese state-owned company.”

Saying the acquisition illustrates the U.S. should move quickly to secure energy resources in Canada, Republican lawmakers made another push for approval of the Keystone XL pipeline. Rep. Lee Terry (R-Neb.) introduced in July a bill that would allow work to immediately begin on the northern segment of the pipeline from the U.S.-Canadian border to the South Dakota-Nebraska border.


Italy Lifts Restrictions On Offshore Drilling
The Italian government in August ratified legislation that modifies and lifts some of the offshore drilling restrictions of Legislative Decree 128/2010 (DL128), which in 2010 banned all such activities within 12 nautical miles of the coast (5 for liquid hydrocarbons).

Article 25 of the new law states that DL128 no longer applies to applications for production concessions that were under review at the time DL128 came into force; any titles, including exploration licences, that had been issued prior to DL128 coming into force; and any proceedings connected with or subsequent to such titles.

The decree also includes a provision for a 3 percent increase (to 7 percent for oil and 10 percent for gas) in the royalty rates payable for offshore hydrocarbon producers with the proceeds to be allocated to the state budgets of the Ministry of the Environment and the Ministry of Economic Development.

Offshore companies that have an interest in this area applauded these changes. CYGAM (Calgary, Canada) said it will begin discussions with authorities on advancing its two projects offshore Italy: the Elsa discovery in the Adriatic Sea and the Aretusa prospect in the Mediterranean Sea.

Mediterranean Oil & Gas plc (London, England) will seek an award of production concession covering the Ombrina Mare oil and gas field in the Central Adriatic based on the application it previously submitted in December 2008. The company said it will also focus on developing discoveries in its existing production concession in the Northern Adriatic.


BSEE Issues Notice to Lessees On Oil Spill Response Plans
The Bureau of Safety and Environmental Enforcement (BSEE) in August issued a notice to lessees to the offshore oil and natural gas industry to clarify the development of oil spill response plans (OSRP).

The notice details the bureau’s application of existing regulations on preparing and submitting regional OSRPs, incorporating lessons learned from the 2010 Deepwater Horizon incident. The bureau has approved nearly 80 regional OSRPs since then, using the approach in this notice.

This notice supersedes NTL No. 2006-G21 and NTL No. 2009-P03. It does not change existing regulations.

In the notice, BSEE encourages applicants to describe the planned response strategy for each worst-case discharge scenario in the OSRP by considering the following factors: location of potential discharge, proximity to sensitive resources, estimated discharge volume, oil characteristics, appropriate source control, containment methods and weathering. The response strategy should also consider the potential for use of surface and subsea dispersants, in-situ burning, mechanical recovery, wildlife protection, rescue and rehabilitation strategies, and real-time response capability.

BSEE’s OSRP review is not limited to assessing whether the calculated effective daily recovery capacity for the listed mechanical equipment equals the worst-case discharge volume. A fully developed strategy, according to the notice, includes a list of all recovery equipment and the operating characteristics of the systems associated with each skimmer. The plan should show the ability to contain and recover the discharge based on the descriptions of the equipment, functioning together.

To view the notice, visit http://1.usa.gov/RMI47M.


Buoyant Tower to be Installed Offshore Peru in September
The CX-15 buoyant tower, designed by a joint venture between GMC Ltd. (Heathrow, England) and Horton Wison Deepwater (Houston, Texas) for BPZ Energy (Houston), has completed fabrication at Wison Offshore & Marine’s yard in Nantong, China, and began sailing for Peru in August.

The shallow-water buoyant tower will be installed in early September, located about 1 mile from the existing CX-11 platform in a water depth of 53 meters in BPZ Energy’s Corvina field in block Z-1. Both platforms will be interconnected via subsea pipelines.

The tower, designed for 12,200 barrels of oil per day, is composed of four cylindrical cells and is connected to the seabed by a single foundation can that is integral to the hull structure. The tower and decks with the production equipment will be transported from the fabrication yard to Corvina field on a submersible heavy-lift ship. After upending, fixed and variable ballast will be pumped into the hull to provide stability for the platform.

A main driver behind the project was that the transport vessel also performs the main installation as the hull and topside are floated off in sequence, eliminating the need for a separate heavy-lift vessel at the tower location.


2013:  JAN | FEB | MARCH | APRIL | MAY | JUNE | JULY | AUG | SEPT | OCT | NOV | DEC
2012:  JAN | FEB | MARCH | APRIL | MAY | JUNE | JULY | AUG | SEPT | OCT | NOV | DEC

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