5 NEWSLETTER 12 LETTERS / CALENDAR 14 JOURNALLY SPEAKING 16 EDITORIAL 28 EQUIPMENT

29 STATISTICS 32 MARKETPLACE 28 ADVERTISERS’ INDEX
Nov. 21, 2011
|
Volume 109.18b International Petroleum News and Technology
|
www.ogj.com
GENERAL INTEREST
US $10
23 Putin: Russia will ‘coordinate’ work with OPEC
Eric Watkins
24 WATCHING THE WORLD
Iran’s nuclear carrot
25 Shale gas subcommittee reviews
industry, government progress
Paula Dittrick
26 EXPLORATION/DEVELOPMENT BRIEFS

27 EDITOR’S PERSPECTIVE
Keystone XL delay serves needs only of obstructionists
18 Senate committee
ponders risks, benefits
of LNG exports
Nick Snow
Abundant shale gas resources in the US
that have turned the natural gas supply
outlook from a shortage to a surplus also are
stimulating proposals to export—instead of
import—LNG.
19 State Department delays
Keystone XL oil sands
pipeline decision until 2013

20 IHS CERA: State Department’s
Keystone XL delay creates new
uncertainties
Nick Snow
21 Nebraska pipeline siting bill
would not apply to Keystone XL
Nick Snow
22 WATCHING GOVERNMENT
State regulators’ resources
22 Bromwich pledges careful, measured
enforcement for contractors
Nick Snow
23 Latest proposed 5-year OCS plan
falls short, API official says
Nick Snow
Construction has started at the Reficar refinery at Cartagena, Colombia. CB&I
is handling the engineering, procurement, and construction of a new 165,000-b/d refinery and the
revamp of the existing one at the site. The project is slated for completion in 2013. Photo from
CB&I.
111121OGJ_1 1 11/17/11 1:04 PM
we are the people
of Baker Hughes.
and our software
adds confidence to
your reservoir decisions.
www.bakerhughes.com
Bob Rundle, Director—Reservoir Software Technology
© 2011 Baker Hughes Incorporated. All Rights Reserved. 32370
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development plan or its drilling and completion programs is tough. And it’s even
tougher if you don’t have complete confidence in your understanding of the reservoir.
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The benefit to your company? Quick adoption. Alignment with your workflows.
Ease of use. And clear, confident decisions you can count on.
As a key member of our new
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Find out how at
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111121OGJ_2 2 11/17/11 1:04 PM
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111121OGJ_4 4 11/17/11 1:04 PM
Newsletter
OGJ®
International News
for oil and gas professionals
For up-to-the-minute news,
visit www.ogjonline.com
Oil & Gas Journal 5
Nov. 21, 2011
GENERAL INTEREST
QUICK TAKES
Chevron says oil seep has decreased off Brazil
Chevron Corp. reported that successful well-control operations
significantly reduced an oil seep believed to be coming from an
appraisal well in Frade field offshore Brazil.
Upon receiving approval from the Brazilian National Agency
of Petroleum (ANP) on Nov. 13, Chevron Brazil immediately
commenced plugging and abandonment activities.
“The amount of oil observed coming from nearby seep lines
on the ocean floor has decreased significantly,” Chevron said,
adding that it continues to monitor activities that will culmi-
nate in final cementing of the well.
Chevron estimates the sheen volume at 400-650 bbl. Six
vessels are working in pairs to contain and recover the oil while
two vessels are working on mechanical dispersion.
The sheen is 120 km offshore and moving southeasterly
away from the Brazilian coast. The Frade project is in 3,800 ft
of water some 370 km northeast of Rio de Janeiro.
Chevron, which has 51.74% interest, started production at
Frade field in 2009 (OGJ Online, June 23, 2009).
Partners in the field are Petroleo Brasileiro SA 30%, and
Frade Japao Petroleo Ltda., a joint venture of Inpex Corp., Sojitz
Corp., and Japan Oil, Gas & Metals Corp. 18.26%.
USI acquires Bossier-Haynesville gas gathering
US Infrastructure Holdings LLC (USI) will acquire the Wildcat
Sabine natural gas gathering system in the Bossier-Haynesville
shale and expand it to nearby interstate carriers. The 28-mile
pipeline lies along the Texas-Louisiana border in the northwest
corner of Sabine Parish, La., and transports gas for producers
such as Eagle Oil & Gas Co.
USI will build a 20-mile extension and expansion at its
southern end, providing direct access to markets served by
Gulf South Pipeline Co. LP and Tennessee Gas Pipeline. The
expansion, expected to be complete by mid-2012, will bring
Wildcat’s takeaway capacity to 400 MMcfd.
Wildcat currently has takeaway capacity of 200 MMcfd and in-
cludes treating and compression facilities. The system already inter-
connects with four regional gathering systems: Enterprise Products’
State Line Gathering System, KinderHawk’s Gas Services, Producers
Gas Transmission, and Tristate Sabine Gathering System.
Eagle Oil has dedicated production from its acreage in the
Bossier-Haynesville shale North Toledo Bend Project for trans-
port on Wildcat.
Nigeria moving to end fuel subsidies
The government of Nigeria, Africa’s largest oil producer and
a member of the Organization of Petroleum Exporting Coun-
tries, is taking the politically sensitive step of moving to end
fuel subsidies.
President Goodluck Jonathan says the government will use
money saved by ending subsidies, which otherwise would cost
an estimated $7.5 billion next year, on infrastructure and social
programs.
Nigeria recently has been producing about 2.3 million b/d of
oil and consuming about 280,000 b/d. Its productive offshore
continues to yield discoveries (OGJ Online, Nov. 7, 2011).
Because utilization is low at the country’s four refineries,
which have total capacity of 445,000 b/d, Nigeria imports oil
products.
Subsidies keep domestic oil prices at about 40¢/l.
Trade unions have threatened to strike if subsidies end next
year as proposed.
ConocoPhillips to name downstream firm Phillips 66
ConocoPhillips plans to name its emerging new independent
downstream company Phillips 66, which will be based in
Houston, ConocoPhillips said. The corporate repositioning re-
mains subject to market conditions, regulatory approvals, and
final corporate board approval.
In July ConocoPhillips announced plans to separate its up-
stream and downstream businesses into two stand-alone, pub-
licly traded corporations via a tax-free spinoff of the refining
and marketing business to ConocoPhillips shareholders (OGJ
Online, July 14, 2011).
Phillips 66 will be involved in refining, marketing, mid-
stream, and chemicals. Greg Garland, designated chairman
and chief executive officer, noted the name has strong brand
recognition and provides a link with corporate history.
ConocoPhillips, which will be a pure-play exploration and
production company after the repositioning, will continue to be
based in Houston. Bartlesville, Okla., will be the global center
for the Phillips 66 technology organization. The ConocoPhil-
111121OGJ_5 5 11/17/11 1:04 PM
Nov. 14 Nov. 15 Nov. 9 Nov. 10 Nov. 11
Nov. 14 Nov. 15 Nov. 9 Nov. 10 Nov. 11
Nov. 14 Nov. 15 Nov. 9 Nov. 10 Nov. 11
Nov. 14 Nov. 15 Nov. 9 Nov. 10 Nov. 11
Nov. 14 Nov. 15 Nov. 9 Nov. 10 Nov. 11
Nov. 14 Nov. 15 Nov. 9 Nov. 10 Nov. 11
WTI CUSHING / BRENT SPOT
$/bbl
115.00
110.00
105.00
100.00
95.00
90.00
85.00
80.00
$/bbl
115.00
110.00
105.00
100.00
95.00
90.00
85.00
80.00
NYMEX NATURAL GAS / SPOT GAS - HENRY HUB
IPE GAS OIL / NYMEX HEATING OIL
NYMEX GASOLINE (RBOB)
1
/ NY SPOT GASOLINE
2
IPE BRENT / NYMEX LIGHT SWEET CRUDE
PROPANE - MT. BELVIEU / BUTANE - MT. BELVIEU
¢/gal
321.00
319.00
317.00
315.00
313.00
311.00
309.00
307.00
¢/gal
182.00
176.00
170.00
164.00
158.00
152.00
146.00
140.00
¢/gal
271.00
268.00
265.00
262.00
259.00
256.00
253.00
250.00
$/MMbtu
3.60
3.50
3.40
3.30
3.20
3.10
3.00
2.90
1
Reformulated gasoline blendstock for oxygen blending
2
Nonoxygenated regular unleaded
Feb. 11 Mar. 11 Jan. 11 Oct. 11 Oct. 10 Nov. 10 Dec. 10 Jul. 11 Aug. 11 Sept. 11 Apr. 11 May. 11 Jun. 11
1,400
2, 000
1,800
2, 200
1, 600
400
600
200
0
BAKER HUGHES INTERNATIONAL RIG COUNT: TOTAL WORLD / TOTAL ONSHORE / TOTAL OFFSHORE
3,900
3, 600
3, 300
3, 000
2,700
2,400
2,100
1,800
1, 500
300
0
3,722
3,373
349
Note: End of week average count
BAKER HUGHES RIG COUNT: US / CANADA
Note: Monthly average count
500
8/27/10 9/10/10 9/24/10 10/8/10 10/22/10 11/5/10
2,016
10/29/10 11/12/10 9/3/10 9/17/10 10/1/10 10/15/10 10/28/11 11/11/11 9/2/11 9/16/11 9/30/11 10/14/11
8/26/11 9/9/11 9/23/11 10/7/11 10/21/11 11/4/11
429
1,685
6 Oil & Gas Journal | Nov. 21, 2011
US INDUSTRY SCOREBOARD — 11/21
Motor gasoline 8,572 9,080 –5.6 8,980 9,110 –1.4
Distillate 4,292 4,130 3.9 3,820 3,768 1.4
Jet fuel 1,434 1,346 6.5 1,437 1,405 2.3
Residual 280 385 –27.3 490 489 0.2
Other products 4,395 4,290 2.4 4,353 4,438 –1.9
TOTAL PRODUCT SUPPLIED
18,973 19,231 –1.3 19,080 19,210 –0.7
Supply, 1,000 b/d
Crude production 5,858 5,566 5.2 5,606 5,484 2.2
NGL production
2
2,195 1,967 11.6 2,109 2,078 1.5
Crude imports 8,717 8,683 0.4 8,903 9,222 –3.5
Product imports 1,932 2,474 –21.9 2,355 2,581 –8.8
Other supply
2 3
2,178 2,010 8.4 2,285 1,983 15.2
TOTAL SUPPLY 20,880 20,700 0.9 21,258 21,348 –0.4
Refining, 1,000 b/d
Crude runs to stills 14,524 14,091 3.1 14,704 14,639 0.4
Input to crude stills 14,886 14,550 2.3 15,110 15,060 0.3
% utilization 84.0 82.7 –– 85.5 85.6 ––
4 wk. 4 wk. avg. Change, YTD YTD avg. Change,
Latest week 11/4 average year ago
1
% average
1
year ago
1
%
Product supplied, 1,000 b/d
Latest Previous Same week Change,
Latest week 11/4 week week
1
Change year ago
1
Change %
Stocks, 1,000 bbl
Crude oil 338,090 339,460 –1,370 364,882 –26,792 –7.3
Motor gasoline 204,167 206,274 –2,107 210,336 –6,169 –2.9
Distillate 135,869 141,889 –6,020 159,902 –24,033 –15.0
Jet fuel–kerosine 44,643 45,759 –1,116 45,940 –1,297 –2.8
Residual 36,148 36,264 –116 40,403 –4,255 –10.5
Stock cover (days)
4
Change, % Change, %
Crude 23.3 23.3 0.0 26.0 –10.4
Motor gasoline 23.8 23.8 0.0 23.2 2.6
Distillate 31.7 33.6 –5.7 38.7 –18.1
Propane 57.4 58.6 –2.0 58.3 –1.5
Futures prices
5

11/11 Change Change %
Light sweet crude ($/bbl) 96.97 93.24 3.73 84.98 11.99 14.1
Natural gas, $/MMbtu 3.67 3.81 –0.14 3.87 –0.20 –5.2
1
Based on revised figures.
2
OGJ estimates.
3
Includes other liquids, refinery processing gain, and unaccounted for crude oil.
4
Stocks
divided by average daily product supplied for the prior 4 weeks.
5
Weekly average of daily closing futures prices.
Source: Energy Information Administration, Wall Street Journal
111121OGJ_6 6 11/17/11 1:04 PM
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8 Oil & Gas Journal | Nov. 21, 2011
lips exploration and production technology organization will
be based in Houston. The repositioning of ConocoPhillips is
expected to be completed in second-quarter 2012.
EXPLORATION & DEVELOPMENT
QUICK TAKES
ExxonMobil eyes deepwater block off Liberia
ExxonMobil Corp. will acquire a 70% interest in the produc-
tion-sharing contract governing Block LB-13 off Liberia follow-
ing Canadian Overseas Petroleum Ltd.’s acquisition of a 100%
interest from the current owner.
ExxonMobil will pay COPL’s Bermuda unit $55 million plus
the unit’s portion of the first well to be drilled to a maximum
of $36 million. If less than $36 million is spent on the unit’s
proportionate cost for the first well, the balance will be applied
towards the unit’s costs of a second well if drilled.
ExxonMobil also will pay the unit’s share of joint venture
costs of $6 million up to the completion of the first well. The
unit’s equity interest in the block will be 30% upon closing, and
ExxonMobil will be the block’s designated operator.
National Oil Co. of Liberia’s approval is required for both
transactions. COPL and its Bermuda unit have agreed with the
current owner, subject to certain conditions being satisfied or
waived, to pay $85 million for a 100% interest in LB-13, includ-
ing $45-50 million in cash and the rest common shares.
The 2,400 sq km block has an 8-year term that began in May
2007, divided into three phases of 4, 2, and 2 years. The second
phase commenced in May.
In 2010, 2,200 sq km of long-offset 3D seismic was shot
to evaluate the oil potential of Cretaceous sands analogous to
the recent deepwater oil discoveries off Ghana and Sierra Le-
one. Reviews of the seismic have identified the potential for a
number of Cretaceous turbidite sand stratigraphic traps on the
block that possess strong seismic AVO anomalies and other di-
rect hydrocarbon indicators that possibly suggest the presence
of hydrocarbons.
Noble sees East Mediterranean oil, gas potential
Noble Energy Inc. said it has identified 12 more prospects with
more than 20 tcf of gross unrisked resource potential in the
eastern Mediterranean that target sands equivalent to those it
discovered at Tamar off Israel.
The company said its acreage also has total gross unrisked
deep oil potential of 3.7 billion bbl, and it plans to reenter the
Leviathan discovery well to test the concept by early 2012.
Noble is drilling the Cyprus A prospect, which has an esti-
mated gross mean resource range of 3 to 9 tcf and a 60% prob-
ability of geologic success. It continues to appraise Leviathan
with the drilling of the third well while evaluating field devel-
opment concepts and commercialization options.
Noble-operated Mari-B field off Israel has achieved record
levels of production this year and since 2004 has lowered Is-
rael’s energy costs by more than $7 billion and reduced carbon
dioxide emissions by 17 million metric tons. At nearby Noa
field, a recently sanctioned development project is expected to
add 100 MMcfd of deliverability in mid 2012, partly offsetting
anticipated depletion at Mari-B.
Meanwhile in deep water, appraisal work has increased the
gross resource estimate of Noble’s Tamar discovery to 9 tcf from
8.4 tcf. The Tamar development project is on schedule for com-
missioning in late 2012. The platform jacket, deck fabrication,
and pipeline installation are 50% complete, and onshore facility
expansion is under way.
Noble is in final stages of sales contract negotiations with
Israel Electric Corp. and is in active discussions with existing
and new customers. Israel gas demand remains robust, and an-
ticipated base growth is 10%/year throughout the decade.
West Newfoundland onshore light oil deposit cored
Vulcan Minerals Inc., St. John’s, Newf., said a core hole program
has indicated that the Flat Bay shallow light oil deposit under-
lies an estimated 8-10 sq km in southwestern Newfoundland.
The dark brown, 34-36° gravity oil with less than 1% sulfur
is primarily in low-permeability conglomerates and sandstones
in the Ship Cove and Fischell’s Brook formations. The oil has a
pour point of 9°, which exceeds the reservoir temperature at the
shallow depths currently intersected, so the oil does not flow.
A qualified reservoir engineering group will review results
from the core drilling program in order to formulate a pilot
project to extract the oil. A total of 14 core holes have been
drilled in the general area south of the Port au Port peninsula.
An input of energy will be required to stimulate flow, said
Vulcan, which shares interests in the project 50-50 with Invest-
can Energy Corp.
The most recent core drilling involved six holes with a com-
bined 1,673 m, and the target reservoirs were oil bearing in
three of the six. Rig capacity limited hole depth, and as a result
it was not possible to penetrate the reservoirs completely.
The gross thickness of the oil-bearing Fischell’s Brook for-
mation in the Flat Bay-1 discovery well was 100 m.
The formations were deeper than expected and beyond the
rig’s depth capacity at core hole 5, but minor live oil shows were
encountered in a sandy lense in an anhydrite that overlies the
unpenetrated target formations.
Holes 4 and 9 were drilled updip of the find and encoun-
tered shallow basement without any oil-bearing target inter-
vals, though both found live oil shows in basement fractures.
Cris-R hydrocarbons logged at ultradeep shelf well
McMoRan Exploration Co. will apply to deepen its Lafitte ul-
tradeep prospect well on the Gulf of Mexico shelf to 32,000 ft
to evaluate deeper Miocene and Oligocene objectives after wire-
line logs indicated 56 net ft of hydrocarbon-bearing sand with
good porosity in a 58-ft gross Lower Miocene Cris-R section.
McMoRan has drilled the Lafitte well, in 140 ft of water on
Eugene Island Block 223, to 29,756 ft and run wireline logs to
29,740 ft. Flow testing will be needed to confirm the flow ca-
pacity of the Cris-R section, which is full to base.
111121OGJ_8 8 11/17/11 1:04 PM
16TH EDITION
CONFERENCE & EXHIBITION
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INTERNATIONAL CONFERENCE CENTRE
ABUJA, NIGERIA
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111121OGJ_9 9 11/17/11 1:05 PM
10 Oil & Gas Journal | Nov. 21, 2011
The Cris-R interval brings the well’s total possible produc-
tive net sands to 171 ft when combined with the 115 ft of po-
tential net pay encountered previously. New Orleans-based
McMoRan controls 15,000 gross acres in the immediate area.
McMoRan said the Lafitte results enhance the potential of
its other acreage in the area, including its Barataria and Captain
Blood ultradeep prospects. Barataria covers 10,000 gross acres
west-southwest of Lafitte, and Captain Blood takes in 10,000
gross acres just south of Lafitte.
McMoRan has a 72% working interest and a 58.3% net rev-
enue interest in Lafitte. Other owners include Energy XXI (Ber-
muda) Ltd. 18% and Moncrief Offshore LLC 10%.
DRILLING & PRODUCTION
QUICK TAKES
Nexen signs North Sea drilling contract
Nexen Petroleum signed a drilling contract with Ensco PLC to
hire the Ensco 120, a harsh-environment jack up rig that Nexen
will use on its Golden Eagle development in the central North
Sea to drill at least 10 wells.
The estimated initial contract is $120 million. The contract
is expected to start during fourth-quarter 2013 following sys-
tems integration testing and mobilization. Terms allow Nexen
to extend the contract through 11 one-well options, potentially
increasing the contract value by an estimated $140 million.
The Ensco 120, now under construction at Keppel FELS
shipyard in Singapore, will be capable of operating in up to 400
ft of water. The jack up design enables large, multiwell platform
programs, ultradeep gas programs, and up to 40,000 ft total
drilling depth.
The rig will feature high-temperature, high-pressure equip-
ment, a proprietary Ensco high-capacity design cantilever
envelope, 2.5 million lb quad derrick, automated hands-free
offline pipe handling systems, ultra-high capacity jacking and
fixation systems, 150-person quarters, and strict noise and er-
gonomic standards.
The Ensco 120 is the first in a series of three such newbuild
jack ups. The Ensco 121 and Ensco 122 are scheduled for deliv-
ery in fourth-quarter 2013 and third-quarter 2014, respectively.
Lundin lets contract for Brynhild development
A unit of Lundin Petroleum AB signed a 700 million kroner
contract with Aker Solutions for the engineering, procurement,
and construction of a subsea production system for the Bryn-
hild project, offshore Norway.
Brynhild, discovered in 1992, is in about 80 m of water on
Block 7/7 in production license 148, adjacent to the Norwegian-
UK border. Lundin plans to develop the field with three subsea
wells tied back to the Shell-operated Pierce floating, produc-
tion, and offloading vessel on Blocks 23/22a and 23/27 in the
UK North Sea.
Lundin estimates that Brynhild holds about 20 million boe
and plans to produce the field at rates up to 12,000 boe/d.
The company submitted a development and operation plan
for Brynhild field (formerly called Nemo) to the Norwegian
Ministry of Petroleum and Energy in mid-2011 (OGJ, Aug. 8,
2011, Newsletter).
The scope of work under the contract with Aker Solutions
includes the delivery of one template-manifold structure, one
riser base, three subsea trees, three wellhead systems, control
system, a tie-in system, 38 km of umbilicals, high-pressure
riser, and rental tooling. The contract contains several options
for additional equipment, including other field developments.
Aker Solutions will primarily perform the management,
engineering, and procurement of the subsea production sys-
tem from Oslo. It plans to fabricate the subsea trees in Tranby,
Norway, the template-manifolds in Egersund, Norway, the um-
bilical in Moss, Norway, and deliver the wellhead systems from
Aberdeen. Its service base in Aagotnes, Norway, will handle the
installation and commissioning work. Aker Solutions expects
to make final deliveries in second-quarter 2013.
Petronas, Shell plan EOR projects off Malaysia
Petronas Carigali Sdn. Bhd. and Shell Malaysia signed an
agreement for two 30-year production-sharing contracts for en-
hanced oil recovery projects offshore Sarawak and Sabah.
Shell estimates the EOR projects will increase recovery fac-
tors to 50% from 36% in the Baram Delta (BDO) and North Sa-
bah fields. It expects to produce an additional 90,000-100,000
boe/d from the projects and estimates that the projects will ex-
tend field life beyond 2040.
The technology planned for the North Sabah fields could
potentially lead to the first field-scale offshore chemical EOR
project in the world, according to Shell.
The new agreement builds on the existing BDO and North
Sabah PSCs.
Petronas Carigali holds a 60% interest in the BDO produc-
tion sharing contract (expiry 2018) and is operator while Shell
holds the remaining 40%.
The North Sabah PSC (expiry 2019) is Shell operated with
each company holding an equal 50% share.
PROCESSING
QUICK TAKES
IOC plans new refineries, major expansion
Indian Oil Corp. Ltd., India’s largest refiner, plans to raise its
total refining capacity to 2.46 million b/d by 2020-21 with two
new refineries and a major expansion.
At a meeting in Vadodara, Gujarat, Rajkumar Ghosh, di-
rector (refineries), disclosed early plans for construction of a
300,000 b/d refinery in the western part of the country.
He also said the 274,000 b/d Gujarat Refinery at Koyali, Va-
dodara, would be expanded to 360,000 b/d by 2016-17 and
460,000 b/d by 2020-21.
Under construction by the state-owned company now is the
300,000 b/d Paradip Refinery in Orissa (OGJ, Nov. 22, 2010).
The Ministry of Petroleum and Natural Gas estimates the refin-
ery will start up in first-quarter 2013.
111121OGJ_10 10 11/17/11 1:04 PM
Oil & Gas Journal | Nov. 21, 2011 11
The company will have 10 refineries when the grassroots
projects are complete.
CVR Energy plans to buy refinery in Oklahoma
CVR Energy Inc. plans to buy Gary-Williams Energy Corp.
and its Wynnewood, Okla., refinery and related assets for $525
million in a transaction expected to close by yearend. Closing
remains subject to regulatory approvals.
CVR Energy said acquisition of the 52,500-b/cd Wyn-
newood refinery will increase the scale and diversity of CVR
Energy’s refining operations.
Based in Sugar Land, Tex., CVR Energy already owns
120,000 b/cd refinery in Coffeyville, Kan. Gary-Williams En-
ergy is based in Denver with marketing and operations in Okla-
homa.
TRANSPORTATION
QUICK TAKES
ConocoPhillips sells Seaway pipeline stake
ConocoPhillips has entered into agreements to sell its interests
in two US pipeline companies for $2 billion. In its first sale,
ConocoPhillips will divest its interest in Seaway Crude Pipe-
line Co. to Enbridge Holdings (Seaway) LLC, a subsidiary of
Enbridge (US) Inc., which will reverse its flow to bring crude
form Cushing, Okla., to the US Gulf Coast.
Enbridge Inc. and Enterprise Products Partners LP (EPP)
agreed to reverse the direction of oil flows on Seaway with an
initial capacity of 150,000 b/d in second-quarter 2012. Follow-
ing pump station additions and modifications, anticipated to be
completed by early 2013, the capacity of the reversed Seaway
Pipeline will reach 400,000 b/d.
The companies expect the reversed Seaway to be fully con-
tracted and will conduct an open season to validate shipper
support for an expansion of Seaway, through looping or twin-
ning. The 670-mile Seaway system includes the 500-mile, 30-
in. OD Freeport, Tex., to Cushing, Okla., long-haul system, and
the Texas City Terminal and Distribution System, serving refin-
eries in the Houston and Texas City areas. SCPC also includes
6.8 million bbl of crude oil tankage on the Texas Gulf Coast and
four import docks at two sites.
Enbridge and EPP also plan to build a 45-mile pipeline link-
ing Seaway directly to EPP’s ECHO crude oil storage terminal
southeast of Houston. The joint-venture partners estimate costs
to reverse the line and construct supporting lateral and related
facilities at roughly $300 million.
Enbridge bought ConocoPhillips’s 50% interest in Seaway
for $1.15 billion. EPP will continue to operate the pipeline sys-
tem and storage facilities. Enbridge and ConocoPhillips expect
the transaction to close in December or early 2012, subject to
customary approvals.
Separately, ConocoPhillips also will sell a 16.55% interest
in Colonial Pipeline Co. and Colonial Ventures LLC to Caisse
de depot et placement du Quebec. ConocoPhillips expects the
transaction to close first-quarter 2012 following approval by
shareholders in Colonial. ConocoPhillips described the sales as
part of an ongoing effort to divest noncore assets.
ConocoPhillips sold the Seaway Products Pipeline Co. to
DCP Midstream in June. DCP will convert the line to NGL ser-
vice (OGJ Online, June 13, 2011).
FERC reports on Marcellus shale projects
Four projects to transport Marcellus shale gas went into service
during October as two more were announced, the US Federal
Energy Regulatory Commission said on Nov. 14 as its energy
projects office released its latest monthly update.
It said National Fuel Gas Co.’s pipeline and storage division
placed its Line N replacement and Lines R and I expansion
projects into service on its Line N system in western Pennsyl-
vania. The projects will provide 150 MMcfd of firm Marcellus
shale gas transportation to Texas Eastern Transmission LP’s
pipeline in Greene County, Pa., FERC said.
Tennessee Gas Pipeline Co., meanwhile, placed its Line 300
expansion project into service, FERC said. The El Paso Corp.
subsidiary’s system will provide 360 MMcfd of firm transpor-
tation, include Marcellus shale gas, with increased reliability.
FERC said NFGC and TGP received approval to construct
and operate their Northern Access and Station 230C projects,
which will provide 320 MMcfd of transportation capacity for
Marcellus shale gas in Pennsylvania and New York.
The report also mentioned two projects outside the US
Northeast shale gas region. It said Northern Border Pipeline Co.
placed into service its nearly 9-mile Princeton Lateral project in
Illinois into service to provide 120 MMcfd of firm gas for Cen-
tral Illinois Light Co.’s plant near Princeton, Ill. It also said El
Paso Natural Gas Co. applied to construct and operate a project
to increase capacity of Wilcox Lateral in Cochise County, Ariz.,
by 185 MMcfd.
Pembina to expand Montney shale line capacity
Pembina Pipeline Corp. will install five new pump stations and
upgrade five existing pump stations to expand NGL through-
put capacity on its Peace and Northern Pipelines (together the
Northern NGL System) by 55,000 b/d to accommodate in-
creased field liquids extraction by producers in the Western
Canadian Sedimentary Basin.
Pembina expects to bring 20,000 b/d of the expansion into
service by yearend 2012 and the remaining 35,000 b/d by year-
end 2013, subject to commercial arrangements and regulatory
approvals.
The WCSB includes the Deep basin, Montney, Cardium, and
Duvernay shales. The Northern NGL System’s current capacity
is 115,000 b/d with average volumes of 88,000 b/d. Pembina
expects this to rise to 100,000 b/d by yearend due to commis-
sioning of its Edson pipeline expansion and the Musreau Deep
Cut facility.
Pembina has secured commercial agreements for 55% of the
expanded system’s 170,000 b/d capacity and expects its expan-
sion to cost about $100 million.
111121OGJ_11 11 11/17/11 1:04 PM
12 Oil & Gas Journal | Nov. 21, 2011
2011-2012 EVENT CALENDAR
org, website: www.api.
org. 25-26.
Gas Transport & Storage
Summit, Berlin, +44
(0)20 7202 7690, +44
(0)20 7202 7600 (fax),
website: www.gtsevent.
com. 26-27.
Plant Maintenance
and HSE Middle East
Annual Meeting, Abu
Dhabi, +971 2401
2932, +971 2401 1928
(fax), e-mail: s.mehta@
theenergyexchange.
co.uk, website: www.
wraconferences.com.
Jan. 29-Feb. 1.
Middle East and North
Africa Energy Confer-
ence, London, +44
(0)20 7957 5753, +44
(0)20 7321 2045 (fax).
website: www.chatham-
house.org/mena2012.
30-31.
Global Tight Oil Summit,
Houston, +44 (0) 20
7067 1800, +44 (0)
20 7242 2673 (fax),
e-mail: marketing@
theenergyexchange.
co.uk, website: www.
theenergyexchange.
co.uk. Jan. 31-Feb. 1.
Topsides Conference
& Exhibition, New Or-
leans, (918) 831-9161,
e-mail: registration@
pennwell.com, website:
www.topsidesevent.
com. Jan. 31-Feb. 2.
Brazil Gas Congress,
Sao Paulo, +55 11
3164 5600, e-mail:
atendimento@iqp.com,
website: www.brazilgas-
congress.com/event.
Jan. 31-Feb.2.
FEBRUARY 2012
Global Pipeline Inspec-
tion and Integrity Fo-
rum, Amsterdam, +44
(0)20 3002 2371, +44
(0)20 3002 3003 (fax),
e-mail: olas@marcu-
sevansuk.com, website:
www.marcusevans.
com. 1-3
OGIS Florida Meeting,
Palm Beach, Fla., (202)
857-4722, (202) 857-
4799 (fax), website:
www.ipaa.org. 2-3.
UT Energy Forum,
Austin, (512) 471-8839,
e-mail: info@UTEner-
avForum.com, website:
www.utenergyforum.
com. 2-3.
SPE Hydraulic Fractur-
ing Technology Confer-
ence, The Woodlands,
Texas, (972) 952-9393,
(972) 952 9435 (fax),
e-mail: spedal@spe.
org, website: www.spe.
org. 6-8.
Pipeline Pigging &
Integrity Management
Conference, Houston,
(713) 521-5929. (402)
557-5723 (fax), e-mail:
info@clarion.org,
website: www.clarion.
org. 6-9.
ARC World Industry
Forum, Orlando, (781)
472-1000, e-mail: info@
arcweb.com, website:
www.arcweb.com/
events. 6-9.
IADC Health Safety
Environment and Train-
ing Conference and
Exhibition, Houston,
(713) 292-1945, (713)
292-1946 (fax), e-mail:
info@iadc.org, website:
www.iadc.org. 7-8.
Carbon Management
Technology Conference,
Orlando, (972) 952-
9393, (972) 952-9435
(fax), e-mail: registra-
tion@carbonmgmt.org,
website: www.carbon-
mgmt.org. 7-9.
Denotes new listing or
a change in previously
published information.
NOVEMBER 2011
IADC Critical Issues
Asia Pacific Confer-
ence & Exhibition,
Kuala Lumpur, (713)
292-1945, (713) 292-
1946 (fax), e-mail:
conferences@iadc.org.
website: www.iadc.org/
conferences/Critical_Is-
sues_ME_2011. 23-24.
AGM and Technical
Meeting, London, +44
1252 625 542, e-mail:
admin@gpaeurope.
com, website: www.
gpaeurope.com/events/
event/20/. 24.
Optimal Hydrocarbons
Logistics, A. Coruna,
+34 91 700 12 71,
e-mail: jlopez@iirspain.
com, website: http://
www.iirspain.com/
programas/CF0167.pdf.
29-30.
Global Tight Oil Summit,
Denver, +44 (20) 7067
1800, +44 (20) 7242
2673 (fax), e-mail:
z.nathan@theenergyex-
change.co.uk, website:
www.theenergyex-
change.co.uk. Nov.
29-Dec. 1.
Refining and Petro-
chemicals in Russia
and The CIS Countries
Annual Roundtable,
Geneva, +44 (0) 207
067 1818, +44 (0)
207 430 0552, e-mail:
j.sundaralingam@
theenergyexchange.
co.uk, website: www.
wraconferences.com.
Nov. 29-Dec. 2.
DECEMBER 2011
DEA(e) Technical Oil
& Gas Conference
on Downhole drilling
Technology, Aber-
deen, +44 (0) 1483
598000, e-mail: dawn.
dukes@otmnet.com,
website: www.dea-
europe.com. 1-2.
ASTM International
Committee D02 on
Petroleum Products and
Lubricants, New Or-
leans, (610) 832-9681,
e-mail: dbradley@astm.
org,website: www.astm.
org/COMMIT/D02.htm.
4-8.
20th World Petroleum
Congress, Doha, +974
44 491373, 974 44
291080 (fax), e-mail:
info@20wpc.com,
website: www.20wpc.
com. 4-8.
Gas Arabia Summit,
Muscat, +44 (20) 7067
1800, +44 (20) 7242
2673 (fax), e-mail:
wra@theenergyex-
change.co.uk, website:
www.theenergyex-
change.co.uk. 11-14.
PIRA Natural Gas Mar-
kets Conference, New
York, (212) 686-6808,
(212) 686-6628 (fax),
e-mail: sales@pira.com,
website: www.pira.com.
12-13.
PIRA Understanding
Global Oil Markets
Conference, New York,
(212) 686-6808,
(212) 686-6628 (fax),
e-mail: sales@pira.com,
website: www.pira.com.
14-15.
PIRA Coal and
Emissions Markets
Conference, New York,
(212) 686-6808,
(212) 686-6628 (fax),
e-mail: sales@pira.com,
website: www.pira.com.
14-15.
JANUARY 2012
Pipe Tech Ameri-
cas Annual Offshore
Production Technology
Summit, London, +44
(0)20 7202 7574, +44
(0)20 7202 7600 (fax)
e-mail: hejke.coetzee@
wtgevents.com. Web-
site: www.offshore-
summit.com. 16-18.
World Future Energy
Summit, Abu Dhabi,
+9712 4446113, +9712
4443768 (fax), website:
www.worldfutureener-
gysummit.com. 16-19.
Summit, Houston,
(416) 214-1707, (416)
214-3403 (fax), e-
mail: laurence.allen@
wtgevents.com, web-
site: www.pipetecha-
mericas.com/program.
18-19.
International Forum
Process Analytical
Technology (IFPAC)
Annual Meeting, Balti-
more, (847) 543-6800,
(847) 548-1811, fax,
e-mail: info@ifpacnet.
org, website: www.ifpac.
com. 22-25.
Flow Assurance Forum,
Aberdeen, +44 (0) 20
7368 9300, e-mail:
enquire@iqpc.co.uk,
website: www.flowas-
surance.org/event.
23-24.
SPE Middle East Un-
conventional Gas Con-
ference and Exhibition,
Abu Dhabi, (972) 952-
9393, (972) 952 9435
(fax), e-mail: spedal@
spe.org, website: www.
spe.org. 23-25.
API Exploration and
Production Winter
Standards Meeting, Fort
Worth, Texas, (202)
682-8195, e-mail: reg-
istrar@api.org, website:
www.api.org. 23-27.
IPAA Private Capital
Conference, Houston,
(201) 857-4722, (202)
857-4799 (fax), web-
site: www.ipaa.org. 24.
AAPG GTW Deepwater
Reservoirs Multi-Disci-
plinary Exploration and
Development Confer-
ence, Houston, (918)
560-2650, (918) 560-
2678 9(fax), website:
www.aapg.org. 24-25.
Annual Shale Gas & Oil
Symposium, Calgary,
Alta., (877) 927-7936,
(877) 927-1563 (fax),
e-mail: customerser-
vice@canadianinstitute.
com, website: www.
canadianinstitute.
com/2012/318/8th-
annual-shale-gas-and-
oil-symposium. 24-25.
Annual Chem-Petro-
chem and Refining
Asset Management
Conference, Houston,
(312) 540-3000 ext.
6754, (312) 894-6304
(fax), e-mail: lindseysi@
marcusevansch.com,
website: www.marcu-
sevans.com. 24-26.
Offshore West
Africa Conference &
Exhibition, Abuja, (918)
831-9160, (918) 831
9161 (fax), e-mail:
registration@pennwell.
com, website: www.
offshorewestafrica.com/
index.html. 24-26.
European Gas Confer-
ence, Vienna, +44 (20)
7067 1800, +44 (20)
7242 2673 (fax), e-mail:
wra@theenergyex-
change.co.uk, website:
www.theenergyex-
change.co.uk. 24-27.
API/AGA Joint Commit-
tee on Pipeline Welding
Practices, Fort Worth,
Texas, (202) 682-8195,
e-mail: registrar@api.
111121OGJ_12 12 11/17/11 1:06 PM
Oil & Gas Journal | Nov. 21, 2011 13
2011-2012 EVENT CALENDAR
International
Petroleum Technology
Conference, Bangkok,
+60 3 2288 1233, +60
3 2282 1220 (fax),
e-mail: iptc@iptcnet.org,
website: www.iptcnet.
org. 7-9.
Middle East Technology
Forum (METECH)—
Dubai, +603 9058
2211, +603 9057 3811
(fax), e-mail: Enquiries@
Europetro.com, website:
www.europetro.com.
14-15.
SPE International Sym-
posium and Exhibition
on Formation Damage
Control, Lafayette,
(972) 952-9393, (972)
952 9435 (fax), e-
mail: spedal@spe.org,
website: www.spe.org.
15-17.
MTB Oil & Gas Confer-
ence, Dubai, 01276
682898, 01276 63736
(fax), e-mail: info@
coplandevents.com,
website: www.cop-
landevents.com/event.
php?id=21. 15-18.
Russia & CIS Executive
Summit Downstream Oil
& Gas, Dubai, Dubai,
+603 9058 2211, +603
9057 3811 (fax), e-mail:
Enquiries@Europetro.
com, website: www.
europetro.com. 16-17.
International Petroleum
Geophysics Conference
& Exposition, Hydre-
rabad, Andhra Pradesh,
+91 135 2795536,
e-mail: spgindia@
rediffmail.com, website:
www.member.seg.org.
16-18.
Downstream Tech-
nology Conference,
Fahaheel, +971 4 364
2975, e-mail: enquiry@
iqpc.ae, website: www.
downstreamtechnology.
com/event. . 19-22.
Annual Production
Optimization Middle
East Summit, Fahaheel,
+971 4 364 2975,
e-mail: enquiry@iqpc.
ae, website: www.pro-
ductionoptimizationme.
com/event. 19-22.
Africa Pipeline Sum-
mit, Johannesburg,
+971 4 364 2975,
e-mail: enquiry@iqpc.
ae, website: www.
oilandgasiq.com/events.
20-21.
North Africa Technical
Conference and Exhibi-
tion, Cairo, (972) 952-
9393, (972) 952 9435
(fax), e-mail: spedal@
spe.org, website: www.
spe.org. 20-22.
International
Nitrogen+Syngas
Conference & Exhibi-
tion, Athens, +44 (0)
20 7903 2444, +44
(0) 20 7903 2432 (fax),
e-mail: conferences@
crugroup.com, website:
www.crugroup.com.
20-23.
Nigeria Oil & Gas Stra-
tegic Conference and
Exhibition, Abuja, 44 20
7978 0000, e-mail: en-
quiries@thecwcgroup.
com, website: www.
africa-energy.com/html/
Public/events.html.
20-23.
Offshore Asia Confer-
ence & Exhibition,
Kuala Lumpur, (918)
831-9160, (918) 831
9161 (fax), e-mail:
registration@pennwell.
com, website: www.
offshoreasiaevent.com/
index.html. 21-23.
Pipe Line Contractors
Association Annual
Convention, Carlsbad,
Calif., (214) 969-2700,
e-mail: plca@plca.org,
website: www.plca.org/
convention. 21-25.
SPE European Artificial
Lift Forum, Aberdeen,
+44 20 7299 3300,
+44 20 7299 3309
(fax), e-mail: spelon@
spe.org, website: www.
spe.org/events. 22-23.
NAPE, Expo, Hous-
ton, (202) 857-4722,
(202) 857-4799 (fax),
website: www.ipaa.org/
meetings. 22-24.
Australasian Oil & Gas
Exhibition & Confer-
ence (AOG), Perth,
+61 39261 4500, +61
39261 4545 (fax),
e-mail: aog@divexhibi-
tion.com.au. website:
www.aogexpo.com.au.
22-24.
GPA Europe Technical
Meeting, Antwerp, +44
(0) 1252 625542, web-
site: www.gpaeurope.
com/events. 22-25.
Deepwater Technol-
ogy Asia Conference,
Jakarta, 65 6222 3422,
e-mail: zaman@safan.
com, website: www.
safan.com/conferences/
dwta12/dwtacallf-
p12htm. 23-24.
Flow Assurance and
Integrated Production
Technology Conference,
Abu Dhabi, +971 4 364
2975, e-mail: enquiry@
iqpc.ae, website: www.
oilandgasiq.com/events.
26-29.
Laurance Reid Gas
Conditioning Confer-
ence, Norman, Okla.,
(405) 325-3136,
e-mail: bettyk@ou.edu,
website: www.engr.
outreach.ou.edu/lrgcc.
26-29.
International Pipeline
Coating Conference,
Vienna, +44 (0) 117
924 9442, +44 (0)
117 989 2128 (fax),
e-mail: info@amiplas-
tics.com, website:
www.2amiplastics.com/
events. 27-29.
Shutdowns and
Turnarounds Forum,
Aberdeen, +971 4 364
2975, e-mail: enquiry@
iqpc.ae, website: www.
oilandgasiq.com/events.
27-29.
Arctic Region Oil & Gas
Conference, Stavan-
ger, +44 (0) 20 7596
5173, e-mail: oilgas@
ite-exhibitions.com,
website: www.ar-oilgas.
com. 28-29.
NPRA Security Confer-
ence & Exhibition,
Houston, (202) 457-
0480, (202) 457-0486
(fax), e-mail: info@npra.
org, website: www.npra.
org. 28-29.
MARCH 2012
International Gas Pro-
cessing Symposium,
Doha, +974 4403
4373, +974 4403
4371 (fax), e-mail:
aaroussi@qu.edu.
qa, website: www.
gasprocessingcenter.
com. 4-7.
Middle East Geosci-
ences Conference &
Exhibition, Manama,
+44 (0) 20 7840 2136,
+44 (0) 20 7840 2119
(fax), e-mail: aridg-
way@oesallworld.com,
website: www.geo2012.
com. 4-7.
Annual International
LPG Seminar, The
Woodlands, Texas,
(713) 331-4000, (713)
236-8490 (fax), web-
site: www.purvingertz.
com. 5-7.
Offshore Pipeline
Technology Conference,
Amsterdam, +44 (0)20
7017 5518, e-mail:
energycustserv@
informa.com, website:
www.ibcenergy.com/
FKA2244OGJ. 6-7.
APPEX Expo, London,
+44 (0) 207 434 1399.
+44 (0) 207 434 1386
(fax), website: www.ap-
pexlondon.com. 6-8.
API Conference & Exhi-
bition, Singapore, (202)
682-8195, e-mail: reg-
istrar@api.org, website:
www.api.org. 6-8.
Subsea Tieback Forum
& Exhibition, Galveston,
Texas, (713) 963-6256,
(713) 963 6212 (fax),
e-mail: sneighbors@
pennwell.com, website:
www.subseatiebackfo-
rum.com. 6-8.
IADC/SPE Drilling Con-
ference and Exhibition,
San Diego, (713) 292-
1945, (713) 292-1946
(fax), e-mail: info@iadc.
org, website: www.iadc.
org/conferences. 6-8.
Annual Petcoke Confer-
ence, Olando, Fla.,
(832) 351-7828, (832)
351-7887 (fax), e-mail:
petcoke@jobs.com,
website: www.petcokes.
com. 9-10.
NPRA Annual Meeting,
San Diego, (202) 457-
0480, (202) 457-0486
(fax), e-mail: info@npra.
org, website: www.npra.
org. 11-13.
Annual Asset
Integrity Management
Conference Week, Abu
Dhabi, +971 4 364
2975, e-mail: enquiry@
iqpc.ae, website: www.
oilandgasiq.com/events.
11-15.
NACE International
Corrosion Conference
& Expo, Salt Lake City,
(281) 228-6200, (281)
228-6300 (fax), e-mail:
firstservice@nace.org,
website: www.events.
nace.org. 11-15.
Unconventional Gas
Forum, Barcelona, +44
(0) 20 7202 7727, e-
mail: sarah.brzezicki@
wtgevents.com, web-
site: www.unconven-
tionalgasforum.com.
13-14.
European Fuels Confer-
ence, Paris, +44 (0)
207 067 1800, +44
(0) 207 430 9513 (fax),
e-mail: e.hulban@
theenergyexchange.
co.uk, website www.
wra.conferences.com.
13-16.
IADC Dual Gradient
Drilling Seminar, Milan,
(713) 292-1945, (713)
292-1946 (fax), e-mail:
info@iadc.org, website:
www.iadc.org/confer-
ences. 19.
SPE UK Oil & Gas
Environmental Semi-
nar, London, 07736
070066, e-mail:
katespe@aol.com,
website: www.spe-uk.
org. 19.
CIPPE China Inter-
national Petroleum &
Petrochemical Tech-
nology & Equipment
Exhibition, Beijing, +91
9654436426, e-mail:
biztradeshows@hotmail.
com, website: www.
biztradeshows.com/
trade-events/cippe.
html. 19-21.
111121OGJ_13 13 11/17/11 1:06 PM
JOURNALLY SPEAKING
14 Oil & Gas Journal | Nov. 21, 2011
SAM FLETCHER
Senior Writer
TV ignores energy news
As an old newspaper reporter, I acknowledge my
prejudice against television news with its “if it
bleeds, it leads” mentality.
TV is great for showing floods, fires, and ter-
rorist attacks. I once saw a TV cameraman at the
site of an auto accident give the wheel of an over-
turned car a spin by hand and then film it to im-
part a sense of immediacy to his coverage of the
wreck. But without lurid bits of film, TV news is
terrible at reporting subjects such as economics,
and it has reduced debate of complicated political
issues to simple sound-bites.
I long ago gave up watching TV news. But now
that I work from home, I often hear the news re-
ports and talk shows less-picky family members
are watching in the next room as I’m filing reports
on the energy market. And what sticks out like a
sore thumb is the lack of US TV coverage of the
economic crisis that is shaking Europe. European
economies teeter, governments fall, all with major
lessons for and potential damage to our own gov-
ernment and economy. Yet US residents who rely
on TV for news hear practically nothing about it.
Keystone XL delayed
Even a major backyard event such as the adminis-
tration’s recent decision to postpone past next year’s
presidential election any action on the Keystone XL
pipeline that would carry crude from Alberta to
Texas got little mention on TV or even in general
print media in this country.
Analysts in the Houston office of Raymond
James & Associates Inc. described it best: “It is
often said that America acts while Europe dithers.
Recent events are proving the opposite,” they said.
“After the leaders of Germany and France decided
that Greece needs a new government, it took less
than a week…. By contrast, the White House is
pushing out its decision on the Keystone XL pipe-
line until after the 2012 election. To recap: one
week to remove the elected leader of a G-7 coun-
try, and several years to make a decision on a pipe-
line. You can decide who’s got their act together.”
After throwing money at now-bankrupt alter-
native energy companies in pretense of reducing
US dependence on unfriendly foreign oil suppli-
ers, the US government apparently torpedoed a
private project that would increase oil supplies
from the biggest, friendliest source outside our
own borders.
At KBC Energy Economics, a division of KBC
Advanced Technologies PLC, analysts said, “The
US move to put off a decision on TransCanada
Corp.’s proposed $7 billion Keystone XL pipeline
for 18 months is a significant blow for Ottawa,
which had strongly backed the project, and its fu-
ture is now uncertain. Canada currently exports
about 2 million b/d of oil, almost all of it to the US.
The Keystone project is one of two that oil sands
producers have been counting on to deliver oil
from Alberta’s oil sands to markets other than the
oversupplied US Midwest.”
KBC analysts reported, “At this stage, it is un-
certain who the main beneficiary of the US de-
cision to delay the project will be, but there is
certainly the possibility that Ottawa will focus its
efforts on marketing its oil in Asia, denying yet
another source of supply to Europe and the US.”
Raymond James analysts said, “Given that
TransCanada has supply contracts for volume
commitments due to expire in 2012 and 2013, the
delay could mean the end of XL.”
They also pointed out, “There are several proj-
ects under way that would undercut XL, includ-
ing Enbridge Inc.’s Northern Gateway project and
the proposed Wrangler pipeline—a possible JV
between Enbridge and Enterprise Products Part-
ners LP. Further, with the recent completion of the
Bakken Oil Express and several other rail projects
under way, the delay could be a boon for the North
American railroad industry. In short, we expect
more Canadian crude to move east and the Cush-
ing, Okla., glut, which is driving the Brent-West
Texas Intermediate disconnect, to persist.”
111121OGJ_14 14 11/17/11 1:06 PM
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EDITORIAL
16 Oil & Gas Journal | Nov. 21, 2011
Big profits, big work
Anyone bothered by scale and wanting to be taken
seriously should avoid talking about energy. It’s a
big subject, an important subject, a subject that
raises big questions about the future. It’s also a
subject encompassing enormous amounts of mon-
ey—capital invested, costs incurred, profits earned,
losses suffered. The money relates to need. Seven
billion people in an industrializing world need lots
of energy.
This won’t change. The numbers won’t shrink.
Investment needs
The International Energy Agency recently pro-
jected 30% growth in global demand for energy in
the next 25 years. Other projections put demand
growth over that period nearer to 50%. IEA says
meeting the need it sees requires investment of $38
trillion.
If that much investment is to occur, if energy
demand is to be met, people and institutions risk-
ing the capital must be able to expect competitive
rates of return. They must have the chance to earn
profits, sometimes very large profits. Any imposed
limit on expectations for energy profits limits hope
for meeting energy demand at predicted levels.
US Sen. Robert Menendez (D-NJ) proposes
such a limit.
In support of discriminatory taxation of the
five largest oil and gas companies active in the US,
Menendez points to recent profits. Those profits
are big. The companies are big. They do big work.
Menendez was lead sponsor of the Close Big
Oil Tax Loophole Act, the latest version of which
died May 17 after failing to win enough votes to
avoid a filibuster. The senator has revived his pop-
ulist antics by calling on the secretive Joint Select
Committee on Deficit Reduction to do what open
democracy would not. That group, better known
as “the super committee,” faces a Nov. 23 deadline
for a plan to trim the federal budget deficit by $1.2
trillion. Failure would trigger automatic spending
cuts.
Menendez wants to deny the five companies
whose profits he so regrets access to six tax mea-
sures he persistently mischaracterizes as sub-
sidies. In a Nov. 2 press release, he called them
“super subsidies.”
The tax changes come from the budget Presi-
dent Barack Obama has proposed in each of his
three years in office but hasn’t been able to push
through Congress. Of the six, only percentage
depletion can be considered a subsidy, and then
only to the extent depletion charges exceed a
property’s cost basis. The five companies whose
taxes Menendez hopes to raise don’t fit that condi-
tion. They, like all integrated oil and gas compa-
nies, haven’t been able to use percentage depletion
since 1975.
To call the other tax measures subsidies strains
credibility. Where’s the subsidy in charging im-
mediately to expense costs incurred during the
drilling and stimulation of wells for materials and
services that leave behind nothing of salvageable
value? Where’s the subsidy in a deduction available
at a greater rate to companies in other industries?
Where’s the subsidy in a tax credit designed to
prevent double taxation of profits earned abroad?
Alarming failure
In his press release, Menendez combined dema-
goguery over “subsidies” with his tilting at the prof-
it windmill, relating the $21 billion he claims his
tax measure would generate over 10 years to the
$100.5 billion the five targeted companies earned
together in the first three quarters this year. “We
should not be spending 21 billion taxpayer dollars
to unfairly reward their tremendous success,” he
said. The statement might have meant something
if the companies’ effective income tax rate fell be-
low industry averages. It doesn’t. According to the
American Petroleum Institute, the oil and gas in-
dustry’s effect tax rate is 41.1%; that of other indus-
trial companies is 26.5%.
Raising taxes preferentially on big oil and gas
companies because they earn big profits would
be unfair. The proposal to do so should alarm all
companies in all industries. It also reveals appall-
ing failure to appreciate how much work humanity
needs big companies to perform on energy. Failure
on that scale by elected officials should alarm all
Americans.
111121OGJ_16 16 11/17/11 1:06 PM
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18 Oil & Gas Journal | Nov. 21, 2011
GENERAL INTEREST
Senate committee ponders risks,
benefits of LNG exports
Nick Snow
Washington Editor
outside the chemical industry, and more than $132 billion
in US economic output—all associated with the shale gas
revolution,” Slaughter said.
Global markets likely will determine how many US LNG
export projects actually go ahead, one federal official indi-
cated. “As we’re now considering applications with about 6.6
bcfd of total exporting capacity, the department decided that
more detailed examination of a broad range of impacts was
warranted,” said Christopher A. Smith, deputy assistant US
energy secretary for oil and gas in DOE’s fossil energy office.
Criteria include US gas needs; adequacy of supplies; US
energy security; impacts on the US economy, consumers,
and industries; job creation, the US balance of trade; inter-
national considerations; environmental considerations; and
consistency with DOE’s long-standing policy of promoting
market competition through free negotiation of trade ar-
rangements, he said in his written testimony.
A second federal official—Jeff C. Wright, energy projects
office director at the US Federal Energy Regulatory Commis-
sion—noted that switching an existing terminal from im-
ports to exports primarily would involve installing refriger-
ant pumps. Building one from scratch would take 3-4 years,
with storage tank construction the most important part of
the process, he told the committee.
Committee member Ronald L. Wyden (D-Ore.) said
FERC approved an application to construct an LNG import
terminal in Oregon over state and local protests, adding that
the project’s sponsor now wants to configure it for exports.
Wright said the new application would be subject to rigor-
ous conditions and, if the project is authorized, mitigation
measures would be identified and implemented before con-
struction could begin.
Possible directions
US markets will continue to improve as more storage is con-
structed to reduce price volatility, Wright continued. More
natural gas vehicles also could be introduced, particularly
in fleets, while gas demand to generate electricity continues
to grow, Wright said. “In terms of getting infrastructure in
place to move gas away from producing fields to markets,
Abundant shale gas resources in the US that have turned the
natural gas supply outlook from a shortage to a surplus also
are stimulating proposals to export—instead of import—
LNG. Policies to encourage such projects should be carefully
considered, witnesses told the US Senate Energy and Natu-
ral Resources Committee on Nov. 8.
Higher prices resulting from possibly tighter supplies are
the most obvious risk, they suggested. Five LNG export ap-
plications have been filed with the US Department of En-
ergy, said Jim Collins, underground utilities director for the
city government in Hamilton, Ohio, who testified on the
American Public Gas Association’s behalf.
“Just the volumes enumerated in these few applications
would make the United States the second-largest exporter
of LNG in the world,” he noted. “These five applications, if
granted by DOE, would permit the export of just under 3 tcf
of natural gas, which represents over 10% of our consump-
tion on an annual basis. This level of export would have seri-
ous adverse implications not only for domestic consumers…
but also for US national security.”
One committee member, Christopher A. Coons (D-Del.),
asked if it would be a better long-term strategy to export
goods manufactured from plants fueled with US gas instead
of LNG. Another, John Hoeven (R-ND), said producers in his
state would prefer selling gas associated with oil recovered
from the Bakken fomation to flaring it, as many do now.
Abundant US supplies not only could provide a reliable
source of less-polluting fuel to generate electricity, but also
might help revive the country’s chemical manufacturing, ob-
served Andrew Slaughter, upstream Americas business en-
vironment advisor, for Shell Exploration & Production Co.
in Houston. Shell recently announced that it is considering
building a gas-to-chemicals plant in the Marcellus shale re-
gion, and seven other companies also have reported plans
for similar facilities, he said.
Shale-associated jobs
“A recent study by the American Chemistry Council noted
the potential for 17,000 new knowledge-intensive, high-pay-
ing jobs in the US chemical industry, another 400,000 jobs
111121OGJ_18 18 11/17/11 1:11 PM
Oil & Gas Journal | Nov. 21, 2011 19
FERC has tried to move expeditiously,” he said.
Wyden also raised the issue of impacts on price in the
US. He noted that spot gas prices are significantly higher
in Asia and asked if US customers would need to compete
with overseas consumers for gas produced domestically.
Smith said DOE already considers price consequences as it
reviews each LNG export application, adding that US gas
prices are volatile but primarily driven by North American
demand. Gas prices also are significantly less fungible than
crude oil’s since there are about 11,000-12,000 crude tank-
ers in the global fleet, compared to a fleet “somewhere in the
hundreds” for LNG tankers, he added.
Another witness—Kenneth B. Medlock III, deputy direc-
tor of the energy forum at Rice University’s Baker Institute for
Public Policy in Houston, said direct comparisons of US and
Asian gas prices don’t always consider that overseas sales are
not in dollars, and that the US currency’s direction creates
arbitrage opportunities. Commercial interest in markets will
determine where US gas is consumed, he suggested.
DOE also is working with other countries to export tech-
nology as well as LNG, but is not considering natural gas liq-
uid exports, Smith said. “We’re looking at ways to increase
opportunities for American companies to increase LNG sup-
plies worldwide,” he told the committee. “The department
also values the sanctity of contracts. As we do our work,
we’ll make certain they stand up to Natural Gas Act obliga-
tions. If the situation changes, DOE has the authority to re-
visit agreements for national security reasons.”
“Certainly, outside of North America, shale gas forma-
tions exist,” said Medlock. “Whether technologies can be
transferred abroad is not as great a factor as access for a
wide range of operators. Governments control more of the
resources abroad. Smaller producers in the US were able to
develop resources here that would not always be available
overseas.”

State Department delays Keystone XL
oil sands pipeline decision until 2013
In a move that will delay a decision on the Keystone XL pipe-
line until at least the first quarter of 2013, the US Depart-
ment of State will study an alternate route for the important
project to connect the oil sands region of Alberta with high-
conversion refineries on the Texas Gulf Coast.
In August, the department accepted a final environ-
mental impact statement (EIS) saying the project posed no
major environmental threat. But environmental groups op-
posing the project have increased pressure on the Obama
administration, which faces an election in November 2012.
The possibility of a delay increased on Nov. 9 when the
State Department inspector general said it would inves-
tigate the department’s handling of the EIS (OGJ Online,
Nov. 9, 2011).
TransCanada, which made its proposal to build the
1,661-mile, 36-in. expansion of the existing Keystone sys-
tem in 2008, said it remained confident about ultimate ap-
proval but warned of harm from the delay.
“This project is too important to the US economy, the
Canadian economy, and the national interest of the United
States for it not to proceed,” said Russ Girling, TransCanada
president and chief executive officer.
The new delay, he said, could hurt shippers and US refin-
ers.
“Supplies of heavy crude from Venezuela and Mexico to US
refineries will soon end,” he said. “If Keystone XL is continu-
ally delayed, these refiners may have to look for other ways
of getting the oil they need. Oil sands producer face the same
dilemma—how to get their crude oil to the Gulf Coast.”
State’s decision
In its announcement about the delay, the State Department said
that during public hearings it heard consistent expressions of
concern about the proposed transit of Nebraska’s Sand Hills
area, which includes wetlands and shallow aquifers.
The department noted that the Nebraska legislature has
scheduled a special session to study the project.
“State law primarily governs routes for interstate petro-
leum pipelines,” it said. “However, Nebraska currently has
no such law or regulatory framework authorizing state or lo-
cal authorities to determine where a pipeline goes.
“Taken together with the national concern about the
pipeline’s route, the department has determined it is neces-
sary to examine in-depth alternative routes that would avoid
the Sand Hills in Nebraska in order to move forward with a
national interest determination for the presidential permit,”
which is necessary because the pipeline would cross an in-
ternational border.
“It is reasonable to expect that this process including a
public comment period on a supplement to the final EIS
consistent with NEPA (National Environmental Protec-
tion Act) could be completed as early as the first quarter
of 2013.”
The department said it then would consult with eight
other agencies to decide “whether the proposed pipeline was
in the national interest, considering all of the relevant issues
together. Among the relevant issues that would be consid-
ered are environmental concerns (including climate change),
energy security, economic impacts, and foreign policy.”
111121OGJ_19 19 11/17/11 1:11 PM
GENERAL INTEREST
20 Oil & Gas Journal | Nov. 21, 2011
dent’s camp in November 2012.”
National Petrochemical & Refiners Association Pres.
Charles T. Drevna said the decision “will strike a blow
against American workers who need jobs, against American
consumers who need energy, and against American econom-
ic and national security.”
Drevna said, “Turning our back on our good friend and
ally Canada will exponentially increase the odds that Ca-
nadian oil is shipped to China and other countries overseas
and will harm American fuel manufacturers and their em-
ployees.”
US Chamber of Commerce Pres. and Chief Executive Of-
ficer Thomas J. Donohue said, “Politics has trumped jobs in
this decision, and we can only wonder if the administration’s
Industry reaction
US oil industry and general business trade associations
lashed out at the decision.
American Petroleum Institute Pres. and Chief Executive
Officer Jack Gerard complained about a political dimension
of the decision.
“Whether it will help the president retain his job is unclear,
but it will cost thousands of shovel-ready opportunities for
American workers” he said. “There is no real issue about the
environment that requires further investigation, as the presi-
dent’s own State Department has recently concluded after ex-
tensive project reviews that go back more than 3 years.
“This is about politics and keeping a radical constituency
opposed to any and all oil and gas development in the presi-
IHS CERA: State Department’s Keystone XL delay creates new uncertainties
Nick Snow
Washington Editor
The US Department of State’s Nov. 10 decision to delay a
final recommendation on the proposed Keystone XL crude
oil pipeline’s cross-border permit application so alternative
routes can be considered will create new uncertainties for
Canadian heavy oil producers as well as US refiners, an IHS
CERA specialist said.
“In the next few years, existing US Midwestern markets
for Canadian oil sands will reach the saturation point,” Jackie
Forrest, oil sands dialogue senior director at IHS CERA, said
on Nov. 11. “By 2015, without new pipeline solutions to
bring oil sands barrels to markets outside the Midwest (such
as the US Gulf Coast), oil sands production growth could
stall for lack of new demand.”
The State Department said the delay effectively post-
pones into early 2013 any approval or rejection of Trans-
Canada Corp.’s application, which President Barack Obama
previously said he would handle personally. Forrest said it
would take about 2 years to build the $7 billion project and
put it into service if it’s approved.
“However, in the 2 years leading up to the in-service date
of the pipeline, oil sands producers would continue to face
steeper and steeper price discounts for their crudes, as oil
sands production growth will outstrip new demand in exist-
ing markets,” she said.
Keystone XL’s permit delay increases the possibility that
other projects to transport oil recovered from Alberta’s oil sands
to US Gulf Coast refiners will move forward, Forrest continued.
The most prominent is Enbridge Inc.’s proposed Wrangler
pipeline which, combined with the Calgary company’s Flanagan
South project and existing Alberta Clipper pipeline, could serve
a function similar to Keystone XL’s, she said.
Enbridge’s plans
In its Nov. 9 report of financial results for the third quarter
and 9 months ended Sept. 30, Enbridge said expansion of
Enbridge Energy Partners LP’s Line 5 and reversal of the
segment of Enbridge’s Line 9 from Sarnia to Westover, an-
nounced in early October, would provide increased access
to US Upper Midwest and Ontario refineries Canada for light
crude produced in western Canada and the US.
It said Wrangler, which it announced in late September
as a proposed joint venture with Enterprise Product Part-
ners, would transport crude from the Cushing, Okla., hub to
Texas Gulf Coast refineries. Enbridge is also developing the
proposed Flanagan South Project to add capacity to Cushing
from its Flanagan, Ill., terminal, Enbridge said.
“Potentially, all legs of this project could be in service by
2014,” Forrest said. “Even in this scenario, oil sands produc-
ers would face steeper price discounts for their crudes, a full
year longer than a scenario where the decision on Keystone
XL is not being postponed.”
Pipeline capacity also is needed to move light crude
produced from North Dakota’s Bakken formation and other
US Midcontinent tight oil formations, she continued. “Based
on our view of growth in Canadian oil sands and tight oil
production, over the next 5 years North America will need
both the Keystone XL and the Enbridge projects in order to
create enough takeaway capacity to prevent bottlenecks,”
Forrest said.
“If no pipeline solutions occur in the next few years, we
are likely to see a very significant build out of rail capac-
ity, which has higher transportation cost than pipelines, to
bring Canadian oil sands and Midcontinent tight oil to new
markets,” she added.
111121OGJ_20 20 11/17/11 1:11 PM
Oil & Gas Journal | Nov. 21, 2011 21
GENERAL INTEREST
Executive Officer Jay Timmons, citing what he estimated to
be 118,000 jobs at stake, called on the administration to re-
verse a decision he described as “outrageous.”

delay will cause Canada to turn their pipeline west and ship
their energy and American jobs elsewhere.”
National Association of Manufacturers Pres. and Chief
Nick Snow
Washington Editor
Nebraska’s unicameral legislature gave first-round approval
to a bill that would establish authority for the state to regu-
late oil pipeline routes within its borders, but the measure
would not apply to TransCanada Corp.’s proposed Keystone
XL crude oil pipeline project if it becomes law. Senators vot-
ed 44-0 to schedule LB-1 for select file debate.
TransCanada agreed a day earlier to work with Nebraska’s
state government on a revised route for the Keystone project,
and the Senate’s Natural Resources Committee unanimously
approved an amendment on Nov. 15 specifying that the new
authority would not apply to any pipeline project that had
applied to the US Department of State for a cross-border per-
mit before the bill’s effective date.
State Sen. Annette Dubas, who sponsored the bill, said
it limits the state’s authority to siting because states do not
have jurisdiction over safety issues. The measure would
give Nebraska authority to impose conditions in the public
interest, based on a proposed pipeline’s impact on natural
resources in the state and evidence of methods to mitigate
those impacts, she said. Evidence of a carrier’s efforts to en-
sure the welfare of residents along a proposed route and the
views of local governments also would be included in the
determination, Dubas said.
The bill would make Nebraska’s public service commis-
sion responsible for evaluating and approving proposed
pipeline routes, and holding public hearings. Applicants
would pay for hearings and state investigations and would
not receive eminent domain rights until the project was ap-
proved. They would be required to include a statement of
reasons for selecting a proposed route, evidence that oth-
er routes were considered, workforce estimates during the
project’s construction and operation, and a list of locations
along the proposed route in proximity to unusually sensitive
groundwater areas.
DOS announced on Nov. 10 that it would defer a deci-
sion on TransCanada’s permit application for the Keystone
XL pipeline project to provide more time to consider alterna-
tives to its proposed route across Nebraska’s Sandhills area
Nebraska pipeline siting bill
would not apply to Keystone XL
atop the Ogallala Aquifer, the state’s primary underground
drinking water source. Gov. Dave Heineman (R) called the
legislature into special session to consider pipeline siting is-
sues after environmental organizations and citizens along
the proposed route raised concerns.
‘Positive conversations’
Alex Pourbaix, president of TransCanada’s oil and pipelines
division, announced on Nov. 14 that the Calgary transmis-
sion company would work with the state to find a different
route, and that Nebraskans would play an important role.
“I am pleased to tell you that the positive conversations we
have had with Nebraska leaders have resulted in legislation
that respects the concerns of Nebraskans and supports the
development of the Keystone XL pipeline,” he said following
meetings in Lincoln.
In Nebraska’s senate, meanwhile, speaker Mike Flood
told lawmakers that TransCanada had volunteered to move
the project’s route out of the Sandhills, and that DOS con-
firmed that the state could conduct a supplemental environ-
mental impact study of any proposed route. The amendment
before the Natural Resources on Nov. 15 gave Nebraska’s
Department of Environmental Quality authority to conduct
such a state, which Flood said would take about 6 months
to complete.
During Nov. 15 debate on LB-1, Sen. Ken Haar said the
bill would give Nebraskans a voice in determine routes of fu-
ture pipelines after feeling excluded from discussions about
Keystone XL’s path. The measure would require the PSC to
decide on a route application within 8 months of receiving
it, although an extension of up to 18 months would be per-
mitted. No extension would be allowed more than 8 months
beyond a presidential permit being issued for a pipeline,
however.
Sen. Tom Carlson said the bill’s application approval
timeframe was too long and that too many agencies would
need to be involved. Sen. Dennis Hastings said that it would
require unnecessary information unrelated to siting such as
the number of workers which would be involved.
Dubas said that senators’ concerns would be addressed
before select file debate begins. “By no means is this the end
product,” she said.

111121OGJ_21 21 11/17/11 1:11 PM
22 Oil & Gas Journal | Nov. 21, 2011
WATCHING GOVERNMENT
NICK
SNOW
Washington Editor
|
Blog at www.ogj.com
State regulators’ resources
Some federal lawmakers still want the
US Environmental Protection Agency
to take a bigger role in regulating sur-
face activities connected with onshore
oil and gas exploration and develop-
ment. Officials from two states with
significant energy resource potential
recently said their agencies have the
authority and experience to continue
doing the job.
Scott Perry, acting deputy secretary
in the oil and gas management office
in Pennsylvania’s Department of Envi-
ronmental Protection, and J. Michael
Biddison, deputy director of Ohio’s
Department of Natural Resources,
separately noted that each of their
states was prominent in early US oil
and gas industry history.
Consequently, each had regulated
oil and gas production before technol-
ogy made it possible to tap the Marcel-
lus and other US shale formations,
they said during a Nov. 8 forum at the
US Energy Association.
Pennsylvania is one of the few
states that make producers get a per-
mit to control erosion and sediment,
and its clean streams law is more strin-
gent than the federal Clean Water Act,
Perry said. As production grew from
the Marcellus shale, which crosses the
state, disposal of produced and waste
water became a serious problem until
the state specified that drinking water
standards had to be met, he said.
The state has a strong enforce-
ment regime, he maintained. Three
contaminated drinking water incidents
occurred when gas well operators
didn’t follow regulations, Perry said.
Producers seeking gas from deeper
shales must take precautions or their
well bores could be penetrated as they
drill through shallower, less-productive
formations, he explained.
In Ohio’s favor
Biddison noted that while Ohio’s shale
gas production isn’t as advanced as
Pennsylvania’s, it has more sophis-
ticated production facilities, better
gathering systems, adequate compres-
sion and gas processing capacity, and
several gas liquids fractionation plants.
It also has about 181 underground
injection wells permitted and operat-
ing, he added.
This will be significant not only
in developing its relatively small part
of the Marcellus shale, but also in
tapping the Point Pleasant portion of
the deeper Utica shale farther west,
Biddison said.
His department’s challenge is
gearing up for more oil and gas de-
velopment as Ohio confronts budget
problems. When John R. Kasich (R)
became governor in January, he faced
an $8 billion deficit and proposed re-
ducing state payrolls to help eliminate
it.
Consequently, Biddison said, the
agency he leads doesn’t have as many
inspectors as he would like, but he
still has some time with only five shale
gas wells in production. “I can’t say
we’d be prepared if 100 rigs moved in
immediately,” he continued. “But most
producers I speak with say they’re in
the evaluation stage and not ready to
drill.”
Bromwich pledges
careful, measured
enforcement for
contractors
Nick Snow
Washington Editor
Interim US Bureau of Safety and En-
vironmental Enforcement Director Mi-
chael R. Bromwich said enforcement
will be careful and measured as he de-
fended extending the US Department
of the Interior’s offshore oil and gas
regulatory reach to drilling contractors
and service and supply companies.
“We did not take this step lightly,
nor did we take it before fully satisfy-
ing ourselves that we had the legal au-
thority to do so,” he said in a keynote
address at the International Associa-
tion of Drilling Contractors’ 2011 an-
nual meeting in Austin. “But once we
concluded that we did, there was no
good reason not to do so.”
Bromwich said the fact that the US
Minerals Management Service, BSEE’s
predecessor agency, unilaterally de-
cided to exempt nonoperators “was a
misguided act of administrative grace
rather than a result dictated by law or
good policy. The fact that we had fol-
lowed a bad practice was not a suffi-
cient reason to continue it.”
He said he considered it inappro-
priate for BSEE to limit its regulatory
reach to offshore well operators when
it had the authority to enforce rules
for all entities involved in oil and gas
exploration and production on the US
Outer Continental Shelf, especially af-
ter the 2010 Macondo deepwater well
accident and crude oil spill.
“I am convinced that we can fully
preserve the principle of holding op-
erators fully responsible, and in most
cases, solely responsible, without sac-
rificing the ability to pursue regulatory
actions against contractors for serious
violations,” Bromwich maintained.
Regulators of other US industries
and of other businesses operating off-
111121OGJ_22 22 11/17/11 1:11 PM
Oil & Gas Journal | Nov. 21, 2011 23
GENERAL INTEREST
three quarters of the estimated oil and gas resources available
off US coasts. The Obama administration based this estimate
on data collected in the 1970s without giving the industry
permission or an opportunity to do 3D seismic mapping in
OCS areas which were closed for 25 years, Milito said.
‘Substantially more’
“We won’t know what’s there until we’re actually out there
and doing the tests and drilling,” he said. “But our experi-
ence has shown us, particularly in the Gulf of Mexico, that
what we find once we do is substantially more than what
was expected.”
He urged the administration to reconsider and schedule
lease sales in the eastern Gulf of Mexico, which is largely
closed by congressional moratorium, and off Virginia’s coast,
where a lease sale was scheduled as part of the current 5-year
program but canceled following the 2010 Macondo well ac-
cident and crude oil spill. Sales off Alaska which have been
scheduled toward the end of the next 5-year period should
be moved up, especially if Shell Exploration Co.’s Beaufort
and Chukchi Sea tests produce positive results, he added.
Milito said higher minimum bids and shorter lease periods
in the latest proposed 5-year program also pose a problem.
“Bonus bids would go up by at least two times for some deep-
water tracts,” he said. “Lease terms would be reduced to 5 or
7 years. Developing offshore leases takes a long time. Addi-
tional costs would make marginal properties subeconomic. A
lot of resources at the margins which are being produced now
wouldn’t be produced under the proposed terms.”
He conceded that it would be difficult to get the Obama
administration to change the proposed plan. “There’s been
discussion on Capitol Hill about proposing additional areas,
and that could have influence down the road. But it appears
unlikely in the near term,” Milito said. “We’re going to keep
working to try and convince this administration to recon-
sider, but it will be a long process.”

Putin: Russia will ‘coordinate’
work with OPEC
Eric Watkins
Oil Diplomacy Editor
Russia’s Prime Minister Vladimir Putin said his country,
which currently leads world oil producers in output, plans
to work closely with the Organization of the Petroleum Ex-
porting Countries.
“OPEC is sometimes irritated by us as we, not being a
member of the organization, produce more oil, which influ-
ences international crude oil prices,” said Putin. “But we will
coordinate our work with OPEC.”
shore have found it bizarre that DOI historically limited its
offshore regulatory reach to well operators, he told his IADC
audience. “As I have said many times, we will be careful and
measured in applying our regulatory authority to contrac-
tors, but we will not hesitate when we determine it is appro-
priate and necessary,” he said.
Bromwich said it is also time to make the process by
which BSEE imposes civil penalties more rational and ef-
ficient. “Under our current process, it can take up to a year
to determine whether civil penalties should be imposed after
the issuance of incidents of noncompliance,” he said. “That is
entirely and unacceptably too long, and I have directed my
staff to find a way to significantly reduce that time.”
He also noted that he has repeatedly said that maximum
fines need to be increased. “I do not believe that a top fine
of $40,000/day/incident, is any type of meaningful deterrent
in an industry in which operators pay between $0.5-1 mil-
lion/day for a rig,” Bromwich indicated. “We will be working
through the legislative process to remedy that.”

Latest proposed 5-year OCS plan
falls short, API official says
Nick Snow
Washington Editor
The US Department of the Interior’s latest proposed 5-year
US Outer Continental Shelf program misses an important
opportunity because it would greatly limit where offshore
oil and gas development could take place from 2012 through
2017, an American Petroleum Institute official said.
The proposed program announced by US Sec. of the In-
terior Ken Salazar on Nov. 8 provides activity in US offshore
areas where the industry is already active while omitting
areas with potentially substantial untapped oil and gas re-
sources, according to Erik Milito, API upstream and indus-
try operations group director.
“While US oil and natural gas production is increasing today,
this is largely due to the development of shale oil and natural
gas on private lands in North Dakota, Pennsylvania, Texas, Ar-
kansas, Louisiana, and elsewhere—and because of leasing and
development on public lands and federal waters initiated many
years ago,” he told reporters during a Nov. 15 teleconference.
“We need a robust strategy for future development of off-
shore areas and BLM-administered lands because they are
and will continue to be important to the nation’s oil and
natural gas production,” Milito maintained. “We need to be
doing the right things today to be able to meet our nation’s
energy needs for tomorrow.”
He particularly questioned Salazar’s statement that the
proposed 2012-17 OCS leasing areas would make more than
111121OGJ_23 23 11/17/11 1:11 PM
24 Oil & Gas Journal | Nov. 21, 2011
WATCHING THE WORLD
ERIC
WATKINS
Oil Diplomacy Editor | Blog at www.ogj.com
Iran’s nuclear carrot
The Iranians, long known for advo-
cating the use of the oil weapon, are
now dangling the nuclear carrot in
front of their neighbors in Turkey.
It makes you wonder what sort of
donkeys they take the Turks for.
“Iran developed a very sophisti-
cated nuclear science and techno-
logical capability, which we are quite
ready to share with…neighboring
countries and friendly countries in
the region,” said Mohammad Javad
Larijani.
“Turkey is for years trying to have
a nuclear power plant but no country
in the West is willing to build that for
them,” said Larijani, before a vote by
the United Nations General Assem-
bly’s human rights committee.
Larijani wears many hats: he is
head of Iran’s High Council for Hu-
man Rights, adviser to Iran’s chief
justice, and head of a mathematics
and physics institute.
Well connected
Larijani also is the brother of parlia-
ment speaker Ali Larijani, making
him well connected. His remarks
were timely, too, coming days after
the International Atomic Energy
Agency said Iran is apparently at
work on an atomic bomb.
Larijani’s remarks were timed
to coincide with support for Syria,
Iran’s ally in the region and the target
of criticism from the US, the EU,
the Arab League and—yes—even
Turkey, too.
The Iranians were aiming to woo
Turkey away from the growing alli-
ance against Syria, and trying to use
their nuclear expertise as the bait.
“Help us, and you’ll go nuclear.”
That, of course, could be a temp-
tation to the Turks, who have nuclear
ambitions of their own. But the Turks
also know that, on this issue, they
have no need to succumb to the
temptation of the Iranians.
For starters, the Turks are getting
all the help they need from a variety
of quarters. That emerged in October
when Japan asked Turkey to con-
tinue with talks on a nuclear power
plant deal.
Help from Japan
At the same time, Japan made sure
to confirm with the US its plans to
strengthen technical cooperation
on nuclear power with Turkey. That
happened during talks among Japan,
Turkey, and the US on the sidelines
of a ministerial meeting of the Inter-
national Energy Agency.
In fact, Ankara has given two
Japanese companies—Toshiba Corp.
and Tokyo Electric Power Co.—prior-
ity rights to negotiate a deal to build a
nuclear power plant in Turkey.
Those talks are going ahead with-
out any input from the Iranians. And
that brings us back to Mohammad
Javad Larijani and his offer to help
Turkey along the nuclear track.
Given Japan’s role in Turkey’s
nuclear development, along with its
clear US backing, Larijani’s would-
be nuclear carrot—in the eyes of
Ankara’s decision-makers—can only
look decidedly wilted.
Putin did not detail how his coun-
try would collaborate or even whether
it planned to attend OPEC’s next meet-
ing. Russia has long spoken of coordi-
nating with OPEC, often sending high-
level delegations to attend its meetings
as observers.
In 2008, Russia sent its most se-
nior delegation in a decade to OPEC’s
Sept. 9 ministerial meeting in Vien-
na. There, Russian Vice-Premier Igor
Sechin proposed extensive coopera-
tion between Russia and OPEC to meet
global energy needs.
At the time, Qatar’s Oil Minister
Abdullah bin Hamad Al-Attiyah even
expressed the hope of seeing Rus-
sia one day become a full member of
OPEC as it would “add value” to the
organization.
But Al-Attiyah also noted the
chances were slim of Russia joining
OPEC: “So far the Russians support
cooperation, but they don’t talk about
full membership,” he said (OGJ On-
line, Oct. 27, 2008).
Putin’s remarks coincided with a
report by the International Energy
Agency that Saudi Arabia will overtake
Russia as the world’s largest producer
of oil producer in about 2015.
In its World Energy Outlook, the
IEA said that Saudi Arabia would over-
take Russia as output at new Russian
fields fails to offset fast decline at ma-
ture deposits.
Russia passed Saudi Arabia as the
top producer of oil when OPEC cut
crude output during the economic cri-
sis in 2009.
But IEA said Russia’s produc-
tion will level off at 10.5 million b/d
in 2015, and that Saudi Arabia’s will
match that. By 2035, IEA said, Saudi
production will hit 14 million b/d.
“Russian fiscal policy is a key de-
terminant of when and how quickly
Russian production will decline. Cur-
rent terms limit the incentive to invest
when prices rise; our projections as-
sume sympathetic evolution of taxa-
tion,” IEA said.
Saudi Arabia and Russia have been
competing with each other for in-
111121OGJ_24 24 11/17/11 1:11 PM
Oil & Gas Journal | Nov. 21, 2011 25
GENERAL INTEREST
ond 90-day report will be forwarded to Chu following a
public comment period. SEAB planned to review the public
comments Nov. 14.
The two reports reflect 6 months of deliberations among
a group of industry experts, environmental advocates, aca-
demics, and former state regulators.
Industry’s progress outlined
In its second report, the subcommittee noted operating
companies are considering ways to measure and disclose air
emissions from shale gas wells. Discussions are under way
regarding specific information collection, appropriate in-
strumentation, and subsequent analysis and disclosure.
The subcommittee recommended independent technical
review of the methodology for measuring air emissions.
API said it’s interacting with the US Environmental Pro-
tection Agency on efforts to compile a more robust basis
for emissions estimation methods for shale gas as part of a
broader national greenhouse gas emissions inventory for the
UN Framework Convention on Climate Change.
The Department of Interior announced Oct. 31 that it in-
tends to require disclosure of the chemicals within hydraulic
fracturing fluid used on federal land. DOI agrees with the
subcommittee’s recommendations that disclosure should in-
clude all chemicals.
DOI also agrees with the subcommittee that chemicals
should be reported on a well-by-well basis on a publicly
available and searchable web site that can aggregate infor-
mation.
“The Ground Water Protection Council and the Interstate
Oil & Gas Compact Commission have taken an important
step in announcing their intent to require disclosure of all
chemicals by operators who utilize their voluntary chemi-
cal disclosure registry, FracFocus,” the subcommittee noted.
API noted that since FracFocus launched its web site in
April, some 50 operators added information about more than
5,543 wells. That nearly doubles the volume of information
that was reported to the subcommittee in July, API said.
“This site does more than just serve as a repository for
disclosure data,” API said. “It also provides a wide array
of reference materials from federal, state, and independent
sources.”
Calling FracFocus a platform to address public concerns,
API said industry continues to work with the GWPC and
IOGCC to discuss expanding the platform’s capabilities and
develop a more sophisticated site.
Several states, including Texas, Louisiana, and Montana,
have incorporated the use of FracFocus in recent legislative
and regulatory initiatives.
One subcommittee recommendation advocated the fed-
eral government support research and development efforts
on shale gas. The Office of Management and Budget is in
discussion with the DOI, DOE, EPA, and the US Geological
Survey about unconventional gas R&D.
creased market share in Asia Pacific, largely due to the onset
of supplies via Russia’s recently launched East Siberia-Pacific
Ocean pipeline.
Indeed, traders last year expected Saudi Arabia to lower
the prices of all its crude grades heading to Asia for August
on slow demand from regional refiners as well as the inten-
sifying competition from Russia’s ESPO crude.
“Saudi Arabia is trying to secure demand in the Asia-Pa-
cific region,” said another trader, adding, “It is closely watch-
ing ESPO activity (OGJ Online, July 19, 2010).”

Shale gas subcommittee
reviews industry,
government progress
Paula Dittrick
Senior Staff Writer
The US natural gas industry is working to ensure shale gas is
produced in an environmentally safe manner and is working
to disclose information that can help minimize public op-
position toward shale development, an advisory committee
to government said.
The Secretary of Energy Advisory Board Subcommittee
on Shale Gas Production (SEAB) issued its second 90-day
report on Nov. 10. It reviewed progress made on 20 recom-
mendations the subcommittee outlined in its Aug. 18 initial
report.
The subcommittee said in a Nov. 10 news release that it
was “gratified by the actions taken to date,” but added that
“the progress to date is less than what the subcommittee
hoped.”
Separately, the American Petroleum Institute reported
“many positive activities undertaken by industry and the
state regulatory authorities.” API issued its own 10-page up-
date regarding how industry has responded to the subcom-
mittee’s recommendations.
John Deutch, subcommittee chairman and an MIT pro-
fessor, called shale gas “one of the biggest energy innova-
tions, if not the biggest, in several decades. …But to ensure
the full benefits to the American people, environmental is-
sues need to be addressed now, especially in term of waste
water, air quality, and community impact.”
The subcommittee said a loss of public confidence could
delay or stop anticipated expansion of shale gas production
expected across the US. Some have forecast the drilling of
100,000 shale gas wells over the next several decades.
Shale gas production already accounts for about 30% of
US gas production. Sec. of Energy Steven Chu convened
SEAB at the direction of President Barack Obama. The sec-
111121OGJ_25 25 11/17/11 1:11 PM
GENERAL INTEREST
26 Oil & Gas Journal | Nov. 21, 2011
wells in Saiwan East field on Block 4 and Farha South field
on Block 3. Production is up, said Tethys Oil AB, which has
a 30% interest in the blocks, and rates continue to vary de-
pending on test program design and available capacity.
CC Energy Development Oman branch is operator with
50% interest, while Mitsui E&P Middle East BV has 20%.
Poland
Talisman Energy Inc., Calgary, has completed drilling a
shale gas exploratory well in the Baltic basin in Poland.
The Lewino 1G-2 well, on the Gdansk W concession,
went to 3,600 m and encountered continuous gas shows
over more than 1,000 m in middle and lower Silurian shales,
Ordovician, and upper Cambrian, said partner San Leon
Energy PLC (OGJ, Nov. 7, 2011, p. 36). Gas shows consist of
methane with small percentages of ethane, propane, butane,
and pentane.
More than 310 m of core were taken in the well to evalu-
ate the rock properties, and an extensive open hole logging
program was also performed to further evaluate the poten-
tial of the area. Evaluation and interpretation of the core and
logs is expected to take 3-4 months in preparation for con-
tinued operations later in 2012.
Following completion of the well for potential future op-
erations, Talisman will move the rig to the Braniewo conces-
sion to spud the Rogity-1 well, to be followed by a well on
the Szczawno concession. Future operations are expected to
include a long-offset horizontal and multistage frac.
The next step, San Leon Energy said, is to evaluate the
geological data in preparation for the next phase: to prove
the viability of commercially producing the huge quantity of
gas from the Baltic basin.
Tunisia
Cooper Energy Ltd., Perth, expects to have processed data
available from the high-resolution 3D seismic survey on its
Nabeul permit in the Gulf of Hammamet off Tunisia avail-
able for interpretation in third-quarter 2012.
CGGVeritas shot 600 sq km of full-fold data on the 3,352
sq km permit in September through November. Survey ob-
jectives were to mature the Alpha, Gamma, and Updip La
Marsa leads in the western part of the permit adjacent to
Birsa and Oudna oil fields.
The permit lies 80-150 km off Tunisia in 270-1,200 m of
water and borders Italian waters. The main exploration play
is Miocene Birsa formation sandstones. The 3D seismic is ex-
pected to enable the location of a well to be drilled by 2013.
Alberta
Strategic Oil & Gas Ltd., Calgary, has completed its third
successful Keg River well in the North Marlowe oil pool at
“As yet, there has been no agreement with OMB on the
scale and composition of a continuing unconventional gas
R&D program,” the subcommittee said in its latest report.
“Failure to provide adequate funding for R&D would be del-
eterious and undermine achieving the policy objectives ar-
ticulated by the president.”
API said it shares the subcommittee’s belief that industry
and various levels of government must work together to de-
velop shale gas in sustainable ways.

E X P L O R A T I O N / D E V E L O P M E N T B R I E F S
Kazakhstan
Tethys Petroleum Ltd. reported a flow of more than 4,300
b/d of oil from a Cretaceous sandstone at the AKD06 Doris
appraisal well in the North Ustyurt basin in Kazakhstan.
The company gauged the well on a
66
∕64-in. choke at a rate
of 4,304 b/d of 45° gravity oil with 186 psi flowing tub-
ing head pressure from an interval at 2,165-70 m. Flow was
restricted for safety reasons, and data indicate an absolute
open flow potential in excess of 6,000 b/d. The well is tied
into test production facilities.
Malta
Mediterranean Oil & Gas PLC, through subsidiaries, has let
a contract to Fugro-Geoteam Pty. Ltd. to shoot 1,000 sq km
of long-offset 3D seismic in Area 4 in the Mediterranean off
Malta. Acquisition is expected to take about 30 days. Pro-
cessing is to start as soon as acquisition is complete, and
results are to be in hand by the end of first-quarter 2012.
MOG holds blocks 4, 5, 6, and 7 in Area 4 totaling 5,700 sq
km bordering Libya.
Area 4 is covered by various vintages of 2D seismic data
and by a 3D survey over the western part of Block 7. Since
2007, MOG has shot 1,012 sq km of 2D seismic and has re-
processed in time and depth the existing 3D dataset. MOG
reinterpreted the entire 2D and 3D package available in the
PSC, confirming four prospects and five leads.
The three most mature prospects are in Block 7, along the
ramp setting of the Melita-Medina graben, close to the Libya
Pelagic basin (see map, OGJ Feb. 13, 2006, p. 37).
MOG, through its Malta Oil Pty. Ltd. and Phoenicia En-
ergy Ltd. subsidiaries, holds a 90% operated working in the
Malta PSC. Leni Gas & Oil Investments Ltd. has 10%.
Oman
A group led by CC Energy Development SAL averaged 6,989
b/d of oil in October from the early production system on
Blocks 3 and 4 onshore Oman.
Long-term production tests have been carried out on
111121OGJ_26 26 11/17/11 1:11 PM
GENERAL INTEREST
THE EDITOR’S PERSPECTIVE
(From the Subscribers Only area of www.ogj.com)
Oil & Gas Journal | Nov. 21, 2011 27
Keystone XL delay
serves needs only
of obstructionists
by Bob Tippee, Editor
By definition, only one item in a list of bad
attributes can be the worst. Much about
a setback to the proposed Keystone XL
pipeline is bad. So what’s the worst?
It’s bad that Department of State
minions said neither the White House nor
politics influenced a decision to study new
routes for the pipeline until no sooner than
the first quarter of 2013.
No one believes this. Everyone knows
President Barack Obama faces a dilemma.
A pipeline economically important to the
country needs his administration’s ap-
proval. But he needs support from pipeline
opponents in his bid for reelection next
year.
So it’s bad that the administration put
politics before national needs, such as for
investment, jobs, energy security, and solid
relations with a friendly neighbor.
It’s also bad that the delay forces
producers in the oil sands region of Alberta
to consider alternative markets for bitumen
and synthetic crude oil.
It’s bad, too, that refineries on the
Texas Gulf Coast will remain detached
from an important source heavy feedstock,
which they need to make best use of con-
version capacity.
And it’s bad that a permitting authority
can’t make a decision about a vital project
after more than 3 years of study.
What’s worst about the Keystone XL
delay is capitulation, yet again, to an ob-
structionist, antioil political agenda.
It’s an agenda driven by fear and ad-
vanced by delay.
In their campaign against Keystone
XL, obstructionists frightened people into
thinking the pipeline would imperil subsur-
face drinking water and aggravate global
warming.
Despite facts about low chances of
real environmental harm, fear prevailed. It
obliterated tolerance for risk and enabled
the administration to postpone its decision
until after elections next year. To obstruc-
tionists, the only thing better would have
been outright disapproval.
Delay achieved through fear limits too
much supply of affordable energy in the
US. The consequent costs are too high.
A country craving jobs and affordable
energy should know better than to jump at
every extremist shout of “Boo!”
ONLINE NOV. 11, 2011 | bobt@ogjonline.com
Steen River, northwest Alberta, and
plans to drill three more vertical Keg
River wells in first-quarter 2012.
The 100/15-22-122-21w5m vertical
well stabilized at 225-250 b/d of clean
oil with associated gas after 11 days on
production. It penetrated a dolomite
zone with over 12 m of net oil pay and
is structurally the highest well in the
pool, on the northeastern rim of the
Steen River astrobleme. The well tested
close to virgin reservoir pressure.
The $1.7 million well confirms the
lateral extent of the oil pool and the
porosity mapping derived from the 3D
seismic. Strategic has a 100% work-
ing interest in the North Marlowe Keg
River pool.
British Columbia
Yoho Resources Corp. and Progress
Energy Resources Corp., both of Cal-
gary, have gauged gas-condensate in
Devonian Upper Montney tight sands
at horizontal wells at Nig northwest of
Dawson Creek, British Columbia.
The d-97-H/94-H-4 well, in the
northern part of Yoho’s land block 8
miles north of the first Yoho-operated
well at Nig, flowed up tubing from the
horizontal section on clean-up at a rate
of 5.6 MMcfd with 700 psig on a
38
∕64-
in. choke with an average 56 b/d of
free condensate after a seven-stage frac
using a plug and perf completion.
Yoho estimates liquids production
to be in excess of 30 bbl/MMcf, 40-
50% condensate.
The company’s first Yoho horizon-
tal well at Nig, a-41-A/94-H-4, was
placed on production in November
through third-party facilities at initial
rates of 5 MMcfd. The d-97-H/94-H-4
well is expected to be on production
early in 2012.
Yoho and Progress are drilling a
third horizontal well targeting the Up-
per Montney. The area is also prospec-
tive for Lower Montney, which is ex-
pected to be tested in early 2012 with
the drilling of a fourth well.
Yoho has accumulated 40,751 gross
(20,375 net) acres of land at Nig.
Yoho anticipates it will apply to li-
cense a 25 MMcfd compressor station
at Nig, construction of which will de-
pend on upcoming drilling results.
Louisiana
Leasing spurred by the oil and gas po-
tential of the emerging Jurassic Lower
Smackover Brown Dense limestone
has spread to East and West Carroll
parishes, together with St. Tammany
the state’s only parishes without hy-
drocarbon production.
Mineral rights to more than 6,000
acres of state land were leased in Oc-
tober in south-central East Carroll
Parish, among the nation’s poorest,
netting more than $1.8 million, said
Louisiana Department of Natural Re-
sources Sec. Scott Angelle. Competi-
tion pushed lease prices above $300/
acre, uncommon in Louisiana outside
the Haynesville shale play, Angelle
noted.
Private interests have nominated
3,000-plus acres of state water bottoms
centering on the southwest quarter of
East Carroll and parts of West Carroll
and Richland parishes in the state’s
northeast corner for bid in the Decem-
ber sale. East Carroll Parish Clerk of
Court staff report that private mineral
lease transfers have accelerated to a
rate unprecedented in recent years.
Operators have drilled 125 wells
ever in East Carroll, and the 30-plus
wells drilled since 1981 were all dry,
Louisiana Office of Conservation re-
cords show.
Initial exploration of the Brown
Dense began farther west in southern
Arkansas and Claiborne and More-
house parishes, La. (OGJ Online, July
29, 2011).
The Morehouse well was the first
permitted that parish in 3 years and
was quickly followed by two more, in-
cluding one by ExxonMobil subsidiary
XTO Energy. Drilling has started at
one of three other wells permitted in
Claiborne.

111121OGJ_27 27 11/17/11 1:11 PM
28 Oil & Gas Journal | Nov. 21, 2011
EQUIPMENT | SOFTWARE | LITERATURE
help avoid motor overheating by detect-
ing below normal voltage conditions, and
detect voltage conditions that can stress
or damage starter components.
VTD voltage transducers can be used
on circuits from 0-15 v DC to 0-600 v
DC to satisfy a range of voltage monitor-
ing needs. Fully isolated and industry
standard 4-20 mA loop-powered output
makes use with existing controllers, data
loggers, and SCADA equipment easy
and reliable, the firm says. Additionally,
input and output circuitry is fully isolated
to maximize operational safety.
Source: NK Technologies, 3511 Charter Park
Drive, San Jose, CA 95136.
NEW OIL FIELD WORK STATIONS
New VisuNet Industrial 900 Series op-
erator work stations are built to withstand
even the harshest oil field operating
conditions, including high shock and
vibration.
NEW HIGH PERFORMANCE
VOLTAGE TRANSDUCER
Here’s the new VTD Series high-perfor-
mance voltage transducer.
Packaged in a compact and easy-to-
install 35 mm wide DIN-rail enclosure,
the VTD series senses voltage in a vari-
ety of DC powered installations, including
motors, battery chargers, and photovol-
taic arrays. These voltage transducers
These 15 in. or 19 in. monitors are
encased in a thin but rugged NEMA 4/4x
stainless or painted steel slim housing
suited for Class I, Division 2 hazardous
area installation. The enclosure design
mitigates heat without the need for vent-
ing or cooling fans. Units feature a glove
friendly touch screen and are available
in transflective models for clear outdoor
viewing.
These work stations can be ordered
to meet the existing communication
infrastructure of the application. The
standard connectivity provided is Cat 5
or fiber-based KVM Monitors, Ethernet
remote network monitor, or full panel PC.
Their adaptable design enables operator
work stations throughout the processing
facility to have a consistent look and feel,
but with different functions.
Source: Pepperl+Fuchs, 1600 Enterprise
Parkway, Twinsburg, OH 44087.
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An Indispensable Work
on Riser Behavior
Charles Sparks, one of the foremost authorities on
riser mechanics, has written the definitive work on riser
behavior. This book is a must-own for anyone who
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FEATURES and BENEFITS:
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O R D E R Y O U R C O P Y T O D A Y ! • W W W . P E N N W E L L B O O K S . C O M •
Baker Hughes 2
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Knovel 7
why.knovel.com
Offshore West Africa 2012 4
www.offshorewestafrica.com
Offshore West Africa 2012
Call for Papers 9
www.offshorewestafrica.com
PennWell 17
www.OffshoreOilEvents.com
PennWell Books 28
www.pennwellbooks.com
Topsides 15
www.TopsidesEvent.com
COMPANY NAME PAGE
ADVERTISERS INDEX
This index is provided as a service. The publisher does not
assume any liability for errors or omission.
111121OGJ_28 28 11/17/11 1:11 PM
STATISTICS
Oil & Gas Journal | Nov. 21, 2011 29
Additional analysis of market trends is available
through OGJ Online, Oil & Gas Journal’s electronic
information source, at http://www.ogj.com.
OGJ CRACK SPREAD
11-11-11* 11-12-10* Change Change,
———–—$/bbl ——–—— %
SPOT PRICES
Product value 121.23 97.20 24.03 24.7
Brent crude 114.79 87.90 26.89 30.6
Crack spread 6.44 9.30 –2.85 –30.7
FUTURES MARKET PRICES
One month
Product value 119.74 96.11 23.63 24.6
Light sweet
crude 96.97 86.86 10.11 11.6
Crack spread 22.77 9.25 13.52 146.1
Six month
Product value 121.80 99.95 21.85 21.9
Light sweet
crude 96.49 88.95 7.54 8.5
Crack spread 25.30 11.00 14.30 130.0
*Average for week ending.
Source: Oil & Gas Journal
Data available at PennEnergy Research Center.
PURVIN & GERTZ LNG NETBACKS—NOV. 11, 2011
–––––––––––––––––––––––––––– Liquefaction plant ––––––––––––––––––––––––––––––––
Receiving Algeria Malaysia Nigeria Austr. NW Shelf Qatar Trinidad
terminal –––––––––––––––––––––––––––––––– $/MMbtu ––––––––––––––––––––––––––––––––––––
Barcelona 11.95 9.58 11.15 9.46 10.34 11.06
Everett 2.90 0.54 2.47 0.62 1.15 3.22
Isle of Grain 9.45 6.78 8.63 6.68 7.50 8.66
Lake Charles 0.95 –1.15 0.68 –0.94 –0.70 1.65
Sodegaura 8.24 10.97 8.45 10.60 9.67 7.32
Zeebrugge 10.56 7.82 9.70 7.70 8.59 9.79
Definitions, see OGJ Apr. 9, 2007, p. 57.
Source: Purvin & Gertz Inc.
Data available at PennEnergy Research Center.
CRUDE AND PRODUCT STOCKS
—–– Motor gasoline —––
Blending Jet fuel, ————— Fuel oils ————— Propane-
Crude oil Total comp.
1
kerosine Distillate Residual propylene
District ———————————————————————————— 1,000 bbl —————————————————————————
PADD 1 ..................................... 9,991 51,101 42,459 11,010 56,367 11,758 6,454
PADD 2 ..................................... 92,186 47,059 26,436 8,827 24,356 1,388 25,444
PADD 3 ..................................... 163,986 71,743 55,495 14,672 41,448 18,345 26,130
PADD 4 ..................................... 16,406 6,211 2,069 670 2,547 195
1
2,222
PADD 5 ..................................... 55,521 28,053 24,197 9,465 11,151 4,462 ––
Nov. 4, 2011 ............................ 338,090 204,167 150,656 44,644 135,869 36,148 60,250
Oct. 28, 2011 ............................ 339,461 206,275 150,970 45,759 141,888 36,263 60,263
Nov. 5, 2010
2
............................. 364,883 210,336 140,889 45,939 159,902 40,402 63,833
1
Includes PADD 5.
2
Revised.
Source: US Energy Information Administration
Data available at PennEnergy Research Center.
REFINERY REPORT—NOV. 4, 2011
REFINERY –––––––––––––––––––––––––––– REFINERY OUTPUT –––––––––––––––––––––––––––
–––––– OPERATIONS –––––– Total
Gross Crude oil motor Jet fuel, ––––––– Fuel oils –––––––– Propane-
inputs inputs gasoline kerosine Distillate Residual propylene
District ––––––– 1,000 b/d –––––––– –––––––––––––––––––––––––––––––– 1,000 b/d –––––––––––––––––––––––––––––––
PADD 1 .............................................. 1,178 1,197 2,743 57 358 58 69
PADD 2 .............................................. 3,227 3,208 2,000 220 925 59 260
PADD 3 .............................................. 7,396 7,247 2,139 661 2,379 277 745
PADD 4 .............................................. 558 554 292 26 176 10
1
105
PADD 5 .............................................. 2,288 2,128 1,525 364 474 103 ––
Nov. 4, 2011 ....................................... 14,647 14,334 8,699 1,328 4,312 507 1,179
Oct. 28, 2011 ...................................... 15,124 14,693 9,068 1,382 4,653 573 1,155
Nov. 5, 2010
2
...................................... 14,505 14,058 9,021 1,338 4,242 464 1,004
17,736Operable capacity 82.6%utilization rate
1
Includes PADD 5.
2
Revised.
Source: US Energy Information Administration
Data available at PennEnergy Research Center.
IMPORTS OF CRUDE AND PRODUCTS
— Districts 1-4 — — District 5 — ———— Total US ————
11-4 10-28

11-4 10-28

11-4 10-28

11-5*
2011 2011 2011 2011 2011 2011 2010
––––––––––––––––––––––––— 1,000 b/d ––––––––––––––––––––––––—

Total motor gasoline ............. 710 781 40 0 750 781 802
Mo. gas. blending comp. ..... 574 752 40 0 614 752 711
Distillate ............................... 102 122 0 0 102 122 179
Residual .............................. 216 261 8 127 224 388 336
Jet fuel-kerosine .................. 32 11 85 21 117 32 53
Propane-propylene .............. 95 71 (23) (13) 72 58 56
Other ................................... (42) 128 182 30 140 158 229
Total products ...................... 1,687 2,126 332 165 2,019 2,291 2,366
Total crude ........................... 7,431 7,957 1,188 998 8,619 8,955 8,089
Total imports ........................ 9,118 10,083 1,520 1,163 10,638 11,246 10,455
*Revised.
Source: US Energy Information Administration
Data available at PennEnergy Research Center.
111121OGJ_29 29 11/17/11 1:06 PM

STATISTICS
30 Oil & Gas Journal | Nov. 21, 2011
OGJ GASOLINE PRICES
Price Pump Pump
ex tax price* price
11-9-11 11-9-11 11-10-10
————— ¢/gal —————

(Approx. prices for self-service unleaded gasoline)
Atlanta .......................... 296.6 344.2 275.4
Baltimore ...................... 303.3 345.2 279.4
Boston ........................... 302.3 344.2 274.4
Buffalo .......................... 272.6 341.7 288.0
Miami ............................ 292.2 345.0 290.1
Newark .......................... 303.8 336.7 283.1
New York........................ 286.6 355.7 296.7
Norfolk........................... 288.1 326.7 273.4
Philadelphia .................. 294.0 344.7 277.4
Pittsburgh ..................... 285.5 336.2 287.7
Wash., DC ...................... 303.3 345.2 290.1
PAD I avg .................. 293.5 342.3 283.2
Chicago ......................... 326.1 395.1 319.4
Cleveland ...................... 284.4 330.8 283.3
Des Moines .................... 295.4 335.8 284.3
Detroit ........................... 274.7 336.8 293.7
Indianapolis .................. 272.5 334.5 295.7
Kansas City ................... 285.1 320.8 274.8
Louisville ....................... 294.9 335.8 283.4
Memphis ....................... 296.3 336.1 284.4
Milwaukee ..................... 287.5 338.8 288.4
Minn.-St. Paul ............... 299.5 345.1 289.8
Oklahoma City ............... 282.4 317.8 267.6
Omaha .......................... 280.1 325.8 278.8
St. Louis ........................ 290.1 325.8 280.0
Tulsa ............................. 288.4 323.8 271.6
Wichita .......................... 281.7 325.1 282.7
PAD II avg ................. 289.3 335.2 285.2
Albuquerque .................. 285.9 323.1 266.6
Birmingham .................. 286.9 326.2 269.0
Dallas-Fort Worth .......... 272.7 311.1 268.3
Houston ......................... 276.7 315.1 267.0
Little Rock ..................... 290.9 331.1 270.6
New Orleans .................. 285.7 324.1 267.7
San Antonio ................... 284.7 323.1 271.7
PAD III avg ................ 283.4 322.0 268.7
Cheyenne....................... 304.0 336.4 273.4
Denver ........................... 308.2 348.6 281.9
Salt Lake City ................ 305.2 348.1 285.4
PAD IV avg ................ 305.8 344.4 280.2
Los Angeles ................... 322.5 391.4 306.0
Phoenix.......................... 313.4 350.8 286.0
Portland ........................ 331.0 380.4 295.0
San Diego ...................... 303.0 371.9 317.0
San Francisco................ 333.5 402.4 326.0
Seattle........................... 316.0 371.9 312.0
PAD V avg ................. 319.9 378.1 307.0
Week’s avg. .................. 295.0 341.7 284.7
Oct. avg. ....................... 296.4 343.1 279.6
Sept. avg....................... 313.3 360.0 269.6
2011 to date ................. 307.9 353.7 ––
2010 to date ................. 229.9 274.8 ––
*
Includes state and federal motor fuel taxes and state
sales tax. Local governments may impose additional taxes.
Source: Oil & Gas Journal.
Data available at PennEnergy Research Center.
US CRUDE PRICES
11-11-11
$/bbl*
Alaska-North Slope 27° ......................................... 108.88
South Louisiana Sweet .......................................... 125.00
California-Midway Sunset 13° .............................. 117.35
Lost Hills 30° ........................................................ 124.60
Wyoming Sweet ..................................................... 92.49
East Texas Sweet ................................................... 99.00
West Texas Sour 34° .............................................. 90.50
West Texas Intermediate ........................................ 95.50
Oklahoma Sweet.................................................... 95.50
Texas Upper Gulf Coast ......................................... 88.50
Michigan Sour ....................................................... 87.50
Kansas Common ................................................... 94.50
North Dakota Sweet ............................................... 89.00
*Current major refiner’s posted prices except North Slope lags
2 months. 40° gravity crude unless differing gravity is shown.
Source: Oil & Gas Journal.
Data available at PennEnergy Research Center.
REFINED PRODUCT PRICES
11-4-11 11-4-11
¢/gal ¢/gal

Spot market product prices
Motor gasoline
(Conventional-regular)
New York Harbor ......... 273.80
Gulf Coast .................. 266.80
Motor gasoline
(RBOB-regular)
New York Harbor ......... 299.80
No. 2 heating oil
New York Harbor ......... 306.70

No. 2 Distillate
Low sulfur diesel fuel
New York Harbor ......... 312.10
Gulf Coast .................. 307.70
Los Angeles ................ 345.50
Kerosine jet fuel
Gulf Coast .................. 306.70
Propane
Mt. Belvieu ................. 144.00
Source: DOE Weekly Petroleum Status Report.
Data available at PennEnergy Research Center.
WORLD CRUDE PRICES
$/bbl
1
11-4-11
United Kingdom-Brent 38° ..................................... 109.22
Russia-Urals 32° ................................................... 108.85
Saudi Light 34° ...................................................... 108.06
Dubai Fateh 32° ..................................................... 106.13
Algeria Saharan 44°............................................... 110.30
Nigeria-Bonny Light 37° ........................................ 111.34
Indonesia-Minas 34°.............................................. 114.66
Venezuela-Tia Juana Light 31° ............................... 108.74
Mexico-Isthmus 33° ............................................... 108.63
-
OPEC basket........................................................... 108.91
-
Total OPEC
2
............................................................ 108.39
Total non-OPEC
2
..................................................... 107.24
Total world
2
............................................................ 107.92
US imports
3
104.35
1
Estimated contract prices.
2
Average price (FOB) weighted by
estimated export volume.
3
Average price (FOB) weighted by
estimated import volume.
Source: DOE Weekly Petroleum Status Report.
Data available at PennEnergy Research Center.
BAKER HUGHES RIG COUNT
11-11-11 11-12-10

Alabama............................................ 6 7
Alaska ............................................... 8 8
Arkansas ........................................... 35 35
California .......................................... 46 36
Land................................................ 46 36
Offshore .......................................... 0 0
Colorado ............................................ 79 67
Florida ............................................... 1 1
Illinois ............................................... 1 2
Indiana.............................................. 1 3
Kansas .............................................. 34 23
Kentucky............................................ 8 5
Louisiana .......................................... 160 182
N. Land ........................................... 84 130
S. Inland waters .............................. 19 17
S. Land............................................ 25 15
Offshore .......................................... 32 20
Maryland ........................................... 0 0
Michigan ........................................... 1 0
Mississippi ........................................ 12 7
Montana ............................................ 9 10
Nebraska ........................................... 1 3
New Mexico........................................ 82 71
New York............................................ 0 2
North Dakota ..................................... 185 137
Ohio................................................... 13 8
Oklahoma .......................................... 196 140
Pennsylvania ..................................... 109 102
South Dakota..................................... 2 1
Texas ................................................. 916 732
Offshore .......................................... 4 3
Inland waters .................................. 0 3
Dist. 1 ............................................. 120 65
Dist. 2 ............................................. 82 48
Dist. 3 ............................................. 47 41
Dist. 4 ............................................. 51 41
Dist. 5 ............................................. 51 71
Dist. 6 ............................................. 53 62
Dist. 7B ........................................... 14 12
Dist. 7C ........................................... 77 65
Dist. 8 ............................................. 286 184
Dist. 8A ........................................... 41 25
Dist. 9 ............................................. 24 38
Dist. 10 ........................................... 66 74
Utah .................................................. 27 29
West Virginia ..................................... 27 20
Wyoming............................................ 52 45
Others—NV-2; OR-1; TN-1; VA-1 ...... 5 9
Total US ........................................ 2,016 1,685
Total Canada ................................ 500 429
Grand total ................................... 2,516 2,114
US Oil rigs ......................................... 1,133 720
US Gas rigs ....................................... 877 955
Total US offshore ............................... 37 23
Total US cum. avg. YTD ..................... 1,859 1,514
Rotary rigs from spudding in to total depth.
Definitions, see OGJ Sept. 18, 2006, p. 42.
Source: Baker Hughes Inc.
Data available at PennEnergy Research Center.
US NATURAL GAS STORAGE
1

11-4-11 11-4-11 11-5-10 Change,
–——––—— bcf —––——– %
Producing region ................ 1,235 1,220 1,231 0.3
Consuming region east ...... 2,085 2,069 2,087 –0.1
Consuming region west ...... 511 505 519 –1.5
Total US ............................. 3,831 3,794 3,837 –0.2
Change,
Aug. 11 Aug. 10 %
Total US
2 ............................
3,020 3,150 –4.1
1
Working gas.
2
At end of period.
Source: Energy Information Administration
Data available at PennEnergy Research Center.
OGJ PRODUCTION REPORT

1
11-11-11
2
11-12-10
–—— 1,000 b/d —–—
(Crude oil and lease condensate)
Alabama ................................. 21 20
Alaska .................................... 620 612
California ............................... 608 602
Colorado ................................. 87 86
Florida .................................... 6 5
Illinois .................................... 26 25
Kansas ................................... 115 110
Louisiana ............................... 1,533 1,566
Michigan ................................ 16 18
Mississippi ............................. 66 65
Montana ................................. 70 70
New Mexico ............................. 191 184
North Dakota .......................... 394 351
Oklahoma ............................... 195 188
Texas ...................................... 1,620 1,371
Utah ....................................... 68 70
Wyoming ................................. 148 147
All others ................................ 69 71
Total .................................. 5,853 5,561
1
OGJ estimate.
2
Revised.
Source: Oil & Gas Journal.
Data available at PennEnergy Research Center.
SMITH RIG COUNT
11-11-11 11-12-10
Proposed depth, Rig Percent Rig Percent
ft count footage* count footage*

0-2,500 236 1.6 190 2.6
2,501-5,000 76 51.3 58 53.4
5,001-7,500 123 27.6 153 17.6
7,501-10,000 321 3.1 282 4.2
10,001-12,500 457 7.4 352 9.0
12,501-15,000 305 0.9 260 2.6
15,001-17,500 163 –– 160 ––
17,501-20,000 116 –– 142 ––
20,001-over 87 –– 43 ––
Total

1,884 6.5 1,640 6.9
INLAND 20

16
LAND 1,826 1,609
OFFSHORE 38 15
*Rigs employed under footage contracts.
Definitions, see OGJ Sept. 18, 2006, p. 42.
Source: Smith International Inc.
Data available at PennEnergy Research Center.
111121OGJ_30 30 11/17/11 1:06 PM
Oil & Gas Journal | Nov. 21, 2011 31
STATISTICS
INTERNATIONAL RIG COUNT
––––––– Oct. 2011 –––––– Oct. 10
Region Land Off. Total Total
WESTERN HEMISPHERE
Argentina ................................ 64 –– 64 62
Bolivia ..................................... 5 –– 5 6
Brazil....................................... 35 49 84 72
Canada ................................... 506 2 508 398
Chile........................................ 3 –– 3 4
Colombia ................................. 68 –– 68 51
Ecuador ................................... 16 –– 16 12
Mexico ..................................... 79 25 104 74
Peru......................................... 7 2 9 10
Trinidad ................................... 2 2 4 2
United States .......................... 1,982 35 2,017 1,668
Venezuela ................................ 66 11 77 82
Other ....................................... 3 1 4 2
--------------- --------------- --------------- ---------------
Subtotal .................................. 2,836 127 2,963 2,443
ASIA-PACIFIC
Australia ................................. 7 7 14 16
Brunei ..................................... –– 4 4 5
China-offshore ........................ –– 27 27 24
India........................................ 88 30 118 109
Indonesia ................................ 41 13 54 61
Japan ...................................... 1 –– 1 3
Malaysia.................................. –– 7 7 11
Myanmar ................................. 2 –– 2 1
New Zealand ........................... 4 –– 4 5
Papua New Guinea .................. 3 –– 3 4
Philippines .............................. 2 –– 2 8
Taiwan..................................... –– –– –– ––
Thailand .................................. 4 12 16 11
Vietnam................................... –– 6 6 16
Other ....................................... 1 –– 1 ––
--------------- --------------- --------------- ---------------
Subtotal .................................. 153 106 259 274
AFRICA
Algeria..................................... 34 –– 34 25
Angola ..................................... –– 7 7 6
Congo ...................................... 2 4 6 2
Gabon...................................... 5 1 6 3
Kenya ...................................... 1 –– 1 ––
Libya ....................................... –– –– –– 15
Nigeria .................................... 4 13 17 19
South Africa ............................ –– –– –– ––
Tunisia .................................... 4 –– 4 4
Other ....................................... 1 5 6 9
--------------- --------------- --------------- ---------------
Subtotal .................................. 51 30 81 83
MIDDLE EAST
Abu Dhabi ............................... 13 9 22 12
Dubai ...................................... –– 1 1 2
Egypt ....................................... 58 11 69 53
Iran ......................................... –– –– –– ––
Iraq ......................................... –– –– –– ––
Jordan ..................................... –– –– –– ––
Kuwait ..................................... 35 –– 35 23
Oman ...................................... 40 –– 40 45
Pakistan .................................. 14 –– 14 15
Qatar ....................................... 2 5 7 8
Saudi Arabia ........................... 62 11 73 68
Sudan...................................... –– –– –– ––
Syria ........................................ 27 –– 27 30
Yemen ..................................... 3 –– 3 12
Other ....................................... 4 2 6 2
--------------- --------------- --------------- ---------------
Subtotal .................................. 258 39 297 270
EUROPE
Croatia .................................... –– –– –– ––
Denmark.................................. –– 3 3 1
France ..................................... 1 –– 1 ––
Germany .................................. 4 –– 4 4
Hungary................................... 1 –– 1 2
Italy ......................................... 5 2 7 7
Netherlands............................. 1 3 4 7
Norway .................................... –– 18 18 20
Poland ..................................... 9 –– 9 2
Romania.................................. 12 –– 12 11
Turkey ...................................... 24 2 26 11
UK ........................................... 3 11 14 20
Other ....................................... 15 8 23 10
--------------- --------------- --------------- ---------------
Subtotal .................................. 75 47 122 95
Total ........................................ 3,373 349 3,722 3,165
Definitions, see OGJ Sept. 18, 2006, p. 42.
Source: Baker Hughes Inc.
Data available at PennEnergy Research Center.
OIL IMPORT FREIGHT COSTS*
Cargo Freight
size, (Spot rate)
Source Discharge Cargo 1,000 bbl worldscale $/bbl
Caribbean New York Dist. 200 –– ––
Caribbean Houston Resid. 380 106 1.26
Caribbean Houston Resid. 500 97 1.15
N. Europe New York Dist. 200 166 2.79
N. Europe Houston Crude 400 120 2.98
W. Africa Houston Crude 910 87 2.41
Persian Gulf Houston Crude 1,900 35 1.82
W. Africa N. Europe Crude 910 93 1.89
Persian Gulf N. Europe Crude 1,900 34 1.30
Persian Gulf Japan Crude 1,750 56 1.68
*October 2011 average.
Source: Drewry Shipping Consultants Ltd.
Data available at PennEnergy Research Center.
WATERBORNE ENERGY INC.
US LNG IMPORTS
Change
Oct. Sept. Oct. from a
2011 2011 2010 year ago,
Country ————— MMcf ———— %
Egypt 2,930 –– 2,950 –0.7
Nigeria –– –– 2,370 ––
Norway 2,930 –– 5,730 –48.9
Peru –– –– 3,230 ––
Qatar 9,050 4,550 4,540 99.3
Trinidad and
Tobago 11,100 8,690 15,230 –27.1
Yemen 8,910 8,700 –– ––
Total 34,920 21,940 34,050 2.6
Source: Waterborne Energy Inc.
Data available at PennEnergy Research Center.

PROPANE
PRICES
Aug. Sept. Aug. Sept.
2011 2011 2010 2010
——–—––––––––– ¢/gal —––—–––––——–
Mont
Belvieu 152.80 156.00 107.20 113.20
Conway NA NA NA NA
Northwest
Europe NA NA NA NA
Source: EIA Weekly Petroleum Status Report
Data available at PennEnergy Research Center.
NOTE: No new data at press time.
MUSE, STANCIL & CO. REFINING MARGINS
US US US US North- South-
Gulf East Mid- West west east
Coast Coast west Coast Europe Asia
––––––––––––––––––––––––––––––––––– $/bbl –––––––––––––––––––––––––––––––––––
October 2011
Product revenues 120.56 121.51 118.68 132.60 122.58 117.38
Feedstock costs –113.41 –115.73 –92.89 –116.61 –113.07 –109.12
Gross margin 7.15 5.78 25.79 15.99 9.51 8.26
Fixed costs –2.24 –2.59 –2.52 –2.93 –2.52 –1.96
Variable costs –1.13 –1.08 –0.90 –1.46 –1.49 –1.87
Cash operating
margin 3.78 2.11 22.37 11.60 5.50 4.43
September 2011 2.01 –1.76 24.93 7.04 4.11 3.18
YTD avg. 6.74 0.22 22.19 11.96 4.32 3.16
2010 avg. 4.46 1.82 8.15 9.39 3.50 0.50
2009 avg. 3.04 1.12 5.23 10.30 2.01 –1.35
2008 avg. 9.09 3.04 11.26 13.54 7.34 1.77
Source: Muse, Stancil & Co. See OGJ, Jan. 15, 2001, p. 46
Data available at PennEnergy Research Center.
MUSE, STANCIL & CO.
GASOLINE MARKETING MARGINS
Los
Chicago* Houston Angeles New York
September 2011 ———–———— ¢/gal ————–———
Retail price 388.61 341.32 392.87 384.30
Taxes 62.85 38.40 66.32 55.12
Wholesale price 293.95 285.01 308.66 296.53
Spot price 304.02 267.12 287.81 280.11
Retail margin 31.73 17.91 17.89 32.65
Wholesale margin –10.07 17.89 20.85 16.42
Gross marketing margin 21.66 35.80 38.74 49.07
August 2011 15.86 34.41 27.11 41.87
YTD avg. 17.81 24.03 29.04 36.14
2010 avg. 18.43 20.23 29.53 33.26
2009 avg. 23.46 21.99 26.60 30.61
2008 avg. 33.11 32.15 27.22 41.81
*The wholesale price shown for Chicago is the RFG price utilized for the
wholesale margin. The Chicago retail margin includes a weighted average
of RFG and conventional wholesale purchases.
Source: Muse, Stancil & Co. See OGJ, Oct. 15, 2001, p. 46.
Data available at PennEnergy Research Center.
Note: Margins include ethanol blending in all markets.
MUSE, STANCIL & CO.
ETHYLENE MARGINS
Ethane Propane Naphtha
——–——– ¢/lb ethylene –—–———
October 2011
Product revenues 55.85 96.34 127.27
Feedstock costs –36.73 –83.75 –143.57
Gross margin 19.12 12.59 –16.30
Fixed costs –5.38 –6.36 –7.19
Variable costs –3.01 –3.48 –4.55
Cash operating
margin 10.73 2.75 –28.04
September 2011 25.23 14.82 –7.50
YTD avg. 27.28 21.83 –9.76
2010 avg. 21.98 17.34 –5.24
2009 avg. 12.93 9.63 –13.72
2008 avg. 21.00 22.89 –5.91
Source: Muse, Stancil & Co. See OGJ, Sept. 16, 2002, p. 46.
Data available at PennEnergy Research Center.
MUSE, STANCIL & CO.
US GAS PROCESSING MARGINS
Gulf Mid-
Coast continent
October 2011 ———–– $/Mcf —–—–—
Gross revenue
Gas 3.42 3.05
Liquids 1.58 3.54
Gas purchase cost 3.81 4.10
Operating costs 0.07 0.15
Cash operating margin 1.12 2.34
September 2011 1.10 2.42
YTD avg. 1.00 2.42
2010 avg. 0.67 1.73
2009 avg. 0.41 1.14
2008 avg. 0.45 1.61
Breakeven producer payment,
% of liquids 27% 33%
Source: Muse, Stancil & Co. See OGJ, May 21, 2001, p. 54.
Data available at PennEnergy Research Center.
111121OGJ_31 31 11/17/11 1:06 PM
32 Oil & Gas Journal | Nov. 21, 2011
EMPLOYMENT
The U. S. Department of Energy (DOE), Office
of the Deputy Assistant Secretary for Petro-
leum Reserves (FE-40) in Washington, DC is
seeking a highly-qualified candidate to serve
as Associate Deputy Assistant Secretary.
The prime responsibility and authority for plan-
ning, management, implementation and adminis-
tration of all programs related to the Strategic Pe-
troleum Reserves (SPR) and the Northeast Home
Heating Oil Reserves. The Office is responsible for
meeting the national objective of storing sufficient
reserves of crude oil and heating oil to be used in
the event of severe energy supply interruptions that
threaten the nation’s energy security and economy.
The ideal candidate will have experience in manag-
ing petroleum operations (refinery, pipeline and/or
storage) with a high level of expertise in storage
and distribution systems. The ability to provide
executive level leadership and program manage-
ment is required. Experience dealing with high
level officials in the petroleum industry and gov-
ernment is preferred.
For more information concerning key require-
ments, major duties, technical qualifications, ben-
efits, evaluation factors and to apply visit USA Jobs
at http://www.usajobs.opm.gov/.
Cameron International Corporation in
Houston, TX seeks Engineer II. Qualified
applicants will possess a Bachelor’s degree in
Mechanical Engineering and two years offshore
wellhead support experience. Email resume to
Davon.Dolejsi@c-a-m.com. Resume must in-
clude job code 29564BR.
Cameron International Corporation in Hous-
ton, TX seeks Project Quality Manager. Quali-
fied applicants will possess a Master’s degree in
Mechanical or Industrial Engineering plus two
years related experience in the oil and gas indus-
try. Email resume to Davon.Dolejsi@c-a-m.com.
Resume must include job code 29233BR.
Cameron International Corporation in Hous-
ton, TX seeks Product Engineer III. Qualified
applicants will possess a Master’s Degree in Chem-
ical, Petroleum, or Mechanical Engineering and
one year of experience in the design and selection
of process equipment for the oil and gas indus-
try. Email resume to Jennifer.Laster@c-a-m.com.
Resume must include job code: PRODENGCPS.
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