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EDITORIAL
NEWSLETTER
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EDITORS PERSPECTIVE
GENERAL INTEREST
JOURNALLY SPEAKING
WATCHING GOVERNMENT
US $10
International Petroleum News and Technology
5 NEWSLETTER
12 LETTERS / CALENDAR
www.ogj.com
14 JOURNALLY SPEAKING
32 STATISTICS
Apr. 30, 2012
16 EDITORIAL
Volume 110.4d
30 EQUIPMENT
30 ADVERTISERS INDEX
GENERAL INTEREST
18 CSB expects to issue final Macondo
report in early 2013
Nick Snow
18 BP agrees to pay $7.8 billion

in Macondo settlements
Paula Dittrick
19 DOJ announces first criminal

charges in Macondo investigation
Nick Snow
19 Total, Transocean drilling

relief well to stem Elgin gas leak
Paula Dittrick
24 Shell unit increases offer for Cove Energy

Paula Dittrick
25 Uinta due $200 million oil shale joint venture

25 Eni-Rosneft pact covers Barents,
Black Sea exploration
26 Dow plans Texas ethylene plant
based on shale gas
Nick Snow
26 Williams boosts capacity

of Atlantic Access Transco expansion
Christopher E. Smith
20 Oil & Gas UK, unions

hit EU safety proposal
28 BP group okays FEED for second-stage Shah

Deniz development
20 House Republicans live in imagined

energy world, Salazar charges
29 EXPLORATION/DEVELOPMENT BRIEFS
Nick Snow
21 WATCHING GOVERNMENT
29 EDITORS PERSPECTIVE
YPF expropriation clouds the allure of Argentine shale
Behind the BSEE safety alert
22 NGSA, IPAA see some improvement

in CFTCs swap dealer definition
Nick Snow
22 USGS updates non-US oil, gas, NGL

conventional resource estimates
Nick Snow
24 NEB: Canadian gas

deliverability to decline
COVER
Total UK Ltd. stopped production on Elgin and
Franklin gas fields following a Mar. 25 gas leak on
the wellhead platform 240 km east of Aberdeen in
the North Sea. Total said contractor Transocean Ltd.
has started drilling a relief well to stop the leak from
well G4 on the Elgin platform. (See story, p. 19.)
Photo from Total UK.
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Save daysnot hours

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OGJ
Newsletter
Apr. 30, 2012
International News
for oil and gas professionals
GENERAL INTEREST Q U IC K TA K E S
Nova Scotia puts fracing on 2-year hold
The Nova Scotia government said it needs 2 more years to study
hydraulic fracturing, a practice that has raised concerns about
potential contamination of drinking water in some US areas
where it has been used on unconventional plays.
No fracing will be approved until the extended review is
completed, Nova Scotia officials said. Previously, Nova Scotia
was slated to release a fracturing report this year, but officials
announced Apr. 16 that the report was delayed until mid-2014.
Energy Minister Charlie Parker said the province wants time
to review emerging regulations by the US Environmental Protection Agency and Environment Canada.
We think its important to get the best possible information thats out there and make an informed decision after weve
learned all that, said Parker.
Premier Darrell Dexter said the province was conducting a
scientific review and coming up with the right decision on it
based on the science.
No comment was immediately available from the Canadian
Society for Unconventional Resources in Calgary.
API: 1Q total drilling down, well completions up

Exploratory well completions increased by 12% in this years
first quarter, the American Petroleum Institute said in its latest
quarterly well completion report. But overall well completions,
including exploration and development completions, declined
by 9% from a year earlier with 8,963 total wells being completed during the quarter.
The report showed that both oil and natural gas well completions declined from year ago levels, with 5,352 oil well completions, a 1% decline from a year earlier. API reported 2,495
natural gas well completions during the recent quarter, a 28%
decline from the first quarter of 2011.
Dry hole completions increased by 11% to 1,116 completions. Estimated total drilling footage during this years first
quarter was 66,254,000 ft, a 9% decline from a year earlier.
Russia reports oil spill at Trebs field

Russian environmental officials reported an oil spill at Arctic
Trebs field in the Nenets Autonomous District near the town of
Oil & Gas Journal
For up-to-the-minute news,

visit www.ogjonline.com
Usinsk. The spill from an exploratory well was stopped after 2

days. The size of the spill was estimated at 800-2,000 tonnes.
A Russian Environmental Agency spokesman told the Associated Press that the spill contaminated at least 8,000 sq m
of land. Trebs field has estimated reserves of 82.469 million
tonnes of oil (OGJ Online, Sept. 9, 2010).
The field is developed by a joint venture involving Lukoil
and Bashneft, AP reported.
Plains All American drops SemGroup offer

Plains All American Pipeline LP has withdrawn its unsolicited
October 2011 proposal to acquire pipeline operator SemGroup
Corp. No additional comment or details were available.
In early October 2011, Plains offered to buy SemGroup for
$24/share. SemGroup rejected the offer. In November 2011,
Plains reiterated its offer to acquire SemGroup.
Plains first approached SemGroup in March 2010 with a
$17/share offer.
EXPLORATION & DEVELOPMENT Q U IC K TA K E S

Heidelberg downdip sidetrack finds deeper oil pay
An Anadarko Petroleum Corp.-operated downdip sidetrack
of the Heidelberg appraisal well in the US Gulf of Mexico has
confirmed oil pay, found an oil-water contact, and greatly increased the fields known areal extent, said partner Eni SPA.
Since mid-February, the Anadarko group has drilled the GC
903-3ST1 sidetrack, which has now located the oil-water contact 700 ft deeper than the previous oil discovery well (OGJ
Online, Feb. 20, 2012).
Heidelberg is in 5,260 ft of water 130 miles off Louisiana.
The appraisal well is 1.3 miles from the discovery well on Green
Canyon Block 903. The updip appraisal well went to 31,030 ft
measured depth, and the downdip sidetrack went to 30,440 ft.
The group is evaluating well data to accelerate the overall
sanctioning process for the project.
Anadarko has 44.25% interest in Heidelberg. Eni and
Apache Corp. hold 12.5% each, and Cobalt International Energy LP and ExxonMobil Corp. have 9.375% each.
Eni owns lease interests in 305 blocks in the gulf, where it
is among the leading producers with net production capacity of
90,000 b/d of oil equivalent, 60% operated.
IPE BRENT / NYMEX LIGHT SWEET CRUDE

$/bbl
125.00
121.00
117.00
113.00
109.00
105.00
101.00
97.00
US INDUSTRY SCOREBOARD 4/30

4 wk.
average
Latest week 4/13
Apr. 18
Apr. 19
Apr. 20
Apr. 23
Motor gasoline
Distillate
Jet fuel
Residual
Other products
Apr. 24
TOTAL PRODUCT SUPPLIED
Crude production
NGL production2
Crude imports
Product imports
Other supply2 3
TOTAL SUPPLY
Net product imports
Apr. 19
Apr. 20
Apr. 23
Apr. 24
8,991
3,805
1,360
507
4,417
19,080
2.8
0.5
3.7
7.1
5.8
2.7
8,370
3,641
1,364
416
4,492
18,283
8,896
3,796
1,389
563
4,550
19,194
5.9
4.1
1.8
26.1
1.3
4.7
5,988
2,364
9,071
1,828
2,314
21,565
866
5,617
2,043
8,676
2,515
2,067
20,918
245
6.6
15.7
4.6
27.3
11.9
3.1
5,843
2,333
8,866
1,918
2,272
21,232
975
5,553
2,057
8,682
2,523
2,123
20,938
307
5.2
13.4
2.1
24.0
7.0
1.4
Crude runs to stills

Input to crude stills
% utilization
14,503
14,657
84.7
14,383
14,733
83.1
0.8
0.5
14,539
14,760
83.8
14,248
14,653
82.7
2.0
0.7
Latest week 4/13
Latest
week
Previous
week1
369,046
213,965
128,977
39,226
33,528
365,190
217,636
131,885
39,282
34,849
Same week
year ago1 Change
Change
3,856
3,671
2,908
56
1,321
Stock cover (days)4

Apr. 18
Apr. 19
Apr. 20
Apr. 23
Apr. 24
356,969
208,096
148,335
41,203
36,894
Change,
%
12,077
5,869
19,358
1,977
3,366
Change, %
Crude
Motor gasoline
Distillate
Propane
Futures prices5 4/20
25.4
24.5
34.1
43.9
25.2
25.2
36.8
42.2
103.02
1.95
102.53
2.02
3.4
2.8
13.1
4.8
9.1
Change, %
0.8
2.8
7.3
4.0
25.1
23.1
39.0
25.7
1.2
6.1
12.6
70.8
Change
Light sweet crude ($/bbl)

Natural gas, $/MMbtu
Change
0.49
0.07
108.21
4.15
5.19
2.20
4.8
53.0
Based on revised figures. 2OGJ estimates. 3Includes other liquids, refinery processing gain, and unaccounted for crude oil. 4Stocks
divided by average daily product supplied for the prior 4 weeks. 5Weekly average of daily closing futures prices.
Source: Energy Information Administration, Wall Street Journal
Apr. 18
Apr. 19
Apr. 20
Apr. 23
Apr. 24
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
3,663
3,316
346
Mar. 11
Apr. 18
Apr. 19
Apr. 20
Apr. 23
Apr. 24
Apr. 11
May. 11
Jun. 11
Jul. 11
Aug. 11 Sept. 11
Oct. 11
Nov. 11
Dec. 11
Jan. 12
Feb. 12
Mar. 12
Note: Monthly average count
BAKER HUGHES RIG COUNT: US / CANADA

2,200
1,972
2,000
1,800
1,800
1,600
1,400
700
500
300
Apr. 18
1Reformulated
Apr. 19
Apr. 20
Apr. 23
gasoline blendstock for oxygen blending

2Nonoxygenated regular unleaded
8,737
3,785
1,410
471
4,162
18,565
Crude oil
Motor gasoline
Distillate
Jet fuelkerosine
Residual
NYMEX GASOLINE (RBOB)1/ NY SPOT GASOLINE2

/gal
321.00
318.00
315.00
312.00
309.00
306.00
303.00
300.00
Change,
%
Stocks, 1,000 bbl
PROPANE - MT. BELVIEU / BUTANE - MT. BELVIEU

/gal
194.00
192.00
190.00
188.00
120.00
119.00
118.00
117.00
YTD avg.
year ago1
Refining, 1,000 b/d

Apr. 18
IPE GAS OIL / NYMEX HEATING OIL

/gal
320.00
318.00
316.00
314.00
312.00
311.00
310.00
308.00
YTD
average1
Supply, 1,000 b/d
NYMEX NATURAL GAS / SPOT GAS - HENRY HUB

$/MMbtu
2.150
2.100
2.050
2.000
1.950
1.900
1.850
1.800
Change,
%
Product supplied, 1,000 b/d
WTI CUSHING / BRENT SPOT

$/bbl
125.00
121.00
117.00
113.00
109.00
105.00
101.00
97.00
4 wk. avg.
year ago1
Apr. 24
100
146
143
2/4/11
2/18/11
2/11/11
3/4/11
2/25/11
3/18/11
3/11/11
4/1/11
3/25/11
4/15/11
4/8/11
2/3/12
4/22/11
2/17/12
2/10/12
3/2/12
2/24/12
3/16/12
3/9/12
3/30/12
3/23/12
4/13/12
4/6/12
4/20/12
Note: End of week average count
Oil & Gas Journal | Apr. 30, 2012
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Wells abandoned off Sierra Leone
Silurian, Ordovician shales to be explored in Lithuania
The West African Transform Margin remains highly prospective despite two Anadarko Petroleum Corp.-operated exploratory wells that encountered water-bearing reservoirs with oil
shows off Sierra Leone and Ivory Coast, said Tullow Oil PLC.
Mercury-2, on Block SL-07B-11 off Sierra Leone 12 km
northwest of the Mercury-1 oil discovery, targeted an area
where the extensive 3D seismic coverage indicated a high probability of finding thick reservoir quality sandstones. It intersected more than 270 m of reservoir quality sandstones that
were water bearing with oil shows at this location, Tullow said.
Mercury-2 went to 5,142 m in 1,815 m of water. Anadarko
operates the block with 55% interest, Repsol YPF has 25%, and
Tullow has 20%.
Kosrou-1 went to 5,241 m in 2,275 m of water on Block CI105 off Ivory Coast 17 km east-southeast of the previous South
Grand Lahou-1 well. Kosrou-1 targeted a channel system identified on 3D seismic survey shot in 2010. The well cut 90 m
of reservoir quality sandstones with oil shows in the primary
target and more than 120 m in total in the well.
On completion of operations the rig will return to the Paon1 location to finish drilling that well. Paon-1 is a high-impact
prospect geologically independent from Kosrou and closer to
recent discoveries in Ghana. Anadarko operates CI-105 with
50% interest. Tullow has 22%, Petroci 15%, and Thani 13%.
Tullow said it will integrate data from the two wells into its
regional models to improve the chances of making a hub-class
discovery with the ongoing exploratory campaign that includes
the Strontium-1 well off Liberia and Paon-1 off Ivory Coast.
UAB Minijos Nafta will spud an exploratory well in May on the

Gargzdai license in western Lithuania that will evaluate several
targets including shales of Silurian and Ordovician age.
The well, which targets a previously undrilled Cambrian
sandstone, will also be extensively logged and cored in the Silurian and Ordovician shale sections, said Tethys Oil AB, Stockholm. The 2012 work program also includes two sidetracks and
a 50 sq km 3D seismic survey.
Tethys Oil said its share of production in Lithuania averaged
159 b/d of oil in the quarter ended Mar. 31, 2012. Gargzdai
gross production averaged 638 b/d.
Tethys Oils share of reserves in Gargzdai, according to the
agreement with Odin Energi AS, as of the end of 2011 were
700,000 bbl proved, 1.7 million bbl proved and probable, and
3 million bbl proved, probable, and possible.
Work programs for the Rietavas and Raiseiniai licenses have
not been finalized, but reprocessing of seismic data continues.
The Silale-1 well on Rietvas, which flowed 150 b/d from Cambrian when drilled in the 1980s, will be worked over.
Tethys assets in Lithuania will be held through a 25% net
indirect interest in UAB Minijos Nafta and a 20% net indirect
interest in UAB LL Investicos. MN holds the Gargzdai license,
and LLI holds Rietavas and Raiseiniai.
Thicker Toro gas found at Pnyang South

A sidetrack of the Pnyang South-1 well in Papua New Guinea
is interpreted to have extended the gas-bearing Toro sandstone
200 m deeper than the lowest known gas in Pnyang South-1,
indicating an increase in the total gas column to 380 m, said
Oil Search Ltd., Sydney.
The sidetrack intersected the top of Toro downdip and 1.1
km south of the original Pnyang South-1 well. It successfully
drilled through the gas-water contact as planned.
Seismic interpretation and structural mapping suggest further updip potential above Pnyang South-1 and indicate a potential vertical gas column in Pnyang South field of more than
650 m, Oil Search said.
Oil Search, with 38.5% interest, drilled the sidetrack to
2,944 m under contract with the operator, Esso PNG Pnyang
Ltd. ExxonMobil affiliates have 49% interest in the sidetrack,
and JX Nippon has 12.5%.
Explorer New Guinea Energy Ltd., Sydney, pointed out that
Oil Searchs Pnyang South well on PRL 3 is 2 km north of the
boundary with NGEs PPL 269. Oil Search said the presence
of gas is indicated in the Toro, Digimu, and Pnyang sands at
the initial Pnyang South-1 well but the underlying Koi-Iange
sandstone appears to be water wet. Pnyang South is 90 km
northwest of giant Juha gas-condensate field.
DRILLING & PRODUCTION Q U IC K TA K E S

PTTEP starts production from GBS field
PTT Exploration & Production PCL (PTTEP) and its Bongkot
joint venture partners reported the start of production from
Greater Bongkot South (GBS) natural gas and condensate field
in the Gulf of Thailand. GBS field lies on Blocks B16 and B17
about 200 km east of the southern Thai city of Songkhla.
This stand-alone development consists of a central processing platform, a living quarter platform, and 13 wellhead platforms. The processing platform has capacity to process 350
MMcfd of gas and 15,000 b/d of condensate. Gas is exported via
a newbuild spur line to the PTTEP grid; condensate is exported
to the existing floating, storage, and offloading vessel at Greater
Bongkot North field, which lies 80 km north.
Bangkot field is operated by PTTEP, which holds 44.45%
interest. Total SA holds 33.33% and BG Group, 22.22%.
Total starts up natural gas field offshore Scotland

Total SA has started production from Islay natural gas field
straddling the UK-Norwegian sector line in the North Sea 440
km northeast of Aberdeen (OGJ Online, July 15, 2010).
Production from a single well, completed subsea in 120 m of
water and tied back to the Alwyn North platform, has reached
15,000 boe/d. Total estimates reserves at 17 million boe of gas
and condensate.
Discovered in 2008, the field lies mostly on Block 3/15 of
the UK sector and partly on Blocks 29/6a and 29/6c of the Norwegian sector.
Total holds 100% interest in Islay and the Alwyn production

hub (OGJ Online, Nov. 6, 2006).
Samburskoye flow starts in West Siberia

SeverEnergia, a Russian joint venture of Eni SPA, Novatek,
Gazpromneft, and Enel, has started production of natural gas
and condensate from Samburskoye field in the Yamal-Nenets
autonomous district of western Siberia, Eni reported (OGJ Online, May 21, 2009).
The initial production rate is 43,000 boe/d. Output is to
peak in 2015 at 145,000 boe/d.
The joint venture is developing the field with two integrated
production systems incorporating three trains for gas and condensate and two trains for rim oil. Facilities are in the Purov
district of Tyumen about 150 km northeast of Novy Urengoy.
Gas and condensate development involves 98 production
wells, including 68 new horizontal wells, 15 slanted wells, 11
workovers of existing wells, and 4 sidetracks. Most drilling of
the wells, to be located in 12 clusters, is to be finished by 2017.
Facilities include a treatment plant with 18.75 million standard cu m/day of total capacity, a 48-km, 40-in. gas export
pipeline, and a 22-km, 12-in. condensate export line.
Oil development will include 55 new horizontal producing
wells, 3 workovers, and 35 water-injection wells, 25 new and 10
converted from oil wells. Most of the oil wells are to be drilled
and completed by 2018.
Oil treatment capacity will total 1.3 million tonnes/year,
200,000 tpy in a first train and 1 million tpy in a second. There
will be a 110-km export oil pipeline.
Interests in SeverEnergia are Eni 30%, Novatek and Gazpromneft 25.5% each, and Enel 19%.
Petrobank: Kerrobert output up in March

Petrobank Energy & Resources Ltd. said production from its
Kerrobert in situ combustion project in southwestern Saskatchewan increased in March to an average 264 b/d of apparently
upgraded bitumen (OGJ Online, Feb. 1, 2012).
The company is using its proprietary THAI technology in
the project, production of which in January and February averaged 155 b/d. To support combustion, it injects air through vertical wells drilled near the toes of horizontal producing wells.
That the produced oil has average API gravity of 13-14 indicates upgrading is occurring in situ, Petrobank says. The reservoir oil is 10.4 gravity.
The company brought Kerrobert field on production last
September.
PROCESSING Q U IC K TA K E S
Oneok plans more processing Cana-Woodford shale
Included will be about $190 million for construction of the

200-MMcfd Canadian Valley natural gas processing plant in
Canadian County, Okla. It is to be in service first-quarter 2014.
When completed, the plant will be the companys largest gas
processing plant in Oklahoma and increase its total gas processing capacity in the state to 690 MMcfd.
In addition, Oneok will invest $160 million to expand and
upgrade existing gas gathering and compression, increasing the
companys gas gathering and processing capacity to 390 MMcfd
in the Cana-Woodford shale.
Additional natural gas processing infrastructure is necessary to accommodate increased production of liquids-rich natural gas in the Cana-Woodford shale, said Pierce H. Norton,
Oneok executive vice-president and chief operating officer.
The partnership now has announced a total investment of
$4.7 billion to $5.7 billion through 2015 for growth projects in
natural gas gathering and processing, natural gas liquids and
crude-oil infrastructure.
Sunoco, Carlyle discuss JV for refinery

Discussions have begun that might keep Sunoco Inc.s 330,000
b/d Philadelphia refinery, considered pivotal to East Coast
product supply, from closing in July.
Sunoco, which is exiting the refining business, said it has
entered exclusive discussions with the Carlyle Group about a
joint venture that would keep the refinery in business.
Sunoco would contribute the refinery assets in exchange for
a nonoperating minority interest in the joint venture and be
relieved of ongoing capital obligations related to the facility.
Carlyle, a global alternative asset manager, would contribute
cash, hold majority interest, and oversee day-to-day operations
of the joint venture and refinery.
Sunoco has been seeking a buyer for the refinery, its last,
and said it would close the facility if one were not found by July
(OGJ Online, Dec. 2, 2011).
The Energy Information Administration in February
warned of market strains likely to result from the refinerys closure, which would follow shutdowns of other refineries crucial
to East Coast supply and come as requirements took effect in
New York for ultralow-sulfur heating oil (OGJ Online, Feb. 28,
2012).
Repsol opens Cartagena refinery expansion

Repsol held a ceremonial opening of the expansion of its
110,000 b/d Cartagena refinery in Murcia, Spain, to 220,000
b/d of distillation capacity (OGJ Online, Jan. 7, 2010).
The 3.15-billion project, which Repsol calls the biggest
industrial investment in Spanish history, includes 50,000 b/d
of hydrocracking, 60,000 b/d of coking, and 60,000 b/d of desulfurization capacity.
Oneok Partners LP, Tulsa, reported it will invest $340-360 million through first-quarter 2014 to expand natural gas gathering and build new processing in the Cana-Woodford shale in
Oklahoma.
10
TRANSPORTATION Q U IC K TA K E S
Enbridge files application to twin Athabasca line
Enbridge Pipelines (Athabasca) Inc. applied with Canadas Energy Resources Conservation Board for licenses to build a crude
oil pipeline with two pump stations from Kirby Lake Terminal south to Battle River Terminal, in the Hardisty, Alta., crude
hub. The 344-km pipeline would transport hydrogen sulfidefree crude using new pump stations at the existing Kirby Lake
and at Bonnyville Station facilities.
The construction is part of Enbridges Athabasca Pipeline
Twinning Project and will generally follow the existing Athabasca Pipeline right-of-way, using 36-in. OD pipe. The twin
line initially will add about 450,000 b/d of capacity between
these points, with low-cost expansion potential to 800,000 b/d,
according to Enbridge (OGJ Online, Sept. 13, 2011).
Enbridge expects to start work on the project in late 2013
pending regulatory approvals, starting with pump station construction in October 2013 and continuing with clearing ROW
and building the pipeline once frozen ground conditions exist
in December 2013. Enbridge expect initial shipments by early
2015 and full initial capacity to be available by 2016.
Enbridge described the new line as addressing the need for
additional capacity to serve Kirby area oil sands growth, beyond already announced plans to expand the existing 30-in.
OD pipeline to its maximum 570,000 b/d capacity.
GDF Suez studies floating LNG unit off India

A unit of GDF Suez is studying feasibility of a floating LNG
regasification terminal offshore southeastern India for Andhra
Pradesh Gas Distribution Corp. Ltd. (APGDC).
APGDC, a joint venture of state-owned GAIL Gas Ltd. and
Andhra Pradesh Gas Infrastructure Corp. Pvt. Ltd., signed a
project framework agreement with GDF Suez LNG UK Ltd.
for the study of a regas terminal with capacity of 3.5 million
tonnes/year, envisioning commissioning early in 2014.
The feasibility study is to be completed by yearend, followed
by a final investment decision. GDF Suez, as a strategic partner,
would have a 26% stake in the terminal with access to equity
regasification capacities.
Indias Minister of Petroleum and Natural Gas, in a statement about the agreement, said shortage of natural gas in
Andhra Pradesh has led to underutilization of infrastructure,
especially in the power sector.
The problem extends to other parts of the country, said Petroleum Minister Shri S. Jaipal Reddy. The need for gas in India
cannot be overstated, he said.
Chubu signs Wheatstone LNG offtake agreement

Chevron Corp. has signed a nonbinding heads of agreement
with Japans Chubu Electric Power Co. Inc. for the supply of
1 million tonnes/year of LNG from the Wheatstone project in
Western Australia.
Chubu also is a foundation member of Chevrons Gorgon
LNG project. It will now receive a total of 2.5 million tpy from
both developments over a 20-year period. Chevron says 70% of
its equity LNG entitlements from Wheatstone are now covered
by long-term contracts with Asian customers.
The plant is being constructed at Ashburton North about
7 km west of Onslow. Initially it will comprise two LNG
trains with a combined capacity of 8.9 million tpy as well as
production from a domestic gas plant.
The project is a joint venture of Chevron 72.14%, Apache Energy 13%, Kufpec 7%, Shell 6.4%, and Kyushu Electric 1.46%.
KMEP launches Cochin Reversal open season

Kinder Morgan Energy Partners LP launched a binding open
season for its Cochin Reversal Project to move light condensate
from Kankakee County, Ill., to existing terminal facilities near
Fort Saskatchewan, Alta. The project involves KMEP modifying
the western leg of its Cochin Pipeline to connect to the Explorer
Pipeline Co. in Kankakee County and to reverse flow to move
the condensate northwest.
The project would move about 75,000 b/d of light condensate on Cochin to meet the growing demand for diluent in Alberta drawing from both Eagle Ford shale and US Gulf Coast
supplies, KMEP said. KMEP has yet to determine the nature of
future eastbound service from Illinois to Windsor, Ont.
KMEP is seeking binding commitments from interested
customers for a minimum contract term of 10 years and 5,000
b/d. The open season ends May 31. Subject to shipper support,
timely regulatory approvals and necessary capital improvements, light condensate shipments could begin on July 1, 2014.
KMEP cited declining propane production in western Canada and increased natural gas production from US shale formations as driving the project, with propane production in North
Dakota expected to rise even as demand for Canadian propane
export transportation services wanes. At the same time, the
company cited Canadian National Energy Board projections of
a more than two-and-a-half fold increase in light condensate
demand in Canada, reaching 450,000 b/d by 2025, in explaining the decision to reevaluate its long-term strategy for Cochin.
KMEP held an open season in 2009 to solicit market interest in using Cochin to ship light Bakken crude eastward, the
demand for propane shipments already waning (OGJ Online,
June 2, 2009). More recently, KMEP contemplated reversing
Cochins eastern leg to carry Marcellus shale NGLs from Riga,
Mich., to the Chicago area (OGJ Online, Apr. 4, 2010). KMEP
withdrew its applications for the new-construction portion of
this projecta 250-mile pipeline from the Marcellus region to
Rigain February.
Cochin is a 1,900-mile, 12-in. OD multiproduct pipeline operating between Fort Saskatchewan, Alta., and Windsor, Ont. It
currently moves propane and ethane-propane mix to Midwestern US and eastern Canadian petrochemical and fuel customers. Explorer Pipeline is a nearly 1,900-mile common carrier
pipeline system moving refined petroleum products, feedstock,
and diluent from the Gulf Coast throughout the Midwest.
11
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2012-2013 EVENT CALENDAR

Denotes new listing or Texas, (918) 493-3872,
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a change in previously
published information. e-mail: gpa@GPAglobal.
org, website: www.
gpaglobal.org/chapters/
APRIL 2012
permian. 3.
GTUI Annual Conference, Calgary, Alta.,
+971 4 8047883,
+971 4 8873584 (fax),
e-mail: info@gtui.org,
website: www.gtui.
lgaryConference.html.
Apr. 29-May 4.
Offshore Technology Conference (OTC),
Houston, (301) 6945243, (972) 952-9435
(fax), e-mail: registration@spe.org, website:
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30-May 3.
Annual International
School of Hydrocarbon
MidContinent GPA An- Measurement (ISHM),
nual Meeting, Oklahoma Norman, Okla., (405)
City, (918) 493-3872,
325-1217, (405) 325(918) 493-3875 (fax),
1388 (fax), e-mail:
e-mail: gpa@GPAglobal. icrowley@ou.edu,
org, website: http://
website: www.ishm.info.
gpaglobal.org/chapter/ 15-17.
midcontinent. 10.
OGU Uzbekistan
APPEA Annual Confer- International Oil & Gas
ence and Exhibition,
Exhibition & ConferAdelaide, 02 6247
ence, Tashkent, +44 (0)
0960, 02 6247 0548
20 7596 5173, e-mail:
(fax), e-mail: appea@
oilgas@ite-exhibitions.
appea.com.au, website: com, website: www.
www.appea.com.au.
oguzbekistan.com.
13-16.
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SPE International
Production & OperaPermian Basin GPA An- tions Conference and
nual Meeting, Odessa, Exhibition, Doha, +971
4 457 5800, +971 4
MAY 2012
12
457 3164 (fax), e-mail:

spedub@spe.org,
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events. 14-16.
457-0486 (fax), e-mail: katespe@aol.com,

info@npra.org, website: website: www.spe-uk.
www.npra.org. 16-17.
org. 17.
PSIG Conference, Santa
Fe, New Mexico, e-mail:
info@psig.org, website:
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Oil and Gas Pipelines

in the Middle East
Conference, Abu Dhabi,
+44 (20) 7067 1800,
+44 (20) 7242 2673
Oman Oil and Gas Con- (fax), e-mail: wra@
gress, Muscat, +971 4 theenergyexchange.
364 2975, e-mail: enco.uk, website: www.
quiry@iqpc.ae, website:
theenergyexchange.
www.oilandgasiq.com/
co.uk. 20-23.
events. 16-19.
IDTC International
IADC Drilling OnDownstream Techshore Conference &
nology and Strategy
Exhibition, Houston,
(713) 292-1945, (713) Conference, Rome, +44
292-1946 (fax), e-mail: (0) 20 7357 8394, +44
info@iadc.org, website: (0) 20 7357 8395 (fax),
e-mail: Enquiries@
www.iadc.org/conferEuropetro.com, website:
ences. 17.
www.europetro.com.
NPRA National Oc21-22
SPE UK Woman in
cupational & Process
Energy Annual SemiSafety Conference &
PIRA London Energy
nar, London, 07736
Exhibition, San Antonio, 070066, e-mail:
Conference, London,
(202) 457-0480, (202)
(212) 686-6808,
(212) 686-6628 (fax),
e-mail: sales@pira.com,
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21-22.
Annual Global Refining
Summit, Barcelona,
+44 (0)20 7202 7690,
+44 (0)20 7202 7600
(fax), website: www.
refiningsummit.com.
21-23.
ILTA Annual International Operating Conference
and Trade Show, Houston, (703) 875-2011,
(703) 875-2018 (fax),
e-mail: info@ilta.org,
website: www.ilta.org.
21-23.
Deep & Ultra-deepwater
Pipeline Conference,
London, 44 207 017
5518, 44 207 017 4745
(fax), e-mail: energy-
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custserv@informa.
com, website: www.
ibcenergy.com/FKA22730JWL. 22-23.
NPRA Reliability &
Maintenance Conference & Exhibition, San
Antonio, (202) 4570480, (202) 457-0486
(fax), e-mail: info@npra.
org, website: www.npra.
org. 22-25.
GPA Europe Annual

Conference, Berlin, +44
(0) 1252 625542, website: www.gpaeurope.
com/events. 23-25.
PIRA Understanding
Global Oil Markets
Conference, Geneva,
(212) 686-6808, (212)
686-6628 (fax), email: sales@pira.com,
website: www.pira.com.
24-25.
CERI Petrochemical
Conference, Kananaskia, Alta., (403) 2202380), (403) 289-2344
(fax), e-mail: conference@ceri.ca, website:
www.ceri.ca. 3-5.
SPEE Annual Meeting,

Colorado Springs, Colo.,
713 651 1639, 713 951
9659, e-mail: info@
spee.org, website: www.
spee.org. 5-12.
PIRA UnderstandIOGCC Midyear Meet- ing Global Markets

Conference, Houston,
ing, Vancouver, (405)
(212) 686-6808, (212)
525-3556, (405)
525-3592 (fax), e-mail: 686-6628 (fax), e-mail:
sales@pira.com, webiogcc@iogcc.state.
site: www.pira.com. 6-7.
ok.us, website: www.
PIRA Scenario Planning
iogcc.state.ok.us. 3-5.
Conference, London,
SPE International
API Exploration and
(212) 686-6808, (212) Oilfield Corrosion
Production Standards
EAGE Conference &
686-6628 (fax), e-mail: Conference & ExhibiOilfield Equipment and
Exhibition Incorporatsales@pira.com, web- tion, Aberdeen, +44
Material Conference,
ing SPE EUROPEC,
site: www.pira.com. 23. 20 7299 3300, +44
Westminster, Colo.,
Copenhagen, +31
20 7299 3309 (fax),
(202) 682-8195, e88 995 5055, +31
mail: registrar@api.org,
Arctic Oil & Gas North e-mail: spelon@spe.org,
30 634 3534 (fax),
website: www.spe.org/
website: www.api.org.
America Conference,
e-mail: eage@eage.org,
events. 28-29.
11-15.
Newfoundland, St.
website: www.eage.org/
Johns, 44 207 017
events. 4-7.
5518, 44 207 017 4745 Turkmenistan Gas
ASME Turbo Expo,
(fax), e-mail: energyCongress (TGC), Avaza,
Copenhagen, (800)
custserv@informa.
+44 (0) 20 7328 8899, World Gas Conference, 843-2763, (973) 882com, website: www.
+44 (0) 20 7624 9030 Kuala Lumpur, +44
1170 (fax), e-mail: igti@
ibcenergy.com/FKA(fax), e-mail: info@sum- 20 7978 0037, +44
asme.org, website:
20 7978 0099 (fax),
22730JWL. 23-24.
mittradeevents.com,
www.asmeconferences.
website: www.turkmeni- e-mail: vthommson@
org. 11-15.
stangascongress.com. thecwcgroup.com,
BBTC International
website: www.wgc2012. PIRA Canadian Energy
29-31.
Bottom of the Barrel
com. 4-8.
Technology Conference,
Conference, Calgary,
Rome, +44 (0) 20 7357 SPE International
AB, (212) 686-6808,
PIRA Scenario Planning (212) 686-6628 (fax),
8394, +44 (0) 20 7357 Oilfield Scale ConferConference, Houston, e-mail: sales@pira.com,
8395 (fax), e-mail:
ence, Aberdeen, +44
(212) 686-6808, (212) website: www.pira.
Enquiries@Europetro.
20 7299 3300, +44
686-6628 (fax), e-mail: com. 12.
com, website: www.
20 7299 3309 (fax),
europetro.com. 23-24. e-mail: spelon@spe.org, sales@pira.com, webwebsite: www.spe.org/ site: www.pira.com. 5. Annual Pipe Tech World
events. 30-31.
IADC Critical Issues
Summit, Istanbul, +44
Continental Europe
SPE Americas Uncon- (0)20 7202 7690, +44
Conference & ExhibiICoTA Well Intervention ventional Resources
(0)20 7202 7600 (fax),
tion, Bucharest, (713) Seminar; Stavanger,
Conference, Pittsburgh, website: www.refining292-1945, (713)
01224 495051, e-mail: (972) 952-9393. (972) summit.com. Website:
292-1946 (fax), e-mail: icota@rodgerandco.
www.pipetechsummit.
952-9435 (fax), einfo@iadc.org, website: com, website: www.
mail: spedal@spe.org, com. 12-13.
www.iadc.org/confericota-europe.com. 31. website: www.spe.org/
ences. 23-24.
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events. 5-7.
Show and Conference,
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JUNE 2012
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Equipment Exhibition
Oil & Gas/Refining and 2545, (403) 245-8649
and Conference,
ASME Annual MeetPetrochemicals Exhibi- (fax), e-mail: paulaarNanjing, +86 25 8452 ing, Montreal, Que.,
nold@dmgevents.
tion & Conference,
1101-819, 86 25 8469 (212) 591-8257, (212)
com, website: http://
Baku, +44 (0) 20 7596
2610 (fax), e-mail:
petroleumshow.com/
591-7856 (fax), e-mail:
5173, e-mail: oilgas@
julia@uaec-expo.com, TorresM@asme.org,
our-events. 12-14.
ite-exhibitions.com,
website: www.ote-china. website: www.calendar.
website: www.caspiacom. 23-25.
asme.org. 2-6.
OPEC International
noil-gas.com. 5-8.
Seminar, Vienna, +44
(0)20 7017 5518, +44

(0)20 7017 7828, email: energycustserv@
informa.com, website:
http://www.opecseminar.org/FKA2245GJWL.
13-14.
site: http://petroleumshow.com/our-events.
20-21.
Secondary Biogenic
Coal Bed Natural Gas
International Conference, Laramie, Wyo.,
IADC World Drill(307) 766-4295,
ing Conference &
e-mail: ser@uwyo.edu,
Exhibition, Barcelona, website: www.uwyo.
(713) 292-1945, (713) edu/cbng/biogenic292-1946 (fax), e-mail: cbng/index.html. 20-21.
info@iadc.org, website:
www.iadc.org/conferSPE Deepwater Drillences. 13-14.
ing and Completions
Conference, Galveston,
AAPL Annual MeetTexas, (972) 952-9393.
ing, San Francisco,
(972) 952-9435 (fax),
(817) 847-7700, (817) e-mail: spedal@spe.org,
847-7704 (fax), e-mail: website: www.spe.org/
aapl@landman.org,
events. 20-21.
website: www.landman.
org. 13-16.
MIOGE Moscow
International Oil & Gas
SPE Managed Pressure Exhibition, Moscow,
Drilling Seminar, Aber- +44 (0) 20 7596
deen, 01224 495051, 5173, e-mail: oilgas@
e-mail: spe@rodgerand- ite-exhibitions.com,
co.com, website: www. website: www.mioge.
spe-uk.org. 14.
com/RPGC-Conference/
About-the-Conference.
aspcx. 25-29.
SPWLA Annual Symposium, Cartagena,
(713) 947-8727, (713) Neftegaz Exhibition,
947-7181 (fax), website: Moscow, +44 (0) 20
www.spwla.org. 16-20. 7596 5173, e-mail:
oilgas@ite-exhibitions.
com, website: www.
ISOPE International
oilgas-events.com/
Ocean and Polar
pages/Neftegaz.html.
Engineering Conference, Rhodes, Greece, 25-29.
(650) 254-1871, (650)
254-2038 (fax), e-mail: RPGC Russian
meetings@isope.
Petroleum and Gas
org, website: www.
Congress, Moscow,
isope2012.org. 17-22. +44 (0) 20 7596
5173, e-mail: oilgas@
ite-exhibitions.com,
Shale Gas World Asia
website: www.mioge.
Trade Show, Beijing,
com/RPGC-Conference/
+65 6222 8550, +65
6226 3264 (fax), web- About-the-Conference.
aspc. 26-28.
site: www.tradeshowalerts.com. 19-22.
IPAA Midyear Meeting,
Atlantic Canada Petro- Colorado Springs,
leum Show, St. Johns, Colo., (202) 857-4722,
Newfoundland & Lab- (202) 857-4799 (fax),
rador, (888) 799-2545, website: www.ipaa.org/
(403) 245-8649 (fax), meetings. 27-29.
e-mail: paulaarnold@
dmgevents.com, web-
13
JOURNALLY SPEAKING
Revisions to data
Readers of OGJs US Industry Scoreboard may have
noticed a recent addition to that table. At the suggestion of a long-time reader, the line disclosing US
net product imports has been added, starting with
the Apr. 16 issue.
Figures from the US Energy Information Administration show that recently, the US became a
net exporter of oil products, mostly gasoline and
distillate, as gross exports of products exceeded
gross imports of the same. While gasoline demand
has weakened since 2009, year-on-year comparisons have been skewed, as EIA was underestimating US exports.
Distorted comparisons
MARILYN RADLER
Senior Editor-Economics Last month, EIA posted on its web site as follows:
EIAs Weekly Petroleum Status Report (WPSR)

collects weekly data on crude oil and product imports, stocks of crude and product, and refinery
runs, but it does not collect data on product exports, which also affect weekly balances and estimates of product supplied. Last August, EIA
implemented a new methodology to improve the
accuracy of the weekly gasoline export estimates.
Consideration of the new export methodology
substantially reduces the estimated decline in gasoline product supplied between January 2011 and
January 2012.
EIA does not collect petroleum product export data on a weekly basis, but instead relies
on a model-based estimate using monthly data
from the US Census Bureau. Historically, US petroleum product exports have been relatively low
compared to domestic consumption. From the
mid-1990s through 2009, US exports of gasoline
rarely exceeded 200,000 b/d and varied little from
month to month, EIA said. However, driven by
changes in markets and refining economics, US
gasoline exports began rising in 2010, and the upward trend continued into 2011.
New methodology
EIA noted that after observing this phenomenon
over several months, it decided to revamp its methodology. EIA identified that the WPSRs modelbased gasoline export estimate, which used 5 years
14
of monthly historical volumes and prices, needed

revising to better reflect current export-market
trends. For example, the WPSRs previous modelbased 4-week average gasoline-export estimate for
January 2011 was only 191,000 b/d, well below the
414,000 b/d of gasoline exports reported by the
Census Bureau and published in EIAs Petroleum
Supply Monthly (PSM) in March 2011.
In August 2011, the WPSR began to use the
latest-available gasoline exports published in the
PSM as the basis of its weekly gasoline export estimates, having determined it to be a better estimator. Because of this change in methodology, it
is important that current comparisons to year-ago
weekly gasoline demand, say for January 2011, account for the fact that actual exports at that time
were later determined to have been 223,000 b/d
higher than the previous WPSR January 2011
estimate, thereby lowering January 2011 weekly
gasoline demand estimates by that same amount.
While the new weekly gasoline export numbers
are still estimates, the new methodology should
provide a closer match with the final monthly
data, EIA said.
A key reason for EIA to improve the estimate
of exports in the weekly data is that exports are
subtracted to calculate domestic product supplied,
which is used as a proxy for consumption. If exports are understated in the weekly data, then the
product supplied estimates will be overstated by a
similar amount.
In January 2011, the initial gasoline export estimate in the WPSR was more than 200,000 b/d
less than the more-accurate export volumes later
reported in the PSM, according to EIA. Without
accounting for the new export-estimate methodology in the WPSR, readers might conclude, for
example, that US gasoline demand in January
2012 declined by about 7% from January 2011.
However, accounting just for EIAs new weekly
gasoline export model adopted last August would
adjust the WPSR-based year-ago comparisons of
January 2012 gasoline demand to show a 4.3%
decline. And if estimates of exports are now overstated, the year-ago comparison would reflect an
even smaller decline, EIA said.
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EDITORIAL
Murdering cap-and-trade
If US President Barack Obama wins reelection he
will try to revive cap-and-trade regulation. He
made fighting global warming and rushing exotic
energy forms to market twin priorities of his first
term. But a legislative push to make cap-and-trade
the core mechanism for pursuing his goals failed.
Now a fallback administrative strategy faces legal
challenges. Given a second term, therefore, the
president would renew his quest for a legislative
program to cap greenhouse gas emissions and allow trading in allowances for the right to exceed
the limits. He would try even though he murdered
the program intellectually in his last campaign for
political office.
Obama foreswore legitimacy of a recidivous
cap-and-trade campaign on Apr. 17 when he
called for a crackdown on speculators who hurt
consumers by illegally manipulating or rigging
the energy markets for their own gain. The presidents words imply manipulation of the oil market is rampant. Beyond coincident increases in oil
prices and trading activity, however, no reason exists to think thats so.
More cops?
The oil market is global, fluid, and transparent.
It has millions of participants, all watching price.
Manipulating such a market isnt easy. Would-be
manipulators must elude aggressive oversight of
the market. A relatively few miscreants might try
anyway. But they dont trade oil in numbers or volumes sufficient to move prices meaningfully. Putting more cops on the beat, as the president asked
Congress to do, would be as wasteful as proposing
to do so is unabashedly political. Already, the proposed toughening of market regulation is all but
forgotten amid other campaign bluster. But the oil
and gas industry shouldnt forget its implications for
cap-and-trade.
If mere suspicion about market manipulation
justifies an enforcement crackdown, the government should have a large posse ready if cap-andtrade ever becomes law. Markets for emission allowances are structurally suspicious. Theyre not
global. Their trading occurs among a relatively few
specialists. They exist for political rather than economic reasons. Indeed, theyre not really markets.
16
Real markets lose legitimacy when manipulation

occurs. Markets created by cap-and-trade systems
are instruments of manipulation.
The showcase European Union Emissions Trading System illustrates the problem. The cap in that
system worked; the trade didnt. Total emissions
have fallen from targeted facilities. Yet the market
for emission credits is near collapse. European officials have been meeting to decide how to make
prices adhere to official desires. Thats manipulation.
Inevitably, official manipulation of markets
breeds shenanigans. When Congressional Democrats introduced a cap-and-trade scheme early in
the Obama presidency, they offered cost-free allowances to select industries in order to garner support
for the program. The system thus fell victim to political corruption before it could beginwhich, to
the great good fortune of the US economy it never
did.
If manipulation is wrong for the oil market
and it isit should be wrong for all markets. And
if manipulation that raises prices in the oil market is wrongto whatever extent it exists and has
that effect on pricesthen it should be wrong in
all markets as well. Yet the very purpose of markets for emissions allowances under cap-and-trade
schemes is to raise the cost of emissions. Doing so
raises prices of hydrocarbon fuelsas a matter of
official intent, no less.
The price aim

If Obama wins the chance to put cap-and-trade
back on the US political agenda, he should have to
answer this question: Why is it not hypocritical for
a government to fight oil price increases that occur
for market reasons having little, if anything, to do
with manipulation yet to pursue oil price increases
with deliberate manipulation of its own?
Raising the question at least would make clear
that a priority aim of cap-and-trade systems is to
raise prices of politically scorned but economically preferable fuels. Supporters of those systems
wouldnt welcome such bold exposure of politically touchy motive, of course. Deception is as much
a part of cap-and-trade as manipulationand
even more revolting.
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CSB expects to issue final

Macondo report in early 2013
Nick Snow
Washington Editor
The US Chemical Safety Board is moving ahead with its investigation of the Macondo deepwater well blowout, explosion, and fire and expects to complete its final report in early
2013, it announced this month on the second anniversary of
the incident. Initial findings indicate a need for companies
and regulators to institute more rigorous incident prevention
programs similar to those used overseas, it said.
CSB said its investigators have determined that process
safety regulations and standards used by US oil companies
in refineries and process plants have a stronger major incident prevention focus, are more rigorous, and apply to operators and key contractors alike.
In our view, while previous investigations of the Macondo blowout have produced useful information and recommendations, important opportunities for change have not
been fully addressed, said CSB Chairman Rafael MoureEraso.
CSB noted that, to date, it has conducted numerous interviews, examined tens of thousands of documents from more
than 15 companies and parties, gathered data from two
phases of blowout preventer (BOP) testing, and conducted
a public hearing on international regulatory approaches. It
said it could release recommendations targeting specific reforms as early as August.
Don Holmstrom, manager of CSBs western regional office in Denver, whose team is conducting the investigation,
said the agency likely will hold the first of several public
meetings in July. CSB anticipates releasing preliminary findings and safety recommendations at the meeting, and to hear
experts testify on the need for the offshore drilling industry
to use safety performance indicators like hydrocarbon leaks
and maintenance of safety critical equipment to drive safety
improvements and to prevent major incidents, according to
Holmstrom.
Moure-Eraso said CSBs investigation is taking a broad
look at the Macondo blowouts causes and hydrocarbon release prompting the subsequent explosion. These issues include the manner in which the industry and the regulating
agencies learn or did not learn from previous incidents. They
also include a lack of human factors guidance, and organiza-
18
tional issues that impaired effective engineering decisions,

he said.
The issue of human factors in offshore drilling and well
completion is particularly important as offshore well control
programs currently rely to a large extent on manual control,
procedures, and human intervention to control hazards,
CSB Investigator Cheryl MacKenzie noted. There are no human factors standards or regulations in US offshore drilling
that focus on major accident prevention, she said.
Transocean Ltd.s workers aboard the Deepwater Horizon
semisubmersible rig, who originally worked 14-day shifts,
had been required to go to 21-day shifts, McKenzie continued. CSB is examining whether this decision was assessed
for its impact on safe operations, she said.
In December 2010, a CSB public hearing in Washington
featured international regulators, companies, trade associations and union representatives discussing the safety case
regulatory approach for offshore safety, a concept widely
used in the North Sea and Australia and supported by a
number of the participants, he said.
The US Department of Justice has filed an action against
Transocean in federal court and has requested that the court
order Transocean to comply with the CSB subpoenas. Following an Apr. 11 hearing, the CSB anticipates a decision
soon, CSBs chairman said.
BP agrees to pay
$7.8 billion
in Macondo settlements
Paula Dittrick
Senior Staff Writer
BP PLC agreed to pay $7.8 billion in settlement agreements

with the Plaintiffs Steering Committee (PSC) to resolve most
of the private economic loss, property damage, and medical
DOJ announces first criminal charges in Macondo investigation

Nick Snow
Washington Editor
A former BP PLC engineer was arrested on charges of intentionally
destroying evidence sought by federal
criminal authorities investigating the
2010 Macondo deepwater well incident and subsequent oil spill, US Atty.
Gen. Eric H. Holder announced. The
arrest on two obstruction of justice
counts stemmed from the first criminal

charges in the investigation, he said.
Kurt Mix, 50, of Katy, Tex., was
a drilling and completions project
engineer for BP who the company told
several times to retain all information,
including text messages, as he worked
on internal efforts to estimate the
amount of oil leaking from the well and
on activities to stop the leak, DOJ said.
Mix allegedly deleted the information
claims stemming from the Macondo well blowout.

The April 20, 2010, blowout trigged an explosion and fire
on Transocean Ltd.s Deepwater Horizon semisubmersible,
killing 11 crew members. The incident caused a massive oil
spill in the Gulf of Mexico off Louisiana.
Along with motions seeking preliminary approval from
a federal judge in New Orleans for the settlements, BP also
requested a delay in any liability trial about remaining disputes.
PSC will not oppose the request, BP said in an Apr. 17
news release. The settlement agreements between BP and
PSC stemmed from lengthy negotiations over several months.
This settlement demonstrates BPs continued progress in
resolving significant issues related to the Deepwater Horizon accident, said Bob Dudley, BP Group chief executive.
He said the settlement provides a framework offering those
affected full and fair compensation, without waiting for the
outcome of a lengthy trial process.
Separately, PSC lawyers issued a statement saying the settlement holds BP fully accountable.
Meanwhile, BP still faces potential claims that could total billions of dollars from the US government, various gulf
states, drilling contractor Transocean, and Halliburton Co.,
which provided the cementing work on the well.
BP said the settlement includes administration costs and
plaintiffs attorneys fees and expenses, and is expected to be
paid from a $20 billion trust fund set up to pay various costs
associated with the incident.
Previously, BP spent more than $22 billion for gulf restoration. BP has paid out more than $8.1 billion to individuals, businesses, and government entities. In addition, BP has
spent $14 billion on operational response.
The settlement agreements outlined Apr. 18 are consistent with terms of a proposed settlement announced during
March and is not expected to result in any increase in the
$37.2 billion charge, which includes the $20 billion trust,
previously recorded in BPs financial statements.
Under the economic loss agreement, there are agreed
instead, it indicated.
The charges were filed and unsealed in US District Court for Eastern
Louisiana on Apr. 24. If convicted, Mix
faces up to 20 years in prison and a
$125,000 fine on each count, DOJ
said.
Holder said that the federal taskforce will continue its investigation and
hold accountable anyone it finds broke
the law in connection with the case.
compensation protocols for the payment of economic losses

and property damages. Under the medical settlement agreement, payments will be made based on a matrix for certain
specified physical conditions. The settlement is not an admission of liability by BP, the company said.
Total, Transocean
drilling relief well
to stem Elgin gas leak
Paula Dittrick
Senior Staff Writer
Total UK Ltd. said contractor Transocean Ltd. has started

drilling a relief well to stop a natural gas leak from well G4
on the Elgin platform in the North Sea, while workers continue to prepare for a well-control operation to stop the leak
on the platform.
The latest scientific flights, modeling, and platform visits
confirmed a decrease in the leak rate to about one third of
the initial estimate of 200,000 cu m/day, which was made
during the first days of the leak.
Total stopped production on Elgin and Franklin gas fields
following a Mar. 25 gas leak on the wellhead platform 240
km east of Aberdeen, Total said. Crisis management teams
were mobilized in Aberdeen and Paris. No injuries were reported, and 238 people were evacuated (OGJ Online, Mar.
27, 2012).
On Apr. 18, Transoceans Sedco 714 semisubmersible
drilling rig spudded the relief well, which is considered a
backup to the G4 kill operation. The Sedco 714 is 2 km east
of the Elgin complex in 90 m of water. UK authorities granted all necessary approvals before drilling started.
Rowan Cos. Inc.s Gorilla V jack up is suspending opera-
19
GENERAL INTEREST
tions on nearby West Franklin field and will be available to
be deployed by early May, Total said. The Gorilla V will drill
a backup relief well if needed.
In parallel, plans are being finalized for the positioning of
the pumping vessel required for the well intervention alongside the Elgin complex. The West Phoenix semi is on standby just outside a 2 nautical mile Elgin exclusion zone.
Total has mobilized the Skandi Aker intervention vessel,
currently in the Scottish port of Peterhead, which also will
be used to support the well intervention operation.
Total and Wild Well Control teams have made numerous
trips via helicopter to the Elgin platform.
Workers are positioning equipment and ensuring the
platform systems required to support the intervention are
functional.
Oil & Gas UK, unions

hit EU safety proposal
Oil & Gas UK and two UK trade unions have issued a joint
statement opposing the European Union proposal to centralize regulation of offshore oil and gas safety (OGJ Online,
Nov. 4, 2011).
The producers group teamed with the National Union of
Rail, Maritime & Transport Workers (RMT) and Unite the
Union to say the proposed EU regulation would, in practice, undermine the current UK regulatory regime and the
high standards of offshore safety and environmental protection that this drives.
EU officials, calling the risk of a major offshore accident
in European waters unacceptably high, proposed a series of
regulatory steps, including aggressive coordination of EU
members regulatory systems, last October.
Oil & Gas UK has opposed the proposal since then, arguing in favor of existing UK regulation of offshore safety. Its
joint statement with RMK and Unite repeats some of those
arguments.
If implemented, the proposed new regulation would necessitate the rewriting and/or revocation of significant parts
of the existing world-class UK sector-specific legislation,
the statement says.
The statement also criticizes the proposal for not involving the industry and workforce sufficiently and for creating widespread compliance confusion and project delay.
It says the text is poorly drafted in a number of important
areas and contains numerous examples of errors and ambiguity which will lead to unintended consequences.
It also faults the proposal as a clear step to regulate the
offshore oil and gas energy industry via safety. It says the
proposal will shift regulatory control away from member
states to the oversight of the EU, with the potential for fur-
20
ther prescriptive intervention at a later date.

In contrast to UK regulatory agencies, the statement says,
the European Commission does not have any technical
competence in this area.
House Republicans live

in imagined energy
world, Salazar charges
Nick Snow
Washington Editor
US Interior Sec. Ken Salazar leveled a broadside against US

House Republicans and other critics of the Obama administrations energy policies who he said are living in a politically
driven imagined energy world.
Its a place where up is down and left is right, where oil
shale seems to be mistaken for shale oil, where record profits
justify billions in subsidies, and where rising US production
and falling dependence on foreign oil somehow add up to
bad news, he said in an Apr. 24 National Press Club luncheon address.
He urged them to forsake election-year politics and pass
bills codifying offshore oil and gas reforms imposed by Interior following the 2010 Macondo well incident and oil spill;
approve an agreement with Mexico opening transboundary oil reservoirs in the Gulf of Mexico for development;
and implement policies to create a long-term, sustained
renewable energy economy, including tax incentives and a
clean energy standard.
Disputing the perception that Americans are deeply
divided over energy policy, Salazar said outside of Washington, people generally agree on what needs to be done:
reduce US reliance on foreign oil; expand offshore oil and
gas activity, but do it safely and in the right places; broaden the national energy portfolio with more solar, wind,
geothermal, and biofuels; and improve motor vehicle fuel
economy.
I think that those who have stood in the way of solutions are going to find the ground shifting under their feet,
Salazar maintained. The energy world is changing, with or
without them. Whether its our oil and gas technology, our
solar power plants, or our auto manufacturers, the pace of
American innovation is staggering. The US is determined to
lead in the new energy world.
Proposals in House
House GOP energy leaders did not immediately respond,
but bills before the two key energy committees there reflect
some of their thinking.
WATCHING GOVERNMENT
The Energy and Commerce Committee was scheduled to begin debate
on Apr. 25 on a bill that would require opening of more federal acreage
for oil and gas activity in response to
any release from the Strategic Petroleum Reserve; and a bill to establish a
committee to analyze potential gasoline, diesel fuel, and natural gas price
impacts of proposed US Environmental Protection Agency regulations.
The measures would go before the
full House as proposed amendments
to a pending transportation appropriations bill.
The Natural Resources Committee, meanwhile, has scheduled a hearing for Apr. 26 on seven bills, three of
which directly involve oil and gas. HR
4381 would direct the Interior secretary to establish energy production
goals on all DOI and US Forest Service
lands; HR 4382 would aim to assure
that leasing occurs by eliminating redundant bureaucracy; and HR 4383
aims to streamline the federal drilling
permit application process.
Salazar suggested that such measures arent necessary. Over the past
3 years, we have worked to restore certainty and reduce conflict, he said.
Our onshore leasing reforms have
helped bring the public into the leasing process earlier, so that fewer leases
end up in court. Weve worked to resolve the controversies on some of the
largest oil and gas projects in the West,
including for more than 3,500 new
wells on Anadarkos Greater Natural
Buttes project in Utah.
Through an interagency team led
by Deputy Sec. David J. Hayes, the
US government isfor the first time
everclosely coordinating its energy
permitting activities in the Alaska, to
good result, he continued. And we
are working to deploy a new system for
processing drilling permits on [US Bureau of Land Management] lands. We
expect to reduce permitting times by
two-thirds.
NICK
SNOW
Washington Editor | Blog at www.ogj.com
Behind the BSEE safety alert

An Apr. 13 safety alert shows how the
US Bureau of Safety and Environmental Enforcement is approaching
its mission in its early days as a separate agency from the Department of
the Interior.
The alert contained recommendations based on its investigation of an
Apr. 18, 2011, platform plugging and
abandonment accident that killed
a worker. It also contained recommendations to prevent the recurrence
of such an incident, according to
BSEEs Gulf of Mexico regional office
in New Orleans.
The incident occurred at 3:30
a.m. on the WC 643 A platform on
West Cameron Block 643 as work
was under way to plug and abandon
the wells and decommission the
platform, BSEE said in its investigation report.
The P&A operations used a power
swivel skid, casing jack, and crane,
it said. As the crane was moving the
power swivel from atop the well, a
roustabout, who was not identified
in the report, was acting as a rigger
to help control the load when he
stepped, or was dragged by the load,
into an opening in the deck, which
was exposed by the power swivels
lift, the report said. The roustabout
died in the subsequent 30-ft fall.
BSEE said its investigators found
that the onsite supervisor and employees did not have an emergency
plan with readily available medical
evacuation procedure and contact
information. The accident occurred
shortly after a shift change at night,
and the preshift job safety analysis

(JSA) meeting did not address the
main deck opening covered by the
power swivel. It also was not attended by all parties including the
roustabout, and no signed, unique
JSA form was created. No fall protection was provided as required by
company policies, BSEE, and the US
Coast Guard.
Other problems
The power swivel skid was equipped
with two, 3-ft long tag lines which
required riggers to be close to the
load. The lines were attached to the
power swivel in a way that made
them drag across the deck opening
as the skid was moved.
Other P&A equipment on the
platform was positioned poorly, and
interfered with the crane lift and
move operation. There was no clearly
designated, direct supervision of the
lift probably because of the supervisors multiple responsibilities.
BSEEs recommendations included prominently displaying medevac
procedures and contacts and making
sure all crew members know the
information; reviewing organization of
multiple simultaneous tasks; making
fall protection available and using
it near open holes; evaluating each
lifts risks and reviewing appropriate
tag lines and their use; and assigning
enough supervision during P&A and
platform decommissioning.
BSEE said it would consider all
the recommendations before taking
enforcement actions.
21
GENERAL INTEREST
NGSA, IPAA see some improvement

in CFTCs swap dealer definition
Nick Snow
Washington Editor
The US Commodity Futures Trading Commissions latest

definition of a swap dealer is an improvement on its original proposal because it recognizes the difference between
a dealer and trader, officials from the Natural Gas Supply
Association and the Independent Petroleum Association of
America separately said. They also plan to wait and see before declaring their concerns fully addressed.
CFTC commissioners voted 4-1 on Apr. 18 to adopt an
interim final rule in the matter. New reporting requirements
took effect immediately, but comments are being accepted
on proposed exemptions before the regulation becomes final
as part of the Dodd-Frank financial reforms law.
Our first impression is that the CFTC appeared to take
a thoughtful and balanced approach, said Jenny Fordham,
NGSAs vice-president for markets. Yesterdays CFTC discussion indicated that regulators acknowledge the importance of a hedging exemption and the distinction between a
commodity dealer and a trader, two key points that are critical to assuring end-user and economic protections.
Susan W. Ginsberg, IPAAs vice-president for crude oil

and natural gas regulatory affairs, recognized the role of
hedging by the energy industry as a means to manage risk,
not as a reason to regulate independent producers as swap
dealers. The commissions intent appears to follow congressional intent to exclude commercial end-users from the registration and financial requirements that swap dealers will
bear, she told OGJ.
Fordham and Ginsberg each noted that more time will be
needed to determine if the changes are adequate. It will be
important to carefully review the final rule upon issuance,
and to see how future final rules on the end-user exemption
and the product definitions are crafted, Ginsberg said. After all, the definition of a swap will be critical to the entity
definitions approved yesterday.
Fordham said, Many of the concerning issues appear
to be adequately addressedbut without the level of precision that we urged in our February filing. This means that
it will take some time to gain assurance that the definition
will work well when it is applied. We need some time to kick
the tires.
USGS updates non-US oil, gas,

NGL conventional resource estimates
Nick Snow
Washington Editor
The US Geological Survey estimates that the worlds undiscovered, technically recoverable conventional oil and gas
resources outside the US total 565 billion bbl of oil, 5,606
tcf of natural gas, and 167 billion bbl of natural gas liquids,
it said on Apr. 18. The assessment, which is the first since
2000, excludes the US where USGS is continuously assessing oil, gas, and NGL resources, the US Department of the
Interior agency said.
The report includes mean estimates of resources in 171
onshore and offshore geologic provinces, USGS said. In the
12 years since the last assessment, the steady progress in
technology now allows additional resources to be regarded as technically recoverable, said Marcia K. McNutt, the
agencys director. By placing this information in the public
domain, government leaders, investors, public and private
corporations, and citizens have a common information base
for planning and decisions.
22
The assessment results indicate that about 75% of the

worlds undiscovered and technically recoverable conventional oil is in four regions: South America and the Caribbean (126 billion bbl); sub-Saharan Africa (115 billion bbl);
the Middle East and North Africa (111 billion bbl); and the
North Americas Arctic provinces (61 billion bbl).
The report noted that while heavy oil, tar sands, shale
gas, shale oil, tight sands gas, coalbed methane, and other unconventional oil and gas resources were not included,
their volumes can be significant. For example, the mean
estimate for recoverable heavy oil from the Orinoco oil belt
in Venezuela alone is 513 billion bbl [a 2009 USGS Orinoco
oil belt team assessment], compared to mean conventional
resources of 565 billion bbl for 171 provinces reported in
this study, it noted.
While we continue to focus our efforts on ways to continue to grow domestic energy production for America and
further reduce our dependence on foreign oil, better knowledge of untapped resource potential all around the world
will help us make better decisions regarding both domestic
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and global energy policy and resource management, US Interior Sec. Ken Salazar said.
In particular, this assessment underscores the importance of continuing to strengthen our energy partnerships in
the Western Hemisphere with nations like Brazil, where we
are working closely with industry and government to share
best practices on offshore drilling safety and to enhance the
energy security of both our countries, Salazar said.
NEB: Canadian gas

deliverability to decline
Deliverability of natural gas in Canada will decline during
2012-14 but remain well above domestic demand, says the
National Energy Board.
A new report by the federal agency defines deliverability as the estimated amount of gas supply from a given area
based on historical production and individual well declines,
as well as projected activity. Production can be less than deliverability because of factors such as weather-related supply
interruptions and curtailments undertaken for economic or
strategic reasons.
Average Canadian gas deliverability in 2011 was 14.6 bcfd.
The Alberta gas price last year averaged $3.28/GJ (Can.).
In a midrange case in NEBs projection, assuming gas
prices of $3.11/GJ in 2012, $3.51/GJ in 2013, and $3.69/GJ
in 2014, deliverability falls to 14.5 bcfd in 2012, 14 bcfd in
2013, and 13.2 bcfd in 2014.
In a case assuming higher prices$4.12/GJ in 2012,
$4.53/GJ in 2013, and $5.22/GJ in 2014deliverability stays
at 14.6 bcfd in 2012 but falls to 14.2 bcfd in 2013 and 13.6
bcfd in 2014.
And with lower prices$1.86/GJ in 2012, $1.98/GJ in
2013, and $2.15/GJ in 2014deliverability slumps to 14.1
bcfd in 2012, 13.1 bcfd in 2013, and 12 bcfd in 2014.
In all cases, deliverability remains above projected Canadian demand of 9.2 bcfd in 2012, 9.4 bcfd in 2013, and 9.8
bcfd in 2014. Demand averaged 8.9 bcfd last year, NEB says.
NEB notes that drilling targeting dry gas has fallen as gas
has lost value relative to oil with supply rising in response to
North American shale-gas development.
Until 2006, 70-80% of wells drilled in Canada sought
gas. The gas share has slumped since then and last year
amounted to only 37%.
Levels of natural gas drilling in Canada over the 2012
to 2014 period will likely not be adequate to offset ongoing
declines in output from existing producing wells, NEB says.
Even though new wells a producing natural gas at higher
initial rates, overall deliverability is likely to decrease.
24
Shell unit increases

offer for Cove Energy
Paula Dittrick
Senior Staff Writer
Royal Dutch Shell PLC announced plans for one of its subsidiaries to buy Cove Energy PLC for $1.81 billion in a transaction marking Shells entry into Mozambique and Kenya.
Shell said the acquisition would provide major LNG project
potential from recent gas discoveries offshore Mozambique.
Cove Energys board recommended that its shareholders
accept the latest offer from Shell, which is 12% higher than
an offer Shell made in February (OGJ Online, Feb. 22, 2012).
Shell faces competitors seeking to buy Cove Energy. The
latest offer matched Thailands PTT Exploration & Production PCLs offer made in February. Indias Oil & Natural Gas
Corp. and Gail (India) Ltd. also reportedly were considering
trying to acquire Cove Energy.
Finalization of the Cove Energy acquisition by Shell Exploration & Production BV, also known as Shell Bidco, remains subject to conditions, including written consent from
Mozambiques Minister of Mineral Resources.
East Africa is a major prospective hydrocarbon province,
which has seen a significant increase in exploration activity
in recent years, Shell said, noting it already has interests in
Tanzania.
In Mozambique, the Rovuma offshore basin is a frontier
area believed to hold large gas reserves suitable for LNG
projects. Cove, which has offices in London and Dublin,
holds 8.5% interest in the 2.6-million-acre Offshore Area 1
off Mozambique.
Anadarko Petroleum Corp. operates the Offshore Area
1 with a 36.5% interest, and Anadarko has estimated the
deepwater Rovuma basin has at least 10 tcf of recoverable
gas.
Shell said its willing to work with the Mozambique government, which wants to see the gas brought on stream to
boost the countrys economy.
Shell joint ventures supplied more than 30% of worldwide
LNG volumes during 2011. Shell produces LNG in Australia,
Brunei, Malaysia, Nigeria, Oman, Russia, and Qatar.
Cove also has a 10% working interest in the Mozambique
Rovuma onshore concession covering 12,000 sq km. The
company plans seismic surveys this year to be followed by a
2-well drilling program next year.
Off Kenya, Cove has a 10% working interest in Blocks L5,
L7, L11A, L11B, and L12. These assets cover 30,682 sq km.
Cove plans to drill its first exploratory well off Kenya yet
this year.
GENERAL INTEREST
Uinta due $200 million oil shale joint venture

French, Canadian, and private US companies are set to
launch a $200 million joint venture to develop oil shale in
the Uinta basin of Utah.
The US affiliate of Total SA, Paris, will fund 80% of the
cost of an early production system to demonstrate the commercial scalability of a proprietary process owned by Red
Leaf Resources Inc., Sandy, Utah, a private Delaware corporation.
As part of its agreement with Red Leaf, Total has the right
to license Red Leafs patented EcoShale In-Capsule Process
for use at other future oil shale projects worldwide and has
become a shareholder of Red Leaf. Red Leaf reported completing a $100 million equity offering in connection with the
closing of the JV with Total.
Red Leaf holds 18 mineral leases totaling 17,000 acres of
state owned and managed school trust lands in the Uinta
basin. Red Leaf said the leasehold, estimated to contain 1.5
billion bbl of oil in place, represents some of the best surface
minable properties for oil shale and contains some of the
richest shale in the US.
Overburden thickness averages 60 ft with a resource
seam at least equivalent. Oil shale in the Uinta basin averages of 25 gal/ton with some areas exceeding 70 gal/ton.
Meanwhile, Questerre Energy Corp., Calgary, recent-
ly acquired nearly 6% of Red Leaf equity for $40 million.

Questerre also formed a joint venture with Red Leaf to develop oil shale acreage in Wyoming and signed an agreement
to obtain licenses to use the Red Leaf process.
Questerre has a 20% working interest in the 5,120-acre
Wyoming project, which is at an earlier stage than the one
in Utah. Work set for mid-2012 is to gather more data to
validate the existing resource assessment and compatibility
with the EcoShale process, Questerre said.
John Bannerman, chief executive officer of Total E&P
USA Inc., said, The partnership with Red Leaf furthers our
commitment to developing unconventional resources.
Red Leaf said a Uinta basin pilot test of its proprietary
technology validated the technology modeling and engineering design aspects and yielded 29 gravity oil that consisted
of about 65% paraffin and naphtha and 12.6% hydrogen.
The test also produced a 39 gravity condensate with 55%
paraffin and naphtha and 12.9% hydrogen. Sulfur content
was 2,200 ppm, and nitrogen content was 1-1.2 wt %. The
produced oil contained almost no entrained solid fines from
the shale ore, Red Leaf said.
James Patten, president and chief executive officer, joined
Red Leaf in 2007 from Battelle Corp. of Ohio, where he had
developed unconventional oil programs since 2000.
Eni-Rosneft pact covers Barents, Black Sea exploration

Eni SPA and Rosneft have signed a strategic cooperation
agreement covering exploration of licenses in the Barents
and Black Seas offshore Russia.
Rosneft again cited tax changes by the Russian government as an incentive to advance international partnerships.
A week earlier, it said tax adjustments encouraged it and
ExxonMobil Corp. to sign agreements under an earlier cooperation pact for projects offshore Russia and in and offshore
the US (OGJ Online, Apr. 17, 2012).
The key factor that prompted [Rosneft and Eni] to sign
the agreement was the steps taken by the government of the
Russian Federation to introduce tax incentives for offshore
production, including canceling export duties and introducing a reduced Mineral Extraction Tax rate of 5-15% depending on project complexity, Rosneft said. The government
also offered guarantees that the favorable tax regime will remain in place for a prolonged period of time.
Rosneft also might participate in Eni international projects under the agreement.
Eni and Rosneft will establish a joint venture to explore
the Fedynsky and Central Barents license areas in the Barents Sea and Western Chernomorsky area in the Black Sea.
The companies estimated recoverable resources in the license areas at 36 billion boe.
Holding a 33.33% interest, Eni will finance comprehensive geological exploration work to confirm the commercial
value of the fields, said Rosneft, which remains the license
holder.
Licenses and work

The license for the 38,000-sq-km Fedynsky block calls for
acquisition of 6,500 line-km of 2D seismic data before 2017
and 1,000 sq km of 3D seismic data by 2018. The first exploration well is due before 2020 and a second by 2025 if the
first is successful. Water depths in the area are 200-320 m.
The companies say 2D seismic surveys indicate nine
prospects in the Fedynsky area with recoverable resources
estimated at 18.7 billion boe.
In the Central Barents area adjoining Fedynsky to the
north, seismic surveys have identified three promising formations holding an estimated 7 billion boe of hydrocarbons.
Water depths are 160-300 m.
The Central Barents license calls for acquisition of 3,200
line-km of 2D seismic data by 2016 and 1,000 sq km of 3D
25
GENERAL INTEREST
data by 2018. The first well is to be drilled by 2021 and a
provisional second well by 2026.
The 8,000-sq-km Western Chernomorsky area in the
Black Sea has water depths of 600-2,250 m. Rosneft has
identified six prospective formations with seismic surveys
with recoverable resources estimated at 10 billion boe. Two
exploration wells are due in 2015-16.
Dow plans Texas

ethylene plant
based on shale gas
Nick Snow
cil in Washington, said access to low-cost ethane has made

the US one of the worlds lowest-cost chemical producers.
Thanks to abundant, affordable natural gas, the nations
chemical companies have entered an era of renewed global
competitiveness which can help generate new domestic investment, jobs, and manufacturing exports, he said.
Williams boosts capacity

of Atlantic Access
Transco expansion
Christopher E. Smith
Technology Editor-Pipelines/Midstream
Washington Editor
Dow Chemical Co. announced plans to build a 1.5-million

tonne/year ethylene plant at its Texas operations in Freeport
under a strategy reported a year ago of integrating US operations with feedstocks available from increasing production
of natural gas from shales.
As part of that strategy, the company said last month its
board had approved spending for detailed engineering and
the purchase of long-lead time equipment for a new propylene plant at its Freeport complex, where, according to OGJs
annual Ethylene Survey, it now has two ethylene plants with
total capacity of 1.64 million tpy (OGJ, July 4, 2011, p. 100).
It also is restarting an ethylene plant and enhancing ethane
flexibility of a second cracker in Louisiana, where it has operations in six locations.
In recent months, INEOS Olefins & Polymers USA, Williams Olefins LLC, and Chevron Phillips Chemical Co. LP
have announced plans for US Gulf Coast olefins projects
based on new supplies of feedstock from shale gas.
Dow Chief Executive Andrew N. Liveris described the
trend in a press statement about the new Freeport ethylene
project.
For the first time in over a decade, US natural gas prices
are affordable and relatively stable, attracting new industry
investments and growth and putting us on the threshold of
an American manufacturing resurgence, he said.
Jim Fitterling, a Dow executive vice-president who also
is president of its feedstocks and energy and corporate development divisions, said the lower price outlook for US gas
was significant to the companys decision to invest $4 billion
to expand its overall US Gulf Coast ethylene and propylene
production capabilities.
Dow said the new ethylene project is on schedule for a
2017 start-up as the company develops feedstock supply arrangements for the plant.
Cal Dooley, president of the American Chemistry Coun-
26
Williams Partners LPs discussions with potential shippers

and other market inquiries regarding the Atlantic Access expansion of its Transco interstate pipeline have prompted it
to increase the projects capacity to 2.3 bcfd from 1.8 bcfd.
Williams Partners also is offering additional firm transportation paths, and revising the proposed in-service date to
December 2015 from late-2014.
Atlantic Access connects gas supplies in western West
Virginia and Pennsylvania to the Northeast, Mid-Atlantic,
Southeast, and Gulf Coast. It will transport gas from northern Pennsylvania bidirectionally along Transcos existing
Leidy Line to Leidy and other markets along the Atlantic
seaboard (OGJ Online, Feb. 7, 2012).
Transco is now proposing a total of six firm transportation paths under Atlantic Access. In addition to the Natrium,
Butler, and Rivervale paths described in the original open
season announcement, Transco offering capacity through
the Station 520 Path, the Station 517 Path, and the Leidy
West Path.
The Station 520 Path will provide an incremental 250
MMcfd of year-round firm capacity from Transcos Zone 6
beginning at any receipt interconnection on Transcos Leidy
Line between and including the existing Grugan Interconnect at MP 190.2 in Clinton County, Pa., and the existing
Barto Interconnect near MP 140 in Lycoming County, Pa.,
and extending eastward along the Leidy Line to Transcos
existing Station 210 and then southward on the mainline
terminating at Transcos existing Station 85.
The Station 517 Path will provide an incremental 250
MMcfd of capacity from Transcos Zone 6 beginning at any
existing receipt interconnection on Transcos Leidy Line
between and including the proposed CNYOG Marc1 Interconnect near MP 136.2 in Lycoming County, Pa., and
the existing Centerville Interconnect with Algonquin Gas
Transmission at MP 13.7 in Somerset County, NJ, and extending eastward along the Leidy Line to Transcos existing
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GENERAL INTEREST
Station 210 and then southward on the mainline terminating at Transcos existing Station 85.
The Leidy West Path will move an incremental 200
MMcfd in Transcos Zone 6 beginning at any existing interconnect on the Leidy Line west of the existing Station 515
at MP 68.9 in Luzerne County, Pa., and extending westward
to existing interconnects with Dominion Transmission and
National Fuel Gas and a proposed, new interconnect with
Texas Eastern Transmission near Leidy Storage at MP 206.8
in Clinton County, Pa.
Transco received insufficient binding commitments in
the original open season for the Natrium Path and continues
to offer firm transportation capacity on it, reducing capacity
for the supplemental open season to 700 MMcfd from 900
MMcfd. Natrium runs from Transcos Zone 6 to Transcos
Zone 3 beginning at a proposed interconnection with Dominion Transmissions gas treatment plant near the existing Natrium plant in Marshall County, W.Va., and extending
through a new line to be constructed by Transco eastward
across southern Pennsylvania to an interconnection with
Transcos mainline at Station 195 in York County, Pa., and
then continuing southward on Transcos mainline to Transcos existing interconnection with Liberty Gas Storage at MP
469.4 in Beauregard Parish, La., the western-most nominatable point in Transcos Zone 3.
The Butler Path and Rivervale Path were fully subscribed
during the original open season. Transco may, however,
under terms of the original open season, allow shippers to
voluntarily reduce or revise their requested transportation
contract quantities (TCQ) on these paths to accommodate
other shippers, starting with the shipper with the largest
requested TCQ. Transco will therefore accept additional
requests on these paths during the current open season,
subject to the existing shippers voluntarily reducing their
TCQs.
A shippers TCQ under the project will be equal to the
sum of the capacity subscribed on the various project paths.
Transco is also evaluating an extension of its existing
Leidy Line westward to a point in Elk County, or an extension from its proposed Butler Lateral northward to a point
in Elk County, to provide additional firm transportation to
Transco markets. Timing and level of shipper interest will
determine if Transco completes this project as part of the
Atlantic Access or pursues it independently.
The Atlantic Access project will be subject to approval by
the US Federal Energy Regulatory Commission and other
agencies. The revised open season ends July 13.
BP group okays FEED

for second-stage Shah Deniz development
BP PLC and partners in the Shah Deniz consortium have
approved initial work on second-stage development of their
giant natural gas and condensate field offshore Azerbaijan
in a step that will include selection of an export route across
Turkey and into Europe (OGJ, Feb. 6, 2012, p. 108).
BP said the group has decided to proceed with front-end
engineering and design of a development stage that would
add 16 billion cu m/year of gas production to Shah Deniz output, now about 9 billion cu m/year, including about
50,000 b/d of condensate.
The field, in 50-500 m of water 70 km southeast of Baku,
holds an estimated 30 tcf of gas and condensate.
Second-stage development, costing an estimated $25 billion, would include the drilling of 26 subsea wells by two
semisubmersible rigs, installation of two bridge-linked production platforms, laying of 500 km of subsea pipelines
in water as deep as 550 m, upgrade of the South Caucasus
Pipeline by 16 billion cu m/year, and expansion of the Sangachal Terminal.
Rashid Javanshir, president of the Azerbaijan, Georgia,
and Turkey Region of BP, said engineering studies, commercial agreements, and support of the Azerbaijan and other
28
governments give the Shah Deniz consortium the confidence to embark upon this FEED phase.
The consortium signed gas sales and transit agreements
with Turkish pipeline company BOTAS and the Turkish
government last October under an intergovernmental agreement between Turkey and Azerbaijan.
Since then, BP noted in a press statement, agreements
have been signed allowing engineering studies for the Trans
Anatolia Pipeline transiting Turkey (OGJ Online, Dec. 1,
2011).
Options for gas transportation to Europe, BP said, are the
Trans Adriatic Pipeline to Italy, the Nabucco West pipeline
through Eastern Europe, and South East Europe Pipeline
through Hungary, Bulgaria, and Romania.
The Shan Deniz consortium will make a final route selection in 2013, BP said.
BP operates Shah Deniz II with 25.5% interest. Statoil
also holds 25.5% interest, with the balance divided among
State Oil Company of Azerbaijan Republic, Lukoil, Total,
and Naftiran Intertrade Co., 10% each, and Turkish Petroleum AO 9%.
GENERAL INTEREST
EXPLOR ATION / DEVELOPMENT BRIEFS
Alaska
Texas
Buccaneer Energy Ltd., Sydney, signed

a binding agreement to acquire a
12,000-ft depth capacity land rotary
rig on Alaskas Kenai Peninsula from
Marathon Oil Corp.s Glacier Drilling
Co. unit for $7.5 million.
The rig was built in 2000 with input from Kenai Peninsula drillers and
is designed for pad drilling near residential areas. Buccaneer has received
inquiries from operators about contracting the rig and also expects to use
it to drill wells for the company.
Bayside Corp., Dallas, renewed leases

in Muscadine field in Tyler County,
Tex., in preparation for rejuvenating
the field, discovered in the late 1950s.
The field, with three wells on 230
acres, and has produced 400,000 bbl
of oil and 350 MMcf of gas. The company plans to drill one new well to
complete in multiple Wilcox formation
zones at 8,175-8,500 ft.
Bayside will permit and drill the 2R
well to replace the existing No. 2 well,
which will be held for conversion to
salt water disposal. The No. 3 and 4
wells require National Park Service approval for workover or recompletion.
Further drilling will be considered.
Bayside owns 100% working interest in and has a 70% net revenue interest in the field.
Kansas
Castle Resources Inc. has completed
an Arbuckle oil well in Rice County,
Kan., and partner AusTex Oil Ltd.,
Sydney, said 3D seismic indicates that
three drillable locations remain on the
four-way closure. The next well was to
spud Apr. 28.
The Ludwig-1, in 35-19s-10w,
pumped 240 bbl of 42 gravity oil in 8
hr each day the past week without water from the Arbuckle at about 3,250
ft.
The well is to produce 5-8 hr/day
until the rod pump is hooked to a permanent electricity connection by the
end of April.
Castle Resources and AusTex are
working interest partners in 3,200
acres in Ellsworth and Rice counties.
TGS Nopec Geophysical Co. is shooting a 161-sq-mile multiclient 3D seismic survey at Wellington in southcentral Kansas to illuminate the
Mississippi lime horizontal oil play.
The Sumner County survey complements the previously announced
Bucklin survey is being acquired utilizing a high channel count Vibroseis
crew.
Final deliverable products will be
processed through pre-stack time migration.
Utah
Resolute Energy Corp. and the Navajo
Nation Oil & Gas Co. have acquired
nonoperated assets in giant Greater
Aneth oil field in the Paradox basin
of Utah from Denbury Resources Inc.,
Plano, Tex., for $75 million.
Denbury estimated the proved reserves related to the assets sold at 6.4
million bbl of oil equivalent, 98% oil
and 58% proved developed producing,
at the end of 2011. The companys previously issued 2012 production guidance assumed production from the assets to be 650 boe/d.
At the end of February, Denbury
completed the previously announced
sale of noncore Gulf Coast assets for
$155 million.
Taking into account their respective closing dates, the asset sales will
reduce Denburys 2012 production
guidance by 1,625 boe/d.
The company also sold Vanguard
Natural Resources units in January for
$83.5 million.
THE EDITORS PERSPECTIVE

(From the Subscribers Only area of www.ogj.com)
YPF expropriation
clouds the allure
of Argentine shale
by Bob Tippee, Editor
On its way down the proverbial slippery
slope toward economic statism, Argentina
has laid claim to oil and gas assets worth,
oh, $18 billion or so. Thats the value Repsol of Spain assigns YPF, its 57%-owned
Argentine oil and gas subsidiary.
President Cristina Ferandez de Kirchner
on Apr. 16 announced plans to expropriate 51% of YPFjust before authorities
promptly entered YPFs office in Buenos
Aires and expelled the staff.
Repsol bought YPF, formerly the national oil company in 1999, 6 years after it
was privatized. In a sense, the government
is reclaiming what once belonged to it, apparently without feeling obliged to pay.
This all happens during a period of
rising interest in Argentinas potential for
production of natural gas from shale.
Repsol has said the country could
double its production by investing $25 billion/year in shale exploration and development for 10 years.
But Argentine oil and gas prospects are
much less attractive to foreign investors
than they were the day before Apr. 20.
Nationalization is serious.
Thanks to heavy-handedness by the
Kirchner governmentmanifest in moves
like import controls and raids on private
pension funds and central bank reserves
the countrys allure to outside capital
already was fading.
Now private property is in jeopardy.
Pundits in Buenos Aires complain
Repsol hadnt fulfilled promises to raise
the countrys oil and gas production. They
overlook unhelpful moves the government
has made since the Repsol-YPF merger,
such as the imposition in 2001 of price
controls on natural gas.
Repsol isnt chastened by the criticism.
On Apr. 17 it promised to fight what it
called the unlawful expropriation of YPF.
The Spanish company received support
on Apr. 20 from the European Parliament,
which passed a resolution calling Argentinas move a unilateral and arbitrary
decision which entails an attack on the
exercise of free enterprise and the principle
of legal certainty, thus causing the investment environment for [European Union]
businesses in Argentina to deteriorate.
Indeed. Larceny by governments always
has that effect.
ONLINE APR. 20, 2012 | bobt@ogjonline.com
29
EQUIPMENT | SOFTWARE | LITERATURE

HIGH SPEED REAMING TOOLS
The Turbocaser Express and Turborunner suite of high
speed reaming technologies is available
to the industry.
Turbocaser Express (shown at right)
enables casings and
intermediate liners to
be landed at target
depth first time,
the company says.
The systems internal assembly can be
drilled through
in minutes
after normal
cementation
in one cost effective operation, which
helps reduce
nonproductive
time in wellbore
conditions, in-
creases wellbore integrity, and decreases

operating costs.
The Turborunner (shown below) is a
completion-compatible reaming tool that
aids first time placement of the completion or liners at target depth. Suited
for all rigs and easy to deploy, it helps
reduce risk at depth, time, and costs.
Another tool, Shalerunner, is being
launched for the shale drilling market,
initially in the US, and is what the company calls another technology eliminating
costly wiper trips.
Source: Deep Casing Tools, Unit 2, 51 York
St., AB11 5DP, Aberdeen, UK.
HIGH PERFORMANCE
OIL FIELD POLYMERS
Fortron polyphenylene sulfide (PPS)
grades and Celstran continuous fiberreinforced thermoplastic (CFR-TP)
composites are available for onshore and
offshore oil and gas operations.
As a liner, Fortron PPS can help
CUSTOM
REPRINTS
prolong the life of steel and offers costeffective features as an overall metal
replacement. It offers high temperature
resistance, chemical resistance, low
permeation properties, dimensional stability, high strength and modulus, wear
resistance, corrosion resistance, flame
resistance, and hydrolytic stability.
Celstran composite products are
available as unidirectional tapes, which
can increase the in-line burst and operating pressures of thermoplastic pipe
when wound around and joined to piping
systems for reinforcement, or as continuous rods, shapes, and profiles that can
replace steel tensile members in ropes
and cabling applications. CFR-TP tape
can also be used in service lines, risers,
and umbilicals. These composite pipes
are lightweight, flexible, durable, and
spoolable, allowing for installation speeds
of as much as 500 m/hr.
Source: Ticona Engineering Polymers, 8040
Dixie Highway, Florence, KY 41042.
ADVERTISERS INDEX
COMPANY NAME
PAGE
Baker Hughes
www.bakerhughes.com
Chevron
www.chevron.com
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This index is provided as a service. The publisher does not

assume any liability for errors or omission.
27 29 November 2012
Perth Convention Exhibition Centre | Perth, Australia
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If you answered YES then your company qualies for the Operators Partner Program!
Send an unlimited number of delegates (employees) for one at rate of USD$4,900*.
Deep Offshore Technology (DOT) International is pleased to offer an exclusive discount program solely for
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STATISTICS
IMPORTS OF CRUDE AND PRODUCTS
Districts 14
District 5
4-13
4-6
4-13
4-6
2012
2012
2012
2012
1,000 b/d
Total US
4-13
4-6
4-15*
2012
2012
2011
Total motor gasoline .............

Mo. gas. blending comp. .....
Distillate...............................
Residual ..............................
Jet fuelkerosine ..................
Propanepropylene ..............
Other ...................................
421
406
119
172
41
53
283
606
582
47
281
0
52
57
7
7
0
46
57
19
44
99
99
17
0
11
6
(29)
428
413
119
218
98
72
327
705
681
64
281
11
58
28
853
752
292
375
79
58
194
Total products ......................
1,495
1,625
180
203
1,675
1,828
2,603
Total crude ...........................
7,680
7,660
1,038
862
8,718
8,522
8,053
Total imports ........................
9,175
9,285
1,218
1,065
10,393
10,350
10,656
*Revised.
Source: US Energy Information Administration
Data available at PennEnergy Research Center.
PURVIN & GERTZ LNG NETBACKSAPR. 20, 2012

Receiving
terminal
Liquefaction plant
Algeria
Malaysia
Nigeria
Austr. NW Shelf
Qatar
Trinidad
$/MMbtu
Barcelona
Everett
Isle of Grain
Lake Charles
Sodegaura
Zeebrugge
11.87
1.05
7.60
0.58
8.13
10.82
9.05
1.29
4.71
2.76
11.04
7.76
10.71
0.60
6.73
0.86
8.33
9.86
8.93
1.22
4.59
2.53
10.63
7.60
9.86
0.74
5.51
2.24
9.64
8.63
10.60
1.39
6.77
0.15
7.12
9.95
Additional analysis of market trends is available

through OGJ Online, Oil & Gas Journals electronic
information source, at http://www.ogj.com.
OGJ CRACK SPREAD

4-2012* 4-2211* Change Change,
$/bbl %
SPOT PRICES
Product value
Brent crude
Crack spread
132.09 133.06
117.24 122.75
14.86 10.32
FUTURES MARKET PRICES

One month
Product value
133.14
Light sweet
crude
103.02
Crack spread
30.12
Six month
Product value
125.17
Light sweet
crude
104.77
Crack spread
20.39
0.97
5.51
4.54
0.7
4.5
44.0
135.95
2.81
2.1
109.75
26.20
6.73
3.92
6.1
14.9
130.51
5.34
4.1
110.80
19.71
6.03
0.69
5.4
3.5
*Average for week ending.

Source: Oil & Gas Journal
Definitions, see OGJ Apr. 9, 2007, p. 57.

Source: Purvin & Gertz Inc.
CRUDE AND PRODUCT STOCKS

Motor gasoline
Blending
Jet fuel,
Fuel oils
Propane
Crude oil
Total
comp.1
kerosine
Distillate
Residual
propylene
1,000 bbl
District
PADD 1 .....................................
PADD 2 .....................................
PADD 3 .....................................
PADD 4 .....................................
PADD 5 .....................................
9,433
102,682
180,269
16,698
59,964
54,633
51,452
71,544
6,600
29,737
46,051
28,067
57,124
2,420
25,711
9,977
7,800
12,289
628
8,532
44,500
31,956
36,115
4,240
12,167
8,760
1,472
18,773
193
4,330
3,060
18,445
23,537
1
993
Apr. 13, 2012 ...........................

Apr. 6, 2012 ..............................
Apr. 15, 20112 ...........................
369,046
365,190
356,969
213,966
217,637
208,096
159,373
161,247
147,844
39,226
39,282
41,203
128,978
131,885
148,335
33,528
34,849
36,894
46,035
45,443
26,387
Includes PADD 5. 2Revised.

REFINERY REPORTAPR. 13, 2011

REFINERY
OPERATIONS
Gross
Crude oil
inputs
inputs
1,000 b/d
District
REFINERY OUTPUT
Total
motor
Jet fuel,
Fuel oils
Propane
gasoline
kerosine
Distillate
Residual
propylene
1,000 b/d
PADD 1 ..............................................
PADD 2 ..............................................
PADD 3 ..............................................
PADD 4 ..............................................
PADD 5 ..............................................
967
3,578
7,302
548
2,256
965
3,561
7,275
543
2,110
2,920
2,260
1,878
268
1,556
51
239
732
28
346
381
1,072
2,366
199
408
45
46
359
11
89
66
259
780
1
123
Apr. 13, 2012 ......................................

Apr. 6, 2012 ........................................
Apr. 15, 20112 .....................................
14,651
14,508
14,594
14,454
14,355
14,103
8,882
8,620
9,156
1,396
1,376
1,410
4,426
4,253
4,162
550
538
522
1,228
1,190
1,032
17,315 Operable capacity

1
84.6% utilization rate
Includes PADD 5. Revised.

32
STATISTICS
OGJ GASOLINE PRICES
BAKER HUGHES RIG COUNT
OGJ PRODUCTION REPORT

1
Price
Pump
Pump
ex tax
price*
price
4-18-12
4-18-12
4-20-11
/gal
(Approx. prices for self-service unleaded gasoline)
Atlanta ..........................
347.5
395.3
Baltimore ......................
345.5
387.4
Boston ...........................
372.4
414.3
Buffalo ..........................
330.3
397.7
Miami ............................
333.0
386.4
Newark ..........................
351.2
384.1
New York........................
348.3
415.7
Norfolk...........................
341.1
379.3
Philadelphia ..................
344.9
395.6
Pittsburgh .....................
333.6
384.3
Wash., DC......................
348.3
390.2
PAD I avg ..................
345.1
393.7
373.9
375.6
395.3
392.5
411.9
355.6
363.5
366.1
376.7
373.7
380.9
378.7
Chicago .........................
Cleveland ......................
Des Moines ....................
Detroit ...........................
Indianapolis ..................
Kansas City ...................
Louisville .......................
Memphis .......................
Milwaukee .....................
Minn.-St. Paul ...............
Oklahoma City ...............
Omaha ..........................
St. Louis ........................
Tulsa .............................
Wichita ..........................
PAD II avg .................
399.0
339.0
345.9
340.6
328.1
339.6
335.1
336.5
335.1
326.8
337.0
339.4
340.7
335.0
332.0
340.7
456.3
385.4
386.3
398.4
385.4
375.3
381.3
376.3
386.4
373.3
372.4
385.4
376.4
370.4
375.4
385.6
431.8
379.4
370.9
390.9
389.2
370.8
380.5
362.6
388.4
391.0
366.8
378.5
388.5
361.9
358.2
380.6
Albuquerque ..................
Birmingham ..................
Dallas-Fort Worth ..........
Houston .........................
Little Rock .....................
New Orleans ..................
San Antonio ...................
PAD III avg ................
338.9
349.9
344.3
338.8
342.1
342.9
338.8
342.2
376.2
389.2
382.7
377.2
382.3
381.3
377.2
380.9
363.1
371.5
379.7
370.5
373.9
370.6
363.8
370.4
Cheyenne.......................
Denver ...........................
Salt Lake City ................
PAD IV avg ................
339.7
336.8
349.3
342.0
372.1
377.2
392.2
380.5
354.6
367.7
362.1
361.4
Los Angeles ...................

Phoenix..........................
Portland ........................
San Diego ......................
San Francisco................
Seattle...........................
PAD V avg .................
Weeks avg. ..................
Mar. avg. .......................
Feb. avg. .......................
2012 to date .................
2011 to date .................
371.6
345.8
351.8
365.6
375.6
361.3
361.9
345.2
334.7
303.6
315.1
289.4
438.6
383.2
401.2
432.6
442.6
417.2
419.2
391.4
380.9
350.0
361.5
334.7
423.7
368.2
390.7
418.3
435.2
396.2
405.4
380.6
351.7
312.3
Includes state and federal motor fuel taxes and state

sales tax. Local governments may impose additional taxes.
Source: Oil & Gas Journal.
REFINED PRODUCT PRICES

4-13-12
/gal
4-13-12
/gal
Spot market product prices

Motor gasoline
No. 2 Distillate
(Conventional-regular)
Low sulfur diesel fuel
New York Harbor ......... 332.20 New York Harbor .........
Gulf Coast .................. 320.70 Gulf Coast ..................
Los Angeles ................
Motor gasoline
Kerosine
jet fuel
(RBOB-regular)
New York Harbor ......... 329.70 Gulf Coast ..................
327.10
325.10
325.30
326.30
Propane
No. 2 heating oil
New York Harbor ......... 316.20 Mt. Belvieu ................. 120.90
4-20-12
4-22-11
Alabama............................................
Alaska ...............................................
Arkansas ...........................................
California ..........................................
Land................................................
Offshore ..........................................
Colorado ............................................
Florida ...............................................
Illinois ...............................................
Indiana..............................................
Kansas ..............................................
Kentucky............................................
Louisiana ..........................................
N. Land ...........................................
S. Inland waters ..............................
S. Land............................................
Offshore ..........................................
Maryland ...........................................
Michigan ...........................................
Mississippi ........................................
Montana ............................................
Nebraska ...........................................
New Mexico........................................
New York............................................
North Dakota .....................................
Ohio...................................................
Oklahoma ..........................................
Pennsylvania .....................................
South Dakota.....................................
Texas .................................................
Offshore ..........................................
Inland waters ..................................
Dist. 1 .............................................
Dist. 2 .............................................
Dist. 3 .............................................
Dist. 4 .............................................
Dist. 5 .............................................
Dist. 6 .............................................
Dist. 7B ...........................................
Dist. 7C ...........................................
Dist. 8 .............................................
Dist. 8A ...........................................
Dist. 9 .............................................
Dist. 10 ...........................................
Utah ..................................................
West Virginia .....................................
Wyoming............................................
Others HI-1; NV-1; OR-1; VA-1 ......
5
7
26
45
45
0
68
1
1
0
26
3
131
41
21
28
41
0
1
10
17
1
85
0
195
12
201
101
1
929
4
1
136
92
40
52
30
41
14
84
304
30
26
75
40
22
40
4
5
5
34
41
41
0
72
1
1
2
28
5
170
110
17
17
26
0
2
11
10
2
73
0
161
9
174
104
0
801
1
1
93
54
48
39
63
51
11
63
237
30
38
72
29
14
41
5
Total US ........................................
Total Canada ................................
1,972
146
1,800
143
Grand total ...................................

US Oil rigs .........................................
US Gas rigs .......................................
Total US offshore ...............................
Total US cum. avg. YTD .....................
2,118
1,337
631
45
1,985
1,943
913
878
28
1,733
(Crude oil and lease condensate)

Alabama .................................
24
Alaska ....................................
604
California ...............................
591
Colorado .................................
111
Florida ....................................
6
Illinois ....................................
25
Kansas ...................................
116
Louisiana ...............................
1,307
Michigan ................................
17
Mississippi .............................
64
Montana .................................
63
New Mexico .............................
210
North Dakota ..........................
555
Oklahoma ...............................
215
Texas ......................................
1,860
Utah .......................................
71
Wyoming .................................
147
All others ................................
63
Total ..................................
6,049
1
OGJ estimate. 2Revised. Source: Oil & Gas Journal.
US CRUDE PRICES
Alaska-North Slope 27 .........................................
South Louisiana Sweet ..........................................
California-Midway Sunset 13 ..............................
Lost Hills 30 ........................................................
Wyoming Sweet .....................................................
East Texas Sweet ...................................................
West Texas Sour 34 ..............................................
West Texas Intermediate........................................
Oklahoma Sweet....................................................
Texas Upper Gulf Coast .........................................
Michigan Sour .......................................................
Kansas Common ...................................................
North Dakota Sweet ...............................................
OPEC reference basket
0-2,500
2,501-5,000
5,001-7,500
7,501-10,000
10,001-12,500
12,501-15,000
15,001-17,500
17,501-20,000
20,001-over
Total
285
79
145
288
495
314
140
119
64
1,929
1.4
50.6
17.9
2.0
4.6
1.5
5.3
INLAND
LAND
OFFSHORE
20
1,870
39
4-22-11
Rig Percent
count footage*
185
61
123
287
404
267
162
154
60
1,703
20
1,667
16
*Rigs employed under footage contracts.

Definitions, see OGJ Sept. 18, 2006, p. 42.
2.1
55.7
20.3
2.4
9.6
1.4
0.6
6.6
$/bbl
Wkly. avg. 42012
116.46
Mo. avg., $/bbl
Feb. 12 Mar. 12
OPEC reference basket.......................

Arab lightSaudi Arabia.......................
Basrah lightIraq.................................
Bonny light 37oNigeria .......................
Es SiderLibya .....................................
GirassolAngola ...................................
Iran heavyIran ....................................
Kuwait exportKuwait ..........................
MarineQatar .......................................
MereyVenezuela ..................................
MurbanUAE ........................................
OrienteEcuador ..................................
Saharan blend 44oAlgeria ..................
Other crudes
Minas 34oIndonesia ...........................
Fateh 32oDubai ..................................
Brent 38oUK .......................................
Isthmus 33oMexico.............................
Tia Juana light 31oVenezuela .............
UralsRussia .......................................
Differentials
WTI/Brent .............................................
Brent/Dubai..........................................
SMITH RIG COUNT

4-20-12
Percent
footage*
4-20-12
$/bbl*
113.64
122.50
112.30
119.15
92.55
102.50
94.50
99.50
99.50
92.50
91.50
98.50
81.08
WORLD CRUDE PRICES
Source: Baker Hughes Inc.

Rig
count
22
607
597
88
6
24
114
1,383
12
64
64
187
353
196
1,590
71
137
51
5,566
*Current major refiners posted prices except N. Slope lags 2

months. 40 crude unless differing gravity is shown. Source: Oil &
Gas Journal. Data available at PennEnergy Research Center.
Rotary rigs from spudding in to total depth.

Definitions, see OGJ Sept. 18, 2006, p. 42.
Proposed depth,
ft
2
4-20-12
4-22-11
1,000 b/d
117.48
118.01
116.21
122.36
120.26
120.51
116.51
116.79
116.99
109.26
119.31
112.44
120.36
122.97
123.43
121.96
127.98
126.03
126.30
122.46
122.32
122.80
112.07
125.61
118.26
126.13
126.31
116.17
114.42
112.36
119.56
118.50
133.85
122.47
120.46
118.41
125.33
122.41
17.21
3.39
19.02
2.86
Source: OPEC Monthly Oil Market Report.

US NATURAL GAS STORAGE1

4-13-12
Producing region ................

Consuming region east ......
Consuming region west ......
Total US .............................
Total US2 ............................
4-6-12
4-13-11
bcf
1,049
1,042
775
1,105
1,092
644
358
353
222
2,512
2,487 1,641
Change,
Jan. 11
Jan. 10
%
2,916
2,308
Change,
%
35.4
71.6
61.3
53.1
26.3
Source: DOE Weekly Petroleum Status Report.

Source: Smith International Inc.

Working gas. 2At end of period.

Source: Energy Information Administration
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