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Inside this month's OGFJ

Don Stowers  

We have an interesting lineup of articles for April, so I'm going to talk about them a little in this month's column. April's focus is on offshore activity, and the issue gets extra distribution at the annual Offshore Technology Conference, which begins in Houston on May 6.

The cover story takes a look at current and recent drilling and production in the Gulf of Mexico three years after the deadly explosion and fire aboard the Deepwater Horizon at BP's Macondo well off the coast of Louisiana. As our headline says, companies operating in the GOM are "back in business," as activity has ramped up to near pre-Macondo levels.

Since the April 2010 Macondo accident, the ranks of leading players in the deepwater GOM has expanded to include several large international companies such as Brazil's Petrobras, which operates an FPSO; Italy's Eni; and BHP Billiton from Australia. Norway's Statoil is poised to move into the deepwater soon, and Spain's Repsol has been operating in Cuban waters.

Even with damaging hurricanes, the Macondo disaster, and a six-month drilling moratorium in 2010, the recovery in the GOM shows that producers still consider deepwater drilling risks worth taking. Deepwater production is mostly oil, and industry analyst Sandy Fielden tells OGFJ he expects US offshore oil production to increase over the next two years.

Atlantic Mirror theory

The petroleum system in the Guianas basins off the northern coast of South America is believed to be a mirror-image of the world-class petroleum system present in West Africa, says Justin Stolte, an attorney with Latham & Watkins, who has examined the evidence for the so-called "Atlantic Mirror" theory. Companies with investments in the region include Anadarko, Apache, Chevron, CGX Energy, ExxonMobil, INPEX, Kosmos Energy, Murphy, Repsol, Shell, Statoil, TOTAL, and Tullow Oil.

The US Geological Survey estimates that the Guyana-Suriname basin alone could potentially hold 15.2 billion barrels of oil. The industry's interest in the offshore Guianas basins is "robust," says Stolte, who adds that the next several years will prove critical in the validation of the basins.

The region is a low-risk operating environment for offshore investment, as Guyana, Suriname, and French Guiana are generally considered politically and fiscally stable and offer contract terms for petroleum investment that are relatively competitive in the region. If the success of the basins is validated, expect to see a frenzy of activity not unlike what has occurred offshore West Africa.

US gas exports to Mexico

The US Energy Information Administration reports that natural gas exports to Mexico grew by 24% to nearly 1.7 bcf/d in 2012, an all-time high. Mexico's natural gas use is also at its highest level ever, and imports now account for more than 30% of the country's total supply. Several US pipeline export projects that could support additional natural gas exports to Mexico have been announced.

FWS plan impacts

In their article, Lowell Rothschild and Kevin Ewing of Bracewell & Giuliani examine the impact of the latest US Fish and Wildlife Service workplan with respect to endangered and threatened species determinations and critical habitat designations. The workplan is a guidepost to the regulated community of where and when FWS will be taking action to protect species and their habitat.

Protecting against lightning

With untold millions and even billions of dollars in assets on the line, oil and gas companies should understand how much is at risk from lightning strikes and the resulting downtime. Avram Saunders, CEO of Lightning Eliminators & Consultants, says those in the C-suite don't always focus on the need for certain precautions, but that there are cost-effective solutions available to protect those assets.

Man camps are booming

Christina Lyons of Vorys, Sater, Seymour and Pease provides an overview of "man camps," temporary housing for oilfield workers in rural and remote locations that lack sufficient living accommodations for workers. The camps provide more than just the basic amenities, but in some communities they also put a strain on local resources. In North America, companies are working with local communities to resolve these issues.

In addition, this month's issue includes the quarterly OGFJ100P report on privately-held companies and the monthly Deal Monitor that looks at global M&A activity. Also, see if you can find a person or company you know in Upstream News, Industry Briefs, and Energy Players.

Finally, take a peek at the special 22-page report "Winds of Change: Mexico's Hydrocarbon Resources." We think you'll like what you see this month.

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