Falklands : Hydrocarbons Daily Record (09 October 2007)
Submitted by Falkland Islands News Network (Juanita Brock) 10.10.2007 (Article Archived on 24.10.2007)
Fear that there would not be sufficient supply seems to be taking hold as demand for winter heating fuel is rising.
HYDROCARBONS DAILY RECORD: TUESDAY, 09 OCTOBER 2007
By J. Brock (FINN)
TODAY’S IMPORTANT NEWS:
FALKLANDS BUSINESS SECTOR LOOKS FORWARD TO JANUARY FOGL/BHP VISIT
By J. Brock (FINN)
Businesses in the Falklands are awaiting the visit of Tim Bushell from Falkland Oil and Gas (FOGL) and representatives from BHP Billiton. While we are being assessed by them, businesses will be vying for position with accommodation, office space, telecommunications and entertainment – the list is endless. It is expected that during this phase of the exploration the oil companies will be operating for more than a year.
For their part, the exploration companies must secure the all-important rig. An oil well cannot be designed unless a rig is procured. Six months notice must be given to the Falkland Islands Government prior to any drilling so that wells can be designed. Once that rig is procured things will move quickly.
Day rates for a semi-submersible rig suitable to drill in the Southern and Eastern Falklands basins are now around $500,000.00. Drill ship rates are considerably higher at approximately $700,000.00 per day. Dr. Colin Phipps of Desire Petroleum mentioned in last week’s interview that a drill ship is more self-contained and can move quickly from one prospect to another.
As mentioned prior to the Oil Operator’s meeting in the Falklands, drilling facilities are not all suitable for the North, South and East Falklands Basins. Hopefully this will bring the operators together to see if there are any viable alternatives for all of them. It could be that BHP will decide to find more than one rig for the Falklands.
One slide that Tim Bushell showed at the Public Meeting showed an LNG facility off Norway. This would require the product coming ashore in the Falklands. The volatile resource would need to be processed here. Dr. Phipps mentioned Gas to Liquids technology that could be operated from a specially designed drill ship. GTL technology produces high grade diesel.
All of this could work for businesses in the Falklands – we wait and see.
CRUDE PRICES: Tuesday, 09 October 2007:
Light Sweet Crude was trading at $80.26 up $1.24 on the New York Mercantile Exchange. Brent Crude was trading at $77.46 up 91 Cents on London’s ICE Futures Market.
ANALYSIS:
Investors have analysed the minutes of the last Federal Reserve meeting and think there could be another rate cut. This not only drove the markets higher but it also increased the price of crude. Reports that heating oil prices have increased in advance of the Northern Hemisphere winter warn us that prices will increase further as demand increases and fears about supply continue to cloud judgement. This year alternative energy is more popular than it was last year with retailers in the Falklands selling solar heating equipment, waste heat recovery and wind power helping out a lot.
THE MARKETS: 09 OCTOBER 2007:
FTSE100: 6,618.70 up 77.80, FTSE250: 11,427.80 up 99.10, SmallCap: 3,831.00 up15.56
DJI: 14,164.53 up 120.80, NASDAQ: 2,803.91 up 16.54 S&P500: 1,565.16 up 12.57
INTERNATIONAL DEVELOPMENTS:
BHP Billiton, HAS announced its first oil production from the Genghis Khan development, located in the deepwater Gulf of Mexico. According to information on the company website, BHP Billiton holds a 44 per cent interest in the operator of both Genghis Khan and Shenzi, a project by the same co-ventures in the region. J. Michael Yeager, Chief Executive for BHP Billiton Petroleum, has said that the development and production of Genghis Khan provides early learnings and synergy with our Shenzi project and expands our ownership of operated infrastructure in this region. The press release goes on to say that Genghis Khan is one of three fields BHP Billiton has in development in the deepwater of Gulf of Mexico and scheduled for first production during 2007. The Atlantis and Neptune fields are expected to commence by end of December 2007.
REGIONAL DEVELOPMENTS:
Petroleos Mexicanos (PEMEX) has announced that Chevron Corp. has agreed to help train their employees in expanding its deepwater oil drilling, PEMEX went on to say that it has signed similar agreements with Statoil ASA, Petrobras and Royal Dutch Shell PLC. Citing lack the experience and technology needed to develop deepwater oil and natural gas reserves in the Gulf of Mexico as the reason for the training, PEMEX had no choice but to sign training agreements.
RELEVANT SHARE PRICES 09 OCTOBER 2007:
TLW: 601.00 up 16.00, DES: 29.25 down 0.50, FOGL: 134.50 up 2.00, RKH: 50.00 unchanged, BOR: 38.50 up 1.00, PRE: 13.50 unchanged, GBP: 8.88 up 0.25, GPK: 420.00 unchanged, BLT 1765.00 up 54.00
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