Feb. 23, 2009 International news for oil and gas professionals For up-to-the-minute news, visit www.opionline.com

General Interest -QuickYakes

Eni sets production growth target of 3.5%/year

Eni SPA plans to increase its production by 3.5%/year over the next 3 years despite the uncertainty surrounding the economic downturn and energy markets.

It will invest euro48.8 billion in 2009-12, slightly less than in its 2008-11 plan; exploration and production will cost euro34 billion.

The company said it would aim for a reserves replacement ratio of 13 0% during 2009-12 and after that would maintain an average production growth of 3%/year to 2015 by stepping up activities in Africa, OECD countries, and Central Asia-Russia.

"More than 90% of production and investments to 2012 will be concentrated in these areas," Eni said.

The company is confident it can achieve these figures because of the quality of its portfolio in low-cost production areas with large projects that have economy of scale benefits.

Paolo Scaroni, chief executive of Eni, told investors in London that this year its production is expected to be above 1.8 million boe/d, based on an oil price of $43/bbl. In 2012, this will exceed 2 million boe/d, based on a $55/bbl scenario.

In the next 4 years, more than 500,000 boe/d of new production will start, 85% of which is related to projects that will be profitable even if oil prices are below $45/bbl.

By 2012 the company expects to have international gas sales of 124 billion cu m with an average growth of 7% a year, thanks also to the contribution of Distrigas.

Coal-fired plants produce more carbon than LNG

Coal-fired power plants produce 161% more greenhouse gas emissions through their life cycles than plants fueled by LNG, an independent study found.

The study, by PACE Global Energy Services for the Center on Liquefied Natural Gas, also found that two cleaner coal technologies, integrated gasification combined cycle (IGCC) and advanced ultras upercritical coal (SCPC), produce 70% more GHG emissions than LNG.

"Replacing just one coal plant with LNG-fueled power generation for one year would equate to removing 557,000 cars off the roads. LNG will clearly play a crucial role in helping meet the substantial increase for clean burning natural gas once climate change legislation becomes a reality," said CLNG Pres. Bill Cooper.

He said the PACE study provides an "apples to apples" comparison by using a representative average of typical US coal and LNG operations for generating electricity. These included a gas-fired power plant supplied with LNG, a coal-fired plant, and plants using the IGCC and SCPC technologies, which are not yet available in the US.

Rockies refiners settle air pollution charges

Two Rocky Mountain refiners agreed to pay more than $141 million to settle federal air pollution charges, the US Environmental Protection Agency and Department of Justice said.

Frontier Oil Corp. agreed to pay a $ 1.23 million fine and spend $127 million on pollution control upgrades at its Cheyenne, Wyo., and El Dorado, Kan., refineries. Wyoming Refining Co. agreed in a separate settlement to pay a $150,000 fine and spend $14 million on similar upgrades at its Newcastle, Wy o., plant.

The settlements will reduce harmful air emissions by 7,000 tons annually, EPA and DOJ said. They said the agreements require installation of advanced control technologies, which will reduce yearly emissions of sulfur dioxide by some 3,775 tons, nitrogen oxide by some 2,100 tons, and other pollutants by some 1,200 tons. The three refineries' combined production capacity is 168,000 b/d.

Each refinery also will upgrade leak detection and repair practices to reduce harmful emissions from pumps and valves, implement programs to minimize the number and severity of flaring events, and implement new strategies to ensure continued compliance with the federal Clean Air Act's benzene waste requirements, according to EPA and DOJ.

As part of its settlement, Frontier agreed to install dome covers on refinery storage tanks at its two plants to reduce volatile organic compound emissions. The company also agreed to correct deficiencies in the refineries' risk management program, which were identified in a 2006 EPA inspection, including overdue inspections and tests of storage vessels containing toxic and flammable substances.

EPA said that under CAA, facilities that handle large amounts of chemicals are required to develop a risk management program to assess hazards associated with dangerous chemicals. The program must include an accident prevention program and an emergency response plan to deal with accidental releases, the federal agency said.

Exploration & Development -Quick Takes

Total appeals Tern pa Rossa delay

Total SA has decided to appeal a decision by an attorney of law courts to suspend for a year the development concession Tempa Rossa oil field in southern Italy, a measure prompted by a preliminary investigation that revealed "corruption" and bids involving some euro10 million.

Total expressed indignation over what it described as a "serious and prejudicial decision" at "a very preliminary stage" of the investigations.

The head of Total Italia, Lionel Lheva, and two other executives of the company were put under house arrest last December. Another Total executive who doesn't live in Italy, was also considered implicated. A total of 15 people, including a Democratic Party deputy, are involved.

Tempa Rossa oil field was discovered by an Italian company in the late 1980s. The development concession was awarded to Total in 2002. It is scheduled to be on stream in 2011 with production estimated at 50,000 b/d.

Nexen discovers oil in UK North Sea

Nexen Inc. said its Hobby exploration well in the UK North Sea discovered oil on Block 20/IN near the Golden Eagle discovery

Future appraisal is pending in the Golden Eagle area, which includes discoveries at Golden Eagle, Pink, and now Hobby

The Pink discovery well encountered 57 ft of net oil pay and was followed up with a sidetrack delineation well that encountered 134 ft of net oil pay.

Pink might be codeveloped with Golden Eagle. Nexen has a 34% operated interest in Golden Eagle and a 46% operated working interest in Pink.

It operates Hobby with 34% interest. Other partners are Maersk Oil North Sea UK Ltd. 36% interest, Petro-Canada 25% interest, and Edinburgh Oil & Gas 5% interest.

Nexen strengthens position in Northeast BC

Nexen Inc., Calgary has 100% interest in 126,000 acres in Northeast British Columbia in an emerging Devonian shale gas play that could become one of North America's most significant shale gas plays.

The land position includes 88,000 acres in the Dilly Creek area of the Horn River basin.

Nexen spent $180 million in 2008 to drill, complete, and test wells and build infrastructure. One horizontal well was completed and tied in last winter and is producing at rates in line with expectations and competitor wells. Nexen plans to complete and tie in two wells later this winter. It is building all-season roads.

The company in 2009 plans to enhance its understanding of optimal drilling and fracturing techniques, including by drilling and testing multiple wells from a single pad. Three of the wells are to be drilled and completed by midyear and on production before winter. The other wells will be drilled later subject to favorable economic and financial conditions.