New base 731 special 18 november 2015

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NewBase 18 November 2015 - Issue No. 731 Edited & Produced by: Khaled Al Awadi

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Oman: Frontier gets extension for Block 38 EPSA Written by Oman Observer

US-based international oil and gas exploration firm Frontier Resources says it has secured a two-year extension of the initial term of the Exploration and Production Sharing Agreement (EPSA) signed with Oman’s Ministry of Oil and Gas for Block 38 in the southwest of the Sultanate.

The company, which has a 100 per cent interest in the Block, said the extension comes with an amended work programme which requires Frontier Resources to drill one exploration well targeting the Nafun formation, as well as undertaking the acquisition, processing and interpretation of 1,000 kilometres of 2D seismic. With the extension, the initial three-year phase of the six-year EPSA has been extended to November 25, 2017, the company said.

Block 38, covering an area of 17,425 square kilometres, is located in Dhofar Governorate in the southern part of the Rub al Khali Basin. The concession is considered as prospective for oil and gas because of its proximity to Block 6, operated by Petroleum Development Oman (PDO), and

EXPLORATION: Block 38 covers an area of 17,425 square kilometres




which accounts for the lion’s share of Oman’s current oil and gas output. During the first half of this year, Frontier Resources pressed on with interpretation of available legacy 2D seismic data. This led to the identification of a number of leads, one of which has “sufficient seismic coverage” to be suitable for drilling, the company said. Consequently, Frontier Resources received approval to exchange the Phase 1 work commitment of a 3D seismic survey for an exploration well with a 2 D seismic survey.

“A proposed drilling location has subsequently been approved and the Company is preparing to initiate the Environmental Impact Study of this location,” M J Keyes, Chief Executive Officer, stated in the Chairman’s report of the unaudited interim results for the first six months of the year.

However, a long-standing effort to secure a farm-in partner has yet to yield results — a setback attributed to the current downturn in the global oil and gas industry, the company noted. “Oman, where we have excellent terms and a drill-ready large structure close to infrastructure we believe should eventually attract a suitable and funded farm–in partner, but inevitably this is a process that is taking longer than planned due to the present crisis within the industry,” Keyes commented.

The company has retained the services of Dallas-based Moyes & Co, a company specialising in international oil and gas mergers and acquisitions, to assist and provide general transaction advice on the ongoing farm-out process by the company for Block 38, Frontier Resources said.

Oman Block 38

Block 38, located in the Dhofar Region of southwest Oman, was awarded to Frontier in October 2012. The block covers approximately 17,425 square kilometers and is bounded to the west by the Republic of Yemen, to the north is the Rub Al Khali Basin and the Kingdom of Saudia Arabia and to the east lies the prolific South Oman Salt basin (SOSB). The Bock is separated from the highly productive South Oman Salt Basin (SOSB by a north-east trending linear basement feature known as the Ghudun-Khasfah High).

Based on data from previous exploration efforts and the results of an independent evaluation by SLR Consulting Frontier believes that this Block contains an untested salt basin with exploration potential analogous to the other proven salt basins of Oman, particularly the SOSB that lies approximately 50 kilomteres to the east.

Exploration targets include carbonate stringers embedded in the Ara Group salts lying a depths of between 3000 and 5000 meters. Secondary targets are within the shallower Haima Supergroup which had minor oil shows during previous drilling and the deeper Buah Formation which has proven to be gas productive elsewhere in Oman.




Saudia: Sepco wins gas booster deal for Aramco project Reuters + NewBase Reuters + NewBase

China's Shandong Electric Power Construction Corp (Sepco) has signed a contract to build a gas compressor station as part of the expansion of Saudi Arabia's main gas pipeline, according to industry sources.

The world's top oil exporter is pressing ahead with gas-related projects to meet rising domestic demand and conserve oil for export and refining.

Overseen by state oil company Saudi Aramco, the project, known as Master Gas System 2 (MGS 2), will raise the system's capacity to 12.5 billion cubic feet of gas a day (cfd) by 2018 from 8.4 billion cfd currently. There was no clear value for the contract but sources have estimated it at around $700 million to $800 million. Saudi Aramco did not respond to an e-mailed request for comment. Sepco was not available for immediate comment.

Sepco is already executing the first phase of the expansion of the MGS, installing booster gas compressor stations due to be complete by the end of 2016 that will help raise capacity to 9.6 billion cfd. The MGS was built in the mid-1970s to gather and process associated gas from oil wells for use by domestic industries.




Madagascar: OMNIS transfers Afren's interest in Madagascar Block 1101 to Oyster Oil & Gas . Source: Oyster Oil & Gas

Oyster Oil and Gas has noted the widely reported demise of the Afren group, and also the recent release of its formerly held interests in Block 1101 in Madagascar. The Company has confirmed that Oyster has been invited by the Government of Madagascar/OMNIS (Office des Mines Nationales et des lndustries Stratégiques) to meet to agree the transfer of responsibilities for Block 1101 to Oyster in accordance with the various con tract agr eements as well as discussions for the forward work program for 2016-2017.

Michael Wood, CEO commented: 'The Oyster executive team have a long standing relationship with Madagascar and OMNIS, which goes back to 2006 as or iginal signatories and operator of the contract (with a previous company). We look forward to working closely together in the future with OMNIS in developing the forward work program and oil prospectivity of Block 1101.'

Background

Block 1101 covers approx. 14,900 sq kms in the east of the Ambilobe Basin. It was originally licensed in 2006 to Candax Madagascar and East Africa Exploration (EAX), with an effective date of July 30 2007. Subsequently EAX, which was acquired by Afren, took over the operating of the block with a 90% working interest. Oyster's interest in the block is historical, as three members of Oyster's management team were involved with the exploration effort until 2011. In October 2013, Oyster acquired Candax's 10% interest in the block. For further information on Block 1101, click here.




UK coal plants must close by 2025, Energy Secretary to announce

Telegraph - Emily Gosden, Energy Editor

Britain will stop burning coal for electricity within a decade and build a new fleet of gas power plants to keep the lights on, Energy Secretary Amber Rudd is expected to announce today.

Unveiling a new energy strategy, Ms Rudd will say it is “perverse” that coal, the “dirtiest fossil fuel” is still such a major part of the UK’s energy system – providing 29pc of the UK’s electricity last year.

It is understood she will announce that the country’s dozen remaining coal-fired power stations must all close by 2025 at the latest. “It cannot be satisfactory for an advanced economy like the UK to be relying on polluting, carbon-intensive 50-year-old coal-

fired power stations. Let me be clear: this is not the future,” she will say.

Ms Rudd will say the ageing coal plants are also becoming increasingly unreliable, highlighting breakdowns which forced National Grid to impose emergency

measures earlier this month. In their place,

she will say Britain must build a new generation of power plants that burn gas – which is significantly more environmentally-friendly than coal.

“One of the greatest and most cost-effective contributions we can make to emission reductions in electricity is by replacing coal-fired power stations with gas,” she will say.

“Gas is central to our energy secure future. In the next 10 years, it’s imperative that we get new gas-fired power stations built.”

She will also back more new nuclear plants, describing the technology as “central to our energy secure future”.

A series of major coal-fired power plants have shut in recent years because of environmental regulations to prevent acid rain, but the dozen that remain have a combined capacity of almost 19 gigawatts (GW), according to the Department of Energy and Climate Change (DECC).

Of these, three have announced they plan to close by the end of March, while a fourth will partially close, together removing about 5.5 GW from the system. DECC already forecasts a declining role for the remaining plants, estimating that coal could provide just 1pc of UK power in 2025 because of a combination of tightening air quality ruled and carbon taxes.

However, until now there has been no fixed closure date and experts had suggested that coal may in fact continue to play a much bigger role for much longer, especially in the absence of new gas plants and if the Treasury fails to increase the UK’s carbon tax, which it has already frozen.




Some of the remaining coal plants could potentially evade the closure date by converting to burn renewable biomass instead, as Drax has partially done. However, ministers have moved to curb the subsidies available for biomass.

Another option could be to fit carbon capture and storage technology, but this is also expected to require subsidies.

Despite political support for new gas plants, and subsidies on offer through a scheme called the "capacity market", investment has ground to a halt and many existing plants have been mothballed because they are losing money.

The only proposed new gas plant that was due to be built under the capacity market, Trafford, is in doubt after developers failing to secure investment. It is hoped that announcing a coal closure date will send a signal to investors that will spur investment in new gas power plants.

Environmental group Greenpeace said it would welcome a move away from coal, but criticised a new “dash for gas” which it said would “lock in more dirty power than we actually need”, arguing ministers should support renewables instead.

Ms Rudd has cut subsidies for onshore wind farms




EU: Record-low water levels on Rhine River are disrupting fuel shipments

Source: U.S. EIA, based on Thomson Reuters

Low water levels on the Rhine River have resulted in transportation disruptions for shipments of petroleum products by barge, which in turn have resulted in record supply disruptions in markets upriver, such as Switzerland and southern Germany, and high stock levels downriver, in the Netherlands and Belgium.

The Rhine River, which runs northwest from the Swiss Alps through Switzerland, Germany, France, and the Netherlands, where it flows into the North Sea, is a major petroleum product

transportation corridor. The navigable portions of the river connect the major refinery and petroleum trading centers of Amsterdam and Rotterdam in the Netherlands and Antwerp in Belgium, collectively known as the ARA, to inland markets.

Tanker barges carry petroleum products from the ARA upriver to inland bulk distribution terminals that provide petroleum products to nearby areas. Water levels on the Rhine River fluctuate with the seasonal rainfall, and both high and low water levels can create problems for barges.

High water levels on the Rhine may put barges at risk of potentially striking bridges over the river. Low water levels mean barges risk getting stuck and hitting the river bottom.

Within safety and operational constraints, barges adjust the amount of cargo they carry to balance bridge clearance and deep draft restrictions




based on the water level. Low water levels mean barges must carry less cargo, increasing the freight rate per unit of cargo.

In recent months, water levels on the Rhine River measured at Kaub, Germany, near the Rhine's midway point, have been at historic lows. The average water level at Kaub in October was 2.8 feet, compared to the five-year average levels of nearly twice that (five to seven feet).

Low water levels on the Rhine since July have resulted in increased barge freight rates, with the estimated rate for a cargo of distillate fuel (heating oil or diesel) from Rotterdam, Netherlands, to Basel, Switzerland, increasing from around $5 per barrel (b) in July to more than $30/b in late October. Rates have also increased for delivery to points closer to the ARA, with delivery to Frankfurt, Germany, now more than $10/b, compared with $2/b in July.

The low water levels have resulted in tight supplies in markets farther upriver, such as Switzerland. On October 28, the

Swiss Federal Office for National Economic Supply permitted the release of emergency fuel reserves following problems at the nation's only refinery and the continued disruption to Rhine River shipments.

Alternatives to shipments on the Rhine River are costly, as Europe's petroleum product pipeline infrastructure is not as extensive as in the United States, leaving relatively more expensive transport by rail and long-distance trucking as the remaining alternatives.




These disruptions come at a time of year when markets upriver of the ARA begin to build stocks of heating oil for the winter.

Normally, stocks of distillate fuel would be transported from refineries and terminals in the ARA region upriver on the Rhine, but the low water levels and high transportation costs are causing distillate stocks to remain in the ARA. After high refinery runs this summer, independently held distillate stocks in the ARA in October averaged 10 million barrels above their five-year average level.

Weather patterns will determine the duration and severity of the disruption. More precipitation in the Alps will flow water in the tributaries of the Rhine River, raising the water level downstream. Warmer-than-normal temperatures in the Rhine River valley could reduce heating oil demand. Drier and/or colder weather could have the opposite effects.




US: Struggling US oil producers get credit lifeline amid downturn Reuters +NewBase

An autumn credit crunch was expected to hit many independent US oil producers, starving the industry of billions of dollars and further denting company budgets and drilling plans.

But banks that adjust their loans to energy companies every six months based on the oil price and volumes of reserves were more lenient than many expected this time, leaving producers with more cash for drilling and allowing them to supply more oil to a market already flush with excess crude.

The biannual process, known in the industry as redetermination, shaved only 4% off bank loans to oil and gas companies, according to a Reuters analysis of loan data, surprising experts who had expected deeper cuts because of a protracted oil price rout.

It offers cash-starved energy firms a lifeline right when oil prices are back near six-year lows around $40 per barrel because of global oversupply.

Of the 37 US oil and gas producers tracked by Reuters that hold credit lines backed by their reserves, 15 had credit reduced, seven saw an increase and 12 saw no change. Two said they expected to keep their credit unchanged and one said it expected a reduction.

In total, the producers retained access to $30.7bn in credit this fall, $1.4bn less than in the spring.




“Is anyone looking to ring the death knell for the energy industry?” asked Thomas Rinaldi, institutional investor service director at global energy consultancy Wood Mackenzie. “I don’t think so.”

The cuts were less steep than many had expected in part because banks were encouraged by producers’ hedges that locked in higher prices, their ability to cut costs during a downturn and increases in production.

Lenders at large were also more lenient than Wells Fargo, the nation’s fourth largest bank, which said in October it had cut energy credit lines by 15% on average, priming some analysts to expect similar lending cuts across the industry.

“If credit lines stay strong, companies will keep drilling and keep inventories higher and oil lower,” said Chris Metcalfe, director of finance and investor relations at Gran Tierra Energy, a small conventional oil producer which had its credit line increased by $50mn to $200mn in September.

“We wanted to push the banks as far as we could, in case we needed it in the future,” he said. While the company has not drawn on the credit yet, Metcalfe said, it needed the extra funds to think about possible expansion.

“We wanted it there in case we needed it for acquisitions,” he said.

Others expressed similar sentiment.

“You won’t see as much of a drawdown in capital expenditure as if there was a 15-20% drop in borrowing bases,” said Nicholas Bobrowski, chief financial officer at EV Energy Partners, a US oil and gas producer whose credit lines rose by $125mn to $625mn this fall.




EV Energy Partners’ ability to borrow increased in part because of an acquisition completed on October 1 and the favorable ratio between the amount of oil it owns in the ground and how much it produces, Bobrowski said. A slide in oil prices from over $100 a barrel last year has slashed revenues, making loans an essential source of capital for many companies and the bi-annual redeterminations a make-or-break event for their operations.

The ultimate impact of loans on US oil output this winter will largely depend on the price of oil, which is determined by many factors beyond US producers’ control, such as exports from the Middle East and the strength of the global economy.

Some analysts say independent US producers will have limited impact on overall US oil output or prices. Factors such as expiring hedges which may make drilling uneconomical in some areas, can work to offset the impact of any credit-fuelled additional supply. Even drillers whose credit lines have increased this fall have not committed themselves to more drilling while crude prices remained stuck near six-year lows.

Banks’ leniency this fall, however, does undermine one of few factors supporting oil markets: the view that small companies, starved of cash, will go under in droves. “It makes for oil to stay at low levels,” said Rinaldi. “The companies aren’t flush, but they aren’t starving. That speaks for the rig count to stay low but not go much lower.”

The US oil rig count now stands at 574, one third of the 1,568 rigs operating a year ago. Meanwhile, oil production, remains stubbornly high near record levels above 9mn barrels per day. The production outlook also depends on the next set of redeterminations six months from now.

The potential impact is clear. Struggling energy producer Exco Resources, which had its credit lines cut by over 37% on October 20, a week later announced that it halted drilling in the Eagle Ford shale in South Texas.

“If commodity prices are still low it will be worse in the spring,” said Leo Mariani, oil and gas analyst at RBC Capital Markets. “It could be more like a 10% drop.”




NewBase 18 November - 2015 Khaled Al Awadi

NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE

Oil prices edge up on reports of falling inventories, higher refinery runs

Reuters + NewBase

Crude oil prices edged up in early trading on Wednesday following reports of falling stockpiles and rising refinery activity, but analysts said the market would remain under pressure for the rest of the year and into 2016.

Industry group American Petroleum Institute (API) said late on Tuesday that U.S. crude stockpiles fell last week by 482,000 barrels due to lower imports and higher refinery runs. This helped push front-month U.S. crude futures up 31 cents from their last settlement to $40.98 a barrel at 0120 GMT. The gain followed an over $1 fall during the previous session.

Official inventory data is due later on Wednesday from the U.S. government's Energy Information Administration (EIA). Internationally traded Brent crude futures were up 33 cents at $43.90 per barrel. Despite the slight gains on Wednesday, most analysts expect prices to remain at low levels for the rest of the year and into 2016 as production continues to outpace demand.

"While the growth in U.S. unconventional production appears to be slowly abating, the upsurge in Organization of the Petroleum Exporting Countries (OPEC) output, robust global stock levels, and ongoing uncertainty around the strength of demand suggest that the oversupply and surpluses are likely to continue well into next year, exerting continued downward pressure on prices," the Center for Strategic and International Studies said in its 2016 outlook on Wednesday.

Analyst estimates for oversupply in 2015 range from 0.7 to 2.5 million barrels of oil being produced per day in excess of demand.

Oil price special

coverage




NewBase Special Coverage

News Agencies News Release 18 Nov.. 2015

“No” is not an Energy Plan

There’s a question I get often when it comes to leadership. The question is this: “What makes a great leader?” It’s simple. Be willing to make decisions and accept the consequences. Take into account all the information available, and make a call. That’s the most important quality in a good leader. Don’t fall victim to what I call the “ready-aim-aim aim-aim” syndrome. You must be willing to fire. It helps to be a good shot. President Obama failed this leadership test in two ways with his handling of the Keystone Pipeline. Blocking the pipeline weakened America’s energy security and damaged prospects for a North American energy alliance while doing nothing to limit CO2 emissions (Let’s be clear: One way or another the oil is going to be extracted and used by someone). Rejection was always going to be the wrong call. But the President compounded his mistake by dragging the decision out over seven years – time the oil and gas industry could have used to




adjust plans for oil from Canada to U.S. refineries. Now 800,000 barrels a day will be shipped to China instead. Looking to his remarks attempting to justify his decision makes the rationale all the more puzzling. Take this line: “What has increased America’s energy security is our strategy… to reduce our reliance on dirty fossil fuels from unstable parts of the world.” While I strongly support this goal, I was not aware Canada was an unstable part of the world. Clearly this administration is not aiming to strengthen American energy security, but to wage war on all fossil fuels despite public comments to the contrary. In his Keystone remarks, the President tried to imply the price of oil and gasoline have fallen during his term of office because of the policies of his administration. In reality, oil and gasoline prices have fallen in spite of having been a rhetorical piñata for the past seven years. Low oil prices for consumers exist because of the ingenuity, the innovation, and the investment of the oil and gas industry. Not because of the federal government. The hydro-fracturing and horizontal drilling techniques that have made energy in America so readily available have given Americans the lowest energy prices in the world. According to economist Steven Moore, for every penny gasoline prices drop, Americans save $1 billion. Of that, 78 percent gets put right back into the U.S. economy. When the President proudly proclaimed that our dependence on OPEC oil is down dramatically since he took office, he made it sound like it was his policies that did that, too. It was not. The more than 3 million members of the Pickens Plan Army having been calling attention to our dependence on OPEC since 2008. They have worked hard to help their elected representatives -- at their state capitals and in Washington, DC -- understand how important it was to them. Then state-by-state, they set about getting laws and regulations changed to help make domestic natural gas an economically feasible alternative to imported diesel. Like so much of America’s history, progress has come not from the top down, but from the bottom up. The President has stopped – at least temporarily – the construction of the Keystone XL pipeline. But, that won’t stop the relentless drive for Americans to create, to build, and to advance. We will get to a day when hydrogen fuel cells or another zero-emissions energy source are the dominant method of powering automobiles and trucks, but it isn’t going to be soon. While we work

toward that day we still need to move food, goods, and people from points “A” to “B.” We do need a comprehensive infrastructure plan as the President suggested. But even before that we need a comprehensive energy plan, because the way we build out the 21st century infrastructure will depend on what we want to drive on it, sail in it, and fly over it. We can have a spirited and profitably national debate

on what an energy plan should include, but I know this: “No” is not an energy plan and it is not leadership.




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Khaled Malallah Al Awadi, Energy Consultant MS & BS Mechanical Engineering (HON), USA Emarat member since 1990 ASME member since 1995 Hawk Energy member 2010

Mobile: +97150-4822502 [email protected] [email protected]

Khaled Al Awadi is a UAE National with a total of 25 years of experience in the Oil & Gas sector. Currently working as Technical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for the GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were spent as the Gas Operations Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years, he has developed great experiences in the designing & constructing of gas pipelines, gas metering &

regulating stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation, operation & maintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE and Energy program broadcasted internationally, via GCC leading satellite Channels.

NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE

NewBase 18 November 2015 K. Al Awadi







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New base 731 special 18 november 2015