Statoil - Norwegian Oil Company - Profits Up

The Norwegian oil company Statoil announced on Monday, July 30, 2007, that its net income in the second quarter of 2007 amounted to Norwegian Kroners (NOK) 11.0 billion, compared to NOK 9.8 billion in the second quarter of 2006. In the first six months of 2007, net income was NOK 18.8 billion compared to NOK 20.6 billion in the first six months of 2006.

The 11% increase in net income from the second quarter of 2006 to the second quarter of 2007 was mainly due to lower income taxes and higher sales volumes of natural gas. The increase in net income was partly offset by a decrease in the natural gas price and in the average realized oil price, both measured in NOK.
"We deliver strong results and a record high international oil production, while continuing our efforts to position the group for future growth. Our acquisition of North American Oil Sands Corporation was approved by the Canadian authorities in June. In July the shareholders of Statoil and Hydro approved the merger of Statoil and Hydro's oil and gas activities, and the integration planning is on track," says Helge Lund, Statoil's chief executive officer.

CEO Lund is also pleased with the continued high exploration and project activity.
"As operator and partner we have announced five discoveries, four on the Norwegian continental shelf and one internationally. In addition, we recently announced a successful appraisal well and production test at Rosebank on the UK continental shelf."

"Three new projects have come on stream and the first delivery of gas from Shah Deniz to Turkey in July represents another milestone for Statoil," Mr. Lund notes.
Return on average capital employed after tax (ROACE) (*) for the 12 months ended 30 June 2007 was 23.6%, compared to 26.4% for the 12 months ended 31 December 2006. The decrease was mainly due to lower oil and gas prices measured in NOK. ROACE is defined as a non-GAAP financial measure (*).

In the second quarter of 2007, earnings per share were NOK 5.00 compared to NOK 4.42 in the second quarter of 2006. For the first six months of 2007, earnings per share were NOK 8.58, compared to NOK 9.33 for the same period in 2006.
Net operating income in the second quarter of 2007 was NOK 26.0 billion compared to NOK 29.9 billion in the second quarter of 2006. The decrease was mainly due to a 13% decrease in gas prices and a 3% decrease in the average realized oil price, both measured in NOK, an 11% decrease in liftings of oil on the Norwegian continental shelf (NCS), and a net increase in operating expenses and selling, general and administrative expenses of NOK 1.0 billion mainly due to higher activity. The decrease in net operating income was partly offset by a change in unrealized profit on inventories of NOK 1.5 billion, higher sales volume of gas of NOK 1.3 billion and an increase of 13% in liftings of oil in International E&P.

In the first half of 2007, net operating income was NOK 49.8 billion compared to NOK 62.9 billion in the first half of 2006. The decrease was mainly due to an 8% decrease in the average oil price and a 14% decrease in gas prices, both measured in NOK, negative changes in derivatives amounting to NOK 3.3 billion, an increase of net NOK 1.7 billion in operating, general and administrative expenses, mainly due to higher activity, and a decrease in other income of NOK 1.1 billion related to sales and exchanges of assets in the first half of 2006. The decrease in net operating income in the first half of 2007 was partly offset by a change in unrealized profit on inventories of NOK 0.7 billion.
Total oil and gas production in the second quarter of 2007 was 1,112,000 barrels of oil equivalent (boe) per day, compared to 1,076,000 boe per day in the second quarter of 2006. The 3% increase of was mainly related to increased oil production from International E&P due to start-up of new fields, and increased gas production from the Sleipner, Asgard and Gullfaks fields on the NCS. The increases were partly offset by reduced gas entitlement from the In Salah field due to production sharing agreements (PSA) effects, and lower production at the Kvitebjorn field.

In the first half of 2007 total oil and gas production was 1,155,000 boe per day, compared to 1,156,000 boe per day in the first half of 2006.
Total oil and gas liftings in the second quarter of 2007 were 1,079,000 boe per day, compared to 1,104,000 boe per day in the same period of 2006. This is equivalent to an underlift of 33,000 boe per day in the second quarter of 2007. In the first half of 2007, total oil and gas liftings were 1,166,000 boe per day compared to 1,168,000 boe per day in the corresponding period of 2006.

Exploration expenditure in the second quarter of 2007 was NOK 2.3 billion, compared to NOK 1.9 billion in the second quarter of 2006. In the first half of 2007 the exploration expenditure was NOK 4.2 billion, compared to NOK 3.5 billion in the first half of 2006. The increase in exploration expenditure was mainly due to higher activity and generally more expensive wells in both periods. Exploration expenditure reflects the period's exploration activities.

Exploration expenses for the period consist of exploration expenditure adjusted for the period's change in capitalized exploration expenditure. Exploration expenses in the second quarter of 2007 amounted to NOK 1.2 billion, the same as in the second quarter of 2006.

A total of 10 exploration and appraisal wells were completed in the second quarter of 2007, five on the NCS and five internationally. Five wells are confirmed discoveries. One exploration extension well on the NCS was also completed in the second quarter of 2007 and resulted in a discovery. Drilling in nine additional wells was ongoing at the end of second quarter 2007. The number of exploration wells completed in the second quarter of 2006 was seven.

In the first half of 2007 a total of 23 exploration and appraisal wells were completed, 11 on the NCS and 12 internationally. One exploration extension well was drilled in the same period. Eleven of the exploration and appraisal wells are confirmed discoveries, seven on the NCS and four internationally. The exploration extension well also resulted in a discovery. The number of exploration wells completed in the first half of 2006 was 13.

Production cost per boe was NOK 29.4 for the 12 months ended 30 June 2007, compared to NOK 26.6 for the 12 months ended 31 December 2006 (*).
Normalised at a USDNOK exchange rate of 6.00, the production cost for the 12 months ended 30 June 2007 was NOK 29.1 per boe, compared to NOK 26.2 per boe for the 12 months ended 31 December 2006 (*). Normalized production cost is defined as a non-GAAP financial measure (*).

The production unit cost, both actual and normalized, has increased, mainly due to increased maintenance cost and cost pressure in the industry.
Net financial items amounted to an income of NOK 2.3 billion in the second quarter of 2007, the same as in the second quarter of 2006. Net financial items in the first half of 2007 amounted to an income of NOK 3.3 billion, compared to an income of NOK 3.6 billion in the first half of 2006.
Income taxes in the second quarter of 2007 were NOK 17.4 billion, equivalent to a tax rate of 61.3%. Income taxes in the second quarter of 2006 were NOK 22.3 billion, equivalent to a tax rate of 69.4%. The tax rate was reduced in the second quarter of 2007 mainly due to changes in the tax level of financial items, an increased relative share of income generated outside the NCS, which is generally subject to lower rates of taxation, and an increased effect of the uplift tax deduction on the NCS.

For the first half of 2007 income taxes were NOK 34.3 billion, with a corresponding tax rate of 64.6%. In comparison, income taxes in the first half of 2006 were NOK 45.9 billion with a corresponding tax rate of 69.0%. The reduced tax rate is mainly due to changes in the tax level of financial items and an increased effect of the uplift tax deduction on the NCS.

Health, safety and the environment (HSE)
Overall, Statoil's total recordable injury frequency has improved slightly while the number serious frequency has increased in the second quarter of 2007 compared to the corresponding period in 2006. Serious incidents in the second quarter of 2007 included a fatality at Mongstad port at the end of May. There have been no serious gas leaks at our offshore or land facilities during the first half of 2007.

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Turkmenistan &t China Gas Talks

The AFX News Limited reported Friday, July 27, 2007 that Turkmenistan's energy minister, Tachberdy Tagyiev, will travel to China on Sunday to finalize the details of a big gas deal, the official Neitralny Turkmenistan daily reported on Friday. "The sides will resolve questions relating to the implementation of agreements signed by the heads of state" of China and Turkmenistan last week in China, the newspaper said. The deal signed by presidents Hu Jintao of China and Gurbanguly Berdymukhamedov of Turkmenistan on July 18 envisages annual gas deliveries to China of 30 billion cubic meters (1.1 trillion cubic feet). The leaders also agreed to build a pipeline linking the two countries, although details of the route have not yet been released. The forthcoming talks will also address a production-sharing agreement between Turkmenistan and the China National Petroleum Corporation (CNPC) for the development of the Bagtyiarlyk gas field in northwest Turkmenistan. No details have been given as to the size of the reserves. Turkmenistan's estimated 2.1 trillion cubic meters of gas reserves have attracted the attention of a number of countries, including the United States.

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Natural Gas Pumps & Front Range Air Pollution

Trevor Hughes of The Coloradoan reports that Colorado State University researchers are working to improve the efficiency and cleanliness of the thousands of engines used to pump natural gas from fields beneath Colorado and beyond.

Natural gas emissions from those natural gas wells and the engines that pump them are considered a significant cause of Front Range air pollution.

Last Friday, the Front Range violated federal ground-level ozone standards, which will likely bring requirements for tighter emission controls in the future.

Colorado State Universities’ Engines & Energy Conservation Lab is conducting the research in partnership with EnCana Oil & Gas Corp. and with Cummins, a major manufacturer of the engines that pump natural gas. The engines used at wells and on pipelines range from 50 to 2,500 horsepower.

"We know Colorado, along with other states, are going to be reducing their emissions over time. Everybody is," said Robin Bremmer, Cummins' director of engineering for high horsepower engines. "The effort with Colorado State is to continue to help us understand the effects of natural gas types as we drive our engine designs to meet lower and lower emission standards."

Natural gas pumped from wells also powers the engines driving the wellhead and pipeline compressors. The quality of that gas can vary widely before it's refined into commercial fuel.

Using the unrefined gas means no one has to refuel the compressor engines, but it also means they must be able to run cleanly and efficiently on fuel that might contain a wide variety of naturally occurring contaminants such as methane and nitrogen, according to experts.

Researchers and students at CSU's Engines & Energy Conversion Lab are using an engine donated by Cummins to model what happens when different contaminants are added to the natural gas.

Lab director Bryan Willson said the work of professor Daniel Olsen and his students has major implications for Colorado, given the "frantic" pace of natural gas exploration and pumping.

"The work really reflects that production of natural gas in Colorado has just boomed in the last five years and ... there are concerns about the impacts of natural gas production on air quality," Willson said.

Bremmer said Cummins has worked with CSU for several years, and one of the project engineers for the company is a recent CSU graduate. He said it's powerful for students to see that their work in class will translate into the real world.

"The fun side is we get to work with the students and prepare them for entering the working world," Bremmer said.

The lab is also working with EnCana to investigate fuel additives that can increase efficiency and lower emissions for existing engines.

Exxon Mobil earn $10 Billion in 90 Days!

So, today is Friday, July 27, 2007 and Steve Gelsi wrote for the Dow Jones news wire about the latest profit news for Exxon Mobil. Exxon Mobil said Thursday, July 26, 2007 that its quarterly income fell slightly because of lower prices for natural gas and rising costs of doing business, causing the oil giant to miss its Wall Street profit target, but they still earned more than $10 billion U.S. dollars for 90 days work.

Exxon Mobil (XOM) said second-quarter net income fell slightly to $10.26 billion, or $1.83 a share, from $10.36 billion, or $1.72 a share, a year ago. Revenue fell to $98.3 billion from $99.03 billion. Gelsi reported that analysts surveyed by Thomson Financial forecast earnings of $1.96 a share on net income of $10.13 billion, on average.

Shares of Exxon fell 3% to $90.09 in morning action on the New York Stock Exchange. The world's No.1 oil company weighed on the overall Dow Jones Industrial Average (DJI) , which gave up 115 points, or 0.8%, to 13,669. Is that incredible or what that a company can earn over $10 billion U.S. dollars in 90 days and people want to bail out on their stock. What is the world of finance really like? I don’t have a clue about this.

Exxon Mobil said lower natural gas prices were "mostly offset" by higher refining, marketing and chemical margins. The company distributed $9 billion to shareholders during the quarter through $2 billion in dividends and $7 billion in share repurchases. Shares outstanding were reduced to 5.55 billion at the end of the quarter, from 5.63 billion at the end of the first quarter. Fadel Gheit, an analyst at Oppenheimer & Co., said in a brief phone interview that the results were "disappointing" and that the company fell well short of its profit mark of $1.97 a share. I don’t know who Fadel is, but he must be one hell of a rich kid to be disappointed in a company that earned $10 billion U.S. dollars in 90 days by selling gasoline in the west at prices above $3.00 a gallon. If I was giving the report to the public like Fadel, I’d be really really disappointed – for sure man!

"Natural gas prices in Europe clobbered them," he said. "The cost of equipment, fuel, material and labor rose very sharply -- throughout the whole industry," Fadel reported.

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Supreme Court Ruled on April 2, 2007 – Clean up Green House Gases – Part 4

The New York times reported on April 2, 2007 that Chief Justice Roberts complained that “today’s decision (automobile emissions and green house gases) recalls the previous high-water mark of diluted standing requirements,” a 1973 decision known as the Scrap case. That was an environmental case that the Supreme Court allowed to proceed on a definition of standing so generous as to be all but unthinkable today. “Today’s decision is Scrap for a new generation,” the United States Chief Justice said, not intending the comparison as a compliment.

It was further reported that the majority addressed the standing question by noting that it was only necessary for one of the many plaintiffs to meet the three-part definition of standing: that it had suffered a “concrete and particularized injury,” that the injury was “fairly traceable to the defendant” and that a favorable decision would be likely to “redress that injury.”

It was reported that Massachusetts, one of the 12 state plaintiffs, met the test, Justice Stevens said, because it had made a case that global warming was raising the sea level along its coast, presenting the state with a “risk of catastrophic harm” that “would be reduced to some extent” if the government undertook the regulation the state sought.

In addition, Justice Stevens said, Massachusetts was due special deference in its claim to standing because of its status as a sovereign state. This new twist on the court’s standing doctrine may have been an essential tactic in winning the vote of Justice Kennedy, a leader in the court’s federalism revolution of recent years. Justice Stevens, a dissenter from the court’s states’ rights rulings and a master of court strategy, in effect managed to use federalism as a sword rather than a shield.

Following its discussion of standing, the majority made short work of the agency’s threshold argument that the Clean Air Act simply did not authorize it to regulate heat-trapping gases because carbon dioxide and the other gases were not “air pollutants” within the meaning of the law.

“The statutory text forecloses E.P.A.’s reading,” Justice Stevens said, adding that “greenhouse gases fit well within the Clean Air Act’s capacious definition of air pollutant.”

The justices in the majority also indicated that they were persuaded by the existing evidence of the impact of automobile emissions on the environment.

The agency itself “does not dispute the existence of a causal connection between man-made gas emissions and global warming,” Justice Stevens noted, adding that “judged by any standard, U.S. motor-vehicle emissions make a meaningful contribution to greenhouse gas concentrations.”

Justice Scalia wrote a dissenting opinion, signed by the other three dissenters, disputing the majority’s statutory analysis.

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Supreme Court Ruled on April 2, 2007 – Clean up Green House Gases – Part 3

The New York Times reported on April 2, 2007 that the United States Supreme Court had made some significant rulings from the bench on environmental law. Even in the nine months since the Supreme Court agreed to hear the first case, the Times reported that Massachusetts v. Environmental Protection Agency, No. 05-1120, and accelerating since the elections in November, there has been a growing interest among industry groups in working with environmental organizations on proposals for automobile emissions limits.

Dave McCurdy, president of the Alliance of Automobile Manufacturers, the main industry trade group, said in response to the decision that the alliance “looks forward to working constructively with both Congress and the administration” in addressing the issue. “This decision says that the U.S. Environmental Protection Agency will be part of this process,” Mr. McCurdy said. If the decision sowed widespread claims of victory, it left behind a prominent loser: Chief Justice John G. Roberts Jr., who argued vigorously in a dissenting opinion that the court never should have reached the merits of the case or addressed the question of the agency’s legal obligations.

His dissent, which Justices Antonin Scalia, Clarence Thomas and Samuel A. Alito Jr. also signed, focused solely on the issue of legal standing to sue: whether the broad coalition of states, cities and environmental groups that brought the lawsuit against the environmental agency four years ago should have been accepted as plaintiffs in the first place.

This was the issue on which the coalition’s lawsuit had appeared most vulnerable, given that in recent years the Supreme Court has steadily raised the barrier to standing, especially in environmental cases. Justice Scalia has long been a leader in that effort, and Chief Justice Roberts made clear that, as his statements and actions in his pre-judicial career indicated, he is fully aboard Justice Scalia’s project.

Chief Justice Roberts said the court should not have found that Massachusetts or any of the other plaintiffs had standing. The finding “has caused us to transgress the proper — and properly limited — role of the courts in a democratic society,” he said, quoting from a 1984 decision. And, quoting from a decision Justice Scalia wrote in 1992, he said, “This court’s standing jurisprudence simply recognizes that redress of grievances of the sort at issue here is the function of Congress and the chief executive, not the federal courts.”

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Supreme Court Ruled on April 2, 2007 – Clean up Green House Gases – Part 2

As reported by the New York Times, Federal, State and Local court cases around the country had been held up while awaiting the Supreme Court decision on the case of green house gases and the Environmental Protection Agency and Automobile Emissions. Among the cases put on hold is a challenge to the environmental protection agency’s refusal to regulate carbon dioxide emissions from power plants, which is now pending in the federal appeals court in Washington, D.C. Individual states, led by the great state of California, are also moving aggressively into what they have seen as a regulatory vacuum.

Supreme Court Justice Stevens, joined by Justices Anthony M. Kennedy, David H. Souter, Ruth Bader Ginsburg and Stephen G. Breyer, said that by providing nothing more than a “laundry list of reasons not to regulate,” the environmental protection agency had defied the Clean Air Act’s “clear statutory command.” He said a refusal to regulate could be based only on science and “reasoned justification,” adding that while the statute left the central determination to the “judgment” of the agency’s administrator, “the use of the word ‘judgment’ is not a roving license to ignore the statutory text.”

The Supreme Court also decided that a second Clean Air Act case Monday, adopting a broad reading of the environmental protection agency’s authority over factories and power plants that add production capacity or make technical renovations that increase emissions of air pollutants. In doing so, the court reopened a federal enforcement effort against the Duke Energy Corporation under the Clean Air Act’s “new source review” provision. The vote in the second case, Environmental Defense v. Duke Energy Corp., No. 05-848, was 9 to 0.

Supreme Court Ruled on April 2, 2007 – Clean up Green House Gases

Linda Greenhouse wrote for the New York Times from WASHINGTON, D.C. on April 2, 2007 that inn one of its most important environmental decisions in years, the Supreme Court ruled on Monday that the Environmental Protection Agency (EPA) has the authority to regulate heat-trapping gases, such as CO2, NOx and SOx in automobile emissions. The court further ruled that the Environmental Protection Agency could not sidestep its authority to regulate the greenhouse gases that contribute to global climate change unless it could provide a scientific basis for its refusal.

The Supreme Court of the United States voted 5-to-4 in favor of its decision that was a strong rebuke to the Republican President Bush administration, which has maintained that it does not have the right to regulate carbon dioxide and other heat-trapping gases under the Clean Air Act, and that even if it did, it would not use the authority. The ruling does not force the environmental protection agency to regulate auto emissions, but it would almost certainly face further legal action (and probably lose) if it failed to do so.

Writing for the majority voters of the Supreme Court, Justice John Paul Stevens said the only way the Environmental Protection Agency could “avoid taking further action” now was “if it determines that greenhouse gases do not contribute to climate change” or provides a good explanation why it cannot or will not find out whether they do.

Beyond the specific context for this case, the so-called “tailpipe emissions” from cars and trucks, which account for about one-fourth of the country’s total emissions of heat-trapping gases, the decision is likely to have a broader impact on the debate over government efforts to address global warming and environmental pollution from automobiles and electric generating power plants.

Natural Gas Prices - Week of July 19, 2007

The Energy Information Administration of the United States Government presents a weekly overview of natural gas prices for the public to view. This past Thursday, July 19, 2007 (next release 2:00 p.m. on July 26, 2007) the latest update was released. The URL is found below, as well as a quick overview. Additional information will be provided during the week.
http://tonto.eia.doe.gov/oog/info/ngw/ngupdate.asp
Energy Information Administration of the United States Government reported that since Wednesday, July 11, 2007 the natural gas spot prices decreased at virtually all markets in the Lower 48 States of the United States. Prices at the Henry Hub, the price for natural gas on the New York Mercantile Exchange, declined 41 cents per million btu, or 6 percent, since Wednesday, July 11, 2007 to $6.24 per million Btu. At the NYMEX, the futures contract for August delivery at the Henry Hub settled yesterday (July 18, 2007) at $6.528 per million Btu, falling 7 cents per million Btu, or 1 percent since last Wednesday, July 11, 2007. Natural gas in storage was 2,692 billion cubic feet as of July 13, 2007 which is 15.7 percent above the 5-year average (2002-2006). The spot price for West Texas Intermediate (WTI) crude oil gained $2.45 per barrel on the week (Wednesday-Wednesday) to $75.03 per barrel or $12.94 per million Btu.

First Gas Production from Independence Hub in the Gulf

Anadarko Petroleum released to the press on Friday, July 20, 2007 that their Atwater Valley Producers Group that consists of Anadarko Petroleum, Devon Energy, Eni and Hydro, along with the owners of the Independence Hub, Enterprise Products Partners L.P. and Helix Energy Solutions Group reported that first natural gas production from the record-setting Independence Hub natural gas project has been achieved on schedule and within budget. The natural gas well located in 8,000 feet of water on Mississippi Canyon block 920, approximately 123 miles southeast of Biloxi, Miss., the Independence Hub is the deepest production platform ever installed and also is the world's largest offshore natural gas processing facility.

Anadarko Petroleum reported that natural gas production through the Independence natural gas Hub began on July 19, 2007, from the first of 15 sub-sea natural gas wells located in 10 anchor fields. The natural gas producers expect to ramp up production toward the Independence Hub's capacity of 1 billion cubic feet of natural gas per day (Bcf/d) by late 2007.

"The Independence project is a remarkable accomplishment by our industry," Anadarko Chairman, President and CEO Jim Hackett said. "It is a true testament to the collaboration of the partners and the ingenuity of the individuals who worked to deliver these once unreachable resources to American consumers. Together we achieved first production on time and within budget from a world-record-setting facility in an ultra-deep area of the Gulf where previously there was no infrastructure."

Anadarko Petroleum reported that first sales were received from the Atlas #1 well located on Lloyd Ridge block 50. The well is expected to ramp up to a rate of approximately 50 million standard cubic feet of gas per day (MMcf/d) over the next week. The block was awarded as a result of Lease Sale 181 in 2001, which opened a new area of the eastern Gulf of Mexico to exploration. Most of the additional 14 natural gas wells have been completed and flow-tested -- the majority of which demonstrated flow rates above 50 MMcf/d -- and will be brought on stream one at a time during 2007 for a total of 15 natural gas wells each producing 50 million standard cubic feet of gas per day.

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Oil Up in North Dakota - on Hold in Alaska

North Dakota setting production records

It was reported by www.ogj.com from HOUSTON, Texas on July 18, 2007 that the state of North Dakota's oil production averaged 120,000 barrels per day and approximately 190 million cubic feet of gas per day was produced May 2007, both of which were 20 year production highs, according to preliminary North Dakota state figures.

In addition to the production about 8% (eight percent) of the casinghead gas was flared into the sky because their gas processing plant capacity was insufficient to handle the entire production. Retrofits, refits and new plants are expected to capture and process all the natural gas within a few months, this according to the state industrial commission.

Oil and gas production and the North Dakota state's rig count are expected to continue growing, mainly due to the horizontal drilling play for oil and gas in the Mississippian Middle Bakken formation in the Williston basin, North Dakota officials said on June 12, 2007.

Shell ordered to suspend Arctic drilling was the headline written by MARY PEMBERTON, Associated Press Writer from Anchorage, Alaska on July 21, 2007. She wrote, “ A federal appeals court has ordered Shell Oil to stop its exploratory drilling program off the north coast of Alaska at least until a hearing in August 2007 can take place. “The order, issued Thursday by the 9th U.S. Circuit Court of Appeals, comes after the United States Federal Minerals Management Service in February 2007 approved Shell's offshore exploration plan for the Beaufort Sea.”

"Vessels currently located in the Beaufort and Chukchi seas shall cease all operations performed in furtherance of that program, but need not depart the area," the 9th U.S. Circuit Court of Appeals order said.

Opponents contend that the United States Minerals Management Service approved Shell's plan without fully considering that a large spill would harm marine mammals, including bowhead and beluga whales. Opponents further contend that polar bears could also be harmed, and they question whether cleaning up a sizable spill would even be possible in the icy waters.

Company officials are obviously disappointed, said Shell spokesman Curtis Smith.

"But the court has asked for more information, and we will provide it. We will comply with the court order and continue to welcome discussions with the North Slope communities," he said. "Alaska is a long-term investment for Shell.

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Russian & Mexico Need Money for Infrastructure

Jim Landers of the Dallas Morning News wrote on Tuesday, July 17, 2007 that Russia and Mexico, along with OPEC members such as Venezuela, Kuwait and Iran, will have to bring huge sums of their own investment capital to bear on increasing oil and gas production, or energy prices will soar well beyond their historic highs. Without increasing current oil production facilities that could mean pushing past $5 gasoline and $100-a-barrel oil.

This concept that not enough oil is going to be produced is the consensus among the world's oil-consuming nations, expressed by such forums as the Group of Eight, which held its summit this year in St. Petersburg, Russia, the Asia Pacific Economic Cooperation nations, and the industrialized countries of the International Energy Agency.

Jim Landers also writes that one forecast looms above the rest in this worldview that the country of China which today has 9 million automobiles will have 150 million by 2030 putting tremendous pressure on the world oil supply.

The experts believe that China is expected to account for one-third of the increase in oil demand in the next two decades and in the meantime two-thirds of the world's known oil and gas reserves are in countries that either limit access or close the reserves to foreign companies, said Karen Harbert, assistant United States secretary of energy for policy and international affairs.

Again it is worth repeating that those countries are not stepping up to the task, including Russia won't be able to meet existing gas contracts to Europe without reversing the downward investment curve in exploration and production in its natural gas fields. Venezuela's oil production is off by half and it is the same basic story – these countries are going to maintain their monopoly on their oil fields, but if expansion is to occur it will be with other people’s money, but no one at the moment is ready to spend the money in the monopoly countries under their proposed terms and conditions as they exist today..

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Oil Producing Infrastructure is Inadequate Long Term

Jim Landers of the Dallas Morning News wrote on Tuesday, July 17, 2007 that at the moment the nationalized oil producing countries are not spending the capital required to bring their oil reserves to market, thus for all intents and purposes their oil is staying in the ground.

Jim Landers writes from Washington that it is now up to the national foreign owned country oil companies of Petróleos de Mexicanos, Saudi Aramco, Petróleos de Venezuela, Russia's Gazprom and others of similar like to decide if they are going to make the capital investments necessary to increase production or whether they are satisfied with their current income and are happy to sit back and wait.

According to the literature, world demand for oil now stands at 86.1 million barrels a day. The U.S. Energy Information Administration expects it to reach 97.3 million barrels a day in seven years and 117.6 million barrels a day by 2030. That extra 31.5 million barrels of daily production is the equivalent of three Saudi Arabias current daily production.

Based on what's known about the world's petroleum reserves, nearly all of the increase of oil’s barrels a day will have to come from countries that have national oil company monopolies.

Jim further reports that conservation, alternative fuels and giant new oil and natural gas fields in areas where Exxon Mobil Corporation and other private companies can explore won't be enough to meet the rising oil demands of a growing oil based global economy.

The Saudis are spending $50 billion to $70 billion to raise production in their country by a third, 331/3% increase, but that won't be enough.

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Mexico Pipeline Bombing Harasses Government

Mexico Pipeline Bombing Harasses Government

Eric Watkins
Senior Correspondent

Senior Correspondent Eric Watkins informed the public on July 17, 2007 from LOS ANGELES, California that the country of Mexico has increased their security measures to protect their strategic installations in the country following a series of bombings on fuel pipelines operated by state-run oil and gas monopoly Petroleos Mexicanos (Pemex).

Mexico’s Interior Ministry condemned the rebel group Ejército Popular Revolucionario (EPR), which claimed responsibility for the explosions and blasts on the fuel pipelines in central Mexico that occurred on July 5, 2007 and July 10, 2007 and EPR said the attacks were "the start of a national campaign of harassment against the oligarchy and this illegitimate government."

EPR the group said it would continue the "harassment" (bombings, explosions, destruction of pipelines) until Mexican President Felipe Calderon Hinojosa and Oaxaca governor Ulises Ruiz show that three EPR members, arrested in Oaxaca, are alive. According to all available government and news reports, no one has seen EPR members Edmundo Reyes Amaya, Raymundo Rivera Bravo or Gabriel Alberto Cruz Sanchez since their arrest May 25 by the Mexican government.

The July 10, 2007 explosion forced suspension of pipeline service on the 36 inch pipeline that runs between Mexico City and Guadalajara. There were no injuries or damage outside of the pipeline's installations, Pemex said.

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Natural Gas Production in United Kingdom

Natural Gas - LONDON, England

It was reported in the Oil and Gas Journal, www.ogj.com that RWE Dea UK (United Kingdom) Development Ltd. has begun commercial gas production of 60 million standard cubic feet of gas per day (MMcfd) from one natural gas well in the Cavendish gas field which is located on Block 43/19a in the United Kingdom’s Southern Gas basin. The natural gas field lies in 18.5 meters of water.

The natural gas field operator is RWE Dea and is equal partners with Dana Petroleum PLC. They are drilling second and third wells that are expected to come on stream, on line, before the end of year. The Cavendish gas field is a Carboniferous gas field that was discovered in 1989 and is RWE Dea's first operated development project in the United Kingdom.

This natural gas development consists of a 6-slot, minimum-facilities fixed platform tied back to the Murdoch platform via 47 kilometers of newly laid pipeline. Murdoch natural gas is part of the Caister Murdoch natural gas system operated by ConocoPhillips, which transports the gas onward to the Theddlethorpe gas terminal in the United Kingdom from the Murdock facility.

The Cavendish natural gas field production originally was expected to start in the first quarter 0f 2007 with an initial flow of 100 million standard cubic feet of gas per day (MMcfd) and to continue until 2016.

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Legal Sludge Dumping in Lake Michigan

It was reported on Sunday, July 15, 2007 by Michael Hawthorne of the Chicago Tribune, a Tribune staff reporter, that the “The massive BP oil refinery in Whiting, Ind., is planning to dump significantly more ammonia and industrial sludge into Lake Michigan, running counter to years of efforts to clean up the Great Lakes.”

It was further reported that BP company officials insisted they did everything they could to keep more pollution out of the lake. "It's important for us to get our product to market with minimal environmental impact," said Tom Keilman, a BP spokesman. "We've taken a number of steps to improve our water treatment and meet our commitments to environmental stewardship."

The Tribune article related that “BP can process more than 400,000 barrels of crude oil daily at the plant, which was built in 1889 by John D. Rockefeller's Standard Oil Co. Total production is expected to grow by 15 percent by the time the expansion project is finished in 2011.”

Other interesting statistics presented included:

Maximum dumping allowed by Federal Law into Lake Michigan is 1,584 pounds of ammonia per day and 4,925 pounds of sludge per day.

OPEC Oil Output Up

Platts Survey: OPEC Oil Output Up Above Target
D Three Technology has been wondering who to believe and who to disbelieve when it comes to oil and gas output. WWW.Rigzone.com has an article on Sunday, July 15, 2007 via the reporting of Platts Survey of 10 members of the Organization of Petroleum Exporting Countries (OPEC) bound by the group's crude oil output agreements that they boosted production by 40,000 barrels per day to 26.6 million in June 2007, from a revised May 2007 level of 26.56 million barrels per day, a Platts’ survey showed July 11, 2007. This is well above the 25.8-million barrels per day production target set in February 2007 by the so-called OPEC-10.

Platts reports that total OPEC output, including volumes from Iraq and new member Angola, averaged 30.22 million barrels per day in June 2007, slightly higher.

The figures were then a revised figure of 30.21 million barrels per day for May 2007, the survey showed. Iraq does not participate in OPEC output agreements, while Angola, whose membership of the group began in January 2007, has yet to accept or be allocated any output target.

Platts further informs us that small volume increases totaling 80,000 barrels per day from Angola, Iran, Nigeria and the UAE were almost completely offset by output decreases totaling 70,000 barrels per day from Iraq, Indonesia and Venezuela.

We are further informed by Platts that Nigerian production in May has been revised downward to 2.05 million barrels per day from 2.13 million barrels per day. In June, the survey found Nigerian production to have risen to 2.08 million barrels per day from the revised May level.

Oil Aplenty or Shortage for the United States

Oil Aplenty or Shortage?

The debate on world oil supply continues unabated. Reuters reported on July 14, 2007 that the proponents of "peak oil" - the theory that global crude oil production has hit its zenith and is headed for a steep decline - are upset with a United States oil industry group's findings that the world has plenty of oil.

Next week the United States National Petroleum Council - a board of high-level UNITED STATES oil industry executives - releases its study titled, “Facing the Hard Truths about Energy”, conducted at the behest of UNITED STATES Energy Secretary Sam Bodman.

According to the report's executive summary, obtained by Reuters, the world is not running out of oil but there are "accumulating risks" to securing supply through 2030.

Peak oil theorists say such findings gloss over Bodman's request to study the issue in detail.

"They've labored mightily and come up with a mouse," said Randy Udall at the Association for the Study of Peak Oil and Gas, whose group dismisses the report as "petro Prozac".

"Give me four college students and two weeks, and I could do better," Udall said.

Reuters reports, “with crude oil futures prices in London at 11-month highs above $US77 a barrel, the International Energy Agency (IEA), adviser to 26 industrialized countries, predicts a supply crunch in 2012.”

The IEA now expects global demand to reach 95.8 million barrels per day (bpd) from 86.1 million bpd in 2007, assuming average global GDP growth of 4.5 per cent annually.

In a draft letter to Bodman outlining its findings, the National Petroleum Council says: "The world is not running out of energy resources, but there are accumulating risks to continuing expansion of oil and natural gas production from the conventional sources relied upon historically."

Those risks include "political hurdles, infrastructure requirements and availability of trained work force", according to the findings of the panel, which includes executives of oil companies such as ExxonMobil Corporation and Chevron Corporation.

One UNITED STATES oil executive hires people to don chicken suits and hand out flyers at peak oil conferences, calling its advocates "Chicken Littles" - most recently in Italy in 2006.

"The abundance side of the debate needs something that grabs attention, too," said Alex Cranberg, chairman of Denver-based Aspect Energy, an independent oil company, referring to the chicken suits. "It is almost equal to, but not equal to, the power of fear."

Daniel Yergin, chairman of oil consultancy Cambridge Energy Research Associates and the panel's vice-chairman of demand issues, has dismissed the idea of peak oil.

Instead, Yergin's group has predicted an "undulating plateau" of crude oil production over several decades, followed by a slow decline.

Reuters reports such findings irk UNITED STATES Representative Roscoe Bartlett, the Maryland Republican and co-chairman of the Congressional peak oil caucus, who has hounded the Bush administration on the peak oil issue.

Reuters reports, "I don't think (the council) did what they asked them to do," Bartlett said in his office this week, brandishing a closet-full of charts and graphs that map out various world oil consumption scenarios. "We're disappointed."

House Republicans Unhappy with Democrats Energy Policy

House Republicans blast Democrats on energy

Nick Snow, a Washington, DC, Correspondent wrote for the oil and gas journal on July 12 that the United States House of Representatives Republicans charged that the "bold action" on energy that Speaker of the House Nancy Pelosi (D-Calif.) promised earlier this year has become "no energy, no action, and all embarrassment."

Snow reports that Congressional House Republican Conference Chairman Adam Putnam of Florida told reporters on July 11, 2007 that Congressional Democrats are "still arguing among themselves, still engaged in intramural spats," although fuel prices continue to rise.

Putnam continued, "They failed to produce a comprehensive plan in the first 6 months of the year. They promised a detailed plan July 4, and still there is no indication that they have anything close to a comprehensive energy plan that produces new energy and lowers prices while making the nation more energy-independent and secure."

Speaker Pelosi and the rest of the Congressional House Democratic leadership declared "energy independence" on June 28, 2007 as they thanked the chairmen of the 11 Energy committees for their work on a broad array of energy measures since January 2007. Congressional Republicans said on July 11, 2007 that Democrats have suppressed dissent.

Former Speaker of the House, republican J. Dennis Hastert (R-Ill.) said pragmatic solutions, such as more gradual motor vehicle fuel economy increases favored by Energy and Commerce Committee Chairman John D. Dingell (D-Va.) and support for coal-to-liquids research proposed by Energy and Air Quality Subcommittee Chairman Rick Boucher (D-Va.), will never reach the floor of the House of Representatives for a vote.

If Democrats can't solve their internal problems and debate doesn't occur until September, former speaker Hastert added, "the promise of the autumn may become the legends of the fall. It may not happen."

Louisiana Oil and Gas Association

Louisiana Oil and Gas Association

The Louisiana Oil and Gas Association reports on its website at www.lioga.com that the 2007 Louisiana Legislative Session Recap for Thursday, June 28, 2007, included in its June 28, 2007 session that every legislative session takes on its own personality and this session was no exception. If Louisiana Oil and Gas Association

could give the session a theme it would be “getting a piece of the billion dollar budget”.

Senate Bill 23 (Act No. 8)

Louisiana Oil and Gas Association reports that the last two years have been a fight to correct an amendment tacked on to Act 169 passed in 2005. Senator Robert Kostelka(R-Monroe) authored 2007’s Senate Bill 23 (SB 23); which returned third party protection in recording a memorandum of oil and gas lease. Louisiana Oil and Gas Association

was able to pass SB 23 with overwhelming support through the House with a 102-0 vote and through the Senate with 28-10 vote and was signed by the governor into law on June, 18, 2007. This is another true win for our industry and the Louisiana Oil and Gas Association.

HB Bill 187

Louisiana Oil and Gas Association reports that HB 187 by Representative Wilfred Pierre(D-Lafayette) Gives the Commissioner of Conservation authority to regulate CO2 pipelines into adjoining states. Louisiana Oil and Gas Association helped get it

passed HB 187 off the House floor this past Tuesday and is headed for the Governors desk.

House Bill 617

HB 617 would prohibit drilling on Lake Peigneur - Louisiana Oil and Gas Association

not wanting any ban on drilling defeated the bill in committee; hence, not allowing it to reach the House floor. Louisiana Oil and Gas Association reports that residents near Lake Peigneur in South Louisiana had reported sporadic bubbling on the surface of the lake and feared larger mishaps would repeat themselves as in the 1980 breach of the salt dome. Worrying that there was an undetected leak in the now present natural gas storage caverns, Representative Sydnie Mae Durand (D-Parks) introduced House Bill 617 which included the banning of drilling into the 1,300 foot-deep lake.

The state has monitored Lake Peigneur and tested it. They have sent divers and done everything that they could to figure out the bubbling. Conclusions found the bubbles are not gaseous or chemical. A geologist who has worked there for some time thinks it is a common geological fault. Durand and residents did not want to compromise.

Louisiana Oil and Gas Association Senate Bill 173 by Senator Joel Chaisson(D-Destrehan) would have prohibited injecting certain waste into salt domes. Louisiana Oil and Gas Association negotiated that out and convinced Senator Chaisson to drop the bill. There are few destinations to dispose of produced water that are better than salt domes.

Natural Gas Scavengers

Gary J. Nagl and Doug L Henguy wrote a very informative article on natural gas scavengers and the most appropriate way of dealing with natural gas problems depending upon the cleaning situation required in the field. They discuss the advantages and disadvantages of liquid scavengers, solid scavengers and other methods for removing hydrogen sulfide.

D Three Technology, LLC has made significant progress in scavenging carbon dioxide, as well as scavenging hydrogen sulfide.

Check out the article by Nagle and Henguy at http://www.gtp-merichem.com/support/technical_papers/technologies/index.php and D Three Technology at http://www.dthreetechnology.com.

Colorado Oil and Gas Association

WWW.coga.org is the website for the Colorado Oil and Gas Association.

If you visit the website you will find it very inviting.

WELCOME
to the
Colorado Oil & Gas Association

Founded in 1984, the Colorado Oil & Gas Association's purpose is to foster and promote the beneficial, efficient, responsible and environmentally sound development, production and use of Colorado oil and natural gas.

We invite you to visit this website. In the days to come we will share additional information from COGA.

Texas Oil & Gas Association - 1997

TXOGA - 1997

When the TXOGA formed in 1917 the concept and plan for the organization was very general in nature. However, TXOGA soon found out that in addition to general problems, there were national problems to be dealt with. TXOGA had local problems in various states that needed attention, guidance and problem solving, and as a result of the local issues they begin to split into state organizations and thus on July 1, 1919, two local divisions were formed under the general auspices of the Mid-Continent Oil & Gas Association. These were known as "Mid-Continent Oil & Gas Association, Kansas-Oklahoma Division" and "Mid-Continent Oil & Gas Association, Texas-Louisiana Division."

But as we all now know well, you couldn’t stop the growth of oil in the United states and soon the Louisiana-Arkansas area had grown to such a size that a separate division of the Mid-Continent Oil & Gas Association was necessary and so on January 4, 1923, the Louisiana activities of the Mid-Continent Oil & Gas Association were separated from the Texas activities, and the "Mid-Continent Oil & Gas Association, Texas Division" and the "Mid-Continent Oil & Gas Association, Louisiana-Arkansas Division" were formed.

Oil keep growing and twelve years later, oil operations in the states of Mississippi and Alabama became quite extensive, and the "Mid-Continent Oil & Gas Association, Mississippi-Alabama Division" was organized at Jackson, Mississippi, on October 27, 1944.

So in 1997 the Texas oil & gas industry, Texas Mid-Continent Oil & Gas Association changed it's name to the Texas Oil & Gas Association, TXOGA, thereby signifying a new era for the organization.

Subsequently, the national Mid-Continent organization elected US Oil & Gas Association as its name. It has four affiliated divisions, (1) the Oklahoma Mid-Continent Oil & Gas Association, with headquarters at Tulsa; (2) the Texas Oil & Gas Association, with headquarters at Austin; (3) the Louisiana Mid-Continent Oil & Gas Association, with headquarters at Baton Rouge; and (4) the US Oil & Gas Association, Alabama-Mississippi Division, with headquarters at Jackson, (formerly the Mississippi-Alabama Mid-Continent.)

Texas Oil & Gas Association - 1917

TXOGA: Mid-Continental Oil & Gas Association 1917

The Texas Oil and Gas Association – TXOGA - came about as a result of the excellent work that the initial founders of the organization did upon its inception on October13, 1917. At a meeting that was originally held in Tulsa, Oklahoma, the United States was engaged in fighting World War I, and one of the principle, main purposes behind the Association’s formation was to provide essential supplies of petroleum and petroleum products (gasoline, diesel, paint, aircraft fuel, bunker fuel for ships) to the armed forces of the United States and its allies. As one member put it, we were going to do what was necessary to allow our country …. “to float to victory upon a wave of oil." TXOGA’s predecessor Mid-Continent’s contribution to that success of the U.S. victor helped establish it as an association in which individuals working cooperatively could resolve mutual problems and achieve major results for the betterment of the national petroleum industry and meeting the needs and ultimate safety of the United States and its allies.

That initial meeting that took place in 1917 had representatives from oil producers, casinghead gasoline producers, supply companies, refiners, as well as other segments of the petroleum industry. Frank Haskell of Tidal Oil Company was the first president of the association, and J. H. Evans of Devonian Oil Company was elected the first vice-president. The first office of Mid-Continental Oil and Gas Association (soon to be the TXOGA in 1997 was established in Tulsa, Oklahoma in November 1917.

Texas Oil and Gas Association

TXOGA – the Texas Oil & Gas Association http://www.txoga.org/ is the petroleum trade association for the State of Texas oil and gas industry. TXOGA unites the Texas oil and gas owners, suppliers, manufacturers, the oil industry to work and represent its common good interests. TXOGA was founded in the year 1919, making it the oldest and largest organization in the State of Texas representing petroleum interests. Today it serves as the only organization in the State of Texas which embraces all segments of the oil, gas, petroleum industry.

TXOGA has approximately 2,000 members in the Association, approximately 500 of whom are the executives representing 50 of the Texas’s largest energy companies. The remaining members are made up of independent oil and gas owners and producers, oil and gas producing and purchasing companies, petroleum refining companies, petroleum marketing companies, drilling contractors, land men, lease brokers, geologists, consulting engineers, royalty owners, pipe line companies and contractors, transportation companies, carbon black companies, geophysical companies, equipment and supply firms, petroleum, oil and gas well servicing contractors, oil and gas tax attorneys, insurance companies, banks, and others interested in promoting the welfare of the petroleum, oil and gas industry.

Texas Oil and Gas Association

California Independent Petroleum Association

D Three Technology, LLC is a member of the California Independent Petroleum Association, which is also known as CIPA. CIPA is a non-profit, non-partisan trade association representing approximately 450 independent crude oil and natural gas producers, royalty owners, and service and supply companies operating in California, of which D Three Technology is one.

CIPA was formed in 1976. CIPA’s creation was the result of a merger between two trade group associations; the Independent Oil & Gas Producers' Association merged with the California Independent Producers & Royalty Owners Association. Today CIPA is an association that has kept the political, regulatory and public policy interests of independent oil and gas producers at the forefront of its agenda.

CIPA states on its website at www.cipa.org that “CIPA represents the diverse interests of its membership before the California State Legislature, the United States Congress and numerous federal, state and local regulatory agencies. The association is an advocate of free market principles, eliminating duplicative regulation, stimulating recovery of domestic resources and improving the industry's public image.”

The CIPA website is a great resource for the oil and gas industry, particularly for those interested in the California market. The CIPA website contains up to date information on legislation that is of interest to the oil and gas industry, as well as oil and gas prices for California.

Who is the American Gas Association?

There is a website we would like to recommend to our readers and it is The American Gas Association, www.aga.org which was founded in 1918 and represents 200 local energy utility companies in the United States. These 200 companies deliver natural gas to more than 64 million United States homes, businesses and industries that are located throughout the 50 United States. A total of 69 million United States residential, commercial and industrial customers receive natural gas in the United States and American Gas Association members’ deliver 92 percent of all natural gas provided by the United State’s natural gas utilities. The American Gas Association is an advocate for 200 natural gas utility companies and their customers, providing a broad range of programs and services for member natural gas pipelines, marketers, gatherers, international natural gas companies and industry associates in the United States. The American Gas Association is proud to represent the natural gas industry and informs us that natural gas meets almost one-fourth of the United States' energy needs.

American Gas Association

The American Gas Association, www.aga.org has an excellent website providing information for the entire natural gas market and more. They have a weekly update that provides a tremendous amount of information. Following are a few selections from their June 15, 2007 website update.

Prices - natural gas futures began the week of June 4, 2007 at $8.19 per MMBTU (million british thermal units) and they pointed out that the demand for natural gas was a little down for the same period one year ago. The March-June 2007 four month future prices were between $7.50 and $7.59 per MMBTU and maintains a very consistent price through what has been termed a volatile market.

Weather - The "cooling" season has begun for 2007 and it is at his warmest temperatures, 9.4 percent higher than is considered normal for this time of year. The New England, Middle Atlantic and Pacific regions are warmer than usual.

Working Gas in Underground Storage - In the week ending June 8, 2007 the net injections were 92 Bcf (billion cubic feet), which resulted in raising the underground storage inventories to 2,225 bCF, which is 19.3% higher than the past five year average.

Natural Gas Production - The American Gas Association quoted the Bentek Energy, LLC for estimates in natural gas production, which was prior to extraction loses, in the lower 48 states - production reached 50.0 BCF per day on February 3, 2007 and has not fallen below that volume since that day. Daily production of natural gas has been as high as 52.7 Bcf per day in 2007 and has been between 51 and 52 Bcf for the first two weeks of June.

July 4, 2007

D Three Technology, LLC would like to say hello to all the oil and natural gas producers in the United States and Canada and wish everyone a Happy Independence Day.

It is on this day that we reflect upon our freedoms that are granted us by our constitution and reflect upon the sacrifices that our men in the military continue to make on behalf of our nation here in the United States.

May we all enjoy this day and never take our freedom for granted.