February 18th, 2006:

Chevron Corp. said Feb. 13 that Raymond Wilcox, president of Chevron North America Exploration and Production Co., will retire effective March 31 to become president and chief executive officer of Chevron Phillips Chemical Co. LLC, a company owned equally by Chevron and ConocoPhillips.
Wilcox will be succeeded by Gary Luquette, currently managing director of the European strategic business unit of Chevron International Exploration and Production Co.
Wilcox, 59, joined Chevron as a design and construction engineer in 1968, and spent the early part of his career in a variety of onshore and offshore production activities in California and Louisiana, and was named to his current position in 2002.
Luquette, 50, joined Chevron in 1978 as a design and construction engineer in the Lafayette, La., exploration and production unit. He was named manager of enhanced oil recovery for P.T. Caltex Pacific Indonesia in 1993, returned to the United States to manage the San Joaquin Valley profit center in 1996 and was promoted to vice president of the San Joaquin Valley business unit in 1999. He was named to his current position, based in Aberdeen, Scotland, in 2003. read more

Beating oil: Canadian company making ethanol for 25 years, could be commercial with waste-to-energy plant using straw by 2009
Paul Elias
Associated Press Biotechnology Writer
The key to kicking what President Bush calls the nation’s oil addiction could very well lie in termite guts, canvas-eating jungle bugs and other microbes genetically engineered to spew enzymes that turn waste into fuel.
It may seem hard to believe that microscopic bugs usually viewed as destructive pests can be so productive. But scientists and several companies are working with the creatures to convert wood, corn stalks and other plant waste into sugars that are easily brewed into ethanol — essentially 199-proof moonshine that can be used to power automobiles.
Thanks to biotechnology breakthroughs, supporters of alternative energy sources say that after decades of unfulfilled promise and billions in government corn subsidies, energy companies may be able to produce ethanol easily and inexpensively.
“The process is like making grain alcohol, or brewing beer, but on a much bigger scale,” said Nathanael Greene, an analyst with the environmental nonprofit Natural Resources Defense Council. “The technologies are out there to do this, but we need to convince the public this is real and not just a science project.”
Concern ethanol plants using too much corn
Using microbes may even solve a growing dilemma over the current ethanol manufacturing process, which relies almost exclusively on corn kernels and yielded only 4 billion gallons of ethanol last year (compared to the 140 billion gallons of gasoline used in the U.S.). There’s growing concern throughout the Midwestern corn belt that the 95 U.S. ethanol plants are increasingly poaching corn meant for the dinner table or livestock feed.
The idea mentioned by Bush during his State of the Union speech — called “cellulosic ethanol” — skirts that problem because it makes fuel from farm waste such as straw, corn stalks and other inedible agricultural leftovers. Cellulose is the woody stuff found in branches and stems that makes plants hard.
Breaking cellulose into sugar to spin straw into ethanol has been studied for at least 50 years. But the technological hurdles and costs have been so daunting that most ethanol producers have relied on heavy government subsidies to squeeze fuel from corn.
Researchers are now exploring various ways to exploit microbes, the one-cell creatures that serve as the first link of life’s food chain. One company uses the microbe itself to make ethanol. Others are taking the genes that make the waste-to-fuel enzymes and splicing them into common bacteria. What’s more, a new breed of “synthetic biologists” are trying to produce the necessary enzymes by creating entirely new life forms through DNA.
Waste-to-energy technology
Bush’s endorsement of the waste-to-energy technology has renewed interest in actually supplanting fossil fuels as a dominant energy source — a goal long dismissed as pipe dream.
“We have been at this for 25 years and we had hoped to be in commercial production by now,” said Jeff Passmore, an executive vice president at ethanol-maker Iogen Inc. “What the president has done is — perhaps — put some wind in the sails.”
Ottawa-based Iogen is already producing ethanol by exploiting the destructive nature of the fungus Trichoderma reesei, which caused the “jungle rot” of tents and uniforms in the Pacific theater during World War II.
Through a genetic modification known as directed evolution, Iogen has souped up fungus microbes so they spew copious amounts of digestive enzymes to break down straw into sugars. From there, a simple fermentation — which brewers have been doing for centuries — turns sugar into alcohol.
Iogen opened a small, $40 million factory in 2004 to show it can produce cellulosic ethanol in commercial quantities. In the last two years, it has produced 65,000 gallons of ethanol that is blended with 85 percent gasoline to fuel about three dozen company and Canadian government vehicles. Oil giant Royal Dutch Shell PLC has invested $40 million for a 30 percent ownership stake in Iogen; Petro-Canada and the Canadian government are also investors.
Looking for financing for commercial-scale factory
Now the company is ready to build a $350 million, commercial-scale factory in Canada or Idaho Falls, Idaho, next year if it can secure financing — long one of the biggest stumbling blocks to bringing the stuff to gas pumps.
While conventional lenders are wary of investing in a new technology, the company is banking on winning a loan from the U.S. Department of Energy. Even under a best-case scenario, Passmore said Iogen won’t be producing commercial quantities until 2009.
Other significant hurdles include how to widely distribute the fuel; getting auto manufacturers to make engines that will use it; and persuading gas stations to install ethanol pumps. There’s hope that funding shortfalls and the remaining technological problems such as how to ship large amounts of ethanol will be overcome in the next few years.
Despite the challenges, Bush’s endorsement and advancements in the field have re-energized alternative energy types.
While no commercial interest has advanced as far as Iogen, other biotech companies are engineering bacteria to spit out similar sugar-converting enzymes, and academics are pursuing more far-out sources.
At the California Institute of Technology, Jared Leadbetter is mining the guts of termites for possible tools to turn wood chips into ethanol. Leadbetter said there are some 200 microbes that live in termite bellies that help the household pest convert wood to energy.
Those microbes or their genetic material can be used to produce ethanol-making enzymes. So scientists at the Energy Department’s Joint Genome Institute in Walnut Creek, Calif., are now sequencing the microbe genes in hopes of finding a key to ethanol production.
“We have this idea that microbes are pests,” said Leadbetter, who has been studying termite guts for 15 years. “But most microbes are beneficial.” read more

Canada’s five integrated oil companies — those who explore, produce, refine and market production — feasted off sky-high commodity prices last year and high refining margins, tallying C$9.56 billion in profits, up 34 percent from 2004.
Backed by such riches, Imperial Oil, Shell Canada, Husky Energy (all controlled by non-Canadian investors), along with Petro-Canada and Suncor Energy (both controlled by Canadians), are expected to make life tough for smaller E&P companies in the competition for drilling rigs and service equipment.
With operating costs estimated to have climbed 19 percent in Western Canada last year, the big players are better placed than their junior rivals to handle sharp rises in the upstream sector.
All five are also key operators in the oil sands sector, where they have major projects and expansions under way.
The profit breakdown shows: Imperial Oil C$2.6 billion (C$2.05 billion in 2004), Shell Canada C$2.01 billion (C$1.29 billion in 2004), Husky C$2 billion (C$1.01 billion in 2004), Petro-Canada C $1.79 billion (C$1.76 billion in 2004) and Suncor Energy C$1.25 billion (C$1.09 billion in 2004).
—Gary Park read more

Only WesternGeco has vessel availability for Alaska OCS work; PGS and Veritas land crews continue active programs
Alan Bailey
Interest in shooting seismic offshore Alaska is heating up. ConocoPhillips has announced plans to conduct seismic surveys in the Chukchi Sea and Petroleum News has already reported that Shell will shoot 3D seismic in the Beaufort Sea in the summer of 2006, using WesternGeco’s MV Gilavar.
Alaska newcomer Eni Petroleum has said it is thinking of partnering with Shell in the Beaufort survey.
In late January, the National Marine Fisheries Service told Petroleum News that Shell is in the process of applying for an Incidental Harassment Authorization for seismic work in the Beaufort and Chukchi seas, and that Kerr-McGee is talking about a seismic survey closer to shore in the Beaufort.
But with oil and natural gas prices maintaining high levels, marine seismic crews equipped for working in Arctic waters seem in short supply. And work in the Arctic waters of the Beaufort and Chukchi seas generally requires vessels with hulls that have been strengthened for ice conditions.
WesternGeco
WesternGeco, the only company that appears currently to have Arctic-equipped vessels available for the summer of 2006, is enthusiastic about returning to the Alaska outer continental shelf.
“Right now WesternGeco does have the resources. We do have vessel availability for working offshore Alaska,” Elaine Buck, the company’s marketing manager for North America, told Petroleum News on Feb. 14. “…We’re very committed to being back in Alaska with 3D marine acquisition … we will be in Alaska in 2006.”
WesternGeco sees the increasing interest in the Beaufort Sea and offshore Alaska, Buck said.
“We’ve noticed that there is an increase in activity going on. The interest is there,” Buck said. “We know that more and more of the super majors are coming back to re-evaluate Alaska offshore and onshore.”
And Buck said that her company enjoys an extensive history of working in the Beaufort Sea.
“Back in the ‘90s we were shooting multi-client data in the Beaufort Sea, so we do have vessels that are equipped for working in the (Arctic) marine environment,” she said.
PGS and Veritas
Two other companies consistently active in Alaska in recent years, PGS Geophysical and Veritas DGC, have marine divisions with vessels strengthened for Arctic work. But neither of these companies have boats available for this summer’s seismic survey season offshore Alaska.
PGS actually bid on a ConocoPhillips offshore Alaska job, but the boat that the company planned on using was assigned to another contract before any commitment to Alaska work, Larry Watt, PGS Onshore Inc.’s area manager for Alaska, told Petroleum News. PGS’s worldwide fleet of 12 streamer vessels includes some ice-strengthened boats, he said.
“We’ve worked every summer around the Sakhalin Islands but they’re all busy right now for this summer,” Watt said.
PGS also operates boats in areas such as the Gulf of Mexico, offshore Brazil and offshore Africa. If a boat became available for use offshore Alaska, it could take anywhere from two weeks to a month for the boat to sail to Alaska waters, Watt said.
Veritas, with a worldwide fleet of 10 vessels (including two under contract), is also fully booked at the moment.
“From the marine perspective our backlog in other areas of the world is such that we did not have any vessels available to meet the requirements for the (2006) summer activity (offshore Alaska),” Jerry Hastings, general manager for Veritas Land in Alaska, told Petroleum News Feb. 15.
Busy onshore
But both PGS and Veritas are active onshore in Alaska.
PGS maintains two seismic crews on the North Slope, one of which is currently engaged in seismic projects, Watt said. A 90-person crew supports 3D data acquisition and a 65-person crew supports 2D acquisition. The 3D crew is equipped for high-resolution data acquisition involving 10,000 or more channels, he said. And all of the field equipment is configured for minimum impact on the tundra, using state-of-the-art rubber tracked vehicles and mobile camps on sleighs.
“They’re the newest camps up there — we bought one in 2000 and one in 2001,” Watt said. “… All of our recording equipment, including the vibrators, is rubber tracked and articulated.”
In the past couple of winters a PGS crew based on the North Slope has also done seismic acquisition in the Glennallen and Nenana areas of the Alaska Interior.
Veritas maintains two Alaska onshore crews, with one crew on the North Slope and one in the Cook Inlet area. Both crews are currently busy.
“We have a crew in the Cook Inlet that’s working on four different proprietary programs this winter,” Hastings said. “We have a crew on the North Slope — a large 3D crew — that’s working on three proprietary acquisitions.”
And Hastings sees continuing demand, especially given the number of new exploration companies that have been coming to Alaska.
“We’re seeing a typical level of activity this winter that we have enjoyed for the last six year,” he said. “But we are seeing an increase in the number of prospective clients.”
Like PGS, Veritas operates low ground-impact vehicles for its Alaska operations. State-of-the-art seismic vibrator technologies create signals for high-resolution recordings that involve thousands of channels.
Hastings said that clients tend to start contracting recording crews as early as June for the upcoming winter onshore seismic season in Alaska.
“I think as demand goes up for crews that may change a little bit, where people are looking at maybe a longer term approach,” he said.
Hastings sees the possibility of increasing the number of Alaska crews if the demand for services reaches a high enough level. However, at a cost of perhaps $30 million, outfitting a new crew becomes an expensive proposition. And obtaining enough trained and experienced personnel could prove problematic.
For example there is a limited number of people with the expertise to maintain the equipment.
“As the crew count increases then they’re in great demand,” Hastings said.
PGS and Veritas also support what’s known as transition zone acquisition — the acquisition of seismic data in shallow water close to shore, such as the area inside the barrier islands of the Beaufort Sea coast. That type of acquisition requires a specialized approach and, in northern Alaska, normally requires ice-free conditions during the summer. PGS operates two transition zone crews worldwide, while Veritas uses a North Slope-based land crew for this type of work. read more

Alyeska, state and federal officials say trans-Alaska oil pipeline less vulnerable than it appears; watch kept for heavy weapons
Mary Pemberton
Associated Press Writer
The trans-Alaska pipeline looks like it would be an easy target for terrorists intent on destroying a valuable American asset, but those responsible for its safekeeping say looks can be deceiving.
The 800-mile pipeline — which carries nearly 17 percent of domestic crude oil production — snakes north to south across Alaska, from the oil fields of Prudhoe Bay to the port of Valdez, where tankers are loaded for delivery to West Coast refineries.
About half of the 48-inch diameter pipeline lies underground. The other half is visible — a huge silver cylinder that parallels two Alaska highways and sits nearly in the backyards of some Fairbanks homes.
The Alyeska Pipeline Service Co., the company that operates the pipeline, even has a visitors center outside Fairbanks where tens of thousands of people have gone to get an upclose look at the pipeline.
“You can walk right under it,” said Alyeska spokesman Mike Heatwole.
Terrorism experts say pipelines in general are easy targets, but tend to be low priority because they can be repaired so quickly.
Officials: hard to get weapons into state
And officials with an intimate knowledge of the pipeline say it’s far less vulnerable than it appears — in part because of the difficulty a saboteur would have getting any weapon capable of serious damage into Alaska.
The pipeline has state, federal and local agencies keeping an eye on it, said John Madden, deputy director of the state Division of Homeland Security and Emergency Management.
When Madden was asked what would keep someone from, say, firing a shoulder-mounted rocket at the pipeline, he cited the difficulty of getting such a weapon near the pipeline.
“The very act of a shoulder-fired weapon suggests transport of that weapon,” he said.
Agencies including customs, immigration, border control and state troopers, work to make sure that such a weapon would never make it into Alaska, he said.
“There are quite a bit of those layers of defense and observation which the public will never see,” Madden said.
However, officials decline to discuss any specifics about what actions have been taken to protect the pipeline.
“We have a security component to our work,” Heatwole said. “It is part of our business.”
SITE found pipeline threat online
Concerns that terrorists were targeting the pipeline were raised several weeks ago when the SITE Institute in Washington, D.C. — the acronym stands for Search for International Terrorist Entities — discovered a well-researched, 12-page Arabic essay posted on the Internet that discussed targeting the Alaska pipeline. Its author is unknown.
“It is not everyone who could sit and write something like this. You would have to have some background on how pipelines work,” said SITE Director Rita Katz.
While the pipeline would be easy to blow up, it is not an attractive target for terrorists, said Henry Lee, director of the Environment and Natural Resources Program at the Belfer Center for Science and International Affairs at Harvard University. The center focuses on international security.
Lee said terrorists blow up pipelines more as an irritant, pointing to a pipeline in Colombia blown up more than 100 times by rebels.
“Pipelines can be blown up, and they are fairly easy to blow up,” Lee said. “The day they did it, it would get headlines in all the papers. The problem is you would have it fixed in a matter of days.”
Chris Kendall, a petroleum geologist at the University of South Carolina who is an expert on the impact of war on oil supplies, described the pipeline as a “soft boundary” target.
“Of course it is vulnerable,” he said.
However, the pipeline’s isolation in Alaska probably works to its advantage, Kendall said. Terrorists need a certain amount of “internal synergy” to be effective, he said.
“They need each other socially,” Kendall said.
He doubted terrorists had that much interest in Alaska.
“Fortunately these idiots, the nihilists, are preoccupied with other focuses. They’re probably running away from people in Pakistan and Afghanistan. They are preoccupied with surviving and fighting in Iraq,” Kendall said.
Alyeska assessed security in ‘01
Alyeska assessed its security following the terrorist attacks on the World Trade Center in New York in 2001, Heatwole said. That same year an Alaska man shot up the pipeline with a .338-caliber hunting rifle, spewing about 300,000 gallons of crude. The man, who is now serving a 16-year prison sentence, apparently had no political motives.
There have been other instances where the pipeline was shot but not perforated.
Alyeska became aware of the Web posting about two weeks ago and sent an e-mail to its employees so people would not become needlessly alarmed, Heatwole said. The company made no changes as a result of the Web posting.
“We are not aware of any pending or imminent threat to the pipeline,” Heatwole said.
The Web posting provided numerous links to other Web sites with specific information on the pipeline, including Alyeska Pipeline Service Co.’s official Web site.
FBI shared information with other agencies
FBI spokesman Eric Gonzalez said when the FBI became aware of the Web posting it shared it with other agencies in a joint terrorism task force formed in 2001. He said the main role of the FBI is to pass on intelligence information and do follow-up.
The Web message was posted on a password-protected al-Qaeda-affiliated forum. It was in response to messages from Osama bin Laden and Ayman al-Zawahri regarding recommended targets. The Web message suggested that attacks be launched on oil pipelines, refineries and pumping stations in Iraq, Afghanistan, Turkmenistan and Alaska.
When referencing the trans-Alaska pipeline, it said, “This kind of target is considered an ideal target for a small group of mujahideen of 4-5 individuals.”
It said members would ideally be American Muslims but if those couldn’t be found than they could be recruited from foreign-born Muslims living in the United States, Canada or Mexico.
“This group should be divided into smaller groups of 4-5 individuals, who have the knowledge and skills need(ed) for explosives,” the Web site said.
It recommended either shooting the pipeline or blowing it up.
“It is preferable that these groups prepare hiding places in different locations alongside the pipeline and detonate the packages from time to time until they can receive the news of the American devils’ defeat,” it said.
It recommended that any attack be planned for summer. read more

For decades natural gas had advantage to United States of being local energy source; billions being invested to bring gas by ship
Brad Foss
Associated Press Business Writer
The United States is increasingly going overseas to meet its natural gas needs, setting in motion a significant shift with a familiar, if unpleasant, side effect for the world’s largest energy consumer.
As America becomes a bigger player in the global natural-gas trade, its vulnerability to faraway production snags and price gyrations will rise, as will its dependence on energy from the Middle East and other volatile regions.
Unlike oil, natural gas has for decades had the advantage of being a local energy source. It either came from within the United States or by pipeline from Canada. But as North American supplies dwindle and demand grows, the energy industry is investing billions of dollars to ship the fuel across oceans as liquefied natural gas, or LNG.
LNG is still a relatively small source of supply for the U.S. But imports are expected to rise fivefold over the next decade, intensifying the competition with Europe and Asia for natural gas coming primarily from the Middle East, West Africa and countries formerly part of the Soviet Union.
“There’s a geopolitical overlay that’s going to look similar to oil,” said Michael Zenker, managing director of the global natural gas team at Cambridge Energy Research Associates.
Which means the price that American homeowners, manufacturers and power plants pay for natural gas will increasingly be linked to the weather in Europe and the pace of economic growth in Asia — not to mention the political stability of countries such as Russia, Iran and Qatar, which combined hold more than half of the world’s natural gas reserves.
The reverse is also true. “A surge in U.S. demand could effectively raise the price for spot LNG cargoes, affecting the price in Japan and other countries,” said George Beranek, a manager in the global gas group at PFC Energy in Washington.
U.S. already third-largest LNG importer
Fuel-hungry America is already the third-largest LNG importer behind South Korea and Japan, according to Energy Department statistics. Spain and France are other major importers today, while China and India are expected to be significant players down the road.
Until recently, the North American natural-gas market was an island unto itself with an abundant resource, and prices were relatively cheap. A supply disruption in the Gulf of Mexico might temporarily drive up prices, but a problem with natural gas output in the Persian Gulf would have virtually no impact.
The fact that natural gas is cleaner-burning than heating oil and coal only burnished its public image, and demand grew rapidly during the 1990s as it became the fuel of choice for heating new homes and running new power plants.
Gradually, though, U.S. — and then Canadian — output began to taper off. Producers drilled many more wells, but still could not offset the depletion of existing wells while satisfying rising demand.
LNG imports tripled in ‘90s
To bridge the gap, LNG imports tripled in the ‘90s, rising to 226 billion cubic feet per year by 2000. And they nearly tripled again by 2004, climbing to 652 bcf, or 3 percent of the country’s total natural gas consumption.
But there is still not much of a supply cushion in the U.S. natural-gas market, which is a major reason why prices climbed steadily in recent years — and then skyrocketed after Hurricane Katrina disrupted output in the Gulf of Mexico. Natural gas futures averaged $9.01 per thousand cubic feet in 2005, more than five times the price in 1995.
Meeting the country’s anticipated demand by 2015 could require the U.S. to import more than 10 bcf per day of LNG, according to government and industry statistics. That’s greater than the amount of gas it will get from Canada via pipeline.
The competition for LNG will be most pronounced in the spot market, a small piece of the global trade in which tankers are usually directed on short notice to wherever the price is highest. But analysts said it could also affect long-term supply contracts because those deals are benchmarked to futures prices, which rise and fall based on short-term events. The U.S. buys LNG primarily on the spot market.
The industry prefers to sell at least a portion of its LNG through long-term agreements to help pay for the large capital investments needed to build critical infrastructure, including plants to liquefy the natural gas, refrigerated double-hulled ships to transport it and terminals on the receiving end to regasify the fuel. It also gives producers a measure of confidence that there will be a market for their supply.
Multibillion-dollar investments
Indeed, companies such as Exxon Mobil Corp., Royal Dutch Shell Plc and BG Group — the largest importer of LNG into the U.S. — are making multibillion-dollar investments up and down the LNG supply chain, creating what one BG executive referred to last fall as a “global virtual pipeline.”
The U.S. has five LNG import terminals today, with four more under construction and dozens more proposed, including one in Fall River, Mass. that local officials oppose.
Some analysts say the U.S. is already feeling the impact of global events that a decade ago would not have registered the slightest ripple in its natural gas market.
For example, UBS natural gas analyst Ronald Barone noted in a recent report how U.S. supplies tightened in January because LNG originally scheduled for delivery at a terminal in Cove Point, Md., was redirected to Europe. European demand for natural gas rose over the past year, analysts said, because of a new import terminal in Britain and a drought that sapped strength from Spain’s hydropower sector.
Trinidad biggest U.S. supplier
In fact, much of the LNG shipped to the U.S. from Trinidad — the biggest supplier to the U.S. — is actually contracted for delivery to Spain, which resells the fuel it does not need into the U.S. market. But as Spanish utilities required more LNG to help fuel power plants, fewer shipments were available to the U.S.
“When things go bad, the U.S. is currently the one that suffers worst because it’s mostly a spot market. It’s the market of last resort,” said Gavin Law, head of the global LNG practice at consultant Wood Mackenzie in Houston.
But Cambridge Energy’s Zenker said there’s another way to look at the situation, one that underscores how the booming LNG business is rapidly connecting natural gas consumers around the globe like never before.
In order to lure back LNG cargoes from the U.S., Spanish utilities paid a premium to the already soaring market price at the Henry Hub, a key Gulf Coast delivery point.
“One could say the Spaniards are paying a price for U.S. hurricanes,” Zenker said. read more

Unidentified buyer digs deep to acquire oil sands leases in February sale, stuffing more cash into Alberta government’s jeans
Gary Park
Just when it seems the Alberta oil sands should be cooling off, things heat up.
The latest surprise occurred Feb. 8 when an anonymous buyer forked over a staggering C$464 million for 10 parcels of land on the western fringes of the Athabasca region, outside the zone where raw bitumen can be extracted by surface mining.
That investment surpassed the record C$433 million collected from all oil sands leasing in 2005 and helped propel this year’s oil sands returns to C$846 million after only three of a scheduled 24 auctions.
Now the industry is left to speculate on the identity of the buyer, who is operating under the name of 1122131 Alberta Inc., a practice used by bidders who want to keep their intentions under wraps.
The numbered company accumulated a total of 88,576 hectares (almost 219,000 acres), including C$80 million for one 9,216 hectare lease at an unparalleled average of C$8,677 per hectare.
Analysts such as Mark Friesen candidly conceded they had no idea who was behind the bidding, suggesting it could either be an established player or someone intent on making a bold entry.
Greg Stringham, vice president of the Canadian Association of Petroleum producers, told the Financial Post that the purchase is evidence of the desire by companies to lock up leases while they can.
Among those who have flagged their interest in the oil sands this year, government officials from India, China and Japan have said the oil sands could become an important part of the global supply equation.
Fort Hills also major buyer
Another major buyer Feb. 8 was the Fort Hills Energy Corp., which paid C$60 million for 12,288 hectares about 50 miles north of Fort Murray, increasing the land holdings at its mining operation to 60,000 hectares.
The partners — Petro-Canada 55 percent, UTS Energy 30 percent and Teck Cominco 15 percent — are developing a two-phase, 190,000 barrel-per-day project that is due to start commercial production in 2010.
UTS Chief Executive Officer Will Roach said the partnership decided it should expand its acreage in a prospective area.
He said independent UTS has no interest in being taken over by any foreign-controlled firms, having seen its stock value climb 68 percent so far this year.
New well permit record
The pace of oil sands activity pushed new well permits across Canada in January to a record 4,078, easily beating the 2,618 posted in January 2005 and is driving Alberta government land sales into unimagined territory.
After three auctions this year, Alberta has collected C$1.24 billion from the sale of 867,381 hectares (2.14 million acres) at an average C$1,431 per hectare.
That compares to just C$182 million from 327,398 hectares at an average C$555 for the same period of 2005.
For all of 2005, it posted a record C$2.26 billion, beating the previous high of C$1.1 billion in 1997, and Energy Minister Greg Melchin is forecasting the province could end 2006 with more than C$3 billion in its coffers from land sales.
The Feb. 8 auction generated a record C$651 million in total deals from 284,124 hectares, representing a staggering C$2,292 per hectare, with oil sands leases accounting for C$559 million and 151,817 hectares at an average C$3,684.
Penn West signals extension
An extension of oil sands activities from the Athabasca region of northeastern Alberta to Peace River in the northwest was also signaled by Penn West Energy Trust, which paid C$3.7 million for 8,393 hectares, adding to its undeveloped base of 56,600 hectares supporting its Seal heavy oil project.
Seal is currently producing about 900 barrels per day from a pilot project and is expected to reach 4,000-5,000 bpd by late 2006.
Meanwhile, companies evaluating the prospects of oil sands and bitumen leases accounted for the bulk of 1,418 wells in northern Alberta, pushing the province’s count to 3,569, including 1,536 conventional gas wells, 246 coalbed methane wells and 228 conventional oil wells.
The top oil sands evaluation projects involve the Nexen/OPTI Canada partnership, North American Oil Sands, Shell Canada, Synenco Energy, EnCana, Value Creation, Canadian Natural Resources and Deer Creek Energy, which was acquired by France’s Total for C$1.67 billion last year.
Permits were issued for 1,776 gas wells in Alberta, British Columbia and Saskatchewan — 246 ahead of the same month last year — and new oil licenses edged up to 542 from 516.
Heading the list of permit-holders were EnCana (down 272 to 421), Canadian Natural Resources up 79 at 234), Apache Canada (152), Husky Energy (135) and EOG Resources (79). read more

New federal minister endorses socio-economic fund, but NWT raises bar
Gary Park
The new Canadian government is sending out encouraging signals that it will deliver C$500 million in socio-economic funds to aboriginal communities along the planned Mackenzie Valley gas pipeline route, but it has been served notice that the fund may not be enough.
In a submission Feb. 14 to the Mackenzie Joint Review Panel, the Northwest Territories government said the fund — promised by former Deputy Prime Minister Anne McLellan — is “not enough.”
On the day the panel started its hearings on the environmental, cultural and social impacts of the project, the territorial government is demanding action from the Conservative government of Prime Minister Stephen Harper on a decades-old bid by the Northwest Territories to collect its own resource royalties rather than have them transferred through the federal government as well as having greater control over resource development.
Further complicating matters, the residents of a lands corporation in Fort Good Hope say they have rejected an access and benefits agreement proposed by Imperial Oil, which is demanding to see the actual count.
Government ‘supportive’ of fund
On the positive side, Indian Affairs and Northern Development Minister Jim Prentice told the Canadian Press prior to the review panel hearings that the Harper government has been “supportive” of the C$500 million fund suggested by the previous administration.
He said that although the final details have to be negotiated and any overall arrangement needs cabinet approval, the issue is “important and is something we will turn our attention to fairly quickly.”
Prentice said he understood the importance of a fund and the role it is designed to play in building a social infrastructure in the Northwest Territories.
Unlike parallel National Energy Board hearings, which focus on economic and technical matters, the Joint Review Panel will capture the depth of feeling among northern residents about the pluses and minuses of the Mackenzie project, with almost 100 parties registered as intervenors, including aboriginal communities and tiny hamlets who are concerned about how their fragile ecosystems might be affected and what training, job and business opportunities will be available to them.
The Northwest Territories government has calculated the pipeline could generate 15,000 person-years of work in the territories over its lifetime as well as encouraging a wave of new energy exploration and supporting the long-held hope of many that an all-weather road can be built along the Mackenzie Valley.
Environmentalists and federal scientists are also poised to enter the debate, unhappy that Imperial and its partners — Shell Canada, ConocoPhillips Canada and ExxonMobil Canada — have failed to calculate the effects of climate change on the project. Some are expected to argue that the loss of permafrost and rising ocean levels could put the Mackenzie Delta gas fields and pipeline at risk.
The panel delivers its report and recommendations to the National Energy Board after its hearings conclude Nov. 16, but the final approval is in the hands of the federal regulator, which is expected to deliver a verdict by mid-2007.
NWT government looking at costs
In its submission to the board, the Northwest Territories government said the Mackenzie project is likely to account for half of the additional C$475 million in socio-economic costs — such as policing, health, welfare, transportation, education and employment services — that the territorial government will face over the next 10 years.
But the Northwest Territories is forecast to receive only C$10 million a year in personal tax revenues during construction of the C$7.5 billion project, while corporate and business taxes are an unknown.
Once the three Delta anchor fields and the pipeline start commercial operations, the Canadian government is expected to reap almost C$378 million a year in various revenues, of which only C$21.8 million will go to the Northwest Territories after taking into account a financing formula that reduces federal grants by clawing back 95 percent of gas-related revenues.
The NWT also warned that slow progress in talks with Ottawa could see the transfer of public lands and resources and the related resource revenues delayed to 2008.
The upshot for the NWT is “uncertainty regarding its fiscal ability to address the impacts of the project that fall within its responsibility,” the submission said.
Lands corporation won’t disclose voting results
Meanwhile, in Fort Good Hope the lands corporation is refusing to disclose the voting results that turned down an agreement intended to provide access to Ka’sho Got’ine land to build the pipeline.
Arthur Tobac, president of the Yamoga Lands Corp., said the atmosphere in his community is “really tense … there’s a lot of unrest here.”
He said some lands corporation members are confused about how the access and benefits pact will fit with the one-third ownership share of the pipeline that is being pursued for Native communities and are unsure how much they can expect from the federal government’s impact fund.
Former NWT premier Stephen Kakfwi, negotiator for the Fort of Good Hope, accused Imperial and Prentice’s department of dividing the people and undermining its leaders, but he and Tobac are hopeful that a turnaround is possible.
Imperial spokesman Pius Rolheiser told the Canadian Broadcasting Corp. that it is “critically important” for his company to know whether the community vote was overwhelmingly against the agreement, or if it slightly favored rejection. read more

New NSB mayor casts friendly eye on extended reach drilling for offshore
Kay Cashman
The new mayor of the North Slope Borough says if the oil industry can show him technology that ensures the protection of the Chukchi and Beaufort seas he would “welcome discussions” about exploring and producing oil outside the barrier islands. But so far Edward Itta says he has “seen nothing — no new technology — that would allay” his many concerns.

In a recent interview with Petroleum News Itta said he is “pleased” Shell has hired his predecessor, former borough Mayor George Ahmaogak Sr., as its Alaska community affairs manager.
“I think he will be a great asset for Shell,” Itta said. “He certainly has a lifetime of knowledge and experience regarding the offshore up here. I’ve worked with him in the past. I still intend to work with him in his capacity with Shell.”
Itta has plans to meet with Ahmaogak “on Feb. 21 or 22.”
“I am looking forward to meeting with him,” he said.
Ahmaogak’s primary responsibility with Shell is working with local communities, including those on the North Slope where Shell is currently focused on exploring its Beaufort Sea leases.
But it will take a lot to make Itta, who describes himself as “pro-development,” approve of oil and gas activities outside the barrier islands in the Beaufort or Chukchi seas of northern Alaska.
“Mayors before me were opposed to (oil and gas activities) in the offshore and mayors who come after me will be opposed, and I am opposed,” he said.
On Feb. 1, Itta told the U.S. Minerals Management Service “there’s a reason for this continuity” with borough mayors. “It tells you how deeply we feel about protecting the migratory paths of the bowhead.”
At the MMS public scoping meeting for the upcoming Chukchi Lease Sale 193 he said if exploration and development could be done without disrupting the whales, then the borough might support outer continental shelf activity “just like we support most onshore development. But industrial activity out in the ocean — the seismic work and the ship traffic and construction and operation of wells — it all makes a lot of noise, and that noise carries through the water. The bowheads hear it, and it changes their normal patterns of travel and feeding.”
The borough’s other major concern is “the risk of an oil spill or even the accidental loss of drilling muds, solvents or any of the many other toxic liquids associated with oil activity. What happens when that stuff gets loose in the ocean? How far does it spread? How much damage does it do to the bowhead’s feeding grounds? And how do these toxins affect the health of the bowhead and the Inupiat who eat them?” Itta asked.
“We know that oil spill cleanup uses primitive technologies with very questionable rates of success. There is no technology to clean up a spill in broken ice conditions, and even in the best conditions, nobody in industry can honestly brag about their ability to really protect the environment in the case of a sizeable spill,” he said.
“These are the things that keep our whalers awake at night. We don’t want to stand in the way of development if we don’t have to. But when some of the most important elements of our traditional culture are being endangered while there is plenty of oil to be found onshore, then we have to stand up and ask the hard questions.”
Extended reach drilling meets approval
Technology that generated a flicker of optimism in Itta for offshore drilling was industry’s ability to drill several miles offshore from an onshore location — i.e. extended reach drilling.
David Harding, head of government and external affairs for the borough, raised the subject of extended reach drilling during the interview with the mayor, referring to a Feb. 5 PN article that mentioned BP’s plan to drill and produce its Beaufort Sea Liberty prospect from a single onshore drill pad, drilling wells into the reservoir as far as eight miles from shore.
BP’s original plan was to develop Liberty from a gravel island, which is what it did with Northstar, the only field currently producing oil in Alaska’s OCS. But it scrapped that plan in favor on an onshore development as extended reach drilling technology improved.
Using “leading edge technology,” Harding said, “seems to be turning offshore drilling into onshore drilling.”
“Surely anything that can be originated from land is going to be less of a challenge for spill clean up versus in the water,” the mayor said, mirroring Harding’s enthusiasm for BP’s plans at Liberty.
Unfortunately, most of the Beaufort and Chukchi cannot be reached with ERD unless it originates on an island or other offshore structure (or vessel). All the wells in the Chukchi drilled to date, for example, were 70-plus miles from shore.
Short and long term priorities
When asked what his short and long term priorities were for oil and gas Itta said “always, first and foremost, protect our cultural onshore and offshore resources and heritage. … Eskimos were here before oil and plan on being here after oil.”
As part of that effort the mayor would like to see “industry apply traditional knowledge … relative to ice … when they plan offshore activities. We have thousands of years of experience here,” he said.
He’s also “a big advocate of alliances” with industry and government that create “baseline data prior to any major activity” in the offshore.
Itta would also like to see documentation of any “adverse impacts” that might result from oil and gas activity incorporated into this baseline data.
Borough’s impact on offshore activities
In his comments to MMS, Itta said “Since MMS is going to offer the Chukchi for sale again no matter what we say, I would ask that the agency put responsible conditions on any activity.” These include:
• Deferral areas to protect whaling activities;
• Conflict avoidance agreements to ensure proper relationships between developers and subsistence users;
• Proof of the industry’s ability to contain and clean up any spills;
• Risk analysis related to oil spills; and
• Risk analysis related to noise.”
When asked what the borough planned to do to deter or impact offshore activities, Itta said he would continue to participate in MMS’s planning process by offering testimony on behalf of the borough.
He also referred to conflict avoidance agreements (CAA) with the Alaska Eskimo Whaling Commission (AEWC) and a good neighbor policy as being effective vehicles for local impact on offshore activities.
Currently, oil and gas companies are encouraged to have both by federal and state agencies, although they cannot necessarily be required to have them, federal officials told PN on Feb. 16.
“We don’t have the authority to require either of those things, but we strongly encourage them,” MMS Acting Regional Director Rance Wall said. “What we do require is that they show good faith to work things out with the locals and one way of showing that is having a conflict avoidance agreement and good neighbor policy in place.”
The companies, he said, have been willing to work with the borough and locals.
“We haven’t had an activity occur without a conflict avoidance agreement in recent history” (last 10 or 15 years) offshore northern Alaska. Wall said.
“From the state side the agreements are not mandatory, but we do encourage them. The North Slope Borough I think does mandate them at times through their permitting and zoning authority, but not in all cases. The state could mandate a conflict avoidance agreement if the situation warrants but probably not a good neighbor agreement at least like the ones we’ve seen so far,” said the State of Alaska’s Division of Oil and Gas Director, Bill Van Dyke.
Gordon Brower with the North Slope Borough’s planning department says the borough does require a conflict avoidance agreement with the whaling commission “for mainly offshore activities … and we enforce that. During operations for development we do require a good neighbor policy. For exploration activities, only in cases where … conflict is likely to occur” does the borough require a good neighbor policy.
Brower said the IHA, Incident Harassment Authorization from National Marine Fisheries Service (NMFS), “requires operators and vessel activities to get into a CAA with AEWC … as a condition of approval.”
New comprehensive plan basically done
When asked if he and his staff would revisit the borough’s comprehensive plan and Municipal Code Title 19, Itta said no.
“It’s basically finished” and close to distribution, he said.
“We’re still working on portions of Title 19 that apply. … Karla Kolasch is working on that. … She’s one of my special assistants.”
Borough officials have said the new comprehensive plan will incorporate traditional values and help chart a course for the future, including providing direction for managing the borough’s resources in the face of declining revenues.
Title 19 contains the borough’s land management regulations and Barrow zoning ordinances, which were adopted in 1990 and are part of the comprehensive plan.
The title contains a set of land management principles and procedures for development in the borough. Its purpose is to achieve the goals and objectives and implement the policies of the plan, including the coastal management plan.
Key players in Itta administration
Kolasch’s duties under the new mayor include overseeing long range planning projects; coordinating and preparing the mayor’s comments on development related activities and documents; serving as the liaison to the borough’s law, wildlife management, and planning departments; representing the mayor at meetings, hearings and negotiations; working with villages on providing input into development activities; working with federal and state agencies and industry; serving on the North Slope Science Initiative Oversight Group staff committee and the Joint Borough Economic Development Committee; and assisting in coordinating negotiations/activities related to stranded gas.
Other key administrators in Itta’s administration include George Olemaun, chief administrative officer and the man who headed Itta’s transition team, and Johnny Aiken, director of Planning and Community Services. Among other things, Aiken’s department oversees oil and gas permitting and zoning changes. read more

18 Feb 2006 16:49:03 GMT
Source: Reuters
Feb 18 (Reuters) – Nigerian militants launched a string of attacks on the world's eighth largest oil exporter on Saturday, abducting nine foreign workers, bombing a major oil export platform and sabotaging two pipelines. Royal Dutch Shell suspended exports from the 380,000 barrel-a-day Forcados tanker terminal, a senior industry source said. Nigeria supplies about 2.4 million barrels daily.
The following foreign companies operate in Nigeria:
* Royal Dutch Shell is the largest, producing over 40 percent of Nigeria's oil. It employs 5,000 people.
* Exxon Mobil is Nigeria's second largest oil producer, with about 720,000 barrels of oil equivalent per day (boepd) of crude, condensate and natural gas liquids. It has 1,900 employees
* France's Total produced around 270,000 boepd in 2004 in Nigeria and has about 1,200 employees.
* Italy's ENI produced around 161,000 boepd in 2004.
* U.S. major Chevron averaged production of 117,000 bpd of oil in 2004. It employs over 2,000 people. read more

Feb. 18, 2006, 10:48AM
By OSMOND CHIDI Associated Press Writer
© 2006 The Associated Press
WARRI, Nigeria — Militants launched a wave of attacks across Nigeria's oil-rich southern delta Saturday, blowing up oil installations and seizing nine foreign oil workers, including three Americans, officials said. A Royal Dutch Shell official said the company was forced to shut down a facility that moves 400,000 barrels of oil a day _ 16 percent of the West Africa nation's output.
About 40 militants overpowered military guards and seized the foreigners before dawn from a barge belonging to Willbros, a Houston-based oil services firm that was laying pipeline for Royal Dutch Shell, a Willbros official said. He spoke on condition of anonymity because he was not authorized to speak to the media.
The militants provided the names of the kidnapped workers _ three Americans, two Egyptians, two Thais, one Briton and one Filipino _ in an e-mail Saturday to The Associated Press.
State Department spokesman Noel Clay said he had no information about the workers, including their identities. The British Foreign Office identified the kidnapped Briton as John Hudspith, of southern England. Officials of the other hostages' home countries either could not immediately be reached or did not provide confirmation.
Shell official Donald Boham said militants attacked the Forcados oil loading platform in the western delta, which moves out 400,000 barrels of oil daily. Nigeria normally produces 2.5 million barrels of oil a day.
The Movement for the Emancipation of the Niger Delta said in the e-mail that the attacks were a response to military helicopter assaults this week on ethnic minority communities in the region. The militants threatened more attacks would follow on “a grander scale.”
Oil prices Friday jumped more than $1 and settled near $60 a barrel on supply concerns sparked by the militant group's threat to wage war on foreign oil interests.
In apparently coordinated violence, militants attacked a tanker berth at Shell's Forcados export terminal and blew up a major Shell crude oil pipeline near a facility by the western delta's Chanomi Creek, Boham said. The militants said that they also damaged equipment linking the pipeline to several smaller lines.
Militants also claimed they had destroyed a state-run pipeline feeding natural gas from the delta's Escravos plant to the country's commercial capital, Lagos. That attack could not be independently confirmed.
The military said its helicopters on Wednesday and Friday targeted barges used by criminal gangs to steal crude oil from pipelines for sale, a thriving illegal trade that sometimes diverts up to 10 percent of the region's daily exports.
Nigeria produces about 2.5 million barrels a day.
The militants say they are fighting for more autonomy, a greater share of oil wealth and compensation for environmental degradation for the impoverished region's estimated 8 million Ijaw people. The area's largest tribe accuses the government and oil companies of cheating it of wealth produced on its land.
The group said the helicopter attacks this week were on minority communities and that militants would now target all helicopters in the delta, including civilian aircraft. The group has accused foreign oil companies of providing their helicopters and air strips for military operations.
The group has claimed responsibility for attacking two pipelines and abducting four foreign oil workers, including an American, who were released last month after 19 days in captivity.
The militants Saturday reiterated warnings for foreign oil workers to leave the Niger Delta.
“Expatriates must realize that they have been caught up in a war, and the Nigerian government can do nothing to guarantee the security of anyone,” the group said. “They are warned again to leave while the doors are still open.”
On Friday, Shell shut down an oil facility pumping 37,800 barrels of crude daily in Nigeria's southern oil-rich delta, following an unexplained blaze at a nearby oil well.
Associated Press writer Dulue Mbachu in Lagos, Nigeria, contributed to this report. read more

18/02/2006 – 09:47:05

Protests against Shell Ireland are due to take place at locations across the country today.
Members of the 'Shell to Sea' group will be mounting pickets in Cork, Ennis and Belfast.
Shell's European headquarters in the Netherlands is also expected to face pickets.
The protestors want crude oil to be processed at an off-shore facility, instead of current plans which involve bringing it ashore with a pipeline for processing in Co Mayo.
Spokesperson Bob Kavanagh said that today's action is aimed at putting the issue back on the political agenda. read more

Feb. 18 (Bloomberg) — Nigerian militants who held four oil workers hostage last month said they attacked an oil pipeline this morning in the Niger River delta and vowed more strikes in retaliation for raids by Nigerian military forces.
The militants, in an e-mailed statement today, said their forces destroyed a pipeline at Escravos at 3:25 a.m. local time today. The pipeline, run by the state-owned Pipelines and Products Marketing Co., feeds petroleum products to the northern city of Kaduna, the statement said.
The militant Movement for the Emancipation of the Niger Delta, or MEND, said it was launching a series of “impromptu'' strikes against oil installations in response to raids by Nigerian military helicopters this week on the Gbaramatu area of Delta state. It said its forces would target all helicopters in the Niger delta and warned foreigners to leave the region.
The group has vowed to cut Nigeria's oil export capacity by 30 percent in February. Royal Dutch Shell Plc's venture has halted 106,000 barrels a day, or about 5 percent of the country's total output, since an attack by MEND on its Trans-Ramos pipeline on Jan. 11. The same day the militants abducted four foreign workers and released them unharmed 19 days later.
“All pipelines, flow stations and crude loading platforms will be targeted for destruction within the next few hours by our units,'' Jomo Gbomo, a self-described MEND member, said in the statement. “This impromptu action is a direct consequence of the helicopter attacks on several communities in the region that has led to death and injury of numerous civilians.''
Expatriate Warning
“Expatriates must realise that they have been caught up in a war and the Nigerian government can do nothing to guarantee the security of anyone,'' today's statement said. “They are warned again to leave while the doors are still open.''
The militants say their aim is to win control of Nigeria's oil riches for the people of the Niger delta. Nigeria was the sixth-biggest producer in the Organization of Petroleum Exporting Nations last month, according to Bloomberg data.
Communities in the Niger delta, a maze of creeks and rivers feeding into one of the world's biggest remaining areas of mangroves, are among Nigeria's poorest, a Shell-funded report on the area said in 2004. It cited studies showing per-capita income in the region to be below the national average of $260. Unemployment surpasses 90 percent in some areas.
MEND is also demanding that the Nigerian government release Diepreye Alamieyeseigha, the former governor of Bayelsa state, who was impeached and arrested on money laundering charges, and Mujahid Dokubo Asari, a militia leader who is in jail on treason charges.
Helicopter Attacks
Military helicopters departing from the Osubi airstrip operated by a venture of Royal Dutch Shell Plc attacked suspected oil smugglers in the Gbaramatu area near Warri on Feb. 15, killing as many as 20 people, Lagos-based ThisDay newspaper reported yesterday.
Shell spokeswoman Caroline Wittgen would neither confirm nor deny whether the Osubi airstrip, near the city of Warri, was used by the helicopters, in an e-mailed statement on Feb. 16. Shell wouldn't comment on military matters, she said.
“Armed intervention is always a decision for the proper authorities and not for private companies such as Shell,'' Wittgen, said in the e-mailed statement.
When a helicopter resumed attacking the Gbaramatu area yesterday, militants fired on it, MEND said. The attack was confirmed by Nigerian military spokesman Major Said Hammed, Agence France-Presse reported yesterday.
MEND today warned foreign oil workers to leave the region immediately.
To contact the reporter on this story:
Karl Maier in Khartoum at [email protected]
Last Updated: February 18, 2006 02:16 EST read more

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By THE ASSOCIATED PRESS
WARRI, Nigeria (AP) — A Nigerian militant leader reportedly warned foreign oil workers to leave the country's troubled delta by midnight Friday as an army helicopter gunship exchanged fire with militants in the latest violence to strike the region. The British Broadcasting Corp. reported militant commander Godswill Tamuno had announced his Movement for the Emancipation of the Niger Delta was declaring ''total war'' on foreign oil interests and warned them to leave the oil-rich southern delta by midnight.
The same group has issued similar threats for more than a month and claimed responsibility for attacking two pipelines. It abducted four foreign oil workers and later released them.
Nigeria is Africa's leading oil producer and the fifth-biggest source of U.S. oil imports.
News of the tensions helped propel oil prices higher Friday on the New York Mercantile Exchange where crude oil futures ended $1.42 firmer at $59.88 a barrel.
Meanwhile, an army helicopter gunship patrolling the delta Friday exchanged fire with armed militants, the military said. No casualties were reported.
Maj. Said Hammed, a spokesman for a joint task force charged with maintaining security in the delta, said the helicopter returned fire after it was shot at by armed men protecting a barge stealing crude oil from a pipeline. He gave no other details.
In an e-mailed statement, the Movement for the Emancipation of the Niger Delta said the helicopter had carried out attacks on ethnic Ijaw communities, and militants responded with ''rockets and machine gunfire.''
''We cannot at this point be certain if it was hit,'' the militant statement said.
On Wednesday, the army had said it attacked eight barges being used by smugglers to steal crude oil from pipelines. Militants had portrayed the earlier incident as an attack on Ijaw communities by military helicopters using an airstrip in the oil port city of Warri operated by Royal Dutch Shell PLC. They threatened to target such aircraft.
Officials of Shell, the biggest foreign oil company in Nigeria accounting for a little under half of the country's daily exports of 2.5 million barrels, were not immediately available for comment.
The militant group says it is fighting for local control of oil wealth in the impoverished region and claims responsibility for a recent rash of attacks on oil operations and the taking of foreign hostages.
Nigerian security agencies estimate that as much as 10 percent of the country's oil is sometimes stolen by criminal gangs for sale to vessels offshore, providing a source of funds for arms used by gangs responsible for worsening violence in the oil region. read more

By REUTERS
BEIJING (Reuters) – China and Iran could sign a multi-billion dollar agreement on developing a major oilfield in Iran as early as next month, the semi-official Caijing Magazine said on its Web site.
The magazine cited Mu Shuling, an executive at Sinopec Corp. (0386.HK), as saying a delegation of the National Development and Reform Commission, China's economic-planning body, could go to Iran as early as March, where the two could sign a deal on jointly developing the Yadavaran field in southern Iran.
The deal, which the magazine said could be worth as much as $100 billion in gas and oil sales and field development costs, follows a memorandum of understanding signed in October 2004. Negotiations over Iranian oil projects often drag on for years.
A spokesman at the Iranian embassy said he could not confirm the report but news of the potential deal comes as Iran is engaged in a stand-off with the West over its nuclear program.
The International Atomic Energy Agency (IAEA) voted earlier this month to report Iran's case to the U.N. Security Council, which could impose sanctions.
Under the terms of the agreement, China, which has repeatedly urged a diplomatic solution to the nuclear crisis, would agree to buy 10 million tonnes of liquefied natural gas (LNG) from Iran each year over the next 25 years in return for the right to develop the field, the magazine said.
Yadavaran has estimated reserves of about 3 billion barrels and is expected to produce about 300,000 barrels per day (bpd), about the same volume of crude that China imports from Iran.
The magazine said that under the current arrangement, Sinopec would take a 51 percent stake in the project, and India's Oil and Natural Gas Corp. (ONGC) (ONGC.BO) would own 29 percent, slightly bigger shares than had been initially agreed. The remaining 20 percent could go to the National Iranian Oil Company (NIOC), the magazine said. It said Royal Dutch Shell (RDSa.L) had also expressed interest in the remaining fifth.
The report cited Mu as saying China's initial target of starting to buy natural gas from Iran in 2009 could be over-optimistic.
“The earliest date at which it could be started is 2010. The term of that contract has already been extended to 2034,'' Mu said.
China has repeatedly urged negotiation and restraint to resolve Iran's nuclear stand-off.
“It's extremely important for the international community to uphold the consensus on resolving the Iran nuclear issue through diplomatic means and call on the related parties to maintain calm, restraint and patience,'' Chinese Foreign Ministry spokesman Qin Gang told a news briefing on Thursday.
On Wednesday, the United States threatened sanctions against Tehran for resuming uranium enrichment for nuclear fuel without resolving suspicions it secretly wants to build atomic bombs. read more