June 1, 1999
The Gulf of Mexico has taken another step towards joining the rest of the world in the use of floating production, storage, and offloading (FPSO) vessels. The US Department of the Interior's Minerals Management Service (MMS) has taken another step by issuing an environmental impact statement (EIS) on the possible use of FPSO's in the Gulf of Mexico.

The Gulf of Mexico has taken another step towards joining the rest of the world in the use of floating production, storage, and offloading (FPSO) vessels. The US Department of the Interior's Minerals Management Service (MMS) has taken another step by issuing an environmental impact statement (EIS) on the possible use of FPSO's in the Gulf of Mexico.

The EIS is expected to take about 18 months and will cost about $1 million funded entirely by the industry group - Deepstar. According to the MMS, the EIS will assess the environmental effects of the use of FPSO's by examining a hypothetical one million bbl storage FPSO that would receive hydrocarbon production and smaller shuttle tankers would offload the production from the vessel for transport to port. The EIS will also examine a high-case scenario with 2.3 million bbl storage.

On an industry panel at the Offshore Technology Conference in May, Chris Oynes, Regional Director for the Gulf of Mexico OCS Region of the MMS, said, "The earliest anyone will be able to begin production from an FPSO will be in 2001. Once the EIS is complete, a specific location environmental review will also be performed before approval is granted. We have been entertaining the use of mild storage on a drillship, but there is a production limit."

Another panel member, John Westwood, Principal of Douglas-Westwood of the UK, offered a European perspective on the issue of the environmental impact of the vessels. Westwood pointed out that FPSO's are not an environmental hazard. The problem lies in transportation of the oil. He said, "Oil gets into the water in one of two ways: seepage and transportation. Oil production is not the polluter; transportation is the case."

The EIS will be released for public comment in March or April of next and public hearings will be held in April or May. A final EIS will then be compiled based on all comments received in September or October. While the EIS does not assure that FPSO's will be given the green light for the Gulf of Mexico, it does indicate a step in the right direction.

Peru: latest country with new offers
What is the best way out of a downturn? Offer up exploration acreage for attractive terms. This seems to be the trend for the past months. According to Gaffney, Cline & Associates, at least 20 acreage rounds have already been announced for this year. Now, we have the latest addition: Peru.

Peru has put 15 of its most attractive blocks on offer for bidding covering an area of about 1.2 million acres each. Of these blocks, 14 are located offshore in several of the country's basins that have abundant quantities of oil and gas seeps and several indicated bright and flat spots. More than 30,000 km of seismic has been shot over the available areas, which is now available from the state oil company, Perupetro.

The timetable for the bidding is as follows:

  • Sale of rules: August 16, 1999 to December 10, 1999
  • Review of technical data: September 01, 1999 to December 17, 1999
  • Questions concerning the rules: December 13, 1999 to December 17, 1999
  • Answers to questions: December 29, 1999
  • Deadline for envelopes 1 and 2 - opening of envelope 1: January 31, 2000
  • Envelope 1 evaluation: February 14, 2000
  • Opening of envelope 2: February 18, 2000
  • Winning bid to be announced: March 03, 2000.

Libya opens its doors
Following the recent trend of Middle Eastern countries (Iran, for example) opening up their oil and gas industry to foreign investment, Libya has announced plans for a new initiative to attract investment to its oil sector. The National Oil Corporation (NOC) of Libya has said that it plans to re-open some blocks in the Sirte Basin as well as some other areas where current agreements are coming to an end. This move follows the United Nations suspension of the seven-year sanctions that were in place against Libya.

Forty new blocks are planned for allowance of foreign investment by international oil firms. While the vast majority of the acreage, about 73,000 sq km, will be onshore, an area of about 18,000 sq km will be open offshore.

The Libyan government is currently in the final draft of a new petroleum law that would replace the 40-year-old existing legislation. Pending approval by the General People's Council, a new bidding round will open early next year.

In the meantime, the NOC has said that it plans to move ahead with opening the initial acreage, which will include 16 blocks with an onshore acreage of 26,000 sq km and an offshore area of 4,000 sq km, and negotiating exploration and production sharing agreements. The remaining 24 blocks covering some 47,000 sq km onshore area and 14,000 sq km offshore area would open later. NOC is now in the process of selecting foreign partners by asking companies to submit an expression of interest in participating in a bidding round.

The Libyan government hopes that the lifting of the sanctions will encourage investment and has said that there would be no bars on foreign investment in any sector of the country's energy industry.

Brazil opens this month
June 15-16 could be a monumentous occasion for the international oil and gas industry, or it could just be another flash in the pan. On those dates, the ANP, the regulatory arm of the Brazilian oil and gas industry, will hold the first open round of bids for the country's oil and gas concessions.

According to the ANP at a recent press conference in Houston, 41 companies have paid the registration fee for the round and 28 companies have purchased the entire information package on the 27 blocks that are on offer. The licenses will be for a term of four to nine years and can be signed up to September 30.

ANP said that the country currently produces about 1.2 million b/d of oil, about 600,000 b/d short of current domestic consumption (1.8 million b/d). The agency expects that with the opening of the industry, domestic production will rise to 2 million b/d of oil in the next five or more years. ANP also quieted many concerns about possible favoritism given to state-owned Petrobras. The agency said that Petrobras will follow the same rules as everyone else and will be given the same license term of four to nine years. Petrobras currently holds about seven to seven and one-half of Brazil's basins.

Many have speculated that this licensing round will be one of the biggest in the industry's history, despite the economic turmoil that has plagued the country in recent months. However, we will have to wait and see who comes out to play at the Sheraton Hotel in Rio de Janeiro on June 15-16.