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Major gas discovery in Marri-Bugti area

The Dawn....................................................... 26-11-2011


      
ISLAMABAD: A bit of good news for the energy-starved nation — the state-run Oil and Gas Development Company Limited (OGDCL) is reported to have made a major gas discovery in Zin block in Balochistan’s restive Marri-Bugti area that has the potential to change the dimension of the country’s power sector. “The first exploration well has been a great success and we have found thick zones of hydrocarbon. It seems to be a big discovery in many years,” a jubilant authoritative source told Dawn on Friday after receiving the latest reports of the discovery.

The official said the country’s largest producer had achieved the target drilling of about 2,300 metres early this week using indigenous expertise, found hydrocarbon in Zone-1, plugged it and moved into Zone-2 where it found more resources.
He said technical results were being evaluated by experts and a formal official announcement about the discovery was expected to be made on Monday. He said it would require a couple of appraisal wells before reaching a conclusion about the size of the deposit.
In reply to a question about the possibility of low heating value of the reserve in view of adjacent low-BTU (British Thermal Unit) deposit of Uch gas field, the official said it was premature to know about the heating value unless evaluation process was complete in a day or two.
But even if it was low-BTU gas it would change the country’s energy dimension because huge power plants could be installed at the site for generating low-cost electricity, he added.
The official, however, said it would take about two years before Zin resources were developed for commercial use in view of the required appraisal wells and their subsequent development.
He said the OGDCL had estimates of 8-10 trillion cubic feet of gas reserves before it moved to Zin area in September last year. He expressed the hope that the reserve would be even bigger in view of the initial results and the fact that the Zin block was hemmed in by major gas
discoveries.
Before starting the drilling, the government had to create a new wing of the Frontier Constabulary of about 500-600 personnel to provide security to the OGDCL operations because the untapped area was surrounded by major gas producing fields — Pirkoh, Loti, Sui and Uch.
The first commercial gas flows from the field is expected in early 2013.
The OGDCL had to shelve a plan to transfer ownership rights of the Zin block to a private company through a controversial deal after Dawn raised questions over the way it was being ‘formed out’ in unusual circumstances on the grounds of adverse security situation.
The government had at that time criticised the OGDCL for lack of progress in the area and threatened to terminate its licence.

Saudi Aramco sees shale oil threat

News wires ..................... 21 November 2011 16:21 GMT

The speech by Saudi Aramco's chief executive was the first from the globe's top oil exporter to acknowledge that unconventional oil was set to shift the energy balance of power and cut US dependence on Middle East crude, Reuters reported.

"The abundance of resources and the more 'balanced' geographical distribution of unconventionals have reduced the much-hyped concerns over 'energy security' which once served as the undercurrent driving energy policies and dominated the global energy debate," the news wire quoted Khalid al-Falih as saying.

For years oil markets, nervously watching pressure on limited spare production capacity, have obsessed over Saudi Arabia's supply cushion as the last defence against prices spiraling higher.

"A few years ago, much of the global energy debate was based on the premise of acute resource scarcity and its economic and political ramifications," Falih said.

"Rather than supply scarcity, oil supplies remain at comfortable levels, even given rising demand from fast-growing nations like China and India," he added.

Saudi Arabian Oil Minister Ali al-Naimi said on Sunday that he saw oil markets as balanced ahead of OPEC's 14 December meeting.

Unconventional oil developments are dominated by energy intensive oil sands in the United States and Canada with 2011 global production amounting to 2.3 million barrels per day or equal to production of non-OPEC member Norway.

Falih said in early October he saw no reason for Aramco to significantly increase its oil production capacity in the mid-term because of rising conventional output from countries like Brazil and Iraq.

Weak US economic data, mounting euro-zone sovereign debt and concern about the exposure of major banks to it raised "the spectre of a double-dip global recession," he told the conference in the Saudi capital on Monday.

"All that makes spending on aggressive energy programmes unlikely," he said, adding that abundant affordable hydrocarbon supplies challenged investment in renewable technologies.

Tight oil is a form of light crude oil held in shale deep below the earth's surface that is extracted with hydraulic fracturing, or "fracking", using deep horizontal wells.

OPEC expects global output of non-conventional oil to rise 3.4 million bpd by 2015, still dominated by oil sands, to 5.8 million bpd by 2025 and to 8.4 million bpd by 2035 when tight oil would be playing a much bigger role.

In 2035, the group of conventional oil exporters expects the United States and Canada to still be dominating unconventional oil production with 6.6 million bpd, but China could be producing 1.1 million bpd of its own unconventional oil by then.

OPEC estimated in a recent report that global reserves of tight oil could be as high as 300 billion barrels, well above current estimates of Saudi Arabia's conventional reserves of around 265 billion barrels.

A technology-led surge in North American shale gas production has created a global glut over the last few years which has reduced US reliance on Middle Eastern gas imports, forced exporters to look for new buyers and cut their revenues.

With competition for crude sales rising and its own gas needs intensifying, Aramco is now focusing on tapping enough of its own gas reserves to meet the kingdom's growing appetite for power generation and industry.

"We are drilling this year a number of (unconventional gas) wells, just to test the geology... and do some preliminary economics. We will continue that in 2012," Falih told the conference.

"In the long term we will be doing some significant pilots as we feel the economics are favourable. Short to medium term is relying on growing our conventional gas reserves," he said.

He said it was still too early to estimate Saudi Arabia's own unconventional hydrocarbon resources.

"Abundance isn't limited to gas reserves, but is also the new headline when it comes to oil," Falih said.

U.S. Imposes New Sanctions on Iran, but Strongest Weapon Remains Unused

                   
                  November 21, 2011

The Obama administration on Monday unveiled a sweeping new set of sanctions against Iran, but the White House held off on directly targeting Iran’s central bank, a hard-hitting move that would damage Iran’s economy but risk sending global oil prices skyrocketing and sparking potentially violent Iranian retaliation.
The administration has been steadily escalating its diplomatic and economic pressure on Iran in response to intelligence showing that Tehran has come closer to successfully building a nuclear weapon than ever before. The sanctions unveiled by Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner are designed to further tighten the screws on Tehran by making it virtually impossible for foreign companies to invest in Iran’s oil sector or complete transactions with any components of Iran’s financial system.
Britain and Canada announced similar measures, with England’s finance minister announcing on Monday that all British financial institutions were now barred from doing business with Iranian banks. The move marked the first time in history that the British government cut off an entire country’s banking sector from its own financial system.
The U.S. followed suit – with one key difference -- a few hours later. Geithner, speaking to reporters at the State Department on Monday evening, said the U.S. would designate Iran’s entire financial sector – including its central bank -- as a “primary money laundering concern” under the Patriot Act. The move stops well short of sanctioning the bank, but it could set the stage for doing so in the future.
“No option is off the table, including the possibility of imposing additional sanctions on the central bank of Iran,” Geithner said.
Despite the tough talk, it’s not clear when - or if – the administration will actually take punitive measures against Iran’s central bank. Sanctioning the bank could spark chaos in the world oil market and push prices higher, threatening the fragile economic recoveries underway in the U.S. and many European countries. But it is widely considered to be the most powerful weapon in the U.S. economic arsenal.
Proponents, including an array of leading lawmakers from both parties, believe that targeting Iran’s Bank Markazi would prevent the country from processing payments for the roughly $90 billion worth of oil and natural gas that it sells each year. Petroleum is one of the country’s most lucrative industries, so such measures would make it far more difficult for Tehran to fund its government, military, or security services.
“There is no question that it will have a real impact on Iran’s ability to finance its illicit activities or even fund the normal operations of its government,” said Matthew Levitt, a counterterrorism expert at the Washington Institute for Near East Policy. “If you did business with the Iranian central bank, you’d lose your ability to do any business whatsoever with American banks. It would have a tremendous impact on oil sales.”
That’s precisely what growing numbers of lawmakers from both parties are hoping for. In a joint letter last week, House Speaker John Boehner, R-Ohio, and House Minority Leader Nancy Pelosi, D-Calif., called on the White House to determine whether the bank was helping the Iranian government finance its nuclear effort or fund “terrorist activities” outside its borders. If so, the lawmakers said the U.S. should immediately sanction the bank.
“Sanctioning the central bank of Iran would impose powerful financial pressure on Iran to curb its dangerous and illegal activities,” the lawmakers wrote.  “We also urge you to make the central bank of Iran’s involvement in proliferation and terrorist activities the target of coordinated multilateral sanctions.”
Sen. Mark Kirk, R-Ill., has drafted an amendment to the massive National Defense Authorization Bill that would impose such sanctions on Iran’s central bank, and the provision is drawing increasing bipartisan support. He and other proponents believe targeting the bank was one of the last options left to the U.S. short of undertaking military strikes against the country’s nuclear facilities.
The administration has said all options are on the table when it comes to preventing Iran from obtaining a nuclear weapon, and has at times signaled a willingness to act against the central bank. In October, David Cohen, the Treasury Department’s undersecretary for terrorism and financial intelligence, told the Senate Banking Committee that his department was “actively” looking at whether to sanction the bank.
More than a month later, however, there are few signs that the administration plans to target the bank anytime soon. The inaction stems from fears about the economic and security implications of sanctioning the bank.
Iran has some of the world’s largest proven reserves of oil and natural gas, and Washington and its allies fear that measures effectively cutting Iran off from the global oil market would send prices spiking higher, further straining weak Western economies.
Other U.S. officials and Middle East experts also fear that Tehran would view the measures as an act of war and retaliate by directly or indirectly striking Israel or other U.S. allies throughout the Middle East.
“If we do in fact cripple the entire Iranian economy, how do they respond to what they’d potentially see as an act of economic war?” asked Suzanne Maloney, an expert on the Iranian economy at the Brookings Institution. “The conundrum for the international community is that there is broad interest in ensuring that the Islamic Republic of Iran is treated as a pariah but real concern about doing that to a country with the second-biggest reserves of oil and natural gas in the world.”
Still, Washington is running out of time to decide. The International Atomic Energy Agency has reported that Iran is making steady progress toward mastering the technological challenges of building a nuclear bomb, and Western intelligence agencies are tracking increasing amounts of activity at a suspected nuclear site southwest of Tehran. Iran has found ways of limiting the impact of previous Western sanctions and there’s no guarantee the new measures will succeed in persuading Iran to drop its nuclear ambitions when so many earlier attempts have failed.