Operators and drillers can expect closer scrutiny and tighter water regs and thus higher costs in the eight–state Ohio River Valley region.

A recent change to Pennsylvania’s water discharge regulations has set the stage for increased disposal costs for drillers in that state and in the wider Ohio River Valley. Water quality in that watershed is governed by ORSANCO, an interstate commission representing Indiana, Illinois, Kentucky, New York, Pennsylvania, Ohio, Virginia, West Virginia, and the federal government. Pennsylvania’s current total dissolved solids (TDS) standard is 2,000 milligrams/liter for industrial wastewater. However, the Pennsylvania Department of Environmental Protection has adopted a new rule that slashes the TDS standard to 500 mg/l for drilling wastewater and grandfathers in existing wastewater sources under the old standard. The state legislature is reviewing the new rule pending final approval.

West Virginia has proposed a 500 mg/l rule for all industrial water discharges, and ORSANCO is considering the same for the entire region.  Now drillers face added costs to control discharges, mainly chlorides and sulfates, from pit water, frac water, and drilling fluids.

FMC Technologies, Inc. has signed a four-year subsea manifold frame agreement with Petrobras, The award is expected to result in approximately $300 million in revenue to FMC Technologies if all of the subsea equipment included in the agreement is ordered.

J. Ray McDermott announced it was recently awarded a contract to upgrade a single point mooring system for Reliance Industries, Ltd. off the coast of Hazira, India.

Noble Drilling has entered into an agreement to acquire Frontier Drilling in an all cash transaction of $2.16 billion.  The sale, which is expected to close by the end of July, will add a total of six floating drilling units to Noble’s fleet.  Frontier’s fleet consists of three DP drillships, including two Bully-class joint venture-owned rigs under construction, two conventionally moored semis and one DP FPSO vessel.  The joint venture-owned Bully class drillships, currently under construction in Singapore, are Arctic-capable and rated to drill in up to 12,000 fsw.  The rigs, which are owned 50/50 by Frontier and Royal Dutch Shell, have firm five and ten year contracts respectively with Shell and both are slated to begin operations in 2011.  In the U.S. Gulf, Frontier currently has the semi Frontier Driller under contract with Shell to mid-May 2012 at a day rate of $383,000.  The purchase will add some 23 rig years of contracts generating approximately $3.2 billion in gross contract backlog ($2.0 billion net to Noble).  As part of the deal, Noble will assume Frontier’s remaining construction obligation, including around $311 million of Frontier’s construction costs for the Bully I and Bully II drillships.  In addition to the Frontier ...

ExxonMobil Corporation has completed its merger agreement with XTO Energy, Inc. The new organization will continue to be known as XTO Energy, Inc. and maintain its headquarters in Fort Worth, Texas.  Jack Williams, a former Vice President of ExxonMobil Development Co., has been elected President of XTO and Keith Hutton, formerly XTO’s Chief Executive Officer, is Executive Vice President of the new organization.

Gulf Coast Western confirmed an oil and gas discovery in their Opelousas field in St. Landry Parish, LA.   Flow tests resulted in a production rate of approximately 672 bopd and 3.2 mcf/d.

BP reports that two systems continue to collect oil and gas flowing from the Deepwater Horizon’s failed blow-out preventer (BOP) and transport them to vessels on the surface. Meanwhile, rough seas expected from Tropical Storm Alex could set back BP's efforts to increase subsea oil collection capacity at the gushing Macondo well by about a week, but should not interrupt current collection methods or drilling operations for two relief wells.

ExxonMobil Corporation has completed its merger agreement with XTO Energy, Inc. The new organization will continue to be known as XTO Energy, Inc. and maintain its headquarters in Fort Worth, Texas.  Jack Williams, a former Vice President of ExxonMobil Development Co., has been elected President of XTO and Keith Hutton, formerly XTO’s Chief Executive Officer, is Executive Vice President of the new organization.

Gulf Coast Western confirmed an oil and gas discovery in their Opelousas field in St. Landry Parish, LA.   Flow tests resulted in a production rate of approximately 672 bopd and 3.2 mcf/d.

BP reports that two systems continue to collect oil and gas flowing from the Deepwater Horizon’s failed blow-out preventer (BOP) and transport them to vessels on the surface. Meanwhile, rough seas expected from Tropical Storm Alex could set back BP's efforts to increase subsea oil collection capacity at the gushing Macondo well by about a week, but should not interrupt current collection methods or drilling operations for two relief wells.

New Orleans U.S. District Judge Martin Feldman refused to put on hold his ruling which blocked the federal government from enforcing its recently imposed six-month deepwater drilling moratorium.  It is expected that the Obama administration will take its case to the U.S. Court of Appeals for the Fifth Circuit in New Orleans.  In the meantime, U.S. Interior Secretary Ken Salazar announced he would take a look at issuing a new, scaled-back moratorium “in the weeks and months ahead”.  Despite the good news for the industry, it is not expected that any operators will resume drilling operations, but will instead wait until all the court battles are over.

The National Oceanic and Atmospheric Administration has suspended daily production of offshore BP’s oil spill trajectory maps because a change in ocean currents has minimized impact risks to the Florida Keys and most of the Florida peninsula.