GENERAL INTEREST — Quick Takes
Energy Transfer Partners to acquire Sunoco
Energy Transfer Partners LP has signed a definitive merger agreement to acquire Sunoco Inc. in a unit and cash transaction valued at $5.3 billion.
Sunoco has been withdrawing from the refining business and now operates mainly as a logistics and retail business, owning the general partner interest of Sunoco Logistics Partners LP. It has said it will close its 330,000-b/d Philadelphia refinery in July if it doesn't find a buyer but recently disclosed discussions about operating the facility under a joint venture with Carlyle Group (OGJ Online, Apr. 23, 2012).
Sunoco Logistics owns 2,500 miles of products pipelines in the Northeast, Midwest, and Southwest US and equity interests in four products pipelines. It also owns 5,400 miles of crude oil pipelines, mainly in Texas and Oklahoma. Its terminal facilities include 42 million bbl of product and crude oil storage capacity.
Sunoco Logistics terminals include the 22-million-bbl Nederland Terminal on the Texas Gulf Coast and the 5-million-bbl Eagle Point Terminal on the Delaware River in New Jersey.
Sunoco Inc. owns about 4,900 retail operations in 23 states.
ETP owns 23,500 miles of natural gas gathering and transportation pipelines in 10 states, as well as treating and processing properties and three storage facilities. It owns a 70% interest in Lone Star NGL, which operates storage, fractionation, and transportation assets in Texas, Louisiana, and Mississippi.
Centrica closes Norwegian shelf acquisitions
Centrica closed separate deals from Statoil and ConocoPhillips of major Norwegian Continental Shelf oil and gas interests.
It paid Statoil $1.525 billion and might make a further payment of as much as $100 million depending on future production of Kvitebjorn natural gas field.
The deal cuts Statoil's interests in Kvitebjorn to 39.55% from 58.55%, in Heimdal gas field to 29.553% from 39.553%, and in Valemon gas field to 53.775% from 66.775%. Statoil remains operator of the fields.
In other areas, Centrica acquires Statoil's only interests. They are: Skirne-Byggve 10%, Fulla 50%, Frigg-Gamma-Delta 40%, Vale 28.853%, and Rind 37.87%.
Centrica said the Statoil acquisition involves proved plus probable reserves of 117 million boe and production of 34,000 boe/d and includes "attractive development potential."
It acquired ConocoPhillips's nonoperated interests in Statfjord oil and gas field and satellites for $223 million, including $103 million in historic tax allowances (OGJ Online, Jan. 31, 2012). Centrica's Statford interest increases to 34.3%. The company estimates proved and probable reserves associated with the deal at 36 million boe.
Kinder Morgan to acquire midstream assets
Kinder Morgan Energy Partners LP signed a definitive agreement to acquire Kohlberg Kravis Roberts & Co. LP's 50% interest in a venture that owns midstream assets in Utah and Texas. The consideration is $300 million in KMEP common units.
The acquisition includes the Altamont gas gathering, processing, and treating assets in Utah's Unita basin and the Camino Real Gathering System in the Eagle Ford shale play of Texas.
El Paso Corp., which Kinder Morgan Inc. is acquiring in a $38 billion deal, owns the other 50% of the joint venture (OGJ Online, Oct. 17, 2011).
The Altamont system includes 1,100 miles of gas gathering pipeline with more than 450 well connections, a gas processing plant with design capacity of 60 MMcfd, and a 5,600-b/d fractionator. The Camino Real Gathering System has capacities of 150 MMcfd of gas and 110,000 b/d of oil.
KKR bought its interest in the assets from El Paso Midstream Group Inc. in 2010 (OGJ Online, Dec. 7, 2010).
Exploration & Development — Quick Takes
Fidelity touts Utah Cane Creek well test results
The potential of the Pennsylvanian Cane Creek play in the Paradox basin "appears significant," said Fidelity E&P Co., a unit of MDU Resources Group Inc., Bismarck, ND.
Fidelity said its Cane Creek Unit 26-2H well tested at a stabilized 647 b/d of oil and 561 Mcfd of natural gas on a 7⁄64-in. choke with flowing pressure exceeding 3,400 psi. The well is flowing from a short, unstimulated horizontal section. The company said the production rate is being greatly restricted "to manage production operations, gather performance data, and minimize natural gas flaring."
Fidelity, which owns 75,000 net acres in the basin, drilled the 26-2H well to 8,685 ft measured depth including a 1,945-ft lateral that was cased and subsequently perforated over a 116-ft interval at the end of the lateral.
"While it is too early to establish reserve potential for the well, a well drilled 5 miles to the southeast during the 1960s has produced over 1 million bbl of oil and a well 7 miles northwest drilled in the 1990s has produced over 600,000 bbl of oil," the company said. "Initial production rates from the 26-2H well are very encouraging; however, further data is required to give a reasonable estimate of ultimate recovery."
Fidelity's second horizontal Cane Creek well, the Cane Creek Unit No. 18-1H, has been drilled to 9,272 ft MD including a 1,154-ft lateral. It is to be completed across a 900-ft horizontal interval and should be put on production during May.
The company plans to drill more Paradox wells in 2012 to further advance the appraisal process and commence the development phase.
Denbury to buy Gulf Coast Thompson oil field
Denbury Resources Inc., Plano, Tex., has agreed to buy Thompson field in Fort Bend County, Tex., from a private seller for $360 million cash and a production payment. Closing is expected in early June.
Denbury plans to develop Thompson's undeveloped conventional reserves, estimated at 17 million bbl net to the nearly 100% working interest being acquired, at a cost of $12 million/year while it designs a carbon dioxide flood. Implementing the flood could require a capital cost of $8-10/bbl, and the flood could recover 30-60 million bbl of oil based on performance of the company's other Gulf Coast floods.
Thompson, producing 2,200 b/d of oil to the interest being acquired, lies 18 miles west of and at similar depth as Hastings field that Denbury is flooding with CO2 shipped via the Green Pipeline from Denbury's source in Jackson Dome, Miss.
Discovered in the early 1930s, the 8,454-acre field peaked in 1974 at 41,000 b/d of oil. Denbury estimated original oil in place at 650 million bbl in Oligocene Frio. It estimated OOIP in the zones initially targeted for CO2 flooding at 300 million bbl.
The seller will receive a production payment of a 5% net revenue interest when oil production exceeds 3,000 b/d and the field is under CO2 flood, anticipated no earlier than 2017. Denbury said knowledge from Hastings will help it optimize the Thompson field flood.
Margarita development phase complete
A group led by Repsol Bolivia completed first-phase development of Margarita gas field, reported BG Group, a 37.5% partner. BG said completion of the project adds production net to its interest of 17,000 boe/d, taking total net Margarita production to more than 25,000 boe/d. The project included construction of a 77-km network of gas gathering and export pipelines, four wells, and gas processing facilities.
A second development phase will include a new processing train, flowlines, and at least three development wells. It will push BG net production to about 42,000 boe/d by yearend 2014. Other interests in the Caipipendi Block encompassing the field are Repsol Bolivia, operator, 37.5%, and PAE E&P Bolivia Ltd. 25%.
Completion continues at Kern Paloma deep test
Neon Energy Ltd., Perth, has spudded the Paloma Deep-2 well in Kern County, Calif., to evaluate the areal extent of the zones of interest encountered in Paloma Deep-1 and to further evaluate in an uncompromised wellbore the Lower Stevens/Fruitvale section that tested gas-condensate.
The Lower Stevens/Fruitvale tested at 1.9 MMcfd of gas and 226 b/d of condensate, natural, before the test ceased prematurely due to downhole mechanical difficulties in Paloma Deep-1 (OGJ Online, Jan. 11, 2012). A shallower Lower Stevens sand interval flowed oil at uneconomic rates due to poor quality reservoir.
A jet pump has been installed after acid treatment of an interval in the Lower Antelope shale member of Miocene Monterey shale, from which Neon recovered 45 bbl of 26° gravity oil on a swab test. The jet pump initially returned acid and completion fluids as the vertical well began to clean up.
Neon said it will investigate whether modern stimulation techniques and horizontal drilling might accelerate recovery from the Lower Antelope. Four other zones of interest remain to be tested in the 13,320-ft well.
Drilling & Production — Quick Takes
BP lets contract for second Mad Dog spar
BP Exploration & Production Inc. let a front-end engineering design contract to Technip for a spar hull and mooring systems for the second phase of development of deepwater Mad Dog oil and gas field in the Gulf of Mexico.
The contract is the first under a 10-year master agreement the companies entered last year for spar development (OGJ Online, May 3, 2011).
The Phase 2 spar will be installed on Green Canyon Block 825 near the first Mad Dog spar, provided by Technip in 2004 and on stream since 2005, which is moored in 4,500 ft of water on Green Canyon Block 782.
BP said last year that extensions had boosted its estimate of the Mad Dog resource to as much as 4 billion boe in place. It said at the time that it was considering installation of another spar with production capacity of 120,000-140,000 boe/d (OGJ Online, Sept. 8, 2011).
Chesapeake reports progress in Utica shale play
Chesapeake Energy Corp. outlined its drilling progress in the Utica shale in eastern Ohio, western Pennsylvania, and northwestern West Virginia during a May 1 earnings call in which the company stressed that it is shifting its focus from natural gas toward liquids-rich plays.
Chesapeake has 1.3 million acres of leasehold in the Utica shale, and it currently operates 10 rigs there. The Oklahoma City independent plans to average 13 rigs in 2012 and 22 rigs in 2013 in the Utica.
The company's initial development focus has been in the play's wet gas window. Chesapeake has drilled 59 wells in the play, of which 9 currently are producing. Of those 9 wells, 8 are in the wet gas window.
On a post-processing basis, peak rates from the wet gas window averaged 415 b/d of oil, 260 b/d of natural gas liquids, and 3.9 MMcfd of gas, Chesapeake said.
Chesapeake's best Utica well, the Buell 8H in Harrison County, Ohio, had an initial peak rate of more than 3,000 boe/d in September 2011 with about half of the production coming from liquids. Currently, the Buell well is producing at 1,040 boe/d.
Meanwhile, 15 Utica wells currently are being completed, 15 wells await completion, and 20 await being connected with a pipeline.
Speaking separately in Columbus, Ohio, on May 2, American Petroleum Institute Pres. and Chief Executive Officer Jack Gerard said Ohio was on the cutting edge of shale energy development that is a "game changer" that the US has not seen since the 1990s.
"Ohio is home to one of the largest resources of energy in the US and using smart policies to develop these resources would mean more jobs, better wages, and more revenue to the government," Gerard said.
Total installs diverter on Elgin G4
Total UK Ltd. has installed a diverter on the G4 well to divert leaking nature gas away from the Elgin wellhead platform in the North Sea, ensuring no gas accumulates around the wellhead or the platform.
"This reinforces the safety of the well intervention operation and helps alleviate restrictions on helicopter landings on the platform from now on," Total said.
Total stopped production on Elgin and Franklin gas fields following a Mar. 25 gas leak on the wellhead platform 240 km east of Aberdeen, Total said. No injuries were reported, and 238 people were evacuated (OGJ Online, Mar. 27, 2012).
Total representatives and specialist contractors also positioned other equipment for the well intervention operation. The dynamically positioned drilling rig, the West Phoenix, will be used as the main support vessel, and it's expected to be placed alongside the Elgin complex soon, Total said Apr. 26.
The Skandi Aker, still in Peterhead Harbor in Scotland, will have a complementary supporting role during this operation.
In parallel, Transocean Ltd.'s Sedco 714 semisubmersible drilling rig is drilling the first relief well according to plan. Total said. The Sedco 712 is 2 km east of the Elgin complex. The relief well was spudded on Apr. 18.
Lukoil starts West Qurna-2 drilling in Iraq
Lukoil has started drilling production wells and building the central processing facility at supergiant West Qurna-2 oil field in Iraq, where it targets production of 500,000 b/d by 2013-14 (OGJ Online, Mar. 22, 2012).
In the current project it plans to drill 23 directional wells with a sliding-rig system from five well pads. The company expects total investment in the West Qurna-2 project to reach $25 billion.
West Qurna-2, covering 340 sq km 65 km northwest of Basra, holds oil reserves estimated at 14 billion bbl.
Lukoil and Statoil won a contract for the project in January 2012 with a bid of a $1.15/bbl remuneration fee at a production level of 1.8 million b/d.
They will be able to recover expenses and receive remuneration once production reaches 150,000 b/d.
Interests are Lukoil 56.25%, state-owned North Oil Co. 25%, and Statoil 18.75%.
CNRL applies for in situ oil sands project
Canadian Natural Resources Ltd., Calgary, has applied with provincial authorities to develop an in situ project to produce as much 50,000 b/d of bitumen from the Athabasca oil sands region of Alberta.
The Grouse project will use steam-assisted gravity drainage with as many as 191 well pairs drilled into the Lower Cretaceous McMurray formation from 36 surface pads over 20 years.
The project, which will include a central processing facility, will be in Lac La Biche County. CNRL plans to start clearing and lease construction in the third quarter of 2014 and major facility construction in the first quarter of 2015. It plans to begin steaming in fourth-quarter 2017.
PROCESSING — Quick Takes
CPCC marks progress toward ethylene plant
Chevron Phillips Chemical Co. LP (CPCC) reached an agreement with the Shaw Group Inc., Baton Rouge, La., for front-end engineering and design for a 1.5 million tonne/year grassroots ethylene plant at CPCC's Cedar Bayou plant in Baytown, Tex.
The scope of work, which will be released in phases, follows a contract announced in December 2011 for Shaw's license of its proprietary technology and a process design package for the project. The new plant will be designed to use ethane supplies from increased shale gas production, said the announcement.
Shell trims cellulosic ethanol venture
Royal Dutch Shell PLC is withdrawing from plans to build a cellulosic ethanol plant in Canada through Iogen Energy, which it jointly owns with Iogen Corp. of Ottawa.
It said a "refocusing" of Iogen Energy's strategy will result in a diminished development program and 150 layoffs.
"Shell continues to explore multiple pathways to find a commercial solution for the production of advanced biofuels on an industrial scale, but the company will not pursue the project it has had under development to build a larger scale cellulosic ethanol facility in southern Manitoba," the oil company said.
Iogen Corp. plans to expand its services with "new technology for the production of advanced and cellulosic biofuels," Shell said.
At one of its service stations in Ottawa, Shell briefly sold gasoline containing cellulosic ethanol made from wheat straw at an Iogen Energy demonstration plant in the same city (OGJ Online, June 10, 2009).
Aromatics plant due at Abu Dhabi site
Abu Dhabi National Chemicals Co. has let a contract to Foster Wheeler's Global Engineering & Construction Group covering production management consultancy services for an aromatics complex at Ruwais, Abu Dhabi.
The complex will convert almost 3 million tonnes/year of heavy and medium naphtha from the 350,000-b/d Takreer Ruwais refinery into paraxylene, mixed xylenes, and benzene.
It will be built in the chemical company's Madeenat Al Gharbia site.
Old Ocean, Tex., picked by CPCC for PE plants
Chevron Phillips Chemical Co. LP (CPCC) selected a site at Old Ocean, Tex., near its Sweeny petrochemical complex for two new polyethylene plants with capacities of 1.1 billion lb/year each.
CPCC earlier had said the plants, part of a major Gulf Coast expansion, would be located at Ocean City or Baytown, Tex. (OGJ Online, Apr. 2, 2012).
CPCC let a contract to Jacobs Engineering Group to design the polyethylene plants. It earlier let a contract to Shaw Group Inc. for front-end engineering and design of a 3.3 billion lb/year ethylene plant at its Cedar Bayou complex in Baytown (OGJ Online, May 1, 2012).
CPCC also is building what will be the world's largest 1-hexene plant at Cedar Bayou and expanding its fractionator at Sweeny (OGJ Online, Apr. 2, 2012).
TRANSPORTATION — Quick Takes
Cameron LNG takes a step towards liquefaction
Cameron LNG LLC, a unit of Sempra Energy, has awarded a unit of Foster Wheeler AG's Global Engineering and Construction Group a contract for natural gas liquefaction at Cameron's LNG terminal in Hackberry, La.
Foster Wheeler's scope of work includes technical assistance for project development, execution of front-end engineering to support permit applications to the US Federal Energy Regulatory Commission, development of technical specifications and invitation to bid packages for engineering, procurement, and construction, and technical reviews.
The work will also include integration with existing Cameron LNG facilities and may include additional work as the project develops, according to the announcement from Foster Wheeler.
No contract value was disclosed.
Lukoil dedicates Barcelona products terminal
OAO Lukoil dedicated a new petroleum terminal at the port of Barcelona. A 50-50 joint venture established in July 2010 between Litasco, an international oil trader and wholly owned Lukoil subsidiary, and Spanish company Meroil, built the terminal.
The terminal, part of an expansion of Meroil's existing facilities, includes 13 tanks with an aggregate capacity of 360,000 cu m. Tanks range in volume from 6,500 cu m to 40,000 cu m on a 40,000-sq-m site.
The existing Meroil terminal, connected to the pipeline system of Hydrocarbonates Logistics Co., includes 8 petroleum-product loading gantries with a throughput capacity of 400 tank trucks/day.
Litasco will use the new terminal, which brings Meroil's total capacity at Barcelona to 1 million cu m, to reexport and distribute diesel, biodiesel, and jet fuel in Spain. The Port of Barcelona also commissioned a 275-m jetty to moor tankers of up to 150,000 dwt.
The new terminal is compliant with the international QHSE Management System, Lukoil said.
Keathley Canyon Connector lets contract for line pipe
Discovery Producer Services LLC (DPS) let a contract to Tata Steel for the provision of pipe for DPS's Keathley Canyon Connector natural gas pipeline in Keathley Canyon in the Gulf of Mexico.
Tata will supply 214 miles of 20-in. OD submerged arc welded line pipe, weighing more than 110,000 tonnes. Delivery is scheduled for this year's second half.
The Keathley Canyon Connector system, with more than 400 MMcfd of gas capacity, will gather gas from the Keathley Canyon, Walker Ridge, and Green Canyon areas of the gulf. Pipelay will occur at 7,380 ft of water.
Tata also recently secured an order to supply 48,000 tonnes of steel pipe for an oil pipeline in the Lucius Development Project, also in the gulf.
A group led by Anadarko Petroleum Corp last year sanctioned development of Lucius using a truss spar, with capacity of 80,000 b/d of oil and 450 MMcfd of gas starting in 2014 (OGJ Online, Dec. 15, 2011).
DPS is a 60-40 joint venture of Williams Partners LP and DCP Midstream Partners LP. The contract is worth more than £100 million. Tata will manufacture the pipe at its 42-in. mill in Hartlepool, England.
CorrectionIn the Apr. 2 issue, p. 56, the steam, hot water, micellar-polymer, CO2 miscible, and CO2 immiscible numbers in Table 1 should read 273,448; 1,676; 70; 272,109; and 9,160. |
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