GENERAL INTEREST — Quick Takes
Alaska senators blast NPR-A land proposal
The US Department of the Interior's new National Petroleum Reserve-Alaska land-management proposal represents the largest federal land withdrawal in decades, the state's congressional delegation said in an Aug. 22 letter to US Interior Sec. Ken Salazar.
US Sens. Lisa Murkowski (R) and Mark Begich (D) and Rep. Don Young (R) said it would place half of the 23.5 million-acre petroleum reserve under special protection, blocking access to vast oil and gas resources and make it hard to connect future offshore production to existing Prudhoe Bay systems.
When he announced the plan on Aug. 13, Salazar said it balanced meeting US energy needs with preserving wildlife and Alaska Native subsistence culture. The proposal also would not preclude construction of a pipeline from offshore oil fields across NPR-A if necessary requirements are met, he added.
Murkowski, who is the Senate Energy and Natural Resources Committee's ranking minority member; Begich; and Young disagreed. "The production of oil and natural gas from offshore areas in the Arctic and onshore within the boundaries of the NPR-A offers untouched and promising sources of domestic energy and will also create tens of thousands of new jobs nationwide and new revenues for Alaska and the federal treasury," they told Salazar.
"Unfortunately, we believe the preferred alternative selected by [Interior] will significantly limit options for a pipeline through the NPR-A and will unnecessarily restrict access to rich oil and natural gas resources within the petroleum reserve," the federal lawmakers said.
API: US oil demand weakened in July
US oil demand in July contracted by 2.7% from a year earlier, according to the latest monthly statistics from the American Petroleum Institute.
API reported that gasoline demand fell by 3.8% from July 2011 and by 2.2% from June. Averaging 8.624 million b/d, US gasoline demand reached its lowest level for July since 1997. Demand for most other major products also declined, but demand for distillates, which increased by 4.9%, was driven by strong ultralow-sulfur diesel deliveries.
Demand for all products totaled 18.062 million b/d, and US exports were 3.244 million b/d, up 11.1% from a year earlier. Imports declined by 9.6% to 10.426 million b/d.
At 6.225 million b/d, crude oil production remained strong and was up from the prior month, prior year, and prior year to date, and it was the highest level of US production for any July since 1998, according to the report.
API said refinery utilization climbed to 92.7% last month vs. 91% in July 2011.
Crude oil stocks were up 5.1% from last year but down 4.3% from June to end in July at 365.8 million bbl. Stocks of all major products were down from last year's levels. Gasoline and distillate stocks were both up in July compared with the month before, API reported.
EPA approves fuel waiver for Louisiana
The US Environmental Protection Agency temporarily waived certain federal clean gasoline requirements for Louisiana as Hurricane Isaac made landfall in the state. The waiver will let the fuel distribution system operate more flexibly to assure supplies are adequate, EPA said on Aug. 29.
The 10-day waiver applies to 7.8 psi low Reid vapor pressure requirements for the state and allows the sale of 9 psi conventional gasoline in 14 parishes, it added.
EPA said it will continue to monitor Louisiana's fuel supply situation resulting from the storm's passage across the state, and is ready to act quickly if extreme and unusual supply situations exist in other areas of Louisiana with a 7.8 psi RVP requirement.
France moves to cut gasoline, diesel prices
The French government and major fuel suppliers have agreed to take steps aimed at lowering costs to consumers of gasoline and diesel.
Finance Minister Pierre Moscovici said the government will trim taxes on vehicle fuel by 3 euro cents/l. for 3 months beginning Aug. 29.
Refiner-marketers in France agreed to lower prices by 1-3 euro cents/l. against unspecified base levels.
During his recent election campaign, President Francois Hollande promised to lower fuel prices.
Exploration & Development — Quick Takes
Pemex boasts Perdido fold belt deepwater oil find
Petroleos Mexicanos said it has the first discovery of crude oil in Mexican waters of the Gulf of Mexico at an exploratory well in the Perdido fold belt.
Mexican President Felipe Calderon said preliminary evaluation indicates that the Trion-1 well located 350 million bbl of oil equivalent proved, probable, and possible reserves.
Pemex plans to deepen the well to evaluate the Paleocene Wilcox, Calderon said. Trion-1 has been drilled to 16,115 ft in 8,200 ft of water 177 km off the Tamaulipas coast and 39 km south of US waters. The Bicentenario semisubmersible spudded the well in June, he said.
Calderon didn't name the discovery formation but said it has 320 m of saturated thickness with 18-25% porosity and as much as 250 md of permeability, "just enough to guarantee productivity and an estimated flow of up to 10,000 b/d," he said.
Calderon noted that less than 2 years had elapsed from when Pemex shot 3D seismic, processed and interpreted it, and made the light oil discovery.
A press release from Pemex added, "This discovery has increased certainty towards the recovery of prospective resources in the Perdido area project which have been estimated at up to 10 billion bbl of oil equivalent, and could potentially allow Mexico to increase its oil production platform in the medium and long-term."
India moves toward open E&P licensing
India is moving toward open licensing for exploration and production rights.
The country now negotiates production-sharing agreements with operators after holding bidding rounds under a program it calls New Exploration Licensing Policy (NELP). It has held nine NELP rounds since 1999.
Indian Minister of State for Petroleum and Natural Gas Shri R.P.N. Singh recently responded to criticism of NELP licensing for its failure to attract widespread participation by large international oil and gas operators (OGJ Online, Aug. 17, 2012).
On Aug. 28, Singh told the upper house of the Indian Parliament that the government has begun work on an "open acreage licensing policy (OALP)."
He also said the Directorate General of Hydrocarbons has started work on a national data repository as a prerequisite of formulation the OALP.
"DGH is examining the possibilities of gathering data bases of national oil companies and private companies and linking them to a common data base," Singh said.
RWE to start Nile Delta Disouq gas flow in 2013
RWE Dea plans to start gas production from the Disouq concession in Egypt's onshore Nile Delta in 2013 after its North Sidi Ghazy-1-2 development well yielded positive results.
NSG-1-2, 100 km north of Cairo, went to 2,843 m true vertical depth on the field's east side and flowed gas at the rate of 35 MMscfd from the Mio-Pliocene Abu Madi formation. It confirmed the NSG-1x discovery, which forms the core asset of the Disouq development project.
RWE in conjunction with Egyptian Natural Gas Holdilng Co. and Suez Oil Co. will develop seven gas discoveries in the first phase of the project that will supply gas to the domestic market.
RWE Dea has moved the rig to the South Sidi Ghazy-1-2 well to develop the northern extent of the South Sidi Ghazy-1x discovery. The North and South Sidi Ghazy wells and three Northwest Khilala wells will be tied back to North Sidi Ghazy central treatment facilities as part of the project's first phase.
The 5,375 sq km Disouq concession was awarded to RWE Dea in July 2004. RWE Dea has 12 onshore and offshore concessions in Egypt covering a combined 19,000 sq km.
BP makes Nile Delta shallow gas discoveries
BP Egypt has made two shallow gas discoveries on the North El Burg concession offshore on Egypt's Nile Delta.
Eni's International Egyptian Oil Co. drilled the Taurt North and Seth South discoveries in 110 m and 78 m of water, respectively, on behalf of concession operator BP. Wireline logs, fluid samples, and pressure data confirmed the presence of gas in one Pleistocene interval in Taurt North and two Plio-Pleistocene intervals in Seth South. The companies are studying options to tie both wells to nearby facilities.
The discoveries are the fourth and fifth in the concession following Satis-1 and Satis-3 Oligocene deep discoveries and Salmon-1 shallow Pleistocene discovery.
Including the Nile Delta and Gulf of Suez, BP and its partners produce nearly 40% of Egypt's gas demand.
BP and IEOC share 50-50 interests in the North El Burg Offshore concession, which lies between the BP-operated Ras El Barr development concession and the IEOC-operated Offshore Baltim development concession.
Rex probing Utica shale, other formations
Rex Energy Corp., State College, Pa., is pursuing liquids potential of several Devonian-age formations in Ohio and Pennsylvania, including the Utica shale, Upper Devonian Burkett shale, and the Upper Devonian Rhinestreet shale.
Rex spudded its second Utica shale well, Hufnagel-1H, in Butler County, Pa., in the quarter ended June 30 and expects to complete it in the first half of 2013, the company said in its second quarter report. The well reached total depth in July.
The company's first Utica well in Butler County, Cheeseman-1H, tested at an initial 9.2 MMcfd and a 30-day rate of 5.3 MMcfd of gas, a 60-day rate of 4.1 MMcfd, and a 120-day rate of 3.7 MMcfd. It was placed in service in the quarter ended Mar. 31.
Rex plans to spud its second Burkett well by the end of 2012. Its first Burkett well, Gilliland-11HB, in Butler County, Pa., has a 2,700-ft lateral and has been shut-in since its initial test. Following the shut-in, the well produced at a restricted rate of 3.2 MMcfd of gas equivalent, which included 117 b/d of natural gas liquids and 4 b/d of condensate, or 23% liquids content excluding ethane.
Gilliand-11HB, on the same pad with five Marcellus shale wells, yielded 16% more liquids than Marcellus wells in the same area, the company said. With ethane extracted, the well is estimated to yield 335 b/d of liquids, and when condensate production is included along with the ethane, the liquids share would be an estimated 43% of the production stream.
Rex also plans to frac one of its legacy vertical wells to test the gas quality and liquids potential of the Rhinestreet formation.
Meanwhile, Rex plans to turn its first Ohio Utica shale well to sales in September 2012. The Brace-1H, in Carroll County, went to 12,332 ft measured depth including a 4,170-ft lateral. It has been shut-in since fracture stimulation in June 2012.
Drilling & Production — Quick Takes
Statoil to install power cables for Troll A
Statoil ASA let a contract to ABB to install high-voltage subsea cables to provide power for two new gas compressors planned for the Troll A platform in the North Sea off western Norway.
With this new contract, ABB's orders in connection with the installation of the two new compressors on the Troll A platform amounts to $360 million.
Over time, the subsea reservoir pressure drops and production decreases unless the pressure is maintained by gas compression.
The new gas compressors will improve production capacity (OGJ Online, Sept. 15, 2011).
Troll A inaugurated its first power from shore in 2005, and the new system is scheduled for operation starting in 2014. The platform has a concrete gravity-based substructure in 300 m of water.
Troll gas field has a third of all gas capacity from offshore Norway and contains 48% of the remaining gas reserves offshore Norway, Statoil said.
Gas from Troll goes onshore to the Kollsnes processing plant before it is delivered to the rest of Europe.
Loyz, Rex Oil & Gas in US farmin with Fram
Loyz Energy Ltd. of Singapore and technical partner Rex Oil & Gas Ltd. have agreed to participate in the drilling of 80 wells in Colorado and North Dakota on acreage held by Fram Exploration, Trondheim, Norway.
Loyz and Rex Oil & Gas will provide two rigs and earn a 40% share of the net revenue interest in each producing well, convertible into a working interest. Splitting costs and interests evenly, they'll supervise and execute drilling under a turnkey contract.
Fram will contribute $12 million of the cost of drilling the first 40 wells. Loyz and Rex will contribute the remainder, estimated at $28 million. For the other 40 wells, Fram will pay $28 million and Loyz and Rex the rest, estimated at $12 million.
In Colorado, Fram operates the 90,445-acre Whitewater Federal Production Unit in the Piceance basin (OGJ Online, Apr. 14, 2010). Within the unit, it holds a 95.6% working interest in 54,000 acres.
Fram made an oil discovery in the previously gas-prone area in 2010 in its Mansur 33-1-K well.
In North Dakota, Fram holds leases centered on 10,863 acres in Renville County in the Williston basin. It believes shallow Mississippian Mission Canyon carbonate is prospective for oil in the area. It says an exploratory well it drilled in March 2011, Funke No. 1, cut 32 ft of net oil pay in the formation.
Draugen field due new subsea multiphase pump
Norske Shell has let a $100-million contract to Framo Engineering for a complete subsea multiphase booster pump system for Draugen oil field offshore Norway, where the world's first such system was installed in 1994.
Draugen field, in 250 m of water in the Norwegian Sea, has produced since 1993 through a concrete gravity platform that now serves as host facility for several satellite fields developed with subsea completions.
Draugen last year produced an estimated 34,000 b/d of crude oil, 20 million standard cu m of natural gas, and 60,000 tonnes of natural gas liquids. The main reservoir is the Late Jurassic Rogn sandstone encountered at about 1,600 m. The western part of the field also produces from the Middle Jurassic Garn formation.
According to the Norwegian Petroleum Directorate, an infill drilling project designed to boost Draugen recovery will include four production wells. First oil from the project is scheduled for 2013.
Framo Engineering, a Schlumberger company, will provide a complete system for topside power and control, the power and control umbilical, and the complete subsea pump module and manifold.
PROCESSING — Quick Takes
Deadly explosion rocks Venezuelan refinery
Firefighting extended into a third day at a storage area of the big Paraguana Refining Center in Venezuela after an Aug. 25 explosion and fire in the Amuay section that killed at least 41 people, according to press reports.
No operating units were reported damaged at the 940,000-b/d complex, but at least the Amuay sector was reported shut down.
The complex integrates the Amuay and Cardon refineries in Falcon state and the Bajo Grande refinery in Zulia.
State-owned Petroleo de Venezuela SA said it was meeting customer needs from inventory.
Most of the victims were reported to be military troops and family members.
Regency Energy to expand processing in Louisiana
Regency Energy Partners LP, Dallas, expand its processing capacity near Dubach in Lincoln Parish, La., to 210 MMcfd by adding an incremental 70 MMcfd of cryogenic capacity and 20 MMcfd of Joule-Thomson capacity (OGJ, May 7, 2012, p. 88; May 7, 2012, p. 104).
The $75 million Dubach expansion also will include construction of high-pressure gathering lines to bring production to the plant. The project, to come online in second-quarter 2013, is backed by fee-based contracts and an acreage dedication, Regency Energy said.
"We have seen volumes at our Dubach facility continue to grow throughout the first half of 2012 due to increased drilling around our facilities," said Jim Holotik, Regency's chief commercial officer. "This expansion will allow us to…provide more efficient liquids."
Regency Energy Partners' general partner is owned by Energy Transfer Equity LP.
Flint Hills eyes boost of Eagle Ford feed
Flint Hills Resources is considering a revamp of its 230,000-b/d Corpus Christi West refinery in Texas to increase runs of crude oil from the nearby Eagle Ford shale play.
Crude oil from the Eagle Ford area of South Texas accounts for more than half the refinery's feed now, a company spokeswoman said. After the revamp, the share would become 100%.
The company announced the possible project on Aug. 23 without specifying what new units might be required or how the work would affect existing units and capacities. In response to questions from OGJ, the spokeswoman said those details wouldn't be available until the company had filed applications for permits from the Texas Commission on Environmental Quality and US Environmental Protection Agency.
The original press statement said Flint Hills, a unit of Koch Industries Inc., expected to submit the applications "in the coming weeks." It said the project would cost more than $250 million and produce a net reduction in refinery emissions of criteria air pollutants—those controlled by the Clean Air Act.
The company's Corpus Christi East refinery has crude capacity of about 70,000 b/d.
According to OGJ's Worldwide Refining Report, processing capacities of the Corpus Christi refineries total about 12,000 b/d of delayed coking, 96,000 b/d of fluid catalytic cracking, 61,000 b/d of catalytic reforming, and 11,700 b/d of catalytic hydrocracking (OGJ, Dec. 5, 2011, p. 30).
Gunvor restarts refinery in Germany
Gunvor Group Ltd. has restarted the 100,000-b/d refinery in Ingolstadt, Germany, that it acquired from Petroplus Holdings AG earlier this year. The refinery will be renamed Gunvor Refinery Ingolstadt GMBH.
Petroplus in January suspended operations of the Ingolstadt facility and two other refineries in Europe because of credit pressure (OGJ Online, Dec. 31, 2011).
TRANSPORTATION — Quick Takes
TNK-BP to tender for Siberian crude pipeline
CJSC Rospan International, a TNK-BP Group company, plans to announce a tender to build a 374-km crude oil pipeline between fields in the Yamal-Nenets Autonomous Region and northern Krasnoyarsk Kray. The project will include the Yamal Oil Pipeline System's Suzun-Tagul-Russkoe-Zapolyamoe metering station.
The new pipeline will follow existing Transneft right-of-way for much of its route. Construction will take place over the next three winter seasons: 2012-13, 2013-14, and 2014-15.
TNK-BP announced earlier this year plans to invest $12 billion to accelerate development in the Yamal-Nenets Autonomous Region. It plans to drill six wells this year, but doesn't anticipate intensive commercial development before 2017 (OGJ Online, Feb. 8, 2012).
Transneft last year launched its 500,000 b/d Purpe-Samotlor pipeline, connecting Russian refineries to fields in both East Siberia's Krasnoyarsk region and West Siberia's Yamal-Nenets (OGJ Online, Oct. 25, 2011).
KMEP begins Parkway pipeline construction
Kinder Morgan Energy Partners (KMEP) has begun building its 136-mile, 16-in. OD Parkway Pipeline.
KMEP is building the 110,000-b/d pipeline to transport gasoline, jet fuel, and diesel from refineries in Norco, La., to an existing petroleum transportation hub in Collins, Miss., owned by Plantation Pipe Line Co., for further shipment to markets in the southeastern US. KMEP owns 51% of Plantation and operates the system.
KMEP is partnering with Valero Energy Corp. in the joint venture that will own Parkway Pipeline LLC. The pipeline, supported by a long-term throughput agreement, will be expandable to more than 200,000 b/d. Pending environmental and regulatory approvals, KMEP expects the roughly $220 million pipeline project to be in service mid-2013.
Construction of Parkway will follow existing utility rights-of-way wherever possible.
Excelerate lets contract for US floating liquefaction
Excelerate Energy let a contract to Houston-based OGS for topsides front-end engineering and design of Excelerate's Lavaca Bay LNG floating liquefaction storage and offloading vessel. OGS is an engineering and project management company partnered with Samsung Heavy Industries.
The vessel will be the first floating liquefaction in the US, designed to export LNG from the Texas Gulf Coast by 2017. The contracted work involves naval architecture, hull structure, and topsides processing for up to 4 million tonnes/year.
According to OGS, the new FEED takes into account new metocean, geotechnical, and regulatory conditions related to the Texas Gulf Coast.
