Domenici calls hearing on BP Prudhoe troubles
US Congress has scheduled a second hearing to discuss BP PLC’s pipeline problems on Alaska’s North Slope.
On Sept. 12 the Senate Energy and Natural Resources Committee will examine the impact of the shutdown on US supplies as well as the steps that may be taken to prevent the event’s recurrence, Chairman Pete V. Domenici (R-NM) said Aug. 17.
House Energy and Commerce Committee Chairman Joe Barton (R-Tex.) previously scheduled a similar hearing for Sept. 7.
Domenici said: “I am very concerned about the impact of BP’s problems on our domestic oil supply. I am pleased that BP plans to maintain production on the western side of the Prudhoe Bay oil field, but US production may still be down 200,000 b/d for a year or more because of this situation. I am particularly worried about what the loss of this oil will mean if the nation faces another difficult hurricane season or a harsh winter.” Witnesses for each hearing will be announced later, both committees said.
Claims settled in Kentucky, Louisiana oil spills
Mid-Valley Pipeline Co. and Sunoco Pipeline LP (SPLP) agreed to pay $2.57 million total to the federal government and state of Kentucky concerning an oil spill last year.
A pipeline spill on Jan. 26, 2005, released more than 206,000 gal of crude oil into the Kentucky and Ohio rivers.
The complaint and consent decree, filed Aug. 15 in US District Court in Kentucky, also addressed government claims against Mid-Valley and Sun Pipe Line Co. for a 600,000-gal oil spill in Louisiana on Nov. 24, 2000. Mid-Valley and Sun Pipe Line agreed to pay a $300,000 civil penalty for the Louisiana spill into Campit Lake in Claiborne Parish.
For the Kentucky spill, Mid-Valley and SPLP will pay $1.4 million to the federal government and $1.17 million to Kentucky. The companies also will enhance their spill response preparation and reimburse the state for more than $120,000 in response expenses.
Defendants already reimbursed federal response expenses of at least $234,000. The settlement also requires Mid-Valley and SPLP to donate $230,000 to a nonprofit organization that helps Kentucky environment.
The 2005 spill stemmed from a girth weld failure in 22-in. pipe that had been laid in 1950. An oil slick stretching more than 17 miles reached the Ohio River and harmed hundreds of migratory waterfowl, the US Environmental Protection Agency said.
The settlement, which resolves claims under the federal Clean Water Act and Kentucky environmental laws, is in addition to $9.5 million which Mid-Valley and SPLP spent responding to the spill, EPA said.
The agency said the $300,000 penalty for the Louisiana spill is in addition to $2.2 million spent by the defendants in response costs and restoration, and to the more than $26,000 reimbursed for federal response costs. Penalties paid to the US will be deposited in the Oil Spill Liability Trust Fund.
Besieged Pakistan tank-truck drivers rebel
Increasing terrorist attacks on truckers transporting cheap oil from Pakistan to war-torn Afghanistan, have prompted an angry reaction from Pakistani tank-truck owners.
On Aug. 9, members of the All Pakistan Oil Tanker Owners Association (APOTOA) threatened a nationwide strike unless Pakistan and Afghanistan provide protection for them.
Within 2 months, nine tanker-trucks have been attacked in Kandahar, Afghanistan, while three were bombed inside the Pakistan border near Chaman in Balochistan province.
APOTOA Chairman Mir Muhammad Yousaf Shahwani said a number of drivers have been killed, but their families have not received any compensation from either government or from Rawalpindi, Pakistan-based Attock Refinery Ltd. (ARL). Attock Oil Co. Ltd. owns 52.5% of ARL.
MMS sells 8.5 million bbl of RIK oil
The US Minerals Management Service has sold more than 8.5 million bbl of royalty in-kind (RIK) oil to seven companies as part of an unrestricted sale.
The companies that submitted winning bids include Chevron Products Co., Shell Trading Co., ExxonMobil Corp., Plains Marketing LP, Marathon Petroleum Co., Citadel Energy Products LLC, and ConocoPhillips. The contracts are for 6-month terms with delivery scheduled to begin Oct. 1.
Representing about 47,000 b/d, the RIK crude sold in this sale will convert to more than 350 million gal of petroleum products, MMS said.
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Exploration & Development - Quick TakesEnCana shows Scotian deepwater opportunity
EnCana Corp., Calgary, is trying to attract interest in its EL 2414 Block in the Atlantic east of Sable Island.
The company, which holds the 148-ha block in 1,500 m of water 250 km east of Goldboro 50-50 with PetroCanada, is in hopes of drilling a well in 2008. The well, targeted to Cretaceous Lower Missisauga and overlying Jurassic formations at 5,800 m, could cost $100 million.
Only 12 wells have been drilled in the deepwater part of the Scotian basin (OGJ, Feb. 24, 2005, p. 35). Marathon Oil Co.’s Annapolis well is the area’s only discovery, and it did not reach Lower Missisauga, EnCana said.
EnCana’s Stonehouse North Prospect could hold 4.3 to 10.7 tcf of gas in place. It is near the eastern end of a structural high EnCana calls the Stonehouse Trend that can be mapped more than 150 km to the southwest.
Seismic data acquired over the prospect are undergoing prestack depth migration and AVO processing, said company officials in Houston for the Summer North American Prospect Expo.
Daewoo gets report on Rakhine gas finds
Independent consultants said 4.8 tcf is the best estimate of recoverable gas from three discoveries in the Rakhine basin off Northwest Myanmar by a group led by Daewoo International Corp., Seoul.
The appraised 2004 Shwe and 2005 Shwe Phyu discoveries on Block A-1 and the 2006 Mya discovery on Block A-3 to be appraised with two wells in 2007 are the basin’s first substantial gas discoveries (see map, OGJ, Mar. 8, 2004, p. 39). Two more prospects are identified on A-3, Daewoo said, and one or two exploratory wells will be drilled in the forthcoming campaign.
Best estimates by Gaffney, Cline & Associates are for Shwe field 2.9 tcf recoverable from 3.4 tcf in place, Shwe Phyu 0.4 tcf recoverable from 0.5 tcf in place, and Mya 1.5 tcf recoverable from 1.8 tcf in place. High estimates of recoverable gas are Shwe 4.7 tcf, Shwe Phyu 0.9 tcf, and Mya 3 tcf.
The Mya-1 well cut a 32-m gas column and flowed 57.6 MMcfd of gas on test (OGJ Online, June 23, 2006).
Interests in the two blocks are Daewoo International, operator, 60%, ONGC Videsh Ltd., 20%, and GAIL (India) Ltd. and Korea Gas Corp., 10% each.
Drilling & Production - Quick TakesUS drilling increases to new high
US drilling increased to a new high for this year, up by 34 rotary rigs to 1,762 working for the week ended Aug. 11, said officials at Baker Hughes Inc.
The US rig count has exceeded 1,700 units for 4 consecutive weeks, a level of drilling activity unsurpassed since Jan. 17, 1986. That compares with 1,433 rotary rigs working during this period in 2005.
Land activity accounted for most of the latest increase, up by 28 rigs to 1,639 drilling. Inland waters activity increased by 6 rigs to 24. Offshore drilling was unchanged at 99 units, including 94 in the Gulf of Mexico.
Atlantis semi heads for deep water
The 58,700-tonne Atlantis semisubmersible platform sets sail from Ingleside, Tex., for its permanent location in 7,074 ft of water on Green Canyon Block 787, about 190 miles south of New Orleans in the Gulf of Mexico. Designed to process 200,000 b/d of oil and 180 MMcfd of gas from subsea wells, Atlantis, with three production-utilities modules, is touted as the deepest moored floating production facility in the world. Oil and gas will be transported to shelf and onshore connections via the Mardi Gras pipeline system. Operator BP America Inc. and partner BHP Billiton expect first oil in 2007. Photo by Marc Morrison, courtesy of BP America.
Anadarko gets Wyoming CO2 kick, finds gas
Anadarko Petroleum Corp. has been operating several dozen workover rigs in recent months in Wyoming, where it operates carbon dioxide enhanced oil recovery projects in Salt Creek, Monell, and Sussex fields.
Gross quarterly CO2 flood area production from giant Salt Creek field in Campbell County of the Powder River basin averaged 4,200 b/d in the quarter ended June 30, compared with 3,900 b/d in the previous quarter. The field set a single-day production record of 4,900 b/d in the second quarter of 2006.
Anadarko in the quarter ended June 30 in Wyoming, Utah, and Colorado averaged 10 operated drilling rigs and 33 operated pulling units and ran 11 to 17 nonoperated rigs. It completed 242 wells with 10 rigs in Salt Creek field.
The Monell Unit in Patrick Draw field west of Rawlins in Sweetwater County in the Green River basin averaged 2,400 b/d, up 14% quarter-to-quarter on good CO2 response.
Anadarko reported producing a combined 2.5 MMcfd of gas from three wells in new producing horizons in the Cretaceous Upper Almond sand below the CO2-flooded Upper Almond 5 oil zone.
The company also began operating a pipeline to transport water produced from Powder River basin coalbed methane wells for injection into the Mississippian Madison aquifer in Salt Creek field.
Michigan reef due portable N-CO2 flood
A start-up service company plans to inject a mixture of nitrogen and carbon dioxide to improve oil recovery from a southern Michigan reef.
Government research has shown that the combination of gases with 10% CO2 is two to three times more efficient in recovering oil than pure CO2, said Daniel Kulka of K5 Holdings LLC, Okemos, Mich.
The company seeks a partner to drill two horizontal wells into the Clarence-35 pinnacle reef, a 40-acre Silurian Niagaran oil structure in Calhoun County, Kulka said in Houston at a meeting leading up to the Summer North American Prospect Expo.
K5 plans to move in a portable unit that burns propane or natural gas to form a nitrogen-CO2 mixture to be injected into one of the wells to reestablish a gas cap. Oil will be produced through the deeper of the horizontal penetrations.
K5 looks to apply its portable process to fields from which 500,000 to 1 million bbl of oil could be recovered. Existing portable units can deliver 2.5 MMcfd of injectable gas, and K5 is designing a 4 MMcfd version, Kulka said.
Clarence-35 has produced 290,000 bbl of oil, or 15% of OOIP. K5 expects to recover 15-40% of original oil in place after injecting gas for 2 months, Kulka said. Project implementation cost is $2.5 million.
Husky completes Tucker oil sands project
Husky Energy Inc., Calgary, reported that construction on the Tucker oil sands project, which began in late 2004, has been completed. On Aug. 20 Husky began steam injection into Tucker’s reservoir, which lies 30 km northwest of Cold Lake, Alta.
Oil production is slated to start in November, with peak production of more than 30,000 b/d expected to be achieved within 2 years after start-up.
Husky said an estimated 350 million bbl of bitumen will be produced during the Tucker project’s expected 35-year life.
“Tucker is in close proximity to Husky’s Cold Lake pipeline system and heavy oil upgrader in Lloydminster, Sask., making it an attractive integrated project,” said Husky Pres. and Chief Executive Officer John C.S. Lau.
Husky used a lump-sum turnkey contract for the project’s central processing facility, which amounted to about 60% of the total project capital costs. This cost was less than the $500 million budgeted.
TX Holdings brings wells into production
TX Holdings Inc, Miami Beach, Fla., reported that it intends to bring marginal wells in Texas into full production, expending private placement funds for recompletions and workovers of the Louie Williams, Parks, and Contract Area 1 leases, primarily in Eastland and Callahan counties, Tex.
The company recently acquired a 75% working interest in the 320-acre Parks lease in Callahan County. The lease, which has estimated reserves of 12-13 million bbl of oil, contains 22 wells. It adjoins the Williams lease, in which the company also has acquired a working interest. The Williams lease has 24 million bbl of reserves, all from shallow zones less than 1,000 ft, including the Frye, Tannehill, Saddle, and Bluff Creek zones, and the upper, middle, and lower Cook zones.
TX Holdings plans to initiate a recompletion and workover program as soon as possible to bring all existing wells into production. The emerging company also plans to acquire and develop additional oil and gas leases and options on properties with proved and provable reserves in Texas, Louisiana, and Oklahoma.
Aramco orders 16 deck modules for offshore use
Saudi Aramco awarded a contract to subsidiaries of J. Ray McDermott SA to build and install 16 production deck modules (PDMs) for oil and gas fields off Saudi Arabia. Financial terms were not disclosed.
In December 2005, Aramco awarded McDermott a contract for related jackets for the Maintain Potential project, which includes work in the Berri, Marjan, Maharah, Safaniya, and Zuluf fields (OGJ Online, Aug. 19, 2005).
In the most recent contract, McDermott agreed to carry out construction, engineering, partial procurement, and fabrication of the PDMs at its Jebel Ali fabrication yard in Dubai. Each PDM weighs 450 tonnes.
The first two decks are scheduled for installation by mid-2007, followed by 10 decks by Oct. 31, 2007, with the remaining four decks scheduled for installation by mid-2008.
Processing - Quick TakesChina to construct dimethyl ether facility
China plans to begin construction of a 3 million tonne/year capacity dimethyl ether (DME) project in Ordos, in the Inner Mongolia Autonomous Region. No completion date was given.
China’s National Development and Reform Commission said the project will make a significant difference in China’s alternative energy sector compared with the country’s current output of 120,000 tonnes/year of DME.
DME will be piped from Ordos to the port city of Tangshan in north China’s Hebei province, and then on to provinces in East and South China.
Firms participating in the DME project include China National Coal Group Corp., China Petroleum & Chemical Corp., and Shenergy Group.
Transportation - Quick TakesMexico’s Atamira LNG terminal gets first cargo
Terminal de LNG de Altamira S de RL de CV-a joint venture of Royal Dutch Shell PLC, Total SA, and Mitsui & Co. Ltd.-reported that the first LNG cargo to be delivered to Mexico arrived at the Altamira terminal, signaling the start of the commissioning phase of the country’s first LNG regasification terminal near Tampico, Tamaulipas state.
The 138,000 cu m of LNG was delivered via Shell-operated vessel SS Gracilis from the Nigeria LNG plant. Subsequent LNG cargoes will be delivered by both Shell and Total, which hold a respective 75% and 25% interest of the terminal’s capacity rights.
Mexico’s power authority, Comisión Federal de Electricidad (CFE), has agreed to buy 5.2 billion cu m/year of regasified LNG for 15 years from Altamira. The LNG will be used for power generation to support existing and future industry in the northeast section of the country. Commercial deliveries of gas to CFE are expected to start in October.
LNG deliveries will support Mexico’s energy policy by fueling new power generation to meet an expected growth in demand.
Permits sought for Los Angeles LNG project
Woodside Natural Gas Inc. has applied for federal and city permits to build and operate its deepwater OceanWay LNG project off Los Angeles (OGJ, Apr. 17, 2006, Newsletter).
The project would use LNG carriers with regasification equipment and flexible pipelines aboard ship to preclude the need for a permanent surface facility.
Woodside submitted applications to the US Coast Guard and Maritime Administration for a deepwater port license and to the city of Los Angeles for a gas pipeline franchise.
It wants to install two delivery buoys more than 20 miles off Los Angeles International Airport and dual pipelines to shore for connection with the distribution network.
When not connected to ships, the buoys would sink to 60 m below surface.
The project initially could deliver an average 400 MMcfd of natural gas. Subsequent phases could raise capacity to 800 MMcfd and 1.2 bcfd.
Indonesia to import LNG for contracted exports
Indonesia’s state-run PT Pertamina plans to import 600,000 tonnes/year of LNG from Oman, along with possible purchases from Qatar, to help meet its export contracts with Japan, South Korea, and Taiwan.
“Oman’s LNG [plants] can produce 10.5 million tonnes, and they have excessive output of some 600,000 tonnes,” said Pertamina president Ari Soemarno on Aug. 11. “We ask Oman to sell the excessive output to Indonesia.”
Soemarno said Pertamina also has approached Qatar to buy 200,000 tonnes of LNG, and the company is conducting intense talks with Qatari officials.
Even with the additional supplies, however, Soemarno acknowledged that 600,000 tonnes or 10 cargoes would not be enough to cover the shortage for exports to Japan, South Korea, and Taiwan. Pertamina has a contract to supply 12 million tonnes/year of LNG to Japan alone.
Soemarno said the shortfall to all three countries amounted to some 75 cargoes or 5 million tonnes/year, including 9 cargoes from Arun in Aceh and 70 cargoes from Bontang in East Kalimantan. He did not offer details of how the remaining cargos would be secured.
Transneft to shut Druzhba-1 oil line for repairs
OAO Transneft may be facing long-term closure of the branch of its Druzhba-1 pipeline in order to conduct much-needed repairs, according to the firm’s Pres. Sergei Vainshtok.
Vainshtok said the lifespan of a pipeline according to industry standards is 30 years, but that Druzhba-1 is 42 years old and is made out of metals that are now outlawed.
Druzhba-1 carries crude to Lithuania’s Mazeikiu refinery, but Transneft cut supplies to the refinery at the start of August after discovering a leak on the pipeline.
PDVSA, Brazilian firm plan shipyard
Petroleos de Venezuela SA has signed a memorandum of understanding with Brazilian construction company Andrade Gutierrez SA to build a shipyard in Venezuela in support of the 42 oil tankers it intends to add to its fleet by 2012.
Venezuelan President Hugo Chavez wants to reduce his country’s dependence on international transportation companies.
Venezuela currently has 16 tankers, which carry 12% of its crude exports. By 2012 it hopes to increase crude production to 5.18 million b/d from the 3.3 million b/d it reports now.
The shipyard’s probable site will be in eastern Venezuela.
BP gets fourth double-hull tanker for Alaska
BP Shipping Ltd. on Aug. 18 was scheduled to take delivery of the last of four Alaska-class, double-hull crude oil tankers that were built by National Steel & Shipbuilding Co. (Nassco) of San Diego.
As with the first three ships, the Alaskan Legend is diesel-electric powered, equipped with 20 separate cargo tanks, and has all of its cargo transfer piping inside the hull rather than on its decks to reduce the chance of accidental spills.
It is capable of carrying as much as 1.3 million bbl of crude and will operate between Alaska and western US ports.
The first three Alaska-class ships-Alaskan Frontier, Alaskan Explorer, and Alaskan Navigator-are already in service.
The tankers, which are 941 ft long and have a beam of 164 ft, have a design draft of 61.5 ft. The ship’s total carrying capacity is 190,000 tonnes at its design draft.
Full use seen of expanded Rockies NGL system
Mid-America Pipeline Co. LLC expects full utilization of the current 225,000-b/d capacity of its Rocky Mountain NGL pipeline system and 50,000 b/d of expansion capacity based on an open season tariff accepted by the Federal Energy Regulatory Commission and effective on Aug. 6.
The Enterprise Products Partners LP subsidiary has entered long-term agreements with all but one of the current shippers on the NGL system.
The shippers have agreed to transport all of their current and future NGL production from the Rocky Mountain region to the Hobbs, NM, fractionator or to Mont Belvieu, Tex., via the Seminole pipeline system for 10-20 years.
Enterprise said construction has begun to expand the Rocky Mountain system, which carries mixed NGLs from the Rocky Mountain Overthrust Belt and San Juan basin to Hobbs. The project will add 30,000 b/d of capacity to the system by yearend and a further 20,000 b/d of capacity via horsepower upgrades at new pump stations by mid-2007.
To accommodate increased NGL production in the Rockies, Enterprise in April completed the addition of 15,000 b/d of fractionation capacity at an existing facility at Mont Belvieu.
It plans by third quarter 2007 to complete construction of a 75,000 b/d fractionator and related storage facilities at the interconnection of the Mid-America and Seminole systems at Hobbs.
