BP seeks DOT nod to resume Alaska production
BP PLC submitted an application Sept. 13 to the US Department of Transportation requesting authorization to resume production in the Eastern Operating Area (EOA) of Prudhoe Bay for the purposes of pigging.
“Although this is an encouraging development, it is the first step of many,” BP said. “Work continues on a number of bypass projects, and we expect these to be ready by the end of October. BP has also committed to completely replace 16 miles of Prudhoe Bay OTLs [oil transit lines] this winter.”
Meanwhile, Prudhoe Bay’s production is up to about 250,000 b/d. Part of the field has been shut-down since early August because of severe corrosion problems discovered in OTLs.
Inspection of the integrity of the OTLs in Prudhoe Bay continues to advance. BP has completed more than 6,662 ft (26%) of ultrasonic (UT) inspections in the EOA. The company excavated three caribou crossings and a number of culverts for additional Western Operating Area (WOA) inspections.
Inspections have restarted in the WOA after the completion of the first tranche of asbestos-handling training for UT and insulation stripping crews. More than 5,813 ft (23%) of UT inspections has been done in the WOA.
“In both EOA and WOA inspections, our results continue to show no significant anomalies have been found, outside of those identified in the original pig run,” the company said.
Saudi oil minister warns of tight refining capacity
Saudi Arabia’s oil and gas investments will total some $70 billion during the next 5 years, said Saudi Minister of Petroleum and Mineral Resources Ali I. al-Naimi in a speech in Vienna Sept. 12.
Speaking before an Organization of Petroleum Exporting Countries international seminar, Al-Naimi said meeting global oil demand will require timely downstream investments.
“The industry must deal with a stretched refining system and match refining capacity to the anticipated future slate of crude oil that is becoming heavier and more sour, as well as attend to the infrastructure bottlenecks in pipelines, terminals, shipping, and critical sea channels,” he said.
Al-Naimi said Saudi production capacity is estimated to reach 12.5 million b/d by 2009 compared with 11 million b/d earlier this year. The Kingdom is experiencing a drilling surge (OGJ Online, Apr. 16, 2006).
Saudi Arabia’s downstream investments include the construction of two grassroots joint-venture export refineries, each with a capacity of 400,000 b/d.
One will be in Jubail on the kingdom’s east coast and the other in Yanbu on the west coast. Saudi Arabia also plans to expand its Ras Tanura refinery, possibly transforming it into an integrated refining and petrochemical complex (OGJ, Feb. 13, 2006, p. 24).
Bolivia’s oil minister resigns amid conflict
Bolivia Oil Minister Andres Soliz has resigned in the wake of a disagreement with Brazil’s state-run Petroleo Brasileiro SA (Petrobras). Soliz had led efforts to nationalize Bolivia’s oil and gas operations.
Soliz resigned Sept. 15, the day after Bolivian Vice-President Alvaro Garcia Linera said Bolivia was suspending a measure that would have exerted majority controlling interest in the operations of international companies working in Bolivia.
On Sept. 13, Soliz had issued the measure, which consequently prompted Petrobras Chief Executive Sergio Gabrielli to cancel a trip to Bolivia.
The measure would have reduced Petrobras’s profit margins at two refineries and given Bolivian state-owned energy firm Yacimientos Petroliferos Fiscales powers to set domestic fuel prices (OGJ Online, Sept. 14, 2006).
Russia to boost oil exports to Asia-Pacific
Russian President Vladimir Putin said a much greater percentage of his country’s oil exports will be heading to Asia and the Pacific in the next decade as part of a strategy of diversified marketing aimed at creating energy security for producing countries.
“We hope and we plan to increase our energy supplies to Asia and the Pacific from the current 3% of the country’s oil exports to at least 30% of the overall energy exports in 10 years’ time,” Putin told the Group of Eight countries’ parliamentary speakers in Sochi, Russia, Sept 17.
“We are to accomplish two major transport projects to deliver natural gas to China in this direction,” Putin said. He added, “Russia has been consistently diversifying energy export routes and consequently has been working to make energy exports more reliable.”
He said the strategy had initially met with resistance, but that everyone now agrees that energy security means “not only security for consumers, but also security for producers.” He added, “Only if we take due account of each others’ interests will we be able to attain a positive effect.”
Putin said construction of the North European Gas Pipeline, agreed to in early September, also forms part of his country’s strategy of energy security.
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Exploration & Development - Quick TakesDNO prepares to start oil production in Iraq
DNO ASA, Oslo, is planning early production, possibly in first quarter 2007, from Tawke oil field in the northern Kurdish region of Iraq based on test results from the discovery well and an appraisal well.
DNO achieved a maximum flow rate of 5,000 b/d of oil during open-hole tests of Tawke-1A, a twin well 20 km from the Tawke-1 discovery well. Tawke-1 also flowed at 5,000 b/d on test (OGJ Online, June 19, 2006, Newsletter). This well penetrated two reservoir zones exceeding 2,000 m deep, which were preserved behind casing and will be tested later.
DNO said all major facilities are secured, and it expects the development plan to be finalized and presented soon to partner Kurdistan Regional Government.
Tawke-1A was drilled in open-hole mode to retest the shallower reservoir sections of less than 1,000 m because it is assumed that formation damage during installation and casing in the discovery well may have restricted oil flow.
The tests results, which were not conclusive, will be further investigated, and additional tests of the intervals are planned in Tawke-2, a stepout well 2 km west of the Tawke discovery. When conducting Tawke-2 tests, a more extensive acid stimulation and fracturing of the reservoir sections will be considered, DNO said.
Tawke-2 will penetrate only the shallower reservoir sections. It will be followed by the drilling of an exploration well in the eastern part of the Tawke area. DNO is performing a 3D seismic survey across the area as part of a program to assess the area’s full oil potential.
Aramco discovers gas with Kassab-1 well
Saudi Aramco has reported a gas discovery in Saudi Arabia’s Eastern Province 50 km south of its giant Ghawar field and 220 km southeast of Riyadh.
The company said its Kassab-1 well flowed on test at 16.2 MMscfd on a 44/64-in. choke at a wellhead pressure of 1,520 psi.
Kassab-1 was tested on Aug. 7 at 15,750 ft in the Lower Devonian Jauf sandstone reservoir underlying the prolific Upper Permian Khuff reservoir.
Pre-Khuff formations at 11,000-17,000 ft are among the major gas-bearing reservoirs in Persian Gulf countries. The Jauf reservoir has permeability and porosity variations with varying amounts of framework and pore lining clay. It exhibits unconsolidation intermingled with consolidated sandstone. The high-permeability layers have excellent flow capacities, Saudi Aramco says. Jauf reservoir sandstones primarily are of quartz with some feldspars such as orthoclase and microcline in some sandstones (OGJ, May 10, 2004, p. 35).
Saudi Arabia, which has one of the world’s largest gas reserves, is pursuing an aggressive natural gas development program, tapping nonassociated gas reserves, particularly in the greater Ghawar field area, to meet a strong domestic demand for gas.
Tullow advances UK North Sea redevelopment
Tullow Oil PLC completed the Ketch 7 development well in the Schooner-Ketch redevelopment in the UK North Sea. On test, Ketch 7 flowed at 45 MMscfd of gas, and the company expects production in early October.
The horizontal well, spudded on June 2, encountered 540 ft of net pay along with higher-than-expected reservoir pressures. The addition of Ketch 7 is expected to increase the production capability of Schooner and Ketch fields to more than 100 MMscfd of gas.
Other Ketch wells are expected to generate additional production. Tullow spudded the 3,000 ft horizontal Ketch 8 well on Sept. 18.
Meanwhile, the NW Schooner appraisal well, targeting an extension of Schooner field, encountered a net gas pay of 275 ft. The well is being completed for testing, expected at the end of September.
If the test yields commercial flow rates, the well will be suspended, and the pipeline laid for tie-in to the Schooner platform in mid-2007.
Tullow owns 100% of Ketch 7 and 90.35% of the Schooner NW appraisal well. The company acquired Ketch and Schooner fields in early 2005.
Statoil find could drive LNG plant expansion
The Statoil ASA-led Snøhvit consortium is planning to drill additional wells in the Barents Sea next year and in 2008 to seek additional gas reserves for a possible future expansion of the Hammerfest gas liquefaction plant at Melkøya in northern Norway.
The plans follow a small gas discovery on the Tornerose structure that the company finds “encouraging.”
Although Tornerose reserves alone would not provide enough gas for expanding the LNG plant, the discovery “marks an important stage in efforts to enlarge the resource base in the area,” said Tim Dodson, Statoil’s senior vice-president for exploration on the Norwegian continental shelf.
“The Tornerose discovery confirms that we’re heading in the right direction,” he said. The structure, which Dodson calls viable, “strengthens opportunities for expanding the Snøhvit gas liquefaction facility at Melkøya.”
Statoil said Transocean Inc.’s Polar Pioneer semisubmersible rig drilled exploration well 7122/6-2 on production license 110B in 408 m of water and proved gas in several sandstone layers from the late-Triassic.
The well was drilled to 3,057 m TMD below sea level about 60 km east of Statoil-operated Snøhvit field and 100 km northwest of Hammerfest.
Petrobras-led group to explore off Argentina
Petróleo Brasileiro SA subsidiary Petrobras Energía SA, Argentina’s Energía Argentina SA (Enarsa), and Madrid-based Repsol YPF SA agreed Sept. 12 to form a consortium to explore, develop, and commercialize oil and natural gas on Argentina’s deepwater continental shelf.
Petrobras Energía, holding a 35% interest, will serve as operator, while Enarsa will hold 35% of the venture, and Repsol YPF 30%.
The consortium plans to conduct exploration activities in 200-3,000 m of water about 250 km off the city of Mar del Plata, Buenos Aires.
Last January the same group entered into an agreement with Petrouruguay SA, for exploration off Argentina in 150-1,500 m of water in the areas of ENARSA-1 (E1) and CCM2.
Drilling & Production - Quick TakesRepairs delay Thunder Horse production start-up
BP PLC plans to retrieve and rebuild all seabed production equipment from Thunder Horse field in the deepwater Gulf of Mexico following a series of tests in 4 months that showed metallurgical failure.
Consequently, BP does not expect production from Thunder Horse to begin before mid-2008. The company said it’s too early to estimate the additional costs.
The original projected start up was for late 2005, but it has been pushed back as BP has resolved “many technology gaps” that emerged during development, a spokesman said.
Thunder Horse field was discovered in 1999. The project involves some of the highest-temperature, highest-pressure wells in the gulf.
The semisubmersible platform weighs more than 50,000 tons and is designed to process 250,000 b/d of oil and 200 MMscfd of gas. BP operates the development, owning 75% interest, and ExxonMobil Corp. owns the remaining interest.
The platform had to be restored to normal trim last year. That incident is unrelated to the latest subsea equipment issues, BP said (OGJ, July 25, 2005, Newsletter).
The drilling, production, and quarters platform on Mississippi Canyon Block 778 in the Gulf of Mexico, 150 miles southeast of New Orleans, was discovered listing 20-30° after Hurricane Dennis passed through the area (OGJ Online, July 12, 2005). The platform is moored in 6,050 ft of water.
The metallurgical problems became evident when BP conducted precommissioning tests by pumping water through the system to establish its integrity. The equipment passed all normal industry standard tests and regulatory requirements, but during more-rigorous and prolonged testing, a failure occurred on a subsea weld.
Consequently, BP opted to retrieve both the damaged seabed manifold and a second manifold for additional examination and testing. The second manifold displayed a similar failure during testing last week, BP said Sept. 18.
Bankers to study Albanian EOR pilot project
Bankers Petroleum Ltd., Calgary, reported it will begin a study for a thermal enhanced oil recovery (EOR) pilot project in Albania’s Patos Marinza field.
A specialized EOR team has initiated the evaluation, economic analysis, and modeling of a thermal pilot project for the southern part of the field.
Under the current development plan, the life of Patos Marinza field is estimated at 25 years, which represents a total incremental oil recovery of 5-6%/year of the total field resources of 2 billion bbl of OOIP.
Total field recovery utilizing primary production techniques is thus estimated to be 10-12%, including the previous production by state-owned Albpetrol.
In Albania, the company this year has focused on continuing to build production through the takeover and redevelopment of wells from Albpetrol.
To date, Bankers’s activities have increased current production to 4,200 b/d of oil. The company’s goal is to reach 10,000-15,000 b/d of oil production in 3-4 years.
While EOR recovery techniques have been shown to have the ability to improve oil recoveries to 20-40%, it is not known at this time what the total potential impact could be on Bankers’s Albanian reserves.
JED wins 20-acre Jonah/Pinedale spacing
JED Oil Inc., Calgary, and JMG Exploration Inc., with which JED is pursuing a merger, said they can drill as many as 32 additional wells on JED acreage in the Pinedale/Jonah area of Wyoming under a density ruling by the Wyoming Oil and Gas Conservation Commission.
The commission approved a request to change to 20-acre from 40-acre well spacing in the Green River basin area.
In August, JED said it had drilled two gas wells in the Pinedale area.
In the first well, JED fracture-stimulated 24 pay zones in 11 stages and encountered water in two of the stages. It was isolating the water zones and preparing the well for production from the six higher frac stages.
JED recently was completing and fraccing the second well, which also encountered multiple pay zones. Before the spacing decision it had identified two other drilling locations and installed a pipeline to market the gas.
IEA: Global crude to get heavier, sweeter
The global crude slate will become heavier and slightly sweeter during 2006-11, predicts the International Energy Agency, Paris.
Global average crude will move to 32.5º gravity from 32.7º during the period, IEA says in its September Oil Market Report. A lightening of crude from the Middle East and Russia will be offset by heavier production elsewhere. Global average sulfur content of crude supply will decline to 1.16% from 1.18%.
IEA’s analysis covered crude oil and condensate and excluded NGLs, biofuels, transport fuel blending components, and refinery processing gains. It used production capacities of members of the Organization of Petroleum Exporting Countries rather than actual production.
In the Middle East, which accounts for 36% of an expected 9.6 million b/d supply increase through 2011, crude lightens to 34.1º from 34.0º gravity while dropping to 1.73% sulfur from 1.78%.
The quality changes come mainly from new condensate streams, especially in Qatar and Iran, and Saudi Arabia’s attempt to boost supply of Arab Light crude at the expense of heavier and sourer grades, IEA says.
The most improvement in projected quality in IEA’s analysis occurs in the former Soviet Union, where average crude will rise to 34.3º from 33.7º gravity while sulfur content drops to 1.15% from 1.28%.
While Russian Urals crude moderates the effect, the improvement will come from Azeri crude and Shah Deniz liquids off Azerbaijan, production from Russia’s Sakhalin projects, and supply from Kazakhstan’s Karachaganak and Kashagan fields.
Oil supply will sweeten slightly to 0.35% sulfur in Africa and to 1.07% in Latin America by 2011, IEA says. But production becomes heavier by 0.7-0.8º gravity in each region to 35.4º gravity in Africa and 25.5º gravity in Latin America. Driving the quality changes are increased deepwater production off Angola and Brazil.
Like its production, the Asia-Pacific region’s crude quality will change little, averaging 34º gravity and 0.18% sulfur.
North American supply will degrade to 27.7º gravity in 2011 from 27.0º in 2006 and to 1.60% sulfur from 1.54%. Growing production from Canadian oil sands is the main reason.
Supply from the North Sea will move to 35.8º gravity from 35.4º in IEA’s study period. Sulfur content will rise to 0.38% in 2008 but return in 2011 to its 2006 level of 0.37%.
Processing - Quick TakesBP to invest $3 billion in Whiting refinery upgrade
BP PLC is in the final planning stage of a $3 billion investment to increase capacity to process Canadian heavy crude oil at its 399,000 b/cd Whiting refinery in northwest Indiana.
The company said reconfiguring the refinery has the potential to increase production of motor fuels by about 15% from its current capacity of 4.5 billion gal/year.
The project includes construction of a world-scale coking unit, a hydrogen production plant, and sulfur recovery facilities. BP said the replacement processing units and enhancements to existing refinery units will increase Canadian heavy crude oil processing capability by about 260,000 b/d.
Project construction is slated to begin in 2007 and be completed by 2011, pending regulatory approvals.
Contract awarded for Tatarstan refinery
CJSC Nizhnekamsk Refinery has let a contract to Foster Wheeler Ltd.’s Paris-based subsidiary Foster Wheeler France SA for front-end engineering and design for a refining and petrochemical complex to be built in Nizhnekamsk in Tatarstan, Russia.
The contract, terms for which were not disclosed, is an addition to an existing project management consultancy contract awarded in 2005.
The planned complex, expected to cost more than $3 billion, will consist of a refinery with 140,000 b/d distillation capacity, a deep conversion refinery, and a petrochemical plant. Construction of the complex will occur in three separate phases during 2008-10.
The oil processing section of the complex will include aromatic units and a deep conversion section with a fluidized catalytic cracker, a distillate hydrocracker, a delayed coker, and a gasification plant. The petrochemical section of the complex will include purified terephthalic acid, polyethylene terephthalate, linear alkylbenzene and polypropylene units, plus the associated power generation facilities.
Neste gets animal fat for biodiesel production
Neste Oil Corp. has signed long-term procurement contracts with Honkajoki Oy and Findest Protein Oy, both owned by Finnish food manufacturers, for the supply of animal fat for biodiesel production at Neste’s 200,000 b/cd Porvoo, Finland, refinery.
Neste plans to import additional animal fat to supplement insufficient Finnish supplies, said Kimmo Rahkamo, Neste Oil’s executive vice-president, components.
Current diesel fuel production capacity at Porvoo is 4 million tonnes/year, but Neste Oil is constructing a 170,000-tonne/year biodiesel plant on the site as the European Union has challenged member nations to increase renewable biofuel usage to 5.75% of all gasoline and diesel fuels by 2010.
Production at the plant will be based on Neste Oil’s proprietary technology that can use a flexible input of any vegetable oil or animal fat.
Biofuel production is expected to begin in summer 2007 at the new €100 million plant.
Transportation - Quick TakesWoodside undertakes LNG study off Australia
Woodside Energy Ltd. hired Foster Wheeler Energy Ltd. to study a proposed offshore LNG development that would process gas from Browse basin off Western Australia.
The contract value was not disclosed. Foster Wheeler, together with WorleyParsons Services Pty. Ltd., will evaluate technical considerations for the Browse LNG project, which comprises the East and West Browse joint ventures operated by Woodside.
Fields involved would be Torosa, Brecknock, and Calliance in 35-700 m of water.
Sonatrach awards ABB pump station contract
Algeria’s state-owned Sonatrach has awarded ABB Group, Zurich, a $215 million contract to construct two pumping stations and automation systems on the 665-km NK-1 oil pipeline linking oil fields in Algeria at Haoud El Hamra with the Mediterranean port of Skikda.
ABB will provide engineering, procurement, construction, and commissioning of the new pumping stations, terminal upgrades, and a 44-km fuel pipeline.
The NK-1 project, scheduled for completion in late 2008, will add 18 million tonnes/year to Algeria’s oil transport capacity.