Chavez vows to expand gas, oil production
Venezuelan President Hugo Chavez said his government is “launching the socialist gas revolution,” claiming that Venezuela possesses “80% of South America’s gas reserves” and “30% of the gas reserves in the Americas.”
He said Sept. 16 that his administration would invest $18 billion to expand natural gas production to 11 bcfd from the current 7 bcfd over the next 5 years.
Touting his country’s assets, Chavez said Venezuela has proved gas reserves of 150 tcf onshore and 30 tcf offshore.
Meanwhile, the Venezuelan leader said his government also plans to increase the country’s production of crude oil to “5 million b/d in 2012,” up from the current 3.2 million b/d.
“We’ll take it there on pace with prices because for us it’s more important to maintain the correct price of oil than to flood the market,” said Chavez, who added that the world is entering an energy crisis because “oil is running out.”
APEC: Growth requires diversified energy mix
Foreign and trade ministers at the Asia-Pacific Economic Cooperation Forum Sept. 6 called for ensuring a “diversified mix of energy sources,” including nuclear energy, in order to pursue the region’s long-term economic growth, while reducing dependence on fossil fuels.
In a joint statement issued after their recent 2-day meeting in Sydney, the ministers said the diversified mix includes “the use of natural gas, biofuels from sustainably farmed crops and residues, renewable energy, and nuclear energy for interested economies.”
“We recognized the importance of achieving oil security, including through improving data sharing,” they said. “Climate change, energy security, and clean development are of vital interest to APEC economies.”
The ministers agreed on “the important role of market-based solutions in mobilizing economy-wide efforts to address energy security and achieve sustained reductions in greenhouse gas emissions.”
APEC comprises Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, South Korea, Taiwan, Thailand, the US, and Vietnam.
ExxonMobil seeking arbitration for Cerro Negro
ExxonMobil Corp. has filed a request for arbitration over Venezuela’s nationalization of the Cerro Negro heavy oil project.
The firm, which filed the arbitration request with the International Center for Settlement of Investment Disputes, held a 41.67% interest in the project before Venezuela expropriated it in June.
The appropriation resulted from a nationalization decree issued by Venezuela’s President Hugo Chavez earlier this year.
Venezuela took majority control of the country’s privately run oil projects on May 1 and gave the companies until June 26 to decide to accept new terms as junior partners.
ExxonMobil and ConocoPhillips rejected the offer, while Chevron Corp., BP PLC, Total SA, and Statoil ASA accepted.
Venezuela’s tax authority Seniat recently said it had received or been promised payments from two state-dominated joint venture firms after imposing large back-tax bills on recently nationalized heavy oil development projects, including Cerro Negro (OGJ Online, Sept. 6, 2007).
Unions push safety look into Shell operations
The UK Health and Safety Executive should investigate Royal Dutch Shell PLC’s safety operations in the North Sea because its change management process is affecting safety on the assets it plans to sell, charges UK trade unions Unite and the Oil Industry Liaison Committee.
Shell union employees complain that there is poor communication from the company regarding the sale of the Cormorant Alpha-Dunlin Alpha and the Tern, Eider, and North Cormorant installations. In a letter to senior managers, offshore staff said as a result of recent departures attributable to the prolonged nature of the divestment issue, “Many platforms areas are now not fully covered by trained and competent people, and certain HSE safety critical roles are not fully supported.
According to the unions, positions lacking adequate staff are control room operators, shift supervisors (process), instrumentation technical custodians and responsible persons (electrical), and reportedly a lack of suitably trained Fire Team Leaders.
The unions said that as key personnel have left in protest at treatment they received, gaps appeared in critical safety positions, which could leave those left behind unable to cope in emergency situations. The unions want to know if Shell can comply with the safety elements of PFEER (prevention of fire and explosion, and emergency response) Regulations 1995 for offshore installations.
Shell staff members also are unhappy that the company has discontinued its “preferred HR principals for divestment and acquisition” system that it has used for 8 years when selling other assets.
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Exploration & Development - Quick TakesLibya prequalifies 56 firms in license round
Libya’s state-owned National Oil Co. has prequalified 35 operators and 21 investors out of the 70 firms or more that were said to have applied in its current natural gas licensing round.
NOC launched the round on July 8 to award foreign energy companies gas exploration licenses for 41 blocks, with offers to be submitted by Aug. 22 and successful bidders to be announced on Dec. 9.
NOC expected to award about 12 natural gas exploration contracts for the 41 blocks, which cover a total area of 72,500 sq km.
Libya’s gas reserves are estimated at 1.314 trillion cu m and its proved oil reserves are 36 billion bbl, according to the Organization of Petroleum Exporting Countries.
In May, Libya signed a $900 million exploration deal with BP, under which BP will explore an area of some 54,000 sq km, primarily for gas, but also in the hope of finding oil.
Centurion Petroleum finds oil in southern Egypt
Centurion Petroleum Corp. has discovered oil in southern Egypt with the Baraka-1 exploration well, the company reported on Sept. 4. Testing of the Early Cretaceous Abu Ballas formation produced 150 b/d of oil from a 39 ft perforated interval.
The recovered oil was 37° gravity, with a wax content similar to the crude oil currently produced and exported in large quantities in Sudan. The well, which was drilled in the Komombo Concession in Upper Egypt, reached a TD of 8,712 ft and penetrated several oil-bearing zones. Baraka tested different volumes of oil from three additional intervals in the deeper early Cretaceous section. The company is calculating the size of the reserves and potential productivity.
The find could affect the economic development of Upper Egypt, which is outside of the country’s traditional producing areas. Dana Gas, the parent of Centurion Petroleum, plans to bring the oil on production as early as possible using existing transportation and refining facilities. It also will continue an aggressive exploration and appraisal program in the area.
The Komombo concession is 700 km from Cairo and 320 km from the closest refinery at Assiut. Early oil production from this discovery may be transported by rail or Nile river barges to the Assiut refinery to the north, Dana Gas added.
Venture tests gas from North Sea field
Venture Production PLC has tested gas production from the first well on Chiswick field in the UK southern North Sea. The company carried out a multiple fracture well stimulation, and 50 MMcfd of gas was produced through a restricted 72/64-in. choke.
Chiswick has been tied back to the Venture-operated Markham J6A platform. The reservoir quality and well production performance are “in line with expectations,” Venture said. The well is expected to reach gross production rates of 55-60 MMcfd through the platform facilities following completion of the ongoing clean-up program, the company said.
Commercial gas production is expected to start at the end of September after the current Markham field annual shutdown is finished.
The Noble Kolskya jack up drilled the Chiswick Alpha well (49/4a-C1y) for Venture during the first half of this year. During August it carried out five hydraulic fracture procedures to maximize gas deliverability from the field.
Venture plans to drill a second development well, Chiswick Gamma, using the same rig. It also is considering drilling another three wells on the field to target incremental reserves on the Gamma block and the undrilled Beta block, depending on performance from the first two wells.
Norsk Hydro takes 10% equity in ONGC’s KG block
Norway’s Norsk Hydro AS has taken a 10% participating farm-in stake in Oil & Natural Gas Corp.’s KG-DWN-98/2 deepwater block in the Krishna-Godavari basin off eastern India.
Hydro may increase the stake by another 10% after commerciality is shown.
The agreement is the follow-up of a development and cooperation agreement the companies signed in July in which an investment cap of $26 million was established during the appraisal phase.
Hydro also is working with ONGC for thin-oil-ream exploitation in Vasai East, near Mumbai-one area identified in the earlier agreement.
In addition, the Norwegian firm has expressed interest in assuming a participating interest in additional New Exploration Licensing Policy (NELP) blocks as well. ONGC has 32 offshore blocks under NELP, of which 12 are in ultradeep water, 14 are in deep water, and 6 in shallow water. ONGC has 100% participating interest in 12 blocks, while varying levels of equity in the remaining 14 blocks have been farmed out to others.
Drilling & Production - Quick TakesHydro begins Ormen Lange gas production
Development operator Norsk Hydro AS has started natural gas production from giant Ormen Lange field on the Norwegian continental shelf, with deliveries via the Langeled pipeline. Ormen Lange will meet as much as 20% of the UK’s gas needs.
The field, expected to supply 70 million cu m/day of gas and 50,000 b/d of condensate at peak rate, will position Norway as the world’s second-largest gas exporter after Russia.
Hydro is testing production from the field in the North Sea about 120 km from the Norwegian coastline, until the inaugural ceremony on Oct. 6, so gas flows may vary.
From a depth of 800-1,100 m, the gas is transported by pipeline through demanding subsea terrain to Nyhamna on the island of Gossen in the municipality of Aukra in More and Romsdal. After being processed, the gas will be sent through the 1,200 km Langeled subsea pipeline to Easington on England’s east coast.
Norway currently is the world’s third largest gas exporter, delivering 85 billion cu m/year. When Ormen Lange reaches plateau production in 2010, total gas exports from Norway will increase to 120 billion cu m/year, or 20% of Europe’s gas requirements.
Royal Dutch Shell PLC will assume operatorship from Hydro on Dec. 1.
CNPC increases drilling forecast for 2007
China National Petroleum Corp. (CNPC) has announced plans to drill 17% more horizontal wells in 2007 than originally planned in order to increase production from both mature and newer fields.
CNPC said it completed drilling 610 horizontal wells by the end of August, exceeding its original full-year target of 600. The state-run firm said it was encouraged to step up the number of horizontal wells to 700 this year because of recent success at Sichuan.
It said that last month’s output from a horizontal well in a Sichuan field was 20 times greater than that of a neighboring vertical well. In 2006, the company drilled 522 horizontal wells, equal to the total number it drilled in 2000-05.
Petrobras commissions Piranema FPSO unit
Brazilian President Luiz Inacio Lula da Silva officially launched the Piranema floating production, storage, and offloading unit, chartered from Sevan Marine and anchored off the Sergipe coast.
The unit’s hull was built at the Yantai-Raffles shipyard in China and then transported to the Keppel Verolme shipyard in the Netherlands, where the oil and gas production processing plant was installed.
The unit, which is capable of producing as much as 30,000 b/d of oil and storing 300,000 bbl of oil, is the world’s first circular FPSO unit and will interconnect a total of six wells at maximum depths of 1,450 m.
Recently Sevan said Petroleo Brasileiro SA (Petrobras) revised the schedule of start up of oil production from Piranema field because of normal delays in the completion of operations. Petrobras signed the charter agreement with Sevan in February 2004.
Declared commercial in August 2004, Piranema field is in deep waters, 35 km off Aracaju, the capital of Sergipe state, and will produce 44º gravity oil.
Petrobras taps Technip for subsea work off Brazil
Petroleo Brasileiro SA (Petrobras) has awarded three contracts totaling $270 million to France’s Technip for pipeline work in deepwater developments off Brazil.
The first contract covers engineering, procurement, installation, and commissioning of a rigid flowline that will connect Canapu oil and gas field in 1,700 m of water in the Espirito Santos basin to the Ciadade de Victoria floating production, storage, and offloading vessel anchored in 1,400 m of water. This 21-km flowline will be the first application of pipe-in-pipe (PIP) technology for subsea gas transportation in Brazil. Technip’s Deep Blue deepwater pipelay vessel will install the flowline during fourth quarter 2008.
Intec Engineering earlier this year completed the front-end engineering design for the PIP flowline (OGJ Online, Apr. 4, 2007).
The second contract comprises engineering and procurement of 37 km of 4-in. and 6-in. flexible flowlines for Mexilhao gas field in the Santos basin. The reservoirs in Mexilhao have high pressures and temperatures. The 6-in. flowlines have been specially designed to cope with extreme temperature and pressure of the carried fluids.
The third contract includes engineering and procurement of four large-diameter flexible risers for the Campos basin oil outflow and treatment plan (PDET) that will be installed in 1,300 m of water in the Campos basin. The PDET export system is designed to increase oil production in Campos basin by as much as 630,000 b/d (OGJ Online, Oct. 20, 2005).
EDC lets contract for jack up construction
Egyptian Drilling Co. (EDC) has let a contract to SembCorp Marine subsidiary PPL Shipyard to build a $201 million Baker Marine Pacific Class 375 (BMC Pacific 375) jack up.
Construction is expected to start in the third quarter with delivery slated for December 2009.
The rig will be built based on PPL’s proprietary BMC Pacific 375 Deep Drilling design and will be equipped with a drilling package capable of drilling high-pressure, high-temperature wells to 30,000 ft total depth, while operating in as much as 375 ft of water.
EDC is an equal joint venture of Egyptian General Petroleum Corp. and AP Moller-Maersk Group.
Processing - Quick TakesSinclair Tulsa plans refinery expansion
Sinclair Tulsa Refining Co. plans a major expansion of its 70,000 b/d Tulsa refinery. The company said recent changes in federal and state tax law have been an encouraging factor in its decision.
The expansion project is expected to increase the facility’s output of ultralow-sulfur gasoline and diesel. A net reduction in actual refinery emissions, also could be realized after the expansion is completed, Sinclair said.
Three major components are involved in the project. These include the facility’s refining capacity, which will be increased by 45,000 b/d to 115,000 b/d; a new delayed coker unit, which will be added to increase refinery output of gasoline and diesel; and modifications to the plant to enable processing of a wider range of oil, including heavy, sour crude.
The delayed coker unit will use odor and particulate control technology that has been successfully demonstrated in California.
Sinclair recently applied to the Oklahoma Department of Environmental Quality for an air quality construction permit for the expansion project. The application indicates the expansion will be below the Prevention of Significant Deterioration significance thresholds for all criteria pollutants.
Assuming ODEQ approves the permit, construction work could begin in 2008, with project completion expected in 2011.
Sinclair also plans to install a flare gas recovery system to minimize flaring.
In addition, the company proposes to treat refinery wastewater to an acceptable level for discharging into Tulsa’s treatment system.
Saras to revamp Sarroch refinery visbreaker unit
Saras SPA has completed a process license agreement with an affiliate of Shell Global Solutions International BV to revamp the visbreaker unit at the 300,000 b/cd Sarroch refinery in Sardinia, Italy.
The unit will be upgraded to use Shell GSI’s deep thermal conversion technology, which will allow the refinery to process heavier crudes.
Saras and Shell GSI are working alongside ABB Lummus Global, one of Shell’s authorized licensors, and have scheduled delivery of the project by the end of September.
The visbreaker license agreement follows the revamp of the refinery’s hydrocracker in March.
The Sarroch refinery has recently undergone a maintenance cycle involving shutdown of a crude distillation unit, a vacuum unit, and now the visbreaking unit. As a result, refinery runs have been reduced by about 10% from normal levels, Saras said.
Spanish firms dropped from Gassi Touil project
Sonatrach has taken sole control of the Gassi Touil integrated gas project in eastern Algeria and dismissed Repsol YPF SA and Gas Natural SDG SA from the project development.
Sonatrach terminated the contract after months of political struggle between Algiers and Madrid over control. Media reports said Sonatrach blamed the companies for cost overruns and delays.
Repsol YPF and Gas Natural plan to launch international arbitral proceedings against Sonatrach, protesting that the project had been taken “through illegitimate means.” They will seek damages and determination of whether the contract had been rightfully terminated.
This was the first project in Algeria to be awarded to a foreign consortium. However, to exert greater control over its national resources, Algeria within the past 18 months passed a law requiring Sonatrach to maintain a 51% stake in energy projects.
Sonatrach’s decision leaves the Spanish companies without access to huge reserves and supply contracts after they beat stiff competition to win the lucrative tender in 2004. For Repsol in particular, the effect is galling, as the company was also forced to revise downwards its oil and gas reserves in South America partly due to energy nationalizations in Bolivia and Venezuela.
The $7 billion Gassi Touil project involved exploration and production phases as well as construction of a 4 million-tonne/year gas liquefaction plant and marketing activities by 2009. Repsol YPF held a 48% stake, Gas Natural 32%, and Sonatrach 20%.
Transportation - Quick TakesPemex brings gas line back in service
Mexico’s Petroleos Mexicanos (Pemex) resumed natural gas transportation Sept. 17 through its 48-in. Cactus-San Fernando pipeline.
The firm said it expected to have service completely restored by Sept. 18 on the network that was put off line by guerrilla bombs at Delicias, Rio Actopan, and Rio La Antigua.
Pemex said the attacks did not result in any casualties, but it cut power to more than 2,000 businesses in 10 states, according to figures from the Canacintra industrial association. The shutdown cost those firms about $100 million/day, Canacintra reported.
The Ejercito Popular Revolucionario (EPR), a secretive Marxist group that killed dozens of Mexican police and soldiers in the late 1990s, claimed responsibility for the attacks.
EPR said it bombed the pipeline to force the release of EPR militants it alleges were arrested by the government May 25. Mexican officials say the rebels are not in custody.
EPR says Edmundo Reyes Amaya, Raymundo Rivera Bravo, and Gabriel Alberto Cruz Sanchez have not been seen since their arrest. EPR wants them back and apparently has been bombing the country’s oil and gas pipelines for that purpose.
In the latest attacks, one bomb was discovered intact, with a note attached. “Alive you took them, alive we want them back,” in an apparent reference to the missing EPR militants.
The rebel group has warned of more attacks if its missing members are not returned unharmed.
Nakilat to take delivery of four LNG carriers
Nakilat, the joint venture of Overseas Shipholding Group Inc. and Qatar Gas Transport Co., will soon take delivery of four new-generation, Q-Flex LNG carriers.
The first two carriers-the Al Gattara built by Hyundai Heavy Industries Co. Ltd. and the Tembek built by Samsung Heavy Industries in Geoje Island, South Korea-are scheduled to be delivered at the end of October.
Deliveries for the remaining vessels are expected in early 2008.
The Q-Flex LNG carriers can transport 216,000 cu m of LNG each, about 40% more than the standard LNG vessels currently in service. They are equipped with an onboard reliquefaction plant.
In addition, the vessels have lower energy requirements than conventional LNG vessels due to economies of scale created by their size and the efficiency of low-emission, electronically controlled diesel engines. Safety features include dual propellers and rudders.
Nakilat last year added six Q-Max LNG carriers to its fleet, which is expected to comprise 61 carriers by 2010 (OGJ, June 5, 2006, Newsletter).
Vietnam refining industry gets oil supply deal
Petrovietnam Trading Co., an affiliate of Vietnam Oil & Gas Group (PVN), has signed an agreement with the Trafigura Group of the Netherlands to supply oil for Vietnam’s refining industry for 30 years and to cooperate in building oil storage facilities, transporting oil to refineries, and shipping oil and products.
State media reported that PVN also is considering investing in a 9 million tonne/year refinery and petrochemical complex in northern Vietnam, and a 10 million tonne/year facility and petrochemical complex in southern Vietnam.
In February, Vietnam Development Bank awarded a credit of $1 billion to state-owned Petrovietnam to finance construction of the country’s first refinery at Dung Quat (OGJ Online, Feb. 13, 2007).
