OGJ Newsletter

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Nexen to fast-track Blackbird oil development

Nexen Petroleum Inc., Calgary, has suspended its Blackbrid well as a future producer in the UK North Sea after a drillstem test indicated an average of 3,800 b/d of oil production potential, with the oil flowing through a ³⁴⁄₆₄-in. choke.

The well, drilled on Block 20/2a, 6 km south of Nexen-operated Ettrick field, struck 111 ft of net pay in multiple zones.

Nexen described the oil as being high quality in good quality reservoir sands. It plans to fast-track the development as a subsea tieback to the nearby Ettrick floating production, storage, and offloading vessel.

Charlie Fischer, Nexen’s president and chief executive, said: “Satellite discoveries such as Blackbird allow for quick and cost effective tie-backs to existing infrastructure, which generates incremental value.”

Nexen is operator of the Blackbird well with a 79.73% working interest. Other coventurers include Bow Valley Energy Ltd. 12% and Atlantic Petroleum 8.27%.

Bankers eyes higher Ardmore Woodford gas flow

The newly separated US unit of Bankers Petroleum Ltd., Calgary, reported a sharply higher flow rate at its fifth horizontal well in Tishomingo field in the Ardmore basin in southern Oklahoma.

The company is making several efforts to increase capacity for its gas sales from the area.

Initial test rate at the Dunn 2-1H well was 4.8 MMcfd of gas equivalent in what the company supposed is the result of an unspecified modified hydraulic fracturing technique. The wells produce gas-condensate and oil from Mississippian-Devonian Woodford shale.

BNK Petroleum Inc., the US subsidiary, drilled and cased eight wells in the quarter ended June 30 and spud four others. The company, whose 4 MMcfd of gas equivalent of output from the play is limited by facilities constraints, plans to stimulate more wells as it obtains more gas processing capacity.

It installed a gathering system to connect the Brock wells to a processing plant that was completed in late March and is waiting on parts for a tap upgrade to remove throughput restrictions into a pipeline operated by Natural Gas Pipeline Co. of America.

Other work includes laying of gathering lines and addition of two compressors.

A temporary plant is being set up that will allow the company to hike production to as much as 20 MMcfd of gas equivalent, and processing agreements are complete with Atlas Pipeline and pending with Chesapeake Energy Corp.

Bankers’ leasehold is in Carter, Murray, and Johnston counties (OGJ, May 26, 2008, p. 34).

Petrobank eyes Muskwa-Evie, Montney shale gas

Petrobank Energy & Resources Ltd., Calgary, has acquired 25 sections of land in Northeast British Columbia to pursue gas in the Devonian Muskwa and Evie shales of the Horn River basin and plans to drill its first vertical well in early 2009.

Petrobank also signed a definitive agreement to buy for $53 million an undisclosed private company that owns 15 sections with strong horizontal development potential in the Triassic Montney formation in the Monias area northwest of Dawson Creek. Consulting engineers assessed the recoverable potential at 148 bcf. Two vertical wells produce 150 Mcfd, and the properties include a 5 MMcfd gas plant. Petrobank plans to complete the acquisition by Oct. 2 and drill two horizontal Montney wells on the lands in 2008.

Canadian Superior’s Bounty finds gas off Trinidad

Canadian Superior has reported a major natural gas discovery on Intrepid Block 5(c) off eastern Trinidad and Tobago. The company said the discovery, which it said has the potential for as much as 2.6 tcf of natural gas in place, was made by the Bounty exploration well.

Bounty was drilled to 17,360 ft TD, encountering gas-bearing horizons, with the main targeted zone in the well encountering about 200 ft of pay. According to the company, initial test results indicate that Bounty is capable of producing 200 MMcfd from this high-pressure zone. Production testing equipment capacity was maximized during testing, restricting flow to a stabilized 60 MMcfd of gas, with a flowing bottomhole pressure of 7,186 psi.

The Bounty find is the second gas discovery Canadian Superior and its partners have made this year on Intrepid Block 5(c), which lies 60 miles off eastern Trinidad. The first discovery, by the Victory well, was estimated to contain 600 bcf-1.2 tcf of gas.

Canadian Superior Chief Executive Craig McKenzie said the Bounty discovery “in combination with our extensive 3D seismic data in the area, appears to exceed 7,000 acres in size.”

Production potential, he said, “compares favorably with production from the nearest analogous field, Dolphin Deep,” where each of the two wells produce at about 150 MMcfd, he said. “We plan to move forward expeditiously with appraisal and development drilling and production.” Operations are under way to demobilize the testing equipment and move the Kan Tan IV semisubmersible drilling rig to spud a third exploration well, the Endeavour, on the block by the end of August.

Canadian Superior is paying 262⁄3% of the Block 5(c) exploration program costs to maintain a 45% working interest in the block, with partners BG International Ltd. paying 40% for a 30% working interest and Challenger Energy Corp. paying 331⁄3% for a 25% working interest.

BP lets $1 billion contract for Block 31 off Angola

In a $1 billion deal, BP PLC contracted Heerema Marine Contractors to produce the URF-1 risers and production flowlines for its first deepwater oil development on Block 31 off Angola.

BP will bring on the Plutao, Saturno, Venus, and Marte fields on stream by 2011, which are expected to peak at 150,000 b/d in 2012.

HMC has begun the presanction engineering work and will start its offshore installation in mid-2010 using the deepwater construction vessel “Balder.” The welding technology will be supported by Pipeline Technique Ltd., HMC’s recently acquired welding specialist in Scotland.

This contract is the largest in HMC’s history and covers engineering, procurement, construction, installation, and the testing of pipe-in-pipe production flowlines, service flowlines as well as vertical riser systems. The award is the first of possibly four similar projects off Angola.

HMC will move its deepwater construction vessel to West Africa and expects to develop other projects in this region. The company will establish local offices, an Angolan Marine Transport Co., and an integrated marine construction support base and multijoint yard to contribute to sustainable Angolan development.

The majority of the onshore fabrication work will be performed by Angolan yards, said Steve Preston, an HMC executive vice-president.

Queensland oil shale project still in the wings

Brisbane-based oil shale hopeful Queensland Energy Resources Ltd. (QER) has shunned the Alberta-Taciuk Processor (ATP) revolving kiln oil shale processing technology in favor of the Paraho II technology to develop its vast oil shale deposits along Queensland’s east coast.

The company chose Paraho II following assessment of 63 other possible technologies and noting the lessons learned from the company’s now decommissioned ATP demonstration plant on the Stuart deposit near Gladstone. This plant is being dismantled, and obsolete components are being sold.

QER acquired most of the assets of the original operator Southern Pacific Petroleum (SPP) from the liquidator in 2004 and shut down the Stuart plant because it did not meet environmental and operating performance standards despite SPP’s having produced and sold more than 1 million bbl of shale oil from the deposit during 2000-03.

QER decided the ATP could not be scaled up to commercial scale production, whereas it believes the Paraho II technology can be a commercial proposition.

Paraho II technology has been tested with more than 8,000 tonnes of samples of Queensland oil shale (which is mined by open cut methods).

QER says the deposits, collectively known as the McFarlane oil shale after the original and long-time chairman and champion of the SPP attempts to commercialize them, have the potential to produce 1.6 billion bbl of shale oil over the next 40 years.

If the shale oil is produced, it will supplement Australia’s fast depleting deposits of conventional oil reserves.

Ascent Resources begins gas output in Hungary

Ascent Resources PLC, London, has begun natural gas production from its PEN-104 well in the Peneszlek area of the Nyirseg permits in eastern Hungary.

Initial production of 48,000 cu m/day was increased over a few days to a target of 85,000 cu m/day.

PetroHungaria KFT originally drilled the PEN-104 discovery well in 2006. Gas production, following metering at the newly constructed PEN-104 facility, is transported by pipeline to the MOL gas processing facility at Hajduszoboszlo, 50 km from the well, Ascent said.

The company will shoot 3D seismic over the permits to delineate other gas reservoirs within the vicinity. Two wells in the survey area previously tested gas but have not been put into production.

Ascent also is investigating whether it should redevelop Peneszlek field, which produced gas during 1983-91.

The company has a 45.23% stake in Peneszlek through its equity interest in PetroHungaria KFT. Other partners are DualEx 37.5%, Geomega 8%, Leni Gas & Oil 7.27%, and Swede Resources 2%.

Ascent managing director Jeremy Eng said the gas would help to meet demand “on the domestic market where over 70% of gas consumed is imported.”

Ascent Resources has sold a 15% stake in the Szolnok gas exploration project to existing partner Rohol-Aufsuchungs Aktiengesellschaft, which now holds 59.5% interest from purchases of interests from other partners. Following the sale Ascent’s interest in the Szolnok project has dropped to 12.5% from 27.5%.

The partners will drill two exploration wells in the Kunstmarten 3D seismic acquisition area, and they will shoot additional 3D seismic nearby.

NPRA releases refining, storage capacity report

US refiners have continued to add capacity despite soaring oil prices and shrinking margins, the National Petrochemical & Refiners Association said as it released its annual refining and storage capacity report.

Domestic refining capacity increased 0.86% during 2007, 4.1% over the last 5 years and 8.2% over the last 9 years, NPRA said, citing data compiled by the US Energy Information Administration. “Refiners have continued to increase capacity to help meet consumer demand for a reliable supply of fuels and other petroleum-based products,” NPRA Pres. Charles T. Drevna said.

The report indicated that as of Jan. 1 there were 149 operable US refineries, excluding Puerto Rico and the Virgin Islands, with a total crude distillation capacity of 17.6 million b/cd and 18.6 million b/sd.

“To continue to meet consumer demand, we must be assured of an adequate, affordable supply of crude oil, and that means expanding domestic exploration and production,” Drevna said. “The American public overwhelmingly supports domestic production given the great strides the oil and gas community has made over the last several decades in the way of cleaner, safer technologies,” he said.

“Ours is a modern, innovative industry prepared to meet tomorrow’s challenges, and policymakers should understand the implications for the consumer in restricting domestic production and singling out American energy producers for punitive, counterproductive tax measures that would only benefit state-owned oil conglomerates abroad,” Drevna said.

Nizhnekamsk refinery upgrade progresses

The 120,500 b/d Nizhnekamsk refinery, 250 km from Tatarstan’s capital city of Kazan, will have a refining capacity of 7 million tonnes/year following upgrade efforts currently under way (OGJ, Sept. 25, 2006, Newsletter). The refinery, which will be renamed OJSC Taneco, will be commissioned in phases during 2011-12. OAO Tatneft, Almetyevsk, Russia, is the refinery’s main shareholder.

Foster Wheeler Italiana will design and supply materials for two furnaces for the hydrocracking unit, a charge heater, and three interheaters for the continuous catalytic reformer unit. It is also carrying out detailed engineering of two heaters for the new delayed coker (OGJ, Oct. 9, 2006, Newsletter).

Taneco, a Tatneft unit, has let a contract to Foster Wheeler Italiana SPA to supply fired heaters by yearend 2009. Terms were not disclosed.

The company already has carried out the front-end engineering and design for the new complex and the process design package for the delayed coker following the award of the contract in 2006.

The refinery will have aromatics units and a deep conversion section with a fluidized catalytic cracker, a distillate hydrocracker, a delayed coker, and a gasification plant.

The petrochemical plant will include purified terephthalic acid, polyethylene terephthalate, linear alkylbenzene and polypropylene units, plus the associated power generation facilities. Oil products will be sent to Europe.

The project was originally expected to cost $3 billion when it was first announced but rising costs, construction completion, and the ultimate availability of project financing, are all key challenges, the company said.

Reversed line would haul Canadian oil to Maine

Portland Pipe Line Corp. and Montreal Pipe Line Ltd. launched an open season to assess interest in reversing an existing 18-in. pipeline to ship Canadian oil from Montreal to South Portland, Me.

The reversal project could begin moving as much as 128,000 b/d of western Canadian heavy crude by the second quarter of 2010. About 2 years later, Portland Pipe Line would accept both light synthetic and heavy grades of western Canadian crude in a two-stream operation and would allow delivery of 128,000-166,000 b/d.

Conditional offers are due by Sept. 10 and binding commitments by Sept. 30. The South Portland marine loading operation is being designed to handle a minimum cargo size of 300,000 bbl. Tankers could deliver the crude to Canadian and US East Coast and US Gulf Coast refineries.

Enbridge Pipeline’s Trailbreaker project would complement PMPL’s 18-in. pipeline reversal project by providing 200,000 b/d of incremental capacity into Montreal. Enbridge is developing Trailbreaker to be in service concurrently with the reversal project.

PMPL would continue to offer northbound service from South Portland to Montreal through its existing 24-in. pipeline.

Gate LNG terminal adds supplier, plans to expand

E.On Ruhrgas AG has agreed to send 3 billion cu m/year of regasified LNG through the Gate LNG terminal in the Netherlands starting in second-half 2011 and will acquire a stake in the facility.

E.On will market the gas in northwest Europe. This is the fourth supply agreement that the Gate LNG project partners have secured; others include Dong Energy, EconGas, and Essent, which have committed to a total throughput of 12 billion cu m/year.

As part of its agreement, E.On Ruhrgas will acquire a 5% equity stake in the Gate facility, which is the first LNG import terminal under construction in the Netherlands.

“With the supply of LNG by E.On Ruhrgas, the total capacity of 540,000 cu m of the three envisaged tanks has been fully contracted,” said Vopak NV, a Gate LNG terminal partner. “To accommodate the additional incoming LNG carriers, Gate terminal will build a second jetty and install the required additional equipment,” Vopak reported. It will pay for the new terminal facilities by raising additional external financing within the coming months. With the expansion, total throughput capacity would rise to 16 billion cu m/year from its initial capacity of 12 billion cu m/year.

Gasunie and Vopak together hold an 80% stake in the terminal, with each of the four supply partners holding 5%.

Gorgon JV plans Barrow Island gas plant

The Chevron Australia-led Gorgon Joint Venture, now developing the vast Gorgon area gas fields off Western Australia for LNG exports, has committed to including a 300 terajoules/day domestic gas processing plant alongside the LNG facilities planned for Barrow Island.

Chevron says the JV will carry out final investment decision for the plant with the LNG project. Plans call for gas to be brought on stream for domestic use about the time the JV commissions the LNG project’s third (of three) 5 million tonnes/year LNG train.

The JV brought the plant proposal to the table earlier than expected and says this will increase the number of supply points for domestic gas into Western Australia.

In response, the Western Australian government has welcomed the move and says Gorgon gas will increase the state’s gas supply by 30% and provide further supply diversity to the local gas market, which has been sorely tested by disruptions caused by the explosion and fire at Apache Energy’s facilities on Varanus Island June 3.

The Gorgon JV comprises Chevron Corp., Royal Dutch Shell PLC, and ExxonMobil Corp.