General Interest— Quick Takes
EPA publishes regs on oil-spill rule amendments
The US Environmental Protection Agency published a final regulation on Nov. 10 that amends certain requirements for facilities subject to its Oil Spill Prevention, Control, and Countermeasure (SPCC) rule.
EPA said the amendments clarify regulatory requirements, tailor requirements to particular industry sectors, and streamline certain requirements for a facility owner or operator subject to the rule. The action completes the SPCC action, which was proposed on Oct. 15, 2007; finalized on Dec. 5, 2008; and for which the agency received public comments on Feb. 3, 2009.
The amendments do not remove any regulatory requirement for owners and operators of facilities in operation before Aug. 16, 2002, to develop, implement, and maintain an SPCC plan in accordance with regulations which were in effect at that time, EPA said. Such facilities continue to be required to maintain their plans during the interim until the applicable date for revising and implementing their plans under the new amendments.
More information about the SPCC rule is available online at www.epa.gov/emergencies/content/spcc/index.htm.
Tight market alters European utilities' spending
The economic crisis is forcing European utilities to defer or cancel investments in facilities, renewables, and energy efficiency and to divest assets, according to Cap Gemini SA, Paris, in its annual European Energy Markets Observatory (EEMO).
Lower prices and drops of 5% in electric power consumption and 8% in natural gas consumption in this year's first half have depleted utilities' 'war chests,' said Colette Lewiner, in charge of the EEMO report.
Germany's E.On AG reduced its 2009-11 investment to €30 billion from €36 billion. Italy's Enel SPA intends to reduce its 2009-13 investment to €32 billion from €44 billion. Investments by Spain's Iberdrola SA are down to €4.5 billion from an initial €13 billion, while the newly merged Gas Natural and Union Fenosa will cut investments to €11-13 billion from €31 billion.
This is a marked change from 2008 when aggregate utilities investments reached a record €120 billion. But debt also increased: the combined debt of the 10 largest European companies rose by 11.3% between 2006 and 2008 to €213 billion.
CSB to investigate Puerto Rico tank farm fire
The US Chemical Safety Board will fully investigate an Oct. 23 tank explosion and fire at Caribbean Petroleum Refining in Puerto Rico that damaged homes and businesses more than a mile away, the board said Nov. 17.
It said that at 12:23 a.m. on Oct. 23, a large vapor cloud ignited at the facility near San Juan that includes a refinery that was shut down in 2000 and a tank farm that is still in operation. CSB sent investigators to the site that day who have conducted interviews, requested hundreds of pages of documents, and catalogued key pieces of evidence, it said.
A tank was being filled with gasoline from a ship docked in San Juan's harbor when the accident occurred, according to CSB. It said that investigators have determined that a likely cause was the tank's being accidentally overfilled. Gasoline then leaked undetected and spread across the facility, creating a vapor cloud 2,000 ft in diameter until it reached an ignition source in the facility's northwest section, it said.
It said that its investigators found that the tank's liquid level could not be determined on the evening of the incident because the facility's computerized level monitoring system was not fully operational and operators used a mechanical gauge on the tank's exterior wall instead. "Therefore, as the gasoline level in the tank rose and eventually overflowed, employees located in the facility's control room were unaware of the emergency," CSB said.
"The filling of a tank without a functioning monitoring system is the type of activity the CSB will be examining very closely," said Jeffrey Wanko, the investigator-in-charge. "The CSB's investigation will examine operations particular to Caribbean Petroleum, but will also look at the regulations and best practices surrounding the industry as a whole in an effort to improve safety practices at similar facilities."
Exploration & Development— Quick Takes
Ivanhoe to acquire stake in PSA in Mongolia
Ivanhoe Energy Inc. said its Asian subsidiary plans to acquire interest in a production-sharing agreement (PSA) held by PanAsian Petroleum Inc., which holds exploration and production rights to a large block in central Mongolia.
Ivanhoe's Sunwing Energy Ltd. plans to acquire interest in Pan-Asian's Mongolian interests for up to 3 million shares of Ivanhoe common stock. Transaction terms do not involve any cash payment to PanAsian.
A private company based in Alberta, PanAsian has a PSA with the Petroleum Authority of Mongolia. The contract provides Pan-Asian with the exclusive right to explore, develop, and produce oil or gas within Block XVI in Mongolia's Nyalga basin.
The structure of the merger is such that the holder of the PSA, PanAsian Energy, and its wholly owned Mongolian subsidiary, Shaman LLC, remain unaltered.
PanAsian has invested $4 million in the acquisition and development of Block XVI, which covers 16,839 sq km and contains four subbasins. The target is light oil, Ivanhoe said.
A Russian driller initially explored part of the block in the 1950s, and the area was included in a regional appraisal conducted by BP International for the Mongolian government in 1990.
Devon to accelerate Haynesville shale drilling
Devon Energy Corp. plans to accelerate drilling in its southern Haynesville shale play based upon results from a well in San Augustine County, Tex.
Kardell 1H achieved an average continuous 24-hr flow rate of 30.7 MMcfd of gas equivalent through a 37/64-in. choke. Flowing pressure was 6,824 psi.
The well was drilled to 18,350 ft TMD, including a horizontal lateral section of 4,500 ft. Devon operates the well with 48% working interest. Crimson Exploration Inc. owns the rest.
David A. Hager, Devon executive vice-president, exploration and production, said the company plans a five-rig program in 2010 in this southern play area.
Devon holds 570,000 net acres in the greater Haynesville trend of east Texas and north Louisiana. Previously, Devon drilled eight horizontal Haynesville wells around Carthage, Tex.
Appraisal well completed in Bo Rang B field
Carnarvon Petroleum Ltd., Perth, and its joint venture partner Pan Orient Energy Corp., Calgary, completed testing the BR-3D1 appraisal well in Bo Rang B oil field in Thailand and declared the field commercial. Pan Orient serves as project operator.
The well is the first horizontal appraisal in the field and flowed at 700 b/d of oil from a fractured volcanic reservoir target at a depth of 446 m.
Carnarvon said this is a significant increase in the flow rate from the nearby BR-2ST1 sidetrack Bo Rang B discovery well, which had a cased-hole completion and flowed at only 35 b/d.
The JV points to the success of horizontal drilling and highlights the shallow zone potential within the Bo Rang and nearby L44-W sectors of the L44 permit.
The JV is now planning to drill three more horizontal appraisals targeting the Bo Rang B field before yearend.
Nine multiwell drill pad locations are under environmental review by the Thai authorities. Approval is anticipated in January.
Petrobras extends Marimba to the north
Petroleo Brasileiro SA (Petrobras) says it has extended Marimba oil field to the north in the Campos basin off Brazil.
The 3-MA-32A exploratory well detected presence of 29° gravity oil in a 30 m of pay with good porosity and permeability. Water depth is 400 m.
Petrobras estimates recoverable oil in the extension at 25 million bbl, which would increase Marimba's recoverable volume by 27%.
It said the discovery resulted from revision of the area's geological model and use of new seismic interpretation methods.
The state-owned company said it will place the well on production through the nearby P-8 platform by next August.
Drilling & Production— Quick Takes
Haynesville buried-array seismic work set
El Paso Corp. let contract to MicroSeismic Inc. for a buried-array seismic monitoring program in its Haynesville shale development program south of Shreveport, La.
The buried array, to be installed before yearend, will provide microseismic monitoring, mapping, and analysis for hydraulic fracturing of El Paso wells. It will be the sixth such system the contractor has installed in the Haynesville shale play.
El Paso has five rigs drilling in the Haynesville play and expects to be producing more than 125 MMcfd of gas equivalent from the shale by December.
In October it said it had 250-300 Haynesville locations on 40,000 net acres, 30,000 in Louisiana. At the time it had 13 Haynesville wells on production with two being completed.
Partners report high Bakken shale test rates
Brigham Exploration Co., Austin, and US Energy Corp., Riverton, Wyo., reported high initial production rates from their first three completions in a six-well program in the Williston basin's Bakken shale oil play.
The latest completion, Brigham Lee 16-21 No. 1H Bakken, flowed on a 24-hr test at 1,341 b/d of oil and 1.22 Mcfd of natural gas after a 28-stage frac job. US Energy said oil sales would begin immediately, with gas sales starting in 90-120 days following connection to a gathering system.
Wells in the program, all operated by Brigham, are drilled about 10,000 ft vertically and 10,000 ft horizontally, targeting middle Bakken strata.
The Lee well is in the Rough Rider area of Williams County, ND, 5 miles south of BCD Farms 16-21 No. 1H and 8 miles northwest of the Brad Olson 9-16 No. 1H, both earlier completions in the Brigham-US Energy program.
The BCD Farms well, also stimulated with a 28-stage frac job, produced 1,553 b/d of oil and 1.34 MMcfd of gas during an early 24-hr flowback period, Brigham said.
The Brad Olson well, 13 miles southeast of the Farms location, tested 2,112 boe/d of oil and gas.
US Energy said Brigham had finished drilling a fourth well, Strand 16-9 No. 1H, and run a sleeve with 26 swell packers into the hole and was preparing for completion. The other two wells, Williston 25-36 No. 1H and State 36-1 No. 1H, are still being drilled.
The companies' interests in the wells vary. Brigham's interests increase after payout.
Bud Brigham, chairman, president, and chief executive officer, said early results confirm his company's interpretation of a continuous Bakken reservoir across the core Rough Rider area. The company holds 100,000 acres in the area and sees potential for three Bakken wells for each 1,280-acre spacing unit.
Suncor revives Firebag oil sands expansion
Suncor Energy Inc. will resume investment in the 50%-complete third stage of its Firebag in situ development in the oil sands of Alberta.
The company has approved capital spending of $5.5 billion (Can.) in 2010, including $900 million for the next step in Firebag expansion and $50 million for the fourth stage. With other projects, the "growth capital" part of Suncor's investment plans for next year totals $1.5 billion.
The company suspended work on the Firebag third stage early this year, along with plans for expanded upgrading capacity for its mining operations. Resumption of the upgrading investment is not part of the 2010 capital budget.
Noting "some improvement" in crude prices and the overall economy, Suncor Pres. and Chief Executive Officer Rick George called the budget "a conservative capital strategy" that Suncor can support from free cash flow at "midcycle" crude prices.
The third and fourth Firebag stages are to have production capacities of 68,000 b/d each from steam-assisted gravity drainage. Production from the third stage is to start in the second quarter of 2011 and from the fourth stage in the fourth quarter of 2012.
Total production from the first two stages, which started up in 2004 and 2006, averaged 54.3 million b/d in July-September.
Production from those stages is recoverying from cap of 42,000 b/d imposed in 2007 by Alberta regulators in response to excessive sulfur emissions from the Firebag operation. The cap was lifted in the third quarter of 2008.
Suncor is completing a sulfur plant, expected to cost $400 million, able to handle emissions from all six planned Firebag stages.
Processing — Quick Takes
ConocoPhillips delays refinery upgrade
ConocoPhillips has confirmed plans to delay the upgrade of its 260,000-b/d Wilhelmshaven refinery in Germany.
"This is the right project for Wilhelmshaven—but not now," said Willie Chiang, senior vice-president, refining, marketing, and transportation. "We will reevaluate this investment opportunity as market conditions warrant."
ConocoPhillips had planned to add a coker, hydrocracker, and hydrogen units to the refinery, which it acquired in 2006 from Louis Dreyfus Refining & Marketing Ltd.
ConocoPhillips Chairman and Chief Executive Officer Jim Mulva last month said delay of the project was possible (OGJ, Nov. 16, 2009, p. 68).
Valero to shut Paulsboro FCCU until early 2010
Unscheduled maintenance on the scrubber at the Valero Energy Corp.'s Paulsboro, NJ, refinery's 55,000-b/d fluid catalytic cracking unit will force its shut down later this month, according to a company news release. The unit will remain down until the maintenance is completed, estimated at mid-January.
During the FCCU shutdown, Valero will also bring down the remainder of the refinery for maintenance, it said. The entire plant will be shut down for about 3 weeks during the longer FCC outage.
Valero said staffing at the plant will not be affected, and production units will be restored to service once the maintenance is complete. Nor will the outage affect a previously scheduled turnaround at the company's Delaware City refinery.
Vietnam's Dung Quat refinery to shut for repairs
Petrovietnam, apparently at the urging of state officials, reported it will shut down the 148,000 b/d Dung Quat refinery for 10-14 days for maintenance in December.
The facility, which began operating in February, has experienced several stoppages in the past year due to technical problems. In mid-August, it was shut down for 6 weeks due to a technical fault in a cracking unit.
"There was a problem at the RFCC unit and repairs should take about 20 days, which means the plant will resume operation by Sept. 9 or 10," said a Petrovietnam official, who declined to be identified (OGJ Online, Sept. 4, 2009).
At the time, officials said the plant would go back online at the end of September, and would begin running at full capacity by Oct. 20.
On Oct. 30, reports said the refinery had operated at full capacity in the first full week after the shutdown, and that Vietnam's crude exports were expected to fall after the unit's successful restart.
However, reports in local media now say the unit's crude oil floating storage and offloading vessel has broken down.
As a result, the Phap luat Thanh pho Ho Chi Minh newspaper Nov. 13 said the state appraisal council, which reported the breakdown to Prime Minister Nguyen Tan Dung, asked Petrovietnam to take "drastic measures" to deal with the issue.
The council's request came just days after Vietnam's Minister of Industry and Trade Vu Huy Hoang said general contractor Technip would hand the Dung Quat facility over to Petrovietnam in January at the latest.
The refinery was due to become fully operational by yearend, or 2 months behind schedule, Hoang said on Nov. 10.
On Nov. 7, Petrovietnam's subsidiary Binh Son Petrochemical & Refinery Co. signed a $4.8 million, 1-year contract with the Marine Oil & Gas Maintenance Co., Oil & Gas Technology Co., and Malaysia's OSS for maintenance of the refinery's single-point mooring structure.
Since starting up in February, the Dung Quat refinery has bought 1.2 million tons of oil pumped from the the Bach Ho (White Tiger) oil field, which lies off the southern coastal province of Ba Ria-Vung Tau. During that time, the $3.054 billion facility has produced 800,000 tons of products.
The Vietnamese government, aiming to reduce the country's trade deficit, has been hoping that production at Dung Quat would help to reduce, or even halt the import of petroleum products during the remainder of 2009. The country's trade deficit is forecast to run at $11.5-12.5 billion this year, compared with $17.516 billion in 2008.
Transportation— Quick Takes
Final leg of Rockies Express line enters service
The final 195 miles of the Rockies Express-East pipeline was completed Nov. 12, entering service between the Lebanon Hub in Warren County, Ohio, and Clarington in Monroe County, Ohio.
The entire 1,679-mile Rockies Express Pipeline, extending from northwestern Colorado to eastern Ohio, is now operational and available for full firm shipper nominations, Kinder Morgan Energy Partners LP said.
Long-term, binding firm commitments have been secured for virtually all of the pipeline's 1.8 bcfd capacity.
The Rockies Express line began service into Lebanon on June 28, opening the first direct route between the Rockies producing region and historically higher priced natural gas markets in Ohio and the US Northeast.
Shippers on the line took advantage of the new capacity almost immediately, moving gas away from the markets they had been serving in the Midwest to higher-priced markets. Regional price differentials shifted in response to the changes in gas flows.
Bentek Energy says completion of the final leg of line to Clarington and additional interconnections with the Northeast market will likely have similar effects (OGJ, Sept 7, 2009, p. 50).
Kinder Morgan owns 50% of the line, which it constructed and operates. Sempra Pipelines & Storage, a unit of Sempra, and ConocoPhillips each own a 25% stake.
Russians close to approval of ESPO oil line tariff
Russia's Federal Tariff Service said it expects to approve the tariff for oil transportation through the East Siberia–Pacific Ocean (ESPO) pipeline in late November or early December.
FTS head Sergei Novikov said the tariff should be introduced from Jan. 1, and would be a through rate for eastbound oil exports, with two or three zones for oil exports.
Novikov's remarks concerning three zones as well as their price structures largely reiterate a proposal made earlier this month by Russia's state-owned OAO Transneft.
Last week a Transneft spokesman said the firm wants the ESPO line to be divided into the eastern, western, and central export tariff zones, with $34/tonne charged for oil transported via the eastern zone, $48/tonne via the western zone, and $42/tonne via the central zone (OGJ Online, Nov. 9, 2009).
Meanwhile, Russian authorities last week announced that all of the onshore and offshore facilities for oil exports have been finished at the Port of Kozmino—the planned terminus of the ESPO pipeline, now under construction (OGJ Online, Nov. 12, 2009).
CNOOC, PetroChina to buy more LNG from Qatar
Qatar's state-owned Qatargas Operating Co. Ltd. boosted its exports of LNG to China by signing supply agreements with China National Offshore Oil Co. (CNOOC) and PetroChina International Co. Ltd. The agreements were announced at the official opening of Qatargas' representative office in Beijing, which was attended by Abdullah Al-Attiyah, Qatar's deputy prime minister as well as minister of energy and industry, and Qatargas Chief Executive Officer Faisal M. Al Suwaidi.
Qatargas signed a memorandum of understanding with CNOOC for long-term supplies of LNG to China in addition to amounts already agreed by the two sides.
Under terms of the MOU, Qatargas intends to supply a further 3 million tonnes/year of LNG to CNOOC commencing in 2013. In addition to the base volume, Qatargas and CNOOC said they will "contemplate the sale and purchase of an additional 2 million tpy of LNG."
These volumes combined with an existing long-term supply commitment of 2 million tpy of LNG agreed under a 2008 sales agreement will potentially take the total volume of the Qatari LNG to be supplied to CNOOC to 7 million tpy.
According to analyst IHS Global Insight, "CNOOC, the largest offshore oil and gas developer of China's [NOCs], is planning a significant expansion of LNG import and storage capacity, which Qatar with its huge liquefaction projects can help to fill."
In addition to the CNOOC agreement, Qatargas also signed an MOU with PetroChina for 2 million tpy of LNG to China.
Besides the 3 million tpy already to be supplied from Qatargas to PetroChina, the new MOU will increase the total amount of LNG deliveries to 5 million tpy.
Qatargas said the initial supply of 3 million tonnes of LNG is expected to commence with the start-up of Qatargas 4's Train 7, while the additional 2 million tonnes of LNG under the new MOU is expected to start in "the first half of the next decade."
In October, CNOOC received its first cargo of LNG from Qatar, 216,000 cu m of gas at the Dapeng LNG terminal in Shenzhen under the long-term supply agreement signed between CNOOC and Qatargas last June (OGJ Online, Oct. 20, 2009).
PEP lets contract for Veracruz pipeline project
Petroleos Mexicanos subsidiary Pemex Exploration & Production (PEP) has awarded Copavisa the tender for construction of various pipelines in its Veracruz project. Copavisa presented a winning bid of $8.77 million for the project, which will last for 2 years.
Pemex's Veracruz project, the second-largest producer of nonassociated gas in Mexico after the Burgos project, also produces some oil and associated gas.
News of the award follows a recent announcement by Pemex that at least 90 of its oil and gas wells in Veracruz and Tabasco states were shut down due to flooding. Production dropped by more than 56%, falling to 26,280 b/d from 60,000 b/d, according to Pemex executive Fernando Flores Rivera, whose office controls 241 wells in the area.
Correction In the story, "EOG sees reserve hike in Barnett Combo play," initial production was incorrectly stated as 6,000 b/d. Production should be 600 b/d (OGJ Online, Nov. 6, 2009). |
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