Iran has reclaimed third position in officially estimated oil reserves, only days after the Iraqi government jumped ahead of it with a large increase of its own.
Masoud Mirkazemi, minister of petroleum, said in Tehran that the official Iranian reserves estimate had increased to 150.31 billion bbl and would increase again by yearend.
The earlier estimate was 137.62 billion bbl, third largest in the world behind Saudi Arabia and Canada until Iraq raised its estimate to 143 billion bbl of reserves from 115 billion bbl (OGJ, Oct. 11, 2010, Newsletter). Most of Canada's reserves estimate is oil sands and heavy oil requiring unconventional production methods.
Reserves figures are important to the assignment of quotas for members of the Organization of Petroleum Exporting Countries. With global oil demand rising slowly and non-OPEC production increasing, tension over quotas is expected to intensify in the exporters' group. OPEC members are thought to be questioning Iraq's exemption from the quota system.
Mirkazemi estimated Iranian gas reserves at 1.17 quadrillion cu ft. The earlier estimate was 1.05 quadrillion cu ft. Only Russia has a larger gas reserves estimate: 1.7 quadrillion cu ft.
The petroleum minister cited the recent discovery of Sefid gas field in Hormozgan, 140 km northwest of Bandar Lengeh, which he said holds 2.5 tcf of gas in place.
Iranian authorities have reported several increases in oil production recently.
Ahmad Qalebani, managing director of National Iranian Oil Co., said on Oct. 10 that second-phase development had pushed production at Darkhovain oil field to 160,000 b/d from 100,000 b/d and that the field would be transferred to Arvandan Oil & Gas Co., an NIOC subsidiary, soon. He said the field now has 22 development, 1 water-injection, and 4 gas-injection wells.
The field, in southwestern Iran, also has been referred to as Darkhowain (see map, OGJ, Jan. 7, 2008, p. 34). Eni was involved in development under a buy-back contract but has withdrawn.
Qalebani also said Jofeir field officially will start up at a rate of 3,300 b/d next month. An Iranian official earlier said the field, also in southwestern Iran, was producing 3,500 b/d and would produce 6,000 b/d after the installation of pumps (OGJ Online, Oct. 4, 2010).
Mahmood Zirakchianzade, managing director of National Iranian Offshore Oil Co., said production from Hengam oil field, which Iran shares with Oman, is on schedule to reach 16,000 b/d by late October. The field has been producing 10,000 b/d of 43.5º gravity oil (OGJ, Sept. 6, 2010, Newsletter).
Strikes continue to cripple French refineriesAfter entering their third week last week, strikes blocking the Fos-Lavera oil terminal in southern France were extended to join up with those in the transportation sector and others that began Oct. 12 throughout the country. The original strike, which began Sept. 27, continues to prevent oil shipments in or out of the port and is tightening product supplies in the region and crippling local refinery operations.
While the transportation strikes and others seem to be easing, industrial action is hardening at refineries throughout the country as well as at port terminals. Compagnie Industrielle et Maritime (CIM) at Le Havre port in Normandy, which operates the oil terminal, has been hit by a strike that restricts supplies to Total SA's Donges refinery as well as to the Petroplus Petit Couronne refinery in Normandy.
Petroplus Pres. Jean-Paul Vettier told OGJ that the shift workers at Petit-Couronne in Normandy have been striking since Oct. 12, forcing down refinery runs to "the technical minimum." Whether or not to extend the strike will be decided later Oct. 13 by the workers, he said.
There are no strikes at Esso's two refineries, one at Fos and the other at Port-Jerome in Normandy, according to company spokesman Emmanuel du Granrut. A short strike at the Fos refinery Oct. 12 disturbed the distribution flow. Esso has enough reserves to keep going for the time being, Du Granrut said, and is not impacted by the CIM strike.
All told, and as much as can be determined during what has become a fast-paced situation, 8 of France's 12 refineries now are either on strike or gradually shutting down for lack of feedstock. All 6 of Total's refineries are on strike. The Provence refinery has been gradually shutting down since Oct. 10 for lack of crude.
Union Francaise des Industries Petrolieres (UFIP) Pres. Jean-Louis Schilansky estimated that the continuing blockade of the Fos-Lavera terminal might well lead to fuel shortages in the south. Currently, 55 vessels are idled at Fos-Lavera, 39 of which are carrying crude and products.
Some of the country's 160 depots were also blocked currently, but the authorities have tried to reassure motorists by saying that there were still 90 days' worth of strategic stocks in the country. The problem remains bringing this oil to the distribution outlets as motorists are starting to queue at retail outlets.
Denbury to sell Haynesville, E. Texas assetsDenbury Resources Inc. plans to sell its Haynesville and East Texas natural gas assets for $217.5 million to an unidentified private oil and gas company.
The sale is expected to close within 45 days, subject to due diligence and satisfaction of closing conditions. Denbury said the properties being sold produced 34 MMcfd of gas equivalent during the second quarter.
To reduce its taxable gain on the sale, Denbury plans to use a like-kind-exchange with the Haynesville-East Texas assets and the previously announced acquisition of the Riley Ridge federal exploratory unit in southwestern Wyoming.
A like-kind exchange allows for the sale of an asset and purchase of another asset. Denbury agreed to acquire a 42.5% nonoperated working interest in the Riley Ridge unit for $115 million. The transaction includes 33% of the carbon dioxide rights in 28,000 acres adjoining the Riley Ridge unit. The Riley Ridge unit and the adjoining acreage are in LaBarge field. Closing, subject to due diligence, is expected by Oct. 31.
The Riley Ridge acquisition contains estimated proved reserves of 185 bcf of natural gas, 6.6 bcf of helium, and 1 tcf of carbon dioxide, net to the interest being acquired. The additional adjoining acreage is estimated to contain an additional 1 tcf of probable CO2 reserves, net to the same interest.
Ultimate recovery could reach 14-19 million bbl of oil from Balnaves field in WA-356-P off Western Australia, said Apache Corp. after successfully appraising the 2009 discovery.
The Balnaves-1 discovery well cut 64 ft of net oil pay in the B20 sand, a high-quality light oil accumulation at 10,600-700 ft below sea level. The pay zone is the Triassic Mungaroo formation below the large gas reservoirs of Brunello field.
Balnaves-2 was a sidetrack from the discovery, and Balnaves-4 was a sidetrack from Balnaves-3. The recent Balnaves-3 appraisal well test-flowed 9,076 b/d of oil and 13 MMscfd of natural gas from a 16-ft perforated section, confirming good reservoir deliverability.
Success at the three Balnaves appraisal wells has triggered development planning by subsidiary Apache Julimar Ltd. Pty.
Julimar and Brunello fields are large gas discoveries that will be developed to provide gas for the Wheatstone liquefied natural gas development operated by Chevron Corp. subsidiary Chevron Australia Pty. Ltd. Apache Julimar will operate the design and construction phases of the WA-356-P upstream part of the Wheatstone project.
Apache Julimar has a 65% interest in WA-356-P and a 16.25% equity interest in the Wheatstone project. Kufpec Australia (Julimar) Pty. Ltd., a subsidiary of Kuwait Foreign Petroleum Exploration Co. KSC, owns the remaining interest in the license and an 8.75% interest in the Wheatstone project. The equity interests may be reduced as a consequence of an earlier HOA signed with Korea Gas Corp. for the purchase of LNG from Wheatstone and an equity stake in the project.
Apache's started production last February from the Van Gogh and Pyrenees oil developments, and the Reindeer gas discovery is expected to begin producing in second-half 2011 through an onshore gas processing facility at Devil Creek.
Brunei's deepest well discovers gas-condensateA Total E&P Borneo group has notched its third positive well in an exploration campaign that started in 2007 with a deep gas-condensate discovery on Block B off Brunei.
The ML-5 well tested at 10 MMcfd of natural gas and 220 b/d of condensate from a limited zone at 5,350 m in a high pressure-high temperature hydrocarbon-bearing formation with more than 800 m of gross thickness.
The well went to 5,664 m in 65 m of water 50 km from the Brunei coast in a new fault block 8 km south of Maharaja Lela/Jamalulalam field. Total, Block B operator with 37.5% interest, said the well is Brunei's deepest and the deepest successful penetration in Southeast Asia.
Total said it is studying the development of the new resources and production through existing facilities. The company said it will soon resume exploration on the CA-1 block seaward of Maharaja Lela field in the South China Sea.
Bakken, Woodford Cana plays drives budgetLiquids-rich plays in the Williston basin Bakken and Anadarko basin Woodford Cana will consume 92% of capital spending by Continental Resources Inc. and will drive the company's growth for the next 5 years.
Continental, which set a $1.36 billion budget for 2011, expects to increase production 30% next year to 20.6 million boe.
The company has built its inventory to 864,559 net acres in the Bakken play, up 47,707 net acres in the quarter ended Sept. 30. About 72% of the acreage is derisked and in the development mode. The company operates 21 rigs.
Continental also holds 73,000 acres in the Colorado-Wyoming Niobrara shale play, up 13,929 net acres in the quarter, and an industry-leading 251,000 net acres in the Woodford Cana play. The company completed 26 gross operated Bakken wells in the quarter with an average 1-day production test of 995 boe/d. The wells are in Dunn, McKenzie, and Williams counties, ND.
Production rates and wellbore pressures clearly indicate that the Middle Bakken and Three Forks zones are isolated from each other. Continental is producing the wells under restriction to conserve the energy resource and minimize flaring.
Continental said it and other operators are just beginning to understand the productive potential of the Anadarko Woodford, which the company called an "enormous, liquids-rich shale resource play."
The industry, which is running 32 rigs, has built the play to 124 horizontal completions. Continental plans to add two rigs by yearend 2010 to the six it is running. The company noted that some wells have potential in as many as 12 uphole zones, including Pennsylvanian Morrow-Springer.
The Dana 1-29H well in Grady County flowed 2.5 MMcfd of gas and 88 b/d of oil on initial test as the company's third and most productive completed well in the southeastern part of the play. The well validated "the productivity and scope of the play from Dewey County in the northwest through Canadian County to Grady County in the southeast, a span of approximately 100 miles."
Drilling & Production — Quick TakesStatoil joins Talisman in Eagle Ford ventureStatoil ASA has agreed to acquire 67,000 net acres in the Eagle Ford shale play of South Texas in deals with Enduring Resources LLC and Talisman Energy Inc. that the Norwegian company says might result in the drilling of 1,500 wells over 20-30 years.
Statoil and Talisman have formed a 50-50 joint venture to acquire Enduring's 97,000 Eagle Ford acres for $1.325 billion. Statoil also will acquire 50% of Talisman's existing 37,000 acres in the Eagle Ford play for $180 million.
Statoil says that through its combined $843 million investment it is acquiring about 550 million boe of recoverable oil and gas. It and Talisman have the option to jointly acquire up to 22,000 net acres more.
Talisman will be operator at first, but Statoil will become operator of 50% of the acreage within 3 years. Enduring operates 90% of its leases, which are in a part of the Eagle Ford play rich will liquids. About 55,000 acres of the Enduring position is held by production.
Four rigs are working on leases covered by the transactions.
The deal is Statoil's second major investment in US unconventional oil and gas resources. In 2008, it acquired a 32.5% interest in Chesapeake Energy Corp.'s holdings in the Marcellus shale play in the eastern US.
CNOOC to buy stake in Chesapeake Eagle FordCNOOC Ltd. has agreed to buy a one-third undivided interest in Chesapeake Energy Corp.'s leasehold in the Eagle Ford shale of South Texas. The deal is expected to result in the drilling of 900 wells by yearend 2012 (See Watching the World, p. 26).
The Chinese company will pay $1.08 billion in cash at closing, subject to adjustments, and fund 75% of Chesapeake's share of drilling and completion costs until it has paid $1.08 billion. Chesapeake, which holds 600,000 net acres in Eagle Ford, expects the carry limit to be reached by yearend 2012.
Chesapeake will be operator of the project. It expects to add two rigs by yearend to the 10 now working on wells it operates in the Eagle Ford play. It expects the venture to be using 31 rigs by yearend 2011 and 40 rigs by yearend 2012.
Chesapeake predicted peak production by the project of 400,000-500,000 boe/d of oil and gas. The company has 10 horizontal Eagle Ford wells on production now, with initial production rates of 1,160 b/d of oil and 400 Mcfd of gas in the play's oil window and 4 MMcfd of gas and 1,200 b/d of oil in the wet gas window south of the oil-prone part of the play.
About 85% of the area covered by the CNOOC agreement is in the oil window and 15% in the wet-gas window of the Eagle Ford and dry-gas window of the Pearsall shale.
CNOOC has the option to acquire its 33.3% share of any additional acreage acquired by Chesapeake in the area—mainly in Webb, Dimmit, LaSalle, Zavala, Frio, and McMullen counties—and to participate with Chesapeake for a 33.3% interest in midstream properties related to production in the deal.
OMV starts oil production off New ZealandAustria's OMV AG and its partners in the Taranaki basin off New Zealand began oil production from Manaia-1 well with initial flow of 4,000 b/d.
The well, which is New Zealand's longest drilled hole with a measured length of 7,943 m, is tied into the joint venture's Maari production facilities.
Manaia-1 penetrated a gross 1,524-m long section of the target Eocene-age Mangahewa formation and doubled the recoverable reserves for the Maari-Manaia fields to about 100 million bbl. The new well will complement production from the original five Maari development wells.
In September, Maari produced its 10 millionth bbl of oil, 19 months after the field was brought on stream in February 2009.
Both fields lie in permit PMP 38160.
OMV New Zealand has 69% interest. Todd Energy Co. of New Zealand has 16%, Sydney-based Horizon Oil Ltd. 10%, and Melbourne-based Cue Energy Resources Ltd. 5%.
Denbury adds 1 tcf of carbon dioxide reservesDenbury Resources Inc., Dallas, has drilled three more wells in the Jackson Dome area of Mississippi in 2010 to hike carbon dioxide deliverability and proved reserves.
They are the Waggoner 35-14-1 and Anderson Estate 36-9-1 wells in Gluckstadt field and the Pearl River 29-16-1 on the DRI Dock prospect, which added a combined 1 tcf of CO2 proved reserves during the year.
The company also completed 3D seismic evaluation and production testing on the DRI Dock prospect, which confirms the original proved reserve estimate of 400 bcf of CO2 reserves for the prospect. Further drilling on the DRI Dock prospect may add reserves but most likely greatly less than originally predicted in estimating the prospect's potential.
The Waggoner well was drilled to add deliverability from Gluckstadt and is expected to produce at 50 MMcfd based on initial tests. The Anderson well was drilled across a known fault, and the initial logging results indicate the reservoir pressure in the well is virgin pressure and thus is not in communication with the existing wells in Gluckstadt.
Based on the Anderson well's net pay and the reservoir's expected areal extent estimated by 3D seismic, the company estimates this fault block contains 600 bcf of CO2 proved reserves.
The additional 1 tcf is expected to provide Denbury with nearly enough CO2 to flood all existing phases in the Gulf Coast, Phases 1 through 9.
PROCESSING — Quick TakesUpgrade contract for Peruvian NGL plant awardedPlusPetrol Peru Corp. SA let a $32 million contract to GE Oil & Gas to supply compression and reinjection upgrade equipment to boost output of the Malvinas NGL processing plant, 400 km from Lima at the southern section of the Peruvian Amazon rainforest. The plant currently has a capacity of 450 MMcfd of gas and throughput of 220 MMcfd.
GE will upgrade two existing GE Frame-5C dry low Nox (DLN) gas turbine modules with Frame-5D DLN technology to reduce emissions and an Extendor kit to reduce outages and extend the life of the equipment. In addition, three existing Frame-5D DLN modules will be upgraded with Extendor kits.
Petrofac to operate gas plant in SharjahThe government of Sharjah has let a contract worth more than $250 million to Petrofac to assume operation from BP Sharjah of the Sajaa gas plant and related assets when BP's concession expires in 2013. Petrofac's contract, awarded through competitive bidding, is for 5 years. The Sharjah Petroleum Council holds a 60% participating interest in the operation, and BP holds 40%.
The plant, with an inlet capacity of about 700 MMcfd, handles production from onshore Sajaa, Moveyeid, and Kahaif gas and condensate fields, producing sales gas, LPG, and condensate. Amoco Sharjah developed the Sajaa area play in the 1980s and became part of BP in 1999.
BP's net Sharjah production fell to 59 MMcfd in 2009 from 123 MMcfd in 2005.
Oklahoma Woodford shale gas plants change handsCardinal Midstream LLC, Dallas, will pay $268 million to Antero Resources LLC, Denver, for gas midstream processing and gathering in eastern Oklahoma's Arkoma Woodford shale.
Cardinal will acquire Antero's 60% interest in Centrahoma Processing LLC, a JV with MarkWest Energy Partners LP, Denver. Centrahoma operates two cryogenic processing plants in Coal and Atoka counties, which have a combined 100 MMcfd in inlet capacity, and an NGL line connecting the plants.
The sales transaction, to be concluded next month, also includes Anetro's Northern Front gathering system that delivers rich natural gas to Centrahoma along with Antero's East Rockpile gathering system in Pittsburgh County, Okla. That system gathers lean gas for amine treating and compression. Cardinal said it will expand treating and compression on East Rockpile as volumes on the gathering system increase.
The two gas plants subject to the sale currently produce about 9,500 b/d of NGLs that are sold to Oneok Partners LP, Tulsa, a company spokesperson told OGJ. Residue gas from the plants currently flows into transmission operated by Enogex, Oklahoma City; MarkWest; Centerpoint, Houston; and Kinder Morgan's Natural Gas Pipeline Co. of America.
TRANSPORTATION — Quick TakesChevron sells stake in Colonial pipelineChevron Pipe Line Co. sold its 23.44% ownership interest in the Colonial Pipeline Co. to an affiliate of Kohlberg Kravis Roberts & Co. LP. The sale closed Oct. 8, and follows Chevron's March announcement that it would sell its share in Colonial as part of realigning its assets. The 5,500-mile Colonial pipeline system delivers an average 2.4 million b/d of products from supply centers on the Gulf Coast to the eastern seaboard.
Colonial in 2009 indefinitely delayed a proposed expansion between Jackson, La., and Austell, Ga., citing weakened consumer demand for petroleum products (OGJ, Feb. 15, 2010, p. 44).
Apache, Kufpec sign up LNG from WheatstoneApache Energy Ltd. and Kufpec Australia Pty. Ltd. signed a heads of agreement to supply 25% of the 3.1 million tonnes/year of LNG that Wheatstone field operator Chevron Corp. had agreed to sell to Tokyo Electric Power Co. (Tepco). Chevron and Tepco originally signed a 20-year deal last December.
Last October Apache and Kufpec aligned their Julimar and Brunello gas field projects with the Wheatstone development. They agreed to supply gas from their two fields for Wheatstone Trains 1 and 2 in exchange for a 16.25% and 8.75%, respectively, equity stake in the processing facilities.
The latest agreement provides a finite plan for integrating Apache and Kufpec into the Chevron-Tepco HOA.
JV lets contract for West Java FSRUNusantara Regas, a JV of Pertamina and PGN, has selected Golar LNG Energy Ltd. for its West Java floating storage regasification unit. The FSRU will be Indonesia's first LNG regasifcation terminal and represents the world's first FSRU project in Asia.
The $500 million contract will be for an initial 11 years and consists of the lease of a floating storage and regasification vessel and associated mooring. Golar will convert one of its existing Moss LNG carriers to an FSRU.
Golar has already completed three FSRU conversions over the last 3 years. The FSRU for West Java will be similar in design to the latest of these three projects, the Golar Freeze, recently delivered to Dubai, said the company's announcement.
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