Vedanta to buy stake in Cairn India
Vedanta Resources PCL, which is trying to acquire a majority stake in Cairn India Ltd., bought 10.4% interest from Petronas, the company reported Apr. 19.
Vedanta said its subsidiary, Sesa Goa Ltd., bought 200 million Cairn India shares for $1.5 billion, or $7.44/share. Petronas said it sold its entire 14.9% interest in Cairn India for $2.1 billion, but Petronas did not release the names of the buyers.
On Aug. 16, 2010, Vedanta offered to acquire a controlling interest in Cairn India from Cairn Energy PLC and minority shareholders at an estimated cost of up to $9.6 million.
India's government has yet to approve the offer from Vedanta, a mining company, for the stake from Cairn Energy.
ONGC Videsh gets interest in Kazakh block
ONGC Videsh Ltd. has signed definitive agreements to acquire a 25% participating interest in the 1,482-sq-km Satpayev exploration block in shallow water off Kazakhstan from Kazmunaigas, the national oil company.
ONGC Videsh, a subsidiary of state-owned Oil & Natural Gas Corp. of India, said the northern Caspian block holds two prospective structures, Satpayev and Satpayev (East), with total hydrocarbon resources estimated at 256 million tonnes.
Chesapeake to buy Bronco Drilling
Oklahoma City independent Chesapeake Energy Corp. has entered into a definitive agreement with Bronco Drilling Co. Inc. to acquire the Edmond, Okla.-based drilling contractor in a deal worth $315 million, including debt, net working capital, and outstanding warrants.
Chesapeake said the acquisition will help further its goal of owning two thirds of the rigs it now operates in its drilling program—"a key aspect of its vertical integration strategy—at an attractive price per rig," it said. Bronco owns 22 drilling rigs, which operate in the Williston and Anadarko basins. Three of Bronco's rigs are currently under contract with Chesapeake.
Chesapeake Chief Executive Officer Aubrey K. McClendon said, "The acquisition of Bronco is a great additional step in our vertical integration strategy and increases confidence in our plan to ramp up drilling activities in highly lucrative, liquids-rich unconventional resource plays."
Following the closing of the transaction, which is expected in the second quarter, Chesapeake will integrate Bronco's rigs into its wholly owned subsidiary, Nomac Drilling LLC, which currently owns 95 drilling rigs available for service, of which 90 are currently drilling under contract for Chesapeake.
Chesapeake is currently operating 160 drilling rigs and plans to end 2012 utilizing 200 drilling rigs. Chesapeake said the Bronco deal "should satisfy the vast majority of Chesapeake's anticipated rig investment needs through 2012."
Chesapeake is the second-largest producer of natural gas—second only to ExxonMobil Corp.—and the most active driller of new wells in the US.
Statoil starts Peregrino; makes adjacent find
Norway's Statoil made a oil discovery south of Peregrino heavy oil field in the Campos basin off Brazil even as it started production from the field earlier this month.
An exploratory well drilled in 120 m of water 85 km east of Rio de Janeiro on the Peregrino South structure a few kilometers south of Peregrino encountered oil in sandstones of the Tertiary Carapebus formation.
Statoil will perform further work to confirm volumes after the well cut a 130-m gross oil column. Drilling continued to probe deeper reservoir units and explore potential below the main reservoir, the company said.
Statoil said the well's results verify upside potential in the general area and, added to the 2007 Peregrino Southwest discovery, will play an important role in further development.
After it completes the Peregrino South well, Statoil will drill one more appraisal well at Peregrino Southwest to determine the overall size of the new development.
Oil production began from Peregrino field in early April. It is to ramp gradually to a plateau of 100,000 b/d of oil equivalent (OGJ Online, Feb. 9, 2011). The initial development is estimated to hold 300-600 million boe recoverable.
Applying produced water injection, horizontal wells, and flow assurance to sustain the project over a longer-term, Statoil has doubled the initial recovery factor to 20%. Peregrino's producing life is expected to extend until 2040.
Statoil in May 2010 sold a 40% stake in Peregrino field to the Sinochem Group. Statoil holds 60% and remains operator.
Cameroon Douala well to test multiple zones
Bowleven PLC is preparing to drillstem test the Sapele-1 sidetrack off Cameroon in the Douala basin after the well cut 23 m of net hydrocarbon-bearing pay in the Omicron objectives.
The sidetrack went to 3,634 m true vertical depth, 4,483 m measured depth, in 25 m of water on the MLHP-5 block in the Etinde permit.
Its main objective was to appraise the Deep Omicron oil discovery encountered in the Sapele-1 wildcat 2 km northwest and to intersect the Upper and Lower Omicron objectives.
The sidetrack encountered 1.4 m of Upper Omicron net pay overlying 24 m of high- quality reservoir that sampled as water-bearing.
In the Lower Omicron, the sidetrack intersected a log-evaluated hydrocarbon interval that is interpreted to comprise fair quality, thinly interbedded reservoir units. Provisional net pay is estimated at 11 m with 17% average porosity. Fluid samples indicate the presence of light oil/gas-condensate.
In the Deep Omicron the sidetrack intersected a log-evaluated hydrocarbon interval that is interpreted to comprise high quality, thinly interbedded reservoir units. Although less well developed at this location and with a corresponding lower net to gross ratio than in Sapele-1, the provisional net pay is conservatively estimated at 10 m with 19% average porosity.
Initial interpretation also indicates that certain pay intervals identified in the original Sapele-1 well have been eroded at the Sapele-1ST location. It was not possible to recover, it is believed due to borehole conditions, reservoir fluid samples and pressure data from Deep Omicron. Consequently, pressure communication could not be confirmed from logging. The GC tracer however indicates the presence of a light, high GOR oil.
Bowleven said further evaluation, including appraisal drilling, is required to fully understand sand distribution in the Tertiary fairways but that results to date are promising.
The company will release the Noble Tommy Craighead jackup for mandatory recertification. The Vantage Sapphire Driller jackup is 15-20 days from reaching total depth at Sapele-2 and is available to drill as many as three more wells.
Trilogy details Duvernay, Montney oil wells
Trilogy Energy Corp., Calgary, reported gas-condensate production from its second horizontal Devonian Duvernay shale well and drilled three horizontal Montney oil wells, all in the Kaybob, Alta., area 150 miles west-northwest of Edmonton.
The Duvernay well has a bottomhole location in 3-13-060-20w5 at 4,866 m measured depth with a 1,391-m lateral in Duvernay shale. Trilogy managed drilling and completion in 50 days at $6.5 million under a joint venture with Celtic Exploration Ltd. and Yoho Resources Inc.
Tied in since Apr. 10, the well was flowing up 7-in. casing at 5.2 MMcfd of sweet natural gas and 390 b/d of natural gas liquids including 180 b/d of 56° gravity condensate, and 1,450 b/d of water. The production rate may improve when production tubing is run and load water recovered.
The expected gas liquids yields is 75 bbl/MMcf including 35 bbl/MMcf of condensate.
Trilogy fracture stimulated the well in 31 perforated intervals in 12 stages along the lateral with 2,300 tonnes of sand and 138,600 bbl of slick water. The "plug and perf" completion technique incorporated perforation clusters (2 and 3 per stage) to stimulate the well. Only 26% of the completion water has been recovered.
Completion costs have totaled $11 million. Trilogy expects major cost savings on subsequent wells as the 3-13 was the first to use "plug and perf" in the Duvernay.
Trilogy expects to participate in one more Duvernay shale well in 2011. The company owns 168,409 gross acres and 138,173 net acres with Duvernay rights at Kaybob and surrounding areas.
Meanwhile, Trilogy added three horizontal Montney oil wells to its first two horizontal completions in the Kaybob Montney oil pool. The 9-1, 13-2, and 5-17 wells are expected to be treated and completed in April and May.
Trilogy is developing an accelerated drilling program as a result of the early success at Kaybob Montney, subject to board approval, that would result in an increase in 2011 capital spending and production.
Drilling & Production — Quick TakesPetrobras initiates test of presalt Brava
With the start of an extended well test (ETW) on the Brava presalt discovery well, Petroleo Brasileiro SA (Petrobras) now has five presalt discoveries on production in the Campos basin off Brazil.
Petrobras started a 2-year, 6,000 bo/d ETW of Brava well 6-MRL-199RJS to the P-27 semisubmersible production platform in Marlim field.
The company drilled the Brava well in 2010 through 1,000 m of salt to a 5,000 m TD. The well is in 648 m of water and found 29° gravity oil in carbonate reservoirs at 4,460 m. Petrobras estimated that the reservoir might recover 380 million boe (OGJ Online, June 7, 2010).
Marlim field, discovered in 1985, produces from reservoirs at about 3,380 m.
The presalt discoveries now on production include Jubarte (September 2008), Baleia Franca (July 2010), Carimbe ETW in the Caratinga area (December 2010), Tracaja ETW in the Marlim Leste area (February; OGJ, Mar. 7, 2011, Newsletter), and Brava ETW in the Marlim area (April).
Trinidad Drilling to build more land rigs
Trinidad Drilling Ltd. announced that it will build two new land rigs for delivery into operations in 2011.
"Demand for high-quality, modern equipment has continued to increase and contract terms have now moved to a point where it is attractive for us to build new equipment," said Lyle Whitmarsh, Trinidad Drilling's president and chief executive officer.
Rig No. 139 will be an $18 million, 18,000-ft triple rig with 1,500 hp. The company expects to operate the rig in the Eagle Ford shale in Texas in this year's second half. It said the rig has a 3-year, take-or-pay contract that guarantees 100% utilization throughout the duration of the contract.
Rig No. 57 will be a $20 million, 18,000-ft triple rig with 1,500 hp for work in steam-assisted gravity drainage drilling in northeastern Alberta. The company said the rig will include an improved fluid handling system for drilling in a pad environment and a new pipe handling system that removes the need for a crew member to be in the derrick.
Trinidad Drilling expects Rig. No. 57 to be operational toward yearend and said the rig is under a 4-year, take-or-pay contract that guarantees a minimum of 1,200 days over 4 years, which equates to an 82% average utilization over the contract term.
In addition to these two newly-announced rigs, Trinidad Drilling currently is building a natural gas powered rig for operations in the Horn River in northeastern British Columbia.
Parex-CESC developing Llanos basin Kona field
The Colombian subsidiary of Parex Resources Inc., Calgary, and Columbus Energy Sucursal Colombia are developing the 2010 Kona field discovery and are further exploring the LLA-16 block in Colombia's Llanos basin.
The Kona-1 discovery well has produced a gross 264,000 bbl of light oil from December 2010 to Mar. 31, 2011. Output averaged 2,520 b/d in March with 5% water cut on natural flow.
Parex expects to complete construction in May of a 25,000 b/d oil treatment plant on the Kona-1 lease. It will pipe clean oil 7 km to the loading facility. After commissioning the plant and drilling a water disposal well, it will temporarily shut-in Kona-1 and install an electric submersible pump to maintain production at an expected 2,000 b/d.
Plant commissioning is expected to allow production start-up of other shut-in Kona wells that exhibit poor cement isolation from water-bearing zones thereby prohibiting dry oil production.
South of Kona field on the block along a separate fault trend, the Supremo-1 well is expected to go on production in early May following the completion of a water disposal well and associated handling facilities. Supremo had tested 2,500 b/d of fluid from Mirador with a 31° gravity oil at 500 b/d.
Based on test results or log analysis of Kona-1, Kona-2, Kona-3, Kona-4, and Supremo-1 and upon the commissioning of the Kona oil treatment plant and the water disposal wells, Parex expects gross production of 4,000-6,000 b/d of oil.
Kona-2 is being redrilled to test the Gacheta or may be completed in Mirador that previously flowed as much as 1,600 b/d of 35° gravity oil, natural. Kona-3 was suspended with a poor cement job in Mirador and tested 750 b/d of fluid, 42% light oil, from the C7 formation, where poor cement isolation is also suspected.
Kona-4 logged potential net oil pay of 20 ft and 30 ft in C7 and Mirador, respectively, while Gacheta was wet. A Mirador completion is planned. Parex has spud Kona-6 to appraise the C7 formation. Log analysis indicated 35 ft and 50 ft of potential net oil pay in C7 in Kona-1 and Kona-2, respectively.
Parex is evaluating the potential to drill an exploratory sidetrack updip from Kopi-1, which tested wet in Mirador and low swab rates of 31° gravity oil in C7.
Exploratory drilling prospects on LLA-16 are Sulawesi-1 and Java-1, both 3D defined multipay targets at 11,000 ft and 12,000 ft, respectively. Parex also plans to drill Supremo-2 updip of Supremo-1, in mid-2011.
The 2011 drilling strategy is to employ two to three drilling rigs and a service rig to allow for continuous operation on the Kona discovery and on other block LLA-16 and LLA-20 drilling prospects.
PROCESSING — Quick TakesFCCU inaugurated at HCPL Mumbai refinery
Hindustan Petroleum Corp. Ltd. has placed into service a 28,000 b/d fluid catalytic cracking unit at its 132,000 b/d Mumbai refinery alongside a 20,000 b/d FCCU in place (OGJ Online, Apr. 1, 2010).
S. Jaipal Reddy, India's minister of petroleum and natural gas, inaugurated the unit on Apr. 14. Engineers India Ltd. provided engineering, procurement, and construction supervision as well as commissioning services and project management.
The FCCU package includes an integrated BELCO flue gas scrubber and a UOP catalyst cooler, which HCPL said is the first of its kind in India.
NuStar buys refinery near Eagle Ford play
NuStar Energy LP, San Antonio, has closed the purchase of a small San Antonio refinery in a deal linked to the nearby Eagle Ford shale play.
NuStar bought the 14,500-b/d refinery from AGE Refining, which entered bankruptcy in February 2010, for $41 million.
NuStar operates 8,417 miles of crude and product pipeline in the US, two US asphalt refineries, and terminals and storage operations in the US, Canada, Mexico, the UK, the Netherlands, and Turkey.
"The refinery's proximity to the Eagle Ford shale is big plus," said Curt Anastasio, president and chief executive officer of NuStar. He said light crude from the shale play "is well-suited to the refinery, and it is in our backyard so our transportation costs are low."
Copano to add 400 MMcfd at Houston plant
Copano Energy LLC, Houston, will expand processing at its Houston Central plant in Colorado County in response to producer demand in the rapidly developing Eagle Ford shale play. The expansion will consist of a 400-MMcfd cryogenic processing plant that will bring total processing capacity at Houston Central to 1.1 bcfd.
The company anticipates capital spending for the expansion to reach about $145 million with an expected in-service date in early 2013.
Operations at the plant are to coincide with start-up of Copano's firm capacity at Formosa Hydrocarbons Co.'s Point Comfort petrochemical plant under a previously announced NGL fractionation and sales agreement.
Copano Energy is a midstream gas company that operates in Texas, Oklahoma, Wyoming, and Louisiana including about 6,400 miles of gas gathering and transmission pipelines, 260 miles of NGL pipelines, and nine gas processing plants, with more than 1 bcfd of combined processing capacity and 22,000 b/d of fractionation capacity.
TRANSPORTATION — Quick TakesUS DOS issues Keystone XL environmental statement
The US Department of State published TransCanada's Keystone XL pipeline's supplemental draft environmental impact statement (SDEIS) and committed to making a decision on TransCanada's request for a Presidential Permit for the US portion of Keystone XL by yearend. DOS said the SDEIS public comment period will be open for 45 days.
Keystone XL would include 1,980 miles of 36-in. OD line starting in Hardisty, Alta., and extending to a delivery point near existing terminals in Port Arthur, Tex. It would add 500,000 b/d of capacity to the Keystone system, bringing it to 1.1 million b/d.
The proposed Cushing, Okla., tank farm site will be adjacent to the proposed site of Pump Station 32, less than ½ mile from the existing Cushing Oil Terminal. The Cushing tank farm would include three, 350,000-bbl aboveground storage tanks.
Keystone has commitments to transport about 600,000 b/d of oil, including firm contracts to transport 380,000 b/d to existing Gulf Coast delivery points. Keystone also has firm contracts to transport 155,000 b/d of oil to Cushing in its existing Keystone Oil Pipeline Project, which includes the Keystone Mainline and the Keystone Cushing Extension. If Keystone XL is approved and implemented, Keystone would transfer shipment of oil under those contracts to it.
TransCanada expects the project to be in service in 2013, pending regulatory approvals.
NuStar, TexStar to build Eagle Ford oil line
NuStar Logistics LP and TexStar Midstream Services LP will develop a pipeline system to transport Eagle Ford shale crude and condensate to Corpus Christi. TexStar will build and operate a 65-mile, 12-in. OD pipeline capable of carrying 120,000 b/d from Frio County to Three Rivers, Tex. TexStar will also build at least two truck unloading facilities along the pipeline to gather oil produced in Atascosa, Frio, LaSalle, McMullen, and Live Oak counties.
At Three Rivers, the TexStar pipeline will interconnect with a storage facility to be built by NuStar, connected to its existing 16-in. OD, 200,000-b/d pipeline delivering into its 2 million-bbl Corpus Christi North Beach terminal. The Port of Corpus Christi Authority recently approved a land lease option agreement for 15 acres contiguous to the existing property, allowing for the facility's potential expansion.
TexStar and NuStar expect to complete construction and begin service on the projects in second-quarter 2012.
Both Harvest Pipeline Co. and Koch Pipeline Co. LP also have announced recent expansion plans for their Eagle Ford-Corpus Christi crude transport capacities (OGJ, Apr. 18, 2011, Newsletter).
Excelerate to retire Gulf Gateway LNG port
The world's first offshore LNG loading system will be retired, announced operator Excelerate Energy LP, citing the "changing market" for LNG imports into the US Gulf Coast.
The Gulf Gateway Energy Bridge Deepwater Port lies about 116 miles off Louisiana and started up in 2005 (OGJ's LNG Observer, April-June 2005, p. 18). Excelerate said it will continue to import LNG into the US through its Northeast Gateway Deepwater Port off Boston, providing incremental LNG access to the high-demand US Northeast.
Energy Bridge regasification vessels (EBRVs) are specially built LNG carriers equipped with onboard regasification that allows delivery of gas directly into downstream markets.
Gulf Gateway, said the announcement, had been effectively delivering gas to the Gulf Coast through two separate offshore pipeline systems. In September 2008, however, Hurricane Ike extensively damaged both pipelines. Although Gulf Gateway was unaffected by the storm, neither line has been able to return to its previous level of service, the company said, and provide adequate operational pipeline capacity for Gulf Gateway.
"Gulf Gateway…was instrumental in confirming the viability of floating LNG regasification," said Excelerate CEO and Pres. Rob Bryngelson. Excelerate wants to expand operations and deliver "flexible and efficient regasification" worldwide, he said, and is "focused on markets with the greatest need."
He said, "This focus, coupled with the surge in LNG importation capacity in the US Gulf Coast in recent years, has reduced the need for Gulf Gateway and confirmed that its retirement is the most financially prudent course of action for us."
To take advantage of favorable weather conditions, said the announcement, Excelerate Energy intends to have all components removed from its offshore location as soon as practicable. Currently, the decommissioning plan is being finalized in coordination with the US Maritime Administration and other regulatory agencies to "ensure an efficient and environmentally sound process."
Gulf Gateway will be removed within 68 days of permit approval with "little environmental impact."
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