GENERAL INTEREST — Quick Takes
API-NOIA study lists Atlantic OCS development benefits
Opening the US Atlantic Outer Continental Shelf to oil and gas activity could create 280,000 jobs, generate $195 billion in private investment, and increase US production by 1.3 million boe/d, a new study concluded.
The Quest Offshore Inc. analysis, which the American Petroleum Institute and National Ocean Industries Association jointly commissioned, also found US Atlantic OCS exploration and production could contribute up to $23.5 billion/year to the US economy, and generate $51 billion in revenue for federal and state governments during 2017-35.
If the first US Atlantic OCS lease sales were held in 2018, exploratory drilling could begin the following year with the first production of oil and gas expected in 2026, the study said. "Major capital investments, job creation, and revenue to government would all begin years before the first barrel goes to market," it added.
"The key is getting Atlantic lease sales included in the federal government's 2017-22 5-year program, which the administration will soon begin to prepare," NOIA Pres. Randall B. Luthi told reporters during a Dec. 5 teleconference. "Completing a seismic study of the region also is essential."
Economic benefits of opening the US Atlantic OCS to oil and gas activity would be felt national, according to Erik Milito, API's upstream and industry operations director, who also participated.
"None of these economic benefits will occur unless the federal government adopts a different strategy," Milito said, adding, "The only question is whether it will open the door to more jobs, more economic growth, and more domestic energy production from the Atlantic OCS."
Canadian forecast assumes heavy oil will be transported
Canadian government analysts identified transportation as a major export uncertainty in the National Energy Board's latest long-term supply and demand projections, but expect market forces to resolve the question, particularly for heavy oil, one of them told a Washington audience.
"We don't make specific assumptions about how it will be transported, although we see it moving by rail now to pipeline terminals," said Abra Bhargava, who leads the Energy Integration Team at NEB's Calgary headquarters, during a Dec. 6 presentation on the forecast at the Center for Strategic and International Studies.
The analysts expect to take a closer look at long-distance rail transportation of diluted bitumen from Alberta's oil sands in future forecasts, she said, adding, "We strongly believe the markets can function, and transportation will be found."
That assessment differs significantly from many US environmental organizations' declarations that crude oil production from Alberta's oil sands won't grow if TransCanada Corp.'s Keystone XL project and other new export pipelines aren't built.
The new forecast, which NEB released last month (OGJ Online, Nov. 22, 2013), projects Canadian crude available for export will increase 139% to 5.5 million b/d in 2035.
Oil sands dominate the long-term production growth outlook, although NEB expects emerging tight oil production to increase through 2016 before stabilizing and declining, according to Bryce van Shuys, another analyst who co-manages the board's Energy Futures Report.
"We believe it's in its infancy compared to the US, and there wasn't enough information available," he said. "Other groups, notably [the Canadian Association of Petroleum Producers], expect tight oil production to increase over a longer period."
When it comes to transportation, van Shuys continued, "the report's key assumption is that energy infrastructure will be built, driven by markets."
Gulfport Energy expands Ohio management team
Oklahoma City-based independent Gulfport Energy Corp. has added to its Ohio management operations as the company increases its focus on the Utica shale.
The company appointed J. Ross Kirtley in September as chief operating officer for Ohio activities. Prior to joining Gulfport, Kirtley served as vice-president of services for Sandridge Energy Inc. and president of Sandridge's wholly owned subsidiaries Lariat Services Inc., Hondo Heavy Haul Inc., and Chaparral Supply LLC.
Gulfport named Robert A. Jones in November as vice-president of drilling for Ohio activities. Jones previously served as Chesapeake Energy Corp.'s drilling engineering manager for the Haynesville, Barnett, and Eagle Ford.
Also that month, the company appointed Mark R. Malone as vice-president of operations for Ohio activities. Malone was previously engineering manager at Sierra Engineering.
Gulfport most recently appointed Ty Peck as managing director of midstream operations. Prior to joining Gulfport, Peck was director of commercial services with Access Midstream Partners.
"The Utica shale provides a huge opportunity for our company and these new team members will augment our ability to capitalize and execute our plans," said Gulfport Chief Executive Officer James Palm.
Earlier this year, Gulfport signed a definitive agreement to buy 22,000 net acres in the Utica from Windsor Ohio LLC, an affiliate of Wexford Capital LP, for $220 million. The deal increased Gulfport's leasehold interests in the Utica to 137,000 gross (128,000 net) acres (OGJ Online, Feb. 11, 2013).
This came shortly after the company reported high liquids yields at its Utica wells (OGJ Online, Jan. 23, 2013).
Exploration & Development — Quick Takes
Companies jointly acquire seismic in Barents Sea
Statoil ASA said it will operate a collaboration consisting of 17 oil and gas companies for joint seismic acquisition in the southeastern Barents Sea.
The blocks for which seismic 3D data will be gathered will be announced in the 23rd licensing round for the Norwegian continental shelf (NCS) in 2014 (OGJ Online, Sept. 3, 2013). The plan was formed at the request of the Norwegian Ministry of Petroleum and Energy (MPE).
New blocks on the NCS have not been made available since 1994. Surveys are slated to begin in April 2014 and finish the following fall.
"Coordinated seismic acquisition has several advantages," said Gro G. Haatvedt, Statoil's senior vice-president for exploration on the NCS. "It will ensure very good data quality, since the industry to a much greater extent will be able to utilize the companies' collective professional expertise within geological understanding and seismic acquisition and processing.
"The initiative lays the foundation for fewer, well-planned operations, thus reducing acquisition costs and potential disadvantages for the fishing industry," she added.
Haatvedt also commented that interest in the Barents Sea has seen a recent jump facilitated by discoveries in the Johan Castberg area. Statoil this week reported it found oil in the third of four wells planned this year in Johan Castberg (OGJ Online, Dec. 9, 2013).
Thirty companies expressed interest in the initial collaboration.
Companies that will initially participate are BP PLC, Chevron Corp., ConocoPhillips, DNO ASA, Eni SPA, GDF Suez, Idemitsu, OAO Lukoil, Lundin Petroleum, Norske Shell, PGNiG SA, Repsol SA, Spike Exploration, Statoil, Suncor Inc., VNG, and Wintershall AG.
Additional companies will be able to participate when authorities circulate the 23rd round nominated blocks for public consultation. A tender process for seismic acquisition will be initiated immediately.
Statoil finds more Johan Castberg area oil
Statoil ASA and partners have found oil in the third of four wells planned this year in the Johan Castberg area of the Barents Sea offshore Norway (OGJ Online, Nov. 7, 2013).
The 7220/7-2 S well proved a 22-m gas column and a 23-m oil column in the Jurassic Tubaen formation and a 133-m oil column in the Triassic Fruholmen.
Gro G. Haatvedt, Statoil senior vice-president for exploration on the Norwegian continental shelf, said the Fruholmen strike "confirmed a new play model in the area."
The Seadrill West Hercules semisubmersible rig drilled the well to the target depth of 1,700 m in 349 m of water on the Skavl prospect in the PL532 license.
Statoil estimates the prospect holds 20-50 million bbl of recoverable oil.
Skavl is 5 km south of the Johan Castberg area, where Statoil has made two oil discoveries, Skrugard and Havis. The first two wells drilled in the area this year, Nunatak and Iskrystall, found natural gas.
The West Hercules will be moved 16 km north to drill the Kramsno prospect.
Statoil, operator, holds a 50% interest in PL532. Eni Norge AS holds 30%, and Petoro AS holds 20%.
Tullow announces dry hole onshore Ethiopia
Despite several recent successes in East Africa, Tullow Oil PLC has announced that its most recent Ethiopian wildcat is a duster. The company reached a total depth of 6,893 ft on its Tultule-1 exploration well in the South Omo block onshore Ethiopia. Tullow reported that the well will now be plugged and abandoned as a dry hole.
The Tultule-1 was targeting oil-bearing sand drilled in its nearby Sabisa-1 well, but the formation was not encountered. The company did report however that gas shows were present. Results from both the Sabisa-1 and the Tultule-1 wells will now be analyzed to organize future exploration plans in the region.
Tullow serves as operator of the Tultule-1 well with a 50% interest along with partners Africa Oil Corp. (30%) and Marathon Oil Corp. (20%).
Tullow is now moving into Ethiopia's Chew Bahir basin to drill the Shimela prospect, also in the South Omo block. According to the company, new seismic has delineated several additional prospects. It expects to spud its next well at the end of the first-quarter 2014.
Tullow last month reported a fifth oil discovery in northern Kenya due south of its South Omo block in Ethiopia (OGJ Online, Nov. 22, 2013). The Agete-1 well discovered an estimated 328 ft of net oil pay in sandstone reservoirs on Block 13T.
The company has announced additional exploration activity on neighboring Block 10BB. Its Amosing-1 well is drilling and the company expects to spud its Ewoi-1 by yearend. In addition, Tullow is preparing to flow test earlier discoveries made at Etuko-1 and Ekales-1, also in Block 10 BB just west of its Block 13T discovery. The company said it expects results from these two discoveries in first-quarter 2014.
Drilling & Production — Quick Takes
FPSO starts up for North Malay basin work
The modified and renamed Perisai Kemelia floating production, storage, and offloading vessel has completed start-up and commissioning in an early-production program by Hess Exploration & Production BV in the North Malay basin offshore Peninsular Malaysia, reports EOC Ltd., the contractor.
Hess is developing nine gas fields on Gulf of Thailand Block PM302 and exploring Blocks PM325 and PM326B, which it operates under production-sharing contracts from state-owned Petronas in a 50-50 partnership with Petronas Carigali Sdn. Bhd. (OGJ Online, June 21, 2012).
The early-production target rate is 100 MMscfd. Full-field production is to be about 300 MMscfd, according to Petronas. Liquids output rates haven't been reported.
Hess has committed to acquire seismic data and drill exploratory wells on the North Malay blocks.
Hess also holds a 50% working interest in Block PM301, which produces gas processed under a unitization agreement on the Cakerawala Platform on Block A-18 in the Malay/Thai Joint Development Area adjacent to the North Malay basin blocks to the north. PM301 is on the JDA-Malay boundary, enclosed by PM302.
The FPSO previously was named Lewek Arunothai. Modifications for the North Malay work included the addition of an external turret mooring system able to withstand cyclones.
EOC in August sold its 51% equity interests in Emas Victoria (L) Bhd., which owns the FPSO, and in Victorial Production Services Sdn. Bhd., which operates it, to Perisai Production Holdings Sdn. Bhd. for consideration worth $89.25 million, including shares in Perisai's parent company and a 49% equity interest in SJR Marine (L) Ltd.
Ecopetrol, Talisman deem Akacias area commercial
Colombia's Ecopetrol SA has deemed the initial commercial viability of the Akacias area to the National Hydrocarbons Agency.
The area is in the Acacias municipality in the Meta Department on CPO-09 block, which is being developed jointly by operator Ecopetrol and Calgary-based Talisman Energy Inc.
Ecopetrol said oil in place is estimated to reach at least 1.3 billion bbl with an estimated minimum 10% recovery factor. The company estimates an initial incorporation of 35 million bbl of reserves, 55% of which are owned by Ecopetrol in accordance with its participating interest in the contract.
Development and production is expected to begin in an area covering 9,825 ha, 4.7% of the 208,248 ha CPO-09 Block. The partners are continuing their exploration activity in search of more hydrocarbon reserves.
Akacias is adjacent to Ecopetrol's major direct-operations area, with its Castilla, Chichimene, and Apiay fields currently producing a total of 215,000 boe/d.
"Akacias constitutes one of the major exploration achievements in recent years in Colombia and clearly shows the heavy crude potential in the area of Llanos, which is the focus of the exploratory campaign to reach Ecopetrol's target of producing 1 million of clean bbl in 2015 and 1.3 million bbl in 2020," stated Javier Gutierrez Pemberthy, Ecopetrol's chief executive officer.
Nine wells have been drilled as part of the Akacias area delimitation campaign. The discovery well Akacias-1 was drilled at yearend 2010 (OGJ Online, Dec. 1, 2010), while extended production tests began in May 2011 (OGJ Online, Nov. 2, 2011), reaching an average production of 2,000 b/d.
The cumulative production reached 1.5 million bbl of crude with 7-9° API gravity. Talisman in February 2012 stated its intention to deem Akacias commercial (OGJ Online, Feb. 16, 2012).
The total current average production of the tested wells is 5,500 boe/d and Ecopetrol estimates reaching a production volume of 25,000 boe/d by yearend 2015.
Petronas, Brunei petroleum authorities sign agreements
Malaysia's Petronas signed several agreements Dec. 8 with Brunei petroleum authorities. They include:
• A heads of agreement toward formalizing a unitization arrangement for Malaysia's Kinabalu West NAG field and Brunei's Maharajalela North Panel field.
• A heads of agreement toward a provisional arrangement for joint development of Malaysia's Gumusut and Kakap fields and Brunei's Geronggong and Jagus-East fields.
• Two production-sharing agreements awarded by Brunei National Petroleum Co. Snd. Bhd. (Petroleum Brunei) to Petronas Carigali Brunei Ltd. and Shell Deepwater Borneo Ltd. for Brunei's offshore Blocks N and Q in the eastern shallow waters. Petronas Carigali Brunei is operator of Block N; Shell operates Block Q.
• An agreement for Petroleum Brunei to acquire a 3% interest in Petronas' Canadian shale gas assets and in Petronas' proposed Canadian LNG facility, as well as a 3% share of the facility's LNG production for a minimum of 20 years.
• A memorandum of understanding by subsidiaries of Petronas and Petroleum Brunei to explore the possibility of setting up a joint venture to provide engineering and fabrication services.
The signings occurred in conjunction with the 17th Annual Malaysia-Brunei Leaders' Consultation in Bandar Seri Begawan.
PROCESSING — Quick Takes
Crude oil runs touch highest rates since July
US refiners boosted crude oil throughputs last week to their highest levels since mid-July, according to the latest data from the US Energy Information Administration.
Refinery inputs of crude oil rose for a ninth consecutive week to average more than 16 million b/d overall for the week ended Dec. 6, according to EIA's Weekly Petroleum Status Report (WPSR), released on Dec. 11.
While the lift in runs was a modest 25,000 b/d gain from the previous week, last week's elevated run rate ushered US refiners' overall weekly crude throughputs to their most robust level since the week ended July 12, according to EIA historical data.
Increased oil runs for last week came alongside a nearly 950,000-b/d drop in overall foreign crude oil imports into the US, the WPSR showed.
The combination of increased crude oil runs amid declines in foreign oil imports follows the last-in, first-out method of tax accounting used by many US refiners, which encourages refineries to reduce the amount of unused crude oil supplies in storage before a yearly inventory tax assessment on Dec. 31.
North Dakota topping plant due modular SRU
Partners in the 20,000-b/d Dakota Prairie Refining LLC topping plant in southwestern North Dakota have let contract to Principal Technology Inc., Plano, Tex., for a small, modular sulfur-recovery unit (SRU) and tail-gas treating unit (OGJ Online, Mar. 27, 2013).
The refinery, near Dickinson, will run Bakken crude and produce 7,000 b/d of diesel for use in the region. Naphtha and atmospheric bottoms will be shipped to other refineries.
Calumet Specialty Products Partners LP, Indianapolis, and MDU Resources Group Inc., Bismarck, ND, are building the plant. Ventech Engineers North America is the primary equipment and technology provider.
The plant is to start work late next year.
Pertamina advances petrochemical complex plans
PT Pertamina of Indonesia and Thailand's PTT Global Chemical PCL (PTTGC) have signed a manufacturing joint venture-heads of agreement to pursue the final investment decision for a petrochemical complex in Indonesia slated for commercial operation by 2018. The agreement is aimed to further the agreed joint-venture principles and investment scope for the project as well as enable both parties to finalize project details by early 2014 prior to conducting the detailed bankable feasibility study and front-end engineering design, Pertamina said.
This latest agreement follows the completion of the extensive project preliminary feasibility study, which is a part of the partnership HOA signed in April (OGJ Online, June 7, 2013).
The companies expect a final investment decision on the project in 2015, according to Pertamina.
Pertamina and PTTGC have targeted the project feasibility study refinement stage for conclusion by second-quarter 2014 to accelerate the implementation and achieve start-up of the complex by 2018, Pertamina said.
Later this month, PTTGC and Pertamina will also enter into a marketing and trading joint venture to initially conduct both PTTGC's and Pertamina's polymer products marketing and distribution throughout Indonesia.
Pertamina first announced its intention to construct the $5 billion complex in December 2012 as part of a plan by the state-owned company to increase its share of the Indonesian petrochemical market (OGJ Online, Dec. 18, 2012).
TRANSPORTATION — Quick Takes
PAA to expand Mississipian Lime pipeline systems
Plains All American Pipeline LP (PAA) announced four projects to expand its Permian basin pipeline infrastructure over the next few years. PAA expects the four projects to be completed in stages throughout 2014 and early 2015. They include construction of three large-diameter pipelines increasing PAA's takeaway capacity in the Delaware and South Midland basins and supporting gathering systems it's building in the Avalon, Bone Spring, and South Spraberry developments.
The first project consists of adding pumps to PAA's existing 20-in. OD Basin pipeline from Jal, NM, to Wink, Tex., increasing its capacity 100,000 b/d to a total 240,000 b/d. The first project also includes building a 100,000-b/d, 40-mile, 12-in. OD pipeline from Monahans to Crane, Tex., supplying both the Longhorn pipeline the origin of PAA's Cactus pipeline at McCamey, Tex.
The second project includes building a 62-mile, 16-in. and 20-in. OD pipeline with 200,000 b/d capacity from the South Midland basin in Central Reagan and Central Upton counties, Tex., to McCamey.
The third project involves building a 80-mile, 20-in. OD pipeline between Midland and Colorado City, Tex., moving 250,000 b/d to supply connecting carriers at Colorado City, including the BridgeTex Pipeline.
The fourth project will add pumping to increase capacity of the Cactus pipeline to 250,000 b/d from 200,000 b/d to meet PAA-expected increases in shipper demand.
PAA also is building about 45 miles of crude oil pipeline to complement its existing Mississippian Lime pipelines. The company expects the line to enter service first-quarter 2014. This project will extend PAA's pipeline infrastructure into Logan County, Okla., and farther into Grant County, Okla., and will deliver crude oil to PAA's terminal in Cushing, Okla.
The project includes building 150,000 bbl of tankage along the system and is supported by a long-term acreage dedication and a storage lease at PAA's Cushing terminal from an area producer.
