GENERAL INTEREST — Quick Takes
Deadly train derailment in Quebec carried Bakken crude
A runaway train carrying crude oil from the Bakken formation derailed early July 6 in Lac Megantic, Que., resulting in fires and explosions that destroyed much of the town. Canadian authorities on July 10 said there were at least 15 people dead and 60 missing.
The train was operated by Montreal Maine & Atlantic Railway Inc. (MMA), a division of Rail World Inc. The train had 72 carloads of crude bound for Irving Oil Ltd.'s refinery in Saint John, NB.
MMA said the train was stopped during a crew rest outside Lac Megantic when the train started to roll, unmanned, about 7 miles before derailing in Lac Megantic, which has a population of 6,000.
MMA said an engineer inspected the train and reported one of the locomotives was running, and that its air brake was engaged. Subsequent to that inspection, the locomotive was shut down, which might have released the brake, said MMA, which is cooperating with an investigation into the incident.
Development of unconventional oil fields in North Dakota and also in Texas during the last 5 years has resulted in more crude oil shipments by rail pending completion of pipelines.
Total, others cleared in 'oil-for-food' case
Total SA, its chief executive officer, and 17 other defendants have been cleared of corruption charges in France related to the United Nations program that allowed Iraq to sell oil despite international sanctions during 1995-2003.
The Paris Criminal Court dismissed allegations of bribery and influence peddling at the time of the UN's "oil-for-food" program.
Defendants, in addition to Total and Chairman and Chief Executive Officer Christophe de Margerie, included five former Total employees, the Swiss trader Vitol, and a former French interior minister.
De Margerie was senior vice-president, Middle East, at the time the misconduct was alleged to have occurred.
Since the French investigation began in 2009, Total had denied knowledge of surcharges paid on purchases of Iraqi oil and argued that its purchases were legal and approved by the UN.
Authorities respond to gulf well-control incident
The US Coast Guard and Bureau of Safety and Environmental Enforcement reported a well-control incident at Ship Shoal Block 225 Platform B, a natural gas and crude oil platform 74 miles southwest of Port Fourchon.
The well is leaking gas and water, USCG said, adding that the platform lies in 146 ft of water.
Energy Resources Technology Gulf of Mexico LLC (ERT), owner of the platform, told authorities that workers became aware of a well-control event while they were working to temporarily plug Well No. B2.
Two other wells on Platform B were producing at the time and were subsequently shut-in. All five workers on the platform were safely evacuated.
BSEE and USCG pollution responders reported gas flowed from, resulting in a rainbow sheen visible on the surface estimated to be more than 4 miles by ¾ mile wide. The incident is being investigated.
Talos Energy LLC owns ERT.
SPDC JV debunks false claims on TNP oil spill
Shell Petroleum Development Co. of Nigeria Ltd. (SPDC) said it has repaired the valve point and removed six other theft connections in efforts to operate the Trans Niger Pipeline safely despite sabotage and oil theft activities that led to a June fire and explosion on the system.
A joint investigation team including regulators and SPDC representatives determined the incident resulted from unknown persons installing a valve to steal oil from the line. SPDC said it responded quickly to a theft spill on June 10 and an explosion and fire on June 19.
Mutiu Sunmonu, SPDC managing director and Shell Nigerian country chairman, said, "Suggestions that we reacted slowly to the fire and spill are false." He also said "actions taken at Bodo West were in the best interest of lives and the environment."
Shell has dismissed suggestions that TNP is unsafe to operate, saying the main cause of failures on TNP has been third-party damage related to sabotage and theft. In 3 years, 25 leaks have been reported, and 23 of those stemmed from sabotage with two operational pinhole leaks, SPDC said in a July 5 news release.
SPDC is a joint venture of Shell, Nigeria National Petroleum Corp., and subsidiaries of Total SA and Eni SPA. The TNP system has a capacity of 150,000 b/d.
In a report on the Royal Dutch Shell PLC web site, Shell said the incident released 2,699 bbl of oil although most of the spilled oil was burned in a subsequent fire. Shell reported 400 bbl was recovered, and the cleanup of an area showing residual effects of the spill is slated to be completed by December.
Nigeria's Niger Delta is known for oil spills, both as a result of aging infrastructure and frequent theft attempts to siphon oil from pipelines.
In June, SPDC said it would spend $1.5 billion to build a pipeline that will bypass a section of TNP where theft attempts are common (OGJ Online, June 23, 2013).
Kazakhstan preempts ONGC Videsh Caspian bid
The government of Kazakhstan has preempted a bid by ONGC Videsh of India to acquire the 8.4% stake held by ConocoPhillips in the North Caspian Sea Production Sharing Agreement, which includes giant Kashagan oil and gas field (OGJ Online, Dec. 3, 2012).
State-owned KazMunaiGaz will buy the interest. Kazakhstan's subsoil law provides for the preemption.
North Caspian Operating Co. operates the production-sharing agreement for seven companies.
ConocoPhillips said it expects proceeds of its sale to remain at about $5 billion, subject to normal adjustments.
Exploration & Development — Quick Takes
Shell to sidetrack Vicksburg strike in deepwater gulf
Royal Dutch Shell PLC plans a sidetrack well to test a prospect on a fault block separate from its deepwater Vicksburg A discovery in the Gulf of Mexico, which it estimates holds potentially recoverable resources exceeding 100 million boe.
The Vicksburg A discovery well, on Mississippi Canyon Block 393 about 75 miles offshore, encountered more than 500 ft of net oil pay, Shell reported.
It was drilled to 26,385 ft in 7,446 ft of water. The location is west of Shell's 2007 Vicksburg B discovery, which the company describes as a separate accumulation, and east of the Appomattox discovery. Shell has appraised the Appomattox find and estimates potentially recoverable resources there at more than 500 million boe.
The sidetrack from the Vicksburg A well will test a prospect called Corinth between the new discovery and Appomattox.
Shell is operator of MC Block 393 with a 75% interest. Nexen Inc., a wholly owned unit of CNOOC Ltd., holds the other 25%.
Ukraine nine-stage frac could set European mark
Schlumberger has rigged up to conduct a nine-stage hydraulic frac job for JKX Oil & Gas PLC in Ukraine at what the companies believe may be the largest onshore frac in Europe to date.
The job is figured to take 40 days and initial flow from the well is expected in August.
The site is JKX's R-103 well on the Rudenkovskoye license in Poltava, Ukraine. The well was drilled to 4,641 m measured depth into the tight Devonian Rudenkovskoye sandstone reservoir and has a horizontal section of just over 1,000 m at 3,650 m true vertical depth.
Schlumberger plans to inject more than 1,200 tons of proppant supported by as much as 35,000 bbl of frac fluid. Clean-up is anticipated to take 2-4 weeks, and the well would reach stable production about a month later.
The first step in the operation, which began June 30, is to run in the hole using a coiled tubing unit to set and test the first plug at the end of the well. The CTU will then jet perforate the first set of perforations before carrying out a preliminary minifrac. This minifrac will permit fine-tuning of parameters for the main fracs, each of which will transport more than 120 tons of proppant into the formation. The sequence of plug, perforate, and frac will be repeated eight times.
JKX Chief Executive Paul Davies said, "A considerable amount of planning and preparation has gone into this pioneering project. We remain confident that the application of this proven technique for tight gas reservoirs will allow us to develop commercially the very large gas in-place in the Rudenkovskoye field."
E&P firm starts amid Sri Lankan bid round
Ceylan Energy, Sri Lanka's first oil and gas E&P company, started business in Colombo as a symposium began in conjunction with the country's second licensing round.
Chairman of the new company is Harry Kulasinghe, who has more than 30 years of oil and gas industry experience, recently as vice-president, business development for Aker Subsea Ltd. in the UK and as a nonexecutive director of Hayleys Energy Services Lanka Pvt. Ltd. in Sri Lanka.
In a press statement, the new company said it was sponsoring the July 8-12 symposium in Colombo, organized by the Petroleum Resources Development Secretariat, promoting the country's new licensing round.
The PRDS is taking bids until Nov. 29 this year on 13 offshore blocks in the Cauvery and Mannar basins.
Its "petroleum resources agreement" includes production sharing with royalty and tax. The agreement provides for an 8-year, three-phase exploration license and a 20-year, extendable development license.
Drilling & Production — Quick Takes
FPS arrives at deepwater Malaysian field
Installation has begun of a semisubmersible floating production system (FPS) on deepwater Gumusut-Kakap oil field offshore Sabah, Malaysia (OGJ Online, Mar. 17, 2009).
The field, operated by Sabah Shell Petroleum Co. under a production-sharing contract with state-owned Petronas, began producing 25,000 b/d last November through tie-back of two subsea wells to Kikeh oil field operated by Murphy Sabah Oil.
Kikeh, Malaysia's first deepwater field, began production in 2007 through a spar connected to a floating production, storage, and offloading vessel (OGJ Online, Aug. 11, 2011).
The Gumusut-Kakap FPS, anchored in 1,200 m of water, will handle production from 19 wells completed subsea and connected to seven subsea manifolds. With a capacity to process 150,000 boe/d of oil and natural gas, it's designed to remain on the field for 30 years and handle production from other fields in the area.
Oil will move from the FPS by pipeline to the Sabah Oil and Gas Terminal in Kimanis, Sabah.
Malaysia Marine & Heavy Engineering Sdn. Bhd. built the FPS at its yard in Pasir Gudang, Johor.
Gumusut-Kakap interests are Shell Malaysia and ConocoPhillips Sabah Ltd., 33% each; Petronas Carigali, 20%; and Murphy Sabah Oil, 14%.
Jackpine oil sands mine expansion advances
Shell Canada Energy, operator of the Athabasca Oil Sands Project (AOSP) joint venture, has received conditional Alberta Energy Regulator approval for expansion of its Jackpine oil sands mine about 70 km north of Fort McMurray, Alta.
The expansion would boost capacity of the mine to 300,000 b/d of bitumen from its current capacity of 200,000 b/d.
The conditional approval came after hearings held by a joint review panel, which has delivered its report to the federal environment minister for review and a decision under the Canadian Environmental Assessment Act of 2012.
The review panel made 88 recommendations to the federal and provincial governments and set 22 conditions for Shell.
In addition to the Jackpine mine, the AOSP owns the Muskeg River Mine and Scotford Upgrader. The upgrader is site of the planned Quest carbon capture and storage project (OGJ Online, July 12, 2012).
AOSP interests are Shell Canada Energy 60% and Chevron Canada Ltd. and Marathon Oil Sands LP, 20% each.
Pacific Energy Development drills Niobrara wells
Pacific Energy Development Corp., Danville, Calif., has drilled two wells on its Niobrara holdings in northeastern Colorado.
Pacific Energy Development focuses on shale oil and gas development and production in the US and Asia.
The 16-7-60 1H horizontal well in Weld County reached 6,260 ft total vertical depth with a total measured depth of 10,630 ft.
The Wickstrom 18-2H horizontal well in Morgan County has spudded and is targeted to reach to 6,100 ft total vertical depth with a total measured depth of 14,700 ft.
The company currently has three producing wells on its Niobrara asset, which covers 10,224 gross acres in Weld and Morgan counties.
Pacific Energy's principle assets include its Niobrara assets in the DJ basin in Colorado, its Eagle Ford asset in McMullen County, Tex., its North Sugar Valley asset in Matagorda County, Tex., and the recently acquired Mississippian asset in the Kansas counties of Comanche, Harper, Barber, and Kiowa.
PROCESSING — Quick Takes
US Midwest gasoline prices returning to normal
The resumption of refineries across the US Midwest has contributed to gasoline prices in that area falling closer to normal, according to the US Energy Information Administration.
"Fuel prices in Minnesota and North Dakota have fallen to below the current US average gasoline price, and prices in Michigan, Indiana, and Illinois are heading lower with the return of regional refinery production," EIA reported.
Midwest prices were pushed up in April and May by longer-than-expected refinery outages and lowered gasoline production and inventories.
"Between mid-April and mid-May, Midwest gasoline inventories declined by 6 million bbl (11%) before recovering as refineries returned to normal operations and as gasoline supplied from other regions reached the Midwest," EIA said.
During disruptions, gasoline is supplied to the Midwest by pipeline and barge from other regions of the country, mostly from the Gulf Coast.
Price volatility is hence amplified given the distances involved and resupply time, EIA said. Since April, Midwest gasoline prices varied in a range three times that of US average prices.
BP PLC has started up a 250,000-b/d crude distillation unit at its Whiting, Ind., refinery. The unit returns the Whiting refinery to its 413,000 b/d nameplate processing capability and clears the way for remaining upgrades of new coking and hydrotreating units, the company said (OGJ Online, Feb. 1, 2011).
Granite Wash gas plant starts up
Eagle Rock Energy Partners LP has started up its 60-MMcfd cryogenic processing plant in Wheeler County, Tex., in the Granite Wash play (OGJ Online, Mar. 7, 2013).
The plant includes the associated Mills Ranch compressor station and lies on a 50-acre site owned by Eagle Rock in the center of the company's existing high-pressure gathering system.
Eagle Rock also built other pipeline enhancements in the immediate area for product gathering, transportation, and marketing to and from the Wheeler plant. The supporting infrastructure and plant site were designed to accommodate one or more additional expansions.
With the completion of the plant, Eagle Rock said it will have more than 500 MMcfd of high-efficiency cryogenic processing capacity in the Granite Wash play. Construction of the plant, associated gathering and pipelines cost about $65 million, said the company.
Contract moves Qatari petrochemical plant ahead
Qatar Petrochemical Co. Ltd. (Qapco) has awarded another contract in the project to build the Al Sejeel petrochemical complex at Ras Laffan. Bechtel, Houston, will provide project management starting with front-end engineering and design, Bechtel reported.
The complex will include an ethylene cracker fed by natural gas produced from Qatari projects and will produce ethylene, high-density polyethylene, linear low-density polyethylene, polypropylene, and butadiene. Start-up targets 2018.
In June, Qatar Petroleum and Qapco signed technology license contracts for the complex with Univation Technologies for the PE technology and with Dow Chemical Co. for the PP technology. With those signings, the Al Sejeel plant will be designed to produce 2.2 million tonnes/year of polymers.
In February, QP and Qapco signed heads of agreement jointly to develop the petrochemical complex, with QP and Qapco holding 80% and 20% equity interest, respectively.
The Al Sejeel petrochemical project is part of Qatar's large-scale expansion of the petrochemicals sector, the companies said in June. It will raise the country's petrochemical output to 23 million tpy by 2020.
TRANSPORTATION — Quick Takes
Oil pipeline to serve Utsira high fields
Statoil and partners have decided on a transportation option that will allow development to proceed of Edvard Grieg and Ivar Aasen oil fields offshore Norway.
Statoil, a nonoperating partner in both fields and operator of the joint venture for oil transportation, said a 43-km, 28-in. pipeline will carry oil from Edvard Grieg field to the Grane oil pipeline, which makes landfall at Sture. It will be called the Edvard Grieg pipeline.
Production is to begin in 2015 at Edvard Grieg, which is operated by Lundin Norway and will process wellstreams from Ivar Aasen. The latter field, operated by DNO, is to begin producing in 2016. A transport decision was a condition of development of the fields, which are in an active exploration area called the Utsira high between Sleipner and Grane oil fields.
Partners in the transport joint venture are Lundin Norway 30%, Statoil 20%, Wintershall Norge 18%, DNO 14%, OMV Norge 12%, and Bayerngas Norge 6%.
Subject to approval by the Norwegian Ministry of Petroleum and Energy, the pipeline will be installed in the summer of 2014, with tie-in operations in 2015.
Santos GLNG project inks deal for interconnect
Two of the coal seam gas-to-LNG schemes at Gladstone on Queensland's central-west coast have inked a deal that will enable them to swap gas through two interconnection points if required.
The Santos GLNG project and the BG Group's Queensland Curtis LNG (QCLNG) project signed an agreement that supports plant operation flexibility and efficiency. The agreement links both projects in two places. One is on the western side of The Narrows, which is the strait between Curtis Island and the mainland. The other is on Curtis Island itself.
The interconnection points will enable gas to flow from one project to the other when, for example, there is LNG plant downtime or planned maintenance in either company's facilities. The agreement enables this to occur without interrupting the project's gas field operations back down the line.
Having two interconnects provides additional flexibility over the lifetimes of both projects and gives more options to plant operators for moving gas.
The net result is that GLNG and QCLNG will be able to buy, sell, and swap gas during scheduled and unscheduled events, maximising plant productivity.
Construction of the two interconnection points on adjoining easements is slated for completion next year.
A similar deal is expected between QCLNG and the third project in Gladstone, namely that of the Origin Energy Ltd.-led Australia Pacific LNG.
MAPL receives Rockies NGL expansion approval
Enterprise Mid America Pipeline (MAPL) has received approval from the US Bureau of Land Management to construct the 234-mile Western Expansion Pipeline III (WEP III) natural gas liquids project. BLM's approval followed completion of an environmental assessment and subsequent 30-day public comment period that found no significant impact likely to result from the project.
WEP III will transport NGL gathered in northwestern New Mexico to Hobbs, NM, and ultimately to markets in Mont Belvieu, Tex. The proposed pipeline includes a series of six loop segments and will follow an existing pipeline corridor.
The pipeline will cross about 67 miles of BLM land, 26 miles of tribal lands (Navajo Nation and Zia Pueblo) administered by the Bureau of Indian Affairs, 27 miles of state land, and 114 miles of private lands. MAPL estimates construction could begin as early as this summer and will take 6-9 months to complete.
MAPL announced plans to add as much as 85,000 b/d of Rocky Mountain NGL capacity using 16-in. OD pipe following a successful open season in 2011. Shippers executed 10-year, firm, ship-or-pay transportation agreements totaling 38,500 b/d in the initial open season, with options which could reach the system's 85,000-b/d design capacity (OGJ Online, May 6, 2011).