GENERAL INTEREST — Quick Takes
US House passes bill with BLM drilling permit provision
The US House of Representatives approved a fiscal 2015 defense appropriations bill that includes a provision to extend and make permanent an onshore drilling permit processing pilot program in several US Bureau of Land Management field offices.
The defense appropriations measure now goes to the US Senate, which previously approved the drilling permit program provision by unanimous consent as a stand-alone bill (OGJ Online, Sept. 17, 2014). The pilot program was scheduled to expire in 2015.
Officials from the American Petroleum Institute and Independent Petroleum Association of America separately welcomed the House's Dec. 4 action.
"A more efficient permitting process is crucial to America's all-of-the-above energy strategy," API Upstream and Industry Operations Director Erik Milito said.
"This legislation will help to address well-documented regulatory delays that have held up energy production on federal lands and slowed the growth of jobs," Milito said. "It's a great example of the kind of bipartisan effort that will be needed in the next Congress to ensure that America can continue to grow as an energy superpower."
Daniel T. Naatz, IPAA's vice-president of federal resources and political affairs, said continuation of the pilot program, which the 2005 Energy Policy Act established, "will provide much-needed certainty for America's independent producers-companies with an average of 12 employees-with operations on federal lands."
Naatz said, "Especially in these uncertain times with price volatility, it is encouraging to have certainty in an expedited permitting process. This program serves an essential role as producers consider future American energy opportunities on federal lands. We hope the Senate approves this measure again in a timely fashion."
The House acted after six oil and gas association presidents and officials from two national business groups urged Speaker John A. Boehner (R-Ohio) to consider S. 2440 before Congress's lame-duck session concludes (OGJ Online, Nov. 26, 2014).
EOG Resources sells bulk of Canadian assets
EOG Resources Inc., Houston, has divested all of its Manitoba assets along with certain assets in Alberta in two separate deals that closed on Nov. 28 and Dec. 1., totaling $410 million.
The assets encompass 1.3 million gross acres, 1.1 million net, 97% of which are in Alberta. Of the 5,800 producing wells sold, 5,255 are natural gas.
Current forecast production from the assets is 7,050 b/d of oil, 580 b/d of natural gas liquids, and 43.5 MMcfd of natural gas. Net proved reserves divested are estimated at 7.7 million bbl of oil, 0.8 million bbl of NGLs, and 78.7 bcf of natural gas.
EOG has retained 382,200 gross acres, 282,100 net, in Alberta, British Columbia, and Saskatchewan. EOG will maintain an operations office in Alberta.
As a result of the deals, $150 million of restricted cash related to future abandonment liabilities was released.
"This decision is consistent with EOG's focus on its outstanding US crude oil opportunities," said William R. Thomas, EOG chairman and chief executive officer. "We plan to reinvest some of the proceeds in these high return assets, while retaining our position in the Horn River basin and other exploration areas."
EOG during 2010-11 undertook a large-scale divestment of its North American natural gas assets, shifting its focus to oil (OGJ Online, Aug. 9, 2010; Nov. 10, 2010; May 6, 2011).
Goodrich considers selling Eagle Ford assets
Goodrich Petroleum Corp., Houston, is considering the sale of at least some of its shale assets in the South Texas Eagle Ford, the company said, adding that it plans to concentrate next year on the Tuscaloosa marine shale.
The board authorized management to explore selling "all or a portion" of the Eagle Ford assets during the first half of 2015 to give Goodrich more flexibility to expand developments elsewhere.
Goodrich said it will focus most of its spending next year on the Tuscaloosa marine shale, where executives report costs are coming down as results continue to improve.
Goodrich outlined 2015 spending plans of $150-200 million compared with its 2014 budget of $325-375 million. Executives said 2014 actual spending will likely be at the lower end of that range.
Exploration & Development — Quick Takes
Stone drills successful Utica exploration well
Stone Energy Corp., Lafayette, La., reported that its Pribble 6HU well in Wetzel County, W.Va., flowed from a 3,605-ft lateral at 30 MMcfd during the last 24 hr of a 5-day test.
The well, in which the company holds 90% working interest, produced on a final 28/64-in. choke with 6,500 psi of flowing casing pressure.
This test flow calculates to a rate of 8 MMcfd per thousand feet of lateral length based on the total effective lateral length of 3,605 ft for the test well.
"The results from the Pribble 6HU well confirm the high potential of the Utica shale underlying our current liquids-rich Marcellus acreage position," said David H. Welch, Stone chairman, president, and chief executive officer.
"The production rate of 30 MMcfd, and certainly 8 MMcfd per thousand feet of lateral, is one of the highest Utica tests announced in the area. This well, along with the numerous third-party Utica tests surrounding our acreage, has significantly derisked our Utica position.
"We have already invested in land and infrastructure in this area due to our Marcellus shale efforts, and this previous investment should enhance our Utica returns. We have contracted a new dual-purpose Utica-Marcellus drilling rig with delivery expected in late 2015, and our Appalachian team will be establishing a development program for this exciting new play," said Welch.
"Our Utica acreage position of almost 30,000 acres in the Mary field should allow for a multiyear development program," he said.
The well, drilled to a TVD of 11,350 ft, was completed in the Point Pleasant formation with 17 fracture stages. There was 210 ft of spacing between each stage and 375,000 lb of proppant per stage.
CNOOC, Kufpec sign three PSCs for South China Sea
China National Offshore Oil Corp. Ltd. reported signing three production-sharing contracts for the South China Sea with Kuwait Foreign Petroleum Exploration Co.
Blocks 52/22, 52/26, and 63/13 are in the Yinggehai basin (OGJ Online, June 20, 2014).
Work plans include 3D seismic data surveys and exploratory drilling. Expenditures during the exploration period will be borne 20% by CNOOC and 80% by Kufpec (China) Inc. CNOOC will be operator.
Once entering the development phase, CNOOC has the right to participate up to 70% of the working interest in any commercial discoveries.
Block 52/22 covers 1,896 sq km in 60-300 m of water; Block 52/26 covers 1,783 sq km in 80-160 m of water; and Block 63/13 covers 698 sq km in 80-140 m of water.
Centrica makes gas find nearby Aasta Hansteen field
The Norwegian Petroleum Directorate reported what it is calling a minor gas discovery made by Centrica Resources Norge AS.
Wildcat 6707/10-3 S was drilled about 20 km northeast of Aasta Hansteen field in the Norwegian North Sea. It was the first exploration well in production license 528 B, which was awarded in the 21st licensing round.
The well encountered a total gas column of about 12 m in the Kvitnos formation in the Upper Cretaceous with good reservoir properties, NPD said. The entire reservoir zone, including the water zone, has a gross thickness of 200 m, it said.
Based on extensive data acquisition and sampling, preliminary calculations of recoverable gas are 2-8 billion standard cu m. The well was not formation tested.
A secondary exploration target in the Upper Cretaceous Lysing formation was tight and aquiferous.
The well was drilled to a vertical depth of 4,264 m below the sea surface by the West Navigator drillship in 1,421 m of water. It was terminated in the Lange formation in the Lower Cretaceous.
Origin makes Otway natural gas discovery
Origin Energy Ltd., Sydney, has made a gas discovery in the offshore Otway basin of western Victoria.
Origin reported that pressure data taken in its Speculant-1 wildcat indicated a 145-m thick gas column in the Waare C formation. Further evaluation is under way.
The discovery lies 3 km off the coast southeast of Warrnambool and is immediately north of the company's existing Halladale and Black Watch fields discovered in 2006.
The well was spudded more than two months ago on Sept. 23, targeting a tilted fault block structure over an area of about 7 sq km. The company used extended reach technology and the Ensign 931 rig for the drilling program.
Drilling & Production — Quick Takes
WoodMac: Eagle Ford shale output tops 1 billion bbl
The Eagle Ford shale in South Texas has produced more than 1 billion bbl of crude oil and condensate, energy consultant Wood Mackenzie Ltd. estimated, adding that the Eagle Ford has produced more than 70% of that total during the last 2 years.
WoodMac forecasts the Eagle Ford will produce 2.8 million boe/d in 2015. Analysts forecast capital expenditure of $30.8 billion for the Eagle Ford shale during 2015 compared with WoodMac's forecast for $16.7 billion to be spent on the Bakken formation in North Dakota and Montana next year.
Analysts said the Eagle Ford currently accounts for 16% of US oil production. More than half of the Eagle Ford's production comes from 10% of its 20,000 sq miles, WoodMac said.
WoodMac said the Eagle Ford play was the third-fastest to have produced 1 billion bbl, trailing the Alaska North Slope and the Ghawar field in Saudi Arabia. Production contributing to the Eagle Ford 1-billion-bbl mark started in 2008, WoodMac said.
Nexen starts bitumen production at Kinosis 1A in Alberta
China National Offshore Oil Corp. Ltd. reported the start of bitumen production at the Kinosis 1A (K1A) steam-assisted gravity drainage (SAGD) facility in Alberta. Nexen ULC, a CNOOC subsidiary, is operator and holds 100%.
K1A is about 12 km south of Nexen's Long Lake SAGD facility (OGJ Online, Apr. 16, 2012). K1A, designed to produce 20,000 b/d, consists of steam-generating equipment, well pad facilities, 37 well pairs, and water and bitumen flowlines.
Bitumen produced from K1A is processed and upgraded at Long Lake. CNOOC said K1A "is expected to play a significant role in filling" Long Lake, which has an operating capacity of 72,000 b/d.
West Hub production starts offshore Angola
Production has begun from the West Hub development project in deep water offshore Angola, reports Eni SPA, the operator.
Production through the N'Goma floating production, storage, and offloading vessel is to increase from 45,000 b/d of oil at present to 100,000 b/d.
The development is in about 1,400 m of water on Block 15/06, 350 km northwest of Luanda and 130 km west of Soyo. The project will sequentially start production from Sangos, Cinguvu, Mpungi, Mpungi North Aera, Vandumbu, and Ochigufu fields.
Start-up of the East Hub development, expected in 2017, will raise production from the block to 200,000 b/d (OGJ Online, Sept. 17, 2014).
Eni said it has drilled 24 exploration and appraisal wells on Block 15/06, discovering more than 3 billion bbl of oil in place and 850 million bbl of reserves.
Kearl resumes oil sands production, Imperial reports
Imperial Oil Ltd., Calgary, has resumed production at its Kearl oil sands operations in Alberta after a precautionary shutdown due to a "vibration issue" with the plant's ore-crusher unit (OGJ Online, Nov. 11, 2014).
The company said production has "ramped up to pre-shutdown levels." Excluding the impact of a planned 14-day turnaround in September, average bitumen production in the third quarter was 92,000 b/d.
PROCESSING — Quick Takes
West Texas gathering, processing to come onstream
EagleClaw Midstream Services LLC, Midland, Tex., has bought natural gas gathering and processing in Reeves County, Tex. The company declined to identify the seller.
Included in the deal are more than 50 miles of gathering pipeline, a 15-MMcfd refrigerated Joule-Thomson (JT) plant, a 60-MMcfd cryogenic plant that remains under construction, and seven new 1,700-hp compressors.
These assets form EagleClaw's East Toyah gathering and processing that will handle production from stacked pay zones in the Delaware basin, including the Upper and Middle Wolfcamp, Bone Spring, and Avalon Shale formations, said the company announcement.
The East Toyah processing plant is on 80 acres in Reeves County, 8 miles northeast of the town of Toyah. The gathering system and the JT plant are in operation; the cryogenic plant will come online in second-half 2015. East Toyah, said the announcement, is large enough to "accommodate multiple expansions to processing capacity."
EagleClaw also announced it has recently commissioned its Northwest Toyah gathering and processing, also in Reeves County, handling production from the Delaware basin and encompassing more than 30 miles of pipeline and a 15-MMcfd refrigerated JT plant.
The Northwest Toyah plant is 6 miles northwest of Toyah, within 13 miles of the East Toyah plant. EagleClaw said it plans to connect the two systems.
Reliance expands desalination at Jamnagar refinery
Reliance Industries Ltd. (RIL), Mumbai, is scheduled to receive proprietary PX technology from Energy Recovery Inc., San Leandro, Calif., as part of an expansion that will switch current desalination operations from a thermal to reverse osmosis process at its Jamnagar refining and petrochemical complex in Gujarat, India.
Energy Recovery has shipped its PX Q300 pressure exchangers to the Jamnagar complex for the seawater reverse osmosis (SWRO) desalination expansion, Energy Recovery said.
The PX technology will add 188,000 cu m/day of capacity to the Jamnagar desalination plant, which has expanded twice since it was first commissioned in 1998, according to Energy Recovery.
A value of the order was not disclosed.
The shipment of Energy Recovery's pressure exchangers follows a contract RIL let to IDE Technologies Ltd., Kadima, Israel, for its proprietary SWRO desalination solution to meet the increased water-capacity needs of the Jamnagar complex, according to a Dec. 11, 2013, release from IDE Technologies.
The expanded desalination plant, which will be located close to the sea to decrease the length of connecting pipes to the refinery and reduce pump-related costs, will deliver high-quality boiler-feed water as well as potable water to the complex using a multi-effect distillation seawater desalination solution, IDE Technologies said.
With a current capacity of 160,000 cu m/day, the Jamnagar desalination plant ultimately will reach a total capacity of 400,000 cu m/day once the reverse osmosis plant installation and expansion project is completed, IDE Technologies said.
The need for increased desalination operations at Jamnagar stems from the ongoing expansion of the refining and petrochemical complex, which aims to boost Jamnagar's crude processing capabilities as well as its derivative production capacities (OGJ Online, Aug. 8, 2014; Jan. 22, 2014), RIL said in a Dec. 16, 2013, release.
During the 2013-14 fiscal year, the Jamnagar integrated refining complex, the world's largest, processed 68 million tonne/year of crude to operate at 110% above its 33 million-tpy design capacity, according to RIL's annual report.
BPCL adds petchem to Kochi refinery expansion
Bharat Petroleum Corp. Ltd. (BPCL), Mumbai, plans to diversify into petrochemicals production as part of the ongoing integrated expansion and upgrade of its Kochi refinery at Ambalmugal in the Indian state of Kerala.
BPCL's board of directors has approved an increased capital expenditure of about 46 billion rupees, or $740 million, to diversify into the petrochemicals business at Kochi, the company said in a formal disclosure to BSE Ltd. (formerly Bombay Stock Exchange).
BPCL plans to use polymer-grade propylene that will be available upon completion of Kochi's integrated refinery expansion project to produce niche petrochemicals such as acrylic acid, acrylates, and oxo alcohols that currently have to be imported into the country, according to the disclosure.
With funding for the proposed project now approved, the Kochi petrochemicals expansion, which tentatively is scheduled to be commissioned during financial year 2018-19, will be submitted for environmental clearances, BPCL said.
Designed to lift crude processing capacity to 15.5 million tonnes/year from 9.5 million tpy, the Kochi refinery integrated expansion project will include a new crude distillation unit, FCCUs, and a delayed coker to enable the production of fuels that meet Europe's latest emissions standards (OGJ Online, Sept. 12, 2014; Nov. 19, 2013; July 16, 2012).
TRANSPORTATION — Quick Takes
BG agrees to sale of Aussie gas line to APA Group
BG Group PLC agreed to sell its wholly owned subsidiary Queensland Curtis LNG Pipeline Pty. Ltd. (QCLNG) to APA Group for about $5 billion.
QCLNG owns a 543-km, large-diameter underground pipeline network linking BG's natural gas fields in southern Queensland to a two-train LNG liquefaction and export plant at Gladstone on Australia's east coast.
BG built the pipeline between 2011 and 2014. It has a current book value of $1.6 billion, according to BG. Tariffs payable on the pipeline will provide a fixed rate of return on the asset base with primary components escalating annually with US inflation indices. Expected tariff for calendar 2016 is $390 million, BG said.
The sale is conditional on the start of commercial LNG deliveries from the QCLNG plant at Gladstone (still slated for this year on the company's web site) and on partner consent. BG Group and its partners have firm capacity rights in the pipeline for 20 years, with options to extend. BG earlier this year began commissioning the Surat basin coal-seam gas processing network that will feed QCLNG liquefaction (OGJ Online, June 27, 2014).
BG described this sale of "noncore infrastructure" as consistent with its strategy of actively managing its global assets.
Southwestern continues Marcellus expansion
Southwestern Energy Co., Houston, has signed an agreement to purchase oil and gas assets, including 46,700 net acres, in northeast Pennsylvania from WPX Energy Inc., Tulsa, for $300 million.
The acreage in the transaction is producing 50 MMcfd of gas from 63 operated horizontal wells primarily in Susquehanna County. Southwestern will also assume firm transportation capacity of 260 MMcfd predominantly on the Millennium Pipeline.
The deal is conditional on receiving a waiver from the US Federal Energy Regulatory Commission regarding transfer of the firm transportation capacity and is currently expected to close in next year's first quarter.
"This acreage position complements our existing Marcellus [shale] acreage in northern Susquehanna County, where we have recently seen very good results from two of our wells, the Hughes North 1H and the Dayton 4H," commented Steve Mueller, Southwestern president and chief executive officer.
Hughes North 1H completed the entire lateral length of 4,981 ft and had a maximum 24-hr rate of 4.7 MMcfd. Dayton 4H has a total lateral length of 5,278 ft and tested a maximum 24-hr rate of 4.5 MMcfd from the first 30% completed to date.
"Further, the additional firm transportation capacity adds to our existing firm transportation portfolio to provide 1.3 bcfd of firm transport capacity upon closing and growing to 1.4 bcfd by the end of 2016," Mueller said.
He said, "The immediate availability of this firm transportation provides the pathway for ongoing growth in production over the next 3 years and the added acreage solidifies future value through a growing well inventory."
Southwestern over the past 2 years has undertaken a large-scale expansion of its position in the Marcellus.
In October, the company acquired 413,000 net acres and 1,500 wells in northern West Virginia and southern Pennsylvania-along with related property, plant, and equipment-from Chesapeake Energy Corp. for $5.375 billion (OGJ Online, Oct. 16, 2014).
That deal expanded on the previously made 162,000-net-acre Marcellus acquisition, which include Susquehanna County acreage, from Chesapeake for $93 million (OGJ Online, Apr. 30, 2013).
The deal represents WPX's sixth agreement since May to "narrow the company's business focus, increase scalability of core assets, bring value forward, and further strengthen its balance sheet."
US industry scoreboard - 12/15
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