GENERAL INTEREST — Quick Takes
Halliburton reports $1.1 billion Macondo claims deal
Halliburton Co. reported a $1.1 billion agreement that it said would settle most of the class claims asserted by plaintiffs against the Houston oil field service company following the 2010 Macondo deepwater well blowout in the Gulf of Mexico.
The proposed settlement, which is subject to the US District Court for Eastern Louisiana's approval and an agreed-upon participation level by current claimants, would be paid into a trust until all appeals have been resolved in three installments over the next 2 years, Halliburton said on Sept. 2. It previously took a $1.3 billion contingency loss related to Macondo incident-related lawsuits in multiple districts.
Halliburton said the proposed settlement includes claims against it that BP PLC, the well's operator, assigned to the settlement class in its April 2012 settlement; punitive claims against Halliburton by a class of plaintiffs alleging damages to property or associated with the commercial fishing industry arising from the incident; and affirmation that Halliburton has no liability for compensatory damages to settlement class members in BP's April 2012 settlement.
Payments would be held in the trust pending final approval and sufficient acceptance of the proposed settlement, Halliburton said. These would include any appeals of BP's 2012 settlement class agreement, the court's earlier determination that the contractual indemnity provided by BP to Halliburton is valid and enforceable, and the court's earlier dismissal of economic damage claims against Halliburton.
The company said it would withdraw the proposed settlement if not enough claimants agreed to accept it.
Buckeye to buy Corpus Christi terminal interest
Buckeye Partners LP has agreed to acquire 80% interest in a company that it will jointly own with Trafigura AG for $860 million. The transaction is expected to close later this month.
The company, to be named Buckeye Texas Partners, will own and operate a vertically integrated system of midstream assets including a deepwater, high-volume marine terminal on the Corpus Christi Ship Channel; a condensate splitter and LPG storage complex in Corpus Christi; and three crude oil and condensate gathering facilities in the Eagle Ford shale.
The Corpus Christi facilities have five vessel berths, including three deepwater docks, and on completion of initial development phase, will offer 5.6 million bbl of liquid petroleum products storage capacity along with rail and truck loading-unloading capability.
The 50,000-b/d condensate splitter is under construction and anticipated to be completed by mid-2015. All assets are supported by 7- to 10-year minimum volume throughput, storage, and tolling agreements with Trafigura.
Buckeye says completion of the initial development phase will bring forth an integrated system connecting production in the field to the marine terminal infrastructure in Corpus Christi.
"We expect this unique integrated system of assets will allow us to capitalize on the rapidly growing production in the Eagle Ford shale," said Clark C. Smith, Buckeye chairman and chief executive officer. "This acquisition complements our portfolio of marine terminal assets in strategic energy hubs and further enhances the logistical solutions we can provide across these key energy markets."
Buckeye Texas Partners is expected to invest $240-270 million relating to the initiatives through first-quarter 2016, with operations coming over the next 9-18 months.
Gas production to resume at In Amenas gas facilities
Statoil ASA and partners BP PLC and Algerian state-owned Sonatrach are set to resume "ordinary operations" at the In Amenas gas production facility of eastern Algeria near the Libyan border 19 months after it was seized by Islamic militants (OGJ Online, Jan. 16, 2013).
Statoil says ordinary rotation will resume at the plant now that all defined security measures have been implemented.
The joint venture has introduced physical security measures at all operating plants in Algeria, and improved dialogue with Algerian authorities on securing the plants, Statoil says. Algerian authorities have also initiated separate security measures.
Security improvements were in part drawn from recommendations by the investigation conducted after the attack.
"We will now, in cooperation with our partners, continue our systematic work to maintain the high level of the security measures, to ensure that we have a good understanding of the security threats and adjust our security measures as required," said Lars Christian Bacher, executive vice-president for Statoil's development and production, international division.
Exploration & Development — Quick Takes
Shell makes Utica gas discovery in Pennsylvania
Royal Dutch Shell PLC has made a natural gas discovery within the Utica shale in Tioga County, Pa.
The Neal and Gee wells were respectively drilled to total measured depths of 14,500 and 15,500 ft with respective lateral lengths of 4,200 ft and 3,100 ft. Shell says the results are comparable to the best publically announced thus far in the emerging southeast Ohio Utica dry gas play.
The Gee and Neal discovery wells extend the "sweet spot" of the Utica formation beyond southeast Ohio and western Pennsylvania, where previous discoveries have been located, and into an area where Shell holds a major leasehold position of 430,000 acres, the company said. Shell expanded its Utica acreage in Pennsylvania last month (OGJ Online, Aug. 14, 2014).
Producing for almost a year, Gee was drilled more than 100 miles northeast of the nearest horizontal Utica producer, and had an initial flowback rate of 11.2 MMcfd of gas. Shell began Neal production in February, with observed peak flowback rates of 26.5 MMcfd of gas.
"Last year, we refocused our resources plays strategy to select fewer plays with specific scale and economic characteristics to best suit our portfolio," explained Marvin Odum, Shell's upstream Americas director. "The Appalachian basin is one of those areas, and these two high-pressure wells both exhibit exceptional reservoir quality."
Shell says it awaits results from four other Utica wells drilled in Tioga County, anticipating that those wells will produce later this year.
AWE makes gas discovery with Senecio well
AWE Ltd., Sydney, has made what it is calling a significant gas reservoir discovery below the original target with its Senecio exploration well drilled in the onshore Perth basin of Western Australia.
The Senecio-3 appraisal well was drilled to a total depth of 3,370 m after intersecting the main Dongara-Wagina formation reservoir and encountering elevated gas shows. Multiple hydrocarbon-bearing formations were found throughout the well.
Wireline logs and pressure tests identified a potentially larger volume of gas in the lower secondary targets than the primary reservoir.
As a result, AWE says contingent resources in the Dongara-Wagina have been upgraded to around 70 bcf of gas. More analysis will be required to estimate the resource in the lower reservoirs.
Nevertheless the discovery adds considerable momentum to the near-term development potential of the Senecio field and other nearby prospects in the north Perth basin.
Gas production tied in to the AWE-operated Dongara gas plant 7 km to the east is the logical development step.
AWE plans to drill the Irwin-1 wildcat to the east of Senecio later this year.
Tullow reports exploration activity onshore Kenya
Tullow Oil PLC, London, reported recent exploration and appraisal results from Blocks 10BB and 13T onshore Kenya.
The Etom-1 exploratory well on Block 13T in the South Lokichar basin, some 6.5 km north of the Agete-1 discovery (OGJ Online, Nov. 22, 2013), was drilled to 2,000 m and encountered 10 m of net oil pay. A 3D seismic survey has been extended to cover a further 247 sq km, and the Weatherford 804 rig will drill the Kodos-1 in the neighboring Kerio basin.
The Amosing-2 well on Block 10BB, the first appraisal well in Amosing field, was drilled from the Amosing-1 (OGJ Online, Mar. 28, 2014) well pad. Tullow said it deviated 1,350 m northeast and downdip from the discovery well and encountered up to 30 m of net oil pay.
The well was sidetracked back to 400 m from the discovery well to provide additional insight into reservoir distribution. The 2A sidetrack encountered as much as 90 m of net oil pay. The Sakson PR5 rig drilled Amosing-2 to 2,878 m and Amosing-2A to 2,165 m. The rig will next explore the southern extent of the South Lokichar basin with the Ekosowan-1 well, 11.9 km southeast of Amosing-1.
"Etom-1 has successfully extended the South Lokichar rift bounding fault play northwards and we look forward to testing the southern area of the basin with Ekosowan-1," said Angus McCoss, exploration director.
In addition, Tullow said the Ngamia-3 well on Block 10BB was drilled 1.6 km north of the Ngamia-1 discovery (OGJ Online, Apr. 15, 2013) and encountered 150 m of net oil pay. The Marriott PR-46 drilled Ngamia-3 to 2,700 m. The rig will drill the Ngamia-4 and Ngamia-5 wells.
Also, the SMP-5 workover rig completed testing of the Ewoi-1 well (OGJ Online, Dec. 9, 2013), with flow rates of 50 b/d. The rig is now testing the Twiga South-2A appraisal well.
Tullow, the operator, has 50% and Africa Oil Corp. has 50%.
Drilling & Production — Quick Takes
Petronas, YPF sign development deal for Vaca Muerta
Malaysia's state-run Petronas signed a $550 million agreement with YPF SA, Buenos Aires, on Aug. 28 in Kuala Lumpur detailing terms and conditions for the development of oil from the giant Vaca Muerta shale in Argentina's Neuquen province.
The project calls for three stages, the first of which involves the development of a shale oil pilot on the 187-sq km La Amarga Chica block, slated to begin in first-quarter 2015. More than 30 wells will be drilled, both vertical and horizontal. YPF will serve as the area's operator with 50% interest.
Petronas will provide $475 million of the total agreed-upon investment. Overall investment is expected surpass $1 billion over the next 5 years.
"We see Neuquen as a very prolific area, with high growth potential that will surely greatly benefit Argentina," noted Shamsul Azhar Abbas, Petronas chief executive officer.
Miguel Galuccio, YPF chief executive officer, said, "We're putting a resource into production that can change the energy future of our country."
The US Energy Information Administration in 2012 estimated Vaca Muerta to hold 741 million bbl of recoverable shale oil.
YPF and Chevron Corp. in April reported plans to invest in large-scale drilling and production in the 96,000-acre Loma Campana concession of Vaca Muerta (OGJ Online, Apr. 10, 2014).
Statoil shuts down production from Huldra platform
Statoil ASA has permanently shut down production from its Huldra field platform on PL051/052 in the North Sea. The platform's production lifespan outlasted its original plan by 6 years.
Huldra field came on stream in November 2001 and has since produced 17.5 billion standard cu m of wet gas at an 80% recovery rate (OGJ Online, Nov. 23, 2001). At its peak it produced more than 11 million standard cu m/day of gas and 4,000 standard cu m/day of condensate.
Huldra was the first Statoil-operated platform without permanent staffing, operated from 16 km away at the Veslefrikk B platform.
The company, which put the platform up for sale in 2011, says it's still actively seeking a solution for reuse. The platform will be regularly maintained until North Atlantic Drilling Ltd.'s West Epsilon drilling rig arrives at Huldra in 2016 for permanent well plugging.
Statoil notes that the field will not be fully decommissioned before 2019 and no later than 2021.
Gazprom Neft starts deliveries of Badra field production
JSC Gazprom Neft has reported that oil production from Badra field in Iraq is being delivered to Iraq's main pipeline system for transfer to the export terminal in Basra (OGJ Online, July 25, 2014).
Current deliveries average more than 15,000 b/d, a level that should be maintained through this year, the company said.
The Iraqi State Oil Marketing Organization, responsible for oil sales, will be delivering a share of oil to the investor companies each quarter to reimburse their initial project costs.
Oil production began from Badra in December 2013, and final commissioning and testing started in May. Two wells are producing and three others are being drilled, the company said.
Badra is in Wasit Province in eastern Iraq. Gazprom Neft, the operator, has 30%. Other interest holders are Iraqi Oil Exploration Co. 25%, Korea Gas Corp. 22.5%, Petronas 15%, and TPAO 7.5%.
Consortium starts drilling UK Horse Hill oil well
Horse Hill Developments Ltd., a London joint venture, spudded the Horse Hill-1 oil well after a series of weather delays for Surrey field, which is part of petroleum exploration and development license 137. Several consortium partners confirmed drilling has started.
Drillers plan to reach 8,680 ft vertical depth to test conventional stacked oil targets in the Jurassic layer and a conventional gas target in the Triassic layer. UK regulators approved drilling plans last month (OGJ Online, Aug. 6, 2014).
Horse Hill Developments holds 65% interest in the project. Stakes in Horse Hill Development are owned by Alba Mineral Resources PLC, Regency Mines PLC, Solo Oil PLC, Stellar Resources PLC, Doriemus PLC, Angus Energy Ltd., and UK Oil & Gas Investments PLC.
Magellan Petroleum Corp. of Denver owns the other 35% interest.
PROCESSING — Quick Takes
ExxonMobil plans upgrade at Norwegian refinery
ExxonMobil Corp. subsidiary Esso Norge AS is planning to install a residual flash tower designed to replace heavy fuel oil production at its 6 million-tonne/year refinery at Slagen, Norway.
The new unit will enable the refinery to produce high-quality vacuum gas oil, a higher-yield feedstock that is used to produce cleaner transportation fuels such as diesel, ExxonMobil said.
The planned upgrade additionally will build on the Slagen refinery's record of a 25% energy-efficiency improvement since 1990 by enabling the plant to improve its product yield in an energy-saving manner, the company said.
"The new investment in Slagen builds upon other strategic investments in Europe and further strengthens the industry-leading position of our advantaged assets in meeting increasing demand for energy," said Jerry Wascom, president of ExxonMobil Refining & Supply Co.
The Slagen project, coupled with a recently announced major upgrade at the company's Antwerp, Belgium, refinery, will further strengthen ExxonMobil's integrated downstream operations to help the refinery better compete in the Europe's challenging industry environment, Wascom added.
ExxonMobil previously announced it will invest $1 billion to install a delayed coker unit at its 320,000-b/d refinery at Antwerp (OGJ Online, July 2, 2014). The unit will convert heavy, higher sulfur residual oils into transportation products such as marine gas oil and diesel fuel.
Rosneft commissions isom unit at Kuibyshev refinery
OAO Rosneft has commissioned an isomerization (isom) unit at its 6.8 million-tonne/year Kuibyshev refinery in Russia's Samara region.
The 280,000-tpy unit will allow the refinery to produce low-sulfur, high-octane gasoline that meets Euro 5 environmental specifications and conforms to the requirements of Russian Technical Regulations through 2020, Rosneft said.
Designed and engineered with a focus on environmental conservation, the new unit-which began construction in July 2012-includes a shut-in flaring system aimed at eliminating smoke, steam, odor, noise, and thermal plume from flare emissions, the company said.
Commissioning of the isom unit is one of the key projects in Rosneft's large-scale investment program to increase production capacities at the Kuibyshev refinery, Rosneft said.
The full scope of the Kuibyshev modernization project includes construction of eight new units as well as reconstruction of four of the refinery's existing operating units, all of which are due to be completed by 2016, Rosneft said.
In addition to optimizing the industrial security and environmental performance of the refinery's production processes, the modernization program at Kuibyshev aims to increase the rate of conversion and recovery of light oil products as well as production of Euro 5-quality motor fuels, Rosneft said.
Modernization projects previously implemented at Kuibyshev already have enabled the refinery to produce Super Euro-98 gasoline that meets Euro 5 standards ahead of schedule, the company said.
The Kuibyshev modernization is part of Rosneft's company-wide refinery modernization plan launched in 2008, which includes the construction of 30 units and reconstruction of more than 20 units at Rosneft's Russian refineries (OGJ Online, Aug. 29, 2014).
Saudi ethylene plant enters planned maintenance
Tasnee & Sahara Olefins Co. (TSOC) has shuttered its ethylene and propylene production plant in Al Jubail Industrial City, Saudi Arabia, for nearly a month of planned maintenance.
The scheduled maintenance shutdown of the plant, which is owned and operated by Saudi Ethylene & Polyethylene Co. (SEPC), began on Sept. 1 and will last for 24 days, according to a release from Sahara Petrochemicals Co., who owns interest in both TSOC (32.55%) and SEPC (24.41%).
While customer supply commitments will not be interrupted due to the planned maintenance shutdown, production losses stemming from the closure will result in a profit loss of about $1 million for Sahara, the company said.
The Jubail plant produces 1 million tonnes/year of ethylene, about 80% of which is used as the primary feedstock for about 800,000 tpy of high-density and low-density polyethylene, according to Sahara's 2013 annual report.
The plant has a propylene production capacity of about 285,000 tpy.
TRANSPORTATION — Quick Takes
Pembina signs $650 million deal to buy Vantage line
Pembina Pipeline Corp., Calgary, has agreed to acquire the Vantage pipeline system and Mistral Midstream Inc.'s interest in the Saskatchewan ethane extraction plant (SEEP) for $650 million from certain entities affiliated with Riverstone Holdings LLC. The transaction, effective Aug. 1, is expected to close in the fourth quarter.
Vantage is a recently constructed 700-km, 40,000-b/d, high-vapor-pressure pipeline originating from a large-scale gas plant in Tioga, ND, and terminating near Empress, Alta., where it is connected to the Alberta ethane gathering system.
The pipeline is underpinned by a long-term, take-or-pay transportation contract, and is sized to reach an ultimate capacity of 60,000 b/d through modest capital investment via the addition of two quarter point pump stations.
The deal ultimately provides Pembina with an ethane line from the Bakken shale to Alberta's petrochemical market.
The transaction also calls for Pembina to acquire pipeline infrastructure from Mistral and Mistral's interest in SEEP, a development-stage, 60-MMcfd deep-cut gas processing facility serving the southeast Saskatchewan Bakken region (OGJ Online, July 17, 2014).
The pipeline infrastructure includes a 105-km, 4-in. ethane pipeline and a 75-km gas gathering pipeline, both of which are under construction.
SEEP will receive liquids-rich gas produced from the Viewfield and Flat Lake gas plants and from TransGas's local system. The facility is underpinned by both a long-term ethane sales agreement and a long-term, fee-for-service processing agreement.
SEEP is expected to produce 4,500 b/d of ethane and will connect into Vantage through a pipeline lateral that is also under construction. Pembina expects SEEP and the associated pipeline lateral to be in-service in mid-2015.
Pembina anticipates incurring additional capital expenditures of $100 million prior to yearend 2015 related to the transaction to complete the construction of SEEP and the associated gathering and delivery system.
EQT, NextEra to build Marcellus-Utica gas pipeline
EQT Corp. and NextEra US Gas Assets LLC, an indirect, wholly owned subsidiary of NextEra Energy Inc., have formed a joint venture, Mountain Valley Pipeline LLC, to build and own the 330-mile Mountain Valley natural gas pipeline. The joint venture also launched a binding open season for shipment on the 2-bcfd system.
Mountain Valley will connect the existing Equitrans transmission system in Wetzel County, W.Va., to Transcontinental Gas Pipeline Co.'s (Transco) Zone 5 compressor station 165 in Pittsylvania County, Va., carrying gas from the Marcellus and Utica shales to consumers in the Mid-Atlantic and South Atlantic coast regions of US. Including EQT, the joint venture has already received firm capacity commitments for 1.5 bcfd and expects the pipeline to enter service fourth-quarter 2018.
EQT will operate the pipeline and own a majority interest in the joint venture. The binding open season ends Sept. 29.
MarkWest Energy Partners LP earlier this year announced plans to increase capacity at its Mobley gas processing complex in Wetzel County to handle production from EQT (OGJ Online, May 7, 2014). MarkWest will build the 200-MMcfd Mobley V cryogenic plant, bringing total capacity at the site to 920 MMcfd by second-quarter 2015.