GENERAL INTEREST — Quick Takes
Pa. DEP issues draft final revisions to well site rules
Pennsylvania's Department of Environmental Protection (PDEP) released draft final revisions to its oil and gas well protection standards. The state agency decided not to include provisions for noise mitigation and centralized storage tanks for wastewater in the final regulations following the latest round of public comments, it said.
"These rules are the culmination of one of the largest public participation efforts the department has ever seen, with nearly 30,000 comments and 12 public hearings during two public comment periods," PDEP Secretary John Quigley said as the latest revisions were issued on Aug. 12.
The latest amendments retained amendments to improve water resource protection, add public resources considerations, protect public health and safety, address property owners' concerns, and enhance transparency and improve data management that were in the original proposal this spring (OGJ Online, Mar. 10, 2015).
PDEP said that separate amendments would apply to conventional and unconventional oil and gas production operations. The draft final revisions will be discussed at day-long meetings of the Conventional Oil and Gas Advisory Committee (COGAC) on Aug. 27 and the Oil and Gas Technical Advisory Board (TAB) on Sept. 2 at the Rachel Carson State Office Building in Harrisburg. Both meetings will be webcast, it noted.
The Pennsylvania Independent Oil & Gas Association and other trade groups in the state did not respond immediately to PDEP's announcement.
Magnum Hunter near closing on Utica JV
Magnum Hunter Corp., Houston, filed US Securities and Exchange Commission documents indicating a tentative letter of intent for a Utica shale joint venture involving an undisclosed private equity fund for $430 million.
A definitive agreement was expected within 30-45 days with closing expected 15-30 days after that.
During an Aug. 7 earnings call, executives said they were close to reaching two deals, one of which was the Utica JV and one of which could prove to be a transaction involving the Eureka Hunter pipeline.
Gary Evans, Magnum Hunter chief executive officer, previously said the company was working on numerous strategic alternatives to enhance Magnum Hunter's liquidity this year, including the possible sale of its equity in Eureka Hunter Holdings LLC.
On Aug. 7, Evans said he was negotiating with a third party on a joint venture to which Magnum Hunter would contribute certain Utica shale unproved, undeveloped leasehold acreage in Ohio in return for a combination of upfront cash and financing for future expenditures.
In total, Magnum Hunter has 200,000 acres under lease in the Marcellus and Utica shales although it has not drilled a well since January to preserve capital.
Shell creates Caribbean unit, appoints Prado to head
Royal Dutch Shell PLC reported it has created an English and Dutch Caribbean region to be headquartered in Trinidad and Tobago. Shell has said the move is an effort to enhance the focus and coordination of Shell's business in the area.
The region will be led by Luis Prado, who will add accountability for the Caribbean to his concurrent responsibilities as Shell Country Chairman for Venezuela and Trinidad and Tobago.
A Venezuelan national, Luis Prado brings more than 36 years of experience in exploration and production to this role. Prado has served as president of the Venezuelan Association of Hydrocarbons and is currently an alternate director of Atlantic LNG (ALNG). Shell is a partner in ALNG and if its acquisition of BG Group gets regulatory approval, it will be the largest single shareholder in ALNG, surpassing BP in the process.
Shell's proposed acquisition of the BG also will make it Trinidad and Tobago's second-largest natural gas producer and will hold interest in the country's prospective deepwater acreage.
Rosneft buying pressure-pumping company
A Rosneft Group subsidiary, RN Assets LLC, has agreed to buy 100% interest in the Russian pressure-pumping unit of Trican Well Service Ltd., Calgary, for $140 million.
Main work of the acquired firm, Trican Well Service LLC, is fracturing of conventional oil wells. The unit also provides coiled-tubing, cementing, and nitrogen services.
Trican said it is negotiating the sale of is Kazakhstan pressure-pumping business to Rosneft.
Exploration & Development — Quick Takes
BSEE approves drilling of Burger J well in US Arctic
The US Bureau of Safety and Environmental Enforcement (BSEE) has given approval to Royal Dutch Shell PLC to drill to total depth the Burger J exploratory well in the Chukchi Sea following the arrival of a capping stack staged on the M/V Fennica vessel.
Shell received approval in July to drill only the top sections of the well, but was prohibited from drilling into oil-bearing zones until a capping stack was present and deployable within 24 hr (OGJ Online, July 23, 2015). The company on Aug. 6 submitted a plan to modify the Burger J application for permit to drill.
"Now that the required well control system is in place and can be deployed, Shell will be allowed to explore into oil-bearing zones for Burger J," said Brian Salerno, BSEE director.
Shell remains limited to the top section of the Burger V well since the prospects lie fewer than 15 miles apart. The company has until late September to drill both wells.
USGS assesses undiscovered resources in Cotton Valley
The Cotton Valley Group, which extends from South Texas to the Florida panhandle across the US Gulf Coast, could contain undiscovered mean volumes of 14 million bbl of oil, 430 bcf of conventional gas, 34,458 bcf of continuous gas, and a total of 391 million bbl of natural gas liquids, according to United States Geological Survey's (USGS) most recent assessment.
The study identified four assessment units (AU) in the Cotton Valley Group in the Upper Jurassic-Cretaceous-Tertiary Composite total petroleum system for the onshore lands and state waters of the Gulf Coast. The potential reservoirs include fluvial-deltaic and shallow-marine sandstones of moderate-to-high porosity. The agency reported the Upper Jurassic Smackover, Haynesville, and Bossier formations were likely sources of oil and gas. The USGS defined the following AUs in its study:
• Cotton Valley Updip Oil (1 million bbl of oil).
• Cotton Valley Peripheral Fault System Oil and Gas (2 million bbl of oil).
• Cotton Valley Downdip Oil and Gas (11 million bbl of oil).
• Cotton Valley Tight Sanstones Gas (34,028 bcf).
Mean conventional and continuous gas resources are 430 bcf and 34,028 bcf, respectively. According to the USGS, seals are intraformational mudstone or thin limestone, and the Knowles Limestone is a regional seal. Traps are stratigraphic, structural, or in combination, but low-permeability reservoirs can retain petroleum in the absence of well-defined closures.
Warren Resources tests Upper Marcellus wells
Warren Resources Inc., New York, reported that two of its Upper Marcellus wells have been flowing back for 2 weeks, currently producing a combined 17 MMcfd with 3% of flowback load recovered.
The wells were drilled and pipe was set during the first quarter from Warren's Mirabelli and Ruark pads within its acreage block in Wyoming County, Pa., acquired last year (OGJ Online, July 7, 2014). Completion operations commenced in July.
Warren notes the Upper Marcellus is 180-ft thick, compared with the Lower Marcellus in the same area measuring 120 ft in thickness. Offset Lower Marcellus wells were monitored during fracturing operations and indicated no communication with the Upper Marcellus.
The company says a successful test of the Upper Marcellus could potentially add more than 40 additional well locations on its acreage block. No reserves were booked by Warren at yearend 2014 for the Upper Marcellus locations.
"Warren's first two Upper Marcellus wells were drilled with the intent to test a wide swath of our acreage block," said Lance Peterson, Warren's interim chief executive officer. "Warren is very encouraged by the early results from these wells, and we expect to see these wells continue to clean up and experience increased flow rates."
Warren also notes that it has pipeline systems and pads already in place to support drilling of additional wells in the Upper Marcellus.
Mongolia due full tensor gradiometer work
Petro Matad Ltd., Douglas, Isle-of-Man, has let a contract to Bell Geospace for an airborne full tensor gravity gradiometry survey over two onshore blocks in Mongolia.
Bell Geospace will acquire 4,247 sq miles of data over Blocks IV and V in central Mongolia. Block IV covers about 11,160 sq miles, and Block V covers about 8,110 sq miles.
Petro Matad said the program is designed "to provide high-resolution gravity coverage, capable of resolving prospect-scale structural features, to aid in correlation between 2D seismic profiles and extrapolate structural networks into frontier areas to optimize future exploration work."
The survey, covering an area of mountainous desert and steppe, will be the first application in Mongolia of the full tensor gradiometer technique.
Drilling & Production — Quick Takes
Joint geological study on shale gas under way in BC
Inpex Corp. has reported the start of a joint geological study for shale gas development in northeastern British Columbia (OGJ Online, Aug. 8, 2012). The study is expected to last a year.
Participants include Japan Oil, Gas & Metals National Corp., Inpex Gas British Columbia Ltd., and Nexen Energy ULC. The firms will focus on the Horn River, Liard, and Cordova areas.
The companies agreed in March to evaluate geological characteristics by analyzing properties of rock samples extracted from shale reservoirs marked for development.
Bounty moving towards production in Tanzania
Bounty Oil & Gas NL, Sydney, is finally moving towards production in its Kiliwani North gas discovery in Tanzania.
The find, on Songo Songo Island 15 km off the mainland and 200 km south of the capital Dar Es Salaam, was made in 2007. Bounty has 10% interest in partnership with Aminex.
The single-well discovery has certified reserves of 45 bcf of gas. It lies just 2 km from the large Songo Songo field gas plant that in turn is connected to the mainland and the key Ubungo power plant that generates about 50% of Tanzania's electricity capacity.
Bounty says the Songo Songo gas plant has undergone a recent upgrade to cater for the increased demand for gas-fired electrical power in the country. The connection of Kiliwani North-1 to the plant and trunkline is nearing completion and Bounty's production is expected to flow at between 20-30 MMcfd.
Finalization of a gas sales agreement is pending.
Bounty also has 5% interest in the Nyuni block immediately offshore where a number of anomalies and leads have been found. A 3D seismic survey is planned to focus on deep water turbidite plays with potential to hold at least 1 tcf of reserves. In addition, there are shallow targets within a relatively short distance of Songo Songo Island.
In 2003-04 Bounty participated in the drilling of Nyuni-1/1A from Nyuni Island to test a Songo Songo style prospect. The 1A well found oil indications but ran into mechanical problems. It was suspended for reentry at a later date.
Cash flow from Kiliwani-1 will help fund the company's share of the forthcoming program.
Production from Wassana to hit 10,000 bo/d
Oil production has started from Wassana field in the G10/48 concession in the Gulf of Thailand, and operator KrisEnergy Ltd. expects peak production to reached 10,000 b/d by yearend as additional development wells are drilled and completed by the Key Gibraltar jack up rig (OGJ Online, June 18, 2015). KrisEnergy became the operator of the G10/48 block in May 2014.
"Work is now under way to bring another five wells on stream and to optimize production in this initial wave of drilling," said Chris Gibson-Robinson, director exploration and production. The field is the first of a series of KrisEnergy-operated developments in Thailand, Cambodia, and Indonesia, Gibson-Robinson said.
As many as 15 development wells are planned for Wassana: 14 producer wells and 1 water disposal well. The Wassana development comprises the Ingenium mobile offshore production unit, a mooring buoy, and the Rubicon Vantage floating storage offloading vessel.
The G10/48 contract area covers 4,696 sq km over the Southern Pattani basin in 60 m of water. The contract area contains three other discoveries-Niramai and Mayura from 2009, and Rayrai in 2015. KrisEnergy holds 89% working interest in G10/48 and Palang Sophon Offshore holds 11% working interest.
Third Te Giac Trang platform starts flow
SOCO reported the start of oil and natural gas production from the third wellhead platform (WHP) on the H5 fault block of Te Giac Trang field on Block 16-1 offshore Vietnam (OGJ Online, Sept. 25, 2013).
Flow began after perforation of the first of five development wells drilled at the H5 WHP. A sixth well might be drilled.
The platform is in the southern part of the Cuu Long basin field, about 100 km from Vung Tau.
Te Giac Trang crude oil moves by pipeline to a floating production and storage vessel. Gas flows to facilities on Bach Ho field 20 km southeast.
The H1 WHP came on stream on Te Giac Trang in August 2011, and the H4 WHP started in July 2012.
SOCO recently reported first-half 2015 field production of 30,715 boe/d of oil and 2,869 boe/d of natural gas.
Block interests are SOCO 30.5%, PetroVietnam Exploration & Production Corp. 41%, and PTT Exploration & Production PCL 28.5%. Operator is Hoang Long Joint Operating Co.
Recompletions double Energy XXI field output
Energy XXI said a recompletion program has more than doubled production of South Pass 78 oil field offshore Louisiana.
After recompletion of nine wells, production reached 5,450 boe/d, compared with 2,100 boe/d when the program began earlier this year.
Recompletion of a 10th well is in progress, the company said.
The field, 96 miles south of New Orleans, is a 1973 discovery in 140-190 ft of water. It has a large salt dome and more than 60 productive sands at depths of 3,000-16,000 ft.
PROCESSING — Quick Takes
LyondellBasell to shed Argentinian petchem assets
LyondellBasell, Houston, has reached an agreement for the sale of its wholly owned subsidiary Petroken Petroquimica Ensenada SA (Petroken), which operates a 180,000-tonne/year polypropylene (PP) plant in the port city of Ensenada, 50 km southeast of Buenos Aires, Argentina.
YPF SA, Buenos Aires, and Grupo Inversor Petroquimica SL, Madrid, will purchase LyondellBasell's 100% interest in Petroken for cash proceeds of about $162 million, LyondellBasell said.
Valued at $145 million on a debt and cash-free basis, the transaction is scheduled to close later this year following approval from Brazilian antitrust authority Conselho Administrativo de Defesa Economica (CADE).
The sale comes as part of LyondellBasell's long-term growth strategy to focus on operations in regions and on assets that will maximize returns to company shareholders, said Tim Roberts, LyondellBasell's executive vice-president for global olefins and polyolefins.
Petroken, Argentina's largest PP producer, will continue to provide support, service, and products to its customers until the sale is finalized, current owner LyondellBasell said.
A timeframe for CADE's approval of the deal was not disclosed.
LyondellBasell assumed full ownership of Petroken, which also operates a propylene splitter and 20,000-tpy advanced polyolefins compounding plant at Ensenada, in 2005 after purchasing joint-venture partner Repsol YPF's 50% interest, according to a Mar. 11, 2005, release from the company.
Al-Shuaiba refinery to restart soon, KNPC says
Kuwait National Petroleum Co. (KNPC) plans to restore operations at its 200,000-b/d Al-Shuaiba refinery within the coming days after an Aug. 17 fire forced a complete shutdown of processing activities at the site.
The fire, which broke out in crude demulsifiers at the refinery's heavy crude unit, was quickly contained, and remaining processing units will resume full operations in a few days, KNPC said on Aug. 18 in a series of posts to its social media accounts.
While no injuries occurred as a result of the incident, KNPC shuttered all processing units as a precautionary measure following the fire's eruption, the company said.
Physical damage from the fire is limited to only the heavy crude unit, Kuwait's Ministry of Oil (MOP) said.
While an investigation committee has been formed to conduct a more thorough investigation into the incident, preliminary findings show the fire was caused by a gas leak from associated piping at the incident area.
The faulty pipes have since been isolated and depressurized, MOP said.
For the duration of the refinery's temporary outage, KNPC will continue to meet product supply obligations to the regional market with production from its 270,000-b/d Mina Abdullah and 466,000-b/d Mina Al-Ahmadi refineries, the ministry said.
Neither KNPC nor MOP disclosed details regarding a timeline for the potential restart of Al-Shuaiba's heavy crude unit.
KNPC previously announced that it will close the Al-Shuaiba refinery following construction of the planned 615,000-b/d Al-Zour refinery complex in southern Kuwait as part of the company's Clean Fuels Project (OGJ Online, July 31, 2015).
TRANSPORTATION — Quick Takes
India, Nepal eye border products line
The governments of India and Nepal have signed a memorandum of understanding for construction of a pipeline to carry oil products from an Indian Oil Corp. depot at Raxaul, India, to Amlekhgunj, Nepal. The agreement also covers reengineering of a depot at Amlekhgunj.
About 39 km of the 41-km pipeline would be in Nepal. The agreement also covers reengineering of the depot at Amlekhgunj. Trucks now carry products from Raxaul and Amlekhgunj by truck, causing congestion at the border.
The project had been proposed in 2006 as a 50-50 venture between IOC and Nepal Oil Corp., but Nepal decline to fund its share, according to an IOC statement.
Under the new agreement, IOC would fund the $30-million pipeline-construction phase of the project.
NEB issues import licenses to Pieridae Energy
Pieridae Energy (Canada) Ltd. reported that it has been issued long-term licenses by Canada's National Energy Board to import natural gas from the US and to export LNG from Canada.
The licenses issued with terms and conditions on Aug. 13 were granted in response to an application by Pieridae submitted to NEB on Oct. 24, 2014.
The gas imported from the US and gas supplied from Canadian sources will be processed at the proposed Goldboro LNG facility to be built in Goldboro, NS, and exported from Canada as LNG for delivery to Europe and other countries.
The term of the export license is for 20 years starting from the date of first export with a maximum export capacity of 16.675 billion cu m/year. The import license also is for 20 years starting from the date of first import and has a maximum import volume of 11.845 billion cu m/year.
In May 2015, Pieridae Energy (USA) Ltd., a corporation affiliated with Pieridae, received authorization from the US Department of Energy to export gas to Canada for end use in Canada and for further export to countries with which the US has free-trade agreements for trade in gas (OGJ Online, June 4, 2015).
Pieridae has a 20-year sales agreement with E.On Global Commodities SE to deliver 5 million tonnes/year of LNG produced from the proposed Goldboro LNG facility.
Pieridae plans to make a final investment decision on the Goldboro LNG project in 2016.
Santos updates Gladstone LNG project status
The Santos Ltd.-led Gladstone coal seam gas-LNG project (GLNG) has introduced first gas to the LNG plant on Curtis Island. The gas will be used to test the plant facilities and move forward in the commissioning process in readiness for the start of LNG production slated for the end of September.
Santos has been progressively starting up all its major processing facilities in its Surat-Bowen basin gas fields since the start of 2015. These include the 420-km pipeline to Curtis Island and all of the LNG facility electric power generation. It has also unloaded into storage the propane and ethylene refrigerants needed to chill the gas and tested the six refrigeration compressors.
Train 1 front-end pretreatment units will be started up during the next few weeks in advance of chilling the refrigeration units.
Santos has 30% interest and operatorship of GLNG. Other participants are Petronas with 27.5%, Total SA with 27.5%, and Korea Gas Corp. with 15%.
