OGJ Newsletter

Exploration & Development Quick Takes

Brazil's presalt rounds draw $1.9 billion on six blocks

Brazil's second and third presalt tender rounds held on Oct. 27 drew signature bonuses of $1.9 billion on six of eight blocks offered. Unlike concession regime rounds, production-sharing contract rounds are unbiddable and set in advance. Government profit-share rates were the primary factor in the bids, says Wood Mackenzie Ltd.

Brazil's recent market-friendly reforms have loosened restrictive local content rules and reduced the burden on exploration and production companies, according to WoodMac Latin America research director Horacio Cuenca. Received bids for Brazil's presalt auction were on average three times the minimum rates required.

ExxonMobil Corp. consolidated its presalt footprint during PSC Round 2, winning the extension of Carcara North block in partnership with Statoil ASA and Petroleo de Portugal SA, a unit of Galp Energia SGPS SA.

Petroleo Brasileiro SA (Petrobras) secured the Peroba block with BP PLC and China National Oil & Gas Exploration & Development Corp. for a profit share bid of 76.96%. Peroba block is thought to contain more than 5 billion boe of prospective resource in place. BP partnered with Pertobras to secure a bid for the Alto de Cabo Frio Central block with a similar profit share bid.

Brazil is putting in place a schedule of multiple licensing rounds per year into the next decade, Cuensa said.

Xanadu-1 discovery's crude similar to Cliff Head field

Analysis has shown that crude oil from Perth-based Norwest Energy Ltd. group's Xanadu-1 discovery in the north Perth basin is of good quality and similar to that produced from the company's Cliff Head oil field further offshore.

First phase analysis of recovered samples indicates the oil is 34.7° gravity with no hydrogen sulfide and extremely low levels of carbon dioxide.

Because of its close match to Cliff Head, the combine expects it will attract similar pricing in the marketplace. The low level of impurities will enable the company to consider lower-cost, efficient development options.

The discovery is in onshore permit TP/15 about 40 km south of Dongara. Xanadu-1 was drilled as a directional well from land into the offshore location. Initial findings indicate there is potential for oil to be found both updip and downdip in the structure from the Xanadu-1 location.

Norwest Energy is studying all available reservoir, pressure, and fluid data to update the predrill structure and better estimate the volume of oil in situ. The similarity of oil characteristics at Xanadu and Cliff Head suggest that oil from both fields may have migrated from the same source. The joint venture says this increases the likelihood that other structures in the region may also have trapped oil.

Looking ahead, the combine is preparing a work program for first half 2018 aiming at a high-impact, low-cost schedule of activities. A substantial component will be put towards oil appraisal and exploration.

The program will include petrophysics, geomechanics, and reservoir engineering studies; plans for a 3D survey over the Xanadu structure; plans for a side-track well from the Xanadu-1 location, and ongoing studies of other prospects in the TP/15 permit.

Partners include Norwest Energy 25%, Triangle (Global) Energy Ltd. 30%, Whitebark Energy Ltd. 15%, and 3C Group IC Ltd. 30%.

Hemisphere adds production at Atlee Buffalo field

Hemisphere Energy Corp. is continuing construction of a facility at Atlee Buffalo G pool in southeast Alberta to handle production from two new wells. The company has completed its "largest drilling program" in its history, according to Chief Executive Officer Don Simmons.

Hemisphere drilled six horizontal development wells targeting the Glauconitic sands of the Upper Mannville F and G pools in the Atlee Buffalo area. Three producing wells were drilled into the Upper Mannville F and two production wells and one injection well were drilled in the Upper Mannville G pool.

Hemisphere said completion operations are proceeding and production results would be disclosed as they become available. The company installed an inclined free water knockout, or SKUD, at the Atlee Buffalo facility to optimize existing production by separating water to increase production throughput. The new wells along with the facility expansion has set Hemisphere up for further development in southeastern Alberta in 2018, Simmons said.

Hemisphere acquired oil and gas assets in the Atlee Buffalo area with a $3.35-million deal in 2013. Estimated original oil in place for the acquisition was 49 million bbl, of which only 4% had been recovered at the time. Proved plus probable reserves were 224 million boe, and the company reported it had identified 75 horizontal drilling locations with upside potential for waterflooding and polymer flooding.

Drilling & Production Quick Takes

Lukoil starts eighth Vladimir Filanovsky well

Lukoil pushed oil production at Vladimir Filanovsky field in the Caspian Sea to 16,500 tonnes/day with the completion of the field's eighth well.

The well, with a 1,560-m horizontal section, flowed 2,800 tonnes/day. Two of the wells in the field are water injectors currently producing oil.

Lukoil estimates initial recoverable reserves at 129 million tonnes of oil and 30 billion cu m of natural gas.

It expects plateau production of 6 million tonnes/year of oil. The field is in 7-11 m of water about 220 km off Astrakhan.

Jadestone boosts output from Stage oil field

Singapore-based Jadestone Energy Inc. has reported an average production rate from Stag oil field in licence WA-15-L off Western Australia of more than 3,600 b/d for the 10-day period to Oct. 14.

This represents a 40% increase in production since the company took over operatorship of the field on July 10 this year. Jadestone bought 100% of the field from the Quadrant Energy-Santos Ltd. joint venture for $10 million cash.

Jadestone says it has been 12 months since the field achieved this level of average production over a 10-day period. It also exceeds the company's forward production guidance for the second half that was 3,000-3,500 b/d.

The last production well at Stage was drilled in April 2013 by the previous operators.

Jadestone bought the mature field believing it could identify opportunities to better manage the asset, including significant reductions in operating costs.

Stag field produces crude from a shallow, low-pressure reservoir 60 km off the coast at Dampier in the Carnarvon basin. It was initially brought on stream in 1998 and achieved peak production rates of 25,000 b/d but has been in steady decline for a number of years, producing just 2,570 b/d in the June quarter just prior to Jadestone acquiring the field and taking over operatorship.

Jadestone Chairman and Chief Executive Officer Paul Blakeley said the company expects to continue maintaining production in the 3,000-3,500 b/d range for the rest of this year. An infill drilling program is planned for 2018 with the intention of testing the capacity of the reservoir and further increase production volumes.

Cub Creek reports flow on Wattenberg pad

Privately held Cub Creek Energy, Highlands Ranch, Colo., has achieved average initial 30-day production of 2,404 boe/d from seven wells drilled on its Haley pad in Wattenberg field, Weld County, Colo.

Of that rate, 1,920 b/d was oil, according to Deutsch Rohstoff AG, Mannheim, Germany, which cofounded Cub Creek in 2014.

Cub Creek completed the wells in the third quarter with an average working interest of 78%.

Rohstoff said Cub Creek plans to start production from 16 wells it has drilled on its Wattenberg Litzenberger pad in the first quarter of 2018.

PROCESSING Quick Takes

Norway launches probe into Mongstad refinery incident

The Petroleum Safety Authority Norway (PSA) has launched an investigation into a naphtha leak that forced the evacuation and partial shutdown of Statoil ASA subsidiary Statoil Refining Norway AS' 9.3 million-tonne/year refinery in Mongstad, north of Bergen, on the morning of Oct. 24.

While no injuries have been reported in relation to the event, PSA will launch its own investigation into the incident beginning this week, said the independent government regulator responsible for safety, emergency preparedness, and work environments in the Norwegian petroleum industry.

The goals of the independent investigation will include clarifying the course of events as well as identifying direct and underlying causes of the leak for a report to be published as part of a broader contribution to learning and experience transfer within the nation's petroleum sector, PSA said.

Reported to Statoil's emergency center on Oct. 24 at 7:14 a.m. local time and brought under control by the operator's emergency response team by 9:02 a.m., the leak forced shutdowns of unidentified parts of the refinery as well as an evacuation of 108 plant employees.

Statoil, which previously confirmed it would carry out its own investigation into the incident, has yet to disclose details regarding either the status of current operations at the facility or any impacts to production that occurred as a result of the partial shutdown.

In 2016, the Mongstad refinery experienced a 35-cu m crude oil spill caused by corrosion to a pipe at the manufacturing site, according to Statoil's annual report to investors.

Serbia's NIS breaks ground on delayed coking project

Serbia's Naftna Industrija Srbije (NIS) JSC Novi Sad has started construction of its long-planned deep conversion, or bottom-of-the barrel (BOTB), complex as part of an ongoing modernization program to improve energy efficiency, boost production of higher-quality products, and ensure operational reliability at its 4.8 million-tonne/year refinery at Pancevo.

A groundbreaking ceremony for the project was held on Oct. 23 in Pancevo, marking the start of a second stage of modernization works planned for the refinery under a broader program initiated in 2009 to optimize overall performance and guarantee long-term competitiveness of the manufacturing site, NIS and majority shareholder JSC Gazprom Neft said in separate releases.

Requiring a total investment of more than €300 million, the BOTB project will include the addition of a delayed coking unit equipped with proprietary process technology from Chevron Lummus Global-a CB&I-Chevron Corp. joint venture-that will be integrated with the refinery's existing CB&I fluid catalytic cracking and Chevron Lummus Global-licensed hydrocracking units.

NIS previously confirmed the BOTB complex also would house new auxiliary units, including an amine regeneration unit and acid water stripper with a unit for removal of phenol.

Once operational, the 2,000-tonne/day BOTB complex will increase Pancevo's processing efficiency to 99.2% from a current 86%, as well as increase the refinery's production of high-quality, low-sulfur gasoline and diesel by more than 38%, NIS and Gazprom Neft said.

Alongside helping improve environmental performance of the refinery by enabling it to cease production of high-sulfur, heavy fuel oil, startup of the new complex will allow Pancevo to begin domestic production of petcoke, a product that, to date, Serbia has been forced to import.

Construction of the project-for which CB&I is providing engineering, procurement, and construction management services-is scheduled to be completed in third-quarter 2019, NIS said.

Contract let for Guru Gobind Singh petchem project

HPCL-Mittal Energy Ltd. (HMEL) has let a contract to CB&I, Houston, to provide technology licensing and engineering for a grassroots mixed-feed ethylene plant at its 9 million-tonne/year Guru Gobind Singh refinery at Village Phullokhari, about 35 km from Bathinda in India's northern state of Punjab.

Alongside providing detailed engineering for its proprietary highly selective Short Residence Time VII cracking heaters for the 1.2 million-tpy ethylene plant-which will be expandable to 1.5 million tpy-CB&I's scope of work on the project includes enabling recovery of refinery off gas and integration with the mixed-feed unit, as well as pyrolysis gasoline hydrogenation, the service provider said.

CB&I revealed neither the value nor duration of the contract.

The new ethylene plant comes as part of HMEL's proposal to build an integrated petrochemical manufacturing site (Guru Gobind Singh Polymer Additions Complex) within Guru Gobind Singh's existing refinery complex to help maximize returns as well as expand its product portfolio, according to documents filed with India's Ministry of Environment, Forest & Climate Change (EFCC).

The new dual-feed ethylene plant will include the steam cracker, refinery off-gas treatment unit, C4 hydrogenation unit, pyrolysis gasoline hydrogenation unit, and benzene extraction unit.

TRANSPORTATION Quick Takes

Samsung gets order for LNG floating storage, regas unit

Samsung Heavy Industries Co. Ltd. has been let a contract to build an LNG-floating storage and regasification unit for about $221.2 million.

The order for a 170,000-cu-m vessel came from a consortium of Marubeni, Sojitz, and Pertamina.

The vessel will regasify LNG offshore and supply gas to meet demand onshore.

Ineos completes Forties system acquisition

Ineos has completed its purchase of the Forties oil pipeline system and associated facilities in the UK North Sea from BP PLC.

The acquiring entity, INEOS FPS Ltd., acquires a 235-mile pipeline system linking 85 oil and gas fields with the mainland, the Kinneil gas processing plant and oil terminal, the Dalmeny storage and export facility, sites at Aberdeen, the Forties Unity platform, and associated infrastructure.

The system has capacity of 610,000 b/d and currently carries about 500,000 b/d.

The companies in April agreed on a price of $125 million with a potential earn-out of $125 million.

Open season launched for Capline pipeline reversal

Plains All American Pipeline LP, Marathon Petroleum Corp., and BP Oil Pipeline Co. are launching a nonbinding open season to gauge shipper interest in a proposed reversal of their 40-in., 1.2 million-b/d Capline pipeline that transports crude oil from St. James, La., to Patoka, Ill.

If the owners decide to proceed, southbound flow could be operational by the second half of 2022. Once in southbound service, Capline would have an initial capacity up to 300,000 b/d. The reversed pipeline would be able to receive crude from connecting carriers at Patoka. At St. James, shippers would have access to a distribution network that includes refineries, terminals, ships, barges, and rail.

The nonbinding open season will be managed on behalf of the Capline owners by the law firm of Caldwell Boudreaux Lefler PLLC and runs through Nov. 17. Marathon Pipe Line LLC operates the pipeline.

Williams to provide Southwestern expanded gas services

Williams Partners LP has agreed to provide natural gas processing, fractionation, and liquids handling services in Southwestern Energy Co.'s wet gas acreage in the Marcellus and Upper Devonian shale along with gas gathering services in the Houston operator's South Utica dry gas acreage.

Williams will provide Southwestern with 660 MMcfd of processing capacity to serve a 135,000-acre dedication in Southwestern's wet gas acreage in the Marcellus and Upper Devonian shale in Marshall and Wetzel counties of West Virginia.

Due to the agreement, Williams expects to further build out its Oak Grove gas processing facility for Southwestern's expanding production of wet gas. The facility can be expanded by as much as 1.8 bcfd.

Williams' Northeast gathering and processing operating area also received a gathering dedication of Southwestern's South Utica dry gas acreage comprising 71,500 acres in Marshall and Wetzel counties in West Virginia. The gathering and processing expansions will be supported by long-term, fee-based agreements and volumetric commitments.

Williams says downstream gas connections into TransCanada Corp.'s proposed 160-mile, 1.5-bcfd Leach Xpress project and proposed 165-mile, 2.7-bcfd Mountaineer Xpress project are being established to boost market access and diversify gas pricing opportunities.