GENERAL INTEREST — Quick Takes
Barclays: Global E&P spending to rise 7% in 2017
Following an unprecedented 2 years of double-digit declines, global exploration and production spending is expected to increase 7% in 2017, according to Barclays' latest E&P spending survey.
North America spending will increase 27% in 2017, after a decline of 38% in 2016. The US rig count forecast will average 730 in 2017, ending the year at 850-875 rigs, Barclays said.
International spending will increase 2% in 2017 after falling 18% in 2016. National oil companies plan to increase spending by 9%, offsetting declines among European IOCs, -7%; US IOCs, -15%; and international E&Ps, -7%. Barclays also expects growth in almost every region except Europe.
Offshore spending is poised to fall another 20-25% this year, after falling 34% in 2016, Barclays said. Offshore well spending represents 15% of total spending. Barclays forecasts 120 contracted floating rigs by yearend vs. 133 rigs currently.
Specifically, an online survey showed 80% of North American E&P companies expect oil-field service costs to increase, primarily in pressure pumping and land drilling rigs. Notably, more than 59% of respondents now believe less than 25% of cost reductions are structural, which is a big shift from the 45% of respondents from their survey last September.
Martinez named Venezuela's minister of petroleum
Nelson Martinez has been named Venezuela's minister of petroleum, according to Petroleos de Venezuela SA (PDVSA).
He succeeds Eulogio Del Pino, who was named petroleum minister in 2015 in addition to serving as president of PDVSA (OGJ Online, Aug. 20, 2015). Del Pino has been president since 2014 and retains that role.
Martinez had been president and chief executive officer of Citgo Petroleum Corp., Houston, since 2013 (OGJ Online, June 21, 2013). Earlier, he served as managing director of refining at PDVSA Oriente, executive director of PDVSA America, and general director of PDVSA Argentina.
ONGC to buy stake in Deen Dayal West off India
Oil & Natural Gas Corp Ltd. said it will buy the 80% stake in Deen Dayal West field offshore eastern India held by Gujarat State Petroleum Corp. Ltd. The agreement for $995.26 million includes operatorship.
The field lies on NELP-III KG-OSN-2001/3 block in the Krishna Godavari basin (OGJ Online, Mar. 28, 2016).
ONGC said trial gas production from Deen Dayal West has begun and that Gujarat State has built wellhead platforms, a living quarters platform, a pipeline, and an onshore natural gas terminal.
Based on future valuations, ONGC will also pay partial consideration for six discoveries in addition to Deen Dayal West.
ONGC said a corridor of high-pressure and high-temperature oil and gas is "emerging" in the basin and that Deen Dayal will "act as a pivot" in developing nearby discoveries.
ONGC also sees an opportunity to use Deen Dayal West infrastructure for development of Cluster-I gas discoveries on the KG-DWN-98/2 NELP block.
Total hikes stake in Tullow Ugandan project
Total SA said it expects "a project sanction in the near future" after agreeing to pay Tullow Oil PLC $900 million for 21.57% interest in the companies' Lake Albert joint venture in Uganda (OGJ Online, June 24, 2008).
Total's interest in the oil-development project will rise to 54.9%. The company acquired its original interest from Tullow in 2011.
Tullow retains 11.76% interest in the venture's licenses: Exploration Areas 1, 1A, 2, and 3A. The interest is subject to reduction to 10% when the Ugandan government exercises back-in rights.
The government removed an impediment to development of Lake Albert discoveries last April when it selected a route through Tanzania for an essential oil export pipeline (OGJ Online, Apr. 25, 2016).
Tullow expects its project with Total to achieve plateau production of 230,000 b/d. The government approved development last August.
Total's consideration to Tullow in the new transaction includes an initial payment of $100 million, payments of $50 million when a final investment decision is made and when production starts, and reimbursement of past costs in installments tied to development progress.
Exploration & Development — Quick Takes
Eni furthers Mediterranean exploration
Eni SPA is advancing exploration in the Mediterranean Sea in Contract Area D offshore Libya. Eni spudded its B1-16/3 well on Jan. 4 in 518 ft of water about 140 km northwest of Tripoli and 5 km north of Bahr Essalam gas field. The 9,865-ft well's primary objective is the Metlaoui group reservoir. Drilling is expected to take 64 days.
Eni was granted the license by Libya National Oil Corp. in June 2008.
Eni late last month signed concession agreements for the North El Hammad and North Ras El Esh exploration blocks in the Egyptian Mediterranean. Both shallow-water blocks were awarded in the 2015 Egyptian Natural Gas Holding Co.'s (EGAS) international bid round (OGJ Online Oct. 12, 2015).
The two agreements follow the recently awarded blocks of Southwest Meleiha (in the Western Desert), Shorouk, Karawan, and North Leil (in the deep water of the Egyptian Mediterranean).
North El Hammad lies west of the Abu Madi West and Baltim-Baltim South development areas, where Eni recently made the Nooros discovery, which has been in production since August 2015 (OGJ Online, Sept. 12, 2016).
Eni is the operator of the North El Hammad block with an equity of 37.5% in participation with BP PLC, who has a 37.5% stake, and Total 25%. Eni holds 50% interest in North Ras El Esh block, which is operated by BP with 50%.
DNO makes oil find in Kurdistan's Peshkabir field
DNO ASA reported that it has discovered oil in the Cretaceous horizon in the southern flank of Peshkabir field with the Peshkabir-2 well, currently being drilled in Iraq's Kurdistan region.
The well flowed at a stable rate of 3,800 b/d of 28° gravity oil through a 52/64-in. choke from an open hole test of a 170-m interval. Pressure data supported by observations of oil shows from cuttings and side-wall cores indicate a Cretaceous oil interval larger than 300 m.
Peshkabir-2 was spudded in October 2016 to explore the Cretaceous horizon and appraise the previously tested deeper Jurassic reservoir on a 2012 discovery 18 km west of DNO's flagship Tawke field (OGJ Online, Oct. 12, 2016).
Following acquisition of 3D seismic, Peshkabir-2 was originally planned for 2015 but delayed following the drop in world oil prices and interruption in payments for the company's production and exports from Kurdistan.
The well is expected to reach total depth of 3,500 m and will be completed in the Jurassic by early February. Pre-spud estimates for drilling, open hole testing of the Cretaceous, and completion stood at $17.5 million.
DNO is considering a number of options to step-up appraisal of the discovery including a geological side-track in the central part of the Peshkabir structure or a third well. Options are also under consideration for possible early Peshkabir production and trucking to DNO's gathering, processing, and export facilities at Fish Khabur some 12 km away.
The company plans to provide an update on the resource potential of both the Cretaceous and Jurassic horizons following post-well evaluation of all data acquired during Peshkabir-2 operations.
DNO operates the Tawke license, which contains Peshkabir field, holding 55% working interest. Genel Energy PLC and the Kurdistan regional government hold a respective 25% and 20%.
W&T Offshore extends Mahogany field resources
After a brief hiatus in drilling in early 2015, W&T Offshore Inc. has logged 149 ft of net oil pay in five zones in its Mahogany field on Ship Shoal Block 359 in the Gulf of Mexico. The SS 349 A-18 well was drilled on the western side of the field to extend the productive limit of the "T" sand, which was discovered in July 2013 by the A-14 well (OGJ Online, July 26, 2013).
"We are benefitting from our recent analysis of our new wide-azimuth seismic data over the field," said Tracy Krohn, W&T chairman and chief executive officer. The new data provides clearer imaging for Mahogany's subsalt formations.
In addition to confirming the "T" sand's presence on the field's west side, the A-18 well also logged and penetrated four additional pay sands. The operator ran casing to the target "T" sand and drilled a further 950 ft to a TVD of 20,000 ft. The exploratory tail tested seismic reflectors imaged with its newest 3D seismic data and discovered an additional pay interval in the deeper "U" sand. By design, the A-18 well penetrated the field's "P" and "Q" sands in the highest structural position in the field's history.
Core data from the A-18 well is expected to confirm the "T" sand's flow potential, which is expected to have permeability of more than one darcy, Krohn said.
The oil-bearing "U" sand marks the operator's deepest producing interval, and W&T plans to evaluate opportunities to extend its presence across the field and in the field's vertical oil column.
The A-18 well, which will be completed in the main objective Upper "T" sand, is expected to begin producing in this year's first quarter. The company said the completion will be set up for a low-cost future recompletion to the untested deep "U" sand. Three additional sands in the "P" and "Q" intervals will be exploited as future recompletions or will be considered for further development well locations to accelerate value.
W&T holds 100% working interest in Mahogany field.
Drilling & Production — Quick Takes
BHI: Global rig count added 94 units in December
The average global rig count gained 94 units month-over-month in December to total 1,772, with only modest movement outside the resurgent US and Canada, Baker Hughes Inc. reported (OGJ Online, Dec. 7, 2016). The count was down 197 units compared with the December 2015 total.
The average US count jumped 54 units during the month to 634, down 80 year-over-year. On a weekly basis, the count ended 2016 at 658, down just 6 units compared with the total at the start of the year (OGJ Online, Jan. 6, 2016). It bottomed at 404 during the weeks of May 20-27.
The average Canadian rig count for December rose 36 units to 209, up 49 year-over-year. On a weekly basis, it bottomed at 36 on May 6.
Outside of North America, the Asia-Pacific region posted the next-highest increase in December, gaining 4 units to 192, down 6 from its December 2015 average. Australia led the way with a 5-unit jump to 9, down 7 year-over-year. Offshore China lost 3 units during the month to 25, even with its year-ago average.
Latin America increased 3 units during the month to 184, down 86 year-over-year. Colombia rose 3 units to 19, up 7 year-over-year. Brazil increased 3 units to 13, down 25 year-over-year. Argentina dived 11 units to 59, down 32 compared with its year-ago average.
Europe added 2 units during the month to reach 99, down 15 year-over-year. Notable increases there included 1-unit rises in Norway to 16, which was down 1 year-over-year; and offshore UK to 11, which was up 2 year-over-year.
Africa edged down a unit in December to 78, down 13 year-over-year. Congo (Brazzaville) lost all 3 of its active rigs. Algeria, Angola, and Nigeria each dropped a unit to 52, 4, and 4, respectively.
The Middle East fell 4 units during the month to 376, down 46 compared with the region's December 2015 average. Kuwait decreased 3 units to 44, up 1 year-over-year. Saudi Arabia dropped 2 units to 125, down 4 year-over-year. Oman fell 2 units to 59, down 14 year-over-year. Egypt, meanwhile, gained 2 units to 24, down 20 year-over-year.
Gas flowing from Cygnus startup in UK North Sea
Cygnus natural gas field in the southern gas basin of the UK North Sea has started producing.
Discovered in 1988 and approved in 2012, Cygnus is 150 km offshore Lincolnshire, UK (OGJ Online, Aug. 13, 2012). Water depth in license areas P1055 and P1731 is less than 25 m.
Production life is estimated at more than 20 years. Operator Engie E&P UK Ltd. said Cygnus has four platforms.
Three are bridge-linked at the Alpha complex: a wellhead platform with 10 drilling slots; a platform for processing and utilities; and a quarters platform with the central control room. Bravo, an unmanned satellite platform with another 10 well slots, is 7 km northwest of Alpha. The field also has two subsea structures.
A 55-km pipeline connects Cygnus to the Esmond Transmission System pipeline, which ends at the Bacton gas terminal in Norfolk, with processed gas going into the National Transmission System.
Engie said plateau production is expected to be 250 MMcfd and contribute 5% of the UK's total gas production. It also estimated that proved and probable reserves are 110 million boe, while Centrica cited 636 bcf.
Maersk Oil to halt Tyra field production in 2018
Maersk Oil, a wholly owned subsidiary of AP Moller-Maersk AS of Copenhagen, says it will shutter production from Tyra field of the Danish North Sea in October 2018, citing the absence of an economically viable solution for full recovery of the field's remaining resources.
"The Tyra facilities are approaching the end of their operational life, and, together with our partners in [the Danish Underground Consortium (DUC)], we have assessed solutions for safe decommissioning and possible rebuilding of the Tyra facilities," said Maersk Oil COO Martin Rune Pedersen.
Maersk says the facilities cannot safely continue production due to new knowledge on storm wave impact, along with subsidence of the underground chalk reservoir that reduces the gap between the platforms and the sea. More than $140 million has been spent on reinforcing the Tyra structures over the past 15 years.
"In January 2017 we will have to reallocate resources from Tyra rebuild planning to engineering work for a detailed plan to discontinue the Tyra field as the Danish hub for gas processing," said Martin Rune Pedersen, Maersk Oil chief operating officer.
Producing since 1984, Tyra is Denmark's largest gas field. Its facilities are the processing and export center for all gas produced by DUC. More than 90% of Denmark's gas production is processed through the facilities, Maersk says.
Tyra East and Tyra West also are hubs for a number of smaller facilities for Tyra field, including the neighboring unmanned facility, Tyra Southeast, which was extended in 2015 (OGJ Online, Mar. 31, 2015).
Tyra field is operated by Maersk Oil on behalf of DUC, a partnership of AP Moller-Maersk with 31.2% interest.
processing — Quick Takes
Whiting closes on sale of Williston basin assets
Denver independent Whiting Petroleum Corp. has completed the sale of its midstream assets in North Dakota's Williston basin to Tesoro Logistics Rockies LLC (TLRL), a division of Tesoro Corp. affiliate Tesoro Logistics LP (TLLP).
The sale included Whiting's 50% interest in the 130-MMcfd natural gas processing plant in Sanish field and associated gas gathering system in Mountrail County, ND, as well as its 50% stake in the 35-MMcfd Belfield gas processing plant near Pronghorn field and associated gas, crude, and water gathering in Stark, Billings, and Dunn counties, Whiting said.
Closing of the deal follows TLLP's November 2016 announcement that it had entered an agreement with Whiting, GBK Investments LLC, and WBI Energy Midstream LLC to acquire the North Dakota midstream assets for $700 million as part of an effort to expand its North American midstream portfolio (OGJ Online, Nov. 22, 2016).
Whiting said it expects its portion of all-cash sale to be about $375 million, pending closing and post-closing adjustments.
Alongside the total 170-175 MMcfd of gas processing capacity, TLRL's newly acquired assets in the Williston basin's Sanish and Pronghorn fields include more than 650 miles of oil, gas, and produced water gathering pipelines, as well as 18,700 b/d of fractionation capacity.
Whiting's decision to shed ownership of the North Dakota gathering and processing assets aligns with the company's ongoing strategy to divest noncore midstream assets to focus on its upstream business, said James J. Volker, Whiting chairman, president, and chief executive officer.
Takreer reports fire at Ruwais refinery
Abu Dhabi Oil Refinery Co. (Takreer), the refining arm of state-owned Abu Dhabi National Oil Co., has confirmed a fire broke out on Jan. 11 at its recently expanded Ruwais refining complex in the UAE, about 240 km west of Abu Dhabi City (OGJ Online, Nov. 13, 2015).
The fire, which occurred at an unidentified processing unit, was quickly contained, and no casualties have been reported, Takreer said in a series of posts to its official Twitter account.
The company did not disclose details regarding the current status of operations at the refinery in the wake of the incident.
In late 2015, Takreer completed a $10 billion expansion at Ruwais that doubled the refinery's crude processing capacity to more than 800,000 b/d.
OMV Petrom lets contract for Petrobrazi refinery
OMV Petrom SA, Bucharest, has let a contract to Axens SA, Rueil-Malmaison, France, to provide process technology licensing for a new unit to be installed at its 4.5-million tonne/year Petrobrazi refinery in the southeast region of Romania, near Ploiesti City.
In addition to providing associated catalysts and adsorbents for the 200,000-tpy unit, Axens will deliver the first commercial installation of its proprietary PolyFuel technology, which resolves imbalances in the gasoline-middle distillate production slate by converting light olefins from gasoline into higher-quality middle distillates that meet more stringent product specifications, the service provider said.
The planned unit at Petrobrazi specifically will use PolyFuel technology to maximize production of diesel using a feedstock of LPGs and light-cracked naphtha from the refinery's fluid catalytic cracking unit.
Production from the new unit will comply with Euro 5-quality specifications for gasoline and diesel pools, according to Axens.
The service provider disclosed neither the value nor duration of the contract.
OMV Petrom has yet to release further details about the proposed project.
TRANSPORTATION — Quick Takes
Troops deployed to safeguard PNG LNG project
Papua New Guinea has deployed about 300 armed troops into Hela province in the Southern Highlands to contain and stop gun violence near the ExxonMobil Corp.-led PNG LNG project.
The soldiers, along with a police contingent, have moved into the area in response to an escalation of tribal violence that has resulted in a number of killings in recent months.
Police initially raised concerns about a build-up of high-powered guns in the region, but the call out also is aimed at securing the LNG project gas processing facilities centered on Hides field that have been subjected to disruptions, blockades, and incursions by disgruntled landowners since mid-2016.
Government Chief Sec. Isaac Lupari said the security operation was planned to stabilize the province. He admitted that there is a law and order problem in Hela region with services like health and education being affected. But he also said the security of the PNG LNG project was a critical aim of the deployment. "The project supports the economy and employs thousands of Papua New Guineans, so restoration of law and order is vital," Lupari said.
The troop and police operation is running in parallel with an amnesty on illegal firearms.
At the root of the landholders' protests is the fact that they are still waiting for royalties, levies, and dividends to be paid with some claiming that the national government is not honoring the original project agreement.
However the government counters this by saying payments have been held up because some landowners obtained a court order preventing the ongoing identification of beneficiaries.
At this stage, production from the PNG LNG project has not been affected.
Pembina receives approvals for NEBC Expansion
Pembina Pipeline Corp., Calgary, has received regulatory approval for and has initiated construction on its previously announced $235-million expansion of its pipeline system in northeast British Columbia (OGJ Online, Nov. 12, 2014).
"With regulatory sanctioning of the NEBC Expansion, we have secured approvals for the majority of the projects within our conventional pipelines business," said Paul Murphy, Pembina senior vice-president, pipelines and crude oil facilities.
The NEBC project entails the construction of 145 km of 12-in. pipeline with a base design capacity of as much as 75,000 b/d. The system will parallel much of the existing Blueberry pipeline system northwest of Taylor, BC, to the Highway-Blair Creek area of British Columbia. The NEBC Expansion will provide a conduit for natural gas liquids and condensate produced in the liquids-rich Montney resource play to access the company's downstream pipeline systems that feed into the Edmonton and Fort Saskatchewan, Alta., area, the company said.
