Saudi Arabia leads MENA investment plans
Saudi Arabia leads countries of the Middle East and North Africa (MENA) in future energy investment, according to a study by Arab Petroleum Investments Corp. (APICORP), Dammam.
The kingdom plans to invest $124 billion in energy projects during the next 5 years, beyond the $42 billion it has committed to projects already under execution.
Iran is second in total planned energy investment, at $103 billion, but leads the group in committed projects with an estimated $51 billion.
The study estimates the value of all committed projects in the MENA region at $337 billion and says a further $622 billion of development is planned during 2017-21.
APICORP's total of $960 billion for planned and committed projects in the MENA region during 2017-21 is $60 billion higher than what it estimated last year for 2016-20.
Of MENA projects planned for 2017-21, power projects account for $207 billion, followed by oil projects at $195 billion and gas projects at $159 billion. Remaining investments are in petrochemicals.
Of projects under execution, $121 billion is for oil, mostly upstream. Gas accounts for $108 of the committed projects, power $91 billion, and chemicals $17 billion.
In the committed category, $174 billion is for projects in Gulf Cooperation Council countries.
In North Africa, Egypt and Algeria lead in committed projects with a combined $52 billion.
Challenges to MENA investment include uncertainty about oil prices, problems of creditworthiness, and turmoil generated by conflicts in Syria, Iraq, Libya, and Yemen, APICORP said.
"Regional instability is unlikely to recede in the immediate future, and investors will be wary of spillover effects in neighboring countries," it said.
White Star to add 49,000 acres in US Midcontinent
White Star Petroleum LLC, Oklahoma City, has acquired 30,500 net acres in the Midcontinent region in two separate deals with Double Eagle Energy Oklahoma LLC, a unit of Fort Worth-based Double Eagle Development LLC, and the equity holders of Oklahoma City-based Lighthouse Oil & Gas LP.
White Star also has agreed to buy 18,500 net acres in central-northern Oklahoma from Sundance Energy Inc., Denver.
Net production from the deals in second-half 2016 averaged 2,530 boe/d. The acreage is primarily in Dewey, Garfield, Logan, Noble, and Payne counties in Oklahoma, with most of the positions held by production.
The Double Eagle deal closed Nov. 30, 2016, and included 12,000 net acres. White Star says the assets supplement its large Mississippian Lime and Woodford shale position in central-northern Oklahoma. Second-half 2016 average net production on the acreage was 350 boe/d.
The deal with Lighthouse closed Mar. 14 and included 18,500 net acres, extending the firm's footprint into the Anadarko basin in western Oklahoma. The acreage is primarily in Dewey County and includes development targets in the Cleveland, Tonkawa, and Cottage Grove formations. Second-half 2016 average net production on the acreage was 1,300 boe/d.
The Sundance Energy deal, expected to close in the second quarter, will include operated and nonoperated producing wells in Garfield, Logan, Noble, and Payne counties. Second-half 2016 average net production on the acreage was 880 boe/d.
White Star also has amended its senior secured, reserves-based revolving credit facility to increase the borrowing base to $285 million from $230 million with commitments from an expanded lender group.
Formerly a unit of American Energy Partners LP, White Star was previously known as American Energy-Woodford LLC.
IEA: Global CO2 emissions flat for third straight year
Global energy-related carbon dioxide emissions were flat for a third straight year in 2016 even as the world economy grew, according to the latest estimates from the International Energy Agency. The findings signal a continuing decoupling of global emissions and economic activity, IEA said, noting that the drivers behind this phenomenon include market forces, technology cost reductions, and climate change and air pollution concerns.
"While the pause in emissions growth is positive news to improve air pollution, it is not enough to put the world on a path to keep global temperatures from rising above 2°C.," IEA reported.
Global emissions from the energy industry stood at 32.1 gigatonnes last year, the same as the previous 2 years. The global economy, meanwhile, grew 3.1%, estimates IEA.
CO2 emissions declined in the US and China-the world's two largest energy users and emitters-and were stable in Europe, offsetting rises in most of the rest of the world, IEA said.
The biggest drop came from the US where CO2 emissions fell 3%, or 160 million tonnes, while the economy grew by 1.6%. "The decline was driven by a surge in shale gas supplies and more attractive renewable power that displaced coal," IEA said.
Emissions in the US in 2016 were at their lowest level since 1992, a period during which the economy grew 80%, IEA said.
"These 3 years of flat emissions in a growing global economy signal an emerging trend and that is certainly a cause for optimism, even if it is too soon to say that global emissions have definitely peaked," said IEA Executive Director Fatih Birol.
Shell to drill 161 gas wells in Queensland
Shell Australia has made a $500-million (Aus.) commitment to drill as many as 161 natural gas wells onshore Queensland by yearend 2018 as part of its "Project Ruby" program.
The program is being run through its Queensland Gas Co. business in the Surat basin and follows the initial $1.7 billion (Aus.) spent in 2015 to establish gas supply for the Curtis Island LNG plant near Gladstone.
Project Ruby has been set in motion to maintain supply to the LNG plant as existing coal seam gas wells decline. But it is also in response to the forecast shortfall in domestic gas supplies on Australia's east coast. Shell has committed to provide more than 75 petajoules, representing more than 10% of the east coast demand and 40% of Queensland's market.
Shell Australia Chairman Andrew Smith called his company's investment a vote of confidence in Queensland's onshore gas industry and compared it favorably compared with Victoria and New South Wales, where drilling has stalled.
Smith was particularly critical of Victoria's moratorium on all exploration drilling. He pointed out that it is in the Victorian manufacturers' interest to have local gas available for their use. He added that Shell and other producers can send gas from Queensland to Victoria to fill the need, but the costs of doing so are higher than shipping gas from the US to Victoria.
The result is that Queensland business has a competitive advantage in attracting manufacturing jobs from Victoria.
Gas supply has become a major issue following blackouts and brownouts in the eastern states during the past 12 months. The growth in LNG exports is seen as the main reason as well as it leading to rapidly rising prices for domestic supplies.
Shell's commitment comes just a week after Prime Minister Malcolm Turnbull called a meeting of the country's major gas producers to discuss how to boost domestic supplies in the face of the looming shortage.
South Australian Pace gas grant scheme funds projects
Five exploration and development projects have shared $24 million (Aus.) in the first round of a South Australian government funding scheme known as the Plan for Accelerating Exploration (Pace) Gas Grants.
South Australian Minister for Mineral Resources Tom Koutsantonis said the grants will generate as much as $174 million (Aus.) in new investment by oil and gas companies in local production projects.
Gas extracted through the grant scheme will be offered to South Australian electricity generators first. It is hoped that this will increase affordability of supply and put downward pressure on power prices.
The five projects are $5.82 million for the Senex-Santos Cooper basin pipeline scheme, $6 million for the Beach Energy Otway basin exploration project targeting conventional reservoirs, $3.96 million for the Santos Cooper basin refracture stimulation project, $6 million for the Santos Cooper basin underbalanced drilling project, and $2 million for the first phase of the Strike Energy Cooper basin deep coal project.
The grants are an attempt to alleviate the tightening supply of gas across Australia due to the large amounts of LNG being exported overseas and the moratoria on exploration onshore Victoria, New South Wales, and the Northern Territory.
The Australian Energy Market Operator has forecast that this supply shortfall will result in an electricity supply shortfall in South Australia, New South Wales, and Victoria in 2018-19 unless gas supply is boosted and bans and moratoria are lifted.
The Pace initiative was first conceived and launched in 2004, but the gas grants are the first to be awarded under the scheme. The government has announced it will run a second $24-million (Aus.) round soon.
South Australian also plans to offer an exploration licence (one tenement) of five blocks in the onshore Otway basin in the south east corner of the state. This will be done through a competitive bidding process to be finalized by yearend.
Geophysical study off Philippines completed
CGG has completed a multiclient geophysical study of a sparsely explored area offshore the Philippines.
The study integrates more than 8,500 line-km of broadband prestack time-migrated 2D seismic data with complementary marine gravity and magnetic data acquired with the seismic.
The survey connects sedimentary basins from West Palawan-country's only productive area-across the Sulu Sea to the Philippines mobile belt.
The area has "extensional and compressional tectonic elements and displays positive indications of active petroleum systems," CGG said, adding that the study considers different physical properties of the same geological section and provides an overview of basement-controlled structure trends.
Drilling & Production — Quick TakesDevelopment contracts let for Johan Sverdrup Phase 2
Statoil ASA is moving ahead with Johan Sverdrup Phase 2, which will include development of another processing platform for the field center and the Avaldsnes, Kvitsoy, and Geitungen satellite areas. Discovered in 2010, the North Sea field has estimated resources of 2-3 billion boe.
Partner Lundin Petroleum AB said Phase 1 of Johan Sverdrup is under development with start of oil production slated for late 2019. Phase 2 development plans are to begin in second-half 2018 with production expected to come on stream in 2022. Statoil says Phase 2 investment will range 30-55 billion kroner. Current estimated cost for Phase 1 is 97 billion kroner.
Kvaerner has signed a deal with Statoil for delivery of a front-end, engineering, and design study on the Phase 2 jacket. The contract is a call-off from the framework agreement that was signed by Statoil and Kvaerner in 2014, including options for additional studies to review alternative installation methods.
Aker Solutions secured a FEED contract for a new processing platform and the bridge that will connect it to the development's riser platform. The contract also includes the design of a module and the work to integrate this with the riser platform. It will be delivered in first-quarter 2018.
Aker's FEED work is part of the 10-year framework engineering agreement awarded to the company for Johan Sverdrup in 2013. The contract includes options for continued maturing of the design as well as engineering, procurement, and management assistance work and is valued at 300 million kroner.
Johan Sverdrup's Phase 1 development is 40% completed and includes four platforms, three subsea installations for water injection, power from shore, and oil and gas export pipelines-Mongstad and Karsto, respectively. Phase 2 builds on this infrastructure, adding another processing platform to the field center. This will result in a processing capacity of 660,000 bo/d for the full field. Citing improvements and cost reductions during Phase 1 completion, Statoil project director Kjetel Digre said, "The breakeven price for the full-field development is now less than $25/bbl." The operator is also targeting a 70% recovery for the field.
BP lets another Mad Dog Phase 2 contract
BP PLC let an engineering, procurement, and construction contract to OneSubsea, a Schlumberger company, to supply the subsea production system for the Mad Dog 2 Phase 2 development in the Gulf of Mexico.
Mad Dog Phase 2, in the Green Canyon area in the deepwater gulf, is a southern and southwestern extension of existing Mad Dog field.
BP sanctioned Mad Dog Phase 2, which will include a new floating production platform with the capacity to produce as much as 140,000 gross b/d from as many as 14 production wells. Oil production is expected to begin in late 2021.
Operator BP holds 60.5% interest in Mad Dog field, BHP Billiton 23.9% , and a Chevron USA Inc. unit 15.6%.
The OneSubsea contract work will include subsea manifolds, trees, control system, single and multiphase meters, water analysis sensors, intervention tooling, and test equipment for producer and water injection wells.
Separately, BP let an engineering, procurement, construction, and installation contract to Subsea 7 for subsea controls, flexible risers, pipeline systems, umbilicals, and associated subsea architecture.
Borr Drilling to buy Transocean's jack up fleet
Borr Drilling Ltd., Hamilton, Bermuda, has agreed to acquire 15 high-specification jack up rigs from Transocean Ltd. for $1.35 billion. The 15 units comprise 10 of Transocean's existing jack up fleet and 5 newbuilds under construction by Keppel FELS Ltd. The purchase price includes Transocean's remaining contract backlog and remaining yard installments to Keppel FELS for the 5 newbuilds.
The deal is expected to close before the end of May.
Borr's current fleet consists of the Borr Drilling Ran, formerly Hercules Triumph; and Borr Drilling Frigg, formerly Hercules Resilience. The units are KFELS Super A class design, built at Keppel, Singapore, in 2013. Borr took delivery of the units in January. Excluding its outgoing jack up units, Transocean's rig fleet comprises 30 ultradeepwater, 7 harsh-environment, 6 midwater, and 3 deepwater rigs.
PROCESSING — Quick TakesBP slashes stake in New Zealand refinery
BP PLC has completed the partial sale of its subsidiaries' collective 21.19% ownership interest in New Zealand Refining Co. Ltd.'s (Refining NZ) 107,000-b/d refinery at Northland, in Marsden Point, New Zealand, near Whangarei.
BP New Zealand Holdings Ltd. and wholly owned subsidiary Europa Oil NZ entered a deal to shed slightly more than 11%, or roughly 34.7 million shares, of their combined ownership in Refining NZ in a sell down process completed on Mar. 17 and scheduled to close on Mar. 21, according to a series of notices between Mar. 16-17 from Refining NZ and NZX Ltd., New Zealand's stock exchange.
Once finalized, the sale will reduce BP's total interest in New Zealand's only refinery to about 10.1%, Refining NZ said.
The New Zealand operator said BP's reduced shareholding in the refinery will not affect contractual arrangements with Refining NZ, including an existing processing agreement.
Regulatory filings did not reveal BP's counterparty in the transaction, and neither BP nor Refining NZ has identified the refinery's new stakeholder.
BP's divestment of what was the largest individual interest in the refinery follows Chevron New Zealand's 2015 sale of its 11.37% shareholding in Refining NZ.
Gazprom Neft to build hydrogen unit at Omsk refinery
PJSC Gazprom Neft is adding a unit for hydrogen production at the 21.4 million-tonne/year Omsk refinery in Western Siberia as part of the company's ongoing modernization and upgrading program aimed at reducing environmental impacts and improving processing capacities, conversion rates, energy efficiency, and production qualities at its Russian refineries by 2020.
The standalone 12,300-tpy hydrogen production unit, on which construction began Mar. 17, will provide 99.9% purity hydrogen for new and reconstructed hydrotreating plants at the refinery and eliminate dependence of Omsk's existing hydrotreating processes on byproduct hydrogen currently supplied by catalytic reforming units at the site, Gazprom Neft said.
Alongside increasing the refinery's stable production of Euro 5-quality motor fuels, the new hydrogen unit also will help boost Omsk's output of high-octane gasolines and other light petroleum products, the operator said. Designed and developed by Russian firm Omskneftekhimproject JSC, the hydrogen production plant is scheduled to be commissioned by yearend.
To date, Gazprom Neft said it has invested 3.4 billion rubles in the project.
Chinese lets catalyst contract for ULSD production
Shandong Wantong Petrochemical Group Co. Ltd. has let a contract to Honeywell UOP LLC, a subsidiary of Honeywell International Inc., to supply its proprietary high-activity HYT-6219 hydrotreating catalyst for production of ultralow-sulfur diesel (ULSD) at Wantong Petrochemical's 6.5 million-tonne/year refinery in Donyging City, Shangdong Province, China.
Already delivered to and in use at the Donyging City manufacturing site, the specialty catalyst has enabled the refinery's existing hydrotreater to produce cleaner-burning, high-centane ULSD as well as attain its lowest sulfur levels on record without requiring any expensive modifications or overhauls to unit equipment, Honeywell UOP said.
Part of Honeywell UOP's Unity hydrotreating portfolio and capable of achieving more stringent global quality specifications on ultralow-sulfur transportation fuels of less than 10 ppm, the new catalyst also is designed to increase the refiner's flexibility to profitably take advantage of less expensive feedstock such as heavier-but-harder-to-process opportunity crudes by allowing more thorough processing to produce cleaner products.
Wantong Petrochemical's use of the HYT-6219 catalyst marks the first commercialization of a Honeywell UOP hydrotreating catalyst in distillate hydrotreating service since the service company exited an alliance with Albemarle Corp. last year, according to Honeywell UOP.
Alongside its primary 6.5 million-tpy primary crude distillation unit, Wantong Petrochemical's Donyging City refinery includes the following major processing capacities, according to its web site: 800,000 tpy of hydrocracking, 1.2 million tpy of delayed coking, 1.8 million tpy of fluid catalytic cracking, 1.4 million tpy of continuous catalytic reforming, 600,000 tpy of bitumen upgrading, and 100,000 tpy of aromatics.
TRANSPORTATION — Quick TakesHoegh ponders Australia for LNG deliveries
Norwegian LNG transport and floating LNG terminal operator Hoegh LNG AS is reported as adding Australia to its list of potential destinations. The company has begun to make approaches to Australian energy retailers with the idea of establishing floating regasification and storage vessels at points around Australia's east coast despite the fact that Australia is set to move into top spot as a global LNG exporter.
The move is seen as a response to the looming domestic gas shortage in the eastern states caused by Australia's gas producers having tailored their gas plants to the export market and entering a number of long-term contracts with overseas LNG customers, particularly in Asia.
Hoegh believes there are potential customers on Australia's east coast where floating regasification and storage units could provide access to the world market.
The idea of importing LNG to Australia is not new. The country's second-largest energy retailer, AGL Energy, said last year it was already considering the establishment of a regasification terminal in South Australia, Victoria, or New South Wales by 2021. However, according to Hoegh, a floating facility could be put in place within 6 months of signing a contract provided there is port space and infrastructure such as a jetty and pipeline hook-up facilities.
A floating facility also could be used as a relatively cheap temporary measure, while a fixed onshore facility may turn out in the long run to be an expensive white elephant.
Analysts in Australia are divided on imported LNG proposals. Some say it will be more economical to divert gas from the country's LNG projects in response to short-term supply needs. Others say that this gas may not be available in time as much of the gas resource still needs to be developed. They point out that there are countries that are gas importers and exporters, including the US where imports are funneled into the northeast states during times of high demand.
Phillips 66 declares open season for Rodeo project
Phillips 66 has announced an open season beginning Mar. 24 to secure binding commitments from prospective shippers for the Reeves-Odessa Origination (Rodeo) project in West Texas.
The project will include a pipeline system for crude oil transportation for producers and other shippers in the Delaware basin, with origination stations in Reeves, Loving, and Winkler counties in Texas, as well as at Odessa, Tex.
The pipeline system will include destination options at Wink, Tex.; the Phillips 66 Partner's Odessa station; a new terminal to be built near Odessa as part of the Rodeo Project; and at Midland, Tex. The Rodeo project will have an anticipated initial throughput capacity of up to 130,000 b/d, with an ultimate potential throughput capacity of up to 450,000 b/d, depending on shipper commitments in the open season.
The pipeline system is expected to be placed in service in second-half 2018. The open season terms and conditions include options for shippers to obtain committed shipper status through either an acreage dedication or a transportation and deficiency commitment.
