OGJ Newsletter

Total expands into E&P in Senegal's deep water

Total SA and Senegal have signed two agreements that will permit Total to contribute to the exploration activities in Senegal's deep and ultradeep waters. Already an established refiner and marketer in Senegal, Total is expanding its exploration and production reach into the country.

The first agreement involves an E&P sharing contract for the 10,357-sq km Rufisque Offshore Profond block. Total will be the operator with a 90% interest alongside Petrosen with 10%.

The group also signed a cooperation agreement with Petrosen and Senegal's Ministry of Energy and Renewable Energy Development under which Total will perform studies to assess the exploration potential of Senegal's ultradeep water and become operator of an exploration block.

Eight firms added in Lebanese bid round

The Lebanese Petroleum Administration (LPA) has designated eight more international companies "prequalified" for an offshore licensing round with bids due Sept. 15 (OGJ Online, Jan. 27, 2017). The administration had prequalified 12 companies as operators and 34 as nonoperators in the first prequalification round before licensing stalled for political reasons in 2013.

The LPA reopened the round in January, offering production-sharing contracts for 5 of Lebanon's 10 offshore blocks.

Newly prequalifying as an operator is India's state-owned ONGC Videsh Ltd. Prequalifying as nonoperators are PJSC Lukoil, Sapurakencana Energy Sdn. Bhd., Sonatrach International Petroleum Exploration & Production Corp., Qatar Petroleum International Ltd., Petropars Ltd., JSC Novatek, and New Age (African Global Energy) Ltd.

Novatek had prequalified earlier in partnership with GPB Global Resources BV but withdrew from the combine to bid alone in the second prequalification round. The partnership no longer is prequalified.

Pemex acquires seismic for southern Gulf of Mexico

Mexico's Petroleos Mexicanos (Pemex) will study the Salina del Istmo province in the southern Gulf of Mexico in a multiclient 3D wide azimuth survey covering deep and shallow-water areas near the Cantarell and Ku-Maloob-Zaap reservoirs.

Schlumberger Ltd. subsidiary WesternGeco said the agreement also includes collaboration with Pemex in the seismic processing phase of the project along with future technology applications.

Cairn unit to operate block off Ireland

Capricorn Oil Ltd., a wholly owned unit of Cairn Energy PLC, has become operator of Licensing Option 16/19 offshore Ireland after acquiring a 70% interest from Europa Oil & Gas (Holdings) PLC.

The Cairn unit will fund a $6 million work program to include participation in a 5,400-sq-km, multiclient 3D seismic survey by TGS between the Porcupine High and Irish Mainland Platform.

The survey will cover the 976-sq-km LO 16/19, which is on the western flank of the South Porcupine basin.

Group raises its Canadian drilling outlook

Canadian oil and gas drilling is brisker than expected after work seasons in 2015 and 2016 that the Petroleum Services Association of Canada describes as "difficult to say the very least."

Citing a strong first quarter, PSAC increased its outlook for 2017 drilling to 6,680 wells drilled (rigs released) from its November 2016 forecast of 4,175 wells.

The group based its updated forecast on prices of $52.52/bbl (US) for West Texas Intermediate crude and $3/Mcf (Can.) for AECO Hub natural gas. It assumed an average Canada-US exchange rate of $0.74.

From the November forecasts, PSAC increased its outlook for drilling in Alberta to 3,320 wells from 1,900 wells, in British Columbia to 449 from 280, and in Saskatchewan to 2,670 from 1,940.

Mark Salkeld, PSAC president and chief executive officer, said Canadian drilling continues to face two main pressures.

"Canada desperately needs pipelines actually built to move oil to tidewater, and secondly, Canada needs LNG train approvals," he said. Referring to the US, Salkeld added, "The days of relying on one customer purchasing our oil and gas at a discount must end."

ConocoPhillips extends North Sea jack up contract

ConocoPhillips extended its contract for the Ensco 92 jack up in the UK North Sea for 4 years, providing work for the rig until December 2022, Ensco PLC said in a recent fleet status report.

The day rate for the Ensco 92 extension was not disclosed. Ensco also announced three new contracts for other rigs.

Sapura Energy Bhd. hired the Ensco 106 jack up to drill four wells offshore Malaysia. That contract started in March and ends in September. The day rate was undisclosed.

INEOS signed a three-well contract for the Ensco 121 jack up in the North Sea. The rig is scheduled to work from July to February 2018. The contract has five one-well options. The day rate was undisclosed.

Ankor Energy LLC plans to use the Ensco 68 for a well in the US Gulf of Mexico from June to July. Currently, Ensco 68 has a contract with EnVen Energy Corp. to May and a contract with W&T Offshore Inc. from May to June.

Ensco said it sold the Ensco 56 jack up for scrap value. The sale price was not disclosed but Ensco said it was in line with net book value for the rig.

Total brings Badamyar gas project on stream

Total SA has started production from the offshore Badamyar project, 220 km south of Yangon in Myanmar. The project will enable an extension of Yadana gas field's 8 billion cu m/year production plateau beyond 2020.

The Badamyar project involves the installation of a new wellhead platform connected to the Yadana production facilities and the drilling of 4 horizontal wells to develop Badamyar gas field as a satellite of Yadana. The project also includes a new compression platform. Launched in mid-2014, the project was completed with no lost-time injuries during the 5 million man-hr worked.

Project operator Total holds 31.2% interest. Partners are Chevron-Unocal 28.3%, PTTEP 25.5%, and MOGE 15%.

Seadrill to sell three jack ups to Shelf Drilling

Seadrill Ltd., Hamilton, Bermuda, said it agreed to sell three jack ups to Shelf Drilling of Dubai for $225 million with proceeds amounting to $123 million after paying outstanding debt. Seadrill is restructuring its debt arrangements with lenders.

Sale of the three jack ups remains subject to closing conditions. After closing, the West Triton and West Resolute are scheduled for delivery to Shelf Drilling by May 31. West Triton and West Resolute were without active contracts.

The West Mischief is scheduled for delivery to Shelf Drilling during the third quarter. West Mischief currently is on contract with National Drilling Co. offshore Abu Dhabi. But NDC had served a contract termination notice to end the contract early.

Shelf Drilling is an independent-leg cantilever jack up fleet contractor with 36 ILC jack ups and one swamp barge. The company concentrates on development drilling and workovers on producing fields in as much as 400 ft of water.

Anadarko shuts 3,000 wells in after Colo. explosion

Anadarko Petroleum Corp., Houston, has shut more than 3,000 producing vertical wells, or a total of 13,000 net boe/d of production, in northeast Colorado following a home explosion and fire in Firestone on Apr. 17. Two men were killed in the incident, which is being investigated by the Colorado Oil & Gas Conservation Commission.

Anadarko said it operates an older vertical well that's about 200 ft from where the home was recently built. As such, the firm has been working with fire officials and state regulatory agencies in their investigations since the time of the explosion. The well was drilled by a previous operator in 1993.

The wells will remain shut in until the company's field personnel can conduct additional inspections and testing of the associated equipment, such as facilities and underground lines associated with each wellhead. The firm holds 400,000 net acres in the DJ basin development area.

Anadarko said particular focus is being placed on areas where housing and commercial developments are occurring in close proximity to existing infrastructure. The wells will not be restarted until each has undergone and passed these additional inspections.

RIL produces CBM from India's Sohagpur

Reliance Industries Ltd. (RIL) has started production from its first coalbed methane (CBM) SP (West) block and plans to ramp up production during the next 18 months. Production is from Sohagpur in Madhya Pradesh.

The production will supply the Shahdol Phulpur Pipeline. RIL had held the license for two adjacent CBM SP (West) and SP (East) blocks, which cover 995 sq km, since 2001 (OGJ, Feb. 2, 2015, Newsletter).

The company has drilled more than 200 wells connected to two gas gathering stations in the first phase of development. RIL plans to drill another 600-800 wells.

Reliance Gas Pipelines Ltd. laid the 302-km Shahdol Phulpur line, which connects Sohagpur CBM fields from Shahdol to Hazira-Vijaipur-Jagdishpur pipeline network at Phulpur.

Sinopec buys BP's SECCO interest for $1.68 billion

Gaoqiao Petrochemical Co. Ltd., a Shanghai-based, wholly owned subsidiary of China Petroleum & Chemical Corp. (Sinopec), has agreed to acquire BP PLC's 50% stake in SECCO Petrochemical Co. Ltd. (SECCO) for $1.68 billion.

SECCO is currently owned by BP with 50% interest, Sinopec 30%, and Sinopec Shanghai Petrochemical Co. Ltd. 20%, in which Sinopec holds a majority interest. Based in Shanghai, SECCO is a major producer of olefins along with polymers and other derivatives including polyethylene, polypropylene, acrylonitrile styrene, polystyrene, butadiene, and other products.

SECCO's primary production plants include a 1.09 million-tonne/year ethylene plant, a 1.09 million-tpy ethylene cracking plant, a 600,000-tpy aromatics extraction plant, a 600,000-tpy polyethylene plant, and a 250,000-tpy polypropylene plant.

Gaoqiao Petrochemical operates 75 plants that produce gasoline, jet fuel, diesel fuel, base stock for lube oil, paraffin wax, synthetic rubber, commodity organic chemicals, synthetic plastics, and fine chemicals. The company's current nameplate capacity includes a 1.13 million-tpy refinery and 600,000 tpy of petrochemical products output.

BP has had a petrochemicals business in China since the 1970s, first through technology licensing and then through manufacturing joint ventures. In addition to SECCO, BP has three other petrochemical manufacturing combines in China: purified terephthalic acid (PTA) production in Zhuhai; and acetic acid and other acetyls production with Yangtze River Acetyls Co. in Chongqing and BP YPC Acetyls Co. in Nanjing. In March 2015, BP began production from Zhuhai Unit 3, the world's largest single-train PTA unit.

The deal is expected to close before yearend with the consideration payable in instalments.

Uzbekistan breaks ground on new refinery

The Republic of Uzbekistan has broken ground on a 5 million-tonne/year grassroots refinery to be built in the former Soviet state's eastern Jizzakh region.

Uzbekistan's President Shavkat Mirziyoyev inaugurated start of construction on the $2.2-billion project in an Apr. 27 ceremony, according to separate releases from Mirziyoyev's office and state-run National Holding Co. Uzbekneftegaz.

Designed in collaboration with a consortium of leading international companies and to be equipped with most advanced technologies for deep processing of crude oil as well as ensuring industrial and ecological safety, the modern refining complex comes as part of Uzbekistan's 2017-21 Action Strategy development plan, the goals of which include achieving national fuel-energy independence as well as increasing the country's export potential, Mirziyoyev's office said.

The refinery will process crude feedstock delivered via pipeline from Russia and Kazakhstan to produce 3.7 million tpy of motor fuel, 700,000 tpy of aviation fuel, and 300,000 tpy of other finished petroleum products.

Supplies of Russian and Kazakhstani crude feedstock for the refinery follow cooperative framework agreements in the oil and gas sector Uzbekistan recently entered with the two countries, according to a series of March-May 2017 releases from Mirziyoyev's office.

As part of those agreements, Kazakhstan's state-owned JSC National Co. KazMunaiGas (KMG) will provide technical support to Uzbekneftegaz on modernization projects at subsidiary Uzneftmahsulot AK's existing refineries, as well as review an opportunity to render technical assistance in building the new refinery, KMG said in a Mar. 23 release.

A definitive timeframe for startup of the proposed Jizzakh has yet to be revealed.

DOE allows Golden Pass LNG exports to non-FTA areas

The US Department of Energy has signed an order authorizing Golden Pass Products LLC to export domestically produced LNG to countries that do not have a free-trade agreement with the US. Golden Pass won approval to export as much as 2.21 bcfd of gas equivalent from its terminal near Sabine Pass, Tex., to any non-FTA country not prohibited by US law or policy for up to 20 years, DOE said.

The US is becoming a net gas exporter with the dramatic increase in gas production, DOE noted. A total of 19.2 bcfd of gas equivalent has been approved for export to non-FTA countries from planned facilities in Texas, Louisiana, Florida, Georgia, and Maryland. These projects, if built, would position the US to be the world's dominant LNG exporter, DOE said.

Golden Pass, which is 70% owned by Qatar Petroleum and 30% owned by ExxonMobil Corp., noted that a study by the Perryman Group estimates the construction of the facility will provide 45,000 direct and indirect jobs over 5 years. It also will provide 3,800 direct and indirect permanent jobs nationwide during its 25 years of operation, including more than 200 positions at the facility itself, it indicated.

The Perryman Group study also anticipates that the GPP Export Project will generate significant tax revenue, including $4.6 billion for federal, state, and local governments from the project and indirect sources, Golden Pass said. The study estimated that the federal government will receive $26 million/year and Texas will receive $1 million/year from the project's operation.

Federal law generally assumes approval of LNG exports to countries having FTAs with the US. For countries that do not, the Natural Gas Act directs DOE to grant export authorizations unless it determines that this would not be in the US national interest.

DOE said it reviewed the Golden Pass export application. It considers, among other factors, the economic, energy security, and environmental impacts, including macroeconomic studies that showed positive benefits to the US economy in scenarios with LNG exports up to 28 bcfd of gas equivalent.

Ichthys CP facility sails from South Korea

Inpex Corp., Tokyo, said the central processing facility for the Ichthys LNG project has sailed from its construction site in Geoje, South Korea.

Towing time to the Ichthys gas-condensate field offshore Western Australia will take about 45 days. The CPF, known as the Ichthys Explorer, will separate and process production from subsea wells into gases and liquids. The project's Ichthys Venturer floating production, storage, and offloading facility also is slated to be towed to the field and undergo hook-up.

Operator Inpex and partners are also proceeding with construction of the onshore gas liquefaction plant outside Darwin in Australia's Northern Territory.