GENERAL INTEREST — Quick Takes
Judge nixes injunction against Chevron, Transocean
A federal judge in Rio de Janeiro denied a request for an injunction requesting that Chevron Corp. and drilling contractor Transocean Ltd. be barred from operating in Brazil following the discovery of an oil seep in offshore Frade field in November 2011.
Chevron Brazil Upstream Frade Ltd. issued a statement on Apr. 11 saying it is confident that it acted diligently and appropriately, and in accordance with industry best practices as well as within the Plan of Development as approved by Brazilian regulators.
"The source of the leak was contained in 4 days," Chevron said of a seep discovered last year. "Continuous monitoring of the incident area shows no discernible environmental impact to marine life or human health. No oil has reached Brazil's coast. We have received no information that anyone was harmed as a result of the incident."
Chevron sealed an appraisal well last year. Frade field lies in 3,800 ft of water 370 km northeast of Rio de Janeiro in the Campos basin.
Following a new seep in the same general vicinity discovered in March, Chevron said it wants to study the "geological complexity" of the area. Chevron asked Brazil's National Petroleum Agency for authorization to temporarily suspend production at Frade field as a precaution.
EPA: Drinking water tests show no health concern
The US Environmental Protection Agency completed a second set of samples at 20 private drinking water wells in Dimock, Pa., and did not find contaminant levels which warrant immediate action, EPA's Region 3 office in Philadelphia said on Apr. 6.
The announcement followed one on Mar. 15 reporting similar findings from tests of the first 11 of 60 private water wells which EPA has agreed to study.
A spokesman for Cabot Oil & Gas Corp., which operates several natural gas wells in the area, said EPA's findings were consistent "with literally thousands of pages of water quality data accumulated by state and local authorities and by Cabot."
The spokesman said, "Importantly, EPA again did not indicate that those contaminants that were detected bore any relationship to oil and gas development in the Dimock area, particularly given the fact that any contaminants are more likely indicative of naturally occurring background levels or other unrelated activities."
Hilcorp to buy Marathon's Cook Inlet gas assets
Hilcorp Alaska LLC signed a definitive agreement to buy Marathon Oil Corp.'s assets in Alaska's Cook Inlet, subject to required approvals, by the fall of 2012.
Marathon's net production from the properties averaged 93 MMcfd of gas and 112 b/d of oil in 2011.
The sale, to be retroactive to Jan. 1, 2012, includes 17 million bbl of oil equivalent of net proved reserves in 10 fields, natural gas storage, 12.5 bcf of gas in storage, and interests in natural gas pipeline transmission systems.
Hilcorp's purchase excludes a land rig that Marathon is marketing separately.
Lukoil Overseas appoints Sierra Leone geologist
Lukoil Overseas has appointed Tomah Jabez Nhabay as director of the office the company has opened in Freetown, Sierra Leone.
Nhabay is a professional geologist who previously worked for the state company Sierra Leone Geological Surveys and for a number of other government organizations. A geophysics graduate of the Moscow Geological Exploration Institute, he previously served as a general director of the Petroleum Resources Unit of the Republic of Sierra Leone.
The main task of the new office is to manage the exploration and development project for the 4,022 sq km SL-5-11 deepwater block in the Sierra Leone-Liberia basin off Sierra Leone. Lukoil Overseas is project operator with 49% participating interest. The other participants are Oranto Petroleum Corp. with 30% and Vanco Energy Co. with 21%.
S-Oil names Al-Mahasher chief executive
S-Oil, Seoul, which operates the 580,000 b/d Onsan refinery in Ulsan, South Korea, has named Nasser Al-Mahasher chief executive officer and representative director.
He has been head of Saudi Petroleum Ltd., Tokyo, managing marketing activities for Saudi Aramco, for which he has worked for 22 years. Al-Mahasher succeeds Ahmed A. Subaey, who served as chief executive officer for 4 years and will return to Aramco.
Exploration & Development — Quick Takes
McMoRan effects completion at Davy Jones well
McMoRan Exploration Co. said it has effected a technical completion at the Davy Jones-1 well on South Marsh Island Block 230 in the Gulf of Mexico and is working to establish commercial production.
Perforation of the Wilcox D sand resulted in positive pressure build-up in the wellbore followed by a gas flare from the well. Initial samples indicated that the natural gas from the Wilcox D sand is high quality and contains low levels of carbon dioxide and no hydrogen sulfide. Blockage from drilling fluid associated with initial drilling operations prevented McMoRan from obtaining a measurable flow rate. Attempts to perforate the Wilcox C sand did not clear the blockage, and McMoRan has begun operations to remove the tubing from the well, clear the residual drilling fluid, and recover the perforating guns currently set across the Wilcox F sand to provide access to all of the Wilcox reservoirs (A through F) totaling 200 net ft.
To maximize production from the well and enable effective formation penetrations, McMoRan plans to use electric wireline casing guns that are larger than the tubing guns used to perforate the Wilcox C and D sands. The Bureau of Safety and Environmental Enforcement issued the final permits on Apr. 6 to approve the current operations. McMoRan expects these operations to enable a measurable flow rate during the second quarter of 2012 followed by commercial production shortly thereafter.
Southwest Soldado light oil gauged offshore Trinidad
Trinidad and Tobago's state Petrotrin LLC said appraisal drilling in cluster 6 of Southwest Soldado field onshore Trinidad has confirmed the existence of a minimum of 48 million bbl of oil.
Four of five appraisal wells found light crude oil unexpectedly as well as heavy oil, said Lindsay Gillette, chairman. The crudes may be mixed to optimize recovery, Gillette said.
The wells, in 60 ft of water off Point Fortin and near the Atlantic LNG liquefaction plant and close to oil production facilities, flowed at an average of 700 b/d.
Petrotrin said the Southwest Soldado discovery is the second with which it has been involved in the last 3 months. The first was the discovery by Bayfield Energy of 32 million bbl of recoverable oil in its first well on the Galeota block.
The Bayfield well, suspended as an oil and gas discovery, went to 2,479 m and found light oil in a good- quality reservoir with production potential of more than 1,000 b/d. Petrotrin, which owns 35% of the Galeota block, and the Southwest Soldado and Galeota discoveries mean a combined estimated delivery of 80 million bbl of oil.
Eni to explore deepwater South China Sea block
Eni SPA's Eni China BV unit will explore deepwater Block 30/27 in the South China Sea under an agreement with China National Offshore Oil Corp.
The block covers 5,130 sq km about 400 km off Hong Kong, CNOOC said. It did not give the water depth range on the block.
Eni will fully fund a 3D seismic survey and the drilling of one exploratory well. CNOOC Ltd. has the right to participate in up to 51% working interest in any commercial discovery.
Elsewhere in the South China Sea, Eni operates Block 28/20 and has equity interests in blocks 16/08 and 16/19.
Well proves reservoir quality at Iara West off Brazil
A group led by Petrobras has demonstrated good quality reservoirs at a well drilled to probe the westerly extent of the Iara presalt accumulation in the Santos basin offshore Brazil.
The BRSA-1032-RJS well, informally known as Iara West, is in 2,150 m of water on the BM-S-11 concession 223 km off Rio de Janeiro and 9 km from the Iara discovery well. It encountered 21-26° gravity oil in presalt carbonates at 5,430 m.
The well went to 6,050 m and is the third well drilled in the Iara area. It is part of the fast-track program to develop the world-class pre-salt Santos Basin discoveries.
Petrobras operates the BM-S-11 block with 65% interest, BG Group has 25%, and Petrogal Brasil/Galp Energia has 10%.
The group will continue to appraise the area, including formation tests to evaluate reservoir production, in line with the plan approved by Brazil's National Agency of Petroleum, Natural Gas and Biofuels.
Drilling & Production — Quick Takes
Cabot restores Marcellus gas production after fire
Cabot Oil & Gas Corp. has restored its Marcellus shale production in Susquehanna County, Pa., to predisruption levels following restart of the Lathrop Compressor Station, which was damaged by a Mar. 29 fire (OGJ Online, Apr. 3, 2012).
Cabot and Williams Partners LP are investigating cause of the fire. The fire quickly extinguished itself, and no injuries were reported.
As of Apr. 5, six compressor units were operational and the seventh was to start this week. Building repairs also were expected to be completed soon, Cabot said.
Dan O. Dinges, Cabot chairman, president, and chief executive officer, estimated the disruption deferred about 1 bcf of gas production in total, which he called "a minor impact to the year."
Cenovus advances Alberta oil sands project
Cenovus Energy Inc. has submitted applications for a thermal development project in the Athabasca oil sands of Alberta that will require dewatering of an aquifer overlying some of the bitumen.
If approved, the Telephone Lake project, formerly Borealis, will progress in two phases with production capacity of 45,000 b/d each. The project is about 70 km east of Fort McKay and 90 km northeast of Fort McMurray, Alta.
Cenovus has submitted applications to the provincial Energy Resources Conservation Board and Alberta Environment and Water to develop the bitumen in the Cretaceous Middle McMurray formation with steam-assisted gravity drainage.
Over an expected 40-year project life, the operator proposes to drill an estimated 961 SAGD well pairs and 378 dewatering wells from a total of 104 well pads.
The project would include a central processing facility with oil treatment; steam production with as many as 10 generators, including two cogeneration units; and water treatment.
Dewatering will be of what Cenovus calls a top water layer directly over the bitumen at depths of 150-175 m in the McMurray formation. The water is nonsaline but contains traces of oil and is therefore unsuitable for consumption or agriculture.
Air injection will help displace water, which will be produced and reinjected elsewhere in the top water zone or in deeper zones. A small amount of the water will support steam generation. Subject to approvals, construction would begin in 2014 and commercial-scale dewatering in 2016.
PROCESSING — Quick Takes
Jacobs gets Afipsky Refinery contract
Afipsky Refinery has let a contract to Jacobs Engineering Group Inc. covering a basic engineering package for an amine regenerator unit, sour water stripper, and an expected 55 ton/day sulfur recovery unit.
Capacity of the refinery when the En+ Group sold it to the private NefteGazIndustria Group in 2010 was reported at 72,000 b/d. Located in the Krasnodarskij Region of Russia, the refinery serves local markets.
Jacobs Engineering said units covered by its contract are part of a refinery extension project including a hydrotreater and visbreaker unit.
It will work with the engineering firm Giprogazoochistka, Moscow, a specialist in gas treating and sulfur recovery units.
HollyFrontier idling Navajo refinery FCCU
HollyFrontier Corp. reported plans for an unscheduled shutdown of the fluid catalytic cracking unit at its 100,000-b/d Navajo refinery in Artesia, NM, for mechanical repairs.
It expected the shutdown to last 10-15 days and total crude throughput to be cut by a total of 800,000 bbl.
Grassroots refinery commissioned in India
HPCL-Mittal Energy Ltd. (HMEL) has commissioned its 180,000-b/d, zero-bottoms Guru Gobind Singh Refinery near Bathinda in the northern Indian state of Punjab.
The grassroots refinery has been running crude oil since last August, but commissioning of the full facility was delayed until Mar. 29 (OGJ Online, Nov. 2, 2011). Processing capacities include delayed coking, fluid catalytic cracking, and continuous catalytic reforming.
A propylene production plant is integrated with the refinery, which is connected to a crude oil terminal at Mundra, Gujarat, by a 1,017-km, 28-30-in. pipeline. The refinery has a 165-Mw captive power plant. The terminal has a single-buoy mooring able to handle very large crude carriers.
HMEL is a joint venture of state-owned Hindustan Petroleum Corp. Ltd., Mumbai, and Mittal Energy Investment Pte. Ltd., Singapore.
TRANSPORTATION — Quick Takes
XTO Energy to anchor Marcellus gathering system
NiSource Gas Transmission & Storage's Midstream Services confirmed ExxonMobil Corp. subsidiary XTO Energy Inc. as the anchor producer of its Western Pennsylvania natural gas pipeline project, Big Pine Gathering System. The project includes installation, refurbishment, and operation of 70 miles of pipeline facilities in the hydrocarbon-rich Western Pennsylvania shale production region, including Allegheny, Butler, Armstrong, Indiana, and Westmoreland counties.
NiSource expects BPGS to provide an initial 425 MMcfd of gas capacity, with interconnects to its own Columbia Gas Transmission pipeline system, as well as Texas Eastern Transmission and Dominion Transmission. NiSource also is discussing long-term commitments to the project with other producers.
BPGS pipeline facilities will cost $150 million. NiSource has begun community outreach, as well as preliminary preparation and right-of-way clearing. The company expects to begin building in late summer and to put the line in service by yearend.
NiSource last month announced plans to build a 90-mile, large-diameter natural gas gathering system in the Utica shale (OGJ Online, Mar. 2, 2012).
Oneok to build Bakken-to-Cushing oil pipeline
Oneok Partners LP plans to invest $1.5-1.8 billion between now and 2015 to build a 1,300-mile, 200,000 b/d crude oil pipeline—the Bakken Crude Express Pipeline—between the Bakken shale and Cushing, Okla. The company described supply commitments for the proposed pipeline as in various stages of negotiation.
Following receipt of all necessary permits and regulatory approvals, Oneok expects building to begin late-2013 or early-2014 for early-2015 completion. Capacity can be increased if supply commitments warrant. Oneok notes that the proposed pipeline route will also be well-positioned to transport crude production from the Niobrara shale.
Oneok expects the proposed pipeline to parallel more than 80% of the partnership's existing and planned NGL. The partnership previously announced $2.8-3.5 billion of investments through 2014 in growth projects, including $1.6-2 billion in projects related to the Bakken shale: the 500-mile NGL pipeline, the Bakken Pipeline; a 270-mile natural gas gathering system and related infrastructure in Divide County, ND (OGJ Online, Apr. 4, 2012); and three 100 MMcfd natural gas processing facilities—Garden Creek plant, Stateline I plant, and Stateline II plant—and related systems. The Garden Creek plant went into service in December 2011.
Oneok said it also has a $1 billion-plus backlog of unannounced growth projects that will be announced when sufficient supply commitments are completed.
Enbridge Inc. and Enterprise Products Partners LP are expanding the flow of the Seaway pipeline between Cushing and the Texas Gulf Coast (OGJ Online, Mar. 27, 2012), while TransCanada is proceeding with a stand-alone Cushing-to-Gulf Coast crude pipeline (OGJ Online, Feb. 27, 2012).
Williams begins Transco expansion open season
Williams Partners LP has started a binding open season for an expansion of its Transco interstate pipeline to provide incremental firm natural gas transportation capacity to markets in southern Virginia and northern North Carolina by September 2015. The Virginia Southside Expansion Project is designed to provide service on the Transco pipeline from its existing Zone 6 Station 210 pooling point in Mercer County, NJ, to delivery points along Transco's South Virginia Lateral.
The company executed a precedent agreement to provide Dominion Virginia Power with 250 MMcfd of the capacity and will solicit bids in the open season from shippers for additional deliveries along the project path. Dominion would use its capacity for a 1,300-Mw, combined-cycle natural gas-fired power station it plans to build in Brunswick County, Va.
Results of the open season, which closes Apr. 25, will determine the capacity, scope, and cost of the project. Work is also pending regulatory approval.
Williams owns 72% of Williams Partners, including the general-partner interest.
KMEP to expand carbon dioxide operations
Kinder Morgan Energy Partners LP will expand the 91-mile Eastern Shelf Pipeline extending to a project near its Katz field, shipping more 130 MMcfd of carbon dioxide via the pipeline starting in 2014. Additional pump stations will provide the extra capacity.
The contract for additional supplies shipped on Eastern Shelf was one of five new CO2 sales contracts KMEP entered during the first quarter, totaling more than 2 tcf combined with aggregate contract quantities exceeding 440 MMcfd at their peak. The company said the newly contracted CO2 volumes, the majority of which are contracted by third-parties, will support new and existing flood projects operated by the purchasers in the Permian basin of West Texas and have a volume weighted average term of nearly 16 years.
KMEP is expanding its Doe Canyon Unit CO2 source field in southwestern Colorado to increase capacity from to 170 MMcfd from 105 MMcfd. The expansion will include installation of both primary and booster compression with construction beginning this quarter. KMEP expects the primary compression to enter service fourth-quarter 2013 and the booster compression second-quarter 2014.
The company plans to drill 19 more wells during the next 10 years to achieve the increased production.
BLM seeks comments on Kokopelli line revision
The US Bureau of Land Management is seeking public comments on a revised natural gas pipeline proposal south of Rifle, Colo. BLM's Colorado River Valley Field Office said it released the original proposal for the 22.3-mile Kokopelli Phase II pipeline, and two water pipelines, which were to have shared its trench for 4.1 miles, in December 2011 (OGJ Online, Dec. 16, 2011). Construction of the lines was to have started this year.
Bargath LLC, a Williams Midstream subsidiary, which proposed the project, has requested that construction be delayed until at least 2013 because of natural gas markets have deteriorated, the field office said on Apr. 5.
Williams Production RMT Co. LLC, which was renamed WPX Energy Rocky Mountain LLC on Jan. 1, originally proposed constructing the water lines and still plans to proceed during 2012, meaning their construction and that of the gas pipeline would occur separately at different times, the notice said. It said BLM will accept comments, as it begins to prepare an environmental assessment of the revised proposal, through May 2.
Floating regas planned for off Colombia
Pacific Rubiales Energy Corp., through its unit Pacific Stratus Energy Colombia Corp., has signed a natural gas/LNG liquefaction, regasification, storage, and loading services agreement with Belgium-based Exmar NV, the company reported.
Exmar will build, operate, and maintain a floating liquefaction regasification and storage vessel off Colombia's Caribbean coast. The agreement grants Pacific Stratus exclusive rights to supply and liquefy up to 500,000 tonnes/year of LNG over 15 years, under a tolling structure, said the announcement.
The FLRSU will be able to store up to 14,000 cu m of LNG and to accommodate a 140,000 cu m LNG floating storage vessel. Commercial operations of the FLRSU will start in fourth-quarter 2014.
As part of the project, Pacific Stratus will build an 88-km, 18-in. OD pipeline from its producing La Creciente field (OGJ Online, Apr. 5, 2011) to the Caribbean coast with an initial design transportation capacity of 100 MMcfd. Gas for the project will be from La Creciente field.
Pacific Rubiales Energy is Canadian-based and produces natural gas and heavy crude oil. It owns Meta Petroleum Corp., a Colombian oil company that operates Rubiales and Piriri oil fields in the Llanos basin in association with Ecopetrol SA. It also has 100% working interest in La Creciente natural gas field in the Sucre department in northern Colombia.
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