Prudhoe Bay field production back to 200,000 b/d
BP Exploration (Alaska) Inc. said on Aug. 29 that Prudhoe Bay field production was restored to more than 200,000 b/d after a temporary shut-down of Gathering Center 2 to make mechanical repairs to a gas compressor.
The compressor was taken down for maintenance starting on Aug. 23, and during that time, Prudhoe Bay production was reduced to 110,000 b/d (OGJ Online, Aug. 21, 2006).
The field normally produces 400,000 b/d but much of its Eastern Operating Area (EOA) remains shut down pending replacement of 16 miles of severely corroded oil transit line that resulted in a small spill (OGJ, Aug. 14, 2006, p. 26).
“While this mechanical issue was unrelated to the Prudhoe Bay oil transit line issue, our commitment to resolving the problem remains the same,” BP said.
Meanwhile, BP has completed ultrasonic inspections of 2,500 ft of pipe in EOA and 5,300 ft of pipe in the Western Operating Area.
“To date, all of our inspections have found no integrity issues beyond those identified in the initial inline inspection,” BP said on Aug. 29.
Venezuela plans to boost oil sales to China
Venezuela will cooperate with China in supplying crude oil to help fulfill the Asian giant’s energy demands, Venezuela President Hugo Chavez said Aug. 25 during a visit to China.
During a news conference in Beijing, Chavez said Venezuela is arranging to sell 500,000 b/d to China in 5 years. In July, Venezuela exported about 155,000 b/d of crude oil to China, and Chavez said he hopes to double oil sales to China next year.
During his China visit-his fourth since 1999-Chavez signed numerous accords with China, including oil and gas agreements.
“We have advanced our bilateral relationship with China to a higher level,” Chavez said. “You will see a trend of continuing increasing oil exports to China. We will supply more and more energy to China.”
Last year, CNPC and Petroleos de Venezuela announced plans to work jointly to boost production in eastern Venezuela from the Junin 4 block in the Orinoco belt and from mature Zumano field (OGJ, Sept. 12, 2005, Newsletter).
Gazprom threatens to cut gas exports to Bosnia
Russian gas giant OAO Gazprom threatened to cut natural gas exports to Bosnia on Oct. 1 unless Bosnia begins to pay its debt, Bosnian state-controlled gas importer Energoinvest said in a statement.
Bosnia, which receives all its gas from Russia, owes Gazprom nearly $105 million from 1992-95. Representatives of Energoinvest and BH-Gas, Bosnia’s state gas transportation company, met with Gazprom in Moscow on Aug. 22.
Gazprom shut off gas exports to Ukraine last winter until Ukraine agreed to double the price it pays for gas (OGJ, Mar. 20, 2006, p. 57).
BLM seeks comments on oil shale ANPR
The US Bureau of Land Management took another step toward issuing commercial oil shale leases with an Advance Notice of Proposed Rulemaking (ANPR) on Aug. 25 to support such a program.
The ANPR seeks public comments on royalty rate and royalty determination points; fair market value for conversion of preference-right acreage and for commercial leasing; diligence; whether it is appropriate to lease small tracts, and other key components of commercial leasing, the Department of the Interior agency said.
“Comments on these key issues will help us propose a rule that ensures an economically and environmentally sound approach to unlocking this very promising domestic energy resource,” said Tom Lonnie, BLM’s assistant director for minerals, realty, and resource protection.
Comments on other aspects of commercial oil shale leasing also will be welcome, he added.
The ANPR is BLM’s second step to develop oil shale on public land as directed by Congress under Section 369 of the 2005 Energy Policy Act (EPA).
The agency previously solicited nominations for research, development, and demonstration oil shale recovery projects on federal acreage in Colorado, Utah, and Wyoming. It is currently analyzing environmental effects of six RD&D proposals it received.
US oil shale resources hold the equivalent of 2.6 trillion bbl of oil, with roughly 72% of the total underlying federal land. BLM also is preparing a programmatic environmental impact statement (PEIS) analyzing environmental, social, and economic issues associated with various leasing alternatives.
BLM said that the PEIS will help it identify which public land in Colorado, Utah, and Wyoming will be available for leasing and under what constraints. The 2005 EPA requires final commercial leasing regulations to be published within 180 days of the PEIS’s completion, it said.
The agency will accept comments on the ANPR through Sept. 25.
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Exploration & Development - Quick TakesChevron wins deepwater permit off Australia
Chevron Australia Pty. Ltd. was awarded the rights to deepwater exploration permit area WO5-13 off Western Australia. The permit has gas potential.
Chevron will become the operator and will hold a 50% interest. Shell Development (Australia) Pty. Ltd. will hold the remaining 50%.
The permit area is 100 miles northwest of the Western Australian coast in the Exmouth Plateau region. The plateau is the deepwater frontier of the Carnarvon basin, which includes the North West Shelf and the Greater Gorgon Area.
The work program for the 1,390-sq-mile block includes geotechnical studies and seismic data acquisition and interpretation. The initial 6-year work commitment includes the acquisition of 930 miles of seismic data. Seismic reprocessing will begin immediately, and a seismic survey will be conducted in 2007-08.
The award of this new acreage follows the award of four large deepwater blocks-WA-364-P, WA-365-P, WA-366-P, and WA-367-P-to Chevron Australia in the Exmouth Plateau last year. Chevron operates a 50-50 combine with Shell Development Australia (OGJ Online, July 11, 2005, Newsletter).
Statoil resumes well program off Venezuela
Statoil ASA has begun drilling the Cocuina-2X well on Block 4 of the Plataforma Deltana area off Venezuela.
The well is being drilled by Transocean Inc.’s Sovereign Explorer semisubmersible, which recently resumed operations after completing 3 months of required upgrades. The semi’s operations had been temporarily suspended on the Ballena 1-X well, also on Block 4, due to mechanical failures and safety requirement concerns.
Statoil, operator of Block 4, plans to reenter the Ballena 1-X well upon completion of the Cocuina well. Ballena 1-X will be followed by the Orca-1X well, planned for 2007.
The Ballena well delays have affected Statoil’s commitment to drill three wells in 4 years on the block, which was awarded in February 2003. Thus, the company applied for and was recently granted an 8-month extension of the exploration period by the Norwegian Ministry for Energy and Petroleum.
If the exploration period, comprising the $200 million 3-well program, is successful, it will be followed by an appraisal period, Statoil said.
Aspen well log shows positive results
Nexen Inc., Calgary, said log analysis of its wholly owned and operated Aspen development well on Green Canyon Block 243 in the Gulf of Mexico indicates excellent quality reservoir sands, consistent with existing producing wells in Aspen field. The well is about 150 miles south of New Orleans.
The well, drilled to 20,691 ft in 3,150 ft of water, encountered 160 ft of net pay.
Nexen has begun completion operations and expects the well to come on stream during the fourth quarter. The well is expected to produce at an initial rate of 12,000-15,000 boe/d, primarily gas.
Nexen Pres. and Chief Executive Officer Charlie Fischer said, “Production from this well, followed shortly by new production from our Wrigley gas discovery, will significantly increase our volumes in the Gulf of Mexico.”
Nexen is installing a production liner and evaluating tieback options for the Ringo gas well, which lies about 120 miles northeast of Aspen field (OGJ Online, Aug. 4, 2006).
Blackbeard West well has disappointing results
The Blackbeard West No. 1 exploration test well, operated by ExxonMobil Corp. on South Timbalier Block 168 in 70 ft of water in the Gulf of Mexico, encountered a thin gas-bearing sand below 30,000 ft, but failed to reach its primary targets because of higher than expected pressure, reported Houston-based Newfield Exploration Co., an interest owner.
David A. Trice, chairman, president, and chief executive officer of Newfield, said, “This has been a challenging well to test-a true frontier play-but Newfield is sufficiently encouraged to continue investing in this play.”
ExxonMobil is preparing to temporarily abandon the well, which reached TD of 30,067 ft.
To date, Newfield has invested about $25 million (net) in drilling the Blackbeard West-1 well, which covers multiple blocks in the South Timbalier and Ship Shoal areas off Louisiana.
Blackbeard West, part of a group of deep shelf prospects known as Treasure Island and generated by Newfield and a predecessor, is thought to have potential for several trillion cubic feet of recoverable gas in Miocene and older sections (OGJ Online, Feb. 10, 2005).
The prospect is subject to a 1.25% overriding royalty interest held by the Treasure Island Royalty Trust.
The working interests in the prospect are ExxonMobil 25%, Newfield 23%, BP Exploration & Production Inc. 20%, Petrobras America Inc. 20%, Dominion Exploration & Production Inc. 7%, and BHP Billiton Petroleum (Deepwater) Inc. 5%.
Drilling & Production - Quick TakesIndex brings Louisiana well on stream
Index Oil & Gas Inc., Houston, said the Walker well in Louisiana is on stream with initial gross production of 200 b/d of oil and 175 Mcfd of associated gas.
Index has a 12.5% interest in the project, and Crawford Operation Co. is the operator. The companies expect to drill three remaining wells this year.
Vieman, in which Index has 17% interest, is expected to be spudded during September. Taffy and Taffy 2 are expected to be drilled during the third or fourth quarter. Index has 7.5% interest in Taffy and 20% interest in Taffy 2.
Statoil to study Snøhvit oil production
Statoil ASA and partners plan to conduct feasibility studies on Snøhvit field in the Barents Sea to assess commerciality of Snøhvit oil production and options for development.
The field’s plan for development and operation (PDO), adopted by the Norwegian parliament in March 2002, prepared only for development of the field’s gas resources. Studies performed prior to the approval of this PDO concluded that production of the oil zone would not be profitable. The Snøhvit oil zone is just some 14 m thick.
Geir Pettersen, manager of the Tromsø Patch business cluster, which includes Snøhvit operations, said, “The [planned] studies are based on new knowledge after the gas wells were drilled in Snøhvit, and expectations for a higher long-term oil price.”
Planning for a possible appraisal well for better identification of the oil zone in Snøhvit is due to begin. A final decision will be made by yearend. If the appraisal well is approved, it may be drilled in first quarter 2007.
Snøhvit licensees are Statoil 33.53%, Petoro SA 30%, Total E&P Norge 18.40%, Gaz de France 12%, Amerada Hess Norge 3.26%, and RWE Dea Norge 2.81%.
Patterson-UTI to build 15 land rigs
Patterson-UTI Energy Inc., a drilling contractor based in Snyder, Tex., agreed to buy $100 million of rig components from National Oilwell Varco Inc. to build 15 land drilling rigs in 2007.
The first of those 1,500 hp electric rigs is expected to be activated midway through 2007. In addition to those 15 new rigs, Patterson-UTI plans to activate 30 rigs this year and 15 rigs in the first half of 2007 through its rig refurbishment program.
Company officials said they expect “continued strong demand” for land rigs. Patterson-UTI owns 403 land-based drilling rigs that operate primarily in the oil and gas producing regions of Texas, New Mexico, Oklahoma, Arkansas, Louisiana, Mississippi, Colorado, Utah, Wyoming, Montana, North Dakota, South Dakota, and Western Canada.
It also is engaged in pressure pumping services and drilling and completion fluid services. Additionally, it has an exploration and production business.
Processing - Quick TakesAramco, Total to sign Jubail refinery contract
Saudi Aramco and Total SA are set to sign a contract for the 400,000 b/d export refinery planned in Jubail, Saudi Arabia. Aramco and partners already have signed a contract for the project’s twin-sister plant in Yanbu (see story nearby).
The Jubail project, slated for start-up in 2011, involves developing a full-conversion refinery that will process Arabian heavy crude.
The companies agreed to form a joint venture to implement the $6 billion project. Each will hold a 35% interest. The interest remaining will be offered for public subscription by Saudi nationals (OGJ Online, May 22, 2006).
The scope of the contract is to conduct front-end engineering and environmental assessment; prepare financing and marketing studies, capital operating cost estimates, and bid packages; and provide procurement support.
Technip Italy will provide support during detailed design and construction, assisting with cost estimate development as well as the development of the lump-sum turnkey packages.
Invensys to provide Ras Laffan plant controls
GSEC, Seoul, awarded a multimillion-dollar automations contract to Invensys Process Systems, London, to provide process control, safety, asset management, and plant information systems at the grassroots Laffan gas condensate refinery under construction at Ras Laffan City, Qatar. GSEC is performing the plant’s engineering and procurement.
Gas condensate, in many ways considered a sweet, light crude equivalent, has a gravity of 50° or lighter, is usually free of metals, and produces a light product outturn, more than half of which is naphtha.
When the 146,000 b/d plant comes on line in 2008, it will process gas condensate from the adjacent QatarGas and RasGas LNG liquefaction facilities. The gas processing plant’s automation systems will be interfaced with existing Invensys systems at the RasGas and QatarGas sites to maximize synergies among the three facilities.
Aramco, partners sign Yanbu refinery contract
Saudi Aramco, ConocoPhillips, and Kellogg Brown & Root (KBR) gathered in Houston recently to sign a front-end engineering contract for start of construction of a 400,000 b/d refinery in Yanbu.
The Yanbu export refinery, slated for completion in 2011, will process Arabian heavy crude oil into motor fuels and other products for US and European markets. Its twin-sister plant in Jubail, a joint venture of Saudi Aramco and Total SA, will primarily serve the Far East market.
Both refineries will be sited near existing Saudi Aramco facilities.
Neste Oil to improve Naantali refinery operations
Neste Oil Corp., Keilaranta, Finland, will improve energy efficiency and increase sulfur recovery capacity during a 5-week shutdown of its 51,800 b/d Naantali, Finland, refinery.
The shutdown-the largest in Naantali’s history-will begin Aug. 31, and maintenance and repair work will commence around Sept. 7. Among projects intended to secure the refinery’s reliability, performance, and safety over the next 6 years, Neste Oil will inspect all statutory pressure vessels and commission a new flare system.
The special-product refinery is scheduled to be back in normal operation in mid-October.
Transportation - Quick TakesHusky to expand Alberta crude mainline
Husky Energy Inc. plans to expand its crude oil mainline between Lloydminster, Alta., and its terminal at Hardisty, Alta.
The $100 million, 80-km pipeline expansion project includes laying pipe, upgrading pumps, and installing associated equipment at the terminals and pumping station.
The expansion will accommodate increased production from Husky’s Tucker oil sands project near Cold Lake and shipments from third parties. It also will allow for increases in future shipping volumes from the company’s heavy oil upgrader at Lloydminster.
Project construction, slated to begin in September, will be performed in two phases. The first phase involves the installation of two, 20-km sections of 24-in. pipe and associated pumps north of Wainwright and the Battle River, Alta., pumping station. It is to be operational by second quarter 2007.
The second phase comprises installation of the remaining 40 km of 24-in. pipe from Lloydminster to Wainwright. Completion is scheduled for fourth quarter 2007.
Ormen Lange field to test subsea compression
Norsk Hydro ASA has let a contract to Aker Kvaerner ASA to develop a pilot program testing a new subsea compression technology in Ormen Lange natural gas field off Norway.
The project will evaluate a technology that GE Oil & Gas and Aker Kvaerner developed and test whether a subsea compressor station in water 900 m deep is a viable alternative to an offshore platform.
In the past, exploiting many gas fields in water deeper than 500 m has not been profitable because of the cost of conventional offshore platforms.
“If the project produces the expected results, the Ormen Lange partners will have a cost-effective alternative to the originally planned offshore platform,” said Libero Mele, GE Oil & Gas regional general manager for central and northern Europe. “This technology then could be applied to other subsea field developments, eliminating the need for offshore platforms.”
The conceptual design is complete for the 12-Mw compressor-the largest ever developed for subsea applications-and GE Oil & Gas is set to begin construction of the equipment. The high-speed, oil-free compressor to be tested evolved from a 2.5-Mw conceptual design called the Blue-C Subsea Centrifugal Compressor unveiled at the 2002 Offshore Northern Seas Conference.
The compact Ormen Lange compressor module is a turnkey system designed for installation in water 850-1000 m deep and at a distance of 120 km from the Nyhamna terminal onshore. Minimizing the number of critical parts, the system has magnetic bearings and a high-speed electric motor directly coupled with a vertically orientated centrifugal compressor.
Pending the Ormen Lange partners’ final approval, the pilot subsea compression station will undergo controlled endurance tests during 2009-11 at a gas treatment facility in Nyhamna, Norway.
Woodside lets FEED contract for Pluto LNG
Woodside Energy Ltd. has let a front-end engineering and design contract for an undisclosed sum to Foster Wheeler Ltd. unit Foster Wheeler Energy Ltd. for Woodside’s planned Pluto LNG development in Western Australia.
Foster Wheeler is leading a joint venture with WorleyParsons Services Pty. Ltd. to execute the contract.
The engineering JV has already completed the preliminary design package and studies for this project. Foster Wheeler is also leading the JV in the engineering execution of the fifth LNG liquefaction train at the Woodside-operated Karratha gas plant in Australia.
EG LNG lets FEED contract for second LNG train
Equatorial Guinea LNG Co. Ltd. (EG LNG) awarded a front-end engineering and design contract to Bechtel Corp. for initial work for a possible second LNG train with a capacity of 4.4 million tonnes/year of LNG on Bioko Island.
The scope of the contract includes feed gas metering, liquefaction, refrigeration, ethylene storage, boil off gas compression, product transfer to storage, and LNG product metering. The FEED work is expected to reach completion by the end of first quarter 2007.
EG LNG is in discussions with gas resource holders in Equatorial Guinea, Nigeria, and Cameroon to secure the required gas supply to support construction of Train 2. After securing adequate gas supplies and the completion of the FEED work, EG LNG expects to reach a decision of whether to proceed with Train 2 during 2007.
Currently, EG LNG is ahead of schedule in constructing the LNG Train 1 project, which will have a capacity of 3.4 million tonnes/year of LNG. The train is slated to begin first shipments in mid-2007. As of the end of the second quarter, the project’s EPC work was 87% complete.
EG LNG envisions Equatorial Guinea as a potential regional gas hub, providing a means to commercialize the large volumes of stranded gas off the country’s coast and other large gas resources in the Gulf of Guinea.
EG LNG interest holders are Marathon Oil Corp. 60%, state-owned Sonagas 25%, Marubeni Gas Development Co. Ltd. 6.5%, and Mitsui & Co. Ltd. 8.5%.
Dubai firms to develop $1 billion LNG storage site
Two leading Dubai government entities-the Dubai Multi Commodities Centre (DMCC) and Techno Park-have formed a partnership with LNG Impel, a wholly owned unit of Galveston LNG Inc., to develop a $1 billion LNG storage facility at Techno Park in Dubai.
The facility, Dubai LNG Storage Hub, will be the first of its kind in the world, said the partners, and is expected to have a total storage capacity of 40-65 bcf of gas.
On Aug. 28 DMCC and Impel began the open season bid process for storage capacity at the hub with an initial nonbinding bid round.
LNG Impel and DMCC signed a memorandum of understanding in June to jointly pursue this project.