UK planning policy to speed energy projects
The UK has launched a white paper to revamp the planning system and ensure that large energy projects of national importance are dealt with quickly, smoothly, and separately from other proposals in the planning program.
Energy companies previously had complained that the planning system-particularly when dealing with major gas projects-was burdensome and that local communities abused the process system by blocking proposals and significantly delaying their timetable.
UK Communities Sec. Ruth Kelly insisted that local communities would have a say in major infrastructure projects at every stage of the process and stressed that the new regime would be accessible to them for voicing their concerns. Companies will now be required to have low-carbon emissions under any new community projects planned.
The new planning system will replace more than eight different planning regimes and could save over £1 billion within 10 years, the UK government said. Ministers and parliament will draw up a new national policy framework to decide how the country’s key infrastructure needs for the next 10-25 years will be met under one legal framework. This will be subject to public consultation.
The government has proposed introducing a new independent infrastructure planning commission that would make decisions on nationally significant energy applications, such as LNG terminals and power plants. The commission would comprise “experts of considerable standing and experience drawn from a range of relevant fields,” the government said.
Trade and Industry Sec. Alistair Darling said, “Secure, clean energy supplies are vital. Currently major energy projects, including wind farms, can take many years going through the planning system which is confusing and unpredictable for both industry and communities.”
Appeals must now be filed within 8 weeks rather than 6 months so they can be dealt with quickly, according to the white paper.
National Grid said that major reform of the planning system was needed and that it would continue to involve local communities in the planning process for its 14 gas and electricity projects that are expected to come on stream by 2012.
E.On welcomed the white paper and urged the government to implement it by 2009 to help facilitate constructing new power stations and renewable schemes. Paul Golby, chief executive of E.On UK said, “The situation is especially pertinent for next generation nuclear power stations and for onshore wind farms, where some of our schemes have been held up in planning for literally years.”
Environmentalists were dismayed that major infrastructure projects, such as nuclear power stations and airport expansions, would get the green light under the white paper, arguing that these would harm the environment.
Interested parties have until Aug. 17 to submit comments on the white paper.
DOE staffer pushes renewable technology transfer
The US Department of Energy’s renewable energy office is working to accelerate technology transfer as part of an overall effort to improve its outreach to industry, a spokesman said at a recent wind and biofuels conference.
Paul Dickerson, chief operating officer of DOE’s office of energy efficiency and renewable energy, said the DOE hired three people having experience as venture capitalists to help accelerate technology commercialization and deployment.
The three visit DOE laboratories and talk with researchers and scientists about ways to provide technology to businesses, said Dickerson. Meanwhile, he schedules weekly meetings between himself and business leaders to discuss technology transfer.
“I have asked the DOE to think differently and to quicken our pace,” Dickerson told reporters after he spoke at an energy conference in Houston sponsored by Haynes and Boone LLP on May 19.
“For the first time in our lives, being ‘green’ is not a partisan issue,” Dickerson said. “It is in our vital interests to diversify the United States’ energy supply, and the way forward is through technology.”
President George W. Bush promotes the use of ethanol in gasoline as a way to help reduce fossil fuel consumption. He has outlined a goal to produce 35 billion gal of renewable and alternative fuel by 2017.
Dickerson called that goal realistic. He said much of the leading-edge fuel technology is being financed by private capital rather than by DOE funding.
Simmons & Co. International analyst Pearce W. Hammond Jr. believes total production of ethanol and biodiesel together could reach only 17.5 million gal by 2017. Other fuel options also will be needed to fulfill Bush’s goal, Hammond told the conference.
Previously the US Energy Information Administration predicted that the nation’s ethanol use will grow to 14.6 billion gal/year by 2030, with corn ethanol accounting for 13.6 billion gal of the total. That projection was made assuming no changes in existing energy policy.
Under the same scenario, EIA predicted US consumption of biodiesel will reach 400 million gal/year in 2030. Last year, the US produced 91 million gal of biodiesel, made primarily from soybean oil.
Pamela Beall, Marathon Oil Corp. vice-president of business development, downstream, noted that Marathon is one of the nation’s largest blenders of ethanol.
Cellulosic ethanol is years away from commercial operations and will not replace corn-based ethanol, Beall said. Renewable fuels will not make energy cheaper, she added.
William Spence, chief executive officer of BioSelect Fuels, Houston, said the biodiesel industry is looking for more feedstock with which to produce biodiesel.
Scientists are researching how to improve crop yields, possibly through genetically modified crops, Spence said, and also are seeking to develop technology enabling a move from food crops for feedstock to nonfood crops.
BioSelect Fuels will operate a biodiesel production and distribution plant in Galveston, Tex. Chevron Technology Ventures LLC, another partner in the project, is part of a joint venture consisting of various investors. The plant is in the process of being commissioned, and it initially will use soy feedstocks.
The facility will have an initial production capacity of 20 million gal/year. Spence hopes the plant can be expandable to 470 million gal/year by 2010 through three sites near refining centers.
Industry Scoreboard
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Exploration & Development - Quick TakesPTTEP’s Gulf of Martaban wells show gas
Thailand’s PTT Exploration & Production PLC (PTTEP) said another two exploration wells drilled on Block M9 in Myanmar’s Gulf of Martaban have both tested natural gas. The results followed on the success made earlier this year (OGJ Online, Apr. 3, 2007).
Zawtika 3, drilled to 2,274 m TD, encountered eight zones of gas-bearing formation with a total thickness of 65 m, the company said. A tubing stem test was conducted on a selected zone, indicating gas flows of 26.7 MMcfd.
Zawtika 4 reached a 2,390 m TD and found 11 zones of gas-bearing formation with a total thickness of 161 m. A tubing stem test was conducted on two zones, indicating gas flows of 39.6 MMcfd and 31.5 MMcfd.
PTTEP said it plans to drill three additional appraisal wells-Kakonna 2, Zawtika 5, and Zawtika 6-in July. It will then prepare a development plan with sights on starting production in 2011 or 2012.
Falcon to develop Mako Trough in Hungary
Timing remains uncertain, but Falcon Oil & Gas Ltd., Denver, plans to develop a vast basin-centered gas accumulation in southeastern Hungary, where it just announced an oil discovery.
The company, which on May 22 received a long-term oil and gas production license from the Hungarian Mining Authority, said it will “put the necessary systems and personnel in place” to develop its holding in the Mako Trough near the borders with Montenegro and Romania.
The production license covers Falcon’s Tisza and Mako exploration licenses totaling 900 sq miles and remains in force as long as the company continues operations, but it was unclear how soon sustained gas or oil production might begin (see map, OGJ, Feb. 6, 2006, p. 40).
The company said its Magyarcsanad-1 well near the acreage’s southern extremity discovered oil and gas in the Miocene Endrod formation below 13,000 ft.
Falcon plans to frac the entire 1,188 ft of Endrod that is behind casing after a 23-ft gross interval at 13,310 ft flowed 377 b/d of sweet, 48° gravity oil and 745 Mcfd of gas at 3,843 psi flowing tubing pressure without treatment. Estimated bottomhole temperature is 360° F.
Magyarcsanad-1 is 10¼ miles south of Falcon’s Mako-6 well, TD 18,674 ft, which encountered 17,100 psi bottomhole pressure and 460° F. temperature. Mako-7, northwest of Mako-6, set a Hungarian drilling depth record at TD 19,964 ft on Dec. 21, 2006.
Falcon has acquired more than 1,100 sq km of 3D seismic surveys, is drilling its sixth well, and has built a high-capacity gathering pipeline on the acreage. The company has described the Tertiary-age Mako Trough basin-centered gas accumulation, discovered in the 1960s, as the world’s youngest.
Consulting engineers in 2006 assessed the acreage as having potential for a contingent resource of 55 tcf of gas, three fourths of which is attributed to the Pliocene Szolnok formation.
Nicaraguan exploration well noncommercial
Norwood Resources Ltd., Calgary, was moving to test its first indicated discovery in the Sandino basin of western Nicaragua after it plugged its second well there as noncommercial.
The company tested eight intervals at the Las Mesas Gutierrez-1 well southwest of Managua. An interval at 3,350-3,460 ft yielded a noncommercial flow of 45° gravity oil.
Intervals at 8,818-38 ft, 8,708-28 ft, and 7,846-8,034 ft tested noncommercial gas flows.
Intervals at 2,770-95 ft, 2,954-3,035 ft, 3,908-56 ft, and 4,742-4,810 ft flowed salt water.
“This well indicates the presence of a positive hydrocarbon basin system (source, maturation, migration and timing of migration including the generation of light oil); and the presence of reservoir rock, as demonstrated by logs, sidewall cores, and water flow rates,” the company said.
Norwood is moving to test the San Bartolo Rodriquez Cano-1 well, where it set casing in February. Logs from that well, showed 232 ft of conventional pay and 300 ft of naturally fractured low permeability sands in eight zones below 6,000 ft. Porosities were 17-21% and permeabilities 3 to 30 md (OGJ, Mar. 26, 2007, p. 38).
Murphy Oil lets Thunder Hawk contracts
Murphy Oil Corp. has let several contracts to Intec Engineering for detailed design of flowlines and export pipelines for the Thunder Hawk project on Mississippi Canyon Block 734 in the Gulf of Mexico.
The work has already begun and will be completed by midyear. It includes the detailed design for twin 8-in. insulated flowlines to be installed in 5,710 ft of water. The lines will transport production fluid from the Thunder Hawk subsea development to the host facility, a floating deep-draft semisubmersible to be located 4.5 miles east of the subsea wells on MC Block 736.
Intec also will perform the detailed design work for two 12-in. export pipelines that will transport the separated oil and gas from the host facility to the Mardi Gras transportation system. This detailed design work includes wall thickness selection, cathodic protection design, expansion and lateral buckling analysis, pipeline crossing analysis, and pipeline routing. Also included is the detailed design of the tie-in jumper spools that will connect the export pipelines to existing tie-in sleds on the Okeanos and Proteus pipelines.
Thunder Hawk is scheduled to start oil production in 2009.
Murphy Exploration & Production Co. USA is the lease operator, and its partners include Dominion Exploration & Development Inc., Hydro Gulf of Mexico LLC, and Marubeni Offshore Production (USA) Inc.
Drilling & Production - Quick TakesCNOOC brings WZ 11-1 oil field on stream
CNOOC Ltd. reported start of oil production from Wei Zhou (WZ) 11-1 field in the western South China Sea. The field currently has one well producing more than 2,100 b/d of oil.
WZ11-1 lies southwest of Weizhou Island in 30-40 m of water and next to WZ11-4 and WZ12-1 producing fields.
The one producing platform in WZ11-1 field is tied back to the adjacent WZ12-1 field’s production facilities and subsea pipelines.
At peak, WZ11-1 field is expected to produce 7,200 b/d of oil.
CNOOC said marginal fields such as WZ11-1 can be commercialized by sharing facilities with surrounding oil fields. The company has previously developed WZ6-1 field, another marginal field next to WZ11-1, in the same way.
CNOOC Ltd. holds 100% interests of WZ11-1.
Antrim to drill three wells in UK North Sea
Antrim Energy Inc. has secured the services of AGR Peak Well Management of Aberdeen and a drilling rig to facilitate its plans to drill three wells this year in the UK North Sea.
The well sites are about 2 miles southwest of Antrim’s 2006 East Causeway discovery, which tested at a combined flow rate of 14,500 b/d of light oil with no water.
Transocean Inc.’s Prospect semisubmersible will drill all the wells, with the first well on schedule to spud the week of May 20, Antrim said. This well is projected to an estimated depth of 11,500 ft and is intended to appraise each of the Jurassic Tarbert, Ness, and Etive sandstones.
The three-well program also will assist in the evaluation of tie-in options for production to nearby facilities.
Meanwhile in Fyne and Dandy oil fields on UK Continental Shelf Block 21/28a, Antrim is acquiring about 70 sq km of 3D seismic data, which is expected to establish an optimum location for development drilling, slated to begin in early 2008.
Petrobras secures semi for work off Brazil
Petroleo Brasileiro SA (Petrobras) has awarded a 5-year, $482 million drilling contract to Pride International Inc. for the Pride Mexico semisubmersible to drill off Brazil.
The contract is to start during second quarter 2008.
Before then, the rig will undergo a 270-day shipyard program and then be moved from the Gulf of Mexico. The $120 million shipyard program includes a previously planned regulatory survey and maintenance, upgrade of the rig’s water depth capability to 2,300 ft from 1,100 ft, and modifications to the rig’s mooring system and crew quarters.
The contract value includes a performance bonus option of as much as 15%, but it excludes revenues for mobilization, demobilization, and reimbursables. The contract also includes an operating cost escalation provision.
Currently the Pride Mexico rig is mobilizing to a shipyard in Galveston, Tex., having recently completed a 3-year contract off Mexico.
Shell lets Scotford upgrader expansion contract
Shell Canada Ltd. has let a construction and fabrication contract to KBR Inc. for the Scotford upgrader expansion east of Edmonton, Alta. The value of the contract, which will be completed in March 2010, was not disclosed.
KBR will fabricate 160 modules to boost by 100,000 b/d the capacity of the Athabasca Oil Sands Project (AOSP) Expansion 1. Shell plans to increase production from AOSP to 550,000 b/d.
The expansion plan includes adding a third bitumen upgrading train which, along with debottlenecking of the existing facilities, will increase upgrading capacity to 300,000 b/d.
AOSP is a joint venture of Shell Canada 60%, Chevron Canada Ltd. 20%, and Western Oil Sands LP 20%. The group plans to invest $10-12.8 billion in the project.
Processing - Quick TakesEssar Global plans $3.4 billion Egypt refinery
India’s Essar Global plans to invest 138 billion rupees ($3.4 billion) to build a proposed 300,000 b/d refinery in northern Egypt. The project likely will be approved, but it is unknown whether Egypt would permit Essar Global to proceed alone or insist in retaining some portion of equity in a project. If approved, the refinery could be on stream by 2010.
Egyptian oil output has declined to 800,000 b/d from peak levels of nearly 1 million b/d in the mid-1990s, and the country is actively encouraging international firms to invest in the oil and gas sector in the country to reverse the declining hydrocarbon output trend.
Egyptian Oil Minister Sameh Fahmy said the country plans to develop recent discoveries in the Gulf of Suez and the Western Sahara. And last month, because of its strategic importance, Egypt postponed a plan to privatize its 100,000 b/d Middle East Oil Refinery (Midor) in Alexandria.
Essar Global’s proposed refinery is part of its plan to have a larger presence in western Asia, where oil-fueled growth and a construction boom have boosted domestic consumption, squeezing supplies to Europe and Asia.
The diversified group also is conducting talks with Iran to develop the country’s largest oil field, Azadegan, to fuel a planned refinery and steel plant.
India’s state-owned refiner Indian Oil Corp. also has proposed participation in a crude pipeline project from the Mediterranean to the Red Sea coast to allow oil flow to Asia, bypassing the Suez Canal.
Transportation - Quick TakesOil flow resumes through Nigeria’s Bomu manifold
Royal Dutch Shell PLC has resumed pumping crude through the Bomu pipeline manifold in the eastern Niger Delta in southern Nigeria. About 170,000 b/d of production was shut in last week because of community protests.
During the shut-in, Bomu was unable to feed the Bonny export terminal in southern Nigeria.
“Force majeure, however, for May and June contracts still remains in place for Bonny,” a Shell spokesman told OGJ. Shell was forced in mid-May to declare force majeure on its contracts after attacks on its facilities.
Nigeria’s oil exports have fallen by about 25% over the past year because of continuous attacks on oil infrastructure by militants, which have promised to increase pressure until May 29 when President-elect Umar Musa Yar’Adua takes over from incumbent Olusegun Obasanjo.
The militants see this transition as an opportunity to demand a more equitable distribution of Nigeria’s oil wealth.
Statoil installs Tampen link for fall gas deliveries
Statoil AS has installed the 23-km Tampen gas pipeline link between Statfjord field and the UK section of the North Sea preparatory to the delivery of gas from its Statfjord field to the UK beginning Oct. 1. Statoil will hand over its operatorship of the Tampen link to Gassco AS when production begins.
The 32-in. Tampen link delivers Statfjord field gas to the Flags pipeline that extends from Brent field in the UK North Sea to St. Fergus, Scotland. Statoil installed the pipeline using Saipem’s Castoro Sei laybarge.
The Statfjord partners will convert three Statfjord field platforms from handling oil with associated gas, to handling gas with associated oil. The work enables Statfjord to continue Statfjord production to 2020, with partners investing just over $2.7 billion.
Statfjord “late-life” additional resources are estimated at 32 billion cu m of gas, 25 million bbl of oil, and 60 million bbl of condensate. The expected recovery ratio is up to 70% for oil and 75% for gas.
National Grid to expand Isle of Grain LNG terminal
Capacity at the UK’s Isle of Grain regasification terminal will increase for the third time by another 50% to 14.8 million tonnes/year by 2010-11. The terminal, which has a current capacity of 3.3 million tpy, is undergoing a second expansion to 9.8 million tpy to start in 2008.
National Grid PLC subsidiary National Grid Grain LNG Ltd., which operates the terminal, will invest $612.3 million to boost capacity, positioning the terminal to import one fifth of forecast UK gas demand by 2010. This expansion is in response to the UK’s growing need for gas imports and its dwindling supplies from the mature UK North Sea.
Under a $500 million lump-sum turnkey contract, Chicago Bridge & Iron Co. NV will construct a jetty to support LNG vessels with capacity as large as 265,000 cu m and with an unloading rate of 12,000 cu m/hr. CB&I also will build another 190,000 cu m full containment LNG storage tank and gas processing infrastructure.
National Grid has secured long-term contracts with E.On, Iberdrola, and Centrica, each of which have taken all the additional capacity to justify the third expansion.
BP PLC and Algeria’s Sonatrach have a 20-year contract for 3.3 million tpy of LNG at Isle of Grain. Long-term contracts for the second phase of expansion have been agreed with Gaz de France, Centrica, and Sonatrach.
Kinder Morgan signs pipeline release agreement
Kinder Morgan Energy Partners LP has entered into a consent agreement with several government agencies to resolve civil claims relating to the unintentional release of petroleum products during three pipeline incidents in northern California.
These releases occurred in the Suisun Marsh area in Solano County in April 2004, in Oakland in February 2005, and near Donner Pass in April 2005.
KMEP has since undertaken a number of operations and pipeline integrity initiatives to prevent similar incidents from occurring in the future. For instance, the Concord-Sacramento pipeline that was involved in the Suisun Marsh incident was replaced in late 2004 as part of a major expansion project and was routed outside the marsh area, KMEP said.
Terms of the agreement state that KMEP will pay $3.7 million in civil penalties, $1.3 million in natural resource damages and assessment costs, and $170,000 in agency response and future remediation monitoring costs. In addition, KMEP agreed to perform enhancements in its Pacific operations relative to its spill prevention, response, and reporting practices, the majority of which have already been implemented.
KMEP has substantially completed remediation and restoration activities at the three sites; remaining restoration work at the Suisun Marsh and Donner Pass areas is expected to be completed later this year.
