Oil worker kidnappings continue in Nigeria
Nigeria’s ability to defend international oil operations came under scrutiny again May 25 when local militants kidnapped six foreign oil workers-including three Americans-from a pipelaying ship owned by Texas-based Transcoastal Corp. under contract to Nigeria’s Conoil.
Shots were fired during the abduction, which occurred off the coast of the Niger Delta near the Brass oil export terminal. According to industry sources, the Americans, two British citizens, and one South African were abducted by the militants who used two speed boats in the attack.
The attack on the Transcoastal ship follows earlier warnings about the increase of piracy off the coast of Nigeria. In April the International Maritime Bureau said that oil tankers and installations off Nigeria continue to be a main target of pirate attacks, despite a downward trend elsewhere around the globe (OGJ Online, Apr. 30, 2007).
Coming just a day after gunmen kidnapped a Polish engineer near Warri, the Brass raid brings the number of hostages now held by militants to 22. The upsurge in violence over the past 18 months continues to depress production by nearly 1 million b/d, or 25%.
On May 15 Royal Dutch Shell PLC said it had been forced to cut 170,000 b/d of oil production after villagers demanding money occupied a major pipeline, bringing the total shut down through unrest, sabotage, and militant action to 980,000 b/d, nearly a third of Nigeria’s 3 million b/d capacity.
The Shell shutdown is apparently unrelated to raids by the Movement for the Emancipation of the Niger Delta that took place earlier in May. At the time, Chevron shut down 15,000 b/d of oil production after one Nigerian sailor was killed and six foreign oil workers were kidnapped by members of MEND, who May 1 attacked the company’s Oloibiri floating production, storage, and offloading vessel off southern Bayelsa state (OGJ Online, May 2, 2007).
Industry unclear about Colorado landowner law
Colorado Gov. Bill Ritter on May 29 signed legislation that promoters said clarifies the structure for negotiated compromises between oil and gas companies and surface landowners.
The Oil & Gas Accountability Project (OGAP) of Durango helped write the law, which it called “precedent-setting legislation that is one of the most powerful state laws in the nation in terms of protecting landowners’ rights and the environment.”
An OGAP news release said the law means landowners can require directional drilling of multiple wells from one pad. However, the law itself makes no mention of directional drilling.
The law calls for a “reasonable accommodation” regarding “oil and gas operations in a manner that accommodates the surface owners by minimizing intrusion upon and damage to the surface of the land.”
Greg Schnacke, executive vice-president of the Colorado Oil & Gas Association (COGA) in Denver, said oil and gas companies are unclear about exactly what the new law will mean to industry.
COGA statistics show that more than 80% of drilling permits filed in the state already are accompanied by a negotiated surface agreement, Schnacke noted.
“Nobody has ever called a surface owner protection bond,” Schnacke said, adding that Colorado oil and gas companies already maintain good relationships with surface owners.
“The concept is an attempt to put into statute what generally already is occurring today. You always are liable for negligence,” Schnacke said, adding that COGA expects someone probably will file a lawsuit stemming from the new law.
DOE awards $22.7 million for basic solar research
The US Department of Energy recently announced $22.7 million in funding over 3 years for 27 solar energy research projects that will be conducted by universities and national laboratories in 18 states.
DOE Undersecretary for Science Raymond Orbach said the projects are part of an “aggressive basic research in the physical sciences-what I call transformational science” intended to push the cost-effectiveness of renewable energy.
These projects, along with the commercialization projects funded through the Solar America Initiative, are part of President George W. Bush’s Advanced Energy Initiative. DOE plans to fund additional projects in fiscal year 2008.
The projects will address two priority technical areas: conversion of solar energy to electricity and conversion of solar energy to chemical fuels.
About $9.9 million and 14 projects involve research into converting sunlight to electricity. The goal is to greatly reduce costs while improving the conversion efficiency.
About $12.8 million for 13 projects involve research into direct conversion of sunlight into chemical fuels. This project overcomes a problem of the day vs. night variation of the solar resource and provides solar-derived energy in forms useful for transportation, residential, and industrial applications.
Wind power costs, investment up next 5 years
Global offshore wind power projects are projected to receive $11.8 billion of capital expenditure to finance new capacity to be installed in the next 5 years, a Douglas-Westwood Ltd. study said.
With just over 900 Mw of capacity installed currently, Douglas-Westwood expects an additional 3.6 Gw of new capacity to be added during that period.
Capital expenditures on offshore wind power are expected to reach $3.8 billion/year by 2011, Douglas-Westwood director Andrew Reid told delegates at an Aberdeen conference May 24.
Northwestern Europe is the key spending area over the period, with the emergence of wind power markets off the US and China following. The UK is expected to become the largest offshore wind power market, with 1,645 Mw of new capacity forecast for the 5-year period. In Germany, 536 Mw of new capacity is expected to be installed during that time.
Costs for offshore wind development and construction are rising compared with the previous 5 years, and anticipated supply chain constraints are expected to continue pushing costs upward, Reid said.
Industry Scoreboard
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Due to the holiday in the US, data for this week’s industry Scoreboard are not available.
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Exploration & Development - Quick TakesBP signs $900 million Libyan exploration deal
BP PLC and a Libyan partner will drill 17 exploratory wells under a $900 million contract with Libya’s National Oil Co. (NOC) covering 54,000 sq km in the onshore Ghadames basin and frontier offshore part of the Sirte basin. BP said its program will primarily target gas.
BP and the partner, Libya Investment Co., will shoot 5,500 km of 2D seismic survey and 30,000 sq km of 3D seismic survey.
“Successful exploration could lead to the drilling of around 20 appraisal wells,” BP said.
BP Chief Executive Tony Hayward described the deal as the company’s “single biggest exploration commitment.” The company hasn’t worked in Libya since the country nationalized the oil industry more than 30 years ago.
NOC wants to boost Libya’s oil reserves to 20 billion boe under a plan covering 2005-15 through an aggressive offshore and frontier exploration program. NOC expects to increase production to 3.5 million b/d by 2020 by encouraging the drilling of at least 50 wildcats/year and acquiring at least 4,000 sq km/year of 3D seismic data and 10,000 km/year of 2D seismic data.
“These targets will be met through existing NOC and joint venture operations and through investment by international oil companies expected to total some $7 billion,” BP said.
Libyan professionals will receive petroleum education and training under a $50 million program organized by BP and NOC during the exploration and appraisal period of the new contract. If oil is found, an additional $50 million will be invested on training once production starts.
Total makes two oil finds on Angola’s Block 32
Total E&P Angola (Block 32) Ltd. and its partners have made two more oil discoveries on deepwater Block 32 off Angola.
The Cominhos-1 well was drilled on the northeastern part of the block in 1,594 m of water and tested 6,258 b/d of 32° gravity oil. Oil came from a selected Lower Oligocene reservoir. The exploration well is 18 km north of the company’s Caril-1 discovery (OGJ Online, Feb. 8, 2007).
The second well, Louro-1, was drilled in the southern part of Block 32 in 1,806 m of water and found both Miocene and Oligocene oil-bearing reservoirs. The find lies 4.5 km west of the Salsa-1 discovery.
Angola’s Sonangol is concessionaire of Block 32. Total holds a 30% interest in the block and serves as operator. Other Block 32 partners are Marathon Oil Co. 30%, Sonangol EP 20%, Esso E&P Angola (Overseas) Ltd. 15%, and Petrogal 5%.
BP makes another strike on Angola’s Block 31
BP Exploration (Angola) Ltd. and Angola’s Sonangol EP have made their fourteenth oil discovery on ultradeepwater Block 31 off Angola.
The Cordelia well tested 2,063 b/d of oil through a 20/64-in. choke. The well was drilled in 2,308 m of water using the Jack Ryan drillship and reached 4,040 m TVD.
The well is 3½ km southeast of the recent Miranda discovery, which flowed on test at 3,822 b/d through a 48/64-in. choke (OGJ Online, May 7, 2007).
BP is the block operator and holds 26.67% interest. Other stakeholders are Esso E&P Angola (Block 31) Ltd. 25%, Sonangol 20%, Statoil Angola AS 13.33%, Marathon International Petroleum Angola Block 31 Ltd. 10%, and Total Group subsidiary Tepa (Block 31) Ltd. 5%.
MMS proposes Central Gulf Lease Sale 205
The US Minerals Management Service proposed an Oct. 3 lease sale in the newly configured Central Gulf of Mexico Planning Area.
The sale, to be held in New Orleans, would be the first central gulf sale in the MMS 2007-12 Outer Continental Shelf oil and gas leasing program.
The sale would involve 5,000 blocks covering more than 28.5 million acres. The acreage is 3-210 miles offshore in 4-3,400 m of water.
Sale 205 excludes the areas under moratorium and respects the buffers created for the Florida coast.
MMS estimates that as much as 1.3 billion bbl of oil and 5.2 tcf of natural gas could be discovered and produced from the lease sale area.
Statoil discovers light oil in Norwegian North Sea
Statoil ASA has found light oil in wildcat well 15/6-9 S, which was drilled on production license 303 in the Norwegian North Sea.
The well is 7 km north of Sleipner field and 3 km east of the 15/5-1 Dagny discovery in the central part of the North Sea. Seadrill’s West Epsilon jack up drilled the well to 3,850 m TD in 114 m of water. West Epsilon will now drill a sidetrack to delineate the discovery.
Statoil said the find will contribute to its goal of producing 1 million boe/d from the Norwegian continental shelf until 2015.
Statoil has not carried out a production test and has focused on gathering extensive data collection and sampling. It will consider producing the discovery with a tie-in to Sleipner, Volve, or Gudrun.
Ascent Resources suspends Hungarian well
Ascent Resources PLC has suspended its PEN-102 exploration well in northeast Hungary as it investigates drilling a sidetrack well to target the Miocene gas reservoir.
Ascent drilled the PEN-102 well to 1,500 m TD within its Nyirseg exploration permits.
“Drilling and logging results indicated that the well had intercepted a fault system and consequently the target Miocene tuffaceous formations were encountered 38 m deeper than prognosis,” Ascent said.
The company found residual gas in the deeper section of the reservoir and shot a seismic survey to identify the orientation of the fault system. After interpreting the survey, Ascent plans to drill a sidetrack well.
PEN-102 is the third well of a four-well program to be drilled under a farm-in agreement Ascent has with Canada’s DualEx and Sweden’s Petro Pequnia. The partners will acquire working interests in the Nyirseg permits of 37.5% and 2%, respectively, by paying 75% and 4% of the costs of these wells. Through its subsidiary PetroHungaria, Ascent will contribute the outstanding 21% for the drilling costs and keep a 60.5% working interest in the permits.
“The drilling rig will move to the last of the four farm-in wells, VAM-1, a gas exploration well designed to test exploration prospects in both the Miocene and Pannonian formations in the Vamospercs area, some 14 km farther southwest of PEN-102,” Ascent said.
Ascent said, “A successful sidetrack of the PEN-102 could yet add reserves to the planned Peneszlek development in Hungary,” which includes the PEN-104 discovery and other proved reserves in PEN-9 and PEN-12.
Drilling & Production - Quick TakesGas sales start from Turkish Black Sea
The first natural gas sold from the Turkish Black Sea has begun flowing from the South Akcakoca subbasin to AKSA, a Turkish gas distributor, reports Toreador Resources Corp. (OGJ, Apr. 16, 2007, Newsletter).
Initial production for the AKSA sale is 29 MMcfd of gas from three wells on the Akkaya platform. Production is expected to increase to 50 MMcfd by this year’s third quarter, when three platforms are on stream. The contract is for 3 years, based on volume.
Toreador has 36.75% interest in the project, state-owned TPAO has 51%, and Stratic Energy Corp. has 12.25%.
Pearl starts up Jasmine C platform off Thailand
Pearl Energy Ltd., a unit of Aabar Petroleum Investments Co. PJSC of Abu Dhabi, began production of 1,450 b/d of oil from a single development well at the Jasmine C platform in the Gulf of Thailand.
The platform is connected via a 3.8-km pipeline to the Jasmine venture MV7 floating production, storage, and offloading vessel. Its 1,150-tonne processing topsides were installed Mar. 21, and drilling of the first group of development wells started Apr. 25. Two additional development wells, C2 and C3, will be completed and brought on production in the next few days of the initial phase of this drilling program, which will comprise a total of 12 development wells and 3 water disposal wells.
In addition, engineering design is under way on two additional platforms, which are to be installed in and around the Jasmine production area following a successful exploration program conducted in first half 2006.
At the end of this year’s first quarter, two existing platforms, Jasmine A and B, were producing at a gross average rate of 24,000 b/d of oil. Production started at the Jasmine A platform June 7, 2005, and at Jasmine B on Jan. 22 of this year (OGJ Online, Jan. 26, 2007).
Venoco runs six rigs in Sacramento basin
Venoco Inc., Denver, spud 34 wells in the quarter ended Mar. 31 in the Sacramento basin, where it plans to drill more than 120 wells in 2007.
Venoco doubled the number of rigs it is running in the basin to six from three in the quarter.
The company’s program is focused mainly on infill drilling and recompletions, and it set casing on 30 of the 34 first quarter wells. More completion rigs are expected to be available the rest of the year.
The company has expanded its land position 164,000 net acres in the basin, where it operates about 250 gas wells.
Processing - Quick TakesKoch to add hydrocracking unit at Navajo refinery
Koch Partners LP will design, supply, and install a gas oil mild hydrocracker at Navajo Refining Co. LP’s 60,000 b/cd refinery in Artesia, NM.
The unit, which will use Process Dynamics Inc.’s IsoTherming process, will have an initial capacity of 15,000 b/sd and be expandable to 30,000 b/sd. It is expected to be operational in fourth quarter 2008.
The project will increase the refinery’s capacity to process outside feedstocks and increase yields of higher-valued products. It also will be a key component in the company’s overall strategy for producing low-sulfur transportation fuels.
Combine lets coker contract for Jubail refinery
Aramco Services Co. and Total France have let a contract to Foster Wheeler USA Corp. for a process design package for a new delayed coker, which will be part of the 400,000 b/d export refinery to be built in Jubail Industrial City, Saudi Arabia.
The coker design package will be developed by Foster Wheeler’s Houston office. Terms of the award were not disclosed.
The delayed coker, expected to be one of the largest in the world, will be based on Foster Wheeler’s selective yield delayed coking process, which upgrades heavy, high-sulfur residue feed into high value transport fuels with minimum fuel coke yields.
The planned Jubail refinery will be a grassroots full-conversion plant designed to process Arabian heavy crude. It is slated for startup in 2011 (OGJ Online, Sept. 4, 2006).
Nigerian group wins Port Harcourt refinery bid
Blue Star, a consortium of Nigerian companies Zenon Oil, Dangote Oil, and Gas & Transnational Corp., paid $561 million to acquire 51% of a government-owned stake in Nigeria’s Port Harcourt refinery.
The companies, which are headed by close associates of the country’s outgoing President Olusegun Obasanjo, won the bid over UK-based international steel baron Lakshmi Niwas Mittal, who bid $550 million.
Blue Star emerged the winner in open bidding conducted last weekend in Abuja by the Nigerian privatization agency Bureau of Public Enterprises.
Sources at Indian government-owned refiner Hindustan Petroleum Corp. Ltd. (HPCL) said Mittal originally had planned to bid for the 210,000 b/d refinery with HPCL, but instead bid it alone when HPCL decided against investing in the facility.
The Indian-born Mittal earlier this year had accepted a 49% stake in HPCL’s proposed $3.3 billion Bhatinda refinery to be built in Punjab, northwestern India (OGJ Online, Feb. 22, 2007).
India’s largest refiner Indian Oil Corp., also invited to bid on the Port Harcourt refinery, decided against making an offer. Two other bidders, local fuel marketer Oando and a combine of Sahara and Refinee PetroPlus, were disqualified.
Transportation - Quick TakesContract let for west-east Malaysian oil line
Ranhill Engineers & Constructors Sdn. Bhd. (REC), a wholly owned unit of Ranhill Bhd. of Kuala Lumpur, has secured a contract for the design, engineering, procurement, construction, and testing of a 320-km west-east oil pipeline across Malaysia.
REC entered into a master alliance agreement with Trans-Peninsula Petroleum Sdn. Bhd. (Transpen), also of Kuala Lumpur, and Tripatra Engineers & Consultants of Jakarta for the Malaysian Trans-Peninsula Pipeline.
Ranhill said Transpen was granted exclusive rights by the Malaysian government to develop the project, which will receive oil from carriers off Western Peninsular Malaysia and store, transport, and deliver oil to carriers off Eastern Peninsular Malaysia.
Work on the pipeline is slated to start in 2008 and be completed in 2014, according to Transpen Chairman Rahim Kamil Sulaiman, who told a news conference that oil would be loaded onto tankers bound for Japan, China, and South Korea, bypassing Singapore and the Malacca Strait, which currently supports transportation of about 50% of the world’s oil.
Sulaiman’s statement confirmed reports in early May that Malaysia had agreed to build the pipeline from northwestern Kedah state, across Perak state, to northeastern Kelantan state which fronts the South China Sea. At the time Prime Minister Datuk Seri Abdullah Ahmad Badawi said the project would enable Middle Eastern shippers to reach East Asian markets without risking cargoes along the busy, pirate-prone Malacca Strait (OGJ Online, May 7, 2007).
The Ranhill statement did not mention refineries. However, Mahdzir Khalid, the chief minister for Kedah state, through which the line will extend, told reporters that two refineries with a combined refining capacity of 450,000 b/d will be built in Kedah by 2010. He said Malaysia’s SKS Ventures and Merapoh Resources Corp. would reveal arrangements for the refineries in August.
FERC issues final EIS for Gulf South gas line
The US Federal Energy Regulatory Commission concluded that the proposed East Texas-to-Mississippi natural gas pipeline project is environmentally acceptable, FERC said in a final environmental impact statement.
The project, proposed by Gulf South Pipeline Co., would transport 1.7 bcfd of gas from East Texas to the US Gulf Coast, Midwest, Northeast, and Southeast.
The final EIS follows a preliminary statement issued Feb. 9. FERC said commissioners will consider the final EIS and other staff recommendations before issuing a decision on the project.
Equatorial Guinea LNG train delivers early
Marathon Oil Corp. and its partners in Equatorial Guinea LNG Co. Ltd. have shipped their first cargo 6 months ahead of the original schedule.
The cargo was shipped from Train 1 on Bioko Island after the $1.5 billion project was completed within budget.
BG Gas Marketing Ltd. owns the cargo under a 17-year agreement calling for the plant’s full capacity of 3.4 million tonnes/year.
The first cargo was destined for Lake Charles, La., although BG has the option to divert the cargo elsewhere.
Interest holders in the plant are Marathon 60%, state-owned Sonagas 25%, Marubeni Gas Development Co. Ltd. 6.5%, and Mitsui & Co. Ltd. 8.5%.
Northeast Gateway LNG port gets Marad nod
Excelerate Energy LLC subsidiary Northeast Gateway Energy Bridge LLC has received its deepwater port license from the US Maritime Administration (Marad) for its Northeast Gateway deepwater LNG importation facility in Massachusetts Bay.
Construction will begin soon, and gas deliveries from the Northeast Gateway facility to Massachusetts and the rest of New England are anticipated by yearend.
The LNG facility will be designed to handle peak deliveries of as much as 800 MMcfd of gas. During normal operations the facility will be able to deliver about 500 MMcfd of gas, or 20% of New England’s current annual gas consumption.
The port’s infrastructure will feature two submerged turret loading buoys supplied by Advanced Production & Loading Inc.
Excelerate Energy will build and own the Northeast Gateway deepwater port 18 miles east of Boston. It will be operated by Skaugen Offshore and will accommodate Excelerate’s proprietary Energy Bridge Regasification Vessel (EBRV) fleet operated by Exmar NV.
Spectra Energy, formerly Duke Energy, will build a 16-mile subsea pipeline from its existing HubLine to the deepwater port site to transfer gas from the vessels into New England’s gas pipeline network.
Northeast Gateway will be the first new LNG importation facility to serve the east coast in more than 25 years. And it is the world’s second deepwater LNG importation facility.
The first, Gulf Gateway, 116 miles south of Cameron Parish, La., in the Gulf of Mexico, is owned and operated also by Excelerate Energy, which recently increased its LNG vessel fleet through equity investments in three new EBRVs to be constructed by 2010. This brings the company’s LNG vessel involvement to eight regasification vessels and one traditional LNG carrier.
California rejects Cabrillo Port LNG project
California Gov. Arnold Schwarzenegger has rejected BHP Billiton Ltd.’s proposed $800 million Cabrillo Port LNG project that was to be built 14 miles off Ventura County.
Australia’s BHP had no immediate comment regarding what additional steps it might take regarding Cabrillo Port.
In April both the California Coastal Commission and the California State Lands Commission voted against the proposal. The US West Coast has no LNG ports.
Sempra Energy unit Sempra LNG is proceeding with plans for its Energía Costa Azul LNG receiving terminal in Baja California, Mexico. Natural gas could be transported from it into California. That plant is slated for operation in 2008.