Norway plans $17.6 billion budget for NCS
Norway expects operators will spend $17.6 billion on the Norwegian Continental Shelf in 2007, according to the revised 2007 national budget published by Norway’s petroleum ministry. The sum is $2.2 billion higher than the last estimate in its national budget for 2007.
The ministry said investment is expected to rise over coming years and attributed the difference to escalating well costs. Production and exploration wells as well as average well costs have all increased since the 2007 national budget was published, it added.
Average Norwegian oil prices are expected to be $61/bbl for 2007 and $58/bbl for 2008 under its revised national budget. The Organization of Petroleum Exporting Countries has reduced its production twice in the last 6 months, and the cartel appears to be aiming for a price of $55-60/bbl, the ministry said.
According to the revised budget, Norwegian oil production, including natural gas liquids, is expected to be 2.6 million b/d in 2007, which would be “slightly lower than the production in 2006,” the ministry said. However, production should rise in 2008, although the ministry did not indicate by how much, and this would gradually trail off in the following years.
The ministry also has reduced slightly its figures for gas sales. Norway should sell 93 billion cu m in 2007 and 109 billion cu m in 2008. Gas sales should increase once production from delayed projects comes on stream after 2008.
Odd Roger Enoksen, Norway’s minister of petroleum and energy, said Norway is expected to sell more than 90 billion cu m of gas to Europe in 2007.
The ministry estimates that the state’s net cash flow from the petroleum sector will be $49.9 billion in 2007, down $10 billion compared with the original estimate in the 2007 national budget. The reduction is the result of reduced oil price estimates, lower production, increased investments, and a rise in operating costs.
The revised budget, presented to Norway’s parliament The Storting on May 15, outlines the government’s plan to implement economic policy and projections for the revised Norwegian economy.
Group to implement LNG training standards
The US Maritime Administration (USMA), seafaring unions, and seafaring academies agreed June 5 to implement training standards for LNG tanker crews.
“The mariners who meet these standards will be the best in the world. They’re the ones companies will want to hire,” USMA administrator Sean T. Connaughton said.
The US once led LNG maritime training worldwide, but that leadership has lapsed, Connaughton said. US standardized training from the Merchant Marine Academy and other academies will help regain that leadership, he said.
The memorandum of understanding will be submitted to the US Coast Guard’s advisory committee on merchant marine issues. Maritime academies and labor-based training facilities plan to adopt the standards.
USMA will encourage more US mariners to join LNG tanker crews.
The new US standards also will be submitted to the International Maritime Organization in London for proposed implementation worldwide, Connaughton said.
“We’ve come up with a curriculum above and beyond what’s being offered internationally,” Connaughton said.
Some maritime academies, including the Texas A&M Maritime Academy in Galveston, Tex., already were working to improving LNG mariner training programs when the standards group was assembled.
Chester Urban, a deck department adjunct instructor in LNG programs at the RTM STAR (Simulation, Training, Assessment & Research) Center in Dania Beach, Fla., said certified US mariners will be able to work on modifications to qualify themselves for LNG tanker duty. “There will be different levels. It will be up to the individual,” Urban explained.
Connaughton said two carriers active in LNG maritime transportation, Teekay Shipping Corp. and Excelerate Energy LLC, agreed to ultimately staff at least 25% of their LNG crews with US mariners. Others will be announced shortly, he indicated.
California Geysers geothermal expansion set
Calpine Corp., San Jose, Calif., plans a 2-year multirig drilling program to increase electricity production by as much as 80 Mw at its Geysers geothermal operation in northern California.
The $200 million program is designed to expand dry steam production, identify new sources of geothermal power, and rebuild four older geothermal turbines to improve energy efficiency. Some of the new wells will be as deep as 11,000 ft.
The company said it will consider further development at Geysers Geothermal field if it is able to enter into long-term power sales contracts.
The field has 350 steam wells and 58 injection wells on 40 sq miles with 80 miles of steam lines. The operation, first drilled in 1954, is in the Mayacamas Mountains near Middletown, 70 miles north of San Francisco.
Calpine, which also operates gas-fired electric generating facilities, supports a state goal of obtaining 20% of its power from renewable sources by 2010.
Geysers, the world’s largest geothermal operation, generates 725 Mw of electricity and represents 25% of California’s renewable energy production and 40% of US geothermal electrical generation. Calpine owns 19 of the 21 geothermal units at the field. The generators connect with five major transmission lines that can deliver power statewide.
The project also recycles wastewater from nearby towns through the geothermal reservoirs for conversion into steam for electricity production.
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Exploration & Development - Quick TakesBarnett play moves far south of Fort Worth
Operators are finding apparently commercial volumes of gas in the Mississippian Barnett shale as far as 100 miles south of Fort Worth.
Considerable drilling is taking place near Waco in Hill County 55 miles south of Fort Worth, and leasing and drilling are under way in Hamilton, Comanche, and even Lampasas counties 100 miles south of Fort Worth, according to a presentation by Westside Energy Corp., Dallas.
Operators are completing Barnett gas wells in Hill County, which had no commercial production for years. The county now has at least several dozen wells permitted, most of which are to be horizontal penetrations.
Operators working in Hill County include EOG Resources Inc., Devon Energy Corp., DTE Gas Resources, JW Operating Co., EnCana Corp., Quicksilver Resources Inc., a joint venture of Westside and Forest Oil Corp., and several others.
Westside and Forest this month are drilling the horizontal section of a third Hill County well, Primula 2H. The second well, Ellison Estate 1H, tested at an initial 1.9 MMcfd of gas on a 40/64-in. choke while returning completion fluid.
The companies’ first well, Primula 1H, gauged 2.1 MMcfd from a 1,600-ft lateral in February.
Since mid-2006, various operators have reported initial potentials of 1.5-3.2 MMcfd from Hill County Barnett horizontal completions. Westside’s economic assumptions are completed well costs of $3 million and estimated ultimate recoveries of 2 bcf/well on 60-acre spacing at $5/Mcf.
Meanwhile, Westside has accumulated 52,000 net acres west of Waco in Comanche, Mills, Hamilton, Coryell, and Lampasas counties. Marathon Oil Corp. has completed one vertical and six horizontal wells in Hamilton County and has built a pipeline, Westside said. The Barnett shale is 130-220 ft thick at 4,500 ft in these areas.
Norway okays Statoil’s Gjøa field development
Norway has approved Statoil ASA’s development and operation plan for Gjøa oil and gas field in the North Sea, bringing it a step closer to fruition. Statoil and partners must secure a final approval from the Norwegian parliament this summer before they can develop Gjøa using subsea templates tied back to a semisubmersible rig.
Kjetel Digre, leader of the Gjøa project at Statoil, said the planned development “allows flexibility with regard to the possibility of new recoverable finds in the area.... The development of the Hydro-operated Vega field can now be implemented in a profitable way.” The small Hydro-operated condensate and gas fields Vega and Vega South are to be tied back to the Gjøa platform, which otherwise, developed by themselves would not be economic.
The chosen development concept ties in the three Norsk Hydro AS-operated oil and gas deposits-Camilla, Belinda, and Fram B-to Gjøa. Production is expected to start in 2010 and the investment will cost 27 billion kroner in 2006 money.
The Gjøa field, proven in 1989, lies 70 km north of Troll oil field on Blocks 35/9 and 36/7. The reserves are estimated at 60 million bbl of oil and condensate and 35 billion cu m of gas. The gas will be sent through the UK pipeline Flags to St. Fergus, Scotland. The oil will be piped to the Troll II line and further to the Statoil-operated 200,000 b/cd Mongstad refinery north of Bergen. Digre said: “Gjøa oil is of good quality and will be important for future supply of raw materials to the Mongstad refinery.”
He added that the company has demonstrated that it can be profitable to use onshore power to meet Gjøa’s power needs on the platform. “With power from land, we will be able to remove up to five gas turbines which otherwise would generate platform electricity. Hence we avoid large carbon and nitrogen oxide emissions.”
The electricity generation license application is now being considered by the Norwegian Water Resources and Energy Directorate (NVE). “Plans call for coordinated electricity generation from the Mongstad energy project (EVM). A combined heat and power (CHP) station at Mongstad, north of Bergen, will come into operation in 2010,” Statoil said. Statoil is development operator with Gaz de France as production operator.
Interests in the Gjøa license are Gaz de France 30%, Petoro SA 30%, Statoil 20%, Royal Dutch Shell PLC 12%, and RWE Dea AG 8%.
Talisman lets engineering contract for Yme field
Talisman Energy Inc., operator of Yme field, let a €110 million, turnkey contract to Technip on behalf of its consortium members to undertake engineering work for the redevelopment of the Norwegian North Sea field.
Technip will design, procure, fabricate, and install 36 km of production, water injection, and service-rigid flow lines. It also will install umbilicals, spools, subsea protection structures, and a manifold. The contract also covers tie-in, trenching, rock dumping, and precommissioning of the field.
Technip’s Apache pipelay vessel will install the flow lines along with other vessels in the company. Offshore installation is scheduled for 2008 and 2009.
Norway approved the plan for development of Yme field earlier this year (OGJ Online, May 14, 2007). The partners will drill 12 production and injection wells, install a production platform to process oil and gas, and establish water injection facilities. First production is planned for 2009 with expected maximum gross production of 40,000 b/d of oil.
Talisman holds a 70% stake in the PL 316 license that includes the Yme field. Revus Energy ASA has 20% and Pertra ASA has 10%.
Giddings gas flows in Montgomery County
Southern Bay Operating LLC, Houston, said it holds enough acreage to support spudding a well every 60-90 days for 2-3 years for Austin chalk gas in the Grimes-Montgomery extension area of Giddings field on the Texas Gulf Coast. Leasing continues.
The 1H WPT Gas Unit in Montgomery County east of Richards, Tex., second development well drilled and completed since a property acquisition in February 2007, made an initial 14.5 MMcfd of dry gas. Higher rates are probable with pipeline adjustments in progress. A third well, 1H Ashorn Unit, is drilling.
The chalk is at 14,000 ft TVD, and the wells have 5,500-6,000-ft laterals. Unit sizes range from 400 to 800 acres and average 600 acres. Southern Bay is operator and partnership manager with 10% interest subject to potential increased reversionary interests.
As the result of an Apr. 17 merger, Southern Bay Oil & Gas LP, Houston, and Chandler Energy LLC, Denver, became subsidiaries of GeoResources Inc., which moved headquarters to Houston from Williston, ND, now a regional office. G3 Operating LLC, Denver, operates GeoResources’ northern region.
GeoResources sold its rotary rig to Redhawk Drilling LLC, Mohall, ND, as of May 24.
Drilling & Production - Quick TakesCross-border Enoch oil field comes on stream
First oil production has begun from Enoch field in the North Sea, reported field operator Talisman North Sea Ltd. The cross-border field is 160 miles northeast of Aberdeen and straddles the UK and Norwegian sectors in UKCS Block 16/13a and NCS Block 15/5 (unitized at 80% and 20%, respectively).
Production, expected to produce 15,000 boe/d at peak, is from a single horizontal development well, which Talisman drilled in 2006. The oil will be processed at the Brae Alpha facility 10 miles northwest of Enoch and exported via the Forties pipeline network.
Enoch field has passed through a number of operators since 1985. Talisman holds 24% interest; Dyas UK Ltd. holds 14%, Bow Valley Petroleum (UK) Ltd. 12%, Roc Oil (GB) Ltd. 12%, Dana Petroleum (E&P) Ltd. 8.8%, and Statoil ASA 11.78%.
McDermott to build Manifa oil platforms
Saudi Aramco has let a lump-sum turnkey contract to J. Ray McDermott Inc. to design, procure, fabricate, transport, install, and connect offshore platforms for Manifa oil field in the Persian Gulf. The field is expected to produce 900,000 b/d of oil and 90 MMscfd of gas in mid-2011. The value of the contract was not disclosed.
Aramco Vice-Pres. of Project Management Ali A. Al-Ajmi described the deal as a “critical phase of the massive Manifa increment.”
Aramco’s Manifa project includes building 13 offshore platforms and modifying 26 existing offshore observation well platforms. “The new facilities support the structures required for the six oil production deck modules that are designed to accommodate equipment required for the electric submersible pumps and seven new water injection platforms,” the company said.
Manifa also will have four major downstream pipelines and terminal facilities at Ju’aymah and Ras Tanura. Gas processing infrastructure will be built at the Khursaniyah gas plant to handle gas and the 65,000 b/d of condensate that will be produced from onshore and offshore areas of Manifa.
Incorporating its other major oil and gas projects that are underway or are to be built-Hawiyah NGL, Khursaniyah, Khurais, Shaybah, and Manifa-Saudi Arabia expects to add nearly 4 million b/d of capacity in 2011, adding almost 5% to the world’s oil supply.
Processing - Quick TakesRosneft to increase refining capacities, M&As
Russia’s OAO Rosneft plans to increase its refining capacities eightfold during 2006-15 to bolster its downstream development, said Chairman and Chief Executive Sergei Bogdanchikov at the Energy Exchange’s CIS Oil & Gas Summit in Paris May 30-June 1.
Bogdanchikov said Rosneft would increase its refining capacity in both Russia and abroad through either acquisitions or partnerships, with preference given to acquisitions abroad, particularly in the Far East.
Rosneft, which is 75% state-owned, is emerging as “a super-NOC” from its current national oil company status, Bogdanchikov said.
It already has access to “policy-makers,” mergers and acquisitions, and resources. It also cooperates with the government and is insulated from political risk, he said.
As a supermajor it can now boast “capital discipline, cost efficiency, shareholder value creation, enhanced corporate governance, and transparency,” he said. He detailed the group’s shareholder base as the Russian State, institutional investors from over 40 countries, about 150,000 ordinary Russian citizens, NOCs, and other supermajors.
Pointing out that Rosneft was sharing experience and technology with leading service companies and is engaged in cooperation with leading oil and gas companies through which it is “implementing the best technology,” as well as sharing experience, risks, and investments, Bogdanchikov said the group could finance its projects, including Sakhalin 5, alone but would invite partners for offshore projects “to deal with their complexity.”
He also said summit sponsor Total SA might “soon” share involvement in Rosneft projects.
Fos-sur-Mer vacuum distillation tower on stream
Esso Raffinage SAF has brought on stream the new vacuum distillation tower at its 110,000 b/d Fos-sur-Mer refinery. The equipment will increase distillate production to raise the refinery’s diesel oil production (OGJ Online, Mar. 26, 2007).
The investment, the cost of which was not disclosed, will also improve the energy efficiency of the refinery and cut down its carbon dioxide emissions.
In 2006, the Fos-sur-Mer refinery treated 5.8 million tonnes of crude.
Sonatrach lets contract for Hassi Messaoud plant
Algeria’s state-run Sonatrach has awarded Saipem SPA a 3-year, $700 million contract for the engineering, procurement, and construction of an oil treatment and stabilization plant in Hassi Messaoud, 800 km southeast of Algiers.
Sonatrach said the plant will comprise three trains, each with 100,000 b/d of oil capacity, one maintenance unit, four stocking units of 50,000 cu m each, and a 45-km pipeline transporting oil, water, and gas. Works are expected to last 37 months.
The project, aiming to enhance crude quality and improve safety and production rates, is expected to contribute significantly to the production optimization program of Sonatrach’s Hassi Messaoud field, Sonatrach said, given the extent of the field’s reserves, their quality, and the complexity of the reservoirs.
Transportation - Quick TakesBG Group to supply gas to Chile LNG terminal
BG Group has signed an agreement to supply Chile’s first LNG regasification terminal, a 2.5 million tonne/year facility to be built in Quintero Bay, about 110 km northwest of Santiago. The terminal is slated to begin operating in second quarter 2009.
The terminal could meet as much as 40% of Chile’s gas demand, organizers said. GNL Quintero SA (GNLQ) will own and operate the terminal. BG is a 40% shareholder in GNLQ. Other partners, each with a 20% stake, are Chilean state company ENAP, power company Endesa Chile, and gas distributor Metrogas.
BG executed the 21-year LNG sale and purchase agreement to supply Chile with 1.7 million tonnes/year of LNG through the terminal, to be supplied from the company’s global LNG portfolio.
ENAP said the LNG project will cost $400 million and, once commissioned, will supply gas to the country at competitive prices. It said the Quintero LNG complex will comprise a quay about 1,300 m long, unloading arms, and two storage tanks of around 160,000 cu m capacity each, in addition to the regasification station.
GNLQ also announced it let engineering, procurement, and construction contracts valued at $775 million to CB&I of The Woodlands, Tex.
Short-term deals to get 10% of Fos Cavaou LNG
The Fos Cavaou LNG terminal in southeastern France will have to free 10% of its 8.25 billion cu m/year capacity for short-term contracts when it comes into operation beginning in 2008. The Energy Regulatory Commission on May 16 issued the notice to Société du Terminal Méthanier de Fos Cavaou, the company that will operate the terminal on behalf of its owners Gaz de France 69.7% and Total 30.3%.
The move is in line with the commission’s policy to bolster competition in southern France, which lacks gas supply sources. In addition, access to GDF’s and Total’s gas lines remains “uncertain” over the 2008-11 period, the commission said. It also indicated that the current gas release program will gradually end over 2008.
Decisions for the development of interconnections with Spain are still pending, so it is necessary to allocate the full available capacities of the Fos Cavaou terminal to boost competition for final consumers in southern France.
The 10% spare capacity will be for 3-year, short-term contracts involving 10 Tw-hr/year, equal to 825 million cu m. The tariff, suggests the commission, should be the same as that of existing terminals-about €1.3/Mw-hr over 2008-11.
The commission also indicates that annual operating costs for Fos-Cavaou will average €38 million over the period, while costs engaged until the terminals comes on stream are estimated by the operating company at around €11 million. Full cost of the terminal up to the time it comes on stream should be about €588 million.
Abu Dhabi lets pipeline contract to CNPC units
China National Petroleum Corp. said Abu Dhabi’s International Petroleum Investment Co. has awarded a contract to CNPC’s two pipeline engineering and construction units, China Petroleum Pipeline Bureau and China Petroleum Engineering & Construction Corp., to jointly build a 360-km, 48-in. oil pipeline in the UAE. The pipeline will extend from Abu Dhabi’s Habshan oil field to an export terminal at Fujairah. Starting and completion dates were not given.
The line will carry 1.5 million b/d of crude oil, about 55% of the Emirates’ production. A third of the crude will be transported to a planned $5 billion refinery in Fujairah, while the remainder would be piped to the export terminal, bypassing the Strait of Hormuz.
Under an original 2006 agreement, IPIC and ConocoPhillips were expected to form a 51-49 joint venture to own and operate the 500,000 b/d Fujairah refinery complex (OGJ, July 24, 2006, Newsletter). In April, however, ConocoPhillips said rising costs had cast doubts on its participation in the refinery, so IPIC last month said it would revise its plan for the refinery.