EU member states’ gas use falls 1.5% in 2007
Natural gas consumption in the 27 member states of the European Union fell 1.5% in 2007 compared with 2006 because of widespread mild weather early in the year.
In some countries high energy prices and increased efficiency also played a role, said Eurogas in Brussels. Natural gas consumption amounted to 505 billion cu m compared with 513 billion cu m in 2006.
By yearend 2007, the number of customers connected to the EU 27 gas grid increased 1% to 110.2 million, pulled along by the UK, Spain, and Italy, which made up for a negative trend in the other countries.
Indigenous production decreased 7% to 198 billion cu m with drops in major producing countries such as the UK, down 9.9%; Germany, down 8.3%; Denmark, down 11.4%; and Italy, down 11.5%. Eurogas said indigenous production provides the highest percentage of gas supplied in the EU 27, covering 38% of total net supplies in 2007.
The main external sources of gas are Russia with 23%, Norway with 18%, and Algeria 10%. It was increasing imports from Norway, which mainly compensated for the drop in indigenous production.
ETP settles gas market manipulation charges
Energy Transfer Partners LP of Dallas and three of its subsidiaries agreed to pay a $10 million fine to settle charges that they attempted to manipulate natural gas markets, the US Commodity Futures Trading Commission announced.
The federal commodities regulator charged the Dallas publicly traded energy partnership and subsidiaries Energy Transfer Co. of San Antonio and Houston, Houston Pipeline Co. of Houston, and ETC Marketing Ltd. of San Antonio and Houston in a Jul. 26, 2007, complaint.
The complaint alleged that from September to early December of 2005, ETP and its subsidiaries sold massive quantities of gas on the InterContinental Exchange to place downward pressure on prices at the Houston Ship Channel (HSC) delivery hub, according to CFTC.
It said the defendants then reported these transactions to McGraw Hill Co.’s Inside FERC Gas Market Reports in an effort to manipulate the HSC gas price index that the reporting service calculated and disseminated in its October and December 2005 issues. ETP and its units did this in an effort to benefit their financial swap positions which were tied to Inside FERC HSC gas index prices during that period, CFTC said.
The agency and ETP settled the charges in a consent order that imposed a permanent injunction against all defendants and ordered them to pay the fine while releasing ETP and its affiliates, directors, and employees from claims or assertions in the proceeding. The agreement, which contains no findings of fact or conclusions of law, was entered before US District Judge Ed Kinkeade of the Northern District of Texas on Mar. 17.
Indonesia looks to replace BP Migas chairman
Indonesia, seeking to replace Kardaya Warnika as chairman of the country’s upstream oil and gas regulator BP Migas, will present three potential candidates for parliament to consider next month.
Energy and Mineral Resources Minister Purnomo Yusgiantoro, who Mar. 12 confirmed that Kardaya would be replaced before his tenure ended in 2010, identified the three candidates and said their names would be presented to parliament.
Purnomo said it was simply time to “refresh” the agency, declining to say if the replacement plan had come in response to complaints by lawmakers over Kardaya’s performance in office.
Purnomo named the candidates as R. Priyono, currently director for upstream activities at the ministry; Evita H. Legowo, an assistant to the minister for human resources and technology; and Hadi Purnomo, director of a research and development center for oil and gas technology.
Reports said lawmakers have been demanding a replacement for Kardaya, saying his administration of BP Migas failed to increase the country’s output of crude oil. The country’s oil production has declined over the past 5 years, falling below 1 million b/d in 2007.
Kardaya, who has held his post since 2005, several times failed to appear before legislators, sending his deputy instead. Lawmaker Tjatur Sapto Edy said parliament is ready to test the candidates next month and hope to install the new chairman by the end of April.
Industry Scoreboard
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Exploration & Development - Quick TakesHess reports on Pony well in deepwater gulf
Hess Corp. reported the results of its Pony No. 2 appraisal well on Green Canyon Block 468 in the deepwater Gulf of Mexico.
The appraisal well was drilled about 1.5 miles northwest of the discovery well and reached a measured depth of 32,900 ft. The Pony No. 2 well encountered the objective target sands in a downdip position in the water leg. Following wireline evaluation and pressure data collection of the Pony No. 2 well, the objective is to sidetrack the well to the oil leg updip, Hess said.
“Based on the results to date of the Pony No. 2 well, the estimated range of gross recoverable resource on the Hess-owned portion of the structure has been narrowed to 100-500 million bbl from the previous estimated 100-600 million bbl,” the company said.
Hess owns a 100% working interest in Pony, and is evaluating a range of development options for the discovery.
Aminex has gas success near Songo Songo field
A wildcat well operated by Ndovu Resources Ltd. (Aminex) in a joint venture with Australian companies Key Petroleum Ltd. and Bounty Oil & Gas NL, both of Perth, has found natural gas about 2 km from producing Songo Songo gas field in Tanzania.
Key Petroleum, which has 20% interest, said the well, Kiliwani North-1, was drilled in the southern tip of Songo Songo Island and has intersected a 60-m gross gas column in the same Neocomian sand reservoirs producing at Songo Songo field.
Electric logs and formation pressure data have confirmed the presence of gas.
Kiliwani North-1 was drilled on the so-called Nyuni Block and will be completed as a future gas producer. Further drilling will be needed to confirm the size of the find.
The close proximity of Songo Songo to Dar Es Salaam gas pipeline bodes well for an early development. Key Petroleum said there is additional potential in Tertiary age reservoirs that may be the target of future wells.
Ndovu Resources holds 40%, RAK Gas Commission 25%, Key Petroleum 20%, East Africa Exploration Ltd. 10%, and Bounty 5%.
Total acquires interest in Alaskan blocks
Total SA will join Chevron Corp. in exploring the onshore White Hills blocks in Alaska by drilling three wells for the winter season. The White Hills blocks lie 40 km southwest of Prudhoe Bay field in Alaska’s central North Slope.
Total has gained a 30% interest in the blocks and the partners plan to drill several exploration wells during next winter. Chevron will operate the blocks with a 70% interest.
The acreage covers 2,000 sq km.
Drilling & Production - Quick TakesTPAO producing gas from Ayazli field
Operator Turkish Petroleum Corp. (TPAO) has begun producing natural gas from Ayazli gas field in the Black Sea off Turkey, reported partner Stratic Energy Corp., Calgary.
Ayazli is the third gas field in which production has begun under Phase 1 of the South Akcakoca sub-basin development program. Production began last year from Akkaya and East Ayazli fields. Officials said initial flow rates from Ayazli support operator estimates that production from the field will average more than 10 MMscfd. Production from the two existing fields recently has been 17 MMscfd gross.
TPAO has started well intervention projects to add further perforations on the East Ayazli-2 well to increase production from that field.
TPAO has 51% interest in the permit area. Dallas-based Toreador Resources Corp. has 36.75%, and Stratic Energy has 12.25%.
UK Chancellor changes decommissioning tax rules
North Sea operators are welcoming tax changes by the UK Chancellor that aim to extend the life of marginal oil fields.
During his first budget, Alistair Darling reported he would reform petroleum revenue tax (PRT) and help operators cover the treatment of decommissioning costs of oil and gas installations in the UK North Sea.
Companies can delay decommissioning because of an extension of corporation tax loss carry-back to 2002, instead of 3 years as was previously the case. The government will also address inconsistencies regarding the application of PRT to decommissioning liabilities and the proposal to remove PRT nonpayers from future exposure to the tax.
Trade association Oil & Gas UK welcomed the measures but stressed that more fiscal changes were needed to attract investment in a competitive global environment.
Malcolm Webb, OGUK’s chief executive, said the new changes will provide greater certainty and consistency. “However, this should only be regarded as the start of the process of simplifying and easing the tax burden on UK oil and gas production, and we look forward to the next stage of the government consultation producing further positive outcomes to that end.”
Investment on the UK continental shelf fell by £1 billion in 2007. OGUK said it was necessary to change the 50-75% tax rate on new projects if the UK is to carry on producing hydrocarbons.
Mike Tholen, OGUK’s economics director, added: “The future of the North Sea can only be properly secured by simplifying and reducing the overall tax burden to ensure [that] investment can be sustained in this mature and challenging province.”
The government estimates that it will receive £9.9 billion in tax revenues from the North Sea in 2008-09, up from £7.7 billion this year.
Processing - Quick TakesP&G: World LPG supply, prices rising fast
Worldwide supply of LPG will expand particularly fast during the next 4-5 years, but record high prices have slowed demand in many developing markets, said Ken Otto of Houston-based consultancy Purvin & Gertz Inc. in opening remarks Mar. 18 to the firm’s 21st Annual International LPG Seminar in The Woodlands, Tex.
Several events slowed the expansion of LPG supply in 2007, but Purvin & Gertz expects the growth to pick up in 2008-09.
High LPG prices are reducing demand growth in residential and commercial sectors, especially in unsubsidized markets in developing economies, Otto said.
All of these factors will push more supplies into the petrochemical feedstock sector. A large expansion of petrochemical capacity is under way in the Middle East, which will increase fairly dramatically base-load demand for LPG. Global LPG supplies, however, will grow faster than base demand, which will increase the amount of LPG available for the feedstock market, Otto said.
Global LPG supply will increase by 43 million tonnes during 2007-12, increasing to about 272 million tonnes from 229 million tonnes, Otto said.
LPG production is growing in most regions of the world, the exception being North America. Because LPG production in North America will be fairly flat, Otto expects the Middle East to surpass North America in a few years to become the largest LPG producing region in the world. The Middle East will expand LPG production more than 45% during 2007-12.
Overall, Otto expects that LPG supply growth will average 3.5%/year through 2012. About 50% of this growth will come from nonassociated gas.
Repsol-YPF to build coker complex at Cartegena
Repsol-YPF SA has awarded a contract to Foster Wheeler Ltd. unit Foster Wheeler Iberia SAU, Madrid, for the detailed engineering, procurement services, and construction management of a new delayed coker complex at its refinery in Cartagena in southeastern Spain.
The coking complex consists of a 53,000 b/sd delayed coker unit, a gas concentration unit, and a 90,000 b/sd vacuum distillation unit. The coker will use Foster Wheeler’s Sydec process technology.
The value of this contract was not disclosed. In 2007, Foster Wheeler Iberia was awarded a separate contract for the design and supply of the coker-fired heaters that are an integral part of the coker unit.
Total responds to Donges refinery bunker oil spill
Total SA is cleaning up bunker oil that spilled Mar. 17 from a pipe leak at the company’s Donges refinery in the Loire Atlantique district. The accidental leak occurred during the loading of a vessel. About 300 tonnes of the heavy oil spilled onto the banks around the refinery and 100 tonnes into the Loire River.
In close liaison with authorities, Total mobilized 200 people to limit the impact of the spill, conduct cleaning operations, and coordinate with teams mobilized by the authorities, as bunker oil requires special handling precautions the group said.
Total has apologized to the riverside residents and the communities the spill affects and confirms its commitment to assume full costs of the cleanup.
BP, Irving join in Eider Rock refinery project
UK major BP PLC and Canadian refiner and marketer Irving Oil Ltd., St. John, NB, have signed a memorandum of understanding to work together on the next phase of engineering, design, and feasibility for the proposed 300,000 b/d Eider Rock refinery in St. John.
BP will contribute $40 million as its share for this stage of the study. The two companies also will consider forming a joint venture to build the refinery, should they decide to proceed.
Irving Oil conducted initial feasibility work and informal public consultation in 2006 on the proposed refinery, and has been engaged since January 2007 in permitting, public consultation, and engineering design for the facility.
The refinery would be situated close to Irving Oil’s existing 300,000 b/d refinery and the existing Irving Canaport deepwater oil terminal, which receives cargoes of oil from very large crude carriers (VLCCs) and is 65 miles from the US border.
This next phase of engineering, design and feasibility work, combined with ongoing permitting and community engagement activities, represents more than $100 million of investment over the next 12-15 months, Irving Oil said.
A final investment decision is not expected before 2009. The refinery is expected to cost at least $7 billion. If permitting approval is received and an investment decision is made to proceed, site preparation would begin in 2010 with full-scale construction to begin in 2011. Start-up is expected in 2015.
Petrobras, Mitsui form Brazilian ethanol venture
Brazil’s Petroleo Brasileiro SA (Petrobras) is forming a 50:50 joint venture with Mitsui & Co. Ltd. of Japan for investments in renewable energy.
The new joint venture, called Participacoes Nippo Brasileira em Complexos Bioenergeticos SA, will provide ethanol for the Japanese market, Petrobras said.
In February Petrobras said it would join with Mitsui and Brazilian builder Camargo Correa SA to form a JV to build the world’s first ethanol-only pipeline.
The pipeline, with a capacity to transport 12 million cu m/year of ethanol, will ship the biofuel from sugarcane-growing areas in western Brazil to the Atlantic coast in Sao Paulo state.
Japanese refiners to push biofuels use by 2013
Fumiaki Watari, chairman of the Petroleum Association of Japan (PAJ), said Japanese refiners will aim to substitute biofuels for 500,000 kl/year of oil equivalent of fuels by the business year ending in March 2013.
The refiners’ stated aim will more than double the initial target of a cut in refining of 210,000 kl/year by 2010, and it comes in response to government requests that the industry reduce carbon dioxide emissions.
Watari said the industry would use only ethyl tertiary butyl ether to blend with gasoline.
He said PAJ will accept the new target if the government helps it tackle problems such as ensuring adequate imports of bioethanol. He also said PAJ wanted to know who would be responsible for CO2 emissions produced in transporting the fuel from overseas.
PAJ’s announcement came as Mitsui & Co. Ltd and Brazil’s state-owned Petroleo Brasileiro SA recently announced the formation of Participacoes Nippo Brasileira em Complexos Bioenergeticos SA, a 50-50 joint venture that will provide ethanol for the Japanese market.
Such changes also coincide with decisions by Japanese automakers to develop cars that use bioethanol fuel on the government view that they can help reduce consumption of gasoline.
Nissan Motor Co. received government approval for a sport utility vehicle that can run on E10, which has 10% ethanol, while Toyota Motor Corp. received government approval for a vehicle that runs on a gasoline-bioethanol mix.
Transportation - Quick TakesGDF receives first LNG from Snohvit
The first shipment to France of LNG from Snohvit in Norway was delivered to Gaz de France’s Montoir-de-Bretagne terminal in Brittany Mar. 12. The Provalys LNG carrier, especially fitted out to withstand the severe weather conditions in Norway’s arctic waters, will unload 154,500 cu m of LNG, marking the opening of a new LNG supply route capable of providing 700 million cu m/year of gas for the European market.
Snohvit field licensees are StatoilHydro (operator) 33.5%, Petoro 30%, Total E&P Norway 18.4%, Gaz de France 12%, Hess 3.3%, and RWE Dea Norway 2.8%.
LNG accounted for 31.5% of Gaz de France’s overall gas supplies in 2007. Deliveries from Snohvit will increase its supply flexibility. The group is already the largest LNG importer in Europe. It has been involved in the Snohvit project, in which it holds a 12% stake, from initial development planning. Commissioned in September 2007, the Hammerfest facility is the first liquefaction plant in Europe, said Gaz de France.
Norway currently is the group’s main natural gas supplier, accounting for 21.5% of its overall supply portfolio. Gaz de France Norge is also involved in Norway’s upstream and in 2006 was approved by the Norwegian authorities as operator for the production phase of Gjoa field, another natural gas development.
Woodside bids to supply LNG to Singapore
Woodside Petroleum Ltd. is competing for a multibillion-dollar contract to become Singapore’s exclusive supplier of LNG, according to Woodside Chief Executive Officer Don Voelte.
Woodside is on a shortlist of five groups bidding for a contract to provide 3 million tonnes/year of LNG starting in 2012, Voelte said, adding that his company might partner with Singapore Power, if successful.
Singapore’s Energy Market Authority, which expects to announce the successful bidder as early as next month, has not disclosed the names of the four other bidders. The winner will supply the country’s planned LNG regasification facility.
Construction of the $1 billion terminal is expected to begin late this year or early in 2009 to enable the city-state to begin importing LNG by late 2011 or early 2012, according to S. Iswaran, Minister of State for Trade and Industry (OGJ Online, Feb. 2, 2008).
Williams, TransCanada propose gas pipeline
Williams Cos. Inc. and TransCanada Corp. are evaluating joint development of Sunstone Pipeline, a major transmission line that would transport natural gas supplies from the Rockies to the US West.
The proposed 618-mile, 42-in. Sunstone line would have a capacity of 1.2 bcfd. The line, proposed for service in 2011, would be built parallel to the existing Williams Northwest Pipeline system between the Opal Hub in Wyoming and Stanfield, Ore. Williams’ Northwest system interconnects at Stanfield with TransCanada’s Gas Transmission Northwest (GTN) pipeline system.
The project provides the option to deliver gas to markets served by the Northwest and GTN pipeline systems. Sunstone’s open season commenced Mar. 17 and extends through Apr. 30. GTN will have an additional open season to offer existing capacity available on its pipeline system between Stanfield and GTN’s terminus at Malin, Ore., near California’s northern border.
Sunstone would provide broad access and enhance supply diversity to markets throughout the Pacific Northwest, northern Nevada and northern California. It would require construction of fewer miles of pipeline along existing utility corridors, including segments of Northwest’s existing pipeline system and would provide favorable rates due to efficiencies from existing infrastructure and operations along the route, officials said. Moreover, Williams has recent construction experience along the pipeline corridor.
Keystone oil line construction to start in 2Q
A partnership of TransCanada Corp. and ConocoPhillips subsidiaries received a presidential permit from the US State Department to proceed with construction, maintenance, and operation of the proposed 2,148-mile Keystone oil pipeline. It will transport Canadian crude to US markets.
“We will begin construction in second-quarter 2008 to achieve an in-service date of fourth-quarter 2009,” said Hal Kvisle, TransCanada president and chief executive officer.
Affiliates of TransCanada will construct and operate Keystone, which will be capable of delivering 590,000 b/d of crude from Hardisty, Alta., to US Midwestern markets at Wood River and Patoka, Ill., and to Cushing, Okla. Initial deliveries to Patoka are expected to begin in late 2009.
Keystone has secured firm long-term contracts of 495,000 b/d with an average duration of 18 years.
Taiwan mulls ending CPC’s gas import monopoly
A number of wTaiwanese legislators have proposed a new Natural Gas Industry Act that could end state-owned CPC Corp.’s monopoly on gas importation. A draft of the act is expected to be completed and submitted to the Taiwan’s Cabinet for approval before the end of April.
If enacted into law, the act would enable other companies to lease CPC’s LNG terminals and pipelines. CPC owns Taiwan’s only two LNG receiving terminals.
A prime candidate for leasing CPC’s terminals is the Taiwan Power Co. (Taipower), which accounts for 60% of Taiwan’s total LNG consumption. Taipower has petitioned the government to import LNG directly and will consider building its own terminal if permission is granted.
