ConocoPhillips gas pipeline proposal turned down
Alaska Gov. Sarah Palin has notified ConocoPhillips that she rejected the company’s proposal to build an Alaska gas pipeline to transport North Slope gas to the Lower 48 states, the governor’s office said.
Meanwhile, a 60-day public comment period is under way regarding TransCanada’s gas pipeline proposal under the Alaskan Gasline Inducement Act (AGIA). ConocoPhillips’s application was outside the AGIA solicitation (OGJ Online, Jan. 7, 2008).
In a Jan. 9 letter to ConocoPhillips’s Chief Executive Officer James Mulva, Palin wrote, “Your alternative does not give the state a reason to deviate from the AGIA process.”
A ConocoPhillips spokesman in Houston said the company was disappointed, and that the company still believes its pipeline proposal offered “tremendous benefits to the state of Alaska.”
Turkey, Syria sign mutual energy, pipeline deal
Turkey and Syria have signed an agreement aimed at enhancing cooperation between their two countries in a number of fields, including a major pipeline development.
After the signing ceremony, Turkish Energy Minister Hilmi Guler said the cooperation agreement included a pipeline that would carry Egyptian natural gas from Aleppo to Turkey’s southeastern town of Kilis, and possibly on to European markets if a link-up with the European Union-sponsored Nabucco pipeline scheme comes online.
Cooperation in electric power also would be developed.
Turkey will have the right to take as much as 1.5 billion cu m of gas for its domestic needs from the 62-mile pipeline, and Turkish contractors will participate in the tenders for line construction. Bids are due by Feb. 20.
Prior to the meeting, Guler met with Syrian Minister of Oil Sufiyan al-Aw and said the two countries could jointly explore for oil and gas because they have identical geologies. “Turkey and Syria can work together to find oil and natural gas reserves,” Guler said, adding that both countries can “trade electricity and minerals.”
StatoilHydro sets higher 2012 production targets
StatoilHydro reported that it hopes to ramp up its total equity production to 2.2 million boe/d by 2012 from 1.96 million boe/d, with the majority of the increase coming from the Norwegian continental shelf.
By 2012, production from the NCS will increase to 1.55 million boe/d from 1.4 million boe/d in 2008. StatoilHydro hopes to keep NCS production at 1.5 million boe/d for the next 10 years.
In contrast, international production will grow to 0.65 million boe/d in 2012 from the current 0.5 million boe/d. However, three quarters of its production-sharing agreements (PSA) are expected to have a major influence on its overall production, as high oil prices would reduce its entitlement and boost taxation in kind. “At an oil price of $75/bbl, PSAs are assumed to have an effect on entitlement production of about 150,000 boe/d in 2008 and 240,000 boe/d in 2012,” StatoilHydro said.
Statoil, which merged with Hydro in October 2007, expects annual synergies to be 6 billion kroner before taxes, 2 billion kroner higher than previously estimated. Despite the merger, production in 2007 fell below expectations of 1.7 million b/d because of technical problems with its fields.
The company has budgeted 75 billion kroner in 2008 as capital expenditures and about 80 billion kroner in 2009. “Approximately 50% of the increase from 2007 is related to higher activity levels for sustaining existing production and supporting the group’s growth ambition, while the remaining is due to cost inflation, combined with gradually increasing project complexity,” StatoilHydro said.
Helge Lund, the company’s chief executive, said its focus would be on short-term deliveries and improved operational performance, as it had not met those expectations.
StatoilHydro will drill 70 wells in 2008 under an 18 billion kroner program, and it has secured rigs for all of its wells. These will be split 50-50 between the NCS and internationally.
Most drilling on the NCS will be in mature areas, StatoilHydro said, “but there will also be frontier exploration in the Barents and Norwegian seas.” Internationally, the most important wells will be in the US Gulf of Mexico, Brazil, Nigeria, and Azerbaijan.
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Exploration & Development - Quick TakesEquatorial Guinea gets gas-condensate find
A group led by Noble Energy Inc., Houston, will continue exploring and appraising Blocks I and O in the Gulf of Guinea east of Equatorial Guinea’s Bioko Island after the latest discovery expanded the company’s estimate of the resource.
The latest well, I-4, is on Block I in 2,226 ft of water 7 miles southwest of Noble’s Belinda discovery on Block O. I-4 flowed 28.9 MMcfd of gas and 1,634 b/d of condensate limited by test equipment capacity from a high-quality Miocene reservoir. It is the last in a six-well program since 2005, only one of which was dry.
The drilling, seismic calibration, and reservoir analysis confirms the area’s resource range to be 60% greater than the original predrill estimate, and well results show that liquids make up 40% of the total resource with proper processing, Noble said.
The Sedco 700 drillship is to spud the next well, to verify the oil resources down dip at the Benita discovery on Block I, in late February.
Noble Energy is technical operator of Block I with 40% interest. Atlas Petroleum International Ltd. has 29%, Glencore Exploration Ltd. 25%, and Osborne Resources Ltd. 6%. State GEPetrol has a 5% carried interest once commerciality has been determined.
Peru’s Ucayali gets big gas-condensate find
A group led by Repsol-YPF SA started production tests at a gas-condensate discovery on Block 57 in Peru’s Ucayali basin.
Early test rates were 35.3 MMcfd and 1,245 b/d from 115 m of pay in an undisclosed formation, and partner Petroleo Brasileiro SA (Petrobras) said the 22-km-long Kinteroni structure’s indicated a capacity of as much as 2 tcf of gas. Tests continued at the well is in Cuzco Province.
Repsol-YPF, with 41% interest, and Petrobras, with 35.15%, were in the process of acquiring the other 23.85% interest from ConocoPhillips’s Burlington Resources Inc. subsidiary, subject to approval by Peruvian authorities.
Petrobras noted that the discovery well is near Blocks 58 and 110, which it is exploring with 100% interest.
Total starts Pazflor development work off Angola
Total SA, operator of Block 17, has awarded the principal contracts for the giant Pazflor oil developmentthe third development center on the offshore block, following Girassol and Dalia, both on production (OGJ, July 9, 2007, Newsletter).
Drilling operations are planned to start in 2009; oil production is slated to begin in 2011.
Pazflor, which lies in 600-1,200 m of water about 150 km offshore and 40 km northeast of Dalia field, involves bringing four fields into production: Perpetua, Hortensia and Zinia (Upper Miocene), and Acacia (Oligocene). The fields were discovered between mid-2000 and early 2003.
Pazflor covers 600 sq km with a north-south axis of more than 30 km. The overall development program uses well-tried techniques on Girassol and Dalia. A floating production, storage, and offloading unit for Pazflor production will process the oil via 49 subsea wells (25 producers, 22 water injectors, and 2 gas injectors). The FPSO will have a processing capacity of 200,000 b/d of oil and a storage capacity of 1.9 million bbl, bringing the installed production capacity on Block 17 to more than 700,000 b/d.
The Pazflor FPSO will handle two oils of very different characteristics: 17-22° gravity oil from Miocene reservoirs and 35-38° gravity oil from the Acacia Oligocene reservoir. Pazflor also will incorporate a number of technological advances in bringing difficult deep offshore fields into production, in particular, seabed gas-liquid separation, adjacent to the production wells. This technology is a world first.
Total E&P Angola holds a 40% interest in the block. It is partnered with StatoilHydro 23.33%, Esso Exploration Angola (Block 17) Ltd. 20%, and BP Exploration (Angola) Ltd. 16.67%.
Talisman makes oil, gas find off Vietnam
Talisman Energy Inc. has tested peak rates of 13,450 b/d of light oil and 6.87 MMcfd of natural gas from its second exploration well, Hai Su Den (HSD), off Vietnam.
HSD targeted a fractured basement reservoir and was drilled to a TVD of 11,168 ft, encountering a hydrocarbon-bearing interval of about 2,400 ft.
The results were constrained by test equipment, Talisman said. It described the discovery as “very promising” and offering a possible new development, as another discovery was made earlier in 2007 on the same block, 15-2/01. There also is the potential for upside from additional exploration wells.
Another four exploration wells are planned over the course of the year by Thang Long Joint Operating Co., a special purpose joint venture vehicle that will carry out all activities on the block. Activities will focus on evaluating features on trend with the HSD discovery.
Talisman holds a 60% working interest in any commercial discoveries on Block 15-2/01 with PetroVietnam Exploration & Production Co. holding the remaining 40%.
Block 15-2/01 is 50 miles off eastern Vietnam and is on trend with large oil and gas discoveries in the Cuu Long basin.
Trinidad and Tobago awards two exploration blocks
Trinidad and Tobago has announced the award of two exploration blocks to a consortium of Voyager Energy, Calgary, and Petrotrin.
The twin-island nation’s Energy Minister Conrad Enill said the focus of the two production-sharing contracts is to explore and develop the Central Range shallow horizon block and the Central Range deep oil block.
Enill said Voyager had special expertise for exploring these blocks, which were “one of the more challenging areas on land.”
Enill said the first phase includes the acquisition of seismic data and the drilling of four wellsthree to 1,350 m on the shallow horizon block, and one to 3,650 m on the deep horizon block
Drilling & Production - Quick TakesProduction starts from Kizomba C off Angola
ExxonMobil Corp. unit Esso Exploration Angola (Block 15) Ltd. has started oil production from the Kizomba C development on Block 15, about 90 miles off Angola. Kizomba C, which is designed to develop 600 million bbl of oil from the Mondo, Saxi and Batuque fields, lies in 2,400 ft of water.
The Kizomba C development has come on stream with Mondo field; Saxi and Batuque fields are expected to come on stream in 2008.
Mondo is expected to plateau at a peak production rate of 100,000 b/d. Plateau production from all three fields is expected to reach a total 200,000 b/d.
The Kizomba C development includes two floating production, storage, and offloading vessels and 36 subsea wells. The Kizomba C FPSO vessels are the fourth and fifth offshore production hubs on Block 15.
Esso Angola serves as operator of Block 15, holding 40% interest. Its other block partners are BP Exploration (Angola) Ltd. 26.67%, Eni Angola Exploration BV 20%, and StatoilHydro Angola 13.33%.
Perenco to develop Peru heavy oil fields
Perenco, Paris, completed the acquisition of Barrett Resources (Peru) LLC, which owns three heavy oil fields set for development in the Maranon basin at a cost of $1.5 billion.
A development plan approved in July 2007 calls for oil production to start in January 2011 (OGJ, Aug. 20, 2007, Newsletter).
When developed, Paiche, Dorado, and Pirana fields on Block 67 have the capacity to produce as much as 100,000 b/d from more than 300 million bbl of proved and probable reserves, Perenco said.
The development plan calls for drilling, construction of surface processing and handling facilities, and pipelines to transport the oil to an existing pipeline that would itself require upgrading in a separate project.
Perenco Peru Ltd., which operates a similar project in Ecuador’s Oriente, will participate in a continuing exploration program in the Peruvian region including the imminent start of a seismic survey on Block 121.
Shell starts gas production from Starling field
Royal Dutch Shell PLC has started natural gas production from Starling field in the central North Sea. It is expected to peak at 140 MMcfd of gas.
The field, developed under a £175 million investment plan, will export gas and liquids to the UK mainland. It is tied back to the Shearwater installation 33 km away.
Starling is on Block 29/3a in 100 m of water. ExxonMobil Corp. holds a 72% interest, and operator Shell holds 28%.
Last June both companies said they plan to sell several fields in the North Sea and are in confidential discussions with potential buyers. The partners, however, said they were prepared to continue investing in the right projects in this mature province.
Woodside lets EPC contract for Pluto platform
Woodside Energy has let a $24 million contract to the Eos joint venture for the design, engineering, procurement, and construction of its riser production platform for the Pluto LNG project off northwest Karratha, Western Australia.
The platform will export 1.6 bcfd of gas via a 36-in. subsea pipeline to an onshore single-train liquefaction plant having the capacity to produce 4.3 million tonnes/year of LNG.
Under the initial phase, Woodside will develop Pluto with five subsea big-bore wells with flowlines to the production platform that will be moored with risers in more than 275 ft of water.
Eos, a joint venture of KBR and WorleyParsons, has expanded the front-end engineering and design contract awarded in September 2006 into the engineering, procurement, and construction contract, with an option for execution services to include detailed design, procurement management services, and construction management assistance.
PTTEP to boost gas output via Arthit North FPSO
PTT Exploration & Production PLC (PTTEP) plans to ramp up its natural gas output from Arthit gas field in the Gulf of Thailand by 120 MMcfd, or 36%, to meet Thailand’s rising gas demand.
In a 3-year program beginning in August, the extra production will come from sister field Arthit North.
Arthit North’s output will supplement delivery from the main field, whose production of 330 MMcfd of gas and 22,000 b/d of condensate has been delayed by construction constraints until February (OGJ, May 12, 2006, Newsletter).
PTTEP will use a floating production, storage, and offloading vessel to support production startup at Arthit North. Development will include the installation of three well-head platforms, and the drilling of 27 development wells.
Gas production from Arthit North and the main Arthit is sold to parent PTT PLC, Thailand’s largest petroleum group.
The country’s 2008 gas consumption is expected to grow by 12.4% year-on-year to 3.9 bcf, according to the Thai Energy Ministry’s latest forecast.
Colombia’s La Creciente gas field starts up
Pacific Stratus Energy Ltd., Toronto, began delivering 35 MMcfd of gas on Dec. 28, 2007, from La Creciente field in Colombia’s Lower Magdalena basin to the Guepaje-Sincelejo pipeline.
The company said its La Creciente D-1 discovery well identified a gas-bearing area of 430 acres. The well found the gas-water contact at 10,131 ft true vertical depth subsea, 32 ft below the top of the reservoir.
The well cut 28 ft of net reservoir sandstones with 18.1% average porosity and 38.8% average water saturation. Formation pressure at the top of the reservoir was 6,492 psi, or 150 psi lower than the pressure registered at the same depth on Prospect A.
The company said the Cienaga de Oro formation consists of 483 ft of well-sorted, coarse to fine grain sandstones (upper unit) and an interbedded sequence of silts, shales, and fine grain sandstones.
Meanwhile, Colombia’s Agencia Nacional de Hidrocarburos awarded Pacific Stratus the Tacacho Technical Evaluation Agreement, which covers the 1.48 million acre Tacacho block in the foreland basin of the Putumayo mountain range in Colombia’s Eastern Cordillera. The area lies along a prominent structural high that trends north-northwest from Ecuador.
The main exploration targets on the block are the Tertiary Pepino formation and Cretaceous Villeta sandstones, prolific producers in the Ecuadorian part of the basin.
US rig count down by 30 units
A total of 30 units dropped out of the US rotary rig count during the week ended Jan. 11, with 1,744 still working, up from 1,717 during the same period a year ago, Baker Hughes Inc. reported.
A cursory check of previous reports indicated it was the largest 1-week decline among US rigs since the period ended Jan. 26, 2007, when the count was down by 46 rigs. The latest loss cut through all three categories. Land drilling lost 17 units to 1,665. Inland water activity dropped 9 rigs to 20, and offshore drilling was down 4 to 59, including 57 in the Gulf of Mexico.
Louisiana had the biggest loss among major producing states, down 22 rigs to 139. Texas dropped 10 to 859; Oklahoma lost 7 to 190. New Mexico and California dropped 1 rig each to 69 and 42, respectively. Wyoming was unchanged with 73 rotary rigs drilling. On the other hand, Colorado’s rig count increased by 4 to 103, and Alaska was up 1 to 7.
Meanwhile, with the seasonal cold improving movement of rigs, Canada’s count jumped by 196 to 515 but was still below year-ago level of 586.
Processing - Quick TakesSinclair settles refinery air pollution charges
Sinclair Oil Corp. agreed to pay a $2.45 million fine and spend more than $72 million to upgrade pollution controls as it settled federal charges that it violated the Clean Air Act at three of its refineries.
The US Department of Justice and Environmental Protection Agency jointly announced the settlement on Jan. 15. It involved alleged violations at Sinclair’s refineries in Casper and Sinclair, Wyo., and in Tulsa.
Sinclair will be required to install new pollution controls at the plants that will reduce nitrogen oxide emissions by about 1,100 tons/year and sulfur dioxide discharges by nearly 4,600 tons/year when fully implemented, DOJ and EPA said in a joint announcement.
The new controls also will reduce emissions of volatile organic compounds and particulate matter from each of the refineries, the federal regulators added. They indicated that the three refineries have a total capacity of 160,000 b/d.
Sinclair also agreed to spend $150,000 on supplemental environmental projects in Oklahoma, including $100,000 to install new controls to reduce emissions of particulate matter from the City of Tulsa’s municipal trash trucks, DOJ and EPA said.
They said Wyoming and Oklahoma joined in the consent decree and will share portions of the civil penalty with EPA. The consent decree, lodged in US District Court for the District of Wyoming, is subject to a 30-day comment period and approval by the federal court.
IPF group studying ethanol potential in diesel
Total SA of France and Brazil’s Petroleo Brasileiro SA are part of the international consortium that Paris-based Institut Francais du Petrole (IFP) launched last spring to study the feasibility and utilization potential of ethanol for the production of diesel motor fuels, IFP said.
Called “Ethanol for Diesel,” or E4D, the consortium also includes automobile manufacturers Renault and Sweden’s VolvoPowertrain for the period covering 2007-09. E4D also is open to other partners.
Based on the expertise of IFP and the consortium partners, the research will study the impact of this type of motor fuel on the combustion process and on the optimization of engines in terms of performance and polluting emissions.
A solid base of experimental data could be establisheda first step toward the direct incorporation of ethanol into the diesel chain, IPF said. Diversifying the types of motor fuels used in the diesel pool could, in the short termand in the current context of the European market’s strong dieselization trendcontribute to reestablishing the diesel-gasoline balance that is negatively impacting refinery streams.
It also could help reduce carbon dioxide emissions and the reliance on fossil fuels, IFP said.
Transportation - Quick TakesSempra proposes gulf terminal, storage facility
Sempra Energy proposed construction of a marine petroleum terminal and storage facility in Port Arthur, Tex., to improve tanker access to refineries in Port Arthur and Beaumont.
San Diego, Calif.-based Sempra initiated an open-season solicitation for potential customers interested in purchasing terminal capacity.
An initial phase of the proposed terminal would provide storage and transportation for oil, liquefied petroleum gas, and related products. Vessels carrying oil and products to the Port Arthur region’s refineries currently are limited by long, inner-waterway voyages restricted to daylight hours, Sempra said.
Its proposed terminal would allow 24-hr marine terminal access with an initial, first-phase throughput of up to 500,000 b/d. The project’s first phase would require about 120 acres of the 2,900 acres Sempra Energy owns near Port Arthur.
The property also is the proposed site of a larger energy complex that includes the planned development of a LNG project capable of storing and regasifying up to 3 bcfd of gas.
The LNG terminal construction awaits Sempra’s obtaining sufficient LNG supply and capacity agreements, the company said.
Uzbekistan approves Russian-Uzbek LNG venture
Uzbekistan’s President Islam Karimov has approved the creation of a $221.5 million joint venture for the production of LNG by Russia’s Stroytransgaz and Uzbekistan’s Uzbekneftegaz.
A spokesman for Uzbekneftegaz said the president’s approval clears the way for the planned signing of an agreement between the two companies by March of this year, aiming to produce LNG at the Mubarek natural gas processing plant.
The facility will process 12 billion cu m/year of gas and produce 270,000 tonnes of LNG along with 70,000 tonnes of gas condensate.
Stroytransgaz will contribute $110 million to the project, with an additional $45.5 million coming from Uzbekneftegaz, $35.5 million from Uzbekistan’s Fund for Reconstruction and Development, and $30 million from an unnamed Chinese bank.