API: Industry will work with new president
The US oil and gas industry is looking forward to working with President-elect Barack Obama and a new Congress “to get to work on meaningful energy policy that contributes to economic stability,” according to Jack Gerard, American Petroleum Institute president and chief executive officer.
“The American people have spoken loud and clear that they want politicians to put aside partisan bickering,” Gerard said in a Nov. 5 news release. “The oil and natural gas industry stands ready to help put America’s vast energy resources to good use, strengthening our nation’s economy and energy security, and providing good jobs for Americans across the country,” he added.
Gerard said the industry stands ready to help the new administration deliver “a comprehensive and realistic energy policy that encourages development of all domestic energy sources, including oil and natural gas, for the benefit of consumers.”
Iraqi deputy oil minister escapes attempt on life
Iraq’s Deputy Oil Minister Saheb Salman Al-Qutub was wounded in a bomb attack outside his home in the northern Ataifiyah neighborhood of Baghdad.
“The senior deputy oil minister Abdul Saheb Al-Qutub escaped an assassination attempt by improvised explosive device close to his house on Nov. 3,” the oil ministry said.
“The deputy minister left the hospital after he received the required treatment,” the ministry said, adding that Al-Qutub suffered slight wounds and his driver was severely hurt.
Al-Qutub, a Shiite from the southern province of Basra, also survived an assassination attempt in 2004 along the highway between Baghdad and Hilla, south of Baghdad. He was an adviser to the oil minister at the time.
Al-Qutub was appointed to his position last year when the former deputy oil minister, Abdul Jabar Al-Wagaa, a Sunni, decided to retire after being kidnapped along with four other ministry officials. Al-Wagaa was released a few weeks later.
The latest attempted assassination on Al-Qutub coincided with reports that Iraq’s crude oil exports in October rose 3.6% to 1.703 million b/d from 1.644 million b/d.
Iraq exported 1.385 million b/d from the Basra oil terminal, while some 309,000 b/d were exported via pipeline to Turkey’s Mediterranean port of Ceyhan. The remaining 9,000 b/d were trucked to neighboring Jordan.
NEB: Economic uncertainty dominates outlook
Canada has sufficient oil and natural gas supplies to meet winter demand, although price volatility is likely, the National Energy Board said.
“Markets here cannot help but be affected by the current volatility of world commodity markets,” NEB Chair Gaetan Caron said Oct. 30 in his agency’s winter energy outlook.
Fuel prices have declined on a combination of factors, including a deepening global financial crisis, falling demand, and a worsening US and global economic outlook.
NEB forecast that crude oil could average $50-75/bbl this winter on the New York Mercantile Exchange, where natural gas could average $6-9/MMbtu.
Heating oil prices are expected to track crude oil prices, which means average Canadian heating oil prices probably will be lower than last year.
Strong US natural gas production has helped to keep gas prices low while helping to ensure adequate gas supply.
Canadian drilling activity has stabilized but remains down from its 2005-06 winter peak, NEB said.
“Relative to the previous winter, Canadian production is expected to continue trending downward,” given slowing gas drilling combined with declines in initial productivity of new wells, NEB said.
Industry Scoreboard
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Exploration & Development Quick TakesApache’s Egyptian discovery tests 4,746 b/d
Apache Corp. said its WKAL-C-1X discovery in Egypt’s Western Desert flowed on test at a rate of 4,746 b/d of oil and 4.4 MMcfd of gas.
“The WKAL-C-1X discovery represents the westernmost oil ever discovered in Egypt and confirms our exploration model for this area of the Faghur basin,” said G. Steven Farris, Apache president and chief executive officer.
The West Kalabsha concession involves the Jurassic Safa formation in Faghur basin, 50 miles east of the Libyan border (OGJ Online, Aug. 11, 2008).
The well, drilled to 14,600 ft TD, logged 46 ft of Safa oil pay. It also logged 36 ft of pay in the Alem El Bueib 3C formation. Wireline pressure data suggests the water level may be at least 190 ft below the base of the oil sand, Apache said.
Shell, ADNOC sign MOU for gas exploration
Royal Dutch Shell PLC will partner with Abu Dhabi National Oil Co. to carry out possible deep offshore gas exploration in the country.
The companies have signed a memorandum of understanding, and Shell plans to sign final agreements to quickly begin joint exploration and development activities.
Last year Shell’s production in Abu Dhabi averaged 146,000 boe/d.
Shell holds a 9.5% interest in a joint venture with Abu Dhabi Onshore Co., and it has a 15% stake in Abu Dhabi Gas Industries.
Total acquires interest in Nigerian licenses
Nigeria has approved Total SA’s farming into two deepwater licenses off its coast. The French company will acquire a 25.67% interest in OPL 285, operated by OMEL Energy Nigeria Ltd., and a 14.5% interest in OPL 279, operated by OMEL Exploration & Production Nigeria Ltd. (OEPNL).
Nigerian firm EMO Exploration & Production Ltd. also is partner in both assets.
OMEL Energy and OMEL E&P will shoot 500 sq km of 3D seismic and drill one exploration well on the blocks. The exploration period runs until 2012.
OPL 285, covering an area of about 1,170 sq km, lies 80 km offshore near Bonga field in 400-900 m of water.
OPL 279, which is 1,125 sq km in area, is 100 km offshore near Ehra and Bosi fields in 800-1,800 m of water.
“In the second 5-year exploration period, which is optional, the work commitments will cover the acquisition of a further 500 sq km of 3D seismic and the drilling of two exploration or appraisal wells,” Total said.
Total’s offshore operated production in Nigeria currently comes from the OML 99, 100, and 102 blocks in joint venture with the Nigerian National Petroleum Corp. The main fields are Amenam-Kpono, Ofon, and Odudu area fields.
Total makes gas, condensate find off Brunei
Total SA has struck a new gas-bearing compartment of over 400 m in Brunei’s offshore Maharaja Lela-Jamalulalam field.
The company said that on Block B within the ML-4 well the column was equivalent to those already in production in the field. Gas also was found in deeper, high-temperature-high-pressure formations. Total will appraise the gas and condensate discoveries later.
The ML-4 well reached a TD of 5,227 m and was drilled in water 62 m deep, about 50-km offshore.
“Following the successful MLJ2-06T well, the ML-4 well completes the first phase of an exploration drilling program that will resume in 2009,” Total added.
Total supplies gas from Maharaja Lela-Jamalulalam field to the Brunei LNG liquefaction plant, which had an average production of gas and liquids of 28,500 boe/d in 2007.
Total operates Block B with a 37.5% interest; partner Shell Deepwater Borneo Ltd. holds 35%, and local partners 27.5%.
MMS to assess mitigation measures off California
The US Minerals Management Service has contracted with Applied Marine Sciences Inc. to help evaluate environmental mitigation measures and conditions required for oil and gas projects off Southern California’s coast.
The 5-year study will examine methods used to alleviate concerns associated with oil and gas operations on the US Outer Continental Shelf there, the US Department of the Interior agency said on Oct. 30.
“The objective of these requirements is to preserve and protect the quality of the human, marine, and coastal environments. Our goal will be to look at whether the measures have achieved their intended purpose or if there are better ways to accomplish the desired protection,” said MMS Pacific Region Manager Ellen G. Aronson.
The study contract with Applied Marine Sciences, Livermore, Calif., calls for ocean fieldwork, including observing, sampling, or monitoring existing OCS oil and gas operations’ mitigation measures and their effects, according to MMS. The Santa Barbara Channel, Santa Maria basin, and San Pedro basin will be the primary study locations, it indicated.
“We expect that information from the study’s scientific analysis will be useful to decision-makers in adapting and-or developing future mitigation measures and project conditions for oil and gas and, perhaps, future alternative energy operations off our coast,” Aronson said.
Science Applications International Corp. (SAIC), Reese-Chambers Systems Consultants Inc., and Fugro West will work with Applied Marine Science on the study, MMS said.
Petrobras to explore just off northwest Cuba
Brazil’s Petroleo Brasileiro (Petrobras), building on agreements signed earlier this year, plans to explore Block 37 in the Florida Straits just off Cuba’s north coast.
The exploration period for the block is 7 years in four periods of 18-24 months each. At the end of each period, Petrobras will decide whether to remain in the contract. The rights can be extended 25 years in case of a commercial discovery.
Cuba’s state Cubapetroleo (Cupet) retains the option to participate further in the project, paying for past and future investments corresponding to costs related to exploration, development, and production, Petrobras said.
In February, reports said Petrobras signed several cooperation agreements with Cupet, marking the first involvement for Brazil in the Cuban oil and gas sector, which Venezuela had previously dominated (OGJ, Feb. 4, 2008, p. 34).
Block 37 is in 500-1,600 m of water between Havana and Matanzas and 90-95 miles south of Key West, Fla.
North of the west end of Block 37, Repsol-YPF drilled the Yamagua-1 exploration well in 2004 in Block 27 about 20 miles northeast of Havana. That well, drilled to TD 3,410 m in 1,660 m of water, revealed the absence of a seal but showed “the existence of oil generation in the basin as well as an excellent carbonate complex,” Repsol said.
Petrobras’s Block 37 adjoins Block 7, which is operated by Sherritt International Corp., Toronto. Block 7 contains several offshore heavy oil fields drilled directionally from shore (see map, OGJ, Jan. 10, 2005, p. 31). Block 7 extends 7-10 km off the coast.
Sherritt relinquished deepwater Blocks 16, 23, 24, and 33 in the Catoche basin to the west of Block 37 earlier this month, saying exploration was not worth continuing (OGJ Online, Oct. 17, 2008).
Meanwhile, Cupet signed an agreement recently with Russia’s Zarubezhneft to improve recovery of heavy oil from Boca de Jaruco field, IHS Inc. reported. Boca de Jaruco field, discovered in 1968 on the north coast, is within the coverage area of Block 7 but is excluded from it.
Drilling & Production Quick TakesJordan freezes oil shale proposals for 18 months
Jordan has stopped all oil shale activities in central Jordan for 18 months to enable the government to explore for uranium.
The Natural Resources Authority (NRA) posted a statement on its web site announcing such a decision of the Council of Ministers. The central Jordan area includes the Attarat Um Ghudran region, which is 34 km east of Qatrana, and the Wadi Maghar region, 40 km southeast of Qatrana.
Royal Dutch Shell PLC is negotiating. Shell is interested in evaluating an area that extends from northern Jordan and West Safawi to Azraq in the middle and Sirhan and al-Jafer in the south.
A Shell spokesman said Shell is working with the government of Jordan under an existing, long-term relationship, and Shell envisions that its activities will be unaffected by this announcement.
Jordan depends on imported oil and refined products to meet all its energy requirements. Oil shale is the only important indigenous source of energy in Jordan, a government document said.
The Jordanian government estimates that Jordan holds more than 50 billion tonnes of oil shale resources.
Galoc sells first oil from field off the Philippines
Galoc Production Co. (GPC), operator for Galoc oil field off the Philippines, has sold its first cargo of 300,000 bbl of crude oil from its new development in the Palawan basin to local refiner Petron Corp.
Offtake is scheduled for Nov. 7 from the Rubicon Intrepid, the field’s floating production, storage, and offloading vessel. The oil is bound for Petron’s 180,000 b/d refinery at Limay, Batan, just outside Manila. Petron supplies about 40% of the country’s total fuel requirements.
Production from Galoc field began in early October and has been flowing at an average 15,000 b/d.
GPC has a 58.29% interest in Galoc field, with Nido Petroleum Ltd., Perth, holding 22.8%. Fellow Perth company, Otto Energy Ltd., has an 18.28% indirect interest through its 31.38% stake in GPC. Other partners in the field include Oriental Petroleum, Alcorn Gold Resources, Forum Energy, PetroEnergy Resources, and Philodrill.
Total plans downhole sulfur removal demonstration
Total SA intends to use the downhole sulfur removal (DSR) technology, which it developed with Austin-based CrystaTech, on sour gas fields in the Middle East and in the Caspian Sea area, Total spokesman Kevin Church told OGJ. A decision has already been taken to move to the pilot unit demonstration phase of the project.
Total signed a technology development and commercialization agreement with CrystaTech, a clean-energy technology development company, to develop a recycling process for the continuous removal and recovery of sulfur deposits in sour gas well bores. CrystaTech is modifying its patented CrystalSulf hydrogen sulfide removal process to develop the new technology for this downhole application.
DSR technology makes the sulfur soluble by continuously injecting a liquid hydrocarbon into the production well bores. It is a nonspecified refinery product that absorbs and carries the sulfur out of the well bore through a state-of-the-art recycling and regeneration process.
Total plans to use the technology in the production of large sour gas reserves in the Middle East and the Caspian Sea. Existing technologies, points out the company, require producers to either shut in gas production while injecting disposable solvents to clear blocked well bores, continuously inject nonrecyclable solvents, or use chemical regeneration processes.
Processing Quick TakesSasol arranges China CTL feasibility study
Sasol Synfuels International Ltd. and Shenhua Ningxia Coal Industry Group Ltd. hired subsidiaries of Foster Wheeler Ltd. to conduct a coal-to-liquids (CTL) feasibility study in China.
The study will evaluate the cost of building an 80,000 b/d CTL plant in the Ningxia Hui region of western China.
The Foster Wheeler contract value was not disclosed. Foster Wheeler’s Chinese consortium partner on the contract is Wuhuan Engineering Co.
Zorco selects project manager for Libyan refinery
Zwara Oil Refinery Co. Ltd. (Zorco) let a contract to Foster Wheeler Italiana SPA to perform consultancy and project management services for a planned 200,000 b/sd refinery at Mellita, near Zwara, in Libya. The $4 billion refinery is planned to be completed in 2014.
The contract includes the optimization of the refinery’s configuration, selection of the licensors and the front-end engineering and design, including preparation of a cost estimate. Foster Wheeler also will prepare the tender documents for the engineering, procurement, and construction phase, will assist Zorco in selecting the EPC contractor, and will serve as project management consultant during the EPC phase.
Foster Wheeler said the planned refinery will be a state-of-the-art facility aimed at producing premium quality gasoline, jet fuel, and diesel with minimal fuel oil production, and related utilities, offsites, and marine facilities.
Tamoil Africa Holdings Ltd. holds the equity in Zorco.
Tula cat cracker offline until late November
Petroleos Mexicanos (Pemex) reported it has shut down the catalytic cracking unit at its 315,000 b/d Tula Hidalgo refinery for maintenance. The cat cracker, which was shut down Oct. 19, will be offline until late November, the company said.
Tula is Mexico’s second-largest refinery after its 330,000 b/d Salina Cruz facility and produces about 100,000 b/d of gasoline.
Pemex usually imports gasoline from US Gulf Coast refineries when it is shut down for maintenance, but because of hurricane-related repairs to US refineries, Mexico had to purchase gasoline from European and Asian refineries in September and October.
Transportation Quick TakesBaku-Supsa line reopens, BTC ships Kazakh oil
BP PLC said the Chevron-led TengizChevrOil (TCO) consortium has begun transporting crude oil through the Baku-Tbilisi-Ceyhan pipeline and that the Baku-Supsa pipeline has reopened after being closed during recent hostilities between Russia and Georgia.
“As of today the Baku-Supsa pipeline has started working again and we will gradually raise the amount of oil pumped through it to the optimal level,” said BP Azerbaijan spokesperson Tamam Bayatly Nov. 5.
The State Oil Co. of the Azerbaijan Republic (SOCAR) said the Baku-Supsa pipeline, which has a benchmark capacity of 145,000 b/d, will carry 90,000 b/d after reopening and likely will remain at that level until yearend.
The line was closed down as a safety measure in August during Georgia’s 5-day war with neighboring Russia. At the time, the Baku-Supsa line had been open only a week after returning to service following an 18-month closure for maintenance and repairs.
BP Azerbaijan also said shipments of TCO oil are now under way through the BP-led BTC pipeline. Shipments of TCO crude began in late October, the firm said, without detailing the amounts or dates of shipments.
The oil from Kazakhstan’s Tengiz field is shipped by tankers across the Caspian Sea to the Apsherob Peninsula in Azerbaijan and then loaded into the BTC line, the BP Azerbaijan spokesperson said.
According to SOCAR officials, the BTC line could eventually transport as much as 100,000 b/d of Kazakh oil.
Origin, ConocoPhillips finalize CSM-fed LNG venture
Origin Energy Ltd., Sydney, has finalized its deal with ConocoPhillips to form a coalseam methane (CSM)-supplied LNG joint venture to be called Australia Pacific LNG. ConocoPhillips has submitted an upfront payment of $5 billion.
The proposal is to develop Origin’s CSM resources in the Surat and Bowen basins in Queensland to supply a proposed 14 million tonnes/year LNG plant at Gladstone on the central east coast of Queensland.
First investment decision for Train 1 is due by the end of 2010, and first LNG production is scheduled for 2014.
Through the JV, Origin will become the largest CSM-LNG producer in Australia.
Origin says Australia Pacific LNG brings together Origin’s 10 and ConocoPhillips’ 25 years of CSM experience. Through ConocoPhillips, the new JV has access to 40 years of experience in operating and developing LNG facilities.
PNG names LNG project share nominee
After several months deliberation, Papua New Guinea has put forward Independent Public Business Corp. (IPBC) as the state’s nominee to manage the government’s 19.4% stake in the $11 billion ExxonMobil Corp.-led Papua New Guinea LNG project.
IPBC was competing with fellow state-owned Petromin for the position.
Prime Minister Michael Somare said the government’s ministerial economic committee and the National Executive Council had noted IPBC’s progress to secure financing for the state’s equity in the project without any sell-down of the government’s stake.
In other words, he said, the state won’t go into debt to finance its equity and won’t need to provide state guarantees.
The equity funding arrangements are expected to be announced in the PNG Parliament in mid-November.
Somare added that the government is pleased with the manner in which ExxonMobil and its coventurers are driving the project, particularly in the uncertain global financial market climate.
He said the time is ripe for development of PNG’s gas resources in view of the growing role of gas as a fuel of choice in global efforts to reduce carbon dioxide emissions and global warming.
IPBC also manages the government’s 17.56% interest in Oil Search Ltd.
Centrica secures LNG cargo from Qatar
Centrica PLC will import its first cargo of LNG from Qatar later this month to commission the second expansion phase of the Isle of Grain LNG terminal in Kent.
The cargo from RasGas Co. Ltd. will be the UK’s largest ever LNG delivery, according to Centrica, and is a crucial step in helping the country address its dwindling indigenous supplies from the North Sea.
National Grid PLC owns the terminal, and Centrica has the rights to import 3.4 billion cu m/year of gas for the next 20 years.
“RasGas will use one of the new generation of high capacity Q-Flex super-tankers, the Al Khuwair. It is among the world’s largest LNG carriers and the largest gas vessel to call at a British port,” Centrica said.
The tanker will deliver up to 50 million therms of gas, which represents about 35% of total UK demand on an average winter day.
The company’s chief executive, Sam Laidlaw, is in Qatar on a trade delegation visit with the British Prime Minister Gordon Brown and other British CEOs.
Sam Laidlaw, chief executive of Centrica, said: “Our capacity at Isle of Grain is just one of many strategic investments Centrica is making in new gas and power assets to secure the UK’s future energy needs.”
LNG, increasingly important for the UK, is expected to make up 28% of the UK’s total supply by 2017, according to National Grid’s 2008 forecast. This year the UK will import 40% of its gas demand, rising to 75% by 2015.
Under a 19-year contract, Centrica also has the rights to an additional 2.4 billion cu m/year of gas due to be available in 2010-11 in the third phase of the Isle of Grain expansion. This will mean that almost 30% of the terminal’s total capacity will be available to supply British Gas customers from that time and, overall, the Isle of Grain will then be capable of supplying 20% of the UK’s annual demand.
