General Interest— Quick Takes
Ex-Im Bank to finance subsalt work off Brazil
Acting through the Export-Import Bank, the US agreed to increase financial support by $8 billion to $10 billion for development of subsalt oil reserves off Brazil.
Ex-Im Bank approved in May a $2 billion preliminary commitment to encourage purchase of US goods and services by Petroleo Brasileiro SA (Petrobras), which plans to invest $174 billion in development over the next 5 years. Weeks later, Petrobras completed negotiations with the China Development Bank for a 10-year, $10 billion bilateral credit line.
By the end of this month, Brazilian President Luiz Inacio Lula da Silva is expected to present to congress several bills concerning development of the country's subsalt reserves, after an advisory commission submitted its proposals to the president Aug. 5.
According to Energy Minister Edison Lobao, the report advises designating Petrobras as operator of all new subsalt licenses, which it would develop through partnerships with international oil companies. Another key measure includes formation of a state-run subsalt regulatory body, Petrosal, to manage exploitation of hydrocarbon resources and collect production entitlements from operators.
Injury rates rise for Canadian pipeline workers
More Canadian pipeline workers got hurt on the job during 2007 than in any other year since 2000, when officials started reporting safety performance indicators, Canada's National Energy Board reported Aug. 11.
NEB's annual report, "Focus on Safety and Environment: A Comparative Analysis of Pipeline Performance 2000-07," said nearly 2 out of every 100 pipeline workers suffered a serious workplace injury in 2007. That was nearly double the 7-year average.
The report said possible causes for increased injuries include employee experience levels, increasing pressure to meet deadlines, worker complacency, and increased pipeline construction activity.
NEB said it is working to help improve pipeline worker safety, including hosting safety forums where companies can share best practices with one another.
Industry Scoreboard
Exploration & Development — Quick Takes
Shell's plan for Beaufort Sea advances
The US Minerals Management Service has received Shell Offshore Inc.'s plan to explore two Beaufort Sea leases and deemed it complete. The agency now will begin a 30-day review and analysis of the plan.
The review will include an environmental assessment specific to Shell Offshore's exploration plan, the US Department of the Interior agency said. It will decide whether to approve, require modifications, or disapprove the plan once it completes the technical and environmental review. MMS said Shell Offshore proposes activities limited to the far western area of Camden Bay, including use of one drillship with one tending ice-management vessel drilling two wells over the course of 1 year. The two leases are about 16 and 23 miles north of Point Thompson, Alas.
Shell Offshore obtained the two leases in federal Outer Continental Shelf Lease Sale 195 in 2005 and Lease Sale 202 in 2007, according to MMS. It noted that the sales were included in the 2002-07 5-year OCS program and were not affected by the recent court decision on the current leasing program, which sent the 2007-12 program back to MMS for additional environmental reviews.
It noted that Shell Offshore would have to meet Alaska's coastal zone management requirements, the US Environmental Protection Agency's air and water quality rules, and federal Marine Mammal Protection Act requirements of the US Fish and Wildlife Service and National Marine Fisheries Service before MMS would allow activity to proceed.
Gulf Keystone finds oil in Iraq's Kurdish region
Gulf Keystone Petroleum International Ltd. (GKP) reported its Shaikan-1 well in Iraq's Kurdish region on Shaikan Block, 85 km northwest of Erbil, found oil in the Middle Jurassic Sargelu formation at a depth of 1,450-1,510 m.
GKP said preliminary test rates indicate 5,000-8,000 b/d of 21-22º gravity oil with wellhead pressures of 380-295 psi. The company said the oil's properties are comparable to oil produced at Tawke field to the northwest of Shaikan Block.
Exports from Tawke field, operated by DNO, started on June 1 after approval by Iraq's central government. Production in the first quarter averaged 1,908 b/d and 5,965 b/d in the second quarter.
GKP plans to use information from Shaikan-1 along with seismic surveys and geological data to evaluate the formation. The company said its preliminary estimate for the tested interval is "300-500 million bbl of oil in place."
In addition to the well test results, GKP said the primary zones of interest for the Shaikan-1 are the Lower Jurassic Alan and Mus formations.
GKP said indications are that "these formations will yield additional oil-bearing zones as we drill ahead to our next casing point at approximately 2,500 m…before subsequently reaching final target depth at 3,200-3,500 m."
Last month, GKP decided to focus its attention on Kurdistan and announced plans to seek a buyer for its interest in the Hassi Ba Hamou Permit in central Algeria.
Just days after that announcement, GKP was granted production-sharing contracts by the Kurdish Regional Government (KRG) for Sheikh Adi and Ber Bahr blocks near the city of Dihok in the vicinity of Mosul.
GKP will operate Sheikh Adi with an 80% stake and Ber Bahr with a 40% stake, while the KRG will maintain a 20% stake in both blocks.
Drilling & Production — Quick Takes
Jacket, piles finished for Buzzard platform
Nexen Petroleum UK Ltd. is set to receive the jacket and piles for the fourth platform on its Buzzard oil field in the UK North Sea ahead of schedule. Early installation of the substructure components will reduce the installation and hook-up work when the topsides and bridge are installed in 2010.
Heerema Vlissingen, one of the fabrication facilities of Heerema Fabrication Group (HFG), has loaded the jacket and piles onto a barge to sail to the field, which is 30 miles northeast of Peterhead in Scotland.
The company won the engineering, procurement, and construction contract in March 2008 to deliver a 3,500-ton jacket and eight piles that weigh 2,200 tons. The jacket measures 42 x 42 x 124 m and has eight 96-in. piles that weigh a total of 2,200 tons.
Heerema Vlissingen delivered the equipment early because it had lined up timely procurement and there were no changes to the design.
The new installation should be equipped to handle 200,000 b/d of crude with up to 500 ppm of hydrogen sulfide. It will also have facilities for up to three tiebacks.
"In the meantime, HFG's fabrication facility Heerema Hartlepool is fabricating the 6,000-ton process deck and 500-ton bridge, due for load-out in March 2010," said HFG.
Buzzard holds more than 1 billion bbl of oil in place. It is one of the UK's largest new North Sea developments of recent years (OGJ Online, May 1, 2008). Nexen expects that the field will require 27 production wells. Reservoir pressure will be maintained by an active waterflood program using produced water supplemented by treated seawater when necessary.
Murphy Oil brings Azurite field on stream
Murphy Oil Corp. has started oil production from Azurite field off Congo (Brazzaville) through what it says is the industry's first floating drilling, production, storage, and offloading facility (FDPSO).
Azurite is on the Mer Profond Sud (MPS) block in 4,500 ft of water. The FDPSO has storage capacity of 1.3 million bbl of oil and can process 40,000 b/d of oil. Drilling and completion of production and injection wells continue as production ramps up.
Discovered in 2005, Azurite is Murphy Oil's first operated development in West Africa.
Azurite, with about 75 million bbl of gross oil, was scheduled to come on stream in the second quarter of 2009 (OGJ Online, Apr. 28, 2008).
Murphy Oil operates the block with a 50% working interest. Partners are PA Resources with 35% and Ste. Nationale Petroles du Congo with 15%.
Premier Oil brings Shelley field on stream
Premier PLC has begun producing 31° gravity oil at unspecified rates from the Paleocene Forties reservoir at Shelley field in the UK North Sea.
The field has two horizontal production wells completed subsea with downhole electric submersible pumps. The wells are connected via a short flowline and a control umbilical to the Sevan Voyageur floating production, storage, and offloading vessel.
The company acquired a 100% interest in the field through its takeover of Oilexco North Sea Ltd. (ONSL) in May this year.
Simon Lockett, chief executive officer at Premier Oil, said: "Prior to Premier's acquisition of ONSL, the development of the Shelley field had been stopped, and the contract with Sevan had been terminated. I am delighted that we have been able to negotiate a new contract with Sevan and, with the support of our key suppliers, restart the development, achieving first production so soon."
When it reported its new contract for the Sevan Voyageur, Premier said Shelly oil production would exceed 30,000 b/d (OGJ Online, Apr. 21, 2009).
Shelley was discovered in 1984 by the 22/2-2 well. It is in 95 m of water about 40 km south of the Premier-operated Balmoral complex.
Ghana ports authority prepares for oil production
The Ghana Ports and Harbor Authority plans to begin construction of an oil service terminal at the Takoradi Port in September in preparation for the start of oil production next year.
About $50 million is needed for phase one of the project, due for completion in 18 months, which includes pipelay from offshore oil fields to the port. The project also includes construction of a terminal space for the operations of 10-15 supply vessels.
In connection with the development, Takoradi port authorities have put in place what they are calling an "immediate master plan" to reclaim a portion of the sea to serve as a berthing area for the oil service vessels, which have had to berth at a nearby naval base.
The plan also calls for the dredging of channels and berths to accommodate larger vessels, as well as increasing warehouse space, transit sheds, and space for trucks.
Earlier this month, Tullow Ghana Ltd. let a contract for subsea, well test, and data acquisition services to Expro International Group PLC for its deepwater Jubilee oil field offshore Ghana, which is due to start production in 2010 (OGJ Online, Aug. 4, 2009).
DOE-backed Fayetteville shale tool available
A US Department of Energy-sponsored project has led to development of an infrastructure placement analysis system (IPAS) to help producers recover natural gas more effectively from shale formations in environmentally sensitive areas.
DOE's Fossil Fuels Office said that the University of Arkansas and the Argonne National Laboratory joined the project, managed by DOE's National Energy Technology Laboratory, to develop the software planning tool, which is available on line.
It said that researchers believe the 50-mile wide Fayetteville shale play, underlying numerous central and eastern Arkansas counties with more than 2 million acres leased, could become one of the nation's most active shale gas production areas.
The risk-management tool lets operators evaluate alternative sites, identify sensitive areas, and minimize environmental impacts, according to DOE. It said the IPAS software accomplishes this by providing a map of the intersection of drilling pads, roads, gathering lines, and other proposed features with sensitive water locations, existing transmission lines, soil data, and other features.
Operators who use the software can streamline well placement and infrastructure development permitting, DOE said.
It said researchers estimate that the software can reduce the time required to locate infrastructure elements by a day or more for at least 10% of wellsites. Cost savings could approach $2.25 million/year with a drilling rig day rate of up to $45,000 on 500 wells/year, it indicated.
Processing — Quick Takes
Rockies, shale NGLs prompt work at Mont Belvieu
Enterprise Products Partners LP announced recently plans to build a 75,000-b/d NGL fractionator at its Mont Belvieu, Tex., complex east of Houston. The unit will provide additional capacity to accommodate growing NGL volumes from producing areas in the Rockies, the Barnett shale, and the emerging Eagle Ford shale play in South Texas.
When completed in early 2011, the project will increase Enterprise's NGL fractionation capacity at Mont Belvieu to about 300,000 b/d and net system-wide capacity to about 600,000 b/d.
Enterprise said the project is supported by long-term processing contracts and will be based on the design of its 75,000-b/d Hobbs fractionator in Gaines County, Tex., that started up in August 2007 (OGJ, June 18, 2007, p. 50; June 23, 2008, p. 50).
"Over the past 3 years," said Jim Teague, Enterprise executive vice-president, "our NGL fractionation volumes have increased by 46% to a record 449,000 b/d in second-quarter 2009.
"Our NGL fractionators are operating at or near their practical limits and we have consistently contracted with third-party fractionators for additional capacity," he said. With expected growth in NGL production and demand for NGLs by the petrochemical industry, "we have seen strong demand for NGL fractionation, storage, and distribution."
The growing demand for fractionation services is indicated, he said, by the fact that Enterprise's Hobbs plant has been operating at capacity since first-quarter 2008. In fact, "we have even been utilizing our fractionators in Louisiana to offload volumes that exceeded our available capacity at Mont Belvieu in order to satisfy customer demands."
Sinopec, KPC select Zhanjiang for complex
China Petroleum & Chemical Corp. (Sinopec) said its joint refining and chemical complex with Kuwait Petroleum Corp (KPC) is to be constructed on Donghai Island in Zhanjiang city, near Hainan.
"From this week, the two sides will start feasibility studies for the new site and an evaluation report on environmental impact," said Sinopec, adding that the new site was chosen after several months of screening by Sinopec and KPC as well as Chinese and international consultants.
Sinopec said the $9 billion complex, which will have an annual capacity of 15 million tonnes, is due for completion by yearend 2013 after it gains approval from the country's National Development and Reform Commission.
The two firms originally chose the Nansha District of Guangdong's capital city Guangzhou as the location for the complex, but local media said they changed plans due to environmental concerns.
Hong Kong's RTHK Radio 3 said Sinopec and KPC agreed to move the refinery project on the mainland further away from Hong Kong after "strong opposition from local green groups and lawmakers."
In May, the Kuwait News Agency reported that the refinery project, which also includes a 1 million tonne/year ethylene cracker unit, will be designed to solely process Kuwaiti crude supplied by KPC.
HF release at Joliet refinery investigated
The US Chemical Safety Board has sent an investigative team to ExxonMobil Corp.'s 240,000-b/d Joliet, Ill., refinery following an Aug. 6 propane and hydrogen fluoride release there. It was the third HF release CSB has investigated this year, CSB Chairman John S. Bresland said.
"We are concerned about the three apparent releases of hydrogen fluoride from refinery alkylation units in Pennsylvania, Texas, and now Illinois that have been reported since March 2009. Because of its high toxicity, any loss of primary containment for hydrogen fluoride is a serious matter," he said.
CSB has investigators examining a July 19 HF release at Citgo Petroleum Corp.'s 156,800 b/d Corpus Christi, Tex., refinery. It said that a similar incident occurred on Mar. 9 at Sunoco Inc.'s 330,000-b/d Philadelphia refinery.
The incident at ExxonMobil's Joliet plant occurred around 12:30 pm CDT when HF and propane suddenly leaked from the refinery's alkylation unit, according to CSB.
It said the leak did not ignite, but one operator was transported to the hospital suffering from what were described as serious, HF-related chemical burns, and was initially reported in critical condition. A second operator was examined at the hospital and released.
CSB said the unit's water deluge system, which is designed to contain airborne HF releases, was activated, and the alkylation unit was shut down as refinery employees sought shelter.
Transportation— Quick Takes
Ras Laffan III LNG Train 6 starts production
Ras Laffan Liquefied Natural Gas Co. Ltd. III has started up Train 6. The project, a joint venture of Qatar Petroleum (70%) and ExxonMobil Ras Laffan (III) Ltd. (30%), expands existing LNG production operated by RasGas Co. Ltd. at Ras Laffan Industrial City, Qatar.
Train 6 can produce 7.8 million tonnes/year, matching the capacity of the largest LNG train in the world, also in Qatar (OGJ Online, Apr. 6, 2009). These plants have "sufficient scale to competitively reach markets all around the globe," said the announcement. In addition, Ras Laffan III is also building its second 7.8-million-tpy train, Train 7, which the company expects to start up later this year. Both trains will be supplied by natural gas from Qatar's giant North field, with estimated reserves of more than 900 tcf.
Ras Laffan III is part of an investment that includes natural gas production and liquefaction facilities in Qatar and investments by affiliates of Qatar Petroleum and ExxonMobil in 12 new Q-Flex LNG carriers (210,000 cu m) and the Golden Pass LNG regasification terminal under construction near Sabine Pass, Tex.
Golden Pass is a joint venture among affiliates of Qatar Petroleum (70%), ExxonMobil (17.6%), and ConocoPhillips (12.4%). Its planned start-up has slipped to 2010 from 2009, partly in response to market conditions and partly the result of damage sustained in September 2008 from Hurricane Ike (OGJ Online, June 18, 2009; July 31, 2009).
Qatar is the world's largest LNG supplier. Through joint ventures with Qatar Petroleum, ExxonMobil has an interest in 12 trains in Qatar to supply LNG to markets in Asia, Europe, and North America.
Ras Laffan III Train 6 is the second 7.8-million-tpy LNG plant brought online by Qatar Petroleum and ExxonMobil joint ventures this year. Last spring, Qatargas inaugurated its two-train Qatargas 2 project (OGJ, Apr. 13, 2009, p. 10).
Gorgon-Jansz LNG project gains approvals
The Chevron Australia-operated Gorgon-Jansz LNG and domestic gas project proposed for Barrow Island off Western Australia has received a double boost by first securing final environmental approval from the Western Australian government and then by receiving confirmation of India's Petronet LNG as a foundation customer.
The project now only needs Australian federal government environmental approval before the Australian consortium of Chevron Corp., ExxonMobil Corp., and Royal Dutch Shell PLC moves to a final investment decision.
Western Australia government approval came after the group agreed that conditions set by State Environment Minister Donna Faragher last month will be met.
Consequently the group has earmarked an additional $30 million (Aus.) to the existing $32.5 million commitment to establish a North West Shelf Flatback Turtle Conservation Program as well as another $20 million to the $40 million Net Conservation Benefits program. This brings the group's total commitment in environmental pledges to $190 million.
This week also saw closure of a deal between ExxonMobil and Petronet announced last May for Petronet to purchase 1.5 million tonnes/year of LNG over 20 years from the project. It marks Australia's first long-term sale of LNG to India.
It could provide impetus for the other partners to finalize their separate agreements that so far are nonbinding.
These include Chevron's agreements with three Japanese utility companies and GS Caltex in South Korea for about 70% of its share of the LNG production, and Shell's reported agreement to sell 2 million tpy over 20 years to PetroChina.
The Greater Gorgon project will produce 15 million tpy of LNG from three trains on Barrow Island as well as 300 terajoules/day from a domestic gas plant connected by pipeline to the mainland.
Kuwait Oil Co. wins approval for port plan
Kuwait City Municipality has agreed to grant Kuwait Oil Co. (KOC) a location in Abu Halifa to establish sea port facilities, according to a senior official.
Municipality administrator Abdullah al-Naumis said the facilities will be built on a 28,300-sq-m area, noting that the request for the port had been denied in May due to environmental concerns.
The municipality's approval came after KOC reevaluated the impact of its port project, taking into account the environmental concerns, which included residential areas as well as a state-run coffee shop.
The Abu Halifa location is east of Kuwait's Al Maqwa oil field, and just north of the country's existing oil export facility at Mina al Ahmadi.
The new port will be built about 300 m from the shore into the sea and will stretch about 140 m along the shore line, according to al-Naumis, who said that KOC will keep a 30 m buffer zone between its facilities and any residential areas.
Adriatic LNG receives first cargo
ExxonMobil Corp. has delivered its first LNG cargo using the Dukhan LNG carrier to the 8 billion cu m/year Adriatic LNG regasification terminal 10 miles off Porto Levante, Italy. Adriatic LNG is the world's first offshore gravity-based structure LNG regasification terminal.
Adriatic LNG is designed around a large concrete structure in 95 ft of water, which houses two LNG storage tanks, a regasification plant, and facilities for mooring and unloading LNG vessels.
ExxonMobil has invested in proprietary technology in this major facility that will meet 10% of Italy's natural gas requirements when it reaches full operational capacity later this year. The terminal will be able to deliver 775 MMcfd of natural gas.
Neil Duffin, president of ExxonMobil Development Co., said, "Through advanced technologies, project execution expertise, and economies of scale, ExxonMobil is extending its ability to bring global LNG supplies to Italy and elsewhere around the world."
The project is jointly owned by Qatar Terminal Ltd., a Qatar Petroleum wholly owned subsidiary, with a 45% stake, ExxonMobil Italiana Gas holds 45%, and Edison SPA holds 10%.
