General Interest — Quick Takes
BP identifies midstream assets to divest
BP PLC has identified 22 US properties for divestment in a midstream asset review aimed at bolstering profitability of its refining and associated operations.
According to a company document, the review seeks to reduce operational flexibility of BP's logistics infrastructure and "to create a sustainable, long-term business for the fuel value chains (FVCs) and [450,000-b/cd] Texas City refinery."
FVCs, created in a 2008 refining and marketing reorganization, are regionally integrated refining, logistics, marketing, supply, and trading activities. BP has six of the groups worldwide, two in the US.
According to the document, the asset review aims to "identify the assets that create strategic sources of value as a direct benefit of owning and operating the asset."
Identified for divestment so far are crude and product pipelines, pipeline interests, and terminals on the Gulf and West Coasts and in the Midwest.
The document said BP at present has no plans to shut down properties identified for divestment for which it finds no buyers.
In the past 2 years, the company has been selling company-owned, company-operated service stations in the US.
Profitability is under stress for all US refiners. For the third quarter this year, BP reported a loss from US refining and marketing of $229 million on a replacement-cost basis before interest and tax, compared to a profit of $338 million in third-quarter 2008. In this year's second quarter, the loss was $326 million.
BP reported a third-quarter 2009 profit of $1.145 billion from non-US refining and marketing, compared with $1.634 billion in third-quarter 2008 and $1.006 billion in this year's second quarter.
In the US, BP operates 10,000 miles of liquids pipeline and five refineries with 1.5 million b/d of total capacity.
PDVSA acquires stake in ConocoPhillips project
Venezuela's state-owned Petroleos de Venezuela SA said it has acquired from ConocoPhillips a stake in the Deltana Platform—a joint natural gas project with Chevron Corp.
PDVSA said the acquisition will result in the creation of a new joint venture to exploit the Deltana Platform, with the Venezuelan company having a 61% stake and Chevron 39%. The Deltana Platform is in the Atlantic Ocean between the mouth of the Orinoco River and Trinidad and Tobago.
PDVSA said output will reach 750 MMcfd of gas, which will be transported via a 300-km pipeline to the Gran Mariscal de Ayacucho Industrial Complex, now under construction in Venezuela's Sucre state.
Venezuela produces 6.3 bcfd of gas, but is working on projects to double that output by 2012; currently, the Andean nation has South America's largest proven reserves of gas at more than 170 tcf.
ConocoPhillips and the Venezuelan government are locked in a dispute over compensation for oil operations in the heavy-crude Orinoco belt of eastern Venezuela.
Venezuela's President Hugo Chavez's administration nationalized four heavy oil projects in 2007, seizing control of ConocoPhillips's operations after the companies failed to agree on terms for a minority stake.
ConocoPhillips later initiated international arbitration against Venezuela to secure compensation for its oil investments and operations.
Toreador to exit Turkey, Hungary
Toreador Resources Corp., Paris, has entered into two definitive agreements to sell separately its Turkish subsidiary, Toreador Turkey Ltd., and its Hungarian subsidiary, Toreador Hungary Ltd.
The company's Turkish unit will be purchased by private Norwegian energy company Tiway Oil for a total consideration of $10.6 million paid at closing, plus exploration success payments of up to $40 million plus contingent future net profit payments.
Toreador's Hungarian unit, meanwhile, will be acquired by private Austrian company Rohol-Aufsuchungs AG for $5.8 million plus a contingent payment of $2.9 million to be paid upon post-transaction completion of agreements relating to certain assets of Toreador Hungary.
The Toreador Turkey transaction is expected to close on Oct. 7 and the Toreador Hungary deal has closed on Sept. 30.
Total combined cash proceeds upon closing of both deals will be $16.4 million (which excludes contingent future payments). Both transactions are subject to standard post-closing purchase price adjustments.
Craig McKenzie, Toreador president and chief exploration officer, said, "We expect that the proceeds of these transactions will enable us to continue repurchasing a portion of our convertible notes, and to continue delivering our corporate strategy to develop the low-risk conventional exploration of our French acreage and to plan our 'proof of concept' phase for the unconventional exploitation of the Paris basin oil shale."
KNOC to buy Harvest Energy Trust
Korea National Oil Corp. plans to buy Harvest Energy Trust for $1.8 billion (Can.) plus the assumption of $2.3 billion in debt.
KNOC Pres. Young-won Kang said the acquisition fits into the company's North American growth strategy.
"KNOC has ambitious plans for future growth and is committed to a long-term investment strategy in Canada," he said.
Closing is expected before yearend. The transaction remains subject to regulatory approval along with the approval of a 662⁄3% of Harvest unitholders.
Harvest reported production of 52,745 boe/d as of Aug. 31, 2009, and reserves of 154.3 million boe as of Dec. 31, 2008. Harvest subsidiary North Atlantic Refining Ltd. owns the 115,000 b/cd Come by Chance refinery in Newfoundland.
Exploration & Development — Quick Takes
BP to ply tight sands gas of Jordan's Risha
BP PLC plans to join Jordan's state-owned National Petroleum Co. (NPC) to exploit the onshore Risha concession in northeasternmost Jordan.
Subject to government and parliamentary approval, BP is to farm into the Risha concession as a partner with NPC. The concession borders Syria, Iraq, and Saudi Arabia.
The Risha concession, awarded by the government to NPC, covers about 1.7 million acres. The concession includes Risha gas field, 170 miles northeast of Amman, where the first successful wells were drilled in the late 1980s.
BP said it will conduct initial exploration and appraisal work that will involve shooting seismic, working on existing wells, and drilling new wells. If that is successful, then the company will move to agreeing on a substantive development.
The gas reservoir appears to be tight sandstones of Lower Paleozoic (Ordovician or Silurian) age at 8,000-8,500 ft. Several Risha wells are nearly astride the Jordan-Iraq border.
Husseini et al. wrote in 2007 that Jordan's Paleozoic Risha field produces 30 MMcfd of gas from more than 30 wells. BP said the present rate is more than 20 MMcfd.
It extends across a 10 by 50 km area, "but the reservoir is a thin sheet of complex sandstones in faulted glaciofluvial channels, ranging in thickness from 2 to 12 m. Its proven reserves are 180 bcf of gas, the equivalent of only 32.4 million bbl of oil (OGJ, July 2, 2007, p. 40)."
Indications are that Risha shares similar geology with the undeveloped Akkas discovery about 125 miles east in Iraq's western desert.
Four Chesapeake shales set output marks
Chesapeake Energy Corp., Oklahoma City, achieved record gross operated production from its four main US shale gas plays.
The company reported exceeding 1 bcfd in from the Barnett shale, reaching 500 MMcfd from the Haynesville shale, topping 400 MMcfd from the Fayetteville shale, and attaining 100 MMcfd from the Marcellus shale.
The production levels came from 1,500 Chesapeake-operated Barnett wells, 125 Haynesville wells, 450 Fayetteville wells, and 60 Marcellus wells.
Since entering the Barnett shale in late 2004, the company has become its second largest gas producer.
Chesapeake said the 125 operated Haynesville wells are 20% the number needed to reach the same production level in the Barnett. Plains Exploration & Production Co. is Chesapeake's 20% joint venture partner in the Haynesville.
Chesapeake is also the second largest gas producer in the Fayetteville, where BP America Inc. is its 25% joint venture partner.
Chesapeake said it's the largest leaseholder in the Marcellus, where StatoilHydro is its 32.5% joint venture partner, and expects to become the play's largest producer by the end of 2009.
Among recent completions:
Barnett—The Day Kimball Hill A1 in Tarrant County, Tex., peaked at 16.4 MMcfd and is expected to average more than 13 MMcfd in its first month and exceed the previous monthly industry Barnett output record established by two Chesapeake-operated wells in mid-2009 that averaged more than 9 MMcfd.
Haynesville—Caspiana 13-15-12 H-1 peaked at 20.2 MMcfd, and Bradway 24-15-12 H-1 peaked at 18.6 MMcfd. Both are in Caddo Parish, La.
Fayetteville—Reva Deen 7-8-1-15H9 in White County, Ark, peaked at 8 MMcfd, and Collinsworth 7-16 2-10H in Conway County peaked at 6.2 MMcfd.
Marcellus—Clapper 2H in Susquehanna County, Pa., peaked at 10.1 MMcfd, and Otten 2H in Bradford County peaked at 8.9 MMcfd.
SEG: Group to research low frequency seismic
Five multinational oil and gas exploration and development companies have joined a 3-year project to research low frequency seismic technologies for hydrocarbon reservoir detection and characterization.
Early participants are Cairn Energy PLC, Chevron Corp., ExxonMobil Corp., GDF Suez, and Petroleos Mexicanos. An Asian national oil company is expected to join the group, known as Low Frequency Seismic Partnership, within months, said Spectraseis, Zurich, Switzerland.
The program will cover key application elements of low frequency seismic technology, such as data acquisition and processing, as well as fundamental theoretical studies, in partnership with researchers at Spectraseis, the Swiss Federal Institute of Technology (ETH) in Zurich, and the University of Bern, Switzerland.
Participants will be at the leading edge of the latest research on low frequency seismic applications and will learn how to extract the maximum value from this technology for their companies, Spectraseis said (OGJ, Oct. 26, 2009, p. 33).
Established in 2003, Spectraseis is the principal technology and service provider in the fast-emerging field of low frequency seismic geophysical surveys and data analysis.
Drilling & Production — Quick Takes
PTTEP stops trying to plug Montara platform leak
Thai company PTTEP has been forced to abandon its fourth attempt to plug the oil leak from its Montara oil platform in the Timor Sea after the drilling assembly failed while being run in the relief well.
PTTEP is now retrieving the assembly and will continue preparations to make a new attempt to intercept the leaking well casing later this week.
The company's repeated failures to stop the leak which began in August and has been flowing about 400 b/d into the surrounding sea ever since, has raised the ire of green groups in Australia and around the world.
Concern has been raised for the environment and marine creatures in the region of the spill 750 km west of Darwin.
PTTEP has agreed to fund an environmental monitoring program for at least 2 years, to be carried out by relevant experts and include marine life surveys, wildlife and habitat studies, water-quality testing, and shoreline ecological assessments.
Daniel Boone discovery starts up in US gulf
W&T Offshore Inc., Houston, started oil and natural gas production from the Daniel Boone discovery well in the deepwater Gulf of Mexico.
Sales began Sept. 28 from the well in Green Canyon Block 646 through a 22-mile subsea tieback to a third-party operated platform in Green Canyon 338. Flow rates reached 6,000 b/d of oil and 5.7 MMcfd of gas by late October, W&T Offshore said.
The discovery well is in 4,230 ft of water 120 miles off Louisiana and five blocks east of Tahiti oil field. The company plans to adjust production to achieve maximum recovery from the reservoir.
W&T Offshore is operator with 60% working interest, and Mariner Energy Inc., Houston, has 40%.
Nexus Energy brings Longtom field on stream
Nexus Energy Ltd., Melbourne, has brought on stream its wholly owned Longtom natural gas field in Bass Strait.
The company is now commissioning the production and processing system in coordination with Santos. Gas is being fed by a 19 km subsea pipeline into the Santos-owned former Patricia-Baleen production line to the Santos onshore facilities near Orbost in Gippsland, in eastern Victoria.
Longtom has 2P reserves of 350 petajoules of gas and 4 million bbl of condensate. Santos will buy the gas while Nexus will market the liquids separately.
Processing — Quick Takes
Plains All American buys Tulsa storage
Plains All American Pipeline LP has bought receiving pipelines, a manifold system, and 400,000 bbl of crude oil storage capacity at Holly Corp.'s 85,000-b/d refinery in Tulsa for $40 million cash.
Holly, the seller, entered a 15-year tank lease and minimum throughput agreement with Plains covering the six tanks and three crude oil receiving pipelines covered by the transaction. Holly retains ownership of 2.8 million bbl of intermediate and finished product storage at the refinery, which it acquired from Sunoco Inc. last June.
The companies agreed to explore use of the Tulsa storage facilities to capture trading opportunities that may arise from Tulsa's proximity to Cushing, Okla., an important pipeline hub and pricing location.
Holly recently agreed to buy from Sinclair Oil Corp. a 75,000-b/d refinery 2 miles from its Tulsa facility. It plans to integrate the refineries in a move that will lower crude capacity to 125,000 b/d (OGJ Online, Oct. 20, 2009).
Russia, Turkey agree on new Ceyhan refinery
Russia and Turkey, building on earlier discussions, have moved forward with plans to construct a refinery as part of their recent agreement to jointly build the Samsun-Ceyhan pipeline.
"We carried out serious analysis work on the state of the Black Sea oil market," said Russia's Energy Minister Sergei Shmatko, referring to the new pipeline agreement signed by his country, Italy, and Turkey (OGJ Online, Oct. 22, 2009).
"We plan to build a major refinery and sell oil products in the Mediterranean," Shmatko told journalists on the sidelines of a conference. He did not specify the projected capacity or any other details of the refinery project.
However, a broad protocol on oil cooperation, including Russia's participation in construction of the Samsun-Ceyhan oil pipeline, was signed during Prime Minister Vladimir Putin's visit to Ankara in August. Under the protocol, the two sides agreed to set up a working group "aimed at analyzing the possibility of building an oil refinery and organizing the joint sales of petroleum products, including in third countries."
CSB team deploys to Puerto Rico tank explosion
A six-person team from the US Chemical Safety Board (CSB) deployed to investigate an explosion and fire that Caribbean Petroleum Corp. reported at a petroleum storage facility near San Juan, Puerto Rico.
Reports indicated large petroleum storage tanks were on fire Oct. 23 at the gasoline storage and distribution center in Bayamon just west of San Juan. Authorities said 21 of 40 tanks had exploded.
Both the US Federal Bureau of Investigation and the Bureau of Alcohol, Tobacco, Firearms, and Explosives dispatched agents to Bayamon, said an ATF spokesman. Several people were treated for minor injuries, and some 1,500 people were evacuated.
The CSB is an independent federal agency. It investigates all aspects of chemical accidents, including physical causes such as equipment failure as well as inadequacies in regulations, industry standards, and safety management systems.
Algeria receives bids for Tiaret refinery project
Algeria's Sonatrach has received bids from four international companies for the contract to perform front-end engineering and design services for the Tiaret refinery project.
The bidders are Technip, Sinopec, Saipem, and CB&I Lummus.
The 300,000 b/d refinery, which is expected to cost $6 billion to build, is scheduled to start up in 2014, and will produce gas oil, gasoline, kerosine, butane, propane, and naphtha for both export and domestic consumption.
Vitol to acquire Belgium refining assets
A division of Vitol Group agreed to acquire Petroplus Refining Antwerp and Petroplus Refining Antwerp Bitumen from Petroplus Holdings for $25 million.
The transaction price excludes the cost of the inventory. Closing, subject to regulatory approvals, is expected by yearend.
The Belgium refining assets include a bitumen processing plant with 875,000 tonnes/year capacity. Assets also include a 22,300 b/d gas oil hydrotreater, and tank storage.
Petroplus Holdings, a European independent refiner, currently owns and operates seven refineries having a combined throughput capacity of 864,000 b/d.
Transportation — Quick Takes
Enterprise, Duncan to expand Acadian gas line
Enterprise Products Partners LP and Duncan Energy Partners LP announced plans to extend their jointly owned Acadian Gas LLC subsidiary's Louisiana intrastate natural gas pipeline system into northwest Louisiana. The expansion will provide producers in the Haynesville shale access to nine interstate pipelines (Florida Gas, Texas Eastern, Transco, Sonat, Columbia Gulf, Trunkline, ANR, Tennessee Gas, and Texas Gas) via Acadian's existing 1,000-mile south Louisiana network.
The project, dubbed the Haynesville Extension, will have capacity to move 1.4 bcfd through 249 miles of 36-in. and 30-in. OD pipeline connecting to both Acadian's system and its affiliated Cypress Gas Pipeline. Acadian will build two new compressor station totaling 67,000 hp as part of the project. Additional long-term commitments could boost capacity to 2 bcfd. Enterprise expects the Haynesville Extension to enter service in September 2011.
The current Acadian system has access to more than 150 end-use markets between Baton Rouge and New Orleans, a rapid-cycle salt dome storage cavern, and the Henry Hub. The Haynesville Extension will intersect with Acadian in Pointe Coupee and Assumption Parishes and with the Cypress system in Point Coupee and West Baton Rouge. Initial upstream connections will include nine Haynesville shale locations in DeSoto and Red River Parishes.
Regency Energy Partners LP, Alinda Capital Partners LLC, and GE Energy Financial Services announced plans in September to construct a $47 million pipeline extension of the Haynesville Expansion Project (HEP) in North Louisiana to increase capacity on the Regency Intrastate Gas System (RIGS). The extension, called the Red River Lateral, will add 100,000 MMbtu/day of capacity to the current project, bringing the total capacity to about 1.2 bcfd. Regency described the Red River Lateral as the first of several opportunities to extend the HEP (OGJ Online, Sept. 14, 2009).
Energy Transfer Partners LP also in September entered into a 10-year contract with a shipper to transport 300 MMcfd of gas on its Tiger Pipeline system, bringing total capacity commitments on the proposed line to not less than 1.8 bcfd. ETP said the new volume commitment further demonstrated the need for additional pipeline capacity out of the Haynesville shale. Pending necessary regulatory approvals, ETP intends to start construction of the line by June 2010 and have it in service in the first half of 2011.
Julimar gas to go to Wheatstone LNG project
Chevron Australia has made an agreement with Apache Energy Ltd. and Kuwait Foreign Petroleum Exploration Co. (Kufpec) for natural gas from the companies' Julimar and nearby Brunello fields to supply the proposed Wheatstone LNG project in Western Australia.
The arrangement also provides for Apache and Kufpec to take a respective 16.25% and 8.7% interest in the Wheatstone facilities. Chevron will retain a 75% stake in the project.
The deal means Wheatstone is the first LNG project in Australia to attract large volumes of third-party gas supplies. It will also extend the life of Wheatstone as it will unlock 2.1 tcf of gas reserves at Julimar and Brunello and generate a production for 15 years.
Apaches says the likely net capital expenditure for its part of the project will be $1.2 billion for the upstream development of its two fields which lie in permit WA-356-P plus $2.9 billion for its share of the Wheatstone facilities, including the LNG plant.
First phase of Wheatstone development is planned as a two-train LNG facility capable of producing 8.6 million tonnes/year of LNG along with pipeline gas from a domestic gas plant.
Turkmenistan completes gas line spur to China
Turkmenistan has completed construction on its 188-km section of a 7,000-km natural gas pipeline that extends from Turkmenistan to China, according to official media.
"Work on the Turkmen section of the Turkmenistan-Uzbekistan-Kazakhstan-China gas pipeline…is complete," said the state-owned Neutral Turkmenistan newspaper.
Construction of the Turkmen section of the line, at a cost of $400 million, was carried out by Russia's Stroytransgaz. The whole line, which will transport gas from the Caspian Sea across Central Asia to China, is scheduled to start up by yearend. The pipeline starts from Turkmen gas fields near the Amu Darya river. It then enters Uzbekistan at Olot, then flows on to southern Kazakhstan, and on to Alashankou in China, where it will be connected to the West-East Gas Pipeline.
In addition to gas from Turkmenistan and Uzbekistan, the $7.3 billion line is to be supplied from Kazakhstan's Karachaganak, Tengiz and Kashagan gas fields. China National Petroleum Corp. has already signed a 30-year agreement for the supply of 30 billion cu m/year of gas through the new line.
The new development comes at an opportune moment for Turkmenistan, whose gas historically has been piped to Russia. But the Central Asian country has been seeking to diversify its export markets away from Russia. The importance of its strategy was underlined earlier this year after a pipeline explosion sparked a disagreement with Russia's OAO Gazprom that saw Turkmen gas exports almost completely cut off. Since then, the two sides have been unable to agree on a new export arrangement.
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