General Interest — Quick Takes
API issues new refinery safety standards
The American Petroleum Institute issued two new refinery safety standards on Apr. 22 that it said will help refiners reduce risks at their installations. It said that the first will help processors identify and use safety indicators to reduce risks, while the second will provide guidance on reducing fatigue risks.
API said both standards were developed after the US Chemical Safety Board recommended that API and other stakeholders develop them following CSB's investigation of the 2005 explosion and fire at BP Products North America Inc.'s Texas City, TEX., refinery which killed 15 and injured 127 people.
"The industry is constantly looking for ways to enhance worker safety and lower the level of incidents: The only acceptable level is zero," said Bob Greco, API's downstream and industry operations group director. The trade association develops recommended standards and practices for the oil and gas industry.
The first standard, Recommended Practice 754, provides companies with leading and lagging process safety indicators for recognizing and evaluating events that may predict safety issues. API said it was developed for the refining and petrochemical industries, but may apply to other businesses with operating systems and processes where loss of containment can cause harm.
API said the second standard, Recommended Practice 755, provides guidance to help manage fatigue risk. It was developed for refineries, petrochemical and chemical operations, natural gas liquefaction plants, and other facilities, API said.
The American National Standards Institute (ANSI) approved both of the standards as meeting its essential requirements. ANSI is the accrediting body for US organizations which develop standards, according to API.
US senators offer bill to extend ethanol tax credit
US senators from agricultural states introduced legislation on Apr. 20 that would extend the federal ethanol tax credit through 2015. Failure to do so would cost 112,000 jobs nationwide and reduce domestic fuel ethanol production by 40%, they maintained.
Sen. Charles E. Grassley (R-Iowa), the Finance Committee's ranking minority and the bill's primary sponsor, said the expiration of a separate biodiesel tax credit at the end of 2009 has cost 29,000 jobs and put 23,000 more at risk. "We can't risk a repeat performance with ethanol, where 112,000 jobs are at stake," he said.
Grassley added that the US already provides duty-free access to some ethanol imports under the Caribbean Basin Initiative, "but the CBI cap has never once been fulfilled," he said, adding, "In fact, last year, only 25% of it was even used by Brazil and other countries."
Senate Budget Committee Chairman Kent Conrad (D-ND), a cosponsor of the bill, said, "Our country is in serious danger because of skyrocketing energy costs. We must be committed to coming together to lessen our dependence on foreign oil, while aggressively pursuing alternative sources of energy such as biofuels. Extending these tax credits is a step in the right direction."
They said the bill would extend by 5 years until the end of 2015 the current 45¢/gal volumetric ethanol excise tax credit and the 10¢/gal small ethanol producers' tax credit, both of which are scheduled to expire on Dec. 31. The measure also would extend by 3 years the $1.01/gal cellulosic biofuel producer tax credit, currently set to expire on Dec. 31, 2012, and extend by 5 years the ethanol tariff, which is scheduled to expire at yearend.
Other Senate cosponsors include Mike Johanns (R-Neb.), Tim Johnson (D-SD), Ben Nelson (D-Neb.), and John Thune (R-SD). US Reps. Earl Pomeroy (D-ND) and John Shimkus (R-Ill.) introduced a similar bill in the House on Mar. 25.
Russia, Ukraine reach accord on gas price
Russia and Ukraine have resolved a longstanding dispute over natural gas prices with a deal extending Russian military presence in its former satellite by 25 years.
Under the former, 10-year deal negotiated by the former Ukrainian government of western-leaning Viktor Yushchenko, Ukraine has been paying more than $300/1,000 cu m for Russian gas.
The new deal, negotiated by a government friendlier to Russia headed by new President Viktor Yanukovych, provides a discount of $100/1,000 cu m when the price is higher than $330/1,000 cu m and of 30% when the price is less.
According to the Russian newspaper RIA Novosti, the discount applies to 30 billion cu m of Russian gas supplied to Ukraine and to 40 billion cu m/year in 2011-12.
Ukraine had been trying to lower contract volumes from 42 billion cu m in 2009 (OGJ, Dec. 7, 2009, p. 56). Novosti said the earlier contract volume for this year was 36.5 billion cu m.
In past price disputes, Russia has halted pipeline deliveries to Ukraine, an important transit country for gas bound for Europe.
In exchange for gas-price relief, Ukraine extended Russia's lease on a base in Crimea for the larger country's Black Sea Fleet.
CSB sends investigators to Oklahoma blast site
The US Chemical Safety Board sent investigators on Apr. 21 to the site of an Apr. 14 Oklahoma oil field explosion that killed a member of the general public. The blast occurred just a day after CSB released a safety video aimed at educating young people on the hazards of socializing at oil production sites, a common phenomenon in rural areas.
A 21-year-old died of burns sustained in the Apr. 14 explosion and fire near Weleetka, Okla., CSB said. A second person apparently was injured critically when two tank batteries exploded at the site east of Oklahoma City, according to published reports. No additional information was available.
CSB board member William Wark said the independent federal agency has become very concerned about explosions at rural oil field sites which continue to take the lives of young people.
"Only last week, I met the families of two teenagers killed last October in an oil site explosion in Mississippi," he said. "In that accident and in others across the country, the victims have had easy access to storage tanks, catwalks, and hatches, and do not appear to have been aware of the serious explosion hazard from highly flammable vapor that is inside or near the tanks."
CSB released a safety video, "No Place to Hang Out," on Apr. 13 aimed at educating young people on the hazards of socializing at oil production sites. It tells the story of 18-year-old Wade White and 16-year-old Devon Byrd who were killed on Oct. 31, 2009, when an oil tank in a clearing in the woods near where they lived suddenly exploded. The 11-min video is online at www.csb.gov.
Exploration & Development — Quick Takes
Murphy Oil interests off Malaysia terminated
Murphy Oil Corp.'s interests in Blocks L and M off Malaysia have been terminated after resolution of a dispute with Brunei over control of the assets.
Murphy was informed by state-owned Petronas that the two blocks are no longer a part of the country following an agreement between Malaysia and the Sultanate of Brunei.
Murphy said its potential participation in replacement production-sharing contracts (PSCs) covering these areas is "under discussion."
The announcement follows recent reports that the two southeast Asian countries are trying to implement an agreement made in March 2009 to establish a commercial arrangement area.
That agreement ended a dispute that erupted in 2003 when Petronas and Murphy were awarded two offshore leases, SB L and SB M. The blocks overlapped with Brunei's Blocks J and K, which had been awarded to Total SA and Royal Dutch Shell PLC.
In a recent report, the Economist Intelligence Unit noted that Brunei and Malaysia are "inching closer towards resolving their border disputes."
EIU noted in particular that "agreement on the land border could pave the way for a deal on the maritime border that would allow both countries to benefit from the discovery of new oil and gas deposits."
Esso, BHP find oil, gas with Remora-1
Esso Australia Resources and BHP Billiton Petroleum reported an oil and gas discovery with their South East Remora-1 wildcat drilled in the Gippsland basin about 35 km off Victoria in Bass Strait.
South East Remora-1 was drilled with the Ocean Patriot semisubmersible rig in 57 m of water. Total depth was 3,602 m subsea. The find was made in the Tertiary-age Latrobe and Golden Beach reservoirs.
However the companies are in no rush as the evaluation of formation fluids and pressure analysis is expected to take several months, they said.
The well lies close to the existing Marlin A platform, one of the original producing fields in Bass Strait. The well is included in the Gippsland basin equal joint venture between Esso (operator) and BHP.
The 50-50 JV is likely to drill follow-up wells on other small structures in the area.
Rubiales oil extension declared commercial
Colombia's Ecopetrol has approved one commerciality declaration for an extension of giant Rubiales heavy oil field in the Llanos basin and is considering a second declaration.
Pacific Rubiales Energy Corp., Toronto, said successes at exploratory drilling campaigns on the Rubiales and surrounding Quifa blocks led it to file for commerciality on more than 40,000 ha. The areas being declared commercial are the Quifa southwest area and the Rubiales southwest area.
Successful drilling has added 163 million bbl of certified proved and probable reserves from exploration campaigns on both blocks.
Pacific Rubiales is preparing a request for a further exploration period at Quifa after the initial program found oil in the northern part of the block. The second exploration phase will include appraisal drilling and shooting more 2D seismic. The company's budget for Quifa is $43.4 million for exploration and $65.5 million to build production facilities.
The commerciality zone at Quifa, which Ecopetrol has approved, is targeted for production of 30,000 b/d by the end of 2010 and 60,000 b/d by the end of 2011. That would include output from the entire Quifa block, including the 40,000 ha just declared commercial. The Quifa contract runs until 2031.
Colombia's Lower Magdalena yields more gas
Petrolifera Petroleum Ltd., Calgary, gauged a dry gas discovery in the Tertiary Cienaga de Oro formation on the Sierra Nevada license in Colombia's Lower Magdalena basin.
The Brillante SE-1X well flowed at a measured 8.4 MMcfd on a 48⁄64-in. choke on a drillstem test at 3,138-3,350 ft with 579 psi surface pressure. The net pay interval is 105.5 ft. Estimated calculated absolute open flow potential is 12.5 MMcfd.
Third party log evaluation of the interval from 3,138 ft to the well's total depth of 9,500 ft indicate the presence of 429.5 ft of possible net gas pay. No resource or reserve calculation can be made until the company conducts a long-term test of the perforated interval.
The Sierra Nevada license, northeast of Petrolifera's La Creciente gas field and contiguous with the company's Magdalena license, is prospective for 40-45° gravity crude oil and liquids-rich natural gas, Petrolifera said. It provides targets in the Cienaga de Oro and shallower Miocene Middle and Upper Porquero and Tubara formations.
Petrolifera will suspend the discovery until it receives a permit to run a long-term test and will evaluate deeper pay intervals in appraisal wells. The company noted that it has the right to appraise its oil and gas finds in Colombia but not to produce them until the reserves are deemed commercial.
Development approved for Kitan oil field
Eni SPA and partners have received approval to develop Kitan oil field in the Joint Development Area (JDA) off Timor Leste and Australia.
Eni will develop the field with three wells completed subsea and tied back to the Bluewater Energy Services LLC Glas Dowr floating production, storage, and offloading vessel (OGJ Online, Feb. 2, 2010).
Eni expects production to start in the second half of 2012. It didn't report expected flow rates. The discovery well flowed 6,100 b/d.
The field lies in 305-335 m of water in the JPDA 06-105 permit area, 250 km south of Dili, Timor Leste, and 500 km north of Darwin, northwest of Bayu Undan gas field.
Timor Leste's National Petroleum Authority estimates the field holds 34.6 million stb of recoverable 59º gravity oil in the most likely case. The reservoir is 3,300 m below seabottom.
The authority estimated development costs at $1 billion.
Eni, with 40% interest, operates the permit. Partners are Inpex Timor Sea Ltd., 35%, and Talisman Resources (JPDA 06-105) Pty. Ltd., 25%.
Drilling & Production — Quick Takes
Helicopter flights resume off Europe
Helicopter service of oil and gas facilities off northern Europe resumed Apr. 21 as authorities began accommodating flight schedules to the volcanic ash that has grounded all but emergency aircraft since Apr. 15.
Aviation authorities in the UK and Norway were basing airspace decisions on 6-hr updates of the heavy ash cloud flowing from a volcano in Iceland.
At midday Apr. 21, Norway had no airspace restrictions. In the UK, all airspace was open except for an area of northwestern Scotland.
Oil & Gas UK said helicopter transfers of offshore workers resumed Apr. 21. In a statement likely to describe aviation until the ash is gone, the trade group said: "The helicopter operating companies are continuing to monitor Met Office reports concerning the path of volcanic ash clouds, and as new information becomes available throughout the day they will revise their flight plans and will suspend operations if atmospheric conditions oblige them to do so."
OGUK said operators were moving offshore workers by boat to the extent possible. It was seeking ways to increase boat transfers.
At the group's request, the Maritime and Coastguard Agency lifted restrictions on the number of passengers allowed on cargo vessels. The usual restriction is 12, even for vessels with capacity for more.
Huizhou field off China on full production
Production has fully resumed from typhoon-damaged Huizhou oil field in the Pearl River Mouth basin off China.
China's CNOOC Ltd. said production from eight platforms has reached 45,000 b/d of oil and more than 40 MMcfd of natural gas.
Flow ceased last Sept. 14 when Typhoon Koppu damaged mooring lines and the delivery hose of the single point mooring system for the Nanhai Faxian floating production, storage, and offloading vessel (OGJ Online, Sept. 24, 2009). There were no casualties.
The field lies in 115 of water 120 miles southeast of Hong Kong. It is operated by the CACT Operators Group encompassing CNOOC, Eni SPA, and Chevron Corp.
Seadrill receives ultradeepwater semi
Seadrill Ltd. has taken delivery of the ultradeepwater West Orion semisubmersible from Jurong Shipyard, Singapore.
The rig is to begin development drilling for Petrobras off Brazil in July.
It's the third of four similar rigs Jurong, a subsidiary of Sembcorp Marine, is drilling for Seadrill.
The dynamically positioned semi can drill to 37,500 ft below rotary table in as much as 10,000 ft of water.
Processing — Quick Takes
ConocoPhillips withdraws from Yanbu project
ConocoPhillips is withdrawing from its venture with Saudi Aramco to build a 400,000-b/d export refinery at Yanbu, on Saudi Arabia's Red Sea coast.
The US company said last November that it was trimming its downstream business and that it would make a decision about the Yanbu project this year (OGJ, Nov. 16, 2009, p. 68).
The planned full-conversion refinery is designed to process Arab heavy crude.
The partners suspended work on the project during the economic crash of 2008 but reinstated it last July.
In response to the withdrawal of ConocoPhillips, Aramco said it was "evaluating options to progress the Yanbu project."
Aramco is in partnership with Total SA for construction of an export refinery of equal size at Jubail on the Persian Gulf.
Shell starts up ethylene cracker in Singapore
Shell Eastern Petroleum Ltd. has started up its new ethylene cracker in Singapore. The cracker complex is part of the Shell Eastern Petrochemicals Complex, which consists of modifications to the existing Bukom refinery and construction of a new worldscale monoethylene glycol plant on Jurong Island.
The 800,000 tonne/year cracker increases Singapore's ethylene capacity by 40%, said a company announcement, while also producing 450,000 tpy of propylene, 230,000 tpy of benzene, and 155,000 tpy of butadiene.
The cracker uses Lummus Technology proprietary ethylene cracking technology, and the butadiene extraction unit uses proprietary technology from BASF/Lummus Technology.
CB&I, Houston, in joint venture with Toyo Engineering Corp., completed the engineering, procurement, and construction of the cracker.
Compression headed to new Algerian plant
The El Merk central processing plant, to be operated by Groupement Berkine in Algeria's Berkine basin, will receive turbo compression equipment from GE Oil & Gas in a $100 million contract executed through subcontractor Petrofac.
GE's scope of supply for the project includes three turbo compressors for gas injection and two turbo compressors for residue-gas service, along with three motor-compressors for gas booster service and three for associated gas services.
The turbo compressors will be manufactured in Florence, Italy, and will start to be shipped to the project site in September, while the motor-compressors will be built in Le Creusot, France, and shipped to Algeria, also in September.
When the new central processing plant enters service, starting in phases late next year, it will be able to handle 98,000 b/d of oil, 28,800 b/d of condensate, and 31,000 b/d of LPG.
Groupement Berkine is a joint operating venture between Anadarko Petroleum Corp. and Sonatrach, formed to develop and produce several oil fields in the deserts of Algeria. From its Hassi Berkine site, Groupement Berkine produces 250,000 b/d.
Transportation — Quick Takes
Kinder Morgan plans westbound Marcellus line
Kinder Morgan Energy Partners LP announced Apr. 20 plans to modify and expand the existing Cochin Pipeline system to facilitate transportation of natural gas liquids from the Marcellus shale basin to fractionation plants and chemical markets near Sarnia, Ont., and Chicago.
KMEP plans to build 250 miles of NGL pipeline from the Marcellus shale in southern Pennsylvania to the Cochin interconnect at Riga, Mich. From Riga, the company anticipates product will travel through the existing Cochin system to Windsor, Ont., and then through the Windsor-Sarnia Pipeline to Sarnia. KMEP also plans to reverse the eastern leg of its Cochin line to move NGL from Riga to Chicago, where it expects to build an additional pipeline to connect to existing fractionation facilities and chemical plants.
The line will transport mixed NGL (Y-grade), as well as purity NGLs such as ethane, and will have an initial throughput capacity of 75,000 b/d, expandable to 175,000 b/d.
The recent decision by Canada's National Energy Board directing reconnection of the Cochin Pipeline to the Windsor-Sarnia Pipeline will give Cochin Pipeline shippers access to the Sarnia chemical complex.
KMEP anticipates offering transportation from Marcellus to Sarnia for under 14¢/gal and expects to move forward with an open season in this year's second quarter.
Enbridge Inc. announced its own plans Mar. 22 to develop an NGL pipeline from the Marcellus shale to the US Midwest. The proposed line would deliver into the existing NGL system in the Chicago area, including the Aux Sable facility (OGJ Online, Mar. 24, 2010).
BLM issues final EIS for Utah-Nevada line
The US Bureau of Land Management's Utah state office issued a final environmental impact statement for a proposed 400-mile products pipeline from Salt Lake Area refineries to terminals near Cedar City and Las Vegas. The EIS also examines proposed amendments to an electric utility right-of-way to accommodate the pipeline.
UNEV Pipeline LLC, which is 75% owned by Holly Energy Partners LP and 25% owned by Sinclair Oil Corp., Salt Lake City, are sponsors of the project, which will be a 12-in., 118,000 b/d capacity pipeline. The system will initially carry 62,000 b/d, the sponsors said. Holly Energy Partners is 45% owned by Dallas-based refiner Holly Corp.
BLM said its offices in Utah and Nevada prepared the final EIS after obtaining public input and in consultation with cooperating agencies including the US Bureau of Indian Affairs, the Paiute Indian tribe's Moapa Band, the US Air Force, Nellis Air Force Base, the US Army, Tooele Army Depot, and the US Forest Service.
The proposed project crosses lands which BLM's Salt Lake field office administers, BLM said. It said that granting a new, major right-of-way for a pipeline required a land use amendment of the Pony Express Resource Management Plan, which was developed for a proposed 140-mile power line from Mona in Utah's Juab County north to the Oquirrh terminal station and substation in Salt Lake County.
Chinese to begin work on Zhuhai LNG project
China's National Development and Reform Commission has given approval for the planned 3.5 million tonne/year LNG regasification terminal in Zhuhai city in southern China.
China National Offshore Oil Corp. and Guandong Yudean Group, a state-owned electric power generation firm, will jointly fund the $1.65 billion project, which is scheduled to start operating in 2013. Zhang Guobao, head of the National Energy Administration, said earlier that China, now with three operating LNG terminals, would expedite the construction of the Zhuhai terminal this year.
The announcement coincided with official reports that China's imports of LNG soared by 86.4% from a year earlier to 599,740 tonnes in March. That volume also was 26% greater than the country's imports of LNG in February.
About 70% of the LNG imports were offloaded at Shenzhen, site of China's first LNG receiving terminal. The second terminal of Putian in Fuzhou received just one cargo, while the third terminal at Shanghai received 121,225 tonnes of LNG.
More Oil & Gas Journal Current Issue Articles
More Oil & Gas Journal Archives Issue Articles
View Oil and Gas Articles on PennEnergy.com