GENERAL INTEREST — Quick Takes
BP to join marine well containment group
BP PLC announced plans Sept. 20 to join the proposed Marine Well Containment Co. (MWCC) and to make its underwater well containment equipment available to all oil and gas companies operating in the Gulf of Mexico.
Chevron Corp., ConocoPhillips, ExxonMobil Corp., and Royal Dutch Shell PLC pooled $1 billion to form MWCC, a nonprofit joint venture that will build an equipment inventory and a rapid response system for future gulf oil spills (OGJ Online, July 21, 2010).
MWCC was announced following the Apr. 20 Macondo well blowout that resulted in an explosion and fire on Transocean Ltd.'s Deepwater Horizon semisubmersible, killing 11 people and contributing to a massive oil spill. Officials declared the Macondo well, on Mississippi Canyon Block 252, dead on Sept. 19.
BP said MWCC operator ExxonMobil agreed the project team will use BP technical personnel having Deepwater Horizon response experience.
Richard Morrison, BP vice-president for gulf operations, said he believes BP's recently gained deepwater intervention experience and specialized equipment "will be important to the marine well containment system."
SPE ATCE: Gas demand expected to grow
Worldwide demand for natural gas may grow by 1.3-1.6%/year through 2030, according to presentations at the opening general session of the Society of Petroleum Engineers Annual Technical Conference & Exhibition in Florence, Italy, on Sept. 20.
China is one of the countries driving the demand higher. During 2000-09, it experienced a 15.4%/year growth in demand, according to PetroChina Co. Ltd. Pres. Yan Cunzhang.
One note of caution about this growth was expressed by Michael Stoppard, IHS CERA managing director. Stoppard noted that the growth might be less than 1.6%/year if governments in Europe adopt a decarbonization strategy that positions gas as a dirty fossil fuel and clean coal as a green energy. He said that the public needs to hear a louder voice about gas which is abundant, clean, safe, cost competitive, technically producible, and with a good track record for delivery to markets such as electricity and power generation.
Howard Paver, with Hess Corp., noted that Hess has a gas demand growth projection of 1.3%/year to 2035. His estimate translates to needing 4,000 tcf of gas in that period and if this gas is unconventional, it would require the drilling of 1.3 million wells at a cost of about $4.5 trillion, he said.
Sara Ortwein, president of ExxonMobil Upstream Research Co., said worldwide gas is abundant. One estimate is that 20,000 tcf remain to be produced worldwide. Of this, 10,000 tcf is conventional gas, 5,000 tcf is undiscovered gas, and 5,000 tcf is unconventional gas, she said.
Ortwein noted that gas has about 60% fewer emissions than coal and that such technologies as control freeze zone will lower the costs of removing carbon dioxide and hydrogen sulfide from sour gas. ExxonMobil plans to start up this fall its CFZ demonstration plant in La Barge, Wyoming, she said.
Centrica to buy Statfjord assets from Shell
Centrica Resources (Norge) AS has agreed to acquire from AS Norske Shell the Royal Dutch Shell PLC unit's interests in Statfjord field and associated satellite fields in the Norwegian North Sea for $225 million. Statfjord field produces natural gas as well as some oil and natural gas liquids.
The sale contributes to Shell's target of selling $7-8 billion worth of assets over 2010-11 as part of its focus on major growth projects.
Shell's share of production from the mature Statfjord field was 13,300 boe/d in 2009.
"Shell's growth strategy for Norway is unchanged," said David Loughman, managing director of AS Norske Shell. The company's production interests include Draugen and Ormen Lange, where Shell is operator, Loughman said. The company also holds equity in Troll, Kvitebjorn, and Gjoa fields is actively exploring in the Voring basin as well as progressing existing discoveries, he said.
The agreement with Centrica includes Shell's 11.04% in production licence 037 and corresponding shares in the underlying producing fields, including 9.44% interest in Statfjord field.
The agreement is subject to approval by the Norwegian authorities.
Licence partners in PL037 include operator Statoil, Petoro, ExxonMobil Corp., and ConocoPhillips. Centrica is a partner in the cross-border Statfjord field. Additional partners in the satellite fields include Idemitsu, Total SA, and RWE Dea.
Discovered in 1974, Statfjord has been on production since 1979. It recently has been producing about 27,000 b/d of oil with associated gas and gas liquids. Operator Statoil is drilling 60 wells in a project called Statfjord Late Life to extend production from the mature reservoir.
Exploration & Development — Quick Takes
El Paso enters Texas Wolfcamp shale oil play
El Paso Corp. has boosted its lease position to more than 135,000 acres in a Wolfcamp shale play in West Texas by submitting winning bids for 123,100 acres with multiple pay opportunities.
The newly acquired University of Texas leases, in Reagan, Crockett, Upton, and Irion counties, give El Paso "a material position in a new oil shale program with significant resource and production potential," the company said.
The acreage acquisition, the culmination of an extensive regional study by El Paso's technical team, is expected to become a new oil-focused core area, the company added. It is El Paso's second organic shale entry following acquisition of more than 170,000 net acres in the South Texas Eagle Ford shale.
El Paso said the combination of large contiguous blocks and a single royalty owner in West Texas give the company "tremendous operational flexibility." The company plans to issue an update on its Wolfcamp shale plans in a Nov. 3 conference call.
El Paso said it "remains committed to managing its E&P program for returns and having E&P live within its means. In addition, the company remains committed to generating free cash flow in 2012. To that end, the $180 million cost of the acquired acreage will be funded over time through portfolio rationalization, and future development capital will compete with other programs in the portfolio."
Chevron acquires Black Sea deepwater block
Chevron Corp. continued its push to acquire deepwater interests outside the US Gulf of Mexico with acquisition of an interest in a block in a new deepwater basin in the Black Sea off Turkey.
Turkey's state Turkiye Petrolleri Anonim Ortakligi (TPAO) is already drilling the first exploratory well on License 3921, which covers 8,700 sq miles 220 miles northwest of Ankara. TPAO operates the wildcat, and Chevron would operate any development.
Chevron is acquiring a 50% interest in the western part of the block, which extends into water more than 2,000 m deep. If the first well finds hydrocarbons, the companies will shoot 3D seismic and TPAO will drill another exploratory well in 2012.
The license is northeast of where a group led by Toreador Resources Corp. found gas in the South Akcakoca subbasin on the Black Sea shelf in the last decade. Toreador sold its interests in the producing Ayazli, Akkaya, and East Ayazli fields to private Norwegian operator Tiway Oil in order to exploit Toreador's shale oil assets in the Paris basin of France (OGJ Online, Oct. 1, 2009).
Devon okays third Jackfish development phase
Devon Energy Corp.'s directors have approved the third phase of development of the company's Jackfish oil sands property in Alberta via steam-assisted gravity drainage.
Each phase involves 35,000 b/d of production and recovery of 300 million bbl. The Jackfish projects are south of Fort McMurray in the Athabasca region.
The first phase is on production, and the second phase is under development, about 85% complete. Start-up of the second phase is scheduled for late next year.
Devon expects to invest $1.2 billion in the third phase through start-up, targeted for 2015. If it receives regulatory approval, construction will start in late 2011.
The company holds 100% working interests in each of the Jackfish projects.
On adjacent Kirby-Pike oil sands leases, Devon said it will conduct additional delineation drilling and 3D seismic surveys in the fourth quarter, aiming for phased SAGD development similar to that under way at Jackfish.
Devon operates the Kirby-Pike leases in a 50-50 joint venture with BP PLC, from which it acquired a 50% interest earlier this year. Devon paid $500 million for the interest and agreed to fund $150 million of BP's capital costs (OGJ Online, Mar. 11, 2010).
Gran Tierra farms into Reconcavo basin
Gran Tierra Energy Inc. will pay $22.6 million to Alvorada Petroleo SA to receive a 70% working interest in Blocks REC-T-129, 142, 155, and 224 in Brazil's onshore Reconcavo basin.
"This farm-in opportunity presents Gran Tierra Energy with a solid entry point into Brazil, with new light oil reserves, production, and exploration upside, including near-term drilling opportunities," said Gran Tierra Pres. and Chief Executive Officer Dana Coffield.
Under the agreement, Gran Tierra will become the operator of the aforementioned four blocks. Gran Tierra has committed to pay all of the costs to drill one exploration well on Block REC-T-129 and another on Block REC-T-142.
Gran Tierra also will pay its working interest share of the 130 sq km 3D seismic program currently being conducted on the four blocks, which were awarded to Alvorada through Brazil's 9th bid round.
Gran Tierra said the four blocks lie 70 km northeast of Salvador, Brazil, in the 10,000 sq km Reconcavo basin, which has produced more than 1.5 billion bbl of 35-40° gravity oil from existing fields.
In May, Eromanga Hydrocarbons Ltd. also finalized a farm-in arrangement with company Alvorada Petroleo SA covering Blocks REC-T-131, 132, 144, and 157 in the Reconcavo basin.
Last October Alvorada Petroleo SA reported that its 1ALV2BA well, drilled on REC-T-155 Block in the Reconcavo basin, showed signs of oil.
Drilling & Production — Quick Takes
New York okays Marcellus, Utica fracturing
The New York State Department of Environmental Conservation has authorized Gastem USA, Montreal, to hydraulically fracture the Marcellus shale formation in the Ross-1 well and stimulate the upper section of the Utica shale in the Sheckells-1 well.
Gastem has an 80% working interest in more than 33,000 acres of leases, primarily in Otsego County, and is operator of the project. The frac treatments will evaluate the production potential of these zones in the two wells, which previously had only stimulated the Lower Utica shale section.
Weatherford Laboratories consulting engineers estimated 145 bcf/sq mile of gas in place for the Utica and Marcellus formations based on core data from the Ross-1 well at 50% probability. The report does not cover the Oneida sands, a conventional formation that lies between the Marcellus and Utica.
Gastem said it expects to test and evaluate the Oneida formation shortly.
BHP Billiton shuts down Angostura field
BHP Billiton Petroleum (Trinidad 2c) Ltd. will shut down for 3 months its operations at Angostura field off Trinidad and Tobago's northeast coast as it installs facilities for production of natural gas.
Company spokeswoman Carla Noel-Mendez said the shutdown will begin this month and oil production will resume in December. Meanwhile, BHP Billiton will forego 1.2 million bbl of oil production out of Angostura for the 3 months. Noel-Mendez said a full field shutdown is required for safe installation of equipment.
The company said the Phase II project will include a new gas platform, a bridge connecting existing facilities, a new gas transmission pipeline, and major modifications to the existing offshore structures. The company also will do maintenance of offshore facilities prior to gas production.
In first-half 2011, the company will commence production of a gas supply that will "enhance and support" the Trinidad and Tobago gas markets. The first gas out of Angostura is expected in first-half 2011 and will be sold to National Gas Co. of Trinidad & Tobago Ltd. for domestic use.
The gas export platform will have a design capacity of 280 MMcfd.
BHP Billiton and its partners operate the Angostura field in Block 2(c) 24 miles east of Trinidad. Oil and gas resources were discovered within a large faulted structure known as the Greater Angostura structure.
Angostura-1, drilled in 1999, was the discovery well for the field, intersecting some 950 ft (gross) of gas pay within Early Oligocene sands. Gross recoverable oil reserves are estimated at 90-300 million stb, with P50 volumes of 160 million stb. The range of gross recoverable gas volumes is 1-2.3 tcf, with a midcase volume of 1.75 tcf.
The midcase resource is estimated at 450 million boe.
Transocean moves deepwater rigs from gulf
Transocean Ltd.'s Discoverer Americas drillship is scheduled to depart the Gulf of Mexico for Egypt next week, and its Marianas semisubmersible already left the gulf for Nigeria, a Transocean spokesman told OGJ.
The Discover Americas, which can drill in 12,000 ft of water, remains under contract with Statoil. The day rate for the work is Egypt is $486,000, and the contract made provisions for the mobilization.
In an updated fleet report issued Sept. 14, Transocean said it and Statoil agreed on a special standby rate and reduced mobilization rate lower than the regular contract day rate while Statoil is prevented from operating in the gulf and until the rig arrives in Egypt.
"For every day on special standby rate or reduced mobilization rate, the contract term is extended by an equal number of days. The existing operating rate and term remain unaffected once the rig returns in the US Gulf of Mexico," a footnote in the updated fleet report said.
The Marianas, which can drill in 7,000 ft of water, worked the gulf for Eni at a day rate of $565,000. The semi continues working for Eni in Nigeria, but Transocean has not reported its day rate for the work there.
Transocean Chief Executive Officer Steven L. Newman was among presenters scheduled for the Barclays Capital Energy-Power Conference on Sept. 15-16. In his presentation posted on the Transocean web site, Newman said the gulf drilling moratorium was expected to have "limited near-term financial impact."
Following the Apr. 20 explosion and fire on the Deepwater Horizon semi, the US government issued a deepwater drilling moratorium in the gulf that was overruled by a federal judge, and a revised moratorium has since been implemented (OGJ Online, Sept. 14, 2010).
The Deepwater Horizon drilled the Macondo well for BP PLC and its partners. Eleven people died after a well blowout, and the semi sank 2 days later contributing to a massive oil spill.
PROCESSING — Quick Takes
EPA joins probes into benzene release at BP refinery
The US Environmental Protection Agency launched an investigation of a possible benzene release at BP America Inc.'s Texas City refinery, joining other government investigations of the Apr. 6 incident. The Sept. 16 action commences another set of procedures that will help other federal and state regulators, according to Al Armendariz, EPA regional administrator, in Dallas.
He said as a first step, EPA will require the BP PLC subsidiary to disclose specific information regarding its operations during the incident within 30 days. It issued a request under the federal Clean Air Act's authority for all information regarding the incident, which began on Apr. 6 and ended on May 16.
The incident resulted in the flaring of chemicals which could have resulted in a catastrophic release of benzene, a hazardous air pollutant, EPA said. It said that it will also examine the promptness of BP's investigation following the incident, and whether it resulted in possible or actual harm.
TRANSPORTATION — Quick Takes
Enterprise to provide Anadarko's Eagle Ford services
Enterprise Products Partners LP announced 6-year term agreements with Anadarko Petroleum Corp. to provide comprehensive natural gas transportation and processing, and NGL fractionation and transportation services for Anadarko's growing liquids-rich natural gas production in the Eagle Ford shale in South Texas.
Enterprise will construct a new 17-mile, 20-in. OD natural gas gathering pipeline originating at Anadarko's central production facilities in Dimmit County, Tex., and interconnecting with Enterprise's existing South Texas pipeline system. Enterprise expects the new pipeline to be in service late-October.
Current processing capacity at Enterprise's South Texas facilities is 1.5 bcfd. An additional 600 MMcfd will be available mid-2012 with the completion of a recently announced cryogenic gas processing plant in Lavaca County, Tex.
Enterprise earlier in September entered a 10-year firm transportation agreement with EOG Resources Inc. for the latter's Eagle Ford production. The agreement included construction of a 140-mile, 350,000 b/d crude oil pipeline (OGJ Online, Sept. 13, 2010).
About 100 rigs working in the Eagle Ford shale have drilled more than 175 wells to date, according to Enterprise, with roughly 150 additional wells in various stages of drilling and completion. Total current production from the play is estimated at about 300 MMcfd natural gas and 40,000 b/d crude oil and condensate.
Marcellus gathering set in Wyoming County, Pa.
Citrus Energy Corp., Castle Rock, Colo., let a contract to UGI Energy Services Inc. to gather Marcellus shale gas produced by Citrus in Wyoming County, Pa., for delivery to Tennessee Gas Pipeline Co.'s interstate pipeline in Susquehanna County, Pa.
UGI Energy will acquire and construct facilities to handle up to 120,000 dekatherms/day. The gathering system is to begin service as early as spring 2011, subject to permitting and regulatory approvals.
UGI previously announced that it plans to invest $300 million in the next 2 years on midstream projects to support gas infrastructure development in the Marcellus shale play. Among these investments are the recently announced agreement between UGI Energy Services and NiSource Gas Transmission & Storage (NGT&S) to market and develop a major pipeline project to provide Marcellus shale producers in Pennsylvania improved access to high-value markets.
Alabama governor approves offshore LNG terminal
Alabama Gov. Bob Riley approved the deepwater port application from TORP Terminal LP for a license to construct, own, and operate the Bienville Offshore Energy Terminal.
The regasification terminal is to be located in the Gulf of Mexico, 63 miles south of Dauphin Island in 425 ft of water and employ closed-loop ambient air vaporization. The terminal will also use a proprietary regasification and offshore loading technology, called HiLoad, owned by TORP LNG AS of Norway and a floating regas ship with no permanent offshore structures.
The HiLoad technology employs a floating L-shaped structure that docks onto LNG carriers with a patented friction-based attachment system creating no relative motion between the carrier and the structure, according to a company announcement. The facility is equipped with standard regasification equipment, said the announcement, and can accommodate any LNG carrier without the use of special equipment aboard the carrier.
TORP Terminal Chief Executive Officer Joseph P. Berno, in response to OGJ questions, said TORP still requires a license from the US Department of Transportation's Maritime Administration to "own, construct, and operate" the Bienville terminal as well as "all applicable permits" from the US Environmental Protection Agency and state agencies to construct and operate the terminal.
"Requirements for these vary by permit type and they will be obtained at the appropriate time as we get closer to those activities," said Berno. The company expects to begin operating the terminal "sometime in 2015," he said, adding that no fabrication contracts have been awarded.
Clarification The story, "North Africa gets first shale gas frac job," may have implied a commercial relationship that does not exist (OGJ Online, Aug. 30, 2010). Perenco, private Paris independent, conducted the frac stimulations in southern Tunisia's El Franig field, which it operates. The information in the story came from Cygam Energy Inc., Calgary, which operates the Sud Tozeur permit just north of El Franig field. Cygam did not participate in the Perenco frac program, and no commercial relationship exists between the two companies. |
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