General Interest — Quick Takes
Western Gas buys Anadarko gathering system
Western Gas Partners LP acquired a natural gas gathering system and other midstream assets in southwest Wyoming from Anadarko Petroleum Corp. for $254.4 million.
Don Sinclair, Western Gas Partners president and chief executive officer, said the assets have significant potential by serving Moxa, Pinedale, and Jonah fields. The acquisition closed on Jan. 29 with an effective date of Jan. 1.
Western Gas purchased Anadarko's 100% ownership interest in the Granger gathering system and the Granger plants, which involve two cryogenic trains with combined capacity of 200 MMcfd, two refrigeration trains with capacity of 145 MMcfd, an NGL fractionation facility with capacity of 9,500 b/d, and associated equipment.
The average throughput on these systems for fourth quarter 2009 was 240 MMcfd. Anadarko's throughput represented nearly half of this amount.
Anadarko's throughput recently was converted into 10-year, fee-based arrangements. To mitigate the remaining gas price risk associated with the acquisition, Western Gas and Anadarko agreed to fixed-price commodity swaps through yearend 2014.
Thailand hikes E&P spending
Thailand's exploration and production spending is projected by the Department of Mineral Fuels (DMF) to increase 18% this year to 169.75 billion baht ($5.14 billion).
E&P spending amounted to 144.23 billion baht in 2009.
Of the projected 2010 budget, 130.23 billion baht would be for capital expenditures, 36.76 billion baht for operating expenses, and 2.76 billion baht for exploration. Most will go to concession areas in the production stage under existing participants, especially PTT Exploration & Production Plc (PTTEP) and Chevron Inc., which are the country's largest gas producers.
PTTEP and Chevron will continue to be top spenders this year at 83.04 billion baht and 67.03 billion baht, respectively. Other concessionaires are expected to spend 19.68 billion baht.
According to DMF, 78% of total expenditures in 2010 will be for development and production, 13% for exploration, and 9% for operation and management costs.
Ghana blocks Kosmos-ExxonMobil deal
Ghana's Minister of Energy Joe Oteng-Adjei denied his country would take by force Kosmos Energy LLC's interest in Jubilee oil field, but the company will not be allowed to sell its stake to ExxonMobil Corp.
Speaking in Port of Spain at an energy conference, Oteng-Adjei said Ghana National Petroleum Corp. (GNPC) is interested in purchasing Kosmos' stake in Jubilee field and has the government's full backing. Kosmos planned to sell its interest to ExxonMobil in a deal valued at $4 billion. Oteng-Adjei told the conference, "What we are saying is that this is an opportunity for us as a country to benefit. What we are saying is that Kosmos as an investor has a fair value to the assets they have invested in, but Kosmos cannot decide on who enters into the country to participate and join with us in the development of our country."
He said Ghana has its own development policies and priorities.
Oteng-Adjei tried to calm fears of oil and gas producers at the conference, telling them investors are safe in Ghana and his country has no interest in taking away assets of Kosmos or any other investor. He said, "We allow every investor to get a fair value of return on their assets and investments that they put into the country. We want to work with them to ensure that whoever they bring into the country is mutually acceptable. But they have no right to impose on us anybody, any entity that does not share our development policies."
Tullow Oil PLC operates Jubilee field, which was discovered in 2007 in deep water off Ghana. It estimates Jubilee is a continuous stratigraphic trap with combined hydrocarbon columns in excess of 600 m, with 600 million-1.8 billion bbl of recoverable hydrocarbons.
Oteng-Adjei said Ghana does not have production-sharing contracts, and the carried participation by its state oil company is 10%. He said the only real return to the government was in taxes and royalties. This is one reason Ghana wants GNPC to obtain Kosmos' stake, he said. Oteng-Adjei said other Jubilee field partners have the financial and technical competence to compete the project even if Kosmos is not part of the consortium.
Tullow holds a 34.7% stake in Jubilee, while Anadarko Petroleum Corp. and Kosmos each hold 23.49%. Sabre Oil & Gas Ltd. holds 2.81%, and EO Group has 1.75%.
Exploration & Development — Quick Takes
Husky tests third S. China Sea gas find
A third discovery on Block 29/26 in the eastern South China Sea "supports an earlier estimation of petroleum initially in place of 4 to 6 tcf for the block," said Husky Energy Inc., Calgary.
Husky plans to submit a development plan for the block to regulatory authorities in early 2010.
The Liuhua 29-1 exploration well, in 723 m of water 43 km northeast of Liwan 3-1 gas field and 20 km northeast of LH 34-2 gas-condensate field, cut a gross gas column of 145 m with what Husky called "a significant thickness of high quality gas charged reservoir." It also found oil in a deeper reservoir.
The well tested gas at an equipment-restricted rate of 57 MMcfd, and indications were that future deliverability could exceed 90 MMcfd. Front-end engineering design for the Liwan 3-1 deepwater project is complete. Husky will develop Liwan 3-1 and Liuhua 34-2 in tandem. Gas production is to start around 2013. Liuhua 29-1 field will be appraised this year and will use Liwan field facilities.
The West Hercules semisubmersible is preparing to spud the first delineation well at Liuhua 34-2 (OGJ Online, Dec. 9, 2009).
CNOOC Ltd. has the right to participate in any field development project for up to 51% working interest.
Colombia Middle Mag find may have two pays
An apparent discovery in Colombia's Middle Magdalena basin may have oil pay zones in the Upper Cretaceous Umir and Paleocene Lisama formations, said PetroLatina Energy PLC.
The Zoe-1 well, on the Midas block 12 km east of Santa Lucia heavy oil field, went to a total depth of 10,924 ft. Logs show the well to be 60 ft true vertical depth subsea structurally higher at the Lisama level to the San Alberto well Texaco drilled on the same structure in 1985.
Log analysis at Zoe-1 indicated 47 ft of net oil pay in Lisama at 8,632-8,701 ft. A section at 8,701-30 ft also has reservoir quality rock and good oil shows, but it is not yet clear whether it is oil-bearing. The Zoe-1 well also appears to contain producible oil in Umir, where it found two thin sands. The Umir sands were found somewhat overpressured with porosities up to 27% and permeability of 100 md.
Umir tested at a stable 42 b/d of 23° gravity oil at 1,500 psi flowing tubinghead pressure on an 8⁄64-in. choke. Water cut is 5% and dropping. Umir tests will continue until the end of February, when a service rig will move in to test the Lisama.
PetroLatina is operator of the Midas block with 70% interest. The rig has moved to drill the Santa Lucia-4 development well between two existing wells that produce 19° gravity oil from Eocene La Paz.
Santa Lucia field has several undrilled development locations and potential extension locations and a nearby undrilled prospect. PetroLatina will drill at least one development well and one exploration well on this block in the current drilling campaign.
PetroLatina operates Santa Lucia field with 20% interest. Petrosantander Inc., Houston, has 20%, and Colombia's state Ecopetrol SA has 60%.
Partners advance Athena field development
Partners in Athena oil field in the Outer Moray Firth of the UK North Sea have approved spending to begin development, expecting production to start in the second quarter of 2011.
Ithaca Energy (UK) Ltd., operator with a 22.5% interest, said the group will spend as much as $14.85 million to buy electrical submersible pumps, subsea trees, and engineering support.
They also commissioned a team to plan the development and submit an environmental statement and field development plan to authorities for approval. The team also will complete negotiation of contracts for a floating production, storage, and offtake vessel, subsea facilities, and drilling services.
Ithaca had considered tying Athena wells back to the Claymore platform but found the FPSO option faster (OGJ Online, July 21, 2008). The company estimates initial gross production from the field of 22,000 b/d.
Ithaca has drilled and suspended three Athena wells, which will be reentered and completed. It plans to drill two more wells, one a producer and the other for water injection, in the fourth quarter this year and first quarter of 2011.
Production will flow through a subsea manifold to the standalone FPSO via a 2-km, 8-in. flowline. Shuttle tankers will carry oil from the FPSO. Ithaca expects all offshore installation work to be complete by the end of the second quarter of 2011.
It said Sproule International Ltd. at the end of 2009 estimated Athena proved and probable reserves at 24.4 million bbl.
Other interests are Dyas UK Ltd. 74.5%, EWE AG 20%, and Zeus Petroleum 10%.
Kurdistan well hits pressure below Shiranish
Well control measures are being implemented at the Kurdamir-1 indicated discovery in the northern part of the 2,120 sq km Kalar Bawanoor Block 44 in the southern part of Iraq's Kurdistan region.
WesternZagros Resources Ltd., Calgary, block operator with 40% interest, has drilled an 81⁄2-in. hole to 4,077 m and has penetrated the Aaliji seal and the Cretaceous Shiranish reservoir target and drilled into the Gulneri seal, where it encountered a high pressure zone. Numerous oil and gas shows encountered while drilling through the Aaliji and Shiranish formations are to be logged and tested through 7-in. casing.
The well flowed at combined, equipment-limited rates of 27.5 MMcfd of gas and 1,172 b/d of 61° gravity condensate from Oligocene Pilaspi-Jaddala carbonates drillstem tested at 2,195-2,235 m and 2,280-2,352 m in late 2009. Independent geochemical evaluation indicates the condensate is from an oil-prone source and is likely to be associated with an oil column deeper in the Kurdamir structure. A follow-up flank well is under consideration.
The Aaliji seal was thicker than prognosed and the Shiranish and Gulneri seal were deeper than prognosed. A revised depth and pressure prediction for the Cretaceous Qamchuqa reservoir target exceeds the well's safety limit, and no deeper drilling will take place.
Talisman Energy Inc., Calgary, has 40% interest in the well, and the Kurdistan Regional Government owns 20%.
Drilling & Production — Quick Takes
Shtokman partners delay production start
Citing "changes in the market situation and particularly in the LNG market," Shtokman Development AG has delayed by 3 years the start-up of production from Shtokman gas-condensate field in the Barents Sea.
The partnership of Gazprom, Total, and Statoil said final investment decisions on pipeline gas will be made in March 2011 and on LNG before the end of 2011.
That schedule will allow for the start of pipeline gas production in 2016 and of LNG in 2017, each 3 years later than initially planned (OGJ, May 18, 2009, p. 23).
The field, discovered in 1988, holds an estimated 135 tcf of recoverable gas. It lies in 1,100 ft of water near the edge of winter sea ice. The Shtokman partners have decided to treat offshore production facilities, the pipeline to shore, and onshore gas treatment as a stage in the first phase of the development project separate from LNG work.
The first phase targets production of 2.4 bcfd of gas from 20 producing wells drilled from three subsea templates. It includes installation of a floating production unit, construction of two dual-phase pipelines to shore, construction of a liquefaction plant at Teriberka, and a link to the North Stream pipeline serving Europe.
Papa Terra FPSO topsides contract let
Brazilian company QUIP selected AMEC PLC to perform basic engineering services for the topsides of the P-63 floating production, storage, and offloading for the Papa Terra heavy 14-17° gravity oil field in the Campos basin off Brazil, operated by Petroleo Brasileiro SA (Petrobras).
Papa Terra is 68 miles off Rio de Janeiro in 3,940 ft of water.
AMEC said the P-63 FPSO will have 16 topsides modules with a total weight of more than 14,000 tonnes. The modules include three oil processing modules, one gas compression module, three electrical power generation modules, two water treating and injection modules, one electrical building module, three utilities modules, one flare system module, and two manifold modules. In addition, the topsides will have a pipe rack more than 200 m long with a material handling trolley.
The FPSO topsides facilities will be designed to process about 140,000 bo/d, 35 MMscfd of gas, and 325,000 b/d of produced water, as well as to inject about 340,000 b/d of seawater.
AMEC's Houston office will manage the engineering for the P-63 FPSO topsides while fabrication and integration work will take place at QUIP's facility in Rio Grande, Brazil.
Previously the Papa Terra Joint Venture let contracts for construction and installation of the P-61 tension-leg wellhead platform (TLWP) for the field (OGJ Online, Feb. 2, 2010).
Operator Petrobras holds a 62.5% interest in Papa Terra and Chevron Overseas of Brazil Ltd. holds 37.5%.
Italy Adriatic field's reserves elevated
Consulting engineers doubled estimates of proved and probable oil reserves at Ombrina Mare field in the Adriatic off central Italy, where Mediterranean Oil & Gas PLC hopes to start production in late 2012.
The consultants estimated 12 million bbl of proved reserves and 28 million bbl of probable reserves, the total being double the firm's June 2008 estimate. The firm didn't revise the previous estimate of 6.5 bcf of proved and probable gas reserves. The field area covers 100 sq km.
The revision resulted from seismic reinterpretation, production test analysis, and other detailed technical studies.
A development plan the company hopes Italian authorities will approve by the end of 2010 calls for the field to produce 5,000-7,500 b/d of 17-19° gravity oil and 3.5 MMcfd of gas. The oil is in a Miocene and Cretaceous carbonate platform reservoir, and the gas is in 16 intervals in Middle-Upper Pliocene sands.
Mediterranean Oil & Gas is conducting reprocessing and inversion on 3D seismic data shot over the field and plans to reassess its contingent oil resource estimate.
Development entails a platform with five wells, including one already drilled and two dual oil and gas completions, a 10,000 b/d floating production, storage, and offloading vessel with 50,000 tonnes of storage, and a 12-km submarine pipeline.
Cenovus seeks nod for Narrows Lake project
Cenovus FCCL Ltd. submitted an application to obtain Alberta environmental approval for its proposed $2.2 billion Narrows Lake oil sands project about 10 km east of Conklin, Alta.
Cenovus plans to use either steam-assisted gravity drainage (SAGD) or solvent aided SAGD (SAP) to produce the bitumen from the Narrow Lake's oil sands. Cenovus FCCL is a subsidiary of Cenovus Energy Inc, a company spun off from Encana Corp. in November 2009.
A project summary says construction could start in January 2013 with bitumen production starting in January 2017. The company expects the project to have a 130,000 b/d capacity and be constructed in two or three phases, with the first phase having a 40,000 b/d production capacity. Expected project life is 40 years.
The company notes that the infrastructure requirements for the project include a central processing facility, well pads, roads, electrical power line, salt caverns for butane storage, wells for water source and disposal, storage tanks for diluted bitumen and diluent, as well as pipelines for fuel gas supply, diluted bitumen sales, diluent supply, fresh water supply, brackish water supply, and water disposal. Cenovus adds that it is studying the option of pipelines or rail for solvent transport.
Intervention boosts Beatrice field oil flow
Ithaca Energy (UK) Ltd. has increased production from the northern platform of Beatrice oil field in the UK North Sea by 1,500 b/d with well interventions.
The Ensco 80 jack up has moved off the field, which is in the Inner Moray Firth area, after refurbishing and restarting three wells tied into the Beatrice Bravo platform. Ithaca, operator of Beatrice field under a lease from Talisman Energy Inc., had expected the production boost to be about 500 b/d.
The company attributed about 1,000 b/d of the incremental production to the B11 well, in which intervention included perforation across a previously untapped section of the Middle Jurassic Beatrice reservoir to access an undrained part of the field.
Ithaca expects production from all Beatrice complex facilities, which also include the Alpha platform and unmanned Jacky wellhead platform north of the Bravo facility, to average 10,200 b/d this year.
Ithaca and Dyas UK Ltd. each hold equal interest in Beatrice field. Jacky interests are Ithaca 47.5%, Dyas 42.5%, and North Sea Energy (UK) Ltd. 10%.
Processing — Quick Takes
Valero buys Wisconsin ethanol plant
Valero Renewable Fuels Co. LLC completed the purchase of a 110 million gal/year ethanol plant near Jefferson, Wis., from privately held Renew Energy.
The purchase price is $72 million. Renew Energy filed for bankruptcy early last year after 6 years of operation.
Valero has been buying financially distressed ethanol plants and now owns 10 of them with total producing capacity of 1.1 billion gal/year (OGJ, July 20, 2009, p. 36).
PRSI selects Fluor for US refinery study
Pasadena Refining System Inc. (PRSI), a subsidiary of Petroleo Brasileiro SA (Petrobras), has selected Fluor to provide front-end engineering study services for a prospective US refinery project.
Fluor will provide engineering, estimating, and project management services for the conceptual engineering phase of the prospective project that would enhance the performance of the 100,000-b/d Pasadena, Tex., refinery.
The engineering study is currently underway in Fluor's Sugar Land, Tex., office and will be completed later this year.
Total mulls over methane terminal at Dunkirk
Total SA is mulling construction of a methane terminal at Dunkirk as well as diversification of its overall refining business, Industry Minister Christian Estrosi told the National Assembly.
Total told Estrosi of the potential methane terminal without addressing rumors and press reports that the company has decided to shut down the Dunkirk refinery. Total refuses to comment prior to a meeting with workers scheduled Feb. 1.
Estrosi was questioned by National Assembly deputies worried that a shutdown would put 350 jobs at risk at the refinery and 400 within subcontracting companies in a time of high unemployment in France.
Transportation — Quick Takes
Petrobras inaugurates new gas pipelines
Brazil's state-run Petroleo Brasileiro SA (Petrobras) has launched the 38-in., 179-km Cabiunas-Reduc III (Gasduc III) gas pipeline, which is capable of carrying 40 million cu m/day.
Petrobras said Gasduc III enhances regional transportation capacity to 40 million cu m/day from 16 million cu m/day. The line can transport gas produced in the Campos and Espírito Santo basins, as well as gas imported from Bolivia and from the Guanabara Bay LNG Regasification Terminal.
Gasduc III also will be able to receive gas coming from the Santos Basin, once the Caraguatatuba-Taubate gas pipeline has been completed later this year. Gasduc III interconnects Brazil's main natural gas processing pole, the Cabiúnas Terminal, to natural gas Hub 2, in Duque de Caxias.
Last month, Petrobras inaugurated the 93-km Paulinia gas pipeline, which will transport 5 million cu m/day. It originates in the city of Paulinia.
In addition to the Paulinia-Jacutinga gas pipeline, Petrobras said that the transportation network that supplies the state of Minas Gerais will be further reinforced in May when the 267-km Gasbel II line is scheduled to begin operating.
With the Paulinia-Jacutinga and Gasbel II gas pipelines, Petrobras said it is boosting its natural gas transportation capacity to Minas Gerais fourfold, rising to 13.2 million cu m/day from 3.2 million cu m/day.
Woodside selects Kimberly hub for Browse LNG
Woodside Petroleum Ltd. and its partners in the Browse LNG project selected James Price Point as the site for the proposed LNG plant, which will process gas from Browse basin fields.
Woodside plans to start front-end engineering and design work in 2011 leading to a final investment decision in mid-2012. The proposed $30 billion (Aus.) LNG plant is in the Kimberley region of Western Australia.
The site decision comes after the Australian government imposed a time limit last year regarding renewal of retention leases on the Browse gas fields—Torosa, Brecknock, and Calliance (OGJ Online, Dec. 4, 2009).
Talks start on Galsi link to Corsica
Negotiations have begun to link Corsica to the 940-km Galsi pipeline planned between Algeria and Italy, French President Nicolas Sarkozy said on a visit to Corsica, a French island off the Mediterranean coast (OGJ, June 8, 2009, Newsletter).
The link from Sardinia to Corsica would require an investment of €425 million, Sarkozy said. The island currently relies on ships for energy deliveries from the continent and fuels its two power stations with heavy fuel oil.
Corsica's natural gas needs are estimated at 300 million cu m/year. The Galsi line, one of two trans-Mediterranean pipelines planned by the Medgaz consortium, is to have capacity of 8 billion cu m/year.
GDF Suez to buy gas fields in Bonaparte Gulf
GDF Suez signed a final agreement to buy 60% of the Petrel, Tern, and Frigate natural gas fields in the Bonaparte Gulf from Santos Ltd. for $200 million.
This heralds the beginning of the proposed Bonaparte LNG project to be run by a GDF Suez subsidiary out of Perth.
The company will begin with a new drilling campaign before yearend to confirm reservoir potential.
Bonaparte LNG project involves floating LNG development of the three fields capable of producing 2 million tonnes/year of LNG. At this stage the contingent resource is estimated at 220 million boe.
First phase of the feasibility and pre-design engineering work will take about 3 years and lead to a final investment decision by 2014.
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