Aramco discussing globalization strategy
Saudi Aramco, the world's biggest oil company in terms of oil reserves and production, is discussing a strategy to extend its operations into more than 50 countries in the next 10-20 years.
"We want to transform Saudi Aramco from a leading oil and gas company into a fully integrated, truly global energy and chemicals enterprise with extensive operations in the kingdom and around the globe," said Aramco President and Chief Executive Officer Khalid A. Al-Falih in an interview posted on the company's web site.
Aramco operates outside Saudi Arabia now mainly through downstream joint ventures and interests. The strategy described by Al-Falih, although lacking details, sounded more like those that have made national oil companies of other countries strong competitors for global oil and gas investment opportunities.
As the holder of reserves estimated at 260 billion bbl of crude oil and condensate and 275 tcf of natural gas, and with production capacity of 12 million b/d, Aramco has formidable financial strength.
Al-Falih said an initiative called 2020 Strategic Intent envisions that, "In 2020, Saudi Aramco is the world's leading integrated energy and chemicals company, focused on maximizing its income, facilitating the sustainable and diversified expansion of the kingdom's economy, and enabling a globally competitive and vibrant Saudi energy sector."
Aramco said the intent is to become "a truly global company with operations in over 50 countries." Describing itself as "a consumer of the best technology" now, it said it will become "an innovator and producer of leading technologies.
Long an oil and gas production powerhouse, Aramco entered the petrochemicals business in 2009 with start-up of the Petro Rabigh petrochemical complex integrated with an upgraded 400,000 b/d refinery at Rabigh on the Red Sea.
Ghanem 'to represent Libya at OPEC'
Libya's Oil Minister Shukri Ghanem, missing for nearly a week, will represent the North African country at the June 8 meeting of the Organization of the Petroleum Exporting Countries, according to a senior Libyan official.
"Shukri Ghanem will be representing (Libya) as the minister of oil" at the OPEC meeting in Vienna, according to Khaled Kaim, the deputy foreign minister.
Kaim also told The Associated Press that Ghanem had been in touch a couple of times with the Libyan prime minister's office in Tripoli since his departure from the country. Kaim did not detail the contents of Ghanem's remarks.
The statement by Kaim, yet to be confirmed by Ghanem, followed increasing uncertainty over Ghanem's whereabouts and loyalties that has grown over the past week due to conflicting statements by Libyan rebels and officials of several governments.
Tunisia's Foreign Minister Mouldi Kefi added to the turmoil by saying that Ghanem had fled Libya and switched his loyalties away from Gadhafi. "I believe and I suspect…Ghanem just left Libya and that he is not any more working with the Gadhafi regime," said Kefi, when asked the whereabouts of Libya's missing oil minister (OGJ Online, May 24, 2011).
El Paso plans to spin off E&P operations
El Paso Corp. plans to split into two publicly traded companies, one encompassing its pipeline and midstream businesses and the other its exploration and production operations.
The company's board has given initial approval for a spinoff of the E&P company by yearend.
El Paso Corp. then will comprise the company's pipeline group, its midstream group, and its general and limited partner interests in El Paso Pipeline Partners LP.
Doug Foshee, chairman, president, and chief executive officer, said the move "will result in significant and sustainable value creation."
El Paso's pipeline group operates 42,000 miles of interstate gas pipelines in the US. It's the largest interstate system in the country.
The El Paso Exploration & Production Co. unit focuses on unconventional and low-risk conventional gas plays, nearly all in the US. It holds reserves of 3.4 tcf gas equivalent, including its 48.8% interest in Four Star Oil & Gas Co. Average production in 2010, including the Four Star interest, was 782 MMcfd of gas equivalent.
El Paso reentered the midstream business last year with investments in gas gathering systems in the Haynesville shale play of Louisiana and Altamont-Bluebell play of northeastern Utah, where it also owns a gas processing plant. With Spectra Energy Corp., the midstream unit plans to build an ethane pipeline system between the Marcellus shale producing region in the US Northeast and the Gulf Coast.
For the quarter ending Mar. 31, El Paso reported net income of $136 million on operating revenue of $989 million. In the comparable quarter of 2010 the company earned $419 million on $1.401 billion of revenue. Total assets on Mar. 31 were $25.857 billion.
Momentum to acquire Newfield's Fashing assets
Momentum Oil & Gas LLC, Houston, will purchase Newfield Exploration Co.'s South Texas oil and gas properties in Fashing field in Atascosa and Karnes counties for an undisclosed sum.
The transaction is to close June 30 retroactive to Apr. 1. The acquisition of 5,000 net acres will make Momentum the field's largest asset holder. Momentum is acquiring all of Newfield's interests below the top of the Georgetown formation at 9,700 ft, including the Edwards, Georgetown, and Pearsall shale formations. Fashing is the largest Edwards gas find in Texas with more than 1.2 tcf of cumulative gas production since 1957. Momentum said the assets provide it with a stable base of long-life gas production and a solid inventory of development projects.
The properties consist of interests in 60 wells with producing a net 3.8 MMcfd of gas equivalent, 6% condensate and 9% natural gas liquids. Momentum will operate 16 wells with 100% working interest. A third party operates the remaining wells in which Momentum is acquiring 47% working interest.
Santos makes oil find off W. Australia
Santos Ltd., Adelaide, made an oil discovery with its Finucane South-1A wildcat in permit WA-191-P in the Carnarvon basin off Western Australia.
Wireline logs have confirmed 18.5 m of net oil pay in high quality sands within the late Jurassic Angel formation.
The find is 15 km east of the company's Mutineer-Exeter oil development facility and has potential to exceed the predrill reserve estimate of 8 million bbl.
The well also lies 2 km south-southwest of the 1987 Finucane-1 well that intersected oil shows at the top of the Angel formation despite having been drilled off structure.
Santos says Finucane South-1A was drilled using Stena Drilling's Stena Clyde semisubmersible rig to identify potential additional resources to supplement those in the adjacent Fletcher field discovered in late 2007.
Woodside finds gas with Xeres-1 off W. Australia
Woodside Petroleum has drilled through 51 m of natural gas pay in its Xeres-1 wildcat off Western Australia.
The find, which was drilled in the target Triassic reservoir by the Maersk Discoverer semisubmersible rig, has been confirmed by wireline logs and the recovery of gas samples to surface. A gas pressure gradient has been established.
The Xeres success follows Woodside's nearby Martin-1 gas discovery last March that encountered 100 m of gross pay in the same reservoir.
Drilling & Production — Quick TakesAlberta forest fires affect Husky's production
Husky Energy Inc. said the forest fires near Slave Lake in northern Alberta have affected about 17,000 boe/d of its production from the area.
Husky noted that the fires are not near any of its facilities, but the fires have shut down the Plains Midstream Rainbow pipeline that transports oil from the area to Edmonton and also have caused power disruptions.
The company has begun transporting from the area 4,500 boe/d to its refining facilities near Lloydminster, Sask., and 2,000 boe/d to processing facilities in Taylor, BC.
Clinton asked to seek delay of drilling off Cuba
US Sen. Bill Nelson (D-Fla.) asked US Sec. of State Hillary R. Clinton to use diplomatic channels to temporarily keep an international consortium led by Repsol SA from drilling for oil off Cuba. Drilling possibly as early as this summer could threaten Florida tourism and is not in US interests, Nelson told her in a May 19 letter.
The senator has fought possible development of Cuba's offshore resources for years in several ways. He has asked Republican and Democratic administrations to withdraw diplomatic letters that the US government exchanges with Cuba every 2 years that enforce the 1977 Maritime Boundary Agreement. He introduced a bill in 2010 to deny US visas to executives of foreign companies drilling in Cuban waters, which Congress did not take up.
Most recently, Nelson said, he has introduced a bill that would require oil companies doing business with Cuba to comply with US safety regulations. "Meantime, national elections are set in Spain for March 2012," he told Clinton, adding, "Spain may have a government less inclined to tolerate investment in Cuba. Until such time as the elections, I urge you to do your utmost to prevent these drilling operations."
Chevron orders Big Foot well completion equipment
Chevron USA Inc. ordered from Baker Hughes Inc. electrical submersible pumps (ESPs) and production packers for seven producing wells, as well as mudline packers for three injection wells for its Gulf of Mexico deepwater Big Foot development.
Baker Hughes notes that this will be the first time a company deploys ESPs in Gulf of Mexico deepwater wells. The ESPs will be installed at about a 16,000 ft true vertical depth.
Discovered in 2006, Big Foot is in 5,200 ft of water on Walker Ridge Block 29 and is scheduled to start production in 2014.
Big Foot will produce to an integrated drilling and production extended tension-leg platform with dry trees and capacity to produce 75,000 bo/d and 25 MMscf of gas. Baker Hughes expects to deploy the ESPs in 2014.
Baker Hughes notes that the 1,200 hp dual ESPs will have the highest horsepower in-well systems ever deployed offshore. The ESPs will be deployed with dual by-pass systems, allowing for reservoir access and the ability to switch between ESPs without intervention.
Chevron estimates that Big Foot contains in excess of 200 million boe of recoverable resources (OGJ, Dec. 27, 2010, Newsletter).
Anadarko contracts two newbuild drillships
Anadarko Petroleum Corp. entered into two drilling contracts with Diamond Offshore Drilling Inc. for two newbuild drillships. Anadarko has contracted each of the dynamically positioned, ultradeepwater drillships, Ocean BlackHawk and Ocean BlackHornet, for 5 years commencing in late 2013 and early 2014, respectively.
Diamond Offshore expects the contracts to generate a maximum of $1.8 billion in revenues, assuming 100% rig utilization.
Hyundai Heavy Industries is preparing to commence construction of the two drillships at its South Korean shipyard.
In addition, Diamond Offshore said it and Anadarko have mutually agreed to dismiss all claims related to the Ocean Monarch semisubmersible drilling rig. Anadarko had sought to cancel the contract on the Ocean Monarch because of force majeure as a result of the US government's imposed moratorium for drilling in the Gulf of Mexico after the Macondo well blowout in April 2010.
PROCESSING — Quick TakesMotiva lets Port Arthur pet coke contract
Motiva Enterprises LLC has let a contract to Roberts & Schaefer, a subsidiary of KBR, for construction of a petroleum coker material-handling system in the expansion of its 285,000-b/d refinery at Port Arthur, Tex.
When the expansion is complete early next year, the refinery will have distillation capacity exceeding 600,000 b/d and become the largest in the US.
Roberts & Schaefer will install, start up, and test the pet coke system and provide on-site construction management and technical support for commissioning and testing. It handled engineering and procurement.
Motiva, a 50-50 venture of Shell Oil Co. and Saudi Refining Inc., said on May 16 that it had completed placement of the expansion project's 375-ft tall delayed coker, which has capacity of 95,000 b/d.
Motiva Enterprises let a contract to KBR unit Roberts & Schaefer for construction of a petroleum coker material-handling system in the expansion of its 285,000-b/d Port Arthur, Tex., refinery. Photo from Motiva.
The expansion includes a new single-train crude distillation unit with capacity of 325,000 b/d.
Other new units include an 85,000-b/d catalytic reformer with associated isomerization and hydrotreating plants, a sulfur recovery facility, a 75,000-b/d hydrocracker integrated with a new 60,000-b/d diesel hydrotreater, and a 50,000-b/d hydrotreater for feed for the existing catalytic cracker (OGJ Online, Mar. 18, 2009).
Work to begin on Nassiriyah refinery in Iraq
Design will begin soon on a 300,000 b/d refinery to be built in Nassiriyah, Iraq, according to a key contractor.
UOP LLC said Iraq's State Company for Oil Projects, part of the Ministry of Oil, has selected it to provide reforming, isomerization, fluid catalytic cracking, and selective hydrotreating technologies for the new facility.
As part of the overall technology package, UOP will provide basic engineering, technology licenses, catalysts, and specialty equipment.
UOP, part of Honeywell, noted that Iraqi refining capacity is to more than double by 2017 to 1.6 million b/d and to double again by 2030.
Last year, the oil ministry reported plans to invest about $20 billion in four refineries. In addition to the facility at Nassiriyah, it has let contracts for preliminary work on refineries with capacities of 150,000 b/d each at Karbala, Kirkuk, and Maysan (OGJ, July 5, 2010, p. 36).
Holly, Endicott building biodiesel plant
Holly Corp., Dallas, has joined Endicott Biofuels LLC, Houston, to build a 2,000 b/d biodiesel plant in Port Arthur, Tex.
"This joint venture will assist Holly in meeting its biofuel obligations under the federal renewable fuel standard," said George Damiris, Holly senior vice-president for supply and marketing.
The joint venture, called Sabine Biofuels LLC, will use Davy technology, licensed to Endicott Biofuels in North America, to convert inedible, renewable fats or oils in any proportion to high-quality biodiesel.
Holly subsidiaries operate a 100,000 b/sd refinery in Artesia, NM; a 125,000 b/sd refinery in Tulsa; and a 31,000 b/sd refinery in Woods Cross, Utah.
Holly shareholders are to meet June 28 to vote on a proposal to merge the company with Frontier Oil Corp., Houston. Frontier operates refineries in El Dorado, Kan., and Cheyenne, Wyo., with total capacity of 177,000 b/d (OGJ, Feb. 28, 2011, Newsletter).
TRANSPORTATION — Quick TakesShell moving ahead with Prelude FLNG project
Shell Australia has given the green light to its Prelude floating LNG (FLNG) project in the Browse basin off Western Australia. The company announced its final investment decision on May 20 in Perth. Prelude received environmental approval from the federal government in November (OGJ Online, Nov. 12, 2010).
The project will see development of the Prelude and nearby Concerto gas fields in permit WA-371-P with total reserves of 3 tcf of gas and about 120 million bbl of condensate.
Shell Australia has given the green light to its Prelude FLNG project in the Browse basin off Western Australia. Artist rendering from Shell.
The development, which some investment sources say will cost $11 billion, will be capable of producing 3.6 million tonnes/year of LNG, 1.3 million tpy of condensate, and 400,000 tpy of LPG. Shell says it is now ready to begin detailed design and construction of what will be the world's first FLNG facility in a ship yard in South Korea.
Initial design of the vessel was done by South Korean firm Samsung Heavy Industries along with Technip of France. The actual construction will be carried out by Samsung at its Geoje Shipyard from 2012. The vessel will be 488 m long and weigh 600,000 tonnes. Delivery is scheduled for 2016 with first gas expected from the project the same year.
During the vessel construction Shell will contract an offshore drilling rig to drill eight subsea wells beginning in 2013. This will take about 2 years.
The wells will be drilled to a depth of 5,400 m and tied back to the subsea manifolds before being hooked up to the FLNG facility via flowlines. FLNG hook-up and installation will take 6 months in advance of commissioning in 2015 and readiness to come on stream in 2016.
The Prelude project is Shell's first upstream project in Australia as operator. It will add $45 billion (Aus.) to Australia's GDP and create 1,000 jobs, Shell said.
Fos Faster LNG terminal plans advance
Following preliminary studies over 2006-09 and a public debate that took place in 2010's second half, plans to build the Fos Faster LNG terminal at Fos-sur-Mer, France, are advancing.
Royal Dutch Shell PLC and Koninklijke Vopak NV formed the Fos Faster LNG joint venture in mid-2009 to develop the terminal (OGJ Online, July 17, 2009). Feasibility studies based on an open season, to take place during June-October, will determine the terminal's final investment decision.
Fos Faster LNG Pres. Philippe Crakowski told OGJ that the feasibility studies would take into account the objections that arose during a public debate by forfeiting the initial plan to build the terminal on an artificial island. Instead it will be built along a deepwater jetty.
The terminal is planned to have an initial regasification capacity of 8 billion cu m/year, which could be expanded to 16 bcm/year at a later stage with the construction of a second jetty.
The initial stage would require an investment of €800 million. The terminal is slated to come on stream in early 2017, Crakowski said.
TAP system begins Italian ESIA process
The Trans Adriatic Pipeline (TAP) has begun its formal environmental and social impact assessment (ESIA) process in Italy. The submission of its scoping report to the Italian authorities follows similar activity in Albania last month. The scoping report document was presented to national, regional, provincial, and municipal authorities in Italy and is accessible to other stakeholders and the general public through the TAP web site.
Following route refinement studies between 2009 and 2011, the scoping document includes a detailed description of TAP's preferred route. Entering Italy at the northern end of San Foca on the Adriatic coast, it will extend 21 km to S. Donato di Lecce and the tie-in point with Snam Rete Gas. The pipeline's offshore length is roughly 45 km inside Italian waters, from the Italian coast to the middle of the Straight of Otranto in the Adriatic Sea, with 42-in. OD pipe used both onshore and offshore.
Submission of the Italian scoping report is the first step of the ESIA process in Italy, which in conjunction with the single authorization process, will give TAP all necessary construction and operating permits. TAP will later submit the full ESIA to Italian authorities in this year's fourth quarter, with official approval anticipated fourth-quarter 2012. TAP says the pipeline will be operational in time for first gas from the Shah Deniz II development in 2017.
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