GENERAL INTEREST — Quick Takes
California issues proposed well stimulation requirements
California's Department of Conservation issued proposals to regulate hydraulic fracturing and other oil and gas well stimulation on Nov. 15, starting a 60-day public comment period on rules it hopes to finalize and have in place by Jan. 1, 2015.
The agency also said it will have emergency regulations in place by Jan. 1, 2014, so major requirements of SB 4, which the state's senate and assembly passed and Gov. Jerry Brown (D) signed into law on Sept. 20, will be addressed in the meantime.
The proposals are the result of a dozen public meetings to both solicit ideas on what the regulations ought to include and to receive comments on an unofficial "discussion draft" of regulations; extensive research of other states' regulations and of scientific studies; and input from other regulatory agencies, the environmental community, and the oil and gas industry, CDOC said.
It has scheduled five public hearings in Sacramento on Jan. 6, 2014; in Long Beach on Jan. 6; in Bakersfield on Jan. 8; in Salinas on Jan. 8; and in Santa Maria on Jan. 13.
CDOC's Oil, Gas & Geothermal Resources Division must certify an environmental analysis of SB 4 by July 1, 2015. Also, the Natural Resources Agency must commission an independent scientific study of well stimulation by Jan. 1, 2015; a timeline for the study is being developed, CDOC said.
BSEE cites 12 operators for not meeting SEMS deadline
The US Bureau of Safety and Environmental Enforcement cited 12 offshore oil and gas operators for not meeting a Nov. 15 deadline to complete an initial Safety and Environmental Management Systems (SEMS) audit. Seventy-three other operators successfully satisfied the requirement, and the US Department of the Interior agency said it will analyze their reports and work them to ensure their corrective action plans address deficiencies and continuously improve.
"An effective, fully implemented SEMS program is essential to reducing risks across offshore operations," BSEE Director Brian Salerno said. "BSEE must be assured that companies are addressing the key elements of SEMS and that they are not needlessly putting their workers and the environment at risk. We will vigorously enforce compliance with this fundamental requirement."
Salerno noted that beginning Nov. 16, he directed five operators—Breton Energy LLC, Houston; EP Energy, Houston; Virgin Offshore USA, Lafayette, La.; Matagorda Island Gas Operations LLC, Morgan City, La.; and XTO Energy Inc., Houston—to suspend operations until BSEE could determine that SEMS requirements had been addressed.
Seven other operators—Tengasco Inc., Houston; Petsec Energy, Lafayette; Monforte Exploration LLC, Houston; Legacy Resources Co. LLC, Scott, La.; GoMex Energy Offshore Ltd., The Woodlands, Tex.; Conn Energy Inc., Mandeville, La.; and Badger Oil Corp., Lafayette—submitted the necessary audit plans by Nov. 15 but did not complete the audits themselves in time.
Those companies were directed to immediately provide BSEE with a copy of their SEMS program; have the company's chief executive officer certify, under penalty of perjury, that the company has implemented the SEMS program; and complete their SEMS audit without further delay, BSEE said.
It said it acted only after repeated notifications via e-mail and letters to the companies during the past year, reminding them of the deadline and offering to work with them to ensure they understood the requirements. BSEE said it also offered to waive the requirement to submit an audit plan 30 days before conducting the audit in an effort to encourage operators to complete their audits before the deadline.
FERC selects acting chairman; Wellinghoff resigns
US President Barack Obama has selected Cheryl A. LaFleur as acting chairman of the Federal Energy Regulatory Commission. Jon Wellinghoff, the longest-serving FERC chairman, resigned on Nov. 24. Wellinghoff, who was appointed FERC chairman in 2009 (OGJ Online, Mar. 27, 2009), announced in May his intention to step down.
LaFleur joined FERC in July 2010, turning her attention to strengthening reliability and grid security, promoting regional transmission planning, and supporting a clean and diverse power supply, FERC said.
LaFleur serves as FERC liaison to the Department of Energy's Electricity Advisory Committee and a member of the National Association of Regulatory Utility Commissioners' Committees on Electricity and Critical Infrastructure. She also has co-chaired the FERC/NARUC Forum on Reliability and the Environment.
LaFleur mentioned tasks the FERC will take on include implementing Order No. 1000 and setting transmission rates.
EXCO Resources chairman, CEO resigns
EXCO Resources Inc. Chairman and Chief Executive Officer Douglas H. Miller has resigned from his positions. EXCO's board has appointed Jeffrey D. Benjamin, a long-time investor in EXCO and an independent member of the independent's board, to serve as nonexecutive chairman.
Benjamin served on the board from 1998 through 2003 and most recently since October 2005. Currently he's a director of Caesars Entertainment Corp. and Chemtura Corp., and chairman of Spectrum Group International Inc.
"Since Mr. Miller led the group that acquired control of EXCO in 1997, his contributions to the organization have been significant," Benjamin said, adding, "The board has initiated a search to identify EXCO's next chief executive officer. The search process will include a full review of both internal and external candidates."
Miller attempted to take the company private in 2010 by offering to buy all outstanding shares he did not already own at $20.50/share, totaling $4.4 billion (OGJ Online, Nov. 3, 2010). However, his bid was rejected by the board the following year.
The company's board also has approved a capital budget of up to $368 million for 2014.
Exploration & Development — Quick Takes
Tullow, Africa Oil drill fifth Kenya oil discovery
Tullow Oil PLC and Africa Oil Corp. have reported a fifth oil discovery in northern Kenya where they plan to run six rigs full time for the foreseeable future.
The Agete-1 exploratory well on Block 13T has discovered and sampled movable oil with an estimated 100 m of net oil pay in good-quality sandstone reservoirs.
Agete-1 is the fifth consecutive oil discovery in the first of a chain of multiple rift basins on Africa Oil's acreage in the region. Agete-1 derisks several follow-on prospects north of and on trend with the Twiga South, Ekales, and Ngamia oil discoveries and adds to the significant resource base already discovered.
The Sakson PR5 rig drilled Agete-1 to a total depth of 1,930 m. Following completion of logging operations the well will be suspended for future flow testing to will confirm the net pay count. The rig will then move to drill the Ewoi-1 wildcat in the east of the basin, targeting a rift flank prospect similar to the recent Etuko oil discovery. Tullow Oil and Africa Oil each holds 50% interest in the discovery.
Elsewhere in Kenya, the companies plan to spud the Amosing-1 well on Block 10BB with the Weatherford 804 rig. The Etuko-1 well test on the same block is scheduled to start with the PR Marriott 46 rig that recently arrived in country, and the Ekales-1 well test is scheduled to begin in early December with the recently mobilized SMP-5 completion unit.
The Africa Oil-operated Bahasi-1 well on Block 9 is drilling as planned with results expected by the end of December.
Two more wells are drilling in Ethiopia, Tutule-1 on the South Omo block and El Kuran-3 on Block 8, and results are expected before yearend.
Keith Hill, president and chief executive officer of Africa Oil, said, "We would expect to see a high rate of success on all exploration wells in this basin based on results to date."
Dana makes another North Sea discovery
Dana Petroleum has made an oil discovery in the Moray Firth after the drilling of the entirely Dana-operated Liberator exploration well.
Using Diamond Offshore Drilling Inc.'s Ocean Nomad drilling rig, Dana drilled the 13/23d-8 well on the Liberator prospect in license P1987. The well encountered hydrocarbons in a Lower Cretaceous captain sandstone reservoir. The rig will be sent to the northern North Sea for further operations on Dana's Western Isles development.
"This is the second North Sea discovery that Dana has made within the last month, and our fifth discovery in the last 3 years," said Paul Griffin, Dana's UK managing director. "The discovery lies close to existing infrastructure and we will now undertake further evaluation work to determine its commercial potential." Dana also reported a gas find in the Pharos prospect in the southern North Sea (OGJ Online, Nov. 19, 2013).
Drilling & Production — Quick Takes
Qatar Petroleum lets contract for Dukhan oil field
Qatar Petroleum has let a $190 million engineering, procurement, installation, and commissioning contract to Kentz Corp. Ltd. for wellhead industrial control systems and corrosion protection for 775 wells in the Dukhan oil field in Qatar.
Kentz, which has worked with QP since 1997, is a holding company of Kentz Engineering & Construction Group. The contract will be executed by its engineering, procurement, and construction business unit for 3 years through 2016.
Kentz said it will provide a supervisory control and data acquisition network infrastructure to monitor wellheads from designated stations, providing centralized real-time and historical wellhead data directly into QP's information technology network. Kentz also will oversee the prevention of external corrosion damage to the well casings in Dukhan field by installing an impressed current cathodic protection system.
Dana Gas lets contract for platform in Zora field
Dana Gas has let a $17 million contract for fabrication of a platform for the Zora gas field. The contract is with Adyard Abu Dhabi, a subsidiary of Interserve PLC.
Dana Gas in 2012 signed agreements with the governments of Sharjah and Ajman to develop the field off the two emirates.
The platform will be installed in 24 m of water. Dana Gas expects to start delivering 40 MMcfd in first-half 2015. Gas will be transported by a 35-km pipeline to an onshore processing facility in Sharjah.
"This contract is the first strategically significant development towards bringing the Zora gas field on stream," said Patrick Allman-Ward, chief executive officer of Dana Gas. He anticipates capital investment of $160 million during the project execution phase.
US drilling rig count edges down to 1,761
The US drilling rig count dropped a single unit to settle at 1,761 rigs working during the week ended Nov. 22, Baker Hughes Inc. reported.
Rigs drilling in inland waters gained 2 units to 19. Land-based rigs were unchanged from a week ago at 1,685. Offshore rigs fell 3 units to 57.
A 2-unit addition by gas rigs to reach a total of 1,387 was offset by a 2-unit subtraction from rigs considered unclassified to 5. Gas rigs lost 1 unit to 369.
Horizontal drilling rigs jumped 13 units to 1,127 while directional rigs declined 4 units to 216.
In Canada, a 33-unit loss to 368 rigs working trumped last week's 23-rig increase. A 1-unit gain in gas rigs to 168 was overshadowed by a 34-unit loss in oil rigs to 200. Canada has 19 fewer rigs compared with a year ago.
Texas finished the week ahead of the major oil and gas-producing states with a 6-unit rise, reaching a total of 831. West Virginia followed closely behind with a 5-unit gain to 37. North Dakota claimed 2 more units to total 167. Louisiana, Wyoming, and Kansas each tallied 1 unit to a respective 110, 56, and 28. Three states were unchanged from a week ago: Ohio, 34; Utah, 28; and Alaska, 9. Colorado and Arkansas lost 1 unit each to respective totals of 68 and 11. New Mexico declined 2 units to 79. Pennsylvania dropped 3 units to 54. Oklahoma decreased 4 units to 172. California's total was reduced 5 to 37.
Notable changes among the major US basins included 3-unit increases in the Eagle Ford and Marcellus to 226 and 90, respectively. The Barnett, meanwhile, fell 3 units to 33.
PROCESSING — Quick Takes
Petrobras advances Ceara refinery plans
Petroleo Brasileiro SA (Petrobras) has signed an agreement with Brazilian government and indigenous groups as part of the licensing process to start construction on its planned 300,000-b/d Premium II refinery in the northeastern state of Ceara.
The agreement, signed on Nov. 22, will create a reservation for the Anace tribe currently occupying the land on which the refinery is to be built, according to a Petrobras news release.
As part of the accord, Petrobras has agreed to reimburse the government of Ceara up to 15 million reais of the costs it will incur to relocate the tribe, including land acquisition, infrastructure, and compensation to tribe members, the company said.
The previously announced Premium II refinery (OGJ Online, Apr. 4, 2011; Nov. 10, 2010; Jan. 26, 2009) will be built in the municipality of Caucaia in the industrial and port complex at Pecem and will supply the domestic market with low-sulfur oil products, according to Petrobras.
The company did not disclose any revised timetable for when construction on the refinery will resume.
Samref lets engineering contract for Yanbu refinery
Saudi Aramco-Mobil Refinery Co. Ltd. (Samref), a 50-50 joint venture of Saudi Aramco and ExxonMobil Corp. subsidiary Mobil Yanbu Refining Co. Inc., has let a 5-year framework contract to Kentz Corp. Ltd. for general engineering services at the Samref refinery in Yanbu, Saudi Arabia.
Under the agreement, Kentz, through its local subsidiary Saudi Arabian Kentz Co. Ltd., will provide design engineers, technicians, planners, and requisite support professionals at the refinery, the global engineering firm said in a news release.
No details regarding either the value of the contract or the scope of work to be completed were disclosed.
The Samref refinery, which began operating in 1984, was designed to process Saudi Arabian crude oil into finished petroleum products for export into the international market and reached its current capacity of about 400,000 b/d in 2005 (OGJ Online, Dec. 19, 2005).
Numaligarh commissions naphtha splitter
Numaligarh Refinery Ltd. (NRL), a subsidiary of Bharat Petroleum Corp. Ltd., has commissioned a naphtha splitter unit at its 3 million tonne/year (tpy) refinery in the Golaghat district of Assam in far-northeastern India.
The unit, which cost 87 crore rupees and was funded entirely from internal sources, began operating on Nov. 18, according to a release from NRL.
The naphtha splitter—plans for which NRL first announced last year (OGJ Online, Sept. 21, 2012)—will supply 160,000 tpy of petrochemical-grade naphtha to the Assam Gas Cracker Project, which will be operated by Brahmaputra Cracker & Polymer Ltd. at Lepetkata in the Dibrugarh district.
TRANSPORTATION — Quick Takes
NEB: Canadian LNG exports possible in 2019
With production of natural gas expected to grow from shales and other tight formations, Canada should be able to export LNG beginning in 2019, says the National Energy Board.
This is an assumption and not a forecast related to any particular project, NEB said in its 2013 forecast of energy markets to 2035. As of Oct. 1, the government had issued licenses for three Canadian LNG export projects and was reviewing applications for five.
NEB's forecast assumes exports from the British Columbia Coast of 1 bcfd of LNG in 2019, rising to 2 bcfd in 2021 and 3 bcfd by 2023.
Key uncertainties about the outlook for LNG, NEB says, include North American gas prices, competition from other LNG suppliers, the pace of LNG demand growth, and the ability of project sponsors to secure contracts from buyers.
NEB expects the Western Canadian Sedimentary Basin to continue dominating the country's gas production, with a strong shift toward output from shale and other tight formations and toward British Columbia.
Virtually all of the projected 17.4 bcfd of gas production for Canada in 2035 will come from the basin as small amounts now produced Nova Scotia and Saskatchewan fade.
Gas production from WCSB tight formations rises to 10.9 bcfd in 2035 from 5.8 bcfd in 2013 in NEB's forecast and from shales to 4.8 bcfd from 400 MMcfd in the same period.
Over the forecast period, gas production from British Columbia rises to 10.7 bcfd from 3.4 bcfd as output from Alberta falls to 6.6 bcfd from 9.1 bcfd.
FERC approves Transco gas pipeline expansion
Williams Partners LP has received approval from the US Federal Energy Regulatory Commission for the $300 million Transco Virginia Southside expansion for service to Dominion's 1,358-Mw facility in Brunswick County, Va. The gas-fired, electric power-generation plant will replace generating capacity from retiring coal-fired plants, Tulsa-based Williams said.
The 100-mile, 24-in. natural gas pipeline is expected to provide 270,000 dth/day of incremental transportation capacity by September 2015, extending from the Transco mainline in Pittsylvania County, Va., into Halifax, Charlotte, and Mecklenburg, terminating in Brunswick County, Va.
More than 90% of the capacity will serve Dominion Virginia Power's new power plant while the remainder will serve Piedmont Natural Gas Co.'s North Carolina local distribution unit.
Transco's plan is to place the pipe parallel to its own existing pipeline alongside the existing utility corridor. Transco also is adding more than 21,000 hp of compression at Station 165 in Pittsylvania County, Va.
The Transco growth projects, which consist of 11 projects in nine eastern states designed to increase system capacity by more than 35%, are scheduled by Williams Partners to be brought into service between 2013-17. Including the expansion, the projects total $2.2 billion.
"Since 2003, we have invested nearly $2 billion in 21 expansion projects that have increased Transco's transportation capacity by 55%" stated Alan Armstrong, Williams' chief executive officer.
"These vital infrastructure expansions connect the sizeable and growing markets along the Transco system with the new, long-lived natural gas reserves that the US is blessed to have in abundant supply," Armstrong added.
Transco is a 10,200-mile pipeline system moving natural gas to the US Northeast and Southeast. Williams said current system capacity is 10.15 million dth/day, enough natural gas to serve the equivalent of more than 42 million homes.
Williams reported in April 2012 it was in discussions with potential shippers and other market inquiries about the Atlantic Access expansion of Transco, prompting the partners to increase the project's capacity to 2.3 bcfd from 1.8 bcfd (OGJ Online, Apr. 17, 2012).
A decade earlier, Williams was fined $1.4 million by the US Justice Department and the Environmental Protection Agency for violating environmental rules protecting soil and water quality (OGJ Online, Feb. 1, 2002).
Freeport gets nod for LNG exports to non-FTA countries
The US Department of Energy has conditionally green-lighted Freeport LNG Expansion LP and FLNG Liquefaction LLC to export additional volumes of domestically produced LNG to countries without a Free Trade Agreement with the US from the Freeport LNG Terminal in Quintana Island, Tex.
The facility is conditionally authorized to export an additional 0.4 bcfd, for a total rate of up to 1.8 bcfd, for 20 years, which the DOE found was not inconsistent with public interest.
Countries that do not have an FTA with the US are authorized for export by DOE. Proposed exports that are found not to "be consistent with the public interest" are rejected.
DOE considered Freeport LNG Terminal's economic, energy security, and environmental impacts. It also considered public comments for and against the application and almost 200,000 public comments related to the associated analysis of the cumulative impacts of increased LNG exports.
Freeport previously received approval to export 1.4 bcfd of natural gas LNG from Freeport to non-FTA countries on May 17 (OGJ Online, May 17, 2013). The DOE then conditionally authorized Dominion's proposed Cove Point facility in September (OGJ Online, Sept. 23, 2013).
Chevron monitoring Milford, Tex., rupture site
Chevron Pipeline Co. continues to depressurize the West Texas LPG pipeline that ruptured and ignited Nov. 14 at 9:30 a.m. CST near Milford, Tex. (OGJ Online, Nov. 14, 2013). The fire continues to decrease in size as residual product is flared and burned-off. Chevron continues to monitor a nearby 14-in. OD LPG pipeline and is in the process of removing product from it and depressurizing it.
Local unified command established a 1½-mile evacuation zone at the site, with about 700 people in Milford asked to evacuate. The local Red Cross has mobilized to assist those affected.
Chevron suffered a leak on West Texas LPG in 2011 and a crude pipeline it operates between Rangely, Colo., and its Salt Lake City refinery in 2010 (OGJ Online, Nov. 5, 2010).
NGL production in West Texas and elsewhere has expanded rapidly with growth in US natural gas and crude production, prompting expansion of US Gulf Coast fractionation and LPG export sites (OGJ Online, Oct. 2, 2013).