OGENERAL INTEREST — Quick Takes
DOE to study Arctic unconventional energy resources
The US Department of Energy's Fossil Energy Office and Alaska's Department of Natural Resources agreed to work together along with potential investors to study unconventional energy resources in Alaska's Arctic.
Christopher Smith, DOE acting assistant secretary for fossil energy, and Alaska DNR Commissioner Dan Sullivan signed a memorandum of understanding establishing the effort Apr. 16 during the LNG17 conference in Houston.
DNR said in signing the MOU, it commits to helping DOE with its ongoing assessment of unconventional energy resources and DOE's field evaluation of potential unconventional energy production technologies on Alaska's North Slope.
This includes facilitating access to state lands and assisting with permitting and logistical issues, as well as providing expert review and interpretation of scientific data and reports by scientists in the state's oil and gas division and its geological and geophysical survey, the Alaska agency said.
It said that DOE, through its National Energy Technology Laboratories, will have the lead role in developing research and development projects and providing scientific oversight of the field studies. In the agreement, DOE commits to sharing the available technical data with the State of Alaska, DNR indicated.
"Alaska DNR and DOE/FEO may also endeavor together to highlight the potential of all of Alaska's natural resources, including conventional resources such as natural gas, and unconventional resources such as gas hydrates and viscous oil, as important supply sources to meet domestic energy demands and to ensure domestic economic and energy security," the agreement said.
Centrica, QPI to buy Suncor gas properties
A joint venture of Centrica PLC and Qatar Petroleum International (QPI) has agreed to acquire the conventional part of Suncor Energy's natural gas business in western Canada for $1 billion (Can.).
Centrica estimates production covered by the agreement at 250 MMcfd of natural gas equivalent, 90% gas. It estimates proved plus probable gas-equivalent reserves at 978 bcf.
The properties are in Alberta, northeastern British Columbia, and southern Saskatchewan.
Not covered are most of Suncor's unconventional gas properties in the Montney region of British Columbia or its Wilson Creek unconventional oil assets in Alberta.
Steve Williams, Suncor president and chief executive, said the agreement reflects "commitment to capital discipline and aligning assets with strategic objectives."
For the buyers, the agreement, if approved by government agencies, would be the first investment under a memorandum of understanding signed in December 2011.
Centrica holds a 60% share of the partnership and is operator. QPI holds the rest.
The assets to be acquired in central and southern Alberta overlap existing Centrica acreage.
The package includes more than 1 million acres of undeveloped land for which Centrica sees potential for horizontal drilling and multistage fracturing.
Centrica estimates contingent resources of the acquisition properties at more than 3 tcf of gas equivalent.
Rosneft, Marubeni sign MOC for joint oil, gas E&D
Rosneft and Marubeni Corp. signed a memorandum of cooperation covering possible joint oil and exploration and development as well as associated LNG project implement, the companies reported.
The companies envision joint studies regarding exploration and development of oil and gas assets already held by Rosneft. The memorandum also calls for the companies to consider cooperatively implementing an LNG project in the Russian Far East with gas marketing directed toward Japanese utilities.
In February, Rosneft Pres. and Chairman Igor Sechin met with executives from Marubeni and other companies from Japan and China to discuss establishing partnerships in Russian offshore Arctic projects and possibly future LNG projects (OGJ Online, Feb. 20, 2013).
"We are glad one of the leading Japanese companies has decided to join our plans," Sechin said in an Apr. 17 statement. "Agreements reached today are aimed, among other things, at ensuring sales market in Japan, which will strengthen Rosneft positions at the promising Asia-Pacific market."
Exploration & Development — Quick Takes
Nebraska Sioux County unconventional play eyed
Stratex Oil & Gas Holdings Inc., Watertown, Conn., said it has leasehold interests in 6,000 net acres in Sioux County, northwestern Nebraska, where it said it is monitoring a possible unconventional shale play in northeastern reaches of the Denver basin.
Stratex noted that Fidelity Exploration & Production Co., a subsidiary of MDU Resources Group, Bismarck, ND, has received a permit to drill the Cattle 1-1H horizontal well in Sioux County. The well is permitted to 8,000 ft or Pennsylvanian Atoka in NE SE 26-26n-56w, Sioux County.
Earlier in 2012, Fidelity was issued a permit for the Sioux Ranch 22-11 well in 11-25n-56w, a proposed 7,895-ft vertical Atoka test within about 10 miles east of the Wyoming state line at Goshen County and 60 miles southwest of Chadron, Neb.
The Cattle 1-1H permit states that the field name of Dancing Bull has been assigned, a possible indication of a hydrocarbon discovery.
Stratex said it acquired its acreage with the anticipation that an unconventional shale play may develop in which it could participate as a nonoperating working interest partner.
Second-phase work starts on Halfaya field
A group led by PetroChina Co. Ltd. has begun work on the second phase of development of giant Halfaya oil field in Iraq, reports PetroChina parent China National Petroleum Corp.
The first phase, which started up in June 2012, is producing 100,000 b/d of crude oil and 2.6 million cu m/day of natural gas (OGJ Online, June 27, 2012).
The second phase includes the drilling of 60 wells, laying of a 272-km trunk pipeline, and construction of a 5 million tonne/year crude processing center. The project, to be operational in the second quarter of 2014, will add 200,000 b/d of production.
Total production is to reach 600,000 b/d when the third phase is complete at the end of 2016, CNPC said.
PetroChina's partners are Total E&P Iraq, Petronas Carigali, and South Oil Co.
Alberta Oilsands eyes eastern Zambia rift basins
Alberta Oilsands Inc., Calgary, has agreed to acquire an 80% interest in petroleum exploration licenses covering three rift basins in eastern Zambia.
Subject to TSX Venture Exchange approval, Alberta Oil Sands would acquire Blocks 42, 44, 52, 54, 55, 57, and 58, which total 18 million acres, and a pending application on Block 25 in the Lake Tanganyika basin, Luangwa Rift, and the Cabora Bassa (Lake Kariba)/Mid-Zambezi trough.
Sellers are British Virgin Island and Zambian entities, and local partners will control the remaining 20% of the licenses.
Alberta Oil Sands said the acquisition would give it a presence in three new rifts and critically a full license on Lake Tanganyika. Block 54 is adjacent to Tanzanian lake acreage held by Beach Energy Ltd., Adelaide, which is concluding interpretation of a major seismic program.
Eni awarded Timor Sea block near Kitan oil field
Eni SPA has been awarded a production-sharing contract on 662 sq km adjacent to Kitan oil field in the Timor Sea in the Joint Petroleum Development area administered by Australia and Timor-Leste.
The PSC in the Flamingo trough area contains the commitment to drill two exploratory wells in the first 2 years and separate options for the drilling of two contingent wells.
Eni has identified a number of oil prospects in the JPDA and indicated that facilities at nearby producing Kitan field could be used in case of a discovery. Water depth in the contract area averages 350 m (see map, OGJ, Apr. 27, 2009, p. 39).
Eni-operated Kitan field went on production in October 2011 about 3½ years after the commerciality declaration. Production peaked at 45,000 b/d of oil in 2012. Eni is operator of the JPDA 11-106 PSC with 40.53% equity in joint venture with Inpex Offshore Timor-Leste Ltd. 35.47% and Timor GAP PSC 11-106 Unipessoal Ltda. (TimorGap) 24%.
Drilling & Production — Quick Takes
Manifa oil flow starts offshore Saudi Arabia
Production has begun from the first phase of development of Manifa oil field offshore Saudi Arabia and is expected to reach 500,000 b/d by July.
The start-up was 3 months ahead of schedule, according to Saudi Aramco.
The company is developing the shallow-water Persian Gulf field with 27 man-made drilling islands, 13 platforms, and 15 onshore drillsites (OGJ Online, Feb. 23, 2011). The project includes 41 km of causeways and 3 km of bridges designed to maintain natural water flow in Manifa Bay.
A 420-Mw heat and electricity also has started up.
Manifa field, about 200 km northwest of Dhahran, is expected to be fully operational by December 2014, when production will be 900,000 b/d of Arabian Heavy crude oil, 90 MMscfd of sour natural gas, and 65,000 b/d of condensate.
Chevron gets okay to restart Frade field off Brazil
Chevron Corp. has received final approval to restart oil production from Frade field off Brazil and was expected to bring the field on at about 20,000 b/d, said Inpex Corp., one of the partners.
Production was halted following a November 2011 offshore oil seep in the Campos basin. At that time, production was 70,000 b/d.
Brazil's National Petroleum Agency (ANP) recently announced that production will be lower for the restart. In addition, regulators have said Chevron is to provide periodic reports regarding the reservoir conditions.
In 2011, Chevron reported well-control operations significantly reduced an oil seep believed to be coming from an appraisal well (OGJ, Nov. 21, 2011, Newsletter).
Earlier this year, a Brazilian judge dropped criminal charges against Chevron, drilling contractor Transocean Ltd., and 17 of their employees regarding the November 2011 seep (OGJ Online, Feb. 21, 2013).
Chevron has a 51.74% operating interest in Frade field. Partners are Petroleo Brasileiro SA 30%, and Frade Japao Petroleo Ltda., a joint venture of Inpex, Sojitz Corp., and Japan Oil, Gas & Metals Corp. 18.26%.
Chevron started production at Frade field in 2009 (OGJ Online, June 23, 2009).
Utah company's technology licensed to Calgary firm
A Utah company's technology that uses an alkali metal in combination with hydrogen or methane to remove sulfur, nitrogen, and metals from bitumen and other heavy oils has been licensed to a Calgary upgrading company, the US Department of Energy announced.
The technology also encompasses an electrolytic process to regenerate the alkali metal and separate sulfur and metals, DOE's Fossil Energy Office (FEO) said on Apr. 9.
Ceramatec Inc. of West Valley City, Utah, developed the technology with assistance from DOE's National Energy Technology Laboratories, FEO said. The process has been licensed to Western Hydrogen Ltd., Calgary, for upgrading Canadian bitumen or heavy oil, it added.
Western Hydrogen, in turn, has formed a new company, Field Upgrading, also of Calgary, to develop and commercialize the technology, FEO indicated.
It said Ceramatec tested the process on heavy oil, oil shale, and oil sands feedstocks with a wide range of densities, boiling curves, and sulfur, nitrogen, metals, and asphaltene contents.
In nearly 6,000 hr of continuous operation, the process consistently removed sulfur and heavy metals, according to FEO. Nitrogen removal was also achieved, but not to the reduction levels of sulfur, it said.
Ceramatec's new technology potentially could use direct quality improvements to increase a heavy oil or bitumen-based refining feedstock's value, and reduce the need for expensive capital processing equipment expansions at refineries, such as fluid catalytic crackers and desulfurization units, FEO noted.
"Using methane as the process feed-gas has the added advantage of reducing the carbon footprint of oil-upgrading by avoiding emissions from steam methane reforming," it said. "The process also eliminates sulfur oxide emissions by erasing the need for conventional sulfur recovery processes."
PROCESSING — Quick Takes
Williams Partners, Shell form midstream JV
Williams Partners LP, Tulsa, and Royal Dutch Shell PLC have joined to form Three Rivers Midstream, a company to provide gas gathering and gas processing for production in northwest Pennsylvania. The venture will invest in both wet-gas handling infrastructure and dry-gas infrastructure serving Marcellus and Utica shale wells.
Three Rivers Midstream has signed a long-term, fee-based dedicated gathering and processing agreement for Shell's production in the area, which includes about 275,000 dedicated acres, said the company announcement earlier this month.
The JV also plans to pursue gathering and processing agreements with other producers in the liquids-rich areas of northeast Ohio in addition to northwest Pennsylvania.
Three Rivers will build a 200-MMcfd cryogenic gas processing plant at a location yet to be determined. The gas processing complex will expand as Three Rivers' business grows, said Williams. The plant is to be in service by second-quarter 2015.
Alan Armstrong, Williams Partners' chief executive officer of Williams Partners' general partner, said the system will be connected to two major proposed developments in Pennsylvania: Shell's proposed ethylene cracker (feasibility still being studied) in Beaver County and the proposed Williams-Boardwalk JV to develop the Bluegrass Pipeline system that would deliver Marcellus and Utica liquids to Gulf Coast and export markets (OGJ Online, Mar. 7, 2013).
The proposed Bluegrass pipeline targets a late 2015 in-service date.
Williams Partners will initially own most of Three Rivers Midstream and operate the assets. Shell retains the right to invest capital and increase its ownership before mid-2015. Williams Partners' portion of initial capital expenditures on the Three Rivers plant, not including the gathering system, will be about $150 million.
Pakistan to build refinery in Khyber Pakhtunkhwa
Pakistan State Oil (PSO) has signed a memorandum of understanding with the government of the northwest province Khyber Pakhtunkhwa to build a 40,000-b/d refinery on about 400 acres in Kohat district of K-P, the state-owned company reported.
The plant will use crude oil from nearby indigenous sources for production of petroleum products that conform to Euro IV standards. The project is to be fully commissioned by 2016-17, said the announcement, but offered no cost estimate. Local media reported the cost at $600 million with construction planned to begin by yearend.
OGJ data for Pakistan's refining show it with more than 185,000 b/d of capacity spread among six refineries, most in or near Karachi (OGJ, Dec. 3, 2012, p. 32).
Rosneft to buy stake in Sardinian refiner
A Rosneft subsidiary has agreed to buy a large minority stake in Saras SPA, which operates a 300,000 b/d, high-conversion refinery in Sarroch, on the southwestern coast of Sardinia.
Rosneft JV Projects SA will buy shares representing 13.7% of the issued share capital of Saras for €178.5 million. The sellers are Saras Chairman Gian Marco Maratti, Massimo Moratti, and Angelo Moratti SAPA. Angelo Moratti will retain an interest of about 50.02%.
Saras also has a large integrated gasification combined cycle plant, markets oil products in Italy and Spain, and operates 200,000-tonne/year biodiesel plant in Cartagena, Spain.
Rosneft and Saras late last year signed a memorandum of understanding to create a 50-50 joint venture for trading and processing crude oil and selling oil products (OGJ Online, Dec. 18, 2012).
TRANSPORTATION — Quick Takes
Plains All American to build Permian crude pipeline
Plains All American Pipeline LP is building the Cactus Pipeline, a 310-mile, 20-in. OD crude oil pipeline from McCamey to Gardendale, Tex. PAA expects the Cactus Pipeline to enter service first-quarter 2015. A long-term letter of intent with a third-party anchor shipper will absorb a majority of the pipeline's 220,000-b/d capacity and Plains All American is in discussions with several other potential shippers for the balance.
Cactus will transport both sweet and sour crude oil from the Permian basin to the Plains All American-Enterprise Products Partners Eagle Ford Joint Venture Pipeline. The Eagle Ford JV line directly serves the Three Rivers and Corpus Christi markets and can supply the Houston-area through a connection to the Enterprise South Texas Crude Oil Pipeline.
Crude delivered on Cactus will have access to rail loading at Plains All American's Gardendale station and access to the Eagle Ford JV barge dock facility in the Corpus Christi area. Cactus' capacity can be increased as demand warrants.
Plains All American expects the project to cost $350-375 million.
Kinder Morgan Energy Partners LP earlier this month announced plans to build a 277,000 b/d crude oil pipeline from the Permian basin to California (OGJ Online, Apr. 9, 2013).
Atlas Pipeline to buy Teak Midstream
Atlas Pipeline Partners LP has agreed to buy Eagle Ford shale natural gas gathering and processing company Teak Midstream LLC. Assets being acquired include Teak's 200 MMcfd Silver Oak I cryogenic processing plant, 265 miles of 20-24 in. OD high-pressure rich gas gathering lines with 750 MMcfd, and a second 200 MMcfd cryogenic processing plant Silver Oak II, expected to be delivered to the partnership for installation in May and enter service first-quarter 2014. Atlas will also acquire 275 miles of low-pressure gathering lines as part of the deal.
Atlas expects further expansion of the acquired Eagle Ford assets beyond 2014, including the potential to add a third 200 MMcfd processing facility and additional gathering pipelines. Atlas sees the potential to eventually grow the complex to more than triple its current size.
Atlas will also acquire a 50-75% interest in various joint venture agreements between Teak and TexStar Midstream Services LP. It anticipates becoming the operator of these assets, which include 235 miles of rich gas gathering, header, and residue pipelines, 3 miles of NGL pipeline, and a co-gen facility, which will produce power for the Silver Oak complex as well as sell power to third-parties and back to the grid during peak season.
Atlas will spend $1 billion cash on Teak and expects the sale to close later this quarter subject to regulatory approval and customary conditions. Atlas expects total capital expenditures associated with the build-out of Silver Oak II and other projects over the next year to total about $100 million.
Atlas late last year acquired Cardinal Midstream LLC, active in the Woodford Arkoma basin (OGJ Online, Dec. 5, 2012).
Western Refining expands basin crude gathering
Western Refining Inc. has started its Mason Station crude oil terminal in Reeves County, Tex., the first phase of its Delaware Basin crude oil gathering system. Mason Station includes crude oil storage, truck offloading stations, and a pipeline interconnection to Kinder Morgan Energy Partner's 450-mile crude oil pipeline supplying Western's 128,000 b/d El Paso, Tex., refinery.
The second phase of the Delaware Basin system includes 50 miles of crude oil gathering lines in southern New Mexico and West Texas expected to be completed later this quarter. Phases 1 and 2 of the Delaware Basin system combined will deliver as much as 100,000 b/d of shale crude oil to the KMEP line for delivery to El Paso.
The refinery currently processes about 25,000 b/d of the Delaware basin-sourced crude oil.
Western is evaluating the feasibility of third and fourth phases for this project. Phase 3 would connect its Delaware Basin system to its existing 16-in. OD TexNew Mex pipeline in Chaves County, NM, providing additional supply flexibility to its El Paso and Gallup, NM, refineries.
Phase 4 would expand Western Refining's crude rail capacity at Gallup to 20 cars/day from 6 cars/day.
