GENERAL INTEREST — Quick Takes
Macondo cleanup officially ends off three states
BP PLC and the US Coast Guard report that cleanup work from the Macondo oil spill has ended in Mississippi, Alabama, and Florida, but BP said cleanup operations continue along 84 miles of Louisiana's coast.
USCG continues to respond to reports of oil washing up anywhere along the Gulf Coast. BP said it takes responsibility for removing oil associated with the deepwater Macondo well blowout of April 2010. The blowout resulted in a massive oil spill in the gulf after an explosion that killed 11 workers on Transocean Ltd.'s Deepwater Horizon semisubmersible.
"This is another important step towards meeting our goal of returning the shoreline to as close to pre-spill conditions as possible while managing the scale of the response to meet conditions on the ground," USCG Capt. Duke Walker said.
The Federal On-Scene Coordinator for the Macondo oil spill has announced that the Gulf Coast Incident Management Team has started transitioning back to National Response Center reporting. NRC serves as the national point of contact for reporting all oil, chemical, radiological, biological, and etiological discharges into the environment.
"The transition is a significant milestone toward fulfilling our commitment to clean the gulf shoreline and ensuring that the region's residents and visitors can fully enjoy this majestic environment," said Laura Folse, BP executive vice-president, response and environmental restoration.
BP said teams surveyed nearly 4,000 miles of shoreline after the spill, identifying 1,100 miles affected by oil.
The Deepwater Horizon Joint Investigation Team released its final report on Sept. 14, 2011, saying the blowout stemmed from multiple causes and decisions involving BP and contractors Transocean and Halliburton Co. (OGJ Online, Oct. 11, 2012).
BP has spent more than $14 billion on response and cleanup activities.
UK rejects bid for low-carbon power target
The UK House of Commons has defeated a proposed amendment to the government's energy bill that would have set an aggressive 2030 target for lowering carbon emissions in electric power generation.
The amendment, proposed by Conservative Tim Yeo, called for target range to be set next year.
The amendment failed 290 votes to 267.
Senators seek repeal of 2007 EISA provision
US Sens. John Barrasso (R-Wyo.) and Joe Manchin (D-W.Va.) introduced legislation to repeal a provision in the 2007 Energy Independence and Security Act (EISA) that bars federal purchases of transportation fuel produced from coal, oil sands, and oil shale. The senators said their bill, S. 1100, would repeal EISA Sect. 526, which prevents federal agencies, including US military services, from contracting for alternative fuels unless the contract specifies that the alternative fuel emits less greenhouse gas than fuel produced from conventional petroleum sources.
That effectively precludes federal transportation purchases of transportation fuel produced from coal, oil shale, and oil sands, the two Energy and Natural Resources Committee members said on June 6.
Cosponsors included Sens. Dan Coats (R-Ind.), Heidi Heitkamp (D-ND), Mike Enzi (R-Wyo.), James N. Inhofe (R-Okla.), and John Hoeven (R-ND).
The American Petroleum Institute said it supports S. 1100. "Any law that threatens the use of one of the most secure sources of oil—Canadian oil sands—jeopardizes our national security and simply defies logic," said Khary Cauthen, API's senior federal relations director.
Devon MLP to own US midstream interests
Devon Energy Corp. will form a publicly traded master limited partnership initially to own a minority interest in the company's US midstream business.
In the US, Devon owns six gas plants in Texas, Oklahoma, and Wyoming and gathering pipelines.
Devon said it expects to file a registration with the US Securities and Exchange Commission in this year's third quarter. An offering of partnership units will follow registration, subject to market conditions.
Devon will own the MLP general partner, all of its incentive distribution rights, and a majority of its common units after the initial public offering.
Encana appoints Suttles as president, CEO
Encana Corp. has named Doug Suttles as president and chief executive officer. Suttles has 30 years of oil and gas experience.
Previously, Suttles was chief operating officer, BP Exploration & Production. Suttles helped direct BP's response to the deepwater Macondo well blowout and resulting oil spill in the Gulf of Mexico during 2010.
At Encana, Suttles succeeds Clayton Woitas, interim chief executive officer, who filled in since January following Randy Eresman's retirement.
Exploration & Development — Quick Takes
DNO tests Tawke Jurassic oil, Cretaceous lateral
DNO International ASA, Oslo, has a Jurassic oil discovery in Tawke field in the Kurdistan Region of Iraq, where the field's first horizontal well, Tawke-20, averaged 8,000 b/d of oil from each of the first four of 10 fractured corridors in Cretaceous.
Tawke-17, deepest in the field, tested at 1,500 b/d of 26-28° gravity oil from the Upper Jurassic Sargelu formation more than 200 m below the field's main Cretaceous reservoir. The find likely bumps recoverable reserves on the Tawke license to the 1 billion bbl mark, the company said (OGJ, Feb. 6, 2012, p. 48).
DNO International continued to test both wells, said Bijan Mossavar-Rahmani, executive chairman, and plans to drill the field's second horizontal well shortly.
"If this second well, Tawke-23, demonstrates the significant deliverability uptick we are now seeing in Tawke-20, we will go back to the drawing board and consider further enhancements to our current target of 200,000 b/d of production capacity by 2015," Mossavar-Rahmani said.
Last month the company said it had met its previous goal of delivering 100,000 b/d from Tawke field following 72 hr of well and facility tests.
Tawke-17 also encountered several Triassic zones that proved either tight or water-bearing. Two more identified reservoir intervals in the Upper Jurassic remain to be perforated and tested.
In early 2012, DNO International said the vertical Tawke-16 well flowed at a combined 25,000 b/d of oil from multiple Cretaceous zones tested separately, making it the field's best well to that point (OGJ Online, Mar. 21, 2012).
DNO International holds a 55% interest in and operates the Tawke license. Genel Energy PLC has 25%, and the Kurdistan Regional Government has 20%.
Lukoil gets stake in block offshore Ivory Coast
Lukoil has acquired a 65% interest in Block CI-504 in the Gulf of Guinea offshore Ivory Coast from Taleveras Energy, a private Nigerian company.
The 399-sq-km block is close to Baobab oil field in 800-2,100 m of water. It abuts on the south Block CI-205, which Lukoil operates with a 63% interest.
The CI-504 work program includes an initial exploration period for interpretation of historical 2D and 3D seismic data and acquisition of additional 3D data by January 2014. It calls for the drilling of two exploratory wells over the next two periods, totaling 5 years.
Wholly owned Lukoil unit Lukoil Overseas is operator. Taleveras holds 25%, and state-owned Petroci Holding holds 10%.
Idemitsu group finds gas-condensate off Vietnam
A group led by Idemitsu Oil & Gas Co. Ltd., Tokyo, has made a gas-condensate discovery at the third well drilled on blocks 05-1b and 05-1c offshore 300 km southeast of Ho Chi Minh City, Vietnam.
Geological information wasn't provided, but the company said it drilled the well between August 2012 and January 2013 and drillstem tested it from February to April. The company will conduct a detailed reserves review and evaluate other potential prospects on the blocks.
Idemitsu signed a production sharing contract with Petrovietnam on Oct. 28, 2004. It shot 2D and 3D seismic in 2005 and began drilling in 2007 (OGJ Online, Jan. 10, 2007).
Operator Idemitsu holds a 35% stake in the venture, JX Nippon Oil & Gas Exploration Corp. has 35%, and Teikoku Oil (Con Son) Co. Ltd. has 30%.
Sinopec Southern to explore Tibet's Lunpola basin
Sinopec Southern Exploration Co. of China and the Oil and Gas Resources Research Center of Geological Survey Bureau of Ministry of Land Resources have signed an agreement on joint exploration for oil and gas in selected areas of the Lunpola basin in Tibet.
"The main task of the joint exploration is to carry out strategic survey on Lunpola basin, evaluate conventional and unconventional oil and gas resources, implement seismic exploration in selected key areas, identify effective traps, drill parametric or exploration wells and strive to achieve strategic breakthroughs in oil and gas exploration," the two organizations said.
The ministry plans to invest 20 million yuan in the Lunpola basin on seismic surveys and parametric well drilling this year.
China Daily reported that China National Star Petroleum Corp. had discovered the first oil field in Tibet Province in 1999 (OGJ Online, Aug. 23, 1999). CNSPC estimated 10 million tonnes of probable reserves and 100-150 million tonnes of possible oil and gas reserves in the Lunpola basin in northern Tibet 185 miles northwest of Nagqu.
BPTT, BHP to jointly acquire seismic off Trinidad
BP Trinidad & Tobago (BPTT) reported that it will conduct joint seismic surveys with BHP Billiton on its deepwater blocks off Trinidad and Tobago's eastern coast.
BPTT Pres. Norman Christie said in an increasingly high cost environment his company was looking at opportunities to control costs, hence the partnership with BHP.
Christie said BHP is in the process of concluding its production-sharing contracts for blocks that are adjacent to those held by BPTT. The combined surveys, he said, will likely lead to a delay in BPTT's activities to allow for a combined shoot.
In July 2012, BPTT was awarded a 100% interest in Blocks 23(a) and TTDAA 14, both in deepwater frontier acreage off Trinidad's east coast.
BPTT's operations in Trinidad and Tobago account for more than half of the twin-island nation's gas output and 12% of BP PLC's global oil and gas production. The awards doubled the acreage held by BP-controlled firms in Trinidad and Tobago.
BHP Billiton is yet to sign final PSCs with the government for their four deepwater blocks as the agreement is being vetted by the country's attorney general.
Christie also said BPTT had completed its $250 million ocean cable bottom seismic survey and the preliminary results were very encouraging. Christie said most of the excitement surrounded possible additional gas in its existing acreage but noted there were also some possibilities of oil.
Christie noted that although results are preliminary, he remains optimistic: "It's mainly gas, but there is some oil play."
MGM gives up Mackenzie Delta conventional licenses
MGM Energy Corp., Calgary, said it has surrendered exploration licenses in Canada's Mackenzie Delta region, where the company had been exploring for conventional gas for the proposed Mackenzie gas pipeline.
MGM Energy has turned back EL 456, EL 457, EL 450, and EL 459, currently scheduled to expire in January 2016, and consolidated EL 461, which is scheduled to expire in June.
With the surrender, MGM Energy is relieved of its obligation to fulfill its commitments relating to the licenses, including $6.3 million that was due to be paid in June.
The relinquished licenses are in the islands region of the Beaufort/Mackenzie Delta southwest of Tuktoyaktuk, and are 700 km northwest of and unrelated to the company's Canol shale play in the Central Mackenzie Valley, where MGM Energy continues to pursue its opportunities.
Drilling & Production — Quick Takes
Eni to use Atwood Beacon jack up off Israel
Atwood Oceanics Inc. said Eni SPA has let a drilling contract to one of Atwood's subsidiaries for use of the Atwood Beacon jack up rig, currently working offshore Israel under a contract expected to conclude by July.
The rig then will be moved to Italy. The new contract has a firm duration of 2 years plus a 1-year optional period.
The contract adds $128 million in revenue backlog, said Atwood Oceanics of Houston, a global offshore drilling contractor that owns 13 mobile offshore drilling units and is constructing three ultradeepwater drillships.
Gullfaks, Oseberg due tailor-made jack ups
Statoil has let contracts for the construction and operation of two tailor-made jack up rigs to be used for drilling at Gullfaks and Oseberg oil fields offshore Norway and to be owned by the license-holders.
Samsung Heavy Industries Co. Ltd. will build the rigs, which will be able to drill to 10,000 m in 70-140 m of water in harsh environments and be optimized for drilling and completing subsea wells.
KCA Deutag Drilling Norway AS will perform drilling services and maintenance as the rigs' operator. The operating and staffing framework is similar to that of leased rigs in conventional drilling contracts, Statoil said.
The company said the new rigs will extend lives of the two mature fields in the northern North Sea.
Gullfaks has been on production since 1986 and now produces about 39,000 b/d of oil. Statoil holds a 70% interest, Petoro AS 30%.
Oseberg, on production since 1988, produces about 59,000 b/d of oil and 8.1 million standard cu m/day of natural gas plus gas liquids. Interests are Statoil 49.3%, Petoro 33.6%, Total E&P Norge AS 14.7%, and ConocoPhillips Skandinavia AS 2.4%.
Kosmos Energy signs contract for new drillship
Kosmos Energy Ltd. signed a long-term rig agreement with a unit of Atwood Oceanics Inc. for the newbuild drillship, Atwood Achiever, slated for completion in June 2014 and expected to commence drilling operations in second-half 2014.
The 3-year contract outlines a day rate of $595,000 with an option to extend the contract for an additional 3-year term. Kosmos of Dallas anticipates using the drillship for exploration offshore Morocco (OGJ Online, July 2, 2011).
The Atwood Achiever is an ultradeepwater, dynamically positioned drillship with enhanced offline capabilities and two blowout preventer systems. The rig's capabilities include drilling to 40,000 ft in 12,000 ft of water.
In addition to the Atwood Achiever rig, Kosmos is pursuing rig capacity for exploration drilling in first-quarter of 2014.
Alberta Oil Sands inks Algar Lake farmout
Alberta Oil Sands Inc. (AOS), Calgary, has entered a farmout agreement with privately held Crescendo Resources Ltd. that will advance exploration of its Algar Lake oil sands prospect in Alberta.
To earn an initial 51% interest, Crescendo will fund, drill, core, log, and abandon at least three wells. To earn an additional 24% interest, it will fund, drill, core, log, and abandon two more wells.
Crescendo, a new company affiliated with privately held Canshale Corp., Calgary, will pay AOS $2 million to enter the agreement and has 2 year to earn its interests.
AOS now holds a 100% working interest in the 13,209-hectare prospect southwest of Fort McMurray. It says legacy core holes indicate the Cretaceous McMurray and Wabiskaw formations, which occur at depths of about 275 m, are prospective.
Only three exploratory wells have been drilled in the region around the prospect, all drilled in 1958-60.
PROCESSING — Quick Takes
Moscow refinery producing Euro 5 diesel
Gazprom Neft started producing 10 ppm sulfur diesel fuel that meets Euro 5 standards at its 250,000-b/d Moscow refinery.
The firm reconstructed a diesel hydrotreater and added a hydrotreatment unit as part of a modernization program begun in 2009. All fuels produced at the refinery have met Euro 4 standards or above since April 2012. The sulfur content limit for Euro 4 diesel is 50 ppm.
"We will soon expand the range of our higher-grade fuels, starting with Euro 5 gasoline," said Anatoly Cherner, Gazprom Neft deputy chief executive officer for logistics, processing, and sales.
Construction due on Vietnamese refinery
Construction will begin in July on the 200,000-b/d refinery to be built in the Nghi Son Economic Zone in Thanh Hoa Province, about 200 km south of Hanoi, Vietnam, reports Idemitsu Kosan Co. Ltd. (OGJ Online, Jan. 30, 2013).
Idemitsu, a 35.1% partner in Nghi Son Refinery & Petrochemical LLC, has reached a final investment decision after financial arrangements were completed for the $9 billion project.
Project financing will provide $5 billion, and sponsors will provide the remainder. Other partners and their shares in the investment are Kuwait Petroleum International 35.1%, PetroVietnam 25.1%, and Mitsui Chemicals 4.7%.
Project finance will come from direct loans of $2.3 billion from Japan Bank for International Cooperation and Export-Import Bank of Korea and loans from commercial banks totaling $2.7 billion. The commercial-bank loans are insured or guaranteed by Nippon Export and Investment Insurance or other overseas export credit agencies.
Construction is expected to be complete in 2016. Commercial operations are to begin in 2017. The refinery, designed to run Kuwait 30.2º gravity crude, will have an 80,000 b/d fluid catalytic cracker and a 700,000-tonne/year aromatics complex.
Pertamina, PTT sign polymer-marketing deal
PT Pertamina (Persoro) of Indonesia has signed a polymer-purchase agreement with a unit of PTT Global Chemical of Thailand in anticipation of the joint development of a petrochemical plant in Indonesia.
The companies in April signed a heads of agreement for formation of a joint venture to build a 1-million tonne/year naphtha cracker (OGJ Online, Dec. 18, 2012).
The new agreement covers the supply of 5,000 tonnes/month of polyethylene and polypropylene until formation of the JV.
CNPC, Recope agree on refining JV finance
China National Petroleum Corp. and Refinadora Costarricense de Petroleo (Recope) have signed a cooperation agreement for financing the refining joint venture they have formed in Costa Rica (OGJ Online, Sept. 4, 2009).
The JV is to revamp the 24,000-b/d Puerto Moin refinery and increase its capacity to 60,000 b/d. The project awaits approval of Chinese and Costa Rican governments.
After the revamp, Recope will lease the refinery for 15 years.
TRANSPORTATION — Quick Takes
Williams lets contract for Texas GC olefins, NGL line
Williams, Tulsa, has let a contract to Wood Group Mustang for the survey, engineering, design, and program management of its Purity Pipeline projects, encompassing the conversion and construction of more than 300 miles of NGL and olefins pipelines along the Texas Gulf Coast. Mustang expects the projects to be complete third-quarter 2014.
Williams Partners LP last year bought Williams Cos. Inc.'s 83% undivided ownership interest in its Geismar, La., olefins plant. The transaction included 325 miles of pipeline inside Louisiana, between Port Arthur, Tex., and Lake Charles, La., and along the Houston Ship Channel (OGJ Online, Nov. 5, 2012).
Williams Partners, established in 2005, holds Williams' natural gas pipeline assets.
KMEP to build 900,000-bbl ULSD capacity at Bostco
Kinder Morgan Energy Partners LP is adding 900,000 bbl of ultralow-sulfur diesel storage at its 185-acre Battleground Oil Specialty Terminal Co. LLC (Bostco) site on the Houston Ship Channel. A long-term leased storage and handling services contract with Morgan Stanley Capital Group Inc. underwrites the expansion and includes six 150,000-bbl tanks, additional pipeline and deepwater-vessel dock access, and 30,000 bbl/hr loading equipment.
KMEP expects to start work on the expansion later this quarter for an in-service date of fourth-quarter 2014. Bostco will be able to handle ships with drafts up to 45 ft (OGJ Online, Nov. 9, 2011).
A joint venture of KMEP, which owns 55% of Bostco and will operate it, and TransMontaigne Partners LP, expects the terminal at mile marker 43 on the HSC to begin operations next quarter. This expansion will bring Bostco's capacity to 7.1 million bbl of fully subscribed ULSD, residual fuels, and other black oils, divided among 57 tanks.
The expansion will cost $54 million; KMEP estimates Bostco's total price at $485 million.
Nakhodkinskoye compressor station starts
Lukoil has commissioned the first stage of a base compressor station at Nakhodkinskoye gas field in the Yamalo-Nenets District of Tyumen, Russia. The station is part of a system to transport gas from Lukoil's fields in the Bolshekhetskaya basin to Gazprom's pipeline system.
First-stage capacity is 18 billion cu m/year. Construction is to begin in 2015-16 on a second stage with capacity of 9 billion cu m/year. Lukoil plans to commission a booster compressor station at Nakhodkinskoye field and complex gas-treatment facilities at Pyakyakhinskoye, Yuzhno-Messoyakhskoye, and Khalmerpayutinskoye fields.