GENERAL INTEREST — Quick Takes
Statoil operating Eagle Ford acreage
Statoil has become operator of half the acreage it holds under a 50-50 joint venture with Talisman Energy USA Inc. in the Eagle Ford play of Texas (OGJ Online, Jan. 12, 2011).
The transfer affects activities in the eastern part of the venture's holdings, mainly in Live Oak, Karnes, DeWitt, and Bee counties. It occurs under an agreement reached last year. Talisman until now has operated all the acreage held by the joint venture, which the companies formed in 2010. It remains operator of the western acreage, mainly in McMullen, La Salle, and Dimmit counties.
Statoil already had taken over operation of three drilling rigs in the Eagle Ford play. On July 1 it assumed responsibility for producing wells, processing facilities, pipelines and infrastructure, and a field office in Runge.
Statoil's net Eagle Ford interests are 73,000 acres and 20,200 boe/d of production from about 300 wells.
CPC takes equity interest in Ichthys project
Taiwan's CPC Corp. has taken a 2.62% equity in the Inpex group's Ichthys gas project in the Browse basin offshore Western Australia. The acquisition price was not disclosed.
If the deal receives Foreign Investment Review Board approval, CPC will take participating interests in production licences WA-50-L and WA-51-L and surrounding exploration permit WA-285-P. It also will take shares in the holding company that owns the project's LNG plant being built in Darwin.
The deal reduces Inpex's share of the project to 63.44%.
France's Total SA increased its stake to 30% last March. A number of Japanese utilities (and now CPC) hold the remaining interest.
The Ichthys LNG project is expected at peak flow to produce 8.4 million tonnes/year of LNG, 1.6 million tonnes/year of LPG, and 100,000 b/d of condensate.
Lukoil buys OMV's European lube business
A wholly owned subsidiary of Lukoil has bought a 35,000-tonne/year lubricant blending plant near Vienna and related assets from OMV.
The companies didn't disclose the price.
The Lukoil unit, LLC-International, also acquired distribution units in nine European cities and the BIXXOL brand name.
The transaction doesn't affect the lube business of OMV's Turkish subsidiary Petrol Ofisi.
UK offshore work force up 8.4% in 2012
The number of workers spending more than 100 nights offshore the UK increased by 8.4% in 2012 to 25,760, its highest level in an annual demographic analysis that began in 2006, reports Oil & Gas UK.
The analysis uses the Vantage Personnel On Board system, a database that tracks all offshore travelers in the UK.
The system reported a total of 56,982 workers traveling offshore last year, up nearly 9% from 2011.
Three and a half times more nonoperator personnel than operator personnel traveled offshore in 2012. Increases from 2011 were 5% for operators and 10% for nonoperators.
Of all workers traveling offshore last year, more than 80% were British, and less than 4% were female. Of the 2,138 women traveling offshore last year, 753 spent more than 100 nights.
Exploration & Development — Quick Takes
Statoil Barents wildcat finds noncommercial gas
A group led by Statoil ASA has made a small gas discovery at the Nunatak prospect on the PL 532 in the Barents Sea offshore Norway.
Well 7220/5-2 encountered gas in rocks of Cretaceous age that based on the present evaluation is considered noncommercial.
Nunatak was the first of four prospects to be drilled in the Johan Castberg area in 2013 with the aim of proving additional volumes for the Johan Castberg field development project. Statoil's partners are Eni Norge AS and Petoro AS.
Statoil noted that Nunatak had the highest geological risk of the four prospects, but it was important to test first due to location 5 km north of the Skrugard discovery.
Nunatak forms an independent structure in a younger geological formation than Skrugard, which it partly overlies, and the well's results have no implications for expectations of the other three planned wells, said Gro G. Haatvedt, Statoil senior vice-president exploration Norway.
"Whilst it is disappointing to find only gas in Nunatak, we believe in further oil potential in the Johan Castberg area," Haatvedt concluded.
The West Hercules semisubmersible will move to drill the 7219/8-2 well on the Iskrystall prospect on the neighboring PL608 license. Iskrystall is a prospect in the early-middle Jurassic play proven by the Skrugard and Havis discoveries but at much greater depth.
Statoil is operator with 50% interest in PL532, Eni Norge has 30%, and Petoro has 20%.
The Norwegian Petroleum Directorate noted that the 7220/5-2 well, 200 km northwest of Soroya, had the objectives of proving petroleum in Cretaceous reservoir rocks of the Knurr formation as well as acquire information for the planned Johan Castberg field development.
Reservoir quality is poorer than expected in the Knurr formation that contains the gas, but further analysis will be carried out to clarify the resource potential. Extensive data acquisition and sampling were carried out, but the well was not formation tested.
The 7220/5-2 well is the fourth exploratory penetration on PL532, awarded in the 20th license round in 2009.
The well was drilled to 1,765 m true vertical depth below the sea surface in 398 m of water and terminated in the Tubaen formation in Early Jurassic.
GeoPark tests discovery in Tierra del Fuego
GeoPark Holdings Ltd. said the Chercan-1 exploratory well gauged oil and gas on the Chilean Flamenco block, becoming the company's first discovery in Tierra del Fuego.
GeoPark, operator of Chercan-1 with a 50% interest, said the well flowed at 35 b/d of oil and 4 MMcfd of gas with 1,800 psi wellhead pressure on an 8-mm choke on a production test of the Jurassic Tobifera formation at 1,920 m after stimulation. Total depth is 2,066 m. Chile's state Empresa Nacional del Petroleo (Enap) owns the other 50% interest.
More production history is needed to determine stabilized flow rates, and the well is continuing to clean up. Efforts are under way to design and construct flowlines from the well to an existing pipeline. The Tobifera has produced in Argentine Tierra del Fuego (OGJ Online, Aug. 15, 2008).
Chercan-1 is the first of 21 exploratory wells to be drilled on the Flamenco, Campanario, and Isla Norte blocks in Chilean Tierra del Fuego as part of a $100 million investment program by GeoPark during the first exploration period. Two other wells, Omeling-1 and Yakamush-1, have been drilled on Flamenco and are to be tested in coming weeks.
About 1,200 sq km of 3D seismic have been collected on the three blocks out of a total committed 3D seismic program of 1,500 sq km.
In its partnership with Enap under the framework of the special operation contracts signed with the Chilean state, GeoPark operates and has a 50% working interest in the Flamenco and Campanario blocks and a 60% working interest in the Isla Norte block. Enap owns the remaining working interests in each block.
James F. Park, chief executive officer of GeoPark, expressed encouragement at the Chercan discovery and said the company is confident in the hydrocarbon potential of its Tierra del Fuego acreage, "which we believe will allow us to replicate the success of our properties nearby to the north across the Magellan Straits."
Celtique Energie outlines drilling plans
Celtique Energie Ltd. of the UK has said it is planning to submit applications for permission to explore for unconventional oil in Weald basin near the village of Fernhurst in West Sussex. Weald basin also has potential in conventional formations.
Outlining its plans in a recent company presentation, Celtique Energie said it tentatively plans to drill a Weald basin well next year. An application is being made to the South Downs National Park Authority to construct a temporary well site.
Celtique Energie's partner is Magellan Petroleum (UK) Ltd., a unit of Magellan Petroleum Corp. of Denver (OGJ Online, May 28, 2013).
Some researchers have said Weald basin is geologically similar to France's Paris basin.
In the UK, two basins are believed to hold 700 million bbl of technically recoverable shale oil resources, said Advanced Resources International Inc. in a paper prepared for the US Energy Information Administration. The estimate came in a June document entitled "World Shale Gas & Shale Oil Resource Assessment."
Woodside takes majority stakes for permits off Ireland
Woodside Petroleum Ltd., Perth, has taken out three farm-in options for offshore acreage offshore Ireland.
The company has taken majority stakes in three permits: 85% in two permits licenced to Petrel Resources PLC and 90% in one permit licenced to Bluestack Energy Ltd.
All three permits lie in the Porcupine basin off western Ireland.
The Petrel blocks cover a total of 14,000 sq km with PL 11/4 in the basin's north and PL 11/6 in the east near shore.
Meanwhile, Bluestack's PL licence 11/3 covers 1,271 sq km 100 km west of County Kerry. Water depths range 400-1,000 m. In 1997, Marathon made a natural gas discovery with its 35/30-1 well using the Jack Bates jack up rig. The company encountered a 200-ft gross gas column in Mid-upper Jurassic reservoir. The company estimated gas-in-place reserves of 5 tcf.
Bluestack has mapped a separate stratigraphic deepwater fan complex in the block that it has named the Ventry prospect and declares has potential to hold 8 tcf of gas in place.
Woodside will conduct preliminary exploration seismic in all three permits as part of its interest-earning program.
Drilling & Production — Quick Takes
Kashagan moves toward start of production
North Caspian Operating Co. (NCOC) has begun pressuring the onshore Bolashak Processing Facility with sweet gas in preparation for the start of oil and gas production later this year from giant Kashagan field offshore Kazakhstan (OGJ, Oct. 22, 2012, p. 22).
Construction on two artificial islands is nearly complete, NCOC said in a press statement.
Production is to begin from eight wells on the artificial island designated A. The wells and pipeline system are ready for production. Production treatment facilities on the other artificial island, D, are in final stages of commissioning.
Twenty of 40 wells planned in the first phase of production have been drilled into the high-pressure reservoir, at about 4,200 m under 3-6 m of water. Eleven wells have been partly drilled.
In the first phase, production will rise to design capacity of 180,000 b/d during 2013-14 in an initial stage, then to 370,000 b/d in a second stage.
The field, 80 km southeast of Atyrau, and its satellites hold an estimated 35 billion bbl of oil in place, 90-13 billion bbl recoverable. Reservoir fluids contain about 15% hydrogen sulfide and 4% carbon dioxide.
Sweet gas used in the Bolashak start-up comes from local supplies.
During the first phase of Kashagan production, about half the produced gas will be reinjected into the reservoir. Separate pipelines will carry produced liquids and raw gas to the Bolashak plant, which will treat oil for export. Some of the processed gas will be returned to the field to fuel operations, and some will fuel the onshore plant.
NCOC operates the 5,600-sq-km North Caspian Production Sharing Agreement Contract Area on behalf of a group of seven companies. It delegates operations to four agent companies: Agip, Shell Development Kashagan, ExxonMobil Kazakhstan Inc., and NC Production Operations Co. NC Production is a joint venture of state-owned KMG (KazMunaiGas) Kashagan and Shell Kazakhstan Development.
Equity interests of the consortium partners are KMG, Eni, ExxonMobil, Shell, and Total, 16.81% each; ConocoPhillips, 8.4%; and INPEX 7.56%.
Indian gas-price hike to lift KG D6 work
The government of India has approved an increase in the price of natural gas sold domestically that will improve economics of development planned around deepwater KG D6 gas field off the country's southeastern coast.
According to a partner in the D6 block, Niko Resources Ltd. of Calgary, a formula approved by the Cabinet Committee of Economic Affairs (CCEA) yields a gas price on Apr. 1, 2014, around $8.40/MMbtu, double the current price for gas sales from the block.
Reliance Industries Ltd., which operates the block with a 60% interest, along with BP, 30%, and Niko, 10%, announced plans earlier this year to invest $5 billion over 3-5 years to further develop KG D6 field, production from which has been disappointing.
The group had been under political pressure to increase drilling but insisted the problems related to reservoir complexity rather than well count (see figure, OGJ, Apr. 1, 2013, p. 62). Before announcing the investment plan, RIL had sought international arbitration to settle the controversy.
On June 28, the CCEA approved a recommendation for a new gas-price formula by a group chaired by C. Rangarajan studying India's production sharing contracts (OGJ Online, Apr. 23, 2013).
The formula, applicable for 5 years beginning on Apr. 1, 2014, is based on the average of prices of Indian LNG imports and the weighted average of gas prices in North America, Europe, and Japan.
Laricina injecting Germain project steam
Laricina Energy Ltd., Calgary, has begun injecting steam into two well pairs at its Germain commercial demonstration project (CDP) in the western Athabasca oil sands region of Alberta.
The company has completed 10 well pairs for steam-assisted gravity drainage at the project, design capacity of which is 5,000 b/d.
Laricina expects this year to receive regulatory approval for two other development phases, which would add 150,000 b/d of production capacity. The company says capacity eventually might reach 205,000 b/d.
Production is from the Lower Cretaceous Grand Rapids formation.
At the CDP, Laricina will continue a staged start-up with steam circulating through three well pairs that have producing wells completed in a thin layer of water at the bottom of the bitumen zone. As the start-up progresses, it will begin steaming four other well pairs with producing wells in bitumen rather than basal water.
It plans to compare performance of basal-water and non-basal-water wells. It will bring remaining well pairs online as needed to sustain production.
Laricina also plans to begin injecting solvent in four active well pairs early in 2014 in a technique it calls solvent cyclic SAGD (SC-SAGD). Other well pairs will remain on SAGD to provide baseline data.
With production rates differing for SC-SAGD and SAGD wells and with typical downtime, sustained production will be about 75% of the CDP's design capacity rate, Laricina says. The project will reach sustained production 12-18 months from start-up.
Bitumen production is expected to start in the third quarter this year.
BlackPearl delays Onion Lake thermal EOR
Construction of a thermal enhanced oil recovery project in Saskatchewan will be delayed by volatility in debt capital markets, says operator BlackPearl Resources Inc., Calgary.
BlackPearl early in June said it planned to use steam-assisted gravity drainage to produce 12,000 b/d of heavy oil at its Onion Lake property on First Nation land near Lloydminster. Primary production at Onion Lake now averages about 5,000 b/d (OGJ Online, June 4, 2013).
Acceleration of the thermal project was to have helped fund a larger SAGD project in northern Alberta called Blackrod.
BlackPearl said it will defer a proposed $350 million second-lien senior secured term loan facility for Onion Lake and will reevaluate financing options when capital markets stabilize.
Although Onion Lake construction will await alternative financing, engineering and some long-lead planning will continue, it said.
CNOOC starts up Pearl River Mouth basin field
CNOOC Ltd. said it has placed on production its 100% owned Wenchang 8-3E oil field in the western Pearl River Mouth basin offshore China.
Wenchang 8-3E is in 110-120 m of water and has four producing wells. It is expected to reach peak production within a year. CNOOC did not provide production rates.
PROCESSING — Quick Takes
BP starts up crude unit at Whiting refinery
BP PLC has started up a 250,000-b/d crude distillation unit at its Whiting, Ind., refinery.
The unit returns the Whiting refinery to its 413,000-b/d nameplate processing capability and clears the way for remaining upgrades of new coking and hydrotreating units, the company said (OGJ Online, Feb. 1, 2011).
When those units are online later this year, the reconfigured refinery will have the flexibility to increase heavy, sour crude processing, according to Iain Conn, BP chief executive for refining and marketing.
Construction of the Whiting refinery upgrade is more than 95% complete, said the company, which expects to commission a new 105,000-b/d gas oil hydrotreater, a 102,000-b/d coker, and other associated units in this year's second half. When all new equipment is fully operating, BP said, the refinery will be able to increase heavy, sour crude processing to roughly 80% of its overall crude run.
Reformer contract let for PDVSA refinery
Petroleos de Venezuela SA's (PDVSA) main contractor consortium Hyundai-Wison has hired Technip to install two 135-MMcfd hydrogen reformers at PDVSA's Puerto La Cruz refinery.
Under a contract worth $65-130 million, Technip will supply technology as well as engineering and procurement services for the two reformers as part of PDVSA's deep conversion project at the refinery (OGJ Online, Oct. 17, 2008).
The contract covers complete engineering, fabrication, modularization, procurement as well as precommissioning and start-up assistance. This project will use Technip's top-fired steam reformers to produce high-purity hydrogen and export steam and the latest nitrogen oxide reduction technology to ensure minimum emissions.
Substitute natural gas pilot due in China
A Foster Wheeler AG subsidiary has signed cooperation agreements with Clariant International AG and Wison Engineering Ltd. covering construction in China of a pilot plant to demonstrate its substitute natural gas technology.
The technology, called VESTA, yields SNG from synthesis gas produced from coal or petroleum coke. It is based on a once-through operation with no recirculation and therefore avoids compressors. Its maximum operating temperature is 550º C., which Foster Wheeler says avoids metal-dusting formation and allows the use of relatively simple reactors.
Under the new agreements, Wison Engineering will provide engineering and construction services, Foster Wheeler will license the technology, and Clariant will supply the proprietary catalyst. Wison Engineering will operate the plant.
The location in China wasn't disclosed. The plant is to be on stream this year.
TRANSPORTATION — Quick Takes
Canada sets pipeline financial thresholds
The Canadian government will require pipelines under its jurisdiction to be strong enough financially to "respond to any incident and remedy damage," it said in a press statement.
Major crude oil pipelines, for example, must have "a minimum financial capability of $1 billion," according to Joe Oliver, minister of natural resources.
The federal government regulates pipelines that cross provincial or international borders.
Among new measures, the government will impose penalties on companies and individuals for a range of infractions of $25,000-100,000. The fines, according to the statement, "will preventatively address contraventions quickly so that larger issues do not arise in the future."
The government also will require companies to appoint an accountable senior officer to ensure management systems and programs comply with its regulations.
It will ensure companies' environmental plans are transparent and easily available for public review.
And it will make the "polluter-pays" principle explicit in law.
Federal oversight applies to about 71,000 km of pipelines and about 100 companies.
CNOOC resumes normal operations at Zhuhai terminal
CNOOC Ltd. has restored normal operations on the subsea natural gas pipeline serving the Zhuhai terminal, which leaked in December 2011 (OGJ Online, Dec. 19, 2011). The Zhuhai terminal is also now operating normally.
CNOOC completed temporary repairs of the third-party damage to the pipeline mid-January 2012, and has been supplying gas to customers since. Severe environmental conditions at the leak site delayed repairs.
Zhuhai terminal, on Hengqin Island, Zhuhai city, is the gas processing terminal for joint development of both the Panyu 30-1 gas field and Hui Zhou 21-1 oil field in the eastern South China Sea off Guangdong Province.
