GENERAL INTEREST — Quick Takes
Pertamina to acquire Malaysian assets for $2 billion
PT Pertamina Malaysia Eksplorasi Produksi has agreed to acquire 30% of the Malaysian oil and gas assets belonging to Murphy Sabah Oil Co. Ltd. and Murphy Sarawak Oil, both wholly owned units of Murphy Oil Corp., for $2 billion in cash.
The two firms will work jointly in a long-term partnership in which Murphy will remain operator. Murphy says it will continue to execute its development plans and expand through exploration in both deepwater and shallow-water Malaysia.
Murphy Pres. and CEO Roger W. Jenkins said, "We are excited to strengthen our partnership with Pertamina and look forward to working with them and our other partners in Malaysia. We will continue to evaluate all aspects of our portfolio. This transaction allows us to redeploy the proceeds through an individual or combination of strategic and financial initiatives such as increased drilling capital in the Eagle Ford shale, acquisition opportunities, debt reduction and share repurchases."
The deal, subject to approval from Malaysia's state owned Petronas, is effective Jan. 1. The first and second phases are expected to close in this year's fourth quarter and first-quarter 2015, respectively.
Shell completes Marcellus, Utica acquisition
Royal Dutch Shell PLC has completed a previously reported deal in which it acquires 155,000 net acres in the Marcellus and Utica areas of Pennsylvania and receives a cash payment of $925 million from Ultra Petroleum Corp., Houston, in exchange for Shell's 19,000 net acres of leasehold interest in the Pinedale of Wyoming, including associated gathering and processing contracts (OGJ Online, Aug. 14, 2014).
Shell receives 63,000 net acres in the Marshlands area as well as 92,000 net acres in the Tioga area of mutual interest (AMI), an unincorporated joint venture with Ultra, giving Shell 100% interest in Tioga AMI. Ultra's first-half net production from the Marcellus and Utica assets averaged 109 MMscfd.
The assets received by Ultra encompass 1,108 gross wells and associated facilities, and an average of 0.7% overriding royalty interest in 11,500 acres. Shell's second-quarter net production from Pinedale totaled 190 MMscfd of dry gas.
EnLink unit to buy Gulf Coast gas pipeline systems
A subsidiary of EnLink Midstream Partners LP and EnLink Midstream LLC has agreed to acquire Gulf Coast natural gas pipeline assets, including the Bridgeline system predominantly residing in southern Louisiana, from Chevron Pipe Line Co. and Chevron Midstream Pipelines LLC for $235 million. The transaction is expected to be completed in the fourth quarter.
The assets include 1,400 miles of gas pipelines spanning from Beaumont, Tex., to the Mississippi River corridor and 11 bcf of working gas storage capacity in southern Louisiana.
"The assets will support our growth strategy by expanding our franchise position in southern Louisiana, a dynamic and growing market we know well," commented Barry E. Davis, EnLink Midstream president and chief executive officer.
The assets include:
• Bridgeline system: 985 miles of gas pipelines in southern Louisiana with a total system capacity of 920,000 MMcfd.
• Sabine system: 150 miles of gas pipelines in Texas and southern Louisiana with a total capacity of 235,000 MMcfd.
• Chandeleur system: 215 miles of offshore Mississippi and Alabama pipelines with a total capacity of 330,000 MMcfd.
• Storage assets: three caverns in southern Louisiana with a combined working capacity of 11 bcf, including two near Sorrento, La., with a capacity of 4 bcf and one inactive cavern near Napoleonville, La., with 7 bcf of capacity.
• Henry Hub: ownership and management of the title tracking services offered at Henry Hub, La.
Exploration & Development — Quick Takes
Statoil, Shell awarded shale license in Algeria
Algeria's energy ministry has awarded Statoil ASA and Royal Dutch Shell PLC the 2,730-sq-km Timissit permit license in the Illizi-Ghadames basin in the southeast part of the country. The award is part of Algeria's Fourth International Bid Round launched in January.
Statoil describes the license as "a potentially large-shale resource play." The company will serve as operator with 30% interest, Shell will hold 19%, and Algerian state-owned Sonatrach will hold 51%.
"Statoil is entering this shale play to test the prospectivity and commerciality through a step-wise approach," said Nick Maden, Statoil senior vice-president for exploration activities in the Western Hemisphere. "The first exploration phase is expected to last up to 2017 and include the drilling of two wells and seismic acquisition."
Statoil's presence in Algeria includes the In Amenas gas production facility that was attacked by Islamic militants in early 2013 (OGJ Online, Jan. 16, 2013). Operations from the facility resumed earlier this month following the implementation of new security measures (OGJ Online, Sept. 2, 2014).
Statoil says the process by which it identified and implemented those measures has provided the company "valuable knowledge" that "will be applied in future activities."
Noble to resume drilling off Falkland Islands
Noble Energy Inc., Houston, will resume exploration drilling offshore the Falkland Islands in mid-2015 following the acquisition and evaluation of an extensive 3D seismic program over portions of the company's 10-million-acre position.
Humpback, the company's initial operated prospect, is one of multiple stacked fan prospects clustered together in the Fitzroy subbasin of the Southern Area license that combine to hold an estimated gross unrisked resource potential of 1 billion boe.
Noble is finalizing prospect locations for a second exploration well planned for later in 2015 following results at Humpback.
Mike Putnam, Noble vice-president of exploration, said, "Our recent 3D seismic acquisition has confirmed our initial thoughts that the basin contains prospects of material size with ample follow on opportunities."
Noble also deemed noncommercial the Scotia well, drilled in 2012 utilizing 2D seismic interpretation, following evaluation of the 3D seismic data and full integration of well results into the company's geologic models (OGJ Online, Nov. 27, 2012).
Noble operates its licenses offshore the Falkland Islands with 35% interest. The remaining interest in the Scotia well is Falkland Oil & Gas Ltd. 40% and Edison International SPA 25%.
Arctic gas find 'play opener,' but noncommercial
Statoil ASA and its PL713 partners have made a gas discovery in the Pingvin prospect of the Barents Sea in the Arctic, 300 km northwest of Hammerfest.
Discovery well 7319/12-1 is the first well drilled in PL713, awarded in the 22nd concession round in 2013 (OGJ Online, June 14, 2013). Statoil describes the discovery as a "play opener" in a large, unexplored frontier area, 65 km northwest from the Johan Castberg discovery (OGJ Online, June 30, 2014).
Transocean Ltd.'s Spitsbergen drilling rig reached a vertical depth of 1,500 m in 422 m of water, proving a 15-m gas column in in reservoir rocks from the Early Palaeocene or Late Cretaceous age.
Statoil estimates the volumes in Pingvin to be in the range of 30-120 million boe recoverable. The discovery has been assessed as noncommercial, and has been permanently plugged and abandoned. The rig will move to drill Statoil-operated wildcat well 7220/2-1 in PL714.
"For a discovery in this area to be commercially viable it needs to be an oil accumulation of a significant size. A gas discovery does not have commercial value at present," explained Dan Tuppen, Statoil vice-president, exploration, Barents Sea and Norwegian Sea.
"On the positive side, it is encouraging that the first well drilled in this unexplored area has proven hydrocarbons in sandstones. This indicates that we have both a reservoir and a working hydrocarbon system in the area, and creates a good basis for further subsurface work in the license.
"The partnership drilled Pingvin just 15 months after the acreage award. The chosen well location allowed us to clarify the hydrocarbon volume in the structure with one very efficiently executed exploration well," said Tuppen.
Statoil is operator of PL713 with 40% interest. Partners are RN Nordic Oil AS 20%, North Energy ASA 20%, and Edison International Norway Branch 20%.
Horizon-Roc Oil makes oil find in Beibu Gulf
The Horizon Oil Ltd.-Roc Oil Co. Ltd. group working in the Beibu Gulf offshore China has made an oil discovery in the first of two planned exploration wells on Block 22/12.
The companies confirmed that their WZ12-10-1 well found an oil zone in the top of the Jiaowei formation over an interval of 5.5 m. Net oil pay was 4.2 m in a highly porous reservoir.
A sidetrack was then drilled with a 340 m eastern step-out that confirmed the oil zone at the very top of the Jiaowei with a net pay of 5.5 m thickness.
The well is 4.7 km northeast of the existing WZ12-8W production platform and about 2.7 km west of the WZ12-8E discovery wells.
The companies are now evaluating the result to decide how best to integrate the find into the Beibu project. The companies say it adds a potentially valuable incremental oil volume to the future of the WZ-12-8E development project currently being planned. It enables the joint venture to evaluate alternative development options.
Meanwhile, the rig will be moved to WZ12-10-2 to drill the second and final well in this exploration program.
Horizon has a 55% interest in the exploration program with Roc holding 40%. Japanese Majuko Corp. has the remaining 5%. China's CNOOC has the right to join the production phase and take a 51% interest, which will reduce the other companies' interests as follows: Horizon 26.95%, Roc 19.6%, and Majuko 2.45%.
Drilling & Production — Quick Takes
Statoil postpones Corner oil sands project in Alberta
Statoil ASA has decided to postpone for a minimum of 3 years the Corner development at the Kai Kos Dehseh (KKD) oil sands project in northern Alberta (OGJ Online, Apr. 8, 2014). A staff reduction of about 70 employees is expected.
"Costs for labor and materials have continued to rise in recent years and are working against the economics of new projects," said Stale Tungesvik, country manager for Statoil Canada. "Market access issues also play a role-including limited pipeline access which weighs on prices for Alberta oil, squeezing margins and making it difficult for sustainable financial returns."
Tungesvik added, "The decision is in line with Statoil's strategy to prioritize capital to the most competitive projects in its comprehensive global portfolio and is consistent with our stepwise approach to the oil sands."
Statoil said the decision has no implications for the company's Leismer steam-assisted gravity drainage project, which is in production (OGJ Online, Jan. 27, 2011). Well Pad 5 came on stream there in August and work is under way for further infill drilling.
Statoil entered KKD through the acquisition of North American Oil Sands Corp. in 2007. Later, Thailand's PTT Exploration & Production (PTTEP) farmed into a 40% interest in KKD for $2.2 billion. Earlier this year, Statoil divided its oil sands leases with PTTEP, with Statoil having 100% of Leismer and Corner and PTTEP having 100% of Thornbury, Hangingstone, and South Leismer (OGJ Online, May 29, 2014).
Dana Gas Egypt signs development agreement
Dana Gas Egypt, a wholly owned subsidiary of Dana Gas, has reached a gas production enhancement agreement (GPEA) with Egyptian Natural Gas Holding Co. (Egas) and Egyptian General Petroleum Co. (EGPC), forming the basis for a development program to eventually increase production from 40,000 boe/d at Dana's development leases in the Nile Delta.
The agreement calls for Dana Gas Egypt to undertake a long-term staged work program over a 7-year period, with project work expected to start in the next few months and first export sales of incremental volumes of condensate following the completion of tie-in activities.
As part of its work program, Dana Gas Egypt plans to drill 37 wells and carry out an equivalent number of workovers of existing wells. Estimated incremental production during the period will be 270 bcf of natural gas, 8-9 million bbl of condensate, and 450,000 tons of LPG. Peak production is expected to occur in 2017 with incremental production of 160 MMscfd of gas and 5,600 b/d of condensate.
The company recently surpassed 100 million boe in production from Egypt, where it started operations in 2007.
Separately, Dana Gas has been awarded the Blocks 1 and 3 concession areas in the onshore Nile Delta. Block 1 represents an extension of the company's existing conventional gas business. Dana will participate in the Block 3 Concession Area on a 50% basis with BP PLC as partner and operator.
Dana says exploration of the deep Oligocene objective will allow BP to participate in the deep potential in adjacent Dana Gas development leases. The Oligocene prospect that will be targeted in Block 3 has multi-tcf potential in a proven hydrocarbon play with a high success rate to date, it said.
Drilling begins on Manora oil development
A joint venture led by Mubadala Petroleum, Abu Dhabi, has successfully drilled the first two of 15 planned development wells in the Manora oil development in the northern Gulf of Thailand. The wells were spudded earlier this month (OGJ Online, Sept. 5, 2014).
The Mubadala-led group also has begun commissioning work on the Manora's production platform.
The MNA-01 and MNA-02 wells encountered a respective 52.4 m and 48.77 m of net oil pay. Production from these wells is required before oil can be introduced to the Manora facilities.
The wells will be completed as single zone producers in two of the three reservoirs in the field.
A third development well, MNA-03, is currently being drilled and is targeting the third reservoir.
Following some delays because of bad weather and minor hold-ups on the production platform, Mubadala now says the field is expected on stream by the end of October.
Manora, discovered in 2009 in 50 m of water on Block G1/48, has an estimated 20 million bbl of oil reserves. It is expected to eventually produce 15,000 b/d from 15 wells housed on the production platform and feeding into a floating storage and offtake vessel.
Venture operator Mubadala holds 60% interest. Its partners include Tap Energy Pty. Ltd. 30% and Northern Gulf Petroleum Pte. Ltd. 10%.
PROCESSING — Quick Takes
Isom unit at Kuibyshev refinery delivers first product
The newly commissioned isomerization (isom) unit at OAO Rosneft's 6.8 million-tonne/year Kuibyshev refinery in Russia's Samara region has produced its first lot of on-specification isomerate to be used in the production of high-octane gasoline, the company said.
With a research octane number (RON) of 88.6, the initial lot of isomerate meets the company's targeted RON rating of no less than 88, according to a statement from Rosneft.
The company said output from the new unit will serve as a high-octane gasoline blending component to enable the refinery's production of low-sulfur fuels that meet Euro 5 environmental specifications.
Commissioned in early September, the 280,000-tpy isom unit was one of the key projects in Rosneft's large-scale investment program to increase production capacities at the Kuibyshev refinery (OGJ Online, Sept. 3, 2014).
The Kuibyshev modernization project also includes construction of eight new units as well as reconstruction of four of the refinery's existing operating units, all of which are due to be completed by 2016, Rosneft said.
The Kuibyshev modernization is part of Rosneft's company-wide refinery modernization plan launched in 2008, which includes the construction of 30 units and reconstruction of more than 20 units at Rosneft's Russian refineries (OGJ Online, Aug. 29, 2014).
Modernization projects previously implemented at Kuibyshev previously enabled the refinery to produce Super Euro-98 gasoline that meets Euro 5 standards ahead of schedule, according to Rosneft.
EPP to build processing, pipelines for Delaware basin
Enterprise Products Partners LP (EPP), Houston, will build a cryogenic natural gas processing plant in Eddy County, NM, along with associated gas and NGL pipelines to handle growing production of NGL-rich natural gas in the Delaware basin.
The plant and pipelines will come online in first-quarter 2016, EPP said. The South Eddy gas plant will have an initial capacity of 200 MMcfd, with the potential for expansions. Completing the plant will bring EPP's total gas processing capacity in the Delaware basin to 400 MMcfd, it said.
The company will build 80 miles of gas gathering pipelines to complement its existing 1,500 miles of gas pipelines in the basin and serve the new plant.
EPP also will build a 75-mile, 12-in. OD NGL pipeline to transport liquids from the South Eddy plant to the company's Hobbs, NM, NGL fractionation and storage in Gaines County, Tex.
In addition, EPP plans to build pipelines to deliver residue gas from the new plant to "multiple third-party" pipelines.
A.J. Teague, chief operating officer of EPP's general partner, said, "Volumes into our existing facilities in the region have doubled since 2012 and existing infrastructure is operating at capacity."
Explosion hits PKN Orlen's olefins plant in Poland
Polski Koncern Naftowy SA (PKN Orlen) confirmed a small explosion occurred early Oct. 1 at its 16.3 million-tonne/year refinery and petrochemical complex in Plock, Poland.
The incident, which occurred at an unidentified, remote installation of the olefins plant, injured six workers engaged in external renovation work at the site, PKN Orlen said.
While the precise cause of the incident remains under investigation, the company said the explosion was related to a small ignition of volatile hydrocarbons during work related to the launch of start-up activities at one of the olefins plant's two production units.
The explosion did not halt start-up procedures on the unit, which still was scheduled to begin production on Oct. 1, PKN Orlen said.
The second production line remains idle and will begin operations once technical service maintenance is completed and start-up activities are safe to initiate, according to the company.
PKN Orlen recently let a contract to CB&I, Houston, for the license and engineering design of a metathesis plant for the on-purpose production of propylene at the Plock complex (OGJ Online, Aug. 21, 2014).
TRANSPORTATION — Quick Takes
EPP completes first segment of Aegis ethane line
Enterprise Products Partners LP reported that construction has been completed of the first segment of the Aegis ethane pipeline between Mont Belvieu and Beaumont, Tex. This 60-mile segment of 20-in. pipeline is part of the 270-mile Aegis ethane pipeline that when complete will create a 500-mile header system that extends from Corpus Christi, Tex., to the Mississippi River in Louisiana. Including EPP's existing South Texas infrastructure, this system is now in service from Corpus Christi to Beaumont.
The remainder of the Aegis pipeline will be completed in two phases. The next segment between Beaumont and Lake Charles, La., is slated for completion in third-quarter 2015. The final segment from Lake Charles to the Mississippi River is expected to be completed by yearend 2015. Aegis will have a capacity expandable to 425,000 b/d.
TC PipeLines to acquire interest in Bison Pipeline
TC PipeLines LP (TCPL) has agreed to acquire the remaining 30% interest in Bison Pipeline LLC from TransCanada Corp. for $215 million.
The Bison pipeline transports Rocky Mountain natural gas to the US Midwest through a connection with the partnership's Northern Border Pipeline. The pipeline is supported by long-term ship-or-pay contracts that extend through 2020.
TCPL in 2013 acquired an additional 45% interest Bison Pipeline from TransCanada Corp. as part of a $1.05 billion deal, expanding TCPL's overall interest at the time to 70% from 25% (OGJ Online, May 16, 2013).
TCPL is a Delaware master limited partnership with interests in six federally regulated US interstate natural gas pipelines serving markets in the US West and Midwest.
Enagas becomes TAP shareholder
Enagas has joined the Trans Adriatic Pipeline AG (TAP) project as a new shareholder with a 16% stake in the company. Separately, existing shareholder Fluxys has increased its TAP stake to 19% from 16%.
The new arrangement follows the purchase by Enagas and Fluxys of the 19% of TAP shares previously owned by E.On AG (9%) and Total SA (10%).
TAP's shareholding is now comprised of BP PLC 20%, State Oil Co. of Azerbaijan Republic 20%, Statoil ASA 20%, Fluxys 19%, Enagas 16%, and Axpo 5%.
TAP will transport natural gas from the giant Shah Deniz II field in Azerbaijan to Europe. The 870-km pipeline will connect with Trans Anatolian Pipeline near the Turkish-Greek border at Kipoi, cross Greece and Albania and the Adriatic Sea, before coming ashore in southern Italy.