GENERAL INTEREST — Quick Takes
Eni: World oil, gas reserves continue to rise
Italy's Eni SPA has published its thirteenth edition of the World Oil & Gas Review, the annual statistics review of world oil and gas production, reserves, and consumption, with a particular focus on refining industry and crude quality.
According to the recently released review, 2013 world oil and gas reserves increased respectively of 0.4% and 1.7% mainly thanks to the US's tight oil new plays and to the gas discoveries in East Africa.
The US holds its leadership in the crude oil production growth, with an increase of 12.2% compared with year 2012 by virtue of the contribution of tight oil. US production counterbalances the drop of Iran and Libya (-9.8% and -35.5%, respectively).
Eni's data show that world's oil and gas consumption increased 1.4% and 1%, respectively, in 2013, with US's demand prominent.
Although there remains consumption weakness in Europe, countries in the Organization for Economic Cooperation & Development recorded an upswing in oil demand in 2013-the first since the economic crisis. As for non-OECD countries, China retained its top spot, reaching second in terms of worldwide oil consumption.
The European refining sector is facing a deep rationalization process, with about 2 million b/d of capacity reductions in the last years. But European refining overcapacity endures, amplified even more by a general decrease of demand.
The availability of low-cost crude is boosting refinery competitiveness in the US. Asia-Pacific and the Middle East are the areas with lately largest investments in new refining capacity to support a growing demand, confirming an ongoing trend.
In 2013, worldwide growth in gas consumption was modest, about 1% compared with an annual average of 2.5% recorded during 2000-13. The large availability of US gas production sustained the growth in consumption, confirming the US's position as the world's top gas consumer.
Chevron to sell 30% in Duvernay shale to Kufpec unit
Chevron Corp. said its Chevron Canada Ltd. unit plans to sell a 30% interest in its Duvernay shale play to Kuwait Foreign Petroleum Exploration Co.'s Kufpec Canada Inc. unit for $1.5 billion. Chevron will retain 70% and remain operator.
The deal, which is expected to close in November, will create a partnership for appraisal and development of liquids-rich shale resources in 330,000 net acres in the Kaybob area in west-central Alberta.
Chevron Canada has drilled 16 wells in the area, with initial well production rates as high as 7.5 MMcfd of gas and 1,300 b/d of condensate (OGJ Online, Mar. 13, 2014). A pad drilling program is under way to optimize reservoir performance and reduce costs.
"We remain encouraged by the early results of our exploration program and view the Kaybob Duvernay as an exciting growth opportunity for the company," said Jeff Shellebarger, president of Chevron North America Exploration & Production Co.
KKR, FDL to acquire Permian properties
A partnership of KKR Natural Resources (KKR) and Fleur de Lis Energy (FDL), Dallas, has agreed to acquire certain oil and gas properties in Ector and Midland Counties in West Texas's Permian basin from Linn Energy LLC for $350 million. The deal is expected to close in the fourth quarter.
The assets are comprised of more than 7,200 contiguous acres producing from multiple hydrocarbon-rich zones, including the Strawn, Spraberry, and Wolfcamp formations. FDL estimates fourth-quarter production of more than 5,200 boe/d-the majority of which is oil-and sees an attractive inventory of near-term development opportunities.
"This field has an extensive geologic column consisting of multiple producing horizons within the Permian basin," commented Porter Trimble, FDL founder and chief executive officer. "This will allow the FDL team to access over 33 million boe of long life reserves."
KKR and FDL reported their partnership in March. The partnership's first investment took place in July, when it acquired Selma Chalk properties from Penn Virginia Corp.
Linn earlier this month also divested $1.95 billion in oil and gas properties and related midstream assets in the western Anadarko basin to a joint venture of startup FourPoint Energy LLC and privately held institutional affiliates of EnerVest Ltd. (OGJ Online, Oct. 3, 2014).
Linn expects proceeds from the sales to finance the company's $2.3 billion acquisition of assets from Devon Energy Corp., which closed in August (OGJ Online, June 30, 2014).
"One of our goals for 2014 was to maximize value for our Midland basin and Granite Wash assets in order to reduce the capital intensity and decline rate within our portfolio," said Mark E. Ellis, Linn chairman, president, and chief executive officer, adding, "We believe today's announcements largely accomplish this goal."
The company has made two asset exchanges with ExxonMobil Corp. this year, the latter of which was agreed upon in September and involved Linn giving up its Permian acreage (OGJ Online, Sept. 19, 2014). That month, Linn also completed its purchase of Hugoton field assets in Kansas from Pioneer Natural Resources Co. (OGJ Online, Sept. 11, 2014).
Ember to buy Encana assets for $605 Million (Can.)
Ember Resources Inc., Calgary, has agreed to acquire the majority of the Clearwater assets in southern and central Alberta belonging to Encana Corp. for $605 million (Can.).
The deal, expected to close in first-quarter 2015, encompasses 1.2 million net acres and more than 6,800 producing wells with second-quarter average production of 180 MMcfd of natural gas equivalent.
"This acquisition establishes Ember as the leading producer of coalbed methane in Canada," commented Doug Dafoe, Ember president and chief executive officer. The company will now own interests in 2.2 million net acres, with combined gross production of 290 MMcfed.
Ember and its shareholder Brookfield Capital Partners have recently consolidated a significant land and production base in the Horseshoe Canyon coal bed methane fairway in Alberta through several acquisitions.
Last year, the company agreed to make a $214-million acquisition of oil and gas producing properties in the Nevis, North Grant Lands, and South Grant Lands areas of western Alberta from Apache Corp. (OGJ Online, Aug. 15, 2013).
Encana will retain 1.1 million net acres in Clearwater, including 480,000 net acres along the eastern edge of the Horseshoe Canyon CBM Fairway.
"This divestiture continues to advance our strategy," said Doug Suttles, Encana president and CEO. "We are unlocking additional value from noncore dry gas assets as we focus on liquids-rich growth areas. Our growth portfolio now includes the top two resource plays in Canada, the Montney and the Duvernay, and the top two resource plays in the United States, the Eagle Ford and, by yearend, the Permian basin."
Encana in May agreed to acquire 45,500 net acres in Karnes, Wilson, and Atascosa counties in the Eagle Ford for $3.1 billion (OGJ Online, May 7, 2014; June 20, 2014). Last month, the company agreed to acquire Athlon Energy Inc. for $5.93 billion, taking possession of 140,000 net acres in the heart of the oil-rich Midland basin in several counties including Midland, Martin, Howard, Glasscock (OGJ Online, Sept. 29, 2014).
Exploration & Development — Quick Takes
Petrobras finds gas in post-salt Espirito Santo basin
Petroleo Brasileiro SA (Petrobras) has discovered a natural gas accumulation in the post-salt Espirito Santo basin, 72 km offshore Brazil's Espirito Santo state.
The Tanganika well, formally known by Petrobras as 3-ESS-222 and Brazil's National Petroleum Agency as 3-BRSA-1259-ESS, was drilled in the Malombe discovery evaluation plan (PAD) in 1,043 m of water, reaching a total depth of 2,996 m. The Malombe discovery was made by the consortium in 2011 (OGJ Online, Nov. 4, 2011).
The Tanganika discovery was confirmed through logging carried out in reservoirs at 2,880 m. Petrobras says it will proceed with plans to evaluate the find through a formation test.
Petrobras operates the two-company consortium with 89.89% interest. Repsol Sinopec holds the remaining 11.11%.
Inpex reports results from appraisal well off Brazil
Inpex Corp. reported early results from an appraisal well drilled in the Espirito Santo basin offshore Brazil.
The well, drilled in the BM-ES-23 concession, "discovered deposits of quality oil" at about 3,550 m. Inpex said oil was confirmed through analysis of logging data and fluid samples obtained by a wireline tester.
Drilling will continue to 4,500 m, the company said. The concession is about 115 km off the southeastern coast in 1,800-2,000 m of water. Operator Petroleo Brasileiro SA (Petrobras) has 65%. Other partners include Royal Dutch Shell PLC 20% and Inpex 15%.
Cairn makes oil discovery offshore Senegal
Cairn Energy PLC, Edinburgh, has made an oil discovery with the FAN-1 exploration well on the Sangomar Deep block, 100 km offshore Senegal.
The well was drilled to a total depth of 4,927 m in 1,427 m of water, with preliminary analysis indicating 29 m of net oil-bearing reservoir in Cretaceous sandstones. No water contact was found in a gross oil-bearing interval of more than 500 m.
Gravity oil of 28° to 41° was indicated from several recovered samples. Cairn says further evaluation will be required to calibrate the well with existing 3D seismic to determine future plans as well as optimal follow up locations to determine the extent of the discovered resource.
"We have encountered a very substantial oil-bearing interval which may have significant potential as a standalone discovery," said Simon Thomson, Cairn chief executive officer. "Furthermore, this result materially upgrades the prospectivity of the block with a proven petroleum system and a number of deep fan and shelf prospects established.
"Work is already under way with the joint-venture partners to determine follow up activity, which is targeted for 2015 onwards," Thomson added.
Following completion of operations at FAN-1, Transocean Inc.'s Cajun Express semi drilling rig will move to the SNE-1 well, also on the Sangomar Deep block, where it will target a dual objective in 1,100 m of water (OGJ Online, Mar. 19, 2014).
The top hole has been drilled pending reentry. Partner FAR Ltd. has estimated the two prospects to hold a combined 1.5 billion bbl of oil. Cairn operates the Sangomar Deep, Sangomar Offshore, and Rusifique blocks offshore Senegal with 40% working interest.
Drilling & Production — Quick Takes
Shell starts oil production from Gumusut-Kakap
Royal Dutch Shell PLC has started oil production from the Gumusut-Kakap floating production platform offshore Malaysia. Gumusut-Kakap field lies in 1,200 m of water.
Shell expects the platform to reach peak production of 135,000 b/d once fully ramped up. Work on the gas injection facilities continues, with startup expected next year.
Assemblage of the platform, built in Malaysia by Malaysian Marine & Heavy Engineering Sdn. Bhd., required lifting four decks totaling 40,000 sq m. Oil is transported to the Sabah Oil & Gas Terminal onshore at Kimanis through a 200-km line.
Shell says the project has allowed the company to share deepwater expertise with Malaysian energy companies, assisting in the Malaysian government's goal to create an offshore industry hub. Gumusut-Kakap is expected to contribute as much as 25% of the country's oil production.
Shell operates the Gumusut-Kakap joint venture with 33% interest. Partners are ConocoPhillips Sabah 33%, Petronas Carigali 20%, and Murphy Sabah Oil 14%.
Gumusut-Kakap is one of several deepwater projects undertaken by Shell, the most recent of which to start production was the Gulf of Mexico's Cardamom development in September (OGJ Online, Sept. 8, 2014).
Lukoil commissions Imilorskoye field
OAO Lukoil reported commissioning of Imilorskoye field in western Siberia. Lukoil Pres. Vagit Alekperov said the field was commissioned nearly 6 months prior to the scheduled deadline.
Production drilling began in February (OGJ Online, Feb. 25, 2014). Construction in the Imilorsko-Istochny license block has included pipelines, access roads, power lines, four well pads, a booster pump station, and a 74-m bridge across the Enti-Imiyagun River.
Lukoil's plans for the license area include additional seismic surveys, the retesting of 20 previous exploration wells, and the drilling of 11 exploration wells. Citing economic growth, Natalya Komarova, governor of the Khanty-Mansi Autonomous District-Yugra, said, "What we need is more fields like Imilor to be put on stream."
Stone to lease Ensco 8503 deepwater rig
Stone Energy Corp., Lafayette, La., has agreed to lease the Ensco 8503 dynamically positioned deepwater drilling rig for Stone's multiyear deepwater drilling program in the Gulf of Mexico.
The rig, which will be modified to include mooring capabilities prior to the commencement of the contract, can reach a maximum depth of 35,000 ft in as much as 8,500 ft of water.
The primary contract term is for 30 months and is expected to commence during second-quarter 2015 at a rate of $350,000/day. The contract permits Stone to exercise options to extend the term up to an additional 12 months, or reduce the 30 month primary term contract by up to 6 months.
"We are excited to execute our first Stone-operated multiyear deepwater drilling contract," said David Welch, Stone chairman, president, and chief executive officer. "This contract will allow Stone to better control the pace of execution of our deepwater drilling plans, which includes both development and exploration projects."
The company in April discovered oil in the deepwater Cardona South well on the gulf's Mississippi Canyon Block 29 (OGJ Online, Apr. 28, 2014).
PROCESSING — Quick Takes
Targa to add processing in Permian, Williston basins
Targa Resources Partners LP, Houston, will expand its natural gas gathering and processing capabilities in the Permian and Williston basins, the company has announced.
Targa Resources will buy and install a 300-MMcfd cryogenic gas processing plant, a header pipeline originating at the plant into the southern portion of the Delaware basin, and related gathering and compression.
The plant will be in Winkler County, Tex., west of Targa's existing Sand Hills gas processing plant to provide additional services to producers on the western side of the Permian basin. Along with the recent start-up of the 200-MMcfd High Plains plant at the company's San Angelo Operating Unit (SAOU). The Winkler County plant will increase Targa's Permian basin capacity by 500 MMcfd to a total gross capacity of nearly 1.1 bcfd.
The processing plant is to be operational at the end of first-quarter 2016.
Targa also approved the purchase of a 200-MMcfd cryogenic plant to be built in McKenzie County, ND, in the Williston basin. When combined with the current 40-MMcfd expansion to be operating at yearend, this new capacity will increase Targa's effective processing capacity when all facilities are debottlenecked up to 300 MMcfd to handle production from the Bakken and Three Forks shale plays.
The additional Badlands plant is to be operating as early as yearend 2015.
Gazprom Neft advances Moscow refinery revamp
Russian oil producer JSC Gazprom Neft has commissioned a newly reconstructed and refurbished sulfur-recovery unit at its 12.15 million tonne/year Moscow refinery.
With a total production capacity of 2.5 tonnes/hr, the almost fully automated unit enables the refinery to produce commercial sulfur in up to 5-mm granules as opposed to the site's former and more energy-intensive process of block sulfur production, Gazprom Neft said.
The upgraded unit, which includes a production management system for production, warehousing, and dispatch, has helped to lower production losses, enhance production quality, and reduce emissions from the refinery by seventyfold compared with a 2013 modification that increased the plant's hydrogen sulfide production volumes by 19%, the company said.
The sulfur plant revamp comes as part of the second phase of Gazprom Neft's full reconstruction and modernization program for the Moscow refinery during 2013-20.
Gazprom Neft completed the first stage of the Moscow modernization in July 2013 with the start-up of catalytic cracking and light-naphtha isomerization units that enabled the plant to begin production of gasoline meeting low-sulfur Euro 5 standards (OGJ Online, July 19, 2013).
The company also recently began a project to improve the efficiency of the refinery's furnaces (OGJ Online, Aug. 26, 2014).
Gazprom Neft said it expects to have spent more than $4 billion by 2020 on the modernization program, the next stage of which will include projects to improve refining yield and increase production of light oil products. Once completed, the modernization program will increase overall design capacity of the refinery to 18.15 million tpy (OGJ Online, May 7, 2013).
Suncor wraps maintenance at Edmonton refinery
Suncor Energy Inc. has completed a month of scheduled maintenance at its 142,000-b/d refinery in Edmonton, Alta. The planned maintenance work, which began on Sept. 8, wrapped within its scheduled timeframe of 4 weeks, Suncor said.
While details regarding the precise nature of the maintenance activities were not disclosed, the work involved was part of the company's regularly scheduled program to support safe, reliable operations at the refinery, Suncor noted.
The company previously wrapped an 8 week-long program of scheduled maintenance at the Edmonton refinery in late May.
An 8-week program of regularly planned maintenance, which also began on Sept. 8, remains ongoing at the company's 85,000-b/d Sarnia, Ont., refinery.
TRANSPORTATION — Quick Takes
Report documents US oil line growth during 2013
Total US crude oil pipeline mileage increased 6% and deliveries rose 11.3% during 2013, data compiled by the Association of Oil Pipe Lines and the American Petroleum Institute showed.
US crude pipelines stretched 60,911 miles, 3,448 miles farther than in 2012, while deliveries climbed by 845 million bbl year-to-year to nearly 8.31 billion bbl, the latest US Liquids Pipeline Usage & Mileage Report said.
"Pipeline usage and mileage are growing to bring the benefits of America's energy production renaissance to the nation's workers and consumers," said AOPL Pres. Andrew J. Black as the two associations jointly released the report on Oct. 7.
US crude pipeline mileage has increased 8,174 miles or 15.5% in the last 5 years, and 11,647 miles or 23.6% in the last 10 years, Black said. Deliveries climbed 1.35 billion bbl, or 19.4%, over 5 years, he said.
The report noted that in 2013, US pipelines carrying crude, refined products, and natural gas liquids totaled 192,396 miles, which was 16,431 miles or 9.3% farther than 5 years earlier.
US transmission pipelines delivered 14.948 billion bbl of crude oil and petroleum products in 2013, up 869 million bbl or 6.2% from 2012 and 1.43 billion bbl or 10.6% from 5 years earlier, it indicated.
Vector floats doubling capacity, bidirectional flow
Vector Pipeline LP is holding a binding open season to secure shipper interest in adding as much as 650,000 MMcfd to its natural gas pipeline system. The 2017 Expansion will be a scalable expansion project adding a 42-in. OD loop and possibly additional compression, boosting total capacity to a potential 1.3 bcfd. Vector expects the new capacity to enter bidirectional service November 2017.
The existing pipeline includes interconnects with Alliance Pipeline LP (at Joliet, Ill.), ANR Pipeline Co. (St. John, Ind.), Blue Water Gas Storage (Lenox, Mich.), DTE Gas Go. (multiple sites), Enbridge Gas Distribution (Sombra, Ont.), Guardian Pipeline and Northern Border Pipeline Co. (both Joliet), and Union (Dawn, Ont.).
The company said that with the potential of Marcellus-Utica gas entering the Vector system in Michigan via proposed third-party pipelines, it envisioned moving gas east-to-west to supply Chicago, Dawn, and all markets in between, in addition to maintaining the more traditional west-east flow.
The open season closes Nov. 4.
Arrow Energy pipeline gets environmental nod
Arrow Energy Ltd. has received environmental approval from the Australian government for construction of its proposed 4,500-km Arrow Bowen project gas pipeline to link its coal seam gas fields in the Bowen basin of Queensland to Gladstone on the central-east coast. The buried line received Queensland state government approval in March 2013, but the federal government's nod follows Arrow's recent decision to begin front-end engineering and design phase for its Bowen CSG project.
The development is based on bringing gas from permits close to its existing gas fields about 150 km southwest of Mackay in a staged expansion of some 4,000 wells in a 8,000 sq km area during the next 40 years.
The Clough-AMEC joint venture has started the $70 million (Aus.) front-end engineering and design contract. The Bowen project is targeting domestic gas markets, but is also one of the CSG projects linked to the company's postponed $20 billion (Aus.) LNG project on Curtis Island near Gladstone. Arrow is owned 50-50 by Royal Dutch Shell PLC and PetroChina.