General Interest — Quick Takes
Mountaineer Keystone adds Marcellus assets
Mountaineer Keystone Energy LLC, Pittsburgh, has completed the acquisition of equity interests in PDC Mountaineer LLC, a 50-50 joint venture of PDC Energy Inc. and Lime Rock Partners LLC with interests in the Marcellus shale, for a total of $500 million.
The acquisition includes more than 131,000 net acres in the Marcellus shale in West Virginia, about 65% of which is held by production.
Reserves and production, calculated from an earlier announcement of the sale by PDC Energy, are a respective 480 bcf proved and 48 MMcfd of gas equivalent.
Mountaineer Keystone also acquired midstream assets of PDC Mountaineer, including 24 miles of high-pressure gathering lines with capacity exceeding 100 MMcfd. MK Midstream Holdings, a joint venture in which Mountaineer Keystone holds a 50% interest, will manage those properties.
Mountaineer Keystone is a portfolio company of First Reserve, a private equity and infrastructure investment firm focused on energy.
BLM office seeks comments on proposed gas project
The US Bureau of Land Management's Rock Springs field office is seeking public comments on a proposal to develop up to 17 natural gas wells on as many as 5 well pads about 35 miles northwest of Baggs, Wyo., in Sweetwater County.
It said the proposed Desolation Road gas project would affect about 117 acres of mostly public land within 2 miles of the northern border of the Adobe Town Wilderness Study Area (WSA), with the closest well pad about 1,000 ft from WSA's boundary.
The project is in a Class II visual resource management area and contains designated pronghorn antelope crucial winter range as well as potential habitat for raptors and mountain plover, BLM said in an Oct. 10 notice.
Primarily exploratory development would take place in 3-5 years, with the actual number of wells and pads dependent on the success of early drilling, it said. The project's anticipated life is 40-50 years.
Written comments will be accepted until Nov. 14, the notice said. BLM also has scheduled open houses Oct. 28 in Rawlins and Oct. 29 in Rock Springs to provide information about the proposed project and give the public the opportunity to comment.
Study: EPA overlooks large methane sources
Methane inventories by the US Environmental Protection Agency, which underlie efforts to regulate emissions from hydraulic fracturing and other oil and gas work, overlook other, potentially larger sources of the greenhouse gas, a study by Los Alamos National Laboratory (LANL) suggests (OGJ Online, Sept. 22, 2014).
The study suspects methane leaks from coal mines.
Remote, regional-scale ground measurements confirm a large methane "hot spot" has existed over the Four Corners area of the US Southwest for almost a decade, according to LANL.
"A detailed analysis indicates that methane emissions in the region are actually three times larger than reported by EPA," said LANL scientist Manvendra Dubey. The hot spot covers about 2,500 sq miles in the Four Corners intersection of Arizona, Colorado, New Mexico, and Utah.
"We attribute this hot spot to fugitive leaks from coalbed methane that actually preceded recent concerns about potential emissions from fracing," Dubey said in a press release.
The measurement ground site was near Waterflow, NM, close to two coal-fired power plants. The area has extensive coal mining.
LANL remote sensing observations, taken continuously through 2011 and 2012, showed large morning increases of methane. The measurements followed indications of the hot spot by a European satellite, which measured methane in the area daily during 2003-09.
The ground and satellite observations indicated EPA modeling estimates of methane emissions for the regions were too low by a factor of three.
The region had almost no hydraulic fracturing of oil or gas wells during the period of satellite observations of methane. "As the quest to understand emissions continues we must also correct for the missing coal-related methane sources and other biogenic sources that include cattle, landfills, and wetlands," Dubey said.
Exploration & Development — Quick Takes
DPE makes deep gas discovery offshore Dubai
Dubai Petroleum Establishment (DPE) reported that its T-02 deep gas exploration well has identified largely natural gas with no hydrogen sulfide content in the Pre Khuff formation in Fateh field offshore Dubai. Drilled to 18,248 ft, T-02 is the deepest well in Dubai to date, DPE said.
Logs from a 900-ft section drilled through the Pre Khuff showed some 390 ft of gas-rich zones. The well is now being suspended for later stimulation and long-term production testing, DPE said.
In 1981, the T-01 well was drilled to 17,397 ft in the Khuff formation. High levels of H2S and nitrogen proved the well to be noncommercial at the time. DPE expects to have test results for the T-01 in late summer 2015, the company said.
Statoil makes another gas discovery off Tanzania
Statoil ASA reported its seventh discovery on Block 2 offshore Tanzania, with the Giligiliani-1 finding 1.2 tcf of gas in place (OGJ Online, June 18, 2014).
Total in-place volumes on Block 2 are now 21 tcf, the company said.
The discovery was made in Upper Cretaceous sandstones along the western side of the block in 2,500 m of water.
"This discovery has proven the gas play extends into the western part of Block 2, which opens additional prospects," said Nick Maden, Statoil senior vice-president, exploration.
The well was drilled by Transocean Inc.'s Discoverer Americas ultradeepwater drillship, which will now move to the Kungamanga prospect in the central part of the block.
Statoil has 65% interest and operates on behalf of Tanzania Petroleum Development Corp. ExxonMobil Exploration & Production Tanzania Ltd., meanwhile, holds 35%.
Earlier discoveries include Zafarani-1, Lavani-1, Tangawizi-1, Mronge-1, Piri-1, and Lavani-2.
Woodside farms into offshore Cameroon block
Woodside Petroleum Ltd., Perth, has farmed into the Tilapia production-sharing contract offshore Cameroon under an agreement with Glencore and Noble Energy Inc.
Woodside will acquire 30% nonoperating interest in the block, which lies in the Douala basin in the country's southwest offshore sector in water depths ranging from the shoreline to 1,100 m.
Noble will retain 46.67% interest and operatorship while Glencore will keep a 23.33% interest.
A wildcat called Cheetah-1 will be drilled on the block in 2015.
The move follows Woodside's moves earlier this year to acquire new African acreage in the Gabon Coastal basin with a 40% interest in Block F15 where Noble retains 60% (OGJ Online, Aug. 11, 2014).
Woodside has also farmed into 70% of fellow Australian company Beach Energy's Lake Tanganyika offshore permit in western Tanzania and an initial 25% interest in the Rabat Deep offshore permits 1-6 in Morocco.
Drilling & Production — Quick Takes
Petrobras starts production from Iracema discovery
Petroleo Brasileiro SA (Petrobras) has started production from the Iracema area on Block BM-S-11 in the Santos basin offshore Brazil.
The Cidade de Mangaratiba floating production, storage, and offloading vessel is the first unit deployed on the Iracema development of Lula field, and the fourth FPSO to date to have started up across the partners' interests on Blocks BM-S-9 and BM-S-11 during the presalt basin's first phase of development.
The unit is anchored in 2,200 m of water, about 240 km offshore. The 4-RJS-647 well, first to be interconnected to the unit, can produce more than 30,000 b/d. The unit will be connected to eight production wells and eight injection wells.
Cidade de Mangaratiba can process 150,000 b/d of oil and 283 MMscfd of gas, the highest production capacity FPSO to be brought online in the Santos basin. It can store 1.6 million bbl of oil. Plateau production is expected in 2016.
Oil produced from Iracema is high quality, medium density 30° gravity, Petrobras says. Gas not used for reinjection will be transferred to shore through the Santos basin pipeline system.
The unit was commissioned in September 2011 by a consortium between Schahin Group and Modec Inc. Transport from the BrasFels shipyard in Angra dos Reis, Brazil, began in August (OGJ Online, Aug. 18, 2014).
Petrobras operates BM-S-11 with 65% interest. BG Group and Petrogal Brasil hold 25% and 10%, respectively. Petrobras operates BM-S-9 with 45% interest. BG Group and Repsol Sinopec Brasil hold 30% and 25%, respectively.
CNOOC begins oil production at Enping 24-2 field
China National Offshore Oil Corp. Ltd. (CNOOC) reported the start of oil production from Enping 24-2 field in the Pearl River Mouth basin of the South China Sea.
The main production facilities include one drilling and production platform; one floating production, storage, and offloading (FPSO) unit; and 17 wells for production. Two wells are producing 8,000 b/d. Water depth is 86-96 m.
CNOOC holds 100% interest and expects to reach peak production of 40,000 b/d in 2017 (OGJ Online, Aug. 25, 2014).
Pemex lets contract for Lakach development
Petroleos Mexicanos (Pemex) has let a $290-million subsea production systems contract to OneSubsea, a joint venture of Cameron International Corp. and Schlumberger Ltd., for development of Lakach gas field in the deepwater Gulf of Mexico.
OneSubsea will provide production equipment and tooling for the 7-well system, as well as installation and commissioning services. Deliveries are expected to launch in June 2016.
Also this month Pemex let an engineering, procurement, construction, and installation contract to Italy's Saipem SPA, a unit of Eni SPA, for work on the system connecting Lakach offshore field with the onshore gas conditioning plant (OGJ Online, Oct. 2, 2014).
PROCESSING — Quick Takes
Details emerge on Salina Cruz refinery upgrade
Mexico's Petroleos Mexicanos (Pemex) has let a contract to a subsidiary of Foster Wheeler AG's global engineering and construction group for work related to an ultralow-sulfur diesel (ULSD) project at its Antonio Dovali Jaime refinery in Salina Cruz, Oaxaca.
The ULSD project at Salina Cruz, to be executed in joint venture with Mexican construction company Arendal, Monterrey, will include a major revamp of four diesel hydrodesulfurization units; the installation of units for hydrogen production, sulfur recovery, and sour water stripping; and extensive upgrades to the utilities and offsite installations, Foster Wheeler said.
Foster Wheeler's scope of work, which also includes start-up and testing, is scheduled to be completed in 2018, the company said.
While Foster Wheeler did not disclose the precise value of the contract, Pemex previously announced its value at $584 million (OGJ Online, Sept. 15, 2014).
The Salina Cruz refinery upgrade is part of the diesel phase of Pemex's recently announced fuel quality project, which involves a $2.8 billion investment into increasing ULSD production at five of Mexico's refineries following the country's recent energy reform (OGJ Online, Aug. 21, 2014; Aug. 18, 2014).
Designed to improve the qualities of air and fuels, the fuel quality project involves the construction of new and modernization of existing plants to reduce the sulfur content of Mexico's diesel production to 15 ppm from 500 ppm, which will lower the country's greenhouse gas emissions by more than 12,000 tpy, according to Emillio Lozoya Austin, Pemex's chief executive officer.
In addition to the Foster Wheeler contract, Pemex also let contracts for work related to the fuel quality project to:
• Tecnicas Reunidas ($568 million) for the Lazaro Cardenas refinery near Minatitlan in Veracruz state.
• ICA Flour Daniel ($737 million) for the Francisco I. Madero refinery in Madero, Tamaulipas.
• Samsung Engineering Co. Ltd. ($359 million) for the Antonio M. Amor refinery in Salamanca, Guanajuato.
• ACS Group ($560 million) for the Miguel Hidalgo refinery in Tula, Hidalgo.
Kurnell refinery to become fuel import terminal
Caltex Australia Ltd.'s 135,000-b/d Kurnell refinery at Sydney has now become Australia's largest fuel import terminal following the closure of refinery operations this week.
The refining infrastructure at the site is to be dismantled during the next few years.
The last refining units were shut down as Caltex reached a milestone on its way to converting the site to a fuel terminal. Cost of the conversion is $270 million (Aus.).
The terminal will provide 750 million l. of storage capacity and supply fuel to retail outlets and commercial customers in New South Wales and the Australian Capital Territory, which surrounds Canberra.
Caltex says the conversion of Kurnell marks the company's transformation from two businesses (refining and marketing) into one integrated transport fuel supply chain company.
Kurnell, built in 1956, previously employed 430 people. The fuel import mode employs 45 people.
Australia's refineries have been steadily decreasing in number. BP's Brisbane facility is the next to go in 2015.
That means Australia will supply just one third of its own fuel, relying on imports for the remainder.
Exterran joins Woodford Express to build gas plant
Exterran Holdings, Houston, will join Woodford Express LLC, a subsidiary of Xplorer Midstream LLC, Oklahoma City, to build a 210-MMcfd natural gas processing plant at Woodford's Grady County gas processing site in the south-central Oklahoma Oil Province shale play.
Under the agreement, Exterran will provide and install processing and compression and deliver engineering, procurement, and construction management, Exterran said.
Under construction near Lindsay, Okla., the Grady plant will complete its first phase, 60-MMcfd construction later this year. By mid-2015, Woodford's gas processing capacity will increase to 210 MMcfd with addition of a second processing train, built under the announced contract with Exterran.
The Grady plant has been designed to accommodate two additional 200-MMcfd processing trains, said Exterran.
Shenchi Group lets contract for gasification plant
Shandong Sincier Chemical Group Co. Ltd., a subsidiary of Shandong Chemical Group Co. Ltd. (Shenchi Group), has let a contract to CB&I, Houston, for the license and engineering design of a gasification unit to be built near Dongying in China's Shandong Province.
As part of the contract, CB&I will provide its proprietary E-GasPlus technology to the 3-train unit, which it will use to produce syngas for hydrogen, fuel gas, and power, CB&I said.
The plant will have the capability of operating on coal and petroleum coke, or a combination of these fuels with a liquid or solid residue from an 800,000-tonne/year upstream hydrocracking unit, according to CB&I and Shenchi Group's web site.
While CB&I's E-Gas technology has been in use commercially for more than 25 years, the package to be licensed for this project represents the latest advancement in the E-Gas technology line, which includes the flexibility to simultaneously process both solid and liquid fuels, said Daniel McCarthy, president of CB&I's technology operating group.
The value of this contract was undisclosed.
This latest contract follows six additional processing units Shenchi Group previously licensed from CB&I for technology to be used in the production of octane-boosting, clean-gasoline blendstocks and petrochemicals, as well as for residue upgrading, the service provider said.
Shenchi Group most recently awarded CB&I a contract for the license and engineering design of a grassroots propane and butane dehydrogenation unit in Dongying that will be capable of processing feeds containing 165,000 tpy of propane and 250,000 tpy of isobutane to jointly produce propylene and isobutylene, according to a Mar. 24 press release from CB&I.
TRANSPORTATION — Quick Takes
TAP issues EPC tender invitation for onshore sections
Trans Adriatic Pipeline AG (TAP) has issued an invitation to tender (ITT) on engineering, procurement, and construction contract, which may be split into further contracts depending on the offering bids, for its onshore portion. The ITT follows the prequalification process for onshore pipeline construction companies launched earlier this year (OGJ Online, May 12, 2014). Scope includes EPC of about 760 km of 48-in. OD onshore pipeline in Greece and Albania. Companies being invited to tender are international pipeline construction organizations, including companies from TAP's host countries.
TAP plans to award the onshore pipeline EPC contract in third-quarter 2015 and begin construction in 2016 with work split into five lots, three in Greece and two in Albania. TAP's highest elevation will be 1,800 m in Albania and the pipeline will cross many roads and rivers.
TAP says the contract for the construction of the onshore section of the pipeline is the largest it is planning to award. The next ITT will cover EPC for compressor stations in Greece and Albania, procurement of compressor units for the compressor stations, and procurement of large diameter ball valves. TAP plans to issue these in this year's fourth quarter.
The pipeline will transport gas from Shah Deniz II field in Azerbaijan to Europe. The 870 km long pipeline will connect with Trans Anatolian Pipeline (TANAP) near the Turkish-Greek border at Kipoi, cross Greece, Albania, and the Adriatic Sea, and make landfall in southern Italy.
Its routing allows gas supply to several southeastern European countries, including Bulgaria, Albania, Bosnia and Herzegovina, Montenegro, and Croatia. TAP's landfall in Italy allows for further transport of Caspian gas to Germany, France, the UK, Switzerland, and Austria.
TAP targets first gas sales to Georgia and Turkey late in 2018, with first deliveries to Europe following roughly 1 year later.
TAP's shareholders include BP PLC 20%, State Oil Co. of Azerbaijan Republic 20%, Statoil SA 20%, Fluxys 19%, Enagas 16%, and Axpo 5%. Statoil retained its share in TAP when selling its Shah Deniz stake to Petronas (OGJ Online, Oct. 13, 2014).
TGP concludes open season for South System line
Kinder Morgan Energy Partners LP subsidiary Tennessee Gas Pipeline Co. LLC (TGP) completed a successful binding open season for its South System flexibility project for 500,000 dth/day of north-to-south natural gas transportation capacity on its system.
MexGas Supply, formerly known as MGI Supply, the gas supply arm of Petroleos Mexicanos, has been awarded 100% of the project capacity.
Anticipated project capital is $187 million, with service beginning as early as Jan. 1, 2015.
Separately, TGP initiated a binding open season Oct. 9 for its proposed Lone Star expansion project, which includes an incremental 300,000 dth/day of firm transportation from Tennessee to South Texas for future infrastructure projects.
TGP has secured an unnamed foundation shipper for this project and will announce the results and further details upon the close of the open season, which is scheduled for Oct. 31.
"The volumes committed are sufficient to justify building the project," TGP said.
Santos coal seam gas pipeline gets first gas
The Santos Ltd.-led Gladstone LNG project in Queensland has introduced natural gas from its Surat-Bowen basin coal seam gas fields into the 420 km pipeline linking them to the LNG plant on Curtis Island for the first time.
This signals the start of commissioning of the line leading to the first shipment of LNG from Gladstone Harbor in 2015. The line will now be progressively filled with gas, section by section. First gas should arrive at the LNG plant late this year.
Santos says that once fully commissioned and in operation, the pipeline will transport up to 40 million cu m/day of gas from the fields to the Curtis Island plant.
Construction of the 1.05-m pipeline by Saipem Australia began in 2012 and involved welding more than 36,000 segments of pipe. The work included a 4.3 km subsea tunnel from the mainland to Curtis Island as well as more than 60 road crossings.
The joint venture also negotiated land access agreements with more than 120 landholders for 142 properties along the pipeline route.
Joint venture partner include operator Santos, Petronas, Total SA, and Korea Gas Corp.
ARM to build Bakken-Three Forks gathering system
Asset Risk Management's wholly owned subsidiary ARM Midstream plans to build a crude oil gathering system in the Bakken shale and underlying Three Forks formation. The system will gather crude from points in McKenzie County, ND, and transport it to interconnections with both downstream pipelines and rail terminals.
Zavanna LLC executed a letter of intent to be an anchor customer on the system, dedicating acreage in the core of its McKenzie County operations. ARM intends to hold an open season to gauge other producers' interest in making long-term commitments to system.