GENERAL INTEREST — Quick Takes
Tamarack to buy Suncor's Wilson Creek assets
Tamarack Acquisition Corp., a subsidiary of Tamarack Valley Energy Ltd., will acquire Wilson Creek assets in central Alberta from Suncor Energy Inc., Calgary, for $168.5 million (Can.).
Estimated net production from the assets so far this year is 1,702 boe/d. The sale is expected to close in the fourth quarter.
Suncor said Wilson Creek is a Cardium-focused operation. Suncor averages more than 80% working interest, including 52% in the Suncor-operated Wilson Creek Unit No. 1, which produces liquids-rich gas.
"These are high-quality assets that no longer fit with our core business," said Suncor Pres. Steve Williams.
AU Energy to acquire Tullow Netherlands unit
AU Energy BV, a subsidiary of Mercuria Energy Group Ltd., has agreed to acquire Dutch operated and nonoperated L12/L15 block interests and nonoperated Q4 and Q5 block interests from Tullow Exploration & Production BV, a subsidiary of Tullow Oil PLC, for $81.1 million.
The transaction involves the acquisition of Tullow Netherlands BV, which, at the time of completion, will hold all Tullow Oil L12/L15 and Q4 and Q5 interests, encompassing seven license interests and six developed fields producing 1,500 boe/d net to Tullow.
The transaction is effective Jan. 1 and completion is expected in early 2015, conditional upon ministerial consent of the intragroup transfer of the L12/L15 and Q block nonoperated license interests to Tullow Netherlands BV, Tullow says.
"The sale of Tullow's interests in Blocks L and Q is a further step towards the group's planned divestment of our North Sea gas assets in order to focus our business on conventional light oil," said Aidan Heavey, Tullow chief executive officer.
Heavey added that the company's sale of part of its UK Schooner and Ketch interests to Faroe Petroleum Ltd., reported in April, is on track to complete before yearend (OGJ Online, Apr. 30, 2014).
Eland Oil & Gas names chief executive officer
Eland Oil & Gas PLC has appointed George Maxwell as chief executive officer, elevating him from his previous position as chief financial officer.
Maxwell succeeds company founder Les Blair, who also will step down from the board to assume the new role of strategic advisor to the company.
The position, which reports to the CEO, involves promoting the company within Nigeria, undertaking certain partner and government related tasks on behalf of the company, and supporting the CEO in specific strategic objectives, Eland says.
Maxwell, a founding director of Eland, previously served as general manager for Addax in Nigeria, where he oversaw finance, fiscal, and commercial activities.
Additionally, Harry Wilson has assumed the position of executive chairman.
Exploration & Development — Quick Takes
Kuwait Energy makes discovery on Iraq's Block 9
A consortium comprised of Kuwait Energy and Dragon Oil PLC has made an oil discovery on Block 9 in Northern Basra, Iraq (OGJ Online, Aug. 14, 2014).
The discovery occurred in the Mishrif formation-the consortium's first target-at 2,700 m via the Faihaa-1 exploration well. Preliminary tests resulted in a flow rate of 2,000 b/d of 20° gravity oil on a 32⁄64-in. choke. Kuwait Energy says the consortium will conduct more detailed testing on Mishrif toward yearend.
The consortium plans to continue drilling activities, exploring deeper horizons, and collecting further data to evaluate the discovery and define an appraisal plan.
"This is the first well drilled in our planned high-impact exploration campaign on Block 9, so we are delighted to have made a discovery so quickly," commented Sara Akbar, Kuwait Energy chief executive officer. "We continue to believe that Block 9 has strong exploration potential and look forward to facilitating an appraisal plan on Faihaa-1 and continuing to drill other exploration targets."
Kuwait Energy operates the consortium with 70% interest. Dragon Oil holds the remaining 30% (OGJ Online, Feb. 3, 2013).
Bohai Bay well fails to yield hydrocarbons
Roc Oil (Bohai) Co., a wholly owned subsidiary of Roc Oil Co. Ltd., has drilled the QK11-1-1 exploration well on Block 09/05 in Bohai Bay off China, 15 km north of Roc's existing Zhao Dong block.
The well was drilled using the CPOE Rig 33 to a total depth of 4,377 m and TVD of 3,862 m. Logging has been completed and plans for abandonment are under way. The well encountered the predicted objectives of Ming, Guantao, and Dongying, but did not confirm the presence of commercial hydrocarbons.
A second exploration well is expected to be drilled next year targeting a different structural trend in the block. The block covers 335 sq km in 5-10 m of water.
Block 09/05 is operated by Roc Oil with 60% interest. AWE Ltd. holds the remaining 40%.
DNO secures extension on Somaliland PSA
Norway's DNO ASA has been granted a 2-year extension on the term of its production-sharing agreement for the 12,000-sq-km onshore Block SL18, 120 km east of Hargeysa, in Somaliland. The company says the first exploration period will now end Nov. 8, 2017.
The partners have completed field survey and environmental assessment studies over the block, and will initiate a planned seismic acquisition program once the Somaliland government has implemented a planned oil protection unit (OPU) to support the international oil companies operating in Somaliland, DNO says. The OPU is expected to be operational in 2015.
DNO, meanwhile, says it will resume a development program focused on drilling water wells to provide local communities in the areas covered by Block SL18 with potable water, security conditions permitting.
DNO operates Block SL18 with 50% interest. The company reached an initial PSA last year (OGJ Online, Apr. 23, 2013).
Drilling & Production — Quick Takes
Statoil starts production from 'fast-track' fields
Statoil ASA reported production startups for two "fast-track" fields in the Norwegian North Sea.
Fram H North is in the Troll area and contains about 10 million recoverable boe. Svalin C is in the Grane area and contains about 30 million recoverable boe.
Fram H North is a standard subsea template that can accommodate four wells (OGJ Online, Oct. 18, 2012). It is connected by a 5-km pipeline and umbilicals to the subsea template on Fram West A2. Svalin C is a subsea facility with 2 wells about 6 km southwest of the Grane platform (OGJ Online, June 15, 2012).
Statoil and partners made the Fram H North investment decision in summer 2012. The project was exempt from having to submit a plan for development and operation (PDO). The PDO for Svalin C was submitted in June 2012 and approved by the Norwegian Ministry of Petroleum and Energy in November 2012.
Statoil said fast-track developments combine standardized subsea solutions and use of infrastructure in a manner that helps extend the lifetime of existing fields. Fram H North and Svalin C are the company's eighth and ninth fast-track development projects.
"We are on the right track with our mindset regarding standardized technical solutions, early maturing of design basis to avoid late changes and last, but not least, use of the same teams from project to project, where people know each other well and share the same philosophy," said Anders Opedal, Statoil senior vice-president for projects.
In Fram H North, Statoil has 49.2%; Idemitsu, 28.8%; GDF Suez 10.8%; and Petoro 11.2%. Statoil has 57% interest in Svalin C; Petoro 30%; and ExxonMobil Corp. 13%.
Lukoil loading more shipments of West Qurna-2 oil
The Achilleas and Front Kathrine, each a 2-million bbl oil carrier charted by OAO Lukoil international marketing and trading unit Litasco, have begun loading in the southern Iraqi port of Basra to transport buyback oil as part of the West Qurna-2 project.
Achilleas will depart for Augusta, Sicily, where oil will be unloaded for processing at Lukoil's ISAB refinery in Priolo, while Front Kathrine will deliver oil to customers in the European Union.
The Sea Triumph carrier departed with the first shipment from Basra on Aug. 19, delivering 1 million bbl of buyback oil to the port of Augusta on Sept. 1 (OGJ Online, Aug. 20, 2014). A majority of that oil was sent to the ISAB refinery.
Lukoil receives buyback oil under the service contract in an effort to recover the company's costs from the project's first phase.
Production from West Qurna-2 currently totals more than 300,000 b/d, up from the 280,000 b/d reported at the time of the first shipment.
WHL could take on stand-alone gas development
WHL Energy Ltd., Perth, has raised the possibility of a stand-alone gas development in its Otway basin acreage offshore Victoria.
The company is basing its possible decision on early interpretation of the recent La Bella 3D seismic survey in permit Vic/P67.
The report suggests a total of 14 prospects with total potential resources of 1,044 bcf of gas and 32 million bbl of condensate and LPGs.
A group of four prospects have been mapped on the Ferrier Terrace immediately west of La Bella gas field in WHL's acreage. They have been named as Mylius, Mylius West, Ferrier, and Ferrier South.
In conjunction with La Bella itself, WHL said, these prospects could form a core gas development in Vic/P67.
The permit is adjacent to existing Otway basin developments projects so development could be routed through this infrastructure. Alternatively there may be sufficient gas for a stand-alone project.
WHL is keen to prioritize and mature two of the new prospects for drilling in 2015.
PROCESSING — Quick Takes
US merchant bank to buy Newfoundland refinery
Harvest Operations Corp., a wholly owned subsidiary of Korea National Oil Corp., has agreed to sell its 115,000-b/d refinery in Come-by-Chance, Newf., to New York-based merchant banker SilverRange Financial Partners LLC.
The sale includes both the refinery as well as 100% ownership in Newfoundland-based subsidiary North Atlantic Refining Ltd.'s (NARL) retail and marketing operations, Harvest said.
As part of the agreement, SilverRange also will purchase existing inventories of crude oil and refined products, as well as NARL's North Atlantic-branded marketing, marine, and home heating affiliate businesses, Harvest said.
Harvest will remain focused on its Canadian upstream business, which includes maintaining and growing its operations in western Canada, according to John Wearing, Harvest's chief operating officer.
"At the same time, the Come-by-Chance refinery will remain an integral part of the local economy in Newfoundland and an important component of the energy supply chain on the Atlantic seaboard," Wearing added.
Come-by-Chance's strategic location along shipping routes with access to US and European petroleum markets as well as the refinery's processing technology makes the opportunity an attractive one for SilverRange, according to partner Harsh Rameshwar.
"[The refinery's] clean-fuel technology enables [it] to produce low-sulfur, clean fuels, providing flexibility to refine crudes from many parts of the world," Rameshwar said.
SilverRange, which already has entered into a multiyear feedstock supply and product off-take agreement with an unidentified global oil firm, also has committed to capital investment projects at Come-by-Chance, including reducing the refinery's overall sulfur dioxide emissions and making improvements to an associated tank farm.
While terms of the sale were not disclosed, the companies said they expect the transaction to close during this year's fourth quarter.
Shifts in LAC refining sector to alter trade flows
Additional refining capacity planned for Latin America and the Caribbean (LAC) by 2020 will limit the region's current demand for surplus global product supplies, particularly those presently arriving from the US Gulf Coast, according to a recent study from ESAI Energy LLC.
"Markets in [LAC] were short roughly 1.5 million b/d of refined products last year," said John Galante, ESAI Energy analyst.
While LAC's rising demand growth amid insufficient refinery investments during the past decade have made its import markets a target for refiners and traders from the US Gulf Coast, Europe, and Asia, an expected 620,000 b/d in new capacity by 2020 is set to alter the region's trade balance for refined products, ESAI Energy said.
Start-up of a 115,000-b/d first phase of Petroleo Brasileiro SA's RNEST refinery at Abreu e Lima, Brazil, and a 165,000-b/d replacement unit at Ecopetrol's Cartagena, Colombia, refinery will contribute most immediately to the rise in regional capacity, said ESAI Energy.
But a variety of upgrades and refurbishment projects planned during the next several years for other refineries in LAC and its set of closely integrated subregions-which include the Caribbean Basin, Atlantic South America, Pacific South America, and Mexico-will lead to overall improvements in regional utilization rates and clean-product yields, ESAI Energy forecasts.
Because LAC is a large and diverse region in which these subregions have very different relationships with international markets, the pending improvements and changes to LAC trade balances inevitably will impact global markets, according to the study.
"[LAC] will not forever serve as a bottomless sink that can absorb surpluses elsewhere, and especially the growing export volumes coming out of the US Gulf Coast," said Galante.
Suncor begins planned maintenance at refineries
Suncor Energy Inc. has started planned maintenance at both its 142,000-b/d refinery in Edmonton, Alta., and 85,000-b/d refinery in Sarnia, Ont., the company said.
Maintenance activities at the two refineries are part of an ongoing, regularly scheduled maintenance program designed to support safe, reliable operations, Suncor said.
Maintenance work at the Edmonton refinery will involve about 600 employees and contractors and is scheduled to last about 4 weeks, while maintenance at the Sarnia refinery, which is scheduled to run for 8 weeks, will require a workforce of about 1,000 people, the company said.
While Suncor said it has taken precautions to ensure disruptions to surrounding areas of both refineries are kept to a minimum during the maintenance period, planned work activities at the plants may result in increased maintenance-related flaring, noise, and traffic.
The impacts to crude throughputs and utilization rates for both refineries already have been factored into Suncor's annual guidance, the company said.
Suncor did not disclose details regarding the specific nature or scope of scheduled projects for either of the refineries.
Pemex lets contract for Cadereyta refinery
Mexico's Petroleos Mexicanos (Pemex), through a contractor, has let a contract to a subsidiary of Yokogawa Electric Corp., Tokyo, for automation work at an ultralow-sulfur diesel (ULSD) fuel plant to be built at its 275,000-b/d Hector R. Lara Sosa refining complex in Cadereyta, Nueva Leon, in northeastern Mexico.
Yokogawa de Mexico SA will provide installation and engineering for an integrated monitoring and control system for the diesel plant's hydrodesulfurization (HDS) and sulfur recovery units, the company said.
The company said it expects to complete installation of all systems and products for the project by first-half 2015.
The diesel plant, which will have the capacity to produce 35,000 b/d of ULSD from naphtha purified at the Cadereyta refinery, is slated to be commissioned during first-half 2017, Yokogawa said.
Pemex previously awarded a $390 million engineering, procurement, and construction contract for the Cadereyta ULSD plant to Cobra Instalaciones Mexico SA, a subsidiary of Spanish EPC-firm ACS Group, ACS said.
In addition to the HDS plant, Cobra will provide a 120,000-tonnes/day sulfur recovery unit as well as a 10,000-b/d wastewater treatment plant, ACS said.
Pemex also commissioned an ULS gasoline unit at the Cadereyta refinery in September 2013 as part of its company-wide Clean Fuels Project. The unit, which has a ULS gasoline nameplate production capacity 42,500 b/d, will be able to produce gasoline with a 30 ppm sulfur content, down from a previous 800 ppm, Pemex said in its 2013 annual report, which was released earlier this year.
TRANSPORTATION — Quick Takes
Williams holding open season on Transco expansion
Williams is holding an open season for its Western Marcellus Pipeline Project, an expansion of the Transco interstate pipeline to provide incremental firm natural gas transportation to growing markets in the Mid-Atlantic and southeastern US by late 2018.
The Western Marcellus Pipeline Project will add from 1 bcfd to more than 2 bcfd of gas transportation capacity from receipt points in the western Marcellus and Utica supply areas to points as far south as Transco's Zone 3 compressor station 65 in Mississippi and as far north as the proposed Zone 6 River Road point in Pennsylvania. The project would also connect Williams' Ohio Valley Midstream processing and gathering system in northern West Virginia with the Transco pipeline.
The project will extend from the Rockies Express pipeline near Clarington, Ohio, and Williams Oak Grove processing plant in Marshall County, W.Va., to Transco compressor station 165 in southern Virginia. From there, mainline modifications would allow both northbound flow to the proposed River Road point and southbound flow to Station 65, through which Louisiana and Texas Gulf Coast markets would be accessible.
Results of the open season, which closes Sept. 29, will determine Western Marcellus Pipeline Project's final capacity, scope, and cost. Transco is a wholly owned subsidiary of Williams Partners LP, of which Williams owns controlling interests and is the general partner.
EQT Corp. and NextEra US Gas Assets LLC earlier this week formed a joint-venture to connect the existing Equitrans gas transmission system in West Virginia to Transco compressor station 165 (OGJ Online, Sept. 3, 2014).
Alaska LNG submits prefiling request with FERC
Alaska LNG project partners have submitted a formal request to the US Federal Energy Regulatory Commission to start the prefile process for the major natural gas project. The FERC prefile milestone sets the stage for activity associated with the environmental review required for the siting, design, and permitting for construction of the proposed project.
A second season of summer field work set for 2015, part of the project's $500 million pre-FEED phase, supports the prefiling process. This year's summer field work, done primarily to collect data to support environmental permitting and project routing and siting, is almost complete. The majority of the work focused on the pipeline route from Livengood, Ala., to the proposed LNG liquefaction site in Nikiski, Ala.
The Alaska LNG project includes a liquefaction plant in the Nikiski area on the Kenai Peninsula, an 800-mile, large-diameter pipeline, up to eight compression stations, at least five offtake points for in-state gas delivery, a gas treatment plant on the North Slope, and pipelines to transport gas from Prudhoe Bay and Point Thomson to the gas treatment plant.
Project participants are the Alaska Gasline Development Corp. and affiliates of ExxonMobil Corp., TransCanada Corp., BP PLC, and ConocoPhillips. Participants in July filed an application to the US Department of Energy for the project's LNG export license (OGJ Online, July 21, 2014).
Arrow lets contract for Bowen CSG development
Arrow Energy has let a $70 million (Aus.) front-end engineering and design contract to construction joint venture Clough-AMEC for Arrow's proposed Bowen coal seam gas development in central Queensland. The 1-year FEED contract includes engineering, procurement, and contracts for the project's early works and will begin Oct. 6.
The Bowen CSG project is targeting the Queensland and Australian domestic gas market, but it is also linked to the stalled $20 billion (Aus.) Arrow LNG project that was earmarked for Curtis Island near Gladstone.
Arrow, which is 50-50 owned by Royal Dutch Shell PLC and PetroChina, put the LNG project on the back-burner earlier this year. Nevertheless the first domestic phase of the Bowen project appears to be going ahead (OGJ Online, Dec. 12, 2013).
It involves initial development of as many as four development areas that are timed to come on stream in 2017. Some 600 production wells are likely to be drilled during the first 2 years.
Arrow has said previously that the total project would aim for 6,625 production wells during its 40-year lifetime.