GENERAL INTEREST — Quick Takes
Colorado joins other states fracturing regs lawsuit
Colorado state officials joined the states of Wyoming and North Dakota in a lawsuit questioning the US Bureau of Land Management’s new rules for hydraulic fracturing for onshore drilling on tribal and federal public lands (OGJ Online, Mar. 20, 2015).
Colorado Atty. Gen. Cynthia H. Coffman issued a statement Apr. 24 saying Colorado already has “robust” regulations in this area that are working. She said BLM exceeded its authority and was intruding on what has traditionally been state regulatory authority regarding fracturing.
She noted the lawsuit does not question the premise that fracturing should be regulated.
“It should be. And, Colorado is doing so,” Coffman said. “The debate over hydraulic fracturing is complicated enough without the federal government encroaching on states’ rights.”
The state of Wyoming first filed the lawsuit (OGJ Online, Mar. 27, 2015). The North Dakota Industrial Commission voted to join the Wyoming lawsuit, which includes requirements for publicly disclosing chemicals using in hydraulic fracturing (OGJ Online, Apr. 1, 2015).
The American Petroleum Institute had said BLM’s rules would impose additional costs and lead to delays.
Total’s 1Q profit down 22%
Total SA reported a first-quarter adjusted net income of $2.6 billion, down 22% from $3.3 billion during first-quarter 2014, citing a 50% decrease in Brent crude oil prices since last year.
Adjusted net operating income from the company’s upstream segment was $1.6 billion, down 56% compared with first-quarter 2014. Total says the losses, primarily due to lower crude prices, were partially offset by production growth and the initial positive results of the cost reduction program.
Hydrocarbon production totaled 2.4 million boe/d during the quarter, up 10% compared with first-quarter 2014 due to production startups including CLOV, Eldfisk II, Ofon Phase 2, and West Franklin Phase 2; lower prices, notably on production sharing contracts; and the Abu Dhabi Co. for Onshore Oil Operations (ADCO) concession in the UAE. All of that offset a 3% drop-off due to natural decline.
Total expects Termokarstovoye gas field to start up in the second quarter, followed by GLNG, Laggan-Tormore, Surmont 2, and Vega Pleyade in the second half. Second-quarter production will be impacted by heavy seasonal maintenance activity, mainly in Nigeria, the UK, and Norway.
Due to the deteriorating security conditions in Libya and Yemen, production was halted in February onshore Libya and in April in Yemen.
Adjusted net operating income from the refining and chemicals segment was $1.1 billion, up threefold compared with first-quarter 2014. Refinery throughputs increased 14% from first-quarter 2014, benefiting from lower levels of maintenance in France as well as the startup of Satorp at full capacity beginning in August, the company says.
“Downstream again generated excellent results due to its ongoing restructuring efforts and improved market conditions in refining and marketing,” said Patrick Pouyanne, Total chief executive officer. “All of our teams are mobilized to reduce costs, lower breakevens, and deliver new projects.”
The group’s net cash flow was $1.4 billion in the red, compared with a positive $1.3 billion in first-quarter 2014.
Comments sought for QEP’s proposed Wyo. gas plant
The US Bureau of Land Management is seeking public comments on QEP Resources Inc.’s plans to build a natural gas and helium processing plant in the Dry Piney Creek area 10 miles northwest of LaBarge, Wyo.
Information received will be used to help prepare an environmental assessment of the proposed project, BLM’s Pinedale field office said in an Apr. 20 notice.
It said the proposal’s draft plan of development includes 10 gas production wells with associated access roads and buried gathering pipelines; a gas processing plant; 7.6 miles of methane pipelines; 8.3 miles of carbon dioxide pipelines; four CO2 injection wells; 13 miles of overhead 230-kv power lines to an associated substation; and a water supply well, water disposal well, and sour gas disposal well.
The proposed facilities and supporting features would be built on a mixture of public, state, and private land, with most of the 355-acre gas processing plant on private land that QEP owns, the notice said.
An open house was scheduled for Apr. 27, and comments would be accepted through May 20, it indicated.
TORC to buy Saskatchewan assets from Surge
TORC Oil & Gas Ltd. has agreed to acquire producing and undeveloped acreage in southeastern Saskatchewan from Surge Energy Inc. for $430 million (Can.) cash. Both companies are based in Calgary.
The acquisition includes 4,750 boe/d of production, 98% light oil and liquids, with an average decline rate of about 20%/year. Reserves estimates are 12.5 million boe proved and 9 million boe proved, developed, producing.
The land covers more than 80 net sections, with more than 40,000 net acres undeveloped.
Surge said its sale of the properties is part of a strategy to reduce debt and focus investment on two plays elsewhere in Saskatchewan and in northwestern Alberta.
Exploration & Development — Quick Takes
Noble, Edison enter PL001 in North Falkland basin
Noble Energy Inc. has acquired 75% interest and operatorship of the PL001 license in the North Falkland basin from Argos Resources Ltd. Edison International SPA has obtained the remaining 25%.
PL001 covers an area of 285,000 gross acres and is northwest of PL032, which includes the Sea Lion oil discovery (OGJ Online, Apr. 2, 2015). Noble Energy and Edison will provide to Argos 5% royalty override from all hydrocarbon development on the license.
In PL001 Noble is initially targeting the Cretaceous-aged stratigraphic trap Rhea prospect, which features multiple reservoir targets and total estimated gross mean unrisked resources of 250 million bbl of oil.
Drilling, slated to begin in the third quarter, will take place in 1,550 ft of water and reach a total depth of 8,760 ft.
Noble’s initial operated Falkland Islands prospect, Humpback in the South Falkland basin, is now expected to commence drilling by early May (OGJ Online, Oct. 1, 2014). It’s the first of multiple- stacked fan prospects clustered together in the Fitzroy sub-basin.
Humpback has estimated gross mean unrisked resources of 250 million bbl of oil, with the cluster of prospects in the sub-basin totaling 1 billion bbl of oil. The Humpback well lies in 4,170 ft of water and will reach a total depth of 17,550 ft. Noble has 35% interest in the South Falkland basin.
MOL agrees to buy Ithaca Petroleum Norge
MOL Group has committed to drill three exploration wells offshore Norway during 2015-16 under an agreement to buy Ithaca Petroleum Norge from Ithaca Petroleum Ltd., part of Ithaca Energy, for $600 million.
Ithaca Petroleum Norge holds 14 exploratory licenses offshore Norway and operates three of them.
The deal provides for bonus payments totaling up to $30 million for exploratory success.
MOL plans to merge Ithaca Norge into MOL Nordsjon BV.
Drilling & Production — Quick Takes
Goliat platform floated off south of Hammerfest
The massive Goliat cylindrical floating production, storage, and offloading vessel—which arrived in Hammerfest, Norway, on Apr. 17 after a 63-day voyage covering 15,608 nautical miles—has been successfully floated off from the Dockwise Vanguard heavy transport vessel (OGJ Online, Feb. 16, 2015).
The FPSO will now be temporarily moored in Ersvika, 6 km southwest of Hammerfest, where it will undergo final preparations including inspections, tests, and checks of all systems and equipment. The platform will then be towed 80 km to Goliat field in the Barents Sea where it will be connected to its 14 anchor lines. The umbilicals and risers will be installed and the platform will then be connected to the electrical power cable from the mainland. Finally, the platform and subsea systems will be made ready for production.
When the field comes on stream later this summer for operator Eni Norge AS, Goliat will become the world’s northernmost producing offshore oil field.
Tow out of the FPSO to Goliat field is expected to occur in early May. The field is slated to come on stream by midyear.
The Goliat platform, which has a production capacity of 100,000 b/d of oil and a storage capacity of 1 million bbl, was designed by Norwegian firm Sevan Marine and built at the Hyundai shipyard in South Korea.
The platform weighs 64,000 tonnes (dead weight) and is 107 m in diameter and 170 m high, including its flare tower. The height from its base to the helideck is 75 m.
The estimated recoverable reserves from Goliat are 178 million boe.
Ichthys begins CPF, FPSO module lifts
Contractors for the Ichthys fields in the Browse basin have completed the first topside module lifts onto the central processing facility and the floating production, storage, and offloading facility.
The lift for the FPSO took place at the Daewoo Shipbuilding & Marine Engineering shipyard in Okpo, while the CPF lifts were at Samsung Heavy Industries shipyard in Geoje. Both are in South Korea.
This signals the beginning of the topsides integration phase for the CPF and FPSO. The hulls and topsides were fabricated separately and this new phase brings the parts together as single, connected structures for the first time.
The first CPF module weighed 3,600 tonnes and measured 50-m long, 43-m wide, and 26-m high. The first FPSO module lift weighed 2,010 tonnes. Project operator Inpex says the combined weight of all topside modules for both facilities is about 120,000 tonnes.
The CPF and FPSO topsides include equipment required to process, store, and offload gas and condensate produced from Ichthys field. They also include living quarters for the workforce on both facilities.
When completed the CPF and FPSO will be towed 5,600 km from South Korea to Ichthys field offshore Western Australia where they will be permanently moored to the seabed for the project’s 40-year lifespan.
When on stream, gas and some condensate will be sent via the 889-km gas export line to the Ichthys onshore LNG plant in Darwin. Stabilized condensate from the FPSO will be offloaded periodically to shuttle tankers for export directly to market.
CNOOC starts oil production at Kenli 10-1 field
China National Offshore Oil Corp. Ltd. reported the start up of oil production from Kenli 10-1 field with 12 wells producing 10,750 b/d.
Facilities include a central processing platform and two wellhead platforms in 17 m of water in the southern Bohai Bay. Peak production of 36,000 b/d is expected in 2016.
CNOOC holds 100% interest in the field.
PROCESSING — Quick Takes
Study finds refining emissions fell over 2 decades
US refining emissions dropped substantially in the last 2 decades as petroleum product production increased, research commissioned by the American Fuel & Petrochemical Manufacturers found.
The study by Sage Environmental Consulting of US Environmental Protection Agency data revealed a significant reduction in both criteria air pollutant (CAP) emissions and hazardous air pollutants (HAP) emissions from 1990 to 2013, AFPM said Apr. 23 as it released the findings.
It said the analysis also found that primary CAP emissions—sulfur dioxide, nitrogen oxides, and volatile organic compounds—fell by 91%, 67%, and 69%, respectively, despite crude oil feedstocks’ density and sulfur content climbing more than 16% during the study period. Total US HAP emissions also declined by 66%, it added.
EPA has proposed new emissions control standards to reduce ground-level ozone from the current 75 ppb limit to 65-70 ppb, AFPM noted. The existing limit was enacted in 2008, but EPA did not finalize implementation regulations until February, AFPM said.
“The numbers don’t lie,” AFPM Pres. Charles T. Drevna said. “EPA’s data show US air quality continues to improve, despite arguments to the contrary, and domestic refiners have significantly contributed to that trend. The air is cleaner today than it ever has been, and so are fuel manufacturing operations.”
Iraq lets contract for Basra refinery revamp
South Refineries Co. (SRC), a part of Iraq’s Ministry of Oil, has let a project management consultancy (PMC) contract to Technip SA, Paris, and Japanese engineering consultant UNICO International Corp., Tokyo, for the modernization and upgrading of its 140,000-b/d Basra refinery in southern Iraq.
The PMC contract, awarded on a reimbursable basis, covers engineering, procurement, construction, commissioning, start-up, and warranty management phases of the project, Technip said.
Designed to increase the Basra refinery’s gasoline production capacity, the modernization project will involve installation of a fluid catalytic cracking unit and associated units, including a visbreaker, hydrotreater, and hydrogen plant among others, Technip said.
The modernization project, which has been funded by the Japanese International Cooperation Agency, is part of the Iraqi government’s plan to meet increasing future demand for hydrocarbon products, Technip said.
A value of the contract was not disclosed.
SRC previously awarded a contract to Shaw Group Inc., Baton Rouge, La., to provide a feasibility study for rehabilitation of the Basra refinery, which was to include an assessment of the refinery’s then-current condition, as well as an estimate of engineering, equipment supply, and construction services required to improve its operation. Shaw said in a Dec. 13, 2011, release.
The US Trade and Development Agency approved a grant of more than $500,000 to SRC to fund project’s 2011-12 feasibility study as part of a strategic framework agreement with Iraq that includes a commitment to help promote the development of the country’s oil sector as well as the rehabilitation of its vital facilities, according to a release from the US embassy in Baghdad on July 21, 2011.
Alongside its modernization plans for the Basra refinery, Iraq has a longer-term plan to construct four refineries in an effort to add 750,000 b/d of refining capacity. These projects include the 140,000-b/d Karbala refinery (OGJ Online, Mar. 27, 2015; Feb. 26, 2014), the 300,000-b/d Nassiriya refinery, and two additional refineries in Maysan and Kirkuk, each with a capacity of 150,000 b/d (OGJ Online, June 4, 2013).
Shintech advances plan for La. ethylene plant
Shintech Inc., the US subsidiary of Shin-Etsu Chemical Co. Ltd., Tokyo, is moving forward with its plan to build a grassroots ethylene production plant in Louisiana’s Iberville Parish.
The ethylene plant, which is to be built on land the company already owns in Plaquemine, La., will have a production capacity of 500,000 tonnes/year and require an investment of about $1.4 billion to be financed by the company’s own funds, said Chihiro Kanagawa, Shintech’s chairman and founder.
Shintech already has let a contract to Toyo Engineering Corp. for the bulk of construction work on the ethylene plant, which will use ethylene process technologies provided by Lummus Technology US Inc., the company said.
Construction of the ethylene plant, the first ever to be built in the US by a Japanese operator, is due to be completed during first-half 2018, Shintech said.
The decision to build the ethylene plant comes as part of Shintech’s strategy to further strengthen its integrated production processes for polyvinyl chloride (PVC) by assuring its existing PVC operations a reliable supply of ethylene, a primary raw material in the production of PVC, Kanagawa said.
The company, which owns PVC operations in Texas and Louisiana, currently is expanding its production capacities of PVC, vinyl chloride monomer, and electrolysis in Louisiana.
This latest announcement follows Shintech’s application last year to the Louisiana Department of Environment Quality for a permit to build the proposed plant (OGJ Online, Apr. 16, 2014).
Louisiana Gov. Bobby Jindal and Kanagawa initially laid the groundwork for the Louisiana expansion during the governor’s 2014 economic development mission to Asia, according to an Apr. 22 release from the Louisiana Economic Development.
Separately, Shintech, through a contractor, let a series of contracts to CB&I, Houston, to provide technology licensing as well as equipment and construction work for the ethylene plant. Under the contracts, which was awarded by Toyo Engineering Corp., CB&I will provide ethylene technology, basic engineering and cracker heater supply, and construction services for the project, which will be located in Plaquemine, La., CB&I said.
CB&I will deliver its proprietary ethylene technology, including SRT cracking heaters and recovery section design, which features low-pressure separation and mixed refrigeration to minimize investment costs, the service provider said. The value of the contracts amount to more than $640 million.
CNOOC lets contract for Huizhou refinery expansion
CNOOC Oil & Petrochemicals Co. Ltd., a subsidiary of China National Offshore Oil Corp. (CNOOC), has let a contract to Praxair Inc., Danbury, Conn., to provide industrial gases to support the expansion of its 12 million-tonne/year Huizhou refinery in Guangdong province, China.
As part of the contract, Praxair will build, own, and operate two 2,400-tonne/day air separation plants in the Huizhou Daya Bay Chemical Industrial Park to supply oxygen and nitrogen to support CNOOC’s expansion of crude oil processing capacity at the Huizhou refinery to 22 million tpy, Praxair said.
Praxair will start delivery of industrial gases for the expansion beginning in 2017, said the service provider, which already supplies specialty gases both to the existing Huizhou refinery and the CNOOC-Shell Petrochemicals Co. Ltd. 50-50 joint venture’s 2.3 million-tpy Nanhai petrochemical complex, also in Guangdong province (OGJ Online, May 7, 2010).
A value of the contract was not disclosed.
The Huizhou refinery expansion, as well as an associated grassroots 1 million-tpy ethylene plant to be built as part of Huizhou’s Phase 2 integration project, are due to be commissioned sometime during 2016-17, according to the most recent updates from CNOOC (OGJ Online, Feb. 2, 2015; Dec. 20, 2013).
TRANSPORTATION — Quick Takes
Freeport LNG unit starts building third train
FLNG Liquefaction 3 LLC, a unit of Freeport LNG Expansion LP, has closed on the $4.56 billion in financing needed to start construction of the third train of FLNG’s gas liquefaction and LNG loading facility on Quintana Island near Freeport, Tex.
The construction cost for the combined three-train project is expected to be $12.5 billion, including owner’s costs and interest during construction. An additional $3 billion in funds were raised for refinancing and acquisition costs associated with the existing LNG import facility, letters of credit facilities, and a special contingency fund.
With closing on this financing, Freeport LNG has completed all milestones and issued a full notice to proceed to CB&I Inc., Zachry Industrial Inc., and Chiyoda International Corp. to construct the project’s third train.
Full three-train operation is expected by third-quarter 2019. LNG production from the first liquefaction train is expected in early 2018, with commercial operation of the first train expected to commence by third-quarter 2018.
Each liquefaction train has a capacity of more than 5 million tonnes/year. About 13.4 million tpy of the production capacity of the three trains has been contracted under use-or-pay liquefaction tolling agreements with Osaka Gas Co. Ltd., Chubu Electric Power Co. Inc., BP Energy Co., Toshiba Corp., and SK E&S LNG LLC.
In November 2014, FLNG received final approvals for its proposed facility from the US Federal Energy Regulatory Commission and the US Department of Energy (OGJ Online, Nov. 14, 2014).
Odyssey Pipeline transports production from Delta House
A joint venture of Shell Pipeline Co. LP and Genesis Energy LP reported that its Odyssey Pipeline System transported the first crude oil production from the Delta House platform in the Mississippi Canyon protraction area of the Gulf of Mexico.
Production began earlier this month at the Delta House semisubmersible floating production system operated and partly owned by LLOG Exploration Co. LLC (OGJ Online, Apr. 17, 2014).
The Delta House platform is a deep-water floating production system with subsea ties to three Mississippi Canyon fields. Odyssey, which is operated by Shell, is a 120-mile network of crude oil pipelines varying 12 to 20 in. in diameter. The pipeline has the capacity to deliver as much as 220,000 b/d.