GENERAL INTEREST — Quick Takes
Iraqi oil production reached highest level in decades
Iraqi oil production surpassed an estimated 3 million b/d in July—the highest level since the end of the Gulf War in 1990, according to a recent report from the US Energy Information Administration.
"Increased investment in Iraq's petroleum industry and export infrastructure underpin these production gains," EIA said. Many factors—including pipeline bottlenecks, export capacity limitations, and security issues—still may limit and constrain the Iraqi oil industry from reaching its full production potential. "Alleviation of these constraints could enable Iraqi oil production and exports to reach record-high levels in the near future," EIA said.
Iraqi oil production rebounded after 2005, the agency reported. In recent years, production in previously developed fields such as Rumaila and West Qurna has increased. New upstream investments, meanwhile, are boosting output further. In June, Halfaya oil field came on line, increasing total Iraqi production by an estimated 70,000 b/d, with the potential to produce as much as 535,000 b/d (OGJ Online, June 27, 2012).
"With existing fields like Rumaila and West Qurna and new production coming on line in Halfaya, Iraqi production has the potential to exceed 4 million b/d," EIA said.
BG to sell stake in Indian gas distributor
BG Group has agreed to sell its majority interest in Gujarat Gas Co. Ltd., India's largest nongovernment gas distribution company, for $470 billion.
BG Asia Pacific Holdings Pte. will sell the 65.12% interest to GSPC Distribution Networks Ltd., a subsidiary of Gujarat State Petroleum Corp.
Subject to regulatory approval, the transaction will be complete in the first half of 2013.
Petromanas to acquire Gallic Energy
Petromanas Energy Inc., Calgary, will acquire Gallic Energy Ltd. for about $10 million with closing expected in the fourth quarter of 2012.
Petromanas said it has always planned to diversify and complement its Albanian exploration portfolio with other European assets. The combined exploration assets are focused on proven petroleum producing basins and offer exposure to a variety of play and commodity types while diversifying risk across the portfolio.
Petromanas's subsurface expertise now being applied in Albania is a good fit for Gallic's naturally fractured carbonate assets in France's Aquitaine basin, Petromanas said. In addition, fiscal terms, regional commodity prices, and infrastructure access in France are very attractive for conventional assets.
Gallic's board unanimously recommended the transaction other than one Gallic director who recused himself from the process of considering the proposed transaction. Gallic will hold a shareholders meeting around Nov. 30.
Gallic has assets in France and Australia. Current operations are focused on France and in particular on the Aquitaine basin, where Gallic holds a 100% working interest in 320,000 net acres of exploration lands. Gallic also holds acreage in the prospective Canning basin in Australia.
Cenovus to acquire Oilsands Quest leases
Cenovus Energy Inc., Calgary, has received court approval to buy the remaining assets of Oilsands Quest, which is being restructured under the Canadian Companies' Creditors Arrangement Act, for $10 million.
It will acquire three oil sands leases covering about 59,000 hectares in northern Alberta and Saskatchewan.
Most of the acreage adjoins to the east Cenovus's Telephone Lake oil sands lease, where the company has a dewatering pilot project in progress (OGJ Online, July 25, 2012).
Cenovus has applied for permits to develop Telephone Lake with initial production of 90,000 b/d.
Exploration & Development — Quick Takes
Seneca updates activity in Marcellus, Utica
Seneca Resources Corp. has provided an update of its Marcellus and Utica shale play activity and a farmout from Chevron USA Inc. in California.
Seneca has brought on three Marcellus wells on its DCNR Tract 100 in Lycoming County, Pa., two of which utilized a reduced cluster spacing (RCS) completion design. The two RCS wells had peak 24-hr production rates of 13.4 and 14.9 MMcfd of natural gas, and the third well had an 11.3 MMcfd peak.
The company has tested eight wells on Tract 100 to date with IPs ranging from 10.5 to 16.1 MMcfd.
A horizontal RCS completion at the Rich Valley prospect in Cameron County, Pa., peaked at 6.3 MMcfd.
Seneca completed horizontal Utica shale wells Pennsylvania. The Tionesta well in Forest County had all stages successfully completed. The Mount Jewett well in McKean County, as a result of an operational challenge unrelated to reservoir quality, was only partially completed with three frac stages. Both wells are shut-in for 60 days and are expected to go on production in November.
Meanwhile, Seneca reached an agreement in principle with Chevron USA for a portion of Chevron's assets in East Coalinga field in California. As part of the agreement, Seneca would become field operator in early 2013 and Chevron would retain a royalty on incremental development and full interest in the existing production.
Seneca also has established a position in the Mississippi lime oil play with 9,300 net acres (23,000 gross) in Pratt County, Kan. Seneca will be operator on 4,600 net acres and will have a nonoperating interest on the rest of the net acreage position. The company expects to participate in three to eight horizontal wells in fiscal 2013.
The activity anticipated as a result of these oil property acquisitions is included in the company's preliminary fiscal year 2013 capital expenditure forecast of $555-710 million and production forecast range of 92-105 bcf equivalent.
Turkish well misses Dadas shale
Anatolia Energy Corp., Calgary, said the Guvenir-1 well in Turkey found no evidence of the Silurian Dadas shale but intersected a younger section with hydrocarbon shows.
Operated by Calik Enerji of Turkey, the well went to a TD of 1,956 m on the Antep license in southeastern Turkey (OGJ Online, Aug. 16, 2012). It is the first well drilled in an unexplored basin that covers 845,418 gross acres at the intersection of two major hydrocarbon systems.
Based on geological data collected during drilling operations, the well is interpreted to have penetrated Ordovician-age strata with no evidence of Dadas shale at that location.
The newly identified younger section indicates the possibility of a thick sedimentary basin with potential source rocks across the Antep area and appears to be analogous to similar source rock intervals and producing horizons found in northeastern Syria, Anatolia Energy said.
A core taken at 1,954-56 m is being analyzed for age dating and hydrocarbon source rock potential which when combined with the vertical seismic profile data will assist in better correlating the existing seismic and creating more precise maps of potential new horizons. Detailed analysis of the data will be required to assess the full potential of this zone, and the wellbore will be available for reentry pending further interpretation of the seismic and well data.
Anatolia will be developing a new suite of prospects and plays in preparation for additional drilling in the district in 2013.
Elsewhere, Anatolia plans to perform a Dadas shale fracture stimulation test on the Bismil license in the first quarter of 2013 to demonstrate the ability to mobilize hydrocarbons from the shale. The Bismil and Sinan licenses in Turkey provide the company with exposure to 263,532 gross acres (131,766 net) of Dadas shale and-or conventional oil prospective acreage.
Central gulf lease sale announced for March 2013
The US Bureau of Ocean Energy Management plans a Mar. 20, 2013, lease sale to offer 38 million acres in the Gulf of Mexico offshore Louisiana, Mississippi, and Alabama.
Lease Sale 227, scheduled for New Orleans, will offer all unleased areas in the central Gulf of Mexico planning area.
This would be the second sale under the new Outer Continental Shelf oil and gas leasing program for 2012-17 and the first of five annual central gulf lease sales.
Sale 227 encompasses 7,250 blocks that are 3-230 miles offshore in 9-11,115 ft of water. BOEM has posted on line the proposed terms and conditions for the latest sale.
BOEM Director Tommy P. Beaudreau said the sale will build on successful lease sales within the last 12 months.
Lease Sale 218, covering tracts in the western gulf and held in December 2011, made 21 million acres available. The sale received high bids on tracts covering 1 million acres and netted $325 million.
Lease Sale 216/222, held in June and covering 39 million acres in the central gulf, attracted more than $1.7 billion in high bids for more than 2.4 million acres.
The next sale, Lease Sale 229, covers the western gulf and is slated for Nov. 28 in New Orleans.
Drilling & Production — Quick Takes
Total sees 95 million boe/d production plateau
Total SA's projections call for a plateauing of global crude oil production at 95 million boe/d by 2025-30, according to Michael Borrell, Total senior vice-president, Continental Europe-Central Asia. While speaking at the KazEnergy Eurasian Forum, Borrell also noted that fossil fuels would retain their lead as the world's primary energy source in 2030, comprising roughly 75% of the total energy market, with natural gas passing coal to become the second largest single energy source behind oil.
Renewables also will grow, Borrell said, filling the gap left by nuclear in the wake of the accident at Japan's Fukashima reactor.
Borrel cautioned that developing the oil resources necessary to meet demand will become increasingly capital intensive and locally contentious, as exploration reaches into ever-newer territories. He also noted that current rates of reserves replacement will not be able to keep pace with demand and listed improvements in seismic imaging and optimization of both reservoir management and enhanced oil recovery as key steps if the 95 million boe/d plateau is to be reached and maintained.
Current global oil production is roughly 83 million b/d according to the 2012 BP Statistical Review of World Energy.
Kazakhstan's KazMunaiGaz outlines growth plans
Kazakhstan's state oil company KazMunaiGaz expects the country's crude oil production to reach 90 million tonnes/year by 2015 and 130 million tpy by 2020. Lyazzat Kiinov, KazMunaiGaz management board chairman, offered the projections during his presentation to the KazEnergy Eurasian Forum. Kazakhstan produced 80 million tonnes of oil in 2010.
Kiinov also detailed KazMunaiGaz's own strategic targets. The company has estimated oil and gas condensate reserves of 779 million tonnes in 2012 and seeks to expand this to 817 million tonnes by 2015 and 1.413 billion tonnes by 2022. Over the same increments, it plans to boost production from 21.9 million tpy to first 24 million tpy and then 35.4 million tpy.
During 2012-15, KazMunaiGaz plans to acquire 4,650 line-km of 2D seismic, 11,970 sq km of 3D seismic, and drill 435 exploration and appraisal wells. It estimates geological exploration costs for the period of $3.7 billion.
The company also plans to modernize its refining complex. Investment projects for 2012-16 include:
• Construction of an aromatic hydrocarbon production complex at the Atyrau refinery.
• Construction of a deep oil processing complex at Atyrau.
• Reconstruction and modernization of Pavlodar refinery.
• Reconstruction and modernization of Shymkent refinery.
• Addition of road bitumen production at the Aktau plastic mass plant.
The modernizations will boost overall capacity to 19 million tpy from 13.7 million tpy currently, Kiinov said. Gasoline production will jump to 6.8 million tpy from 2.8 million tpy, jet fuel to 957,000 tpy from 388,000 tpy, and diesel to 5.9 million tpy from 4.1 million tpy.
Shell lets contracts for ultradeepwater drillships
Royal Dutch Shell PLC let 10-year contracts to Transocean Ltd. for the construction of four newbuild dynamically positioned ultradeepwater drillships. Cost of the four rigs is an estimated $3 billion, excluding interest.
The newbuild rigs will be constructed at the Daewoo Shipbuilding & Marine Engineering Co. Ltd. shipyard at Okpo, South Korea. Construction on the first drillship is expected to commence during fourth-quarter 2013, Transocean said.
Shipyard delivery for the first drillship is scheduled for mid-2015. The other three drillships are expected to be delivered from the shipyard at 6-month intervals after that.
After customer acceptance, the contracts are expected to commence in 2015 and 2016.
Peter Sharpe, Shell's executive vice-president of wells, said, "Shell continues to develop its deepwater operations and modernize its contracted rig fleet at fair market rates. These state-of-the-art deepwater rigs, on which we are collaborating with Transocean to design, will comply with the highest industry standards for safety, operations and environmental protection for drilling deepwater wells."
Each of the drillships will be designed to operate in 12,000 ft of water and drill wells to 40,000 ft. The drillships will feature Transocean's patented dual-activity drilling technology and have a variable deckload capacity of 23,000 tonnes.
The newbuilds will be outfitted with two 15,000 psi blowout preventers, which are expected to reduce customer nonproductive time between wells. The four drillships will be able to accommodate a future upgrade to a 20,000 psi BOP when available.
The rigs also will feature diesel engines configured to comply with anticipated Tier III International Maritime Organization emissions standards.
Buoyant tower platform set on Corvina field
The buoyant tower drilling and production platform for BPZ Energy's Corvina oil field has been set offshore Peru (OGJ Online, Aug. 7, 2012).
The CX-15 platform, called the world's first such structure, was installed in 175 ft of water 1 mile from the existing CX-11 platform, reports Horton Shallow Water Developments, the designer.
The hull was floated horizontally from the Offshore Heavy Transport Osprey heavy-lift vessel, which carried it to the location from the construction site in Nantong, China, and upended with a controlled flood. The hull took on additional ballast before mating of the topsides.
The platform can support production of 12,200 b/d of oil and 12.8 MMscfd of natural gas. It has produced-water handling and injection capacity of 3,500 b/d.
PROCESSING — Quick Takes
Westlake to change feed to ethylene cracker
Westlake Chemical Corp., Houston, will convert the feed to its Calvert City, Ky., ethylene plant to ethane from propane and increase ethylene production capacity to 630 million lb/year (about 286,000 tonnes/year) from 450 million lb/year.
The expansion and feedstock conversion, said the company's announcement, will enhance Westlake's "vinyl chain integration" and take advantage of low-cost ethane being developed in the Marcellus shale.
At the same time, Westlake announced plans to expand its existing polyvinyl chloride (PVC) plant in Calvert City to add about 200 million lb/year of capacity to the existing 1.1 billion lb/year capacity. This expansion allows Westlake, it said, to take advantage of increased ethylene production at the site and provide additional PVC resin to growing global demand.
Estimated construction costs for the projects are between $210 and $240 million. The ethylene expansion and feedstock conversion project is to start up in second-quarter 2014, and the PVC expansion in late 2014.
Westlake said the Kentucky Economic Development Finance Authority has preliminarily approved tax incentives up to $10 million, with an additional $7 million pending approval through the Kentucky Reinvestment Act for the new projects and other work in progress at Calvert City.
Saudi petrochemical complex starts up
Saudi Polymers Co. has begun commercial production at its petrochemical complex in Jubail, Saudi Arabia.
The complex has capacities of 1.22 million tonnes/year (tpy) of ethylene, 440,000 tpy of propylene, 1.1 million tpy of polyethylene, 400,000 tpy of polypropylene, 200,000 tpy of polystyrene, and 100,000 tpy of 1-hexene.
Saudi Polymers is owned 65% by National Petrochemical Co., a Saudi joint-stock company, and 35% by Arabian Chevron Phillips Petrochemical Co. a wholly owned subsidiary of Chevron Phillips Chemical.
Connacher, Calumet close refinery sale
Connacher Oil & Gas Ltd., Calgary, said it has closed the sale of its 100% interest in Montana Refining Co. to a subsidiary of Calumet Specialty Products Partners LP, Indianapolis (OGJ Online, Aug. 15, 2012).
After-tax proceeds, including the value of inventory and working-capital adjustments, was $201 million.
Montana Refining operates a 9,500 b/d heavy-oil refinery in Great Falls, Mont.
TRANSPORTATION — Quick Takes
Lack of gas discoveries halt Snohvit expansion
Norwegian producer Statoil ASA and its partners have cited lack of sufficient natural gas discoveries in the Snohvit license area in the Barents Sea as the main reason for the decision to halt any plans to expand the project. Statoil stated Oct. 2 that the partners will instead focus on optimizing and upgrading the existing single-train, 4.3 million tonne/year gas liquefaction facility on Melkoya off Hammerfest.
"The license has not determined whether LNG or a pipeline solution is the best concept for a potential capacity increase at a future date," said Statoil, the project's operator. "Over the last 18 months, the Snohvit license partners have carried out studies for the expansion of the gas export capacity from Melkoya. The increased capacity would enable the accelerated gas production of increased reserves in the Snohvit license, together with existing discoveries in the area," the company said.
Statoil noted that Snohvit license partners have "devoted considerable resources to finding solutions that could make a capacity expansion profitable." These have included studies for either a second LNG train or a dew-point facility and pipeline—the latter solution studied in collaboration with Gassco.
"The possibility of producing increased reserves in existing trains has been an alternative throughout the process, in addition to the two concepts for capacity increase," it said.
The Snohvit LNG project was built to exploit the gas resources from three Barents Sea fields: Snohvit, Albatross, and Askeladd. "There will be major investments associated with Phases 2-4, which include the development of Askeladd and a future compression solution," said to Oystein Michelsen, Statoil executive vice-president, development and production, Norway.
In total, the installation of five new subsea templates and a total of 12 production wells are planned, he said.
Project partners are operator Statoil 36.79%, Petoro 30%, Total E&P Norge 18.4%, GDF Suez E&P Norge 12%, and RWE Dea Norge 2.81%.
Alliance gas pipeline gets FERC approval
Alliance Pipeline is moving ahead with construction preparations for its Tioga lateral natural gas pipeline project in North Dakota. The US Federal Energy Regulatory Commission gave Alliance the green light Sept. 20 for the line's 79.3-mile, 12-in. lateral that will connect gas production from the Williston basin to the Alliance mainline in North Dakota.
The gas will then be shipped onward to Chicago. The planned in-service timing for the pipeline is summer 2013.
The pipeline has been certificated for 106.5 MMcfd, and is underpinned by a contract with Hess Corp. for transport of 61.5 MMcfd. The pipeline is expandable, based on shipper demand, Alliance reported.
The Alliance system consists of a 2,311-mile integrated Canadian and US high-pressure gas transmission pipeline system that will carry gas from the Western Canadian Sedimentary Basin and the Williston basin to Chicago. The US portion of the system consists of 900 miles of mainline and related infrastructure. The system has been in commercial service since December 2000 and delivers an average of 1.6 bscfd of gas.