Saudis, citing oil attack plans, arrest 172
Saudi Arabia’s ministry of interior Apr. 27 announced the arrest of 172 Islamic militants it said were plotting to attack the country’s oil installations.
Interior Ministry spokesman Brig. Mansour al-Turki said the militants had reached an advanced stage of readiness. He said that, apart from setting the exact time, the militants had the personnel, money, arms, and all the necessary elements for terror attacks.
The ministry, in a statement read on state television, said police seized weapons and more than 20 million riyals ($7 million) in cash from seven armed cells.
“Some had begun training on the use of weapons, and some were sent to other countries to study aviation in preparation to use them to carry out terrorist operations inside the kingdom,” the statement said.
“One of their main targets was to carry out suicide attacks against public figures and oil installations and to target military bases inside and outside [the country],” it said.
Regarding the latest arrests, al-Turki said, “It is obvious that the deviant group is still trying to revive its criminal activities in the kingdom.”
Chinese oil workers released in Ethiopia
Seven Chinese workers kidnapped by members of the Ogaden National Liberation Front (ONLF), who attacked a Chinese oil company operating in Ethiopia, have been released, the Chinese Foreign Ministry said (OGJ Online, Apr. 27, 2007).
Earlier, a spokesman for the International Committee of the Red Cross in Ethiopia said the men had been released on Apr. 29 but declined to provide other details. He said the ICRC would transport the men to a safe location before handing them over to Ethiopian and Chinese authorities.
The Chinese ministry said survivors of the ONLF attack, along with bodies of victims, were flown back to their hometown in central China’s Henan Province.
The ONLF launched its attack on Apr. 24, killing 65 Ethiopian and nine Chinese workers at the Abule exploration site in Degeh Bur Zone in eastern Ethiopia and kidnapping the seven Chinese and two Ethiopian workers.
The ONLF, which said all of those held were in good health and had been treated well, includes ethnic Somalis from Ethiopia’s eastern Ogaden region who claim to be fighting for self-determination.
NGSA: US gas producers’ costs nearly triple
US natural gas producers’ costs have nearly tripled since 2003 because of growing finding and production costs, reported Natural Gas Supply Association Chairman Chris Conway Apr. 26.
“A combination of increasing activity along with higher per-unit service and technology rates led US producers to spend about $156 billion last year alone in response to continuing tight supply,” said Conway, who also is president of gas and power at ConocoPhillips.
“Compared to the $56 billion spent in 2003, that’s an increase of almost 200%,” he added during a Canadian Embassy briefing with the Canadian Association of Petroleum Producers.
While some costs are coming down from peaks reached following Hurricanes Katrina and Rita, Conway said, expenses remain high as more unconventional supplies are tapped. International competition for offshore rigs, deeper resource recovery levels, and a growing onshore fleet also are contributing, he said.
US gas well completions, nevertheless, were a record 31,587 during 2006, according to an analysis performed for NGSA by ICF International’s unit EEA Inc. The number of onshore rigs drilling for gas doubled from 2003 to more than 1,400, it added.
Domestic gas reserves increased to 196 tcf at yearend 2005 from 158 tcf in 1999, the analysis said. Gas reserves in shale, tight sands, and coalbed formations climbed to 19.9 tcf in 2005 from 18.4 tcf in 2004, it indicated.
Conway said the US gas reserve changes during 2004-05 show that most of the increase in the Lower 48 states came from shale and tight sands formations. “The Rockies and eastern Texas dominate recent tight-sand reserve additions,” he said. “The Barnett play in northern Texas dominates shale-gas reserves.”
Baker Hughes to pay $44 million to settle charges
Baker Hughes Inc. and a subsidiary agreed to pay more than $44 million in fines to settle federal charges that it and one of its employees violated the Foreign Corrupt Practices Act, said the US Department of Justice and the Securities and Exchange Commission on Apr. 26.
The combined fines and penalties are the largest sanction so far in an FCPA case, the two federal agencies said. The charges stemmed from allegations that Baker Hughes Services International Inc. (BHSI) and one of its employees paid more than $4 million in bribes over 2 years to an intermediary that the company believed would relay the payments to a Kazakhstan national oil company official. Separate SEC charges alleged additional FCPA violations by Baker Hughes in Nigeria, Angola, Indonesia, Russia, Uzbekistan, and Kazakhstan.
BHSI pleaded guilty in federal district court in Houston to violating the FCPA’s antibribery provisions, conspiracy to violate the FCPA, and aiding and abetting falsification of its parent company’s records. It simultaneously entered into a deferred prosecution agreement with DOJ and accepted responsibility for its employees’ conduct.
BHSI agreed to pay an $11 million criminal fine, serve 3 years of organizational probation, and adopt a comprehensive antibribery compliance program, DOJ said. In related charges, SEC said, Baker Hughes agreed to pay $10 million in civil penalties and more than $23 million in disgorgement and prejudgment interest.
SEC said it also charged Roy Fearnley, a former business development manager for Baker Hughes, with violating the FCPA and aiding and abetting violations of the act. It said Fearnley has not reached a settlement with the commission.
DOJ said BHSI submitted a bid in February 2000 on behalf of Baker Hughes to perform project management, oil drilling, support, and other services as four international oil companies and Kazakhoil developed Karachaganak oil field in Kazakhstan.
Soon after, Kazakhoil demanded that Baker Hughes pay a commission to an Isle of Man consulting firm, which supposedly was the national oil company’s agent. Although the consulting firm performed no services for Baker Hughes, BHSI agreed in September 2000 to pay it an amount equal to about 2% of its revenue on the Karachaganak project and 3% on future projects in Kazakhstan.
BHSI was awarded the contract the following month, DOJ said. From May 2001 through November 2003 it paid $4.1 million in commissions to the consulting firm’s account in a London bank from a BHSI account in Houston, the federal agency said.
Baker Hughes and BHSI voluntarily disclosed the violations and cooperated in investigations of the allegations and implementation of reforms, DOJ and SEC said.
China’s crude exports fall as imports rise
China’s rising demand for oil is slashing the country’s oil exports and boosting imports, according to statistics released by the General Administration of Customs.
The agency reported an 83.2% year-on-year decline in oil exports and an 8.8% rise in imports for March.
Cao Xiaoxi, chief engineer of Sinopec’s Economic and Development Research Institute, said the figures reflect a 5% tariff aimed at discouraging export trade. “It’s a long-term, clear policy to rein in crude and oil product exports,” Cao said.
The outlook for imports is unclear.
Niu Li, an economist with the State Information Center affiliated with China’s top economic planner, the National Development and Reform Commission, said there is no guarantee that oil imports will rise this year. He said high global oil prices would dampen local demand.
In March, China exported 218,988 tonnes of oil. In February it exported no oil, while January exports stood at 300,000 tonnes.
During the next 2-3 months, Chinese demand gains against year-earlier levels are projected at 6% for diesel, 6.5% for gasoline, 5.5% for kerosine, and 20% for naphtha.
Industry Scoreboard
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Exploration & Development - Quick TakesBP makes 13th oil find on Angola’s Block 31
BP Exploration (Angola) Ltd. has made an oil discovery on ultradeepwater Block 31 off Angola. The Miranda find is the company’s 13th discovery to date on the block.
Miranda flowed on test at 3,822 b/d through a 48/64-in. choke. The well is 11 km south of the recently announced Titania discovery made earlier this year (OGJ Online, Jan. 30, 2007).
The Jack Ryan drillship drilled in 2,436 m of water 375 km northwest of Luanda, and reached 5,116 m TVD subsea.
Block 31 spans 5,349 sq km in 1,500-2,500 m of water.
Sonangol is the concessionaire of Block 31 and holds 20% interest. BP holds 26.67% and its partners are Esso Exploration & Production Angola (Block 31) Ltd. 25%, Statoil Angola AS 13.33%, Marathon International Petroleum Angola Block 31 Ltd. 10%, and Total SA unit Tepa (Block 31) Ltd. 5%.
Indonesia well confirms 1974 Kutei gas find
Aabar Petroleum Investments Co. PJSC, Abu Dhabi, gauged gas at the Makassar Straits-4 well on the 5,920 sq km Sebuku production-sharing contract, confirming for the second time a 1974 Ashland Petroleum discovery off East Kalimantan.
MS-4, TD 5,367 ft, cut 279 ft of net gas pay in a single reservoir and a total of 318 ft of gross gas pay. MS-4 and the earlier MS-1 well 1.2 km east proved a combined 618 ft gas column.
MS-4 flowed 16 MMcfd and 23 MMcfd, respectively, on two drillstem tests. The company said the strong flow rates confirm excellent reservoir properties in the Lower Miocene Upper Berai carbonate zone.
The drillship is moving to the MS-3 location 2.75 km south of MS-1.
Aabar, through its wholly owned subsidiary PearlOil (Sebuku) Ltd., is operator with 50% participating interest. It will hold 100% interest after acquiring the other interest from its former partner, subject to government approval.
Drilling nears in Colorado’s San Luis basin
Lexam Explorations Inc., Toronto, is awaiting interpretation of the first 3D seismic survey in the San Luis basin of Colorado to determine whether to proceed with drilling of two permitted wildcats in the nonproducing basin.
The Colorado Oil & Gas Conservation Commission approved permits to drill two 14,000 ft wildcats on the company’s Baca project to test primarily for gas in Cretaceous Dakota, estimated to be 50-120 ft thick with 15-21% porosity in the target area. Gas in the Lower Tertiary section is a secondary objective (OGJ, Sept. 1, 1997, p. 78).
Interpretation results of the 25-sq-mile survey are expected in mid-May. Lexam holds 75% interest and ConocoPhillips 25% in more than 100,000 acres 45 miles southwest of Florence oil field. Completed well cost for the two holes is estimated at $21 million.
Eni acquires, will operate license off Congo
Eni SPA will operate 1, 103 sq km of new exploration acreage off Congo (Brazzaville) following the signing of the new license with the Congolese authorities. The permit is 15 km offshore in 20-50 m of water.
Eni said the acreage, Marine XII, has proved oil reserves, which it did not define, and potential for gas and condensates, which will be developed through an integrated gas-to-power project. Eni will build a 300-450 Mw power plant near the Djeno terminal that it said would contribute “to enhancing the power and reliability of the local electrical system.”
Eni will have 90% stake in the license area and will work with Société Nationale des Pétroles du Congo, which holds the remaining 10%. The partners will shoot a 3D survey.
Eni also has increased its acreage in Brazzaville through the recent acquisition of the onshore M’Boundi field and other assets for $1.4 billion (OGJ Online, Feb. 23, 2007). That deal covers Maurel & Prom’s 48.6% interest in M’Boundi oil field; 66% interest in Kouakouala A oil field; 50% interest in the Kouakouala B, C, and D production concession; and a 50% interest in the Kouilou exploration permit, in which the seller will retain 15%.
Drilling & Production - Quick TakesChevron shuts down Nigeria production after attack
Chevron Corp. has shut down 15,000 b/d of oil production in Nigeria after one Nigerian sailor was killed and six foreign oil workers were kidnapped by members of the militant group Movement for the Emancipation of the Niger Delta (MEND), who attacked Chevron’s Oloibiri floating production, storage, and offloading vessel off southern Bayelsa State on May 1.
A Chevron spokesperson said the firm had shut down the production from Funiwa oil field to avoid any additional security or safety incidents following the attack. The FPSO supports the Funiwa oil field.
MEND spokesman Jomo Gbomo said the hostages would be released on May 30, if oil companies and Bayelsa State government officials made no attempt to secure their release or offered ransom money.
Gbomo, who warned that such offers would be viewed as a “slight” and would “worsen the situation of these hostages,” identified the men as Raffele Pascariello, Alfonso Frawza, Ignazio Gugliota, Mario Celetano, John Stapleton, and Juricha Ruis.
Gbomo said the attack on Chevron’s facilities should also be interpreted as a warning to Royal Dutch Shell PLC, which has recently returned to fields in Bayelsa and Delta states earlier attacked by MEND. MEND is fighting for more local control over the Niger Delta’s oil wealth.
Sakhalin-1 partners drill record ERD Well
Exxon Neftegas Ltd. (ENL) reported the completion of drilling of the Z-11 well on Sakhalin Island off Eastern Russia to a total measured depth of 37,016 ft-the world’s longest measured depth extended-reach drilling (ERD) well, according to parent company ExxonMobil Corp.
The Z-11 well is the 17th ERD producing well to be completed as part of the multiphase Sakhalin-1 project. It was drilled in 61 days, more than 15 days ahead of schedule, and below expected cost with no safety or environmental incidents, ExxonMobil said.
The Sakhalin-1 project includes Chayvo field, which lies 5-7 miles offshore. The Z-11 well was drilled to the Chayvo reservoir from the Yastreb rig-the world’s largest land-based drilling rig, ExxonMobil said. Chayvo field reached its peak production rate of 250,000 b/d of oil in February after startup in October 2005.
Since the first Sakhalin-1 well was drilled in 2003, the time required to drill these world-class wells has been reduced by more than half, ExxonMobil said.
ENL holds 30% interest in the Sakhalin-1 project and serves as operator. Other partners are Japan’s Sakhalin Oil & Gas Development Co. Ltd. 30%, Rosneft units RN-Astra 8.5% and Sakhalinmorneftegas-Shelf 11.5%, and India’s ONGC Videsh Ltd. 20%.
Oil flow starts from field off Indonesia
Indonesia ’s upstream oil and gas regulator BP Migas said Hess Corp. has begun producing oil from Ujung Pangkah field in the Java Sea off East Java ahead of the original schedule (OGJ Online, Aug. 13, 2004).
BP Migas Deputy Chief Dodi Hidayat said flow started in April from the field, originally expected to start producing in 2009.
Production of 1,600 b/d of crude oil is transported by shuttle tanker to a storage facility in Tuban, East Java.
Processing - Quick TakesTotal to pay fine, upgrade Port Arthur plant
Total Petrochemicals USA Inc. agreed to pay $2.9 million in fines and upgrade pollution controls at its 240,000 b/d Port Arthur, Tex., refinery to settle federal charges that it violated the Clean Air Act, the US Department of Justice and the Environmental Protection Agency said May 1.
The Total SA subsidiary agreed to make $37 million of changes designed to reduce the plant’s sulfur dioxide emissions by more than 800 tons/year, nitrogen oxides by more than 180 tons/year, and carbon monoxide by more than 120 tons/year, the federal agencies said.
Total also agreed to upgrade leak detection and repair practices, to adopt strategies to ensure the proper handling of benzene wastewater, and to implement programs to minimize the flaring of hazardous gases.
The settlement is the first for a US refinery to include fixed penalties for the flaring of hydrocarbon gases, according to EPA. Under the agreement, penalties will apply to future flaring at the plant of both acid gas and hydrocarbon gases that contain hydrogen sulfide and sulfur dioxide.
Total also agreed to install a supplemental environmental project in which it will install new infrared cameras to detect equipment leaks, EPA said. Such leaks may contain emissions which contribute to ground-level ozone and smog.
Sinopec JV plans Chinese chemical plant
Sinopec Zhenhai Refinery & Chemical has established a 4.44 billion yuan venture with Lyondell Chemical Co. to construct a propylene oxide-styrene monomer (POSM) manufacturing facility in Ningbo, China, across Hangzhou Bay from Shanghai.
The plant will produce 274,000 tonnes/year of propylene oxide and 602,000 tpy of styrene under an agreement that also will allow SZRC to tap into Lyondell’s POSM technology.
Feedstock will come from an SZRC plant now under construction that will be capable of producing 1 million tpy of ethylene. A Sinopec spokesman said the project is 75% owned by SZRC and 25% by Lyondell.
Lyondell said it will contribute POSM technology and overall operating and technical experience in exchange for a share of the propylene oxide (PO) profitability from the plant. It said the two partners will jointly market all PO manufactured by the new facility, which is due for completion in 2009.
China’s National Development and Reform Commission wants to more than double the country’s ethylene output capacity. It plans a 4.38 million-tonne increase by upgrading existing plants and a further 6.2 million-tonne increase through construction of new facilities.
China produced 7.55 million tonnes of ethylene in 2005.
Sonatrach lets EPC contract for Arzew LPG trains
Algeria’s Sonatrach signed an engineering, procurement, and construction contract Apr. 22 with Japan’s Ishikawajima-Harima Heavy Industries Co. and Itochu Corp. for the construction of three separation trains at the GP1/Z liquefied petroleum gas plant within the Arzew industrial complex in western Algeria.
The project, due for completion by September 2010, includes the three LPG trains having a separation capacity of 1 million tonnes each and two temperature-controlled product stocking jigs, each with a capacity of 70,000 cu m.
The plants will have a total capacity of 3 million tonnes/year of commercial propane and butane and will be integrated into the Arzew complex at Oran. They will be supplied by Sonatrah’s LPG terminal in Béthioua.
Suncor starts maintenance at Sarnia refinery
Suncor Energy Products Inc., Calgary, said it will begin planned maintenance Apr. 25 at its 70,000 b/cd refinery in Sarnia, Ont.
The work, which will start on the refinery’s alkylation and catalytic cracker units, is expected to be complete in June.
The refinery’s hydrocracker unit also is scheduled to be shut down for about 8 weeks, beginning in August, to complete modifications designed to enable the refinery to process sour crude from the company’s oil sands operation.
Throughout the shutdown periods, certain sections of the refinery will continue production. Suncor said it has made supply preparations and expects to meet all customer supply agreements.
Transportation - Quick TakesShell plans LNG terminal at Fos-sur-Mer
Shell Energy Europe plans to build an LNG regasification terminal at Fos-sur-Mer on southeastern France’s Mediterranean coast. Shell signed an agreement with Port of Marseille authorities for the project, which will have an initial capacity of about 8 billion cu m/year in the first stage. Costs have not yet been disclosed.
The terminal will not be operational before 2015, considering the many authorizations needed, said Shell France spokeswoman Mathilde Nithard.
The regasification terminal would have the same capacity as the Fos Cavaou terminal that Gaz de France and Total ASA expect to have on stream at yearend near the site of Shell’s planned terminal. Both plants are larger than Gaz de France’s existing terminal at Fos-sur-Mer.
Surprisingly, the project was announced barely a month after a CGT strike that blocked the Fos-sur-Mer hydrocarbon terminal for more than 2 weeks in March, costing refineries in the area about €25 million (OGJ, Apr. 9, 2007, Newsletter).
At the time, the strike seemed likely to discourage further area investments, but Shell’s project timetable allows time for things to change, Nithard pointed out.
Shell’s regasification terminal is the last in a list of such projects recently announced for France’s coasts. ExxonMobil a year ago had a similar project in view at Fos but has since abandoned it.
China-Myanmar oil line funded; gas line planned
China’s National Development and Reform Commission has approved funds for an oil pipeline between China and Myanmar. Construction is expected to start this year.
Official reports said the line will link Myanmar’s deepwater port of Sittwe with Kunming, the capital of China’s southwestern Yunnan Province. Myanmar also will receive a Chinese government loan of some $83 million to develop its oil resources.
Further reports said China also will invest 8 billion yuan ($1 billion) to build a 2,380-km natural gas pipeline linking Myanmar with Kunming.
Jamaica to put out bids for floating LNG terminal
State-owned Petroleum Corp. of Jamaica has put out bids for a floating LNG terminal and is also seeking “bridging volumes of LNG” to facilitate its planned 2009 first receipt of LNG.
Jamaica has been trying to get LNG from Trinidad and Tobago and even signed a memorandum of understanding with the Caribbean island, but earlier this year the twin-island nation told Jamaica it would not be able to meet the 2009 start-up date because it does not have additional LNG available.
In the prequalification documents Jamaica said it appears that neither Trinidad and Tobago nor Venezuela can provide LNG by the start-up date.
The document reads, “It appears that LNG from either of these two sources (Trinidad and Venezuela) will not be available in time to meet the 2009 target for the first gas in Jamaica. Therefore the government of Jamaica is now seeking bridging volumes of LNG to facilitate the 2009 start up.”
Jamaica will open bids on June 15 for the floating LNG terminal, which will now replace the $350 million regasification facility that was originally planned for Port Esquivel, Old Harbour.