GENERAL INTEREST — Quick Takes
Court rejects petition for E15 suit rehearing
A federal appeals court for the District of Columbia rejected a petition to rehear a legal challenge to the US Environmental Protection Agency's allowing introduction of gasoline with a higher ethanol blend into the marketplace.
The Jan. 15 ruling followed the US District Court's earlier ruling that the American Petroleum Institute, American Fuel & Petrochemical Manufacturers, and Independent Liquid Terminals Association lacked legal standing in the Grocery Manufacturers Association's suit against EPA's waiver allowing sales of gasoline with a 15% ethanol blend.
AFPM General Counsel Rich Moskowitz expressed disappointment in the decision. "We remain concerned that EPA's partial waiver will result in significant misfueling and will harm consumers," he said. "EPA has authorized the sale of an ethanol blend that virtually every automobile manufacturer has warned will damage existing vehicles."
BLM releases Grand Junction area draft RMP
The US Bureau of Land Management released a draft resource management plan (RMP) for its Grand Junction, Colo., field office, and will accept comments on it until Apr. 25. The final RMP will guide management decisions involving more than 1 million surface acres and 1.2 million of subsurface mineral estate for the next several decades, it said on Jan. 14.
"We've worked hard with our partners to craft a wide range of alternatives for public review and comment," said Katie Stevens, the field office's acting manager. "We only revise these plans about every 2 decades, so this is a really important opportunity to make your voice heard about how public lands are managed in the Grand Junction Field Office."
Public hearings about the draft RMP have been scheduled for Jan. 29 in Colbran, Jan. 30 in DeBeque, Jan. 31 in Grand Junction, Feb. 5 in Gateway, and Feb. 7 in Fruita.
It analyzes four potential management plans. While one is labeled "preferred," none represents a final decision, BLM emphasized. The US Department of the Interior agency will use the public comments to help develop a proposed RMP/final environmental impact statement, which is scheduled for release next winter. In development of the proposed RMP, BLM may select various management actions from each of the alternatives analyzed in this draft, BLM said.
Salazar to step down from Interior secretary position
US Sec. of the Interior Ken Salazar announced Jan. 16 that he plans to leave his position by Mar. 31 to return to his home state of Colorado, having fulfilled his 4-year promise to President Barack Obama.
Salazar supervised an overhaul of DOI's management of the Minerals Management Service into three agencies. Salazar also played a key role in the government's response to the deepwater Macondo oil well blowout and resulting spill in the Gulf of Mexico off Louisiana.
"We have undertaken the most aggressive oil and gas safety and reform agenda in US history, raising the bar on offshore drilling safety, practices, and technology and ensuring that energy development is done in the right way and in the right places," said Salazar. "Today, drilling activity in the gulf is surpassing levels seen before the spill, and our nation is on a promising path to energy independence."
EPA revises standards for stationary engines
The US Environmental Protection Agency, in compliance with settlement agreements, has revised standards to reduce air pollution from stationary engines.
The final amendments to the 2010 National Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines reflect new technical information submitted by stakeholders after the 2010 standards were issued.
EPA said the revised standards will reduce capital costs of the 2010 standards by $287 million and annual costs by $139 million.
Pollution emitted from the engines can cause cancer and other serious health effects, EPA said.
PetroFrontier reviews financial options
PetroFrontier Corp., founded in 2009 as one of the first companies to explore for oil and natural gas in the southern Georgina basin of Northern Territory, Australia, is considering, recapitalization, a merger or other combination with another company, or outright sale.
The company, based in Calgary, has retained GMP Securities LP as its exclusive financial advisor and has opened an electronic data room.
PetroFrontier has a working interest of about 85.5% in 14.1 million gross acres in Australia (OGJ Online, Dec. 6, 2012).
Exploration & Development — Quick Takes
Wintershall group has oil find off Norway
Wintershall Norge AS will attempt to determine the commerciality of an oil discovery on the PL 457 license in the North Sea offshore Norway.
The company's preliminary resource estimate is 20-40 million bbl of recoverable oil for the Asha Noor appraisal wells 16/1-16 and the 16/1-16A delineation well. The wells are 3 km east of the 16/1-9 discovery well in the Ivar Aasen discovery and about 3 km north of Edvard Grieg field.
Wintershall said the Asha Noor discovery, in 113 m of water 200 km west of Stavanger, "provides further confirmation that the Utsira high region offers considerable potential."
Asha Noor is the company's first drilling on PL 457, awarded in 2007. Wintershall Norge is operator with 40% interest. Holding 20% each are E.ON E&P Norge AS, Bridge Energy Norge AS, and VNG Norge AS.
The 16/1-16 and 16/1-16A wells were drilled to vertical depths of 2,722 m and 2,683 m below mean sea level, respectively, and were terminated in the Permian Rotliegendes and the Triassic Skagerrak formations. The wells were permanently plugged and abandoned.
Southeastern Turkey trends under exploration
Calik Enerji has spudded Giremir-1, initial exploratory well on the Sinan license in southeastern Turkey, said Anatolia Energy Corp., Calgary.
Anatolia Energy can earn as much as a 50% interest in the license. The well is permitted to 1,250 m at a cost of $1.4 million. The Paleocene Upper Sinan formation, the deepest horizon to be penetrated, produces in five fields in southeastern Turkey, including large Selmo field 47 km northeast, but its potential on the Sinan license is unknown.
The well satisfies the work commitment of the Sinan license during its initial 4-year exploration period and satisfies the district drilling obligation that includes the Bismil licenses. The Sinan and Bismil licenses cover 17,833 and 245,699 gross acres, respectively, in the Silurian Dadas shale oil trend and also have Cretaceous and Ordovician conventional oil potential.
Anatolia Energy said activity focused on the Dadas shale is gaining momentum as numerous drilling and testing operations progress, including the drilling of Saribugday-1, the first well of the Shell-TPAO joint venture 20 km from the Sinan license boundary. Shell is expected to drill five wells to the Dadas shale.
Meanwhile, Anatolia Energy is working on optimal design of a fracture stimulation test of the Dadas shale on the Bismil license. The tests are due to be carried out in 2013 with the aim of flowing hydrocarbons from the shale. A large volume of physical and geochemical data extracted from the shale cores has led management to anticipate a positive fracture response from the shale.
Anatolia Energy said it is focused on four play types in Turkey: the Dadas shale oil trend, Paleozoic Bedinan sand trend, Cretaceous Mardin strike-slip trend, and Garzan reef trend.
Tennessee Fort Payne horizontal oil well completed
Miller Energy Resources Inc., Knoxville, reported completion of a horizontal well in Mississippian Fort Payne limestone in Tennessee.
Initial test rate at the CPP-H-1 well in Scott County was 365 b/d of oil and 730 Mcfd of gas on a ¾-in. choke with no water. Miller Energy said the lateral exposed 2,300 ft of pay section (OGJ Online, Dec. 21, 2012).
Production is to start as soon as the company receives Environmental Protection Agency approval to reject the gas into the solution gas drive reservoir. Miller Energy expects the well to produce 200-225 b/d of oil equivalent once reinjection has started.
Miller Energy has spudded a second Fort Payne horizontal well and designated two more for drilling soon. The company has identified 25 sites on 40,000 acres on which it may drill horizontal wells.
The company estimated that it has previously recovered 9% of the original oil in place on its acreage and expects future horizontal wells to greatly increase the recovery factor.
Drilling & Production — Quick Takes
EPA says Alaska drilling units violated air permits
The US Environmental Protection Agency has said Royal Dutch Shell PLC's Kulluk conical drilling unit and the Noble Discoverer drillship, under contract to the Anglo-Dutch multinational firm, violated numerous conditions of air-quality permits while drilling off Alaska during 2012.
EPA's complaint, outlined in two separate letters dated Jan. 10, said Shell failed to properly monitor air emissions as required by permits issued under the Clean Air Act. In addition, EPA said drilling units exceeded nitrogen-oxide emissions limits and other emissions limits.
Each violation could carry a fine of up to $37,500/day.
The Kulluk ran aground on the uninhabited Sitkalidak Island south of Alaska on Dec. 31, 2012, while being towed to Seattle for maintenance. On Jan. 7, Shell towed the Kulluk to Kodiak Island's Kiliuda Bay where damages are being assessed (OGJ Online, Jan. 7, 2013).
Shell used the Kulluk for drilling in the Beaufort Sea and used the Discoverer for drilling in the Chukchi Sea.
"We have made every effort to meet the permit conditions established by the EPA for offshore Alaska, and we continue to work with the agency to establish conditions that can be realistically achieved," Shell said in an e-mail to OGJ.
"We are working with the EPA on the path forward for 2013, as we have already proposed necessary permit revisions as a result of ongoing conversations with the agency. We remain committed to minimizing the environmental footprint of our Arctic offshore operations," Shell said.
TNK-BP sees Verknechonskoye plateau in 2014
TNK-BP will focus development work at supergiant Verkhnechonskoye oil and condensate field in the northern Irkutsk region of Russia on expanding capacity of the oil treatment unit to 7.5 million tonnes/year and building a third train of the power park and other infrastructure.
TNK-BP said completion of the work will allow production to reach its plateau rate of 7.8 million tonnes/year in 2014.
The field is a major supplier of crude oil to the East-Siberia-Pacific Ocean pipeline system. TNK-BP said early estimates indicate production increased 40% last year to more than 7 billion tonnes.
Zapolyarnoye output reaches capacity rate
Supergiant Zapolyarnoye natural gas and condensate field has reached its design capacity output of 130 billion cu m/year to become Russia's most prolific gas field, reports Gazprom, parent of operator Gazprom Dobycha Yamburg.
On stream since 2001 in the Taz District of the Yamal-Nenets Autonomous Area, the field reached capacity with the commissioning of a second comprehensive gas treatment unit for production from Valanginian deposits and of the third compressor workshop at the Zapolyarnaya main compressor station of the 190-km-long Zapolyarnoye-Urengoy gas trunkline.
The field now has two comprehensive gas treatment units for Valanginian production and three for Cenomanian gas. Gazprom estimates reserves at more than 3.5 trillion cu m of gas and 80 million tonnes of condensate and oil.
Production from initially developed Cenomanian strata reached full capacity of 100 billion cu m/year in 2004. Production from deeper Valanginian deposits began in 2011.
PROCESSING — Quick Takes
API: Good policies crucial to US refining success
A strong US energy future heavily depends on being able to refine reliable motor fuels, suggested Cindy Schild, refining senior manager at the American Petroleum Institute. Sound decisions on the proposed Keystone XL crude oil pipeline, the Renewable Fuels Standard, and refinery regulations could make a major positive difference, she maintained.
"Our nation's energy future has never looked better, in large part because of our rapidly advancing ability to tap into vast new oil and natural gas resources right here in the United States," Schild told reporters during a Jan. 15 teleconference. "But a strong energy future for our nation depends also on our ability to refine and distribute the fuels from these resources."
Her comments coincide with API's launch of a new television commercial highlighting the refining industry's importance in the US.
Refiners have contributed significantly to US air quality improvement over several decades, Schild observed. "Since 1990, they have invested more than $137 billion meeting environmental requirements," she said. "Over that time, pollution levels for the six common air pollutants, including ozone, have substantially declined, as have total emissions of toxic pollutants."
US refiners compete globally, and need commonsense operating and regulatory policies to do so effectively, she continued. "With such policies, we can continue creating cleaner fuels and products in technologically advanced facilities here in the US where it means jobs for Americans, and security and revenue to our government," Schild said.
Dow restarts Taft 2 ethylene plant on schedule
Dow Chemical Co. said it restarted its Taft 2 ethylene plant near Hahnville, La., late last year, meeting its anticipated schedule as the company works to boost feedstocks from increasing US shale gas supplies.
Taft 2, also called the St. Charles olefins plant, was idled in January 2009. It began producing on-spec ethylene on Dec. 25, 2012.
OGJ's ethylene survey shows the plant has a capacity of 410,000 tonnes/year. Dow said it does not release plant-specific figures.
Dow is working increase ethylene supply and ethane cracking capabilities at its existing plants along the coast of the Gulf of Mexico.
SIBUR adds MTBE capacity in Russia
The Russian petrochemical conglomerate SIBUR says it has increased its design capacity to produce methyl tertiary butyl ether in the Tchaikovsky area of Perm Territory to 220,000 tonnes/year from 200,000 tonnes/year.
Two of its companies produce MTBE in the area: Uralorgsintez, which operates an NGL fractionation plant with capacity of 750,000 tonnes/year, and Sibur-Khimprom, which produces 500,000 tonnes/year of petrochemicals from liquid hydrocarbons.
TRANSPORTATION — Quick Takes
Study finds more delays in gas pipeline permits
Project permits from federal agencies other than the US Federal Energy Regulatory Commission are taking interstate pipelines longer to obtain since passage of the 2005 Energy Policy Act, a new study by the INGAA Foundation found.
The finding contradicts one of EPACT's main purposes, which was to streamline and expedite permits for such projects, according to the foundation, which was founded in 1990 by the Interstate Natural Gas Association of America.
The study, Expedited Federal Authorization of Interstate Natural Gas Pipelines: Are Agencies Complying with EPACT?, found that for interstate gas pipeline projects, the percentage of federal authorizations that were issued more than 90 days beyond FERC's issuing an environmental impact statement or an environmental assessment rose from 7.69% before EPACT became law to 28.05% after its implementation.
Federal authorizations granted 180 days or longer after FERC issued an EIS or EA rose from 3.42% before EPACT became law to 19.51% after, the study said. It also found that the only EPACT provision that provides an applicant with recourse in the face of agency delay—a petition to the US Court of Appeals for the DC Circuit—has rarely been used, allowing agencies to miss the required federal authorization deadline without consequence.
"There are many undesirable consequences of permitting delays, ranging from increased project costs to missed in-service dates, along with a variety of associated adverse business, environmental and other implications," noted INGAA Foundation Pres. Donald F. Santa.
"The study suggests amending the Natural Gas Act to provide FERC effective tools for enforcing deadlines at other agencies regarding natural gas pipeline project applications," he said. "That's something we hope legislators will consider."
INGAA Foundation Executive Director Richard Hoffman said at a Jan. 16 American energy exports conference that FERC's project permitting process is not only transparent, but also consistent.
"The US oil and gas pipeline network already is extensive, but more is needed," he told the conference cosponsored by Women in International Trade and the US Chamber of Commerce's Institute for 21st Century Energy. "About 2,000 miles/year of new interstate pipelines are needed, which is why a good overall federal permitting structure is essential. FERC's is the gold standard."
KMEP to expand Houston Ship Channel storage
Kinder Morgan Energy Partners LP is expanding its Houston Ship Channel liquids storage and docking services. The expansion will include the purchase of 42 acres, building a ship dock to handle ocean-going vessels, and building 1.2 million bbl of liquids storage tanks.
KMEP entered into a letter of intent with a major ship-channel refiner to develop six 150,000-bbl tanks and four 75,000-bbl tanks with connectivity to its Galena Park terminal and the refiner. The property will provide dock services for as many as 8 vessels/month for the refinery and 4 vessels/month for KMEP's terminal.
The company said the $170 million expansion will alleviate existing dock congestion among KMEP's HSC terminals and provide additional export capacity. It will also be possible to add a second phase of storage tanks to the project in the future.
KMEP and BP North America last year executed agreements to provide BP condensate processing and storage at KMEP's HSC terminals, including 750,000 bbl at Galena Park (OGJ Online, July 19, 2012). KMEP expects to have both the condensate splitter and storage covered by that agreement operating first-quarter 2014.
Cormorant platform incident shuts down pipeline system
Abu Dhabi National Energy Co. (TAQA) shut down Cormorant Alpha platform in the northern UK North Sea and the Brent System pipeline infrastructure extending through the platform as a precaution following a hydrocarbon release into one platform leg.
There was no hydrocarbon release into the environment, TAQA said. It evacuated 92 noncore personnel following detection of a hydrocarbon release Jan. 15.
Cormorant Alpha platform handles about 90,000 b/d of crude oil feeding the Brent system pipeline, including 10,000 b/d from Cormorant field.
TAQA Bratani Ltd. operates Cormorant Alpha, which is 232 miles from Peterhead, Scotland. The Brent system transports crude oil from more than 20 North Sea fields to an export terminal at Sullom Voe in the Shetlands Islands.
BP PLC operates the Sullom Voe terminal. TAQA Bratani operates the Brent system pipeline.
"Investigations into the exact source of the hydrocarbons are still under way," TAQA said Jan. 16. "Measurements within the leg show that the volume released is small."
TAQA evaluated plans to restore throughput of 80,000 b/d in the Brent system pipeline, excluding any Cormorant Alpha production. Meanwhile, 67 workers remain on the platform along with three specialists brought aboard to resolve the incident. Cormorant Alpha is on Block 211/26a.
Shell UK Exploration & Production operated the Brent System pipeline until 2009, marking a change in management for the first time in almost 30 years (OGJ Online, Aug. 4, 2009).
Chevron advances Cabinda-ALNG pipeline
Cabinda Gulf Oil Co. Ltd., a Chevron Corp. subsidiary, has completed pipe-end measurement of 19,402 20-in. and 22-in. OD joints for its Congo River Crossing Pipeline project. Optical Metrology Services Ltd. performed the measurements.
Pipe installation will occur in strong currents at the mouth of the Congo River as it enters the Atlantic Ocean, in 117 m of water. Saipem last year won an engineering, procurement, construction, and installation contract for the project. Saipem expects Castoro 7 to complete pipelay work on the project by this year's fourth quarter.
Chevron has drilled a well intersection conduit below the Congo River canyon which will hold the two pipelines as they cross the river mouth, preventing exposure to the currents.
The 81-mile Congo River Crossing Pipeline will transport 250 MMcfd of natural gas from Chevron-operated Block 0 and Block 14 offshore Angola to the Angola LNG Project (ALNG). The pipeline will start at Block 0's South Nemba platform.
Inpex Corp. of Japan last year acquired a 9.99% indirect interest in Block 14 from Total SA (OGJ Online, Aug. 21, 2012).
