GENERAL INTERESTQuick Takes
Russia eyes new imports of Turkmen natural gas
Russia hopes to resume pipeline imports of gas from Turkmenistan after slashing them in 2015 in a dispute over pricing.
According to Radio Free Europe, Gazprom CEO Aleksei Miller told an interviewer from a state-controlled television station in Ashgabat that he expects purchases to restart early next year. Miller said details of a new purchase deal remain to be negotiated. He was part of a Russian delegation meeting in the Turkmen capital with President Gurbanguly Berdimuhamedov.
Russia imported 10 billion cu m (bcm)/year from Turkmenistan during 2010-14 but trimmed the amount to 4 bcm/year in 2015. It halted purchases of Turkmen gas in 2016, leaving China as the Caspian country’s main gas customer.
Trump nominates McNamee to fill vacancy at FERC
US President Donald Trump nominated Bernard L. McNamee, who presently is director of the US Department of Energy’s Policy Office, to the Federal Energy Regulatory Commission on Oct. 3. If confirmed by the US Senate, McNamee will serve the remainder of a 5-year term ending June 30, 2020. He will succeed Robert F. Powelson, who resigned in mid-August.
McNamee previously was DOE’s Deputy General Counsel for Energy Policy, and practiced energy law as a senior counselor at McGuire Woods LLP in Richmond. He also has served attorneys general in Virginia and Texas in varying capacities, and was a policy advisor and legal counsel to Virginia Gov. George Allen (R) from 1995 to 1998.
IPC agrees to acquire BlackPearl Resources
International Petroleum Corp., Vancouver, BC, has agreed to acquire BlackPearl Resources Inc., Calgary, in an all-stock deal that would create a company with an enterprise value of $1.36 billion (US), proved plus probable reserves of 291 million boe, and production of 44,500 boe/d.
BlackPearl produced 10,600 b/d of oil in last year’s fourth quarter, mostly heavy oil in Alberta and Saskatchewan.
The production comes mainly from the firm’s Onion Lake property in the Lloydminister area of Saskatchewan, where output is growing this year from thermal operations. Onion Lake also produces via cold heavy oil production with sand.
BlackPearl also has conventional production in the Mooney area of Alberta and a planned steam-assisted gravity drainage project at Blackrod in the Athabasca oil sands region of Alberta.
BlackPearl estimates its proved plus probable reserves as of yearend 2017 at 159 million boe.
In a joint press release, the companies said recent stock prices imply an acquisition price of $1.85 (Can.)/share of BlackPearl stock. Based on BlackPearl’s number of fully diluted shares, that makes the deal worth about $675 million (Can.).
RockRose acquires Dyas’s Dutch interests
RockRose Energy PLC, London, has acquired Dyas BV and Dyas Infrastructure BV, which hold the Dutch interests of Dyas, a unit of SHV Holdings NV, Utrecht. Terms weren’t disclosed.
Dyas, which invests in nonoperating exploration and production interests, said it will focus its North Sea investments on Norway, Denmark, and the UK. Dyas BV recently had interests in more than 35 licenses off the Netherlands.
RockRose said the working adjustment attributable to the acquisition of Dyas BV was €77.3 million. It said the purchase boosts its production to 11,000 boe/d, equally split between oil and natural gas. Before the acquisition, it reported average production of 5,176 boe/d, about 444 boe/d of which was gas.
US clears Serica’s plans for fields off UK
Serica Energy PLC and BP PLC have received a conditional license and assurance from the US Office of Foreign Assets Control allowing work to continue at Rhum gas field in the UK North Sea although National Iranian Oil Co. holds a 50% interest through a subsidiary (OGJ Online, May 23, 2018).
The development allows Serica to proceed with acquisitions that will make it operator of Rhum, Bruce, and Keith gas and condensate fields.
Because of the interest held by Iranian Oil Co. (UK) Ltd., Rhum operations fell under question when the US withdrew from the Joint Cooperative Plan of Action on Iranian nuclear development last May and reimposed sanctions.
The sale to Serica of BP’s interests in Rhum, Bruce, and Keith gas and condensate fields, announced in November 2017, was conditional on receipt of the license and assurance.
The license allows US and US-owned or controlled entities to provide goods, services, and support to Rhum. The assurance is that entities providing goods, services, and support will not be exposed to US secondary sanctions.
Benefits related to Iranian Oil’s interest must be held in escrow while sanctions remain in effect against Iran.
Receipt of the license and assurance allows Serica also to proceed with its agreed acquisition of Total’s nonoperated interests in Bruce and Keith fields. BP and Total will retain a 1% interest each in Bruce field.
Serica’s interests after the transactions will be Rhum, 50%; Bruce, 78.25%; and Keith, 59.83%. It will operate all three.
Exploration & DevelopmentQuick Takes
Kosmos to plug Pontoenoe test off Suriname
Kosmos Energy will plug its Pontoenoe-1 exploration well in 2,497 m of water offshore Suriname after determining the main, Late Cretaceous target reservoir was water-bearing (OGJ Online, May 21, 2018).
The Block 42 well went to 6,194 m about 280 km northwest of Paramaribo. It tested a stratigraphic trap thought to be sourced from oil-mature Albian and Cenomanian-Turonian source kitchens. Kosmos said reservoir quality is high and noted evidence of a working source kitchen. But the prospect lacked a trap. It said it plans to test the next prospect on the 6,000-sq-km block in 2020.
Kosmos is exploration operator with 33.3% interest in the production-sharing contract from state-owned Staatsolie. Hess Corp. and Chevron Corp. hold 33.3% interests each.
DNO to spud Baeshiqa test in Kurdistan
DNO ASA, Oslo, is preparing to spud the first well on its Baeshiqa license east of Mosul in Iraqi Kurdistan after having raised production at Peshkabir oil field to the northwest to 50,000 b/d (OGJ Online, Aug. 16, 2018).
The first Baeshiqa well will target Cretaceous strata. A second well will target Jurassic and Triassic layers on the same structure. A third well, to be drilled next year, will test Jurassic and Triassic rocks on a separate structure.
DNO holds a 32% interest in the Baeshiqa production-sharing contract. Other interests are ExxonMobil, 32%; Turkish Energy Co., 16%; and Kurdistan Regional Government, 20%.
At Peshkabir field, the recently completed Peshkabir-7 well is producing more than 10,000 b/d from nine Cretaceous zones.
The Peshakabir-6 well established a Cretaceous oil-water contact deeper than expected and is being tested in multiple zones. A workover boosted production of the Peshkabir-3 well to 11,000 b/d from 8,000 b/d.
DNO spudded the Peshkabir-8 well in August and plans to spud the Peshkabir-9 well in November.
Test facilities process Peshkabir production. A central processing plant with capacity of 50,000 b/d will be commissioned by yearend. DNO is laying a 10-in., 60,000-b/d pipeline between Peshkabir and Fish Khabur on the border with Turkey. Production from the field now moves by truck and a 6-in. pipeline.
At nearby Tawke oil field, DNO was preparing to start production from the Tawke-50, drilled to 320 m in Lower Miocene Jeribe. DNO expected to complete the Tawke-49 Cretaceous well this month. The company recently restarted development drilling to reverse natural decline at Tawke, now producing slightly more than 80,000 b/d of oil.
By yearend, it planned to drill two more Tawke wells, one each in the Jeribe and Cretaceous. Two Tawke wells recently were being worked over. DNO holds a 75% interest in the Tawke production-sharing contract. Its partner is Genel Energy International Ltd., London.
Lundin to acquire Equinor’s Luno II stake
Lundin Norway AS said it plans to apply for development of its Luno II oil discovery in the Norwegian North Sea next year after closing a newly agreed acquisition of Equinor Energy’s 15% interest in the license (OGJ Online, Aug. 12, 2015).
The deal will increase Lundin Norway’s operated interest in PL359 to 65%. The company will pay cash and transfer its 20% interest in PL825 to Equinor. PL825 contains a prospect named Rungne.
Lundin Norway plans to develop Luno II field with a subsea tie-back to the platform on Edvard Grieg oil field 15 km north, which it operates.
Acquisition of the Equinor stake will align Edvard Grieg and Luno II interests. Lundin Norway estimates the Luno II hydrocarbon resource at 40-100 million boe.
Other PL359 partners are OMV, 20%, and Wintershall, 15%.
Eni to farm in to BP’s Libyan blocks
Exploration is to resume next year on three Libyan blocks now operated by BP PLC after a planned farmin by Eni SPA.
The companies and National Oil Corp. signed a letter of intent to work toward Eni’s acquisition by yearend of a 42.5% participating interest in BP’s exploration and production-sharing agreement. The agreement covers a total of 54,000 sq km in two contract areas in the onshore Ghadames basin and an area in the offshore Sirt basin.
BP currently holds 85% in the agreement, which was awarded in 2007. The Libyan Investment Authority holds 15%.
Eni is to become operator. Work under the agreement was suspended in 2014.
Drilling & ProductionQuick Takes
Drilling contractors Ensco, Rowan to merge
Ensco and Rowan Cos. have agreed definitively to merge in an all-stock deal forming an offshore drilling contractor with 82 rigs with current operations and contracts off six continents.
The combined fleet includes 28 floating units, including two drillships under construction, and 54 jack ups, including one under construction. The totals exclude rigs in ARO Drilling, a 50-50 joint venture formed in October 2017 by Rowan and Saudi Aramco.
Among floaters covered by the merger, 25 rigs can drill in more than 7,500 ft of water.
Enterprise value of the combined company, based on share-price closings on Oct. 5, is $12 billion.
Ensco shareholders will own 60.5% of the combined company, and Rowan shareholders will own the remainder. Wood Mackenzie estimated the deal’s value at $2.38 billion.
Rowan Pres. and Chief Executive Officer Tom Burke will hold those positions in the new company. Carl Trowell, Ensco chief executive officer and president, will be executive chairman.
Mero field moves toward full production
Petrobras has let a contract to Aker Solutions covering the subsea production system and related services for the first full production phase of giant, deepwater Mero oil field offshore Brazil.
The state-owned company said the group it leads concluded on Oct. 2 an extended well test, which began last November, of the presalt Santos basin field with the Pioneiro de Libra floating production, storage, and offloading vessel. The unit will be used for early production systems at other Mero wells.
During the test, the FPSO reinjected produced gas, which has a high concentration of carbon dioxide. The test also involved what Petrobras called the first prelaunch of flexible lines with floats in ultradeep water. The field has water depths of 1,700-2,400 m and wells as deep as 6,000 m.
For the first full development phase, Aker Solutions will supply 12 vertical subsea trees, four subsea distribution units, three topside master control stations for the Mero 1 Guanabara FPSO, and spare parts. It also will provide installation and commissioning-support services.
The Guanabara is to come on stream in 2021 with capacity to process 180,000 b/d of oil and 12 million cu m/day of natural gas. It’s the first of four production systems of equivalent capacity planned for the field.
Mero interests are Petrobras, 40%; Shell and Total, 20% each; and China National Petroleum Corp. and CNOOC Ltd., 10% each. State-owned Pre-Sal Petroleo is contract manager.
Venture aims at ADNOC Drilling expansion
Abu Dhabi National Oil Co. said a strategic partnership agreement it has signed with Baker Hughes, a GE company, aims at expanding ADNOC Drilling into a “fully integrated drilling and well-construction provider.”
Baker Hughes agreed to acquire 5% of ADNOC Drilling. It will be the partnership’s sole provider of proprietary equipment and technologies. ADNOC said the agreement represents the first time a strategic partner has acquired a direct equity stake in one of its existing services businesses.
ONGC lets $1.7-billion Cluster-2 contract
State-owned Oil & Natural Gas Corp. has let a contract for combined subsea work on its KG-DWN-98/2 (“Cluster-2”) deepwater development off eastern India to a consortium of Baker Hughes, McDermott International Inc., and L&T Hydrocarbon Engineering, a subsidiary of Larsen & Toubro.
With an awarded cost of about $1.7 billion, the package includes the supply of all subsea production systems (SPS), including 34 deepwater trees, and the installation of subsea umbilicals, risers, and flowlines (SURF) in 984-10,500 ft of water in the Krishna-Godavari basin.
Baker Hughes will provide the subsea hardware and precommissioning services. McDermott will provide pipeline and construction vessels and engineering, procurement, construction, and installation services. L&T Hydrocarbon Engineering will coordinate local work and services.
ONGC said integrating the subsea work “will help to eliminate major interface issues among SPS and SURF packages, resulting in time and cost optimization to the company.”
Peak production rates are estimated at 16 million standard cu m/day of natural gas and 80,000 b/d of oil.
ONGC began drilling in April. It expects gas production to start by December 2019 and oil production to begin by March 2021 (OGJ Online, Apr. 9, 2018).
PROCESSINGQuick Takes
Total, Sonatrach expand Algerian gas, petchem
State-owned Sonatrach SPA and Total SA have signed two agreements to further Algerian gas and petrochemicals development as part of the companies’ comprehensive partnership announced in 2017 (OGJ Online, June 11, 2018).
As part of the extended agreements, Sonatrach and Total, along with Algeria’s National Agency for the Valorization of Hydrocarbon Resources (Alnaft), signed a new concession contract to jointly develop Erg Issouane gas field in the Tin Fouye Tabankort (TFT) Sud permit, Total said.
Sonatrach 51% and Total 49% will develop the reserves of Erg Issouane located on the TFT Sud permit—which is south of TFT field and of which Total is a long-standing partner—estimated at more than 100 million boe.
The development, which represents an investment of about $400 million, will be tied back to the existing TFT gas treatment unit by a 22 km gas pipeline.
The partners, which also have signed a gas market agreement, said that while the concession contract will become effective upon approval by the Algerian authorities, first gas from the project is due in late 2021.
Alongside the Erg Issouane agreement, Sonatrach 51% and Total 49% also have entered a shareholder agreement to create the Sonatrach Total Entreprise Polymeres joint venture.
STEP will be responsible for executing a joint petrochemical project that will include a propane dehydrogenation (PDH) unit and a polypropylene production unit with an output capacity of 550,000 tonnes/year in Arzew, western Algeria.
Sonatrach and Total said the project will enable valorization of large quantities of propane produced locally by transforming it into polypropylene, a plastic for which demand is strongly growing.
Aramco, Total advance plan for Jubail petchem complex
Saudi Aramco and Total SA have signed an agreement to launch front-end engineering design for their previously announced proposal to add an integrated petrochemical complex downstream of their jointly held Saudi Aramco Total Refinery & Petrochemicals Co.’s (Satorp) 440,000-b/d full conversion refinery in Jubail, on Saudi Arabia’s eastern coast.
Aramco Pres. and CEO Amin H. Nasser and Total Chairman and CEO Patrick Pouyanne signed the joint-development agreement to proceed with FEED on the project in Dhahran on Oct. 8, Total said.
To be located next to and receive feedstock from the Satorp refinery in the same industrial area, the new complex will include a mixed-feed steam cracker—50% ethane and refinery off gas—with a capacity to produce 1.5 million tonnes/year of ethylene and related petrochemical units designed to yield an overall production of more than 2.7 million tpy of high-quality chemical products.
Alongside an Aramco-Total investment of about $5 billion, the project’s cracker will feed other petrochemical and specialty chemical plants that represent an additional $4 billion investment by third party investors for an overall project value of about $9 billion, the companies said upon announcing the project in April. The complex is scheduled for startup in 2024.
Map Ta Phut Olefins lets contract for cracker
Map Ta Phut Olefins Co. Ltd. (MOC), a joint-venture of Siam Cement Public Co. Ltd. subsidiary SGC Chemicals Co. Ltd. and Dow Chemical Co., has let a contract to McDermott International Inc. to provide process technology for the upgrade and expansion of an existing olefins cracker at MOC’s petrochemical plant in Rayong Province, Thailand.
As part of the contract, McDermott will deliver basic engineering and technology licensing of its Lummus olefins technology as well as design and supply of the proprietary Short Residence Time (SRT) III heater for MOC’s cracker debottlenecking project, which will involve adding a parallel gas cracker to increase plant capacity using the Lummus’ side-cracker technology, including a low-pressure chilling train and enhanced binary refrigeration, the service provider said.
The side-cracker technology will enable a cost-effect expansion of a liquid-feed plant that already has reached its maximum capacity using conventional technology, said Daniel M. McCarthy, executive vice-president of McDermott’s Lummus technology business.
While portions of the contract were booked in previous quarters, McDermott said it will reflect the heater-supply portion of the award in its third-quarter 2018 backlog.
McDermott valued the order’s overall value at $1-50 million.
In July and September presentations to investors, SGC said MOC’s $485-million cracker debottlenecking project—which would expand the olefins cracker by 350,000 tonnes/year (20%) to 2.05 million tpy—is scheduled to be completed in second-quarter 2021 and ready for startup by midyear.
TRANSPORTATIONQuick Takes
Williams to place Atlantic Sunrise line into service
Williams Cos. Inc. received US Federal Energy Regulatory Commission approval to place its Atlantic Sunrise natural gas project into full service.
Backed by long-term shipper commitments, Atlantic Sunrise increases design capacity of the Williams’s Transco pipeline by 1.7 bcfd (about 12%) to 15.8 bcfd. Williams described the project as further strengthening and extending the Transco system’s bidirectional flow, directly connecting Marcellus gas supplies with markets as far south as Alabama.
Greenfield construction on the Pennsylvania portion of the project began in September 2017 (OGJ Online, Sept. 18, 2017). The project featured installation of 186 miles of greenfield pipe, 12 miles of pipe looping, 2.5 miles of pipe replacement, two new compressor stations, and compressor station modifications in five states.
The greenfield segment of the Atlantic Sunrise project, known as the Central Penn Line, is jointly owned by Transco and Meade Pipeline Co. LLC. Meade is owned by WGL Midstream, Cabot Oil & Gas, and EIF Vega Midstream.
Salt Creek, NMP to build Delaware basin system
Salt Creek Midstream has entered into a letter of intent with Noble Midstream Partners to form a 50-50 partnership on a crude oil pipeline and gathering system in the southern Delaware basin. The project will be underpinned by dedicated contribution from about 180,000 acres by Noble Midstream, Salt Creek, and five other basin producers. Additional dedications totaling roughly 100,000 acres could also be added, including partial dedication of Noble’s 70,000-acre Reeves County, Tex.
The system will include nearly 100 miles of pipeline in Pecos, Reeves, Ward and Winkler Counties, Tex., in-field crude gathering lines, and a trunkline to Wink hub that will provide downstream connectivity for producers in the southern Delaware basin. Salt Creek has begun building the system to meet an expected operational date of second-quarter 2019. The project provides access to 200,000 bbl of new crude oil storage with expansion potential to 300,000 bbl.
TransCanada starts first WB Xpress phase
TransCanada Corp. has started service on the Western Build of its WB Xpress project to increase movement of Appalachian basin natural gas to the US Gulf Coast.
It plans to put the Eastern Build on stream later this year.
The Western Build can move 760 MMcfd of gas to a delivery point on the Tennessee Gas Pipeline Broad Run System. Construction included the Elk River Compressor Station at Clendinin, W.Va., and associated pipelines.
The $900-million WBX project upgrades TransCanada’s existing system with two new compressor stations, 30 miles of new pipeline, and modifications of seven existing pipelines, adding a total of 1.3 bcfd of capacity.
