OGJ Newsletter

Exploration & DevelopmentQuick Takes

Petronas buys stake in Khazzan field in Oman

Malaysia’s state-held Petronas has acquired a 10% stake in BP PLC-operated Khazzan field in the Oman Desert 350 km south of Muscat (OGJ Online, Sept. 25, 2017). Petronas unit PC Oman Ventures will acquire the share in Block 61.

BP currently holds 60% interest in the Khazzan project, which encompasses Khazzan and Makarem tight gas fields. Oman Oil Co. Exploration & Production (OOCEP) holds 40%.

“The announcement highlights Petronas’ strong appetite for international business development and gas resource capture, coming less than 6 months after it joined Shell’s LNG Canada project,” said Max Petrov, part of Wood Mackenzie Ltd.’s corporate analysis team.

“We believe the company is buying into the project for its strong gas reserves potential. The size of resource on Block 61 means that future phases could be developed, beyond the current expansion, provided the partners can secure a buyer for the additional gas.”

For Petronas, the field could contribute 2% of Petronas’ global output by 2023. For OOCEP, the deal “could be worth in excess of $1.3 billion,” an important consideration as spending on Khazzan’s second phase, Ghazeer, ramps up, said Liam Yates, WoodMac analyst for MENA upstream.

“Khazzan recently celebrated 1 year of gas delivery in Oman, with field output around 1 bcfd. When Ghazeer comes onstream in the early-2020s, output will increase to 1.5 bcfd,” he said. According to OOCEP, more than 300 wells will be drilled over Khazzan field’s estimated lifetime.

TransGlobe receives South Alamein access approval

TransGlobe Energy Corp., Calgary, has spudded its second South Ghazalat exploration well, SGZ 6X, in Egypt’s Western Desert, the company said in an operational update.

SGZ 6X is on the eastern portion of the concession offsetting Rami oil field in the Abu Gharadig basin. The well targets stacked Cretaceous oil targets similar to those of producing Rami and Southwest Rami fields.

In South Alamein, TransGlobe received notification from the military that access will be granted to drill the South Alamein 24X Jurassic exploration well. It submitted the required documentation. Final written approval is expected by Dec. 31.

Plans call for SA 24X to be drilled next year pending that approval. The South Alamein concession is onshore and includes parts of the Alamein and Tiba basins. The area is covered by 3D seismic (OGJ Online, Nov. 9, 2011).

Chariot to plug well offshore Namibia

Chariot Oil & Gas Ltd. will plug its Prospect S well on the Central Blocks license offshore Namibia after determining the target reservoir is water-bearing (OGJ Online, Sept. 28, 2018).

The Ocean Rig Poseidon drillship drilled the well to 4,165 m TMD in 1,650 m of water. The well penetrated the targeted Upper Cretaceous turbidite sands at predicted depths.

Drilling & ProductionQuick Takes

FERC’s EPO issues draft HDD plan guidance

The US Federal Energy Regulatory Commission’s Energy Projects Office (EPO) has issued a draft guidance called Guidance for Horizontal Directional Drill (HDD) Monitoring, Inadvertent Return Response, and Contingency Plans. The guidance is intended to help industry professionals improve the quality and consistency of their HDD plans and, as a result, make FERC’s environmental review more efficient and effective, EPO said.

EPO’s staff said it is seeking public input and suggestions for modifications from the natural gas industry, federal and state agencies, inspectors, construction contracts, environmental consultants, and other interested parties with special expertise in preparing HDD monitoring and contingency plans associated with gas projects.

Comments will be accepted through Dec. 28. EPO’s staff expects to issue the final version of the plan in February 2019.

Woodside’s GWF Phase 2 comes on stream

The Woodside Petroleum Ltd.-led North West Shelf Project joint venture has started gas production from its Greater Western Flank Phase 2 project off Western Australia.

Woodside’s Chief Executive Officer Peter Coleman said GWF-2 had been delivered $630 million (Aus.) below the initial estimate of $2 billion and 6 months ahead of schedule.

GWF-2 is about 135 km northwest of Dampier and includes eight subsea wells from six offshore fields: Keast, Dockrell, Sculptor, Rankin, Lady Nora, and Pemberton. The wells have been tied back to the existing Goodwyn A platform via a 35-km corrosion-resistant subsea pipeline.

Construction began following a final investment decision on the project in December 2015.

Coleman said the GWF-2 will extend the life of the Karratha gas plant on the Burrup Peninsula and contribute to Woodside achieving a targeted production of 100 million boe in 2020.

He added that the next phase of growth includes the proposed developments of the Scarborough and Browse offshore gas resources, which are part of the company’s vision to unlock the future value of the Karratha gas plant and Pluto LNG.

Woodside, BHP Billiton, BP Developments Australia, Chevron Australia, Japan Australia LNG (MIMI), and Shell Australia are all equal participants in the NWS Project JV.

Equinor approved for continued use of Snorre A, B

Equinor ASA has received consent from the Norwegian Petroleum Directorate to continue use of the Snorre A and Snorre B facilities in Snorre oil and gas field in the Tampen area of the Norwegian North Sea through 2040. Previous consent was use of Snorre A until May 1, 2022, and Snorre B until May 1, 2021.

In 2013, Equinor, then Statoil, recommended the construction of a drilling and processing platform for extracting the remaining reserves from Snorre field. With license partners, Equinor has worked to extend Snorre field life to 2040 (OGJ Online, Oct. 28, 2013).

In July, the Ministry of Petroleum and Energy approved the revised plan for development and operation of the Snorre expansion project (SEP), focused on cost-efficient enhanced recovery from the Snorre reservoir and expected to contribute to 25 more years of production.

SEP comprises installation of six well templates with 24 wells that will be tied back to the Snorre A platform. The plan includes an option for further expansion with additional well templates. SEP is expected to increase recovery from the field by 32 million standard cu m of oil (200 million bbl), raising the field’s recovery rate to 51% from 46%. At startup, the expected field life was up to 2011-14. Original oil reserves were 307 million standard cu m (1,929 million bbl). Remaining oil reserves are estimated at 94 million cu m (590 million bbl).

Snorre A is a floating drilling, production, and living quarters platform moored to the seabed with tension legs. Snorre UPA is a subsea production facility tied back to Snorre A. There is also a dedicated process module on Snorre A for full stabilization of the well stream from Vigdis. Production started in 1992.

In 1998, the authorities approved the PDO for the Snorre B facility, a semisubmersible integrated drilling, process, and living quarters platform. Snorre B started production in 2001.

PROCESSINGQuick Takes

EPP begins construction of Delaware basin gas plant

Enterprise Products Partners LP (EPP) has started construction of a seventh natural gas processing plant in the Delaware basin.

Situated in Loving County, Tex., the Mentone cryogenic gas processing plant will have the capacity to process 300 MMcfd of gas and extract more than 40,000 b/d of NGLs upon its startup in first-quarter 2020, EPP said.

“The project, which is supported by a long-term acreage dedication agreement, further extends EPP’s value chain in the growing Delaware basin and provides access to the operator’s fully integrated midstream network serving domestic and international markets,” said A.J. Teague, CEO of EPP’s general partner. “The new plant complements EPP’s Orla natural gas processing complex in Reeves County, Tex., where the second of three trains [Orla II, 300-MMcfd capacity] is now in service.”

The third train remains on scheduled to be completed during second-quarter 2019, Teague said.

Orla and Mentone combined will provide 1.3 billion MMcfd of gas processing capacity and 195,000 b/d of NGL production.

To support development of Mentone, EPP is building 66 miles of large-diameter gathering and residue pipelines and expanding compression capabilities, the operator said.

The projects will allow the Mentone gas processing plant to link to the partnership’s NGL system, including the Shin Oak pipeline scheduled for completion in second-quarter 2019, as well as EPP’s existing Texas Intrastate gas pipeline network.

EPC contract let for Thai refinery upgrade

Thai Oil PLC has let a $4-billion contract to a consortium of Saipem, Petrofac, and Samsung for the Clean Fuel Project at its 275,000-b/d refinery at Sriracha, Thailand.

The work will include engineering, procurement, construction and start-up for new units and upgrading of existing units.

The project includes retirement of two crude distillation units (CDU). The addition of a fourth, 220,000-b/d CDU to the third unit will raise the refinery’s total capacity to 400,000 b/d.

The project also will add a vacuum gas oil hydrocracker, a residue hydrocracker, a hydrogen manufacturing unit, a naphtha hudrotreater, a diesel hydrodesulfurization unit, a sulfur recovery unit, and a power plant fueled by residue pitch.

The refinery, now 100% dependent on light crude, will have a crude slate after completion of the project of 40-50% light crude, 5-15% medium crude, and 40-50% heavy crude.

The project will improve product yields to 25% light distillate, 62% middle distillate, and 13% others, such as sulfur, long residue, and reformate, with no fuel oil.

SOCAR opens Turkish refining complex

STAR Rafineri AS, a subsidiary of SOCAR Turkey Energy AS—the Turkish arm of State Oil Co. of Azerbaijan Republic—has officially opened its 10 million-tonne/year SOCAR Turkey Aegean Refinery (STAR) in Izmir, Aliaga, Turkey (OGJ Online, Jan. 28, 2014; Dec. 14, 2010).

On Oct. 19, STAR Rafineri held a grand opening ceremony to mark the start of full operations of the $6.3-billion project—which initiated preliminary commissioning activities earlier this year. Official full commissioning of the refinery follows delivery of the first 80,000-tonne cargo of Azerbaijani Azeri Light crude to the complex in August (OGJ Online, Aug. 8, 2018).

The refinery—which is integrated with Petkim Petrokimya Holding’s (Petkim) 3.6-million tpy nearby petrochemical complex—will produce 4.8 million tpy of low-sulfur diesel, 1.6 million tpy of naphtha, 1.6 million tpy of jet fuel, and 300,000 tpy of LPG to meet 25% of Turkey’s refined product needs.

Earlier in the year, Petkim—of which SOCAR Turkey owns 51%—carried out a $500-million bond to become and indirect shareholder of an 18% stake in the STAR refinery. The new refinery comes as part of SOCAR’s program to increase competitiveness by further integrating refining and petrochemical operations, as well as to help reduce Turkey’s dependence on imported products.

TRANSPORTATIONQuick Takes

Enable Midstream expands in Anadarko, Williston

Enable Midstream Partners LP, Oklahoma City, is expanding its crude oil midstream business in the Anadarko basin and its crude water gathering systems in the Willison basin.

In the Anadarko basin, Enable signed a definitive agreement to acquire Velocity Holdings LLC for $442 million, comprised of 150 miles of pipeline capable with 225,000 b/d of capacity, along with more than 400,000 bbl of owned and leased storage and 26 truck bays capable of unloading more than 100,000 b/d.

Included is Velocity’s 60% interest in a 26-mile pipeline system joint venture with a third party that owns and operates a refinery connected to the Velocity system.

Operations are backed by large area dedications and long-term, fee-based contracts with more than 2 million acres dedicated from shippers, including acreage dedications from top SCOOP and Merge producers. The Velocity system is the only integrated crude oil and condensate gathering and transportation system in the SCOOP and Merge plays. The acquisition was expected to close by Nov. 1, following the satisfaction of remaining preclosing conditions.

In the Williston basin, Enable entered into contractual commitments for expansion of its crude and water gathering systems to support volumes from over 90,000 gross dedicated acres in North Dakota’s Dunn and McKenzie counties under long-term, fee-based agreements.

Subject to future drilling plans, Enable will add up to 72,000 b/d of crude oil gathering design capacity, increasing total Williston basin crude gathering capacity to about 130,000 b/d. Enable expects to start gathering volumes associated with these system expansions in first-half 2019, including volumes from many drilled but uncompleted wells.

JupiterMLP gets funding to advance Permian oil line

JupiterMLP LLC has secured enough funding from Charon System Advisors to build the 1 million-b/d capacity Jupiter Pipeline from the Permian basin to the Port of Brownsville, Tex., and will hold an open season for remaining capacity in November.

Expected to be operational in late third quarter of 2020 with origination points near Midland, Pecos, and Crane, Tex., and offtake points near Three Rivers, Tex., JupiterMLP has completed engineering, design, and right-of-way planning for the 680-mile dedicated high-gravity crude oil line. As designed, it will be the only pipeline out of the Permian basin that can access all three deep water ports in Texas—Houston, Corpus Christi, and Brownsville—and will have direct access to a fully capable very large crude carrier loading facility.

In addition to the pipeline, the company is constructing a crude upgrading, processing, and export terminal capable of loading VLCCs on 270 acres of land in the Port of Brownsville.

The company already has secured all initial governmental and regulatory permits to load and unload vessels of up to 65,000 dwt or Panamax-sized vessels at the Jupiter Export Terminal. Permits to construct more than 2.8 million bbl of storage in Brownsville have been secured and additional permits are on file to increase its storage to more than 6 million bbl, of the potential 10 million bbl of storage capacity. Also, the company is “in the final stages” of securing a permit to construct a 170,000 b/d processing facility designed to process light US shale crude into on-spec US gasoline and ultralow sulfur diesel.

IOG completes SNS FEED, Thames pipeline testing

Independent Oil & Gas PLC (IOG) has completed front-end engineering and design of its Southern North Sea (SNS) natural gas project and integrity testing of its Thames pipeline, which it will recommission to bring SNS gas to shore at Bacton terminal. IOG is completing preparation for its final investment decision on SNS, having substantially completed bidding processes and advanced negotiations with preferred parties.

The company expects FID in this year’s fourth quarter, with unit construction following in 2019, installation first-half 2020, and start of gas flow in late second-quarter 2020.

IOG on Sept. 6 ran an internal crawler-based measurement device from the Bacton terminal to 800 m offshore, a section at a higher risk of degradation since the line’s 2015 decommissioning to assess Thames internal and external condition.

Results of this inspection allowed IOG to determine 150 bar as a safe maximum test pressure for 24-hr hydrotesting conducted Sept. 21-23. The maximum operating pressure required under IOG’s field development plan (FDP) is about 80 bar, with the 150-bar test translating to a maximum allowable operating pressure (MAOP) of 100 bar. The gap between FDP pressure and MAOP will allow for expansion of future operating capacity up to roughly 550 MMcfd of gas. IOG says this rate will comfortably encompass all planned production from its 632-bcf portfolio (303-bcf 2P reserves and 329-bcf midcase resources) while leaving ullage for any fields acquired in the future or tariff-paying third-party gas.

Alongside the pipeline integrity operations, FEED studies have been completed for all key areas needed to make an SNS Phase 1 FID, including refurbishment of Thames pipeline’s onshore Thames reception equipment at Bacton terminal. For safety reasons, Phase 1 offshore installation is scheduled to begin immediately after the 2019-20 winter season, rather than in fourth-quarter 2019, leading to the expected first gas date towards end second-quarter 2020.

Crimson, MPLX gauge interest for Swordfish pipeline

Crimson Midstream LLC and MPLX LP have launched a binding open season to assess interest and solicit commitments from prospective shippers for crude oil transportation service on the Swordfish Pipeline. The pipeline is being developed to connect existing terminal facilities in St. James, La., and Raceland, La., to the LOOP terminal facility in Clovelly, La.

The proposed line would be a multi-diameter (16-in., 20-in., and 30-in) batched system with the ability to transport as much as 600,000 b/d and provide shippers with access to storage services, vessel loading, and connectivity to other carriers.

The pipeline is expected to be in service in first-half 2020.

“We believe our pipeline’s ability to be paired with existing assets will make it more competitive than alternative projects to supply refiners in the region. The pipeline would also provide needed additional capacity for exporters of North American crude,” said MPLX Pres. Michael Hennigan.

The open season will run until midday Nov. 30.