OGJ Newsletter

Exploration & Development Quick Takes

NPD grants Spirit drilling permit in the North Sea

The Norwegian Petroleum Directorate granted Spirit Energy Norge AS a drilling permit in the North Sea for Well 7322/7-1, which will be drilled from the Island Innovator drilling complex.

Well 7322/7-1 is to be drilled at 73°24’48.4” North and 22°02’22.09” East after Spirit Energy completes drilling appraisal well 6506/9-4 A in Production License 433.

The drilling of Well 7322/7-1 involves a wildcat well in Production License 852 on Block 7322/7. Spirit Energy is the operator with 60% interest. Aker BP has 40% interest.

The well will be drilled about 110 km northeast of Johan Castberg field. Authorities awarded PL 852 in 2016 during the 23rd licensing round on the Norwegian shelf. This is the first well to be drilled in the license, NPD said.

The permit is contingent upon the operator securing all other permits and consents required by other authorities before drilling activities start.

Sharjah seeks bids for three onshore areas

Sharjah National Oil Corp. (SNOC) is seeking international partners for exploration and development of three onshore areas covering much of the emirate.

One of the areas, 437-sq-km Area A, contains Sajaa, Moveyeid, and Kahaif natural gas and condensate fields, found by the former Amoco Corp. and operated now by SNOC. The fields are excluded from the concession, but an undeveloped deeper-pool discovery below Sajaa is included.

For Area A and 1,184-sq-km Area C adjacent to the east, SNOC offers 75% interests and operatorships. Partners will carry SNOC through exploration and appraisal, recovering costs during development. There are no bonuses on these areas.

Bids will be based on drilling commitments.

SNOC will operate 264-sq-km Area B, where it plans to drill its first well, and retain a 50% interest with no carry. Bids will be based on a bonus and agreement to fund 50% of SNOC’s first well. Partners will pay their own ways through exploration, appraisal, and development.

The license round uses a new fiscal regime based on a concession agreement with a “flexible gross split” in which the government’s share of revenue is variable.

“The resulting threshold for any discovery is low, and even small discoveries would be commercial,” according to documents from Envoi Ltd., London, which is assisting SNOC.

Bids are due by Nov. 18, 2018.

Ecopetrol makes oil find at Cundinamarca

Colombia’s Ecopetrol made an oil discovery with the Búfalo-1 well in the Valle Medio del Magdalena, near the town of Guaduas, Department of Cundinamarca. The finding recorded a depth of 1,153 m, in the Middle Magdalena Valley basin, and confirmed the presence of dry gas and light crudes in the Grupo Honda.

Bufalo-1 is operated by Ecopetrol with 51% interest. Partner CPVEN E&P Corp. holds a 49% interest. The well is the first discovery in the VMM32 exploration contract.

Proximity to Ecopetrol’s transport infrastructure could facilitate its commercial production stage, the company said.

OIL testing gas strike in Andhra Pradesh

State-owned Oil India Ltd. is testing a second natural gas discovery on NELP VI Block KG-ONN-2004/1 in Andhra Pradesh, India.

Its Thanelanka-1 high-pressure, high-temperature well encountered multiple sands in the Late Jurassic-Early Cretaceous Gollapalli formation and one zone in the Cretaceous Raghavapuram formation.

An HP-HT Gollapalli zone at 4,912-5,159 m flowed gas at the rate of 1,300 standard cu m/day through a 16/64-in. choke.

Last year on the block, OIL tested gas from four packages in Permian-Triassic Kummuguden sandstone in its Dangeru-1 discovery well.

Drilled to 3,719 m, the well has been suspended due to fish in the hole during production testing.

Drilling & Production Quick Takes

OCTP gas production starts off Ghana

Production of natural gas has begun from Sankofa field, part of Ghana’s Offshore Cape Three Points (OCTP) integrated oil and gas project.

Production of sweet, 28.9° gravity oil began last year into the John Agyekum Kufuor floating production, storage, and offloading vessel (OGJ Online, May 22, 2017).

Sankofa field, under development with Gye Nyame field, will produce 180 MMscfd of gas for at least 15 years, according to Eni, the operator.

Gas production is from two of four deepwater subsea wells linked to the FPSO.

When commissioning of offshore facilities is complete, gas will flow through a dedicated 60-km pipeline to the onshore receiving facility in Sanzule for compression and distribution.

OCTP gas will displace oil in Ghanaian power generation.

Water depths in the OCTP area are 520-990 m.

OCTP interests are Eni, 44.44%; Vitol, 35.56%; and Ghana National Petroleum Corp., 20%.

Wintershall secures semi for Nova drilling

The Northern Drilling Ltd. West Mira harsh-environment semisubmersible will drill six wells to be completed subsea in Nova oil and gas field in the Norwegian North Sea under a contract signed last month with operator Wintershall Norge AS.

Wintershall and partners plan three production wells and three water-injection wells drilled through two subsea templates, with production tied back to the Gjoa complex 17 km northeast. The production plans includes an option for a third template and four more wells (OGJ Online, May 18, 2018).

Water depth is about 370 m.

Seadrill Norway Operations Ltd. will operate the West Mira semi on behalf of Northern Drilling under the Wintershall contract, which includes options for as many as 10 additional wells.

The Nova drilling will begin in the first half of 2020.

Nova interests are Wintershall, the operator, 35%; Capricorn Norge AS and Spirit Energy, 20% each; Edison Norge AS, 15%; and DEA Norge AS 10%.

Ocean Rig agrees to postpone delivery of Ocean Rig Crete

Ocean Rig UDW Inc. reported plans to delay taking delivery of an enhanced integrated design newbuild drillship, the Ocean Rig Crete, until September 2020 as agreed upon with Samsung Heavy Industries (SHI).

The agreement may be amended later to a sooner date depending on oil market conditions, Ocean Rig said. Pankaj Khanna, Ocean Rig president and chief executive officer, said his firm has a continuing strategic partnership with SHI for construction of 11 drillships.

The Ocean Rig Crete is an 8th generation enhanced integrated design drillship featuring a hook load capacity of 2.8 million lb, two blowout preventers, and six mud pumps. It can be equipped to drill in 4,000 m of water.

Aramco, NOV plan JV in Saudi Arabia

Saudi Aramco and National Oilwell Varco Inc. (NOV) will form a joint venture in Saudi Arabia.

The proposed JV will provide high-specification land rigs, rig and drilling equipment, offer certain aftermarket services, and establish an education center to train Saudi technicians in the maintenance and operation of the drilling technology that the venture will bring to the kingdom, the companies said.

A previously announced commitment from Saudi Aramco Nabors Drilling Co. to purchase 50 onshore drilling rigs from the NOV/Aramco JV over 10 years will support the combine. Through an exclusivity agreement, the JV will have the opportunity to supply Saudi Arabia, GCC, and MENA region. NOV will own a 70% interest in the JV. Saudi Aramco will own 30%.

Commissioning of the facility is expected by 2020 with the first rig to be delivered by 2021, said NOV Chairman, Pres. and Chief Executive Officer Clay Williams.

PROCESSING Quick Takes

Essar Oil (UK) wraps capacity, production expansions at Stanlow refinery

Essar Oil (UK) Ltd. has completed its previously announced investment of more than $250 million to boost operational efficiency, expand capacity, and improve production performance at its Stanlow refining complex in the UK, near Ellesmere Port, Cheshire (OGJ Online, Sept. 7, 2017).

Executed alongside unidentified maintenance works during the refinery’s recently completed and largest turnaround ever, Project Tiger Cub entailed major improvements to Stanlow’s key units to help further reduce crude costs, improve yields across the production slate, and increase overall crude throughputs at the site to more than 10.2 million tonnes/year from its previous 9 million-tpy capacity, Essar Oil (UK) said.

The combined turnaround and project cost amounted to about $258 million, according to the operator.

By the close of the operator’s fiscal-year 2018—which ended on Mar. 31—Essar Oil (UK) said it has invested more than $850 million on projects to turn around performance as well as ensure profitability and sustainability of the Stanlow refinery since purchasing the complex from Royal Dutch Shell PLC in (OGJ Online, Aug. 2, 2011).

Completion of Project Tiger Cub this year follows Essar’s fiscal-year 2015 project to reconfigure Stanlow into a single-train manufacturing site, which included mothballing the refinery’s smaller CD3 crude unit to reduce fuel oil and naphtha production as well as help increase absolute margins (OGJ Online, Feb. 18, 2014).

On July 4, Prashant Ruia, chairman of Essar Oil (UK), said the company will continue to make proactive investments in technology to build a sustainable business that remains competitive in the rapidly changing global energy market.

GS Caltex lets contract for grassroots olefins complex

GS Caltex Corp., Seoul, a 50-50 joint venture of GS Energy Corp. and Chevron Corp., has let a contract to KBR Inc. to supply its proprietary Selective Cracking Optimum Recovery (SCORE) technology license, basic engineering design, and proprietary equipment supply services for a grassroots mixed-feed cracker as part of GS Caltex’s previously announced project to build an olefins production complex near its existing refining and petrochemical operations at Yeosu in the South Korean province of Jeollanam-do (OGJ Online, Apr. 20, 2018).

Under the terms of the contract, KBR will provide its SCORE technology license and basic engineering design services for the proposed 700,000-tonne/year ethylene mixed-feed cracker, the service provider said.

The plant will use naphtha, LPG, and refinery off gases from GS Caltex’s 790,000-b/d Yeosu refinery as its main feedstocks, KBR said, which will also supply its highly selective SC-1 furnaces for the ethylene plant project.

Scheduled to begin construction in 2019, the mixed-feed cracking complex also will produce 500,000 tpy of polyethylene, GS Caltex said upon announcing the project.

Alongside a 790,000-b/sd refinery, GS Caltex’s Yeosu current operations also include plants for production of 2.8 million tpy of aromatics and 180,000 tpy of polypropylene.

Petronas lets contract for Melaka refinery

Petronas, through a contractor, has let a contract to John Wood Group PLC, Aberdeen, to provide engineering and equipment for a steam methane reformer as part of a new hydrogen production unit to be implemented at Petronas’ two-trained 270,000-b/d refinery complex in Sungai Udang, Melaka state, Malaysia.

Wood will deliver detailed engineering services and material supply for the steam methane reformer, which will be included in a new Wood-licensed hydrogen production unit for the Melaka refinery’s Diesel Euro-5 project, the service provider said.

As part of the multimillion-dollar contract awarded by Hyundai Engineering Co. Ltd., Wood will supply its proprietary Terrace Wall process technology for hydrogen production.

Neither Wood, Hyundai Engineering, nor Petronas have disclosed further details regarding the proposed Diesel Euro-5 project, including either a timeframe for commissioning or a precise project location within the Melaka refinery.

The two-trained refinery includes the 100,000-b/d PSR-1, owned and operated by Petronas Penapisan (Melaka) Sdn. Bhd. (PPM), which processes sweet crudes and condensates, as well as the 170,000-b/d PSR-2, owned by Petronas subsidiary Malaysian Refining Co. Sdn. Bhd. but operated by PPM, which processes both sweet and sour grades (OGJ Online, Nov. 12, 2014).

Petrobras, CNPC mull partnership to revive
Comperj refinery project

Petroleo Brasileiro SA (Petrobras) and China National Petroleum Corp. (CNPC) subsidiary China National Petroleum Corp. International (CNPCI) have signed a heads of agreement to advance negotiations for formation of a strategic partnership to complete the previously stalled 150,000-b/d Comperj refining complex in Itaboraí, in the state of Rio de Janeiro (OGJ Online, July 25, 2016; June 4, 2007).

The scope of the partnership, to be designed as an integrated project, also would include CNPCI’s participation in Marlim oil field in the Campos basin off Brazil, Petrobras said.

Implementation of the proposed strategic partnership depends on successful negotiations of the final agreements, the Brazilian operator said.

The planned partnership comes as part of the companies’ intention to strengthen their ties and contribute to deepen the global strategic partnership between Brazil and China.

Petrobras said the partnership agreement also forms part of a broader program to revitalize its eastern Brazilian refining and logistics park.

In its 2017 annual report released earlier this year, Petrobras told investors completion of the first Comperj refining train depended on establishment of a strategic partnership.

Since 2013, Petrobras and CNPC have been partners in the Libra area of the Santos basin presalt layer, which was the first contract under a production-sharing agreement regime between the companies.

In Brazilian presalt tender rounds during 2017, a consortium formed by Petrobras 40%, CNPC subsidiary China National Oil & Gas Exploration & Development Corp. 20%, and BP PLC 40% also secured the Peroba block, which contains more than 5 billion boe of prospective resource in place and for which Petrobras acts as operator (OGJ Online, Nov. 3, 2017; Oct. 30, 2017).

TRANSPORTATION Quick Takes

Eastbound shipments start from Yamal LNG

Novatek began regular shipments via the eastbound, Northern Sea Route from its Yamal LNG project in the Russian Arctic as two Arc7 vessels transited the ice-covered part of the route in 9 days with no icebreaker escort.

The company uses a westbound route to Europe and Asia in winter and can ship eastbound in summer.

The Vladimir Rusanov LNG carrier arrived at the Bering Srait, and the Eduard Toll entered open water in the Chukchi Sea. The vessels, able to carry 170,000 cu m each, are bound for the port at Jiangsu Rudong, China.

The vessels departed the port at Sabetta on the Yamal Peninsula with cargoes from Yamal LNG, where the first 5.5-million-tonne/year train started up late last year (OGJ Online, Dec. 6, 2017).

Yamal LNG interests are Novatek, 50.1%; Total and China National Petroleum Corp., 20% each; and Silk Road Fund, 9.9%.

Magnum holds open season for WEST Header Project

Magnum Energy Midstream Holdings LLC is holding a nonbinding open season for an interstate natural gas pipeline to transport natural gas bidirectionally between multiple receipt and delivery points, including storage, throughout multiple western US states.

The proposed large-diameter Western Energy Storage & Transportation (WEST) Header Project will extend 650 miles to provide access to gas supplies at or near the Opal Hub in Wyoming, Goshen Hub near Salt Lake City, and Permian basin supplies flowing westbound to locations at or near Ehrenberg, Ariz. It is being designed to maximize 40 million dekatherms of high deliverability, multicycle salt cavern storage near Delta, Utah.

The project anticipates allowing for receipts and deliveries directly into the Salt Lake City Valley at or near the Opal Hub, the Goshen Hub, the Las Vegas market, the Southern California market, and Phoenix/Tucson market (through Needles/Topock/Blythe/Ehrenberg), as well as possible international exports to Mexico at Yuma, Ariz., and West Coast LNG exports, including via Energia Costa Azul near Ensenada, Baja California, Mexico.

“Historically single directional flows worked well for traditional 24-hr ratable gas deliveries. With the introduction of intermittent renewable energy sources, the need for strategically located natural gas infrastructure to provide intraday flexibility has become increasingly important. By utilizing multiple HDMC salt caverns for gas storage and large-capacity pipe for natural gas transportation, the WEST Header Project is being designed with increased flexibility of gas flows in mind,” said Kevin Holder, executive vice-president, Magnum Energy Midstream.

The nonbinding open season runs through Aug. 31.

Epic NGL Permian-to-Corpus Christi pipeline
completes Phase 2 construction

Epic Midstream Holdings LP, San Antonio, has completed Phase 2 of its NGL pipeline. NGL is being transported from DLK Black River Midstream to Benedum, Tex., in Upton County. About 205 miles of the 700-mile pipeline project are in service.

Phase 1 was completed in April (OGJ Online, Apr. 3, 2018). Work continues on Phase 3, which will extend from Benedum to Corpus Christi, Tex.

The NGL pipeline is now connected to five processing complexes that have a capacity of 1 bcf. When complete, the pipeline will have a throughput capacity of over 440,000 b/d with multiple origin points in the Delaware and Midland basins.

Epic began construction of the pipeline in December 2017 after signing a definitive agreement with BP Energy Co. to anchor the system (OGJ Online, Sept. 29, 2017).

The company let a contract to Optimized Process Designs LLC, Houston, for engineering, procurement, and construction services for its first 100,000-b/d fractionation train.

AGIG awarded Northern Territory gas pipeline contract

The Australian Gas Infrastructure Group (AGIG) has been awarded a $170 million (Aus.) contract to build a new gas pipeline for Newmont Mining Corp. in the Northern Territory.

The deal is for AGIG to build, own, and operate the proposed 440-km line that will transport natural gas to Newmont’s Granites and Dead Bullock Soak open cut gold mine sites in the Tanami desert region about 540 km northwest of Alice Springs.

To be called the Tanami Gas Pipeline, the line will tap into the existing Alice Springs to Darwin Amadeus Gas Pipeline—the connection point to located about 180 km northwest of Alice.

The line will follow the alignment of the Tanami-Halls Creek that runs through a mix of pastoral land, Aboriginal freehold land and Crown land.

AGIG said it has ensured that all landholders and local communities have been well informed in the lead-up to help define the final route with consideration given to existing infrastructure, utilities, pastoral, mining, environmental and landform issues along with Aboriginal heritage and sites of significance. All parties will continue to be consulted throughout construction.

A separate, but related project will be to build two gas power stations at the Tanami facilities.