GENERAL INTERESTQuick Takes
Aramco SABIC purchase might delay IPO
A purchase under study by Saudi Aramco of a stake in chemical manufacturer Saudi Basic Industries Corp. (SABIC) might delay the planned initial public offering of 5% of the oil producer, according to press reports.
Aramco has confirmed it is in “very early-stage discussions with the Public Investment Fund (PIF) regarding acquiring a strategic interest in SABIC by way of a private transaction.”
The PIF is a sovereign wealth fund that would receive a liquidity boost from an Aramco IPO or a purchase by Aramco of some of its 70% stake in SABIC.
The government wants to raise funds for investment in economic modernization.
The IPO initially was to have occurred this year, although a delay had been considered probable even before the prospective SABIC deal came to light (OGJ Online, Mar. 28, 2017).
Aramco said it has no plans to acquire any of the 30% of SABIC shares held by the public.
“Consistent with the company’s strategy of rebalancing its portfolio by moving further into downstream and the petrochemical sector in particular, the company has been evaluating a number of acquisition opportunities, both local and global,” Aramco said in a press statement.
ADNOC, CNPC to explore more cooperation
Abu Dhabi National Oil Co. and China National Petroleum Corp. have signed a “strategic cooperation framework agreement” covering oil and gas opportunities beyond those in which they already work together.
A press statement said the agreement “outlines opportunities for possible future collaboration across ADNOC’s upstream and downstream value chains and support for China’s growing energy needs.” It mentions exploration and production, technology support, research and development, drilling and oil field services, refining, petrochemicals, and oil supply and storage.
The statement said ADNOC and CNPC will “explore potential Chinese investment in a number of planned downstream projects, including an aromatics plant, a mixed-feed cracker, and a new refinery.”
The companies also will discuss ADNOC partnership in one or more downstream projects in China.
Upstream discussion will examine prospects across Abu Dhabi, including six blocks made available for competitive bidding in April (OGJ Online, Apr. 10, 2018).
Also due study is a technology hub linked to the Al Yasat concession, in which CNPC holds a 40% interest.
In addition to the Al Yasat joint venture, CNPC has a minority stake in Abu Dhabi’s onshore concession and 10% interests in the Umm Shaif and Nasr and Lower Zakum offshore concessions.
And a CNPC affiliate, China Petroleum Engineering & Construction Corp., has an engineering, procurement, and construction contract with ADNOC for work on expansion of production capacity of onshore Bab field.
Rosneft sues Sakhalin-1 over North Chayvo
Rosneft has filed a $1.4-billion lawsuit against the Sakhalin-1 consortium operated by Exxon Neftegas Ltd. in an apparent dispute over drainage of Northern Chayvo oil and gas field.
The Russian company began production from the offshore field, which is adjacent to the Sakhalin-1 concession, in September 2014. Its design plateau production rate is about 30,000 b/d of oil from five wells drilled directionally from onshore locations.
According to Reuters, Rosneft field suit in a Sakhalin district arbitration court accusing the consortium of “unjust enrichment,” which the consortium denied.
Court documents reviewed by Reuters mentioned “cross-flows” from Northern Chayvo.
The main Chayvo field is one of three offshore reservoirs productive at Sakhalin-1, where total output is believed to be limited by Russian authorities to about 200,000 b/d of oil.
Diversified doubles production with purchase
Diversified Gas & Oil PLC, Birmingham, Ala., has acquired EQT Corp.’s southern Appalachian producing gas and oil and midstream assets for $575 million. With the deal’s close July 18, Diversified’s production doubled to more than 60,000 boe/d.
Diversified assumes operation of select EQT gas and oil assets across Kentucky, Virginia, and West Virginia, totaling more than 11,000 wells, 6,400 miles of gathering pipe, and 59 compressor stations. More than 250 employees will join Diversified, the company said.
The purchase was funded through an extension to the company’s existing credit facility, which increased to $1 billion from $500 million, and a capital raise of $250 million.
The deal follows Diversified’s purchase of Alliance and CNX Resources assets in the Appalachian basin, concentrated in Ohio, Pennsylvania, and West Virginia (OGJ Online, Feb. 12, 2018). The deals closed in April.
Edmonton MP gets Canadian resources job
An Edmonton member of the Canadian Parliament voiced support of the Trans Mountain Pipeline expansion after being sworn in as minister of natural resources on July 18.
“We need to make sure that we’re building this pipeline to get our resources to international, non-US market,” said Amarjeet Sohi, according to CBC Radio-Canada. “The $15 billion that we lose every year because we get a discount on our oil, we need to change that.”
Sohi, formerly minister of infrastructure, replaced Jim Carr, who became minister of international trade diversification in a cabinet shuffle seen as preparation for federal elections next year.
The Canadian government in May agreed to buy the expansion project, stymied by opposition in British Columbia, and existing Trans Mountain system from Kinder Morgan Canada Ltd. in an effort to expedite construction (OGJ Online, May 29, 2018).
The system carries crude oil, oil products, processed and diluted bitumen from Edmonton to Burnaby, near Vancouver.
The 590,000-b/d expansion would increase capacity to 890,000 b/d.
Exploration & DevelopmentQuick Takes
Shell signs PSCs for blocks off Mauritania
Shell Exploration & Production Mauritania will begin exploration activities as operator with 90% interest of two blocks offshore Mauritania following government approval of production-sharing contracts signed with that country’s government, marking the company’s entry into the West African Atlantic Margin.
Blocks C-10 and C-19, which cover a total of nearly 23,675 sq km, lie in 20-2,000 m of water off Mauritania. The new Block C-10 consists of three previous blocks: C-10, C-28, and C-29.
Shell will set up an office in Nouakchott and begin exploration, starting with reprocessing and analysis of existing seismic data and acquisition of new data.
ADNOC lets contracts for deep seismic survey
Abu Dhabi National Oil Co. (ADNOC) has let contracts worth $1.6 billion for what it is calling the world’s largest continuous 3D onshore and offshore seismic survey, covering as much as 53,000 sq km. Survey results will pinpoint potential reservoirs at depths of up to 25,000 ft.
As part of its 2030 smart growth strategy, the seismic survey will add to the 2D and 3D data already acquired across Abu Dhabi.
The survey will cover an area of up to 30,000 sq km offshore and 23,000 sq km onshore. ADNOC let the contract to BGP Inc., a subsidiary of China National Petroleum Co.
Using seismic streaming vessels and ocean-bottom nodes to acquire data in Abu Dhabi waters and vibrator trucks to survey the onshore desert areas, the survey is slated to be completed by 2024.
UK launches 31st Offshore Licensing Round
The UK government is offering 1,766 frontier blocks covering 370,000 sq km in its 31st Offshore Licensing Round and allowing operators to propose additional blocks in more-mature areas.
Areas include West of Scotland, East Shetland Platform, Mid North Sea High, South West Britain, and parts of the English Channel. Before launching the round, the Oil and Gas Authority published more than 80,000 km of seismic data acquired over areas on offer during 2015-16.
Applications for the offered blocks are due by Nov. 7, 2018. Nominations for additional blocks are due by July 18 and must include plans for “substantial” work programs.
OGA hopes to decide on block awards “as early as possible in the first half of 2019.”
In May, it awarded 123 licenses for 229 blocks in mature offshore areas to 61 companies in the 30th round (OGJ Online, May 24, 2018). It plans to launch the 32nd round, focusing on mature offshore areas, in summer 2019.
Lukoil to develop Caspian oil, gas field
Lukoil has approved development of Rakushechnoye oil and gas field in the Caspian Sea off Russia.
The company plans a fixed, ice-resistant platform, a quarters platform, a crossover bridge, and subsea interfield pipelines and cable lines connected with a second fixed platform at V. Filanovsky field 8.5 km away (OGJ Online, June 18, 2018).
Lukoil expects Rakushechnoye commercial production to start in 2023 and reach a plateau rate of 1.2 million tonnes/year.
Discovered in 2001, the field is in 5-8 m of water 100 km from Russia’s west coast and 160 km from the port of Astrakhan.
Lukoil estimates recoverable reserves at 39 million tonnes of oil and condensate and 33 billion cu m of natural gas.
Premier okays Tolmount development off UK
Premier Oil PLC directors have approved development of Tolmount natural gas field in the southern UK North Sea, where the company sees satellite potential.
In an operations update, Premier said formal sanction by partners is expected in the third quarter.
Development will use a stand-alone, normally unstaffed platform and a new 48-km pipeline to an onshore terminal northeast of Grimsby, England.
Four wells will be drilled from the platform to develop 540 bcf of gas reserves in the Tolmount main structure. Premier expects production to start from the main structure in 2020 and to peak in 2022 at about 240 MMscfd.
It has identified step-out potential in structures labeled Tolmount East and Tolmount Far East, where wells could be completed subsea and tied back to the platform. It also reports a prospect north of Tolmount East called Mongour.
E.On of Germany made the Tolmount discovery in 2011 on Block 42/28d with a well that cut more than 200 ft of gas pay in Permian Leman sandstone and tested 50.2 MMcfd of gas on an 80/64-in. choke.
Premier acquired E.On’s 50% interest in the license, P1330, in 2016 (OGJ Online, Jan. 13, 2016). Dana Petroleum Ltd., Aberdeen, holds the other 50% of the license.
Dana Petroleum and CATS Management Ltd. will build and own the platform and pipeline. Tolmount’s upstream partners will pay a tariff for use of the facilities.
Serica, Dana apply for UK gas developments
Serica Energy PLC, London, expects gross production of as much as 40 MMcfd of natural gas and 1,150 b/d of condensate from Columbus field in the central UK North Sea, development of which is contingent on development of larger Arran gas-condensate field nearby.
In a field development plan submitted to the UK government late last month, Serica said it would develop the field with a single subsea well linked to a proposed 50-km pipeline between Arran field and Shell’s Shearwater C platform.
Dana Petroleum Ltd., Aberdeen, in April applied for development of Arran field, in 88 m of water, with two wells each drilled through two subsea manifolds.
Dana expects Arran production to start in 2020 and to peak in the first year at 109 MMscfd of gas and 4,560 b/d of condensate.
Arran is on Blocks 23/11a, 16b, and 16c. Columbus is on Blocks 23/16f and 23/21a Columbus Subarea.
Drilling & ProductionQuick Takes
Strikes hit UK platforms, end off Norway
Oil workers on July 23 started what the labor union Unite said could be the first of several strikes on three oil and gas platforms in the UK North Sea operated by Total SA in a dispute over hours and wages. Meanwhile, a limited strike by oil workers off Norway was reported to have ended.
About 40 workers took part in a 24-hr shutdown of Total’s Alwyn, Elgin, and Dunbar platforms, which together handle oil production of 45,000-50,000 b/d.
Unite had said on July 5 it planned to halt production from the platforms with 24-hr work stoppages on July 23, Aug. 6, and Aug. 20 and 12-hr stoppages on July 30 and Aug. 13.
NOC sees quick restart of Libyan field
National Oil Corp. of Libya expected production from El-Feel (Elephant) oil field to resume at 50,000 b/d 2 days after its lifting of force majeure and to 72,000 3 days later.
The field has been shut in since Feb. 23 because of pay and benefit demands by a local group guarding surface facilities.
El-Feel is among Libyan fields recently hampered by disputes among rival militant groups, which also closed ports.
On July 11, NOC lifted force majeure on ports Ras Lanuf, Es Sider, Hariga, and Zueitina.
Frac of onshore UK horizontal well approved
Cuadrilla has received approval from the UK Department for Business, Energy & Industrial Strategy (BEIS) to hydraulically fracture the first of two horizontal wells it has drilled at Preston New Road in Lancashire (OGJ Online, July 17, 2018).
Its PNR 1/1Z will be the first onshore horizontal well to be hydraulically fractured in the UK, where the completion technique meets stiff opposition and is suspended or banned in Scotland, Wales, and Northern Ireland.
The well was drilled to 2,273-2,341-m TVD with a 782-m lateral in Carboniferous Lower Bowland shale.
Cuadrilla applied to inject slickwater and sand in as many as 41 frac stages with up to 765 cu m/stage of frac fluid and 75 tonnes/stage of proppant. It will use microseismic monitoring from an observation well.
Cuadrilla CEO Francis Egan said the firm will submit a fracture-consent application to the BEIS for the second Preston New Road well.
Kharyaga PSA in Russia extended 13 years
Russia has extended the production-sharing agreement covering Kharyaga oil field in the Netets Autonomous District by 13 years. The PSA, of which Zarubezhneft is operator with a 40% interest, now runs through 2031.
Kharyaga produces about 29,000 b/d of oil. Other interests are Statoil Kyaryaga AS, 30%; Total E&P Russie, 20%; and Nenets Oil Co. JSC, 10%.
Flow starts from new Yury Korchagin platform
Lukoil reports flow of 500 tonnes/day of crude oil from the first well drilled from the wellhead platform installed during second-phase development of Yury Korchagin oil field in the Caspian Sea off Russia (OGJ Online, Apr. 30, 2018).
A jack up drilled the well to 5,217 m MD with a reach of 4,235 m. In an extension of first-phase development, Lukoil drilled a 1,408-m sidetrack in the No. 14 well, which it said will increase production and extend plateau output.
The first phase, including a fixed ice-resistant platform with drilling, quarters, and transshipment facilities, began commercial production in 2010.
Water depth at Yury Korchagin is 11-13 m.
PROCESSINGQuick Takes
AFPM: Robust midstream transportation important
The US still has a strong oil products and petrochemical supply system, but projects to keep it that way face midstream transportation project permit decisions delays which need to be addressed, the American Fuel & Petrochemical Association said in a July 10 report. “Today, the US is developing its energy resources at record levels, but to continue, our infrastructure must keep pace,” AFPM Pres. Chet Thompson said.
US refiners and petrochemical manufacturers are investing billions of dollars in new infrastructure, he pointed out. “But crucial investments rely on ensuring that federal policies provide regulatory certainty to efficiently build out a network that reliably delivers America’s energy and keeps our economy competitive,” Thompson said.
Citing National Association of Environmental Professionals figures, AFPM’s report said that it took the federal government an average 1,166 days (3.2 years) in 2000 to complete an environmental impact statement required under the National Environmental Policy Act. “By 2016, the time required had ballooned to 1,862 days (5.1 years), not including the time needed for required state and regional analyses,” it continued.
Infrastructure, including oil midstream transportation systems which serve the refining and petrochemical industries, is the US economy’s backbone, the report observed.
AFPM separately noted that in 2017 about 43.3 million bbl of crude oil, refined products, and natural gas liquids, and 79.1 billion lb of plastic resins moved through the US midstream oil infrastructure networks each day.
Byco commissions Pakistan’s largest isom plant
Byco Petroleum Pakistan Ltd. (BPPL) subsidiary Byco Isomerisation Pakistan (Private) Ltd. (BIPPL) has completed startup of Pakistan’s largest isomerization unit at its plant at Mauza Kund, Sub Tehsil Gadani, District Lasbella, Baluchistan.
Equipped with an unidentified “superior technology” and expanded capacity, the 12,500-b/d isom plant began producing high-octane premium motor gasoline as of July 16, BPPL said in a filing to Pakistan Stock Exchange Ltd.
With a current gasoline output of 40,000 tonnes/month, the plant will steadily increase production to 65,000 tonnes/month in the coming days, BPPL said.
Total gasoline production capacity from BPPL—which operates the combined 155,000-b/d refining complex in Mouza Kund, Hub, Baluchistan—now stands at 1.25 million tonnes/year, helping to substantially reduce overall imports into the country, the operator said.
BIPPL acquired its isom plant from BPPL in March 2015, according to BPPL’s web site.
Independent Russian refinery wraps revamp
Privately held JSC Antipinsky Refinery, the main production enterprise of JSC New Stream, Moscow, has completed a project to expand capacity of the atmospheric residue deep conversion unit (ARDCU) at its 9 million-tonne/year refinery in the Tyumen region of Western Siberia, Russia.
Carried out by Tehinzhstroy Construction Co. LLC and completed as of July 11, the modernization and technical upgrade of the ARDCU complex—which includes the refinery’s vacuum distillation unit (VDU) and delayed coker—has increased feedstock processing capacity of the VDU to 540 tonnes/hr from 375 tonnes/hr, boosting the unit’s overall capacity to 4.5 million tpy from 3 million tpy, half, New Stream said.
The project also expanded processing capacity of the delayed coker to 1.7 million tpy from its previous 1.3 million-tpy capacity, according to the operator.
Alongside installation of higher-capacity piping as well as more powerful pumps and a gas compressor, the upgrading project included replacement of more than 55 tonnes of contact devices inside the vacuum column.
Preventative maintenance activities executed during the project included a complete purging of the ARDCU’s pipeline system, according to New Stream.
TRANSPORTATIONQuick Takes
Woodside exits Port Arthur LNG development
Woodside Petroleum Ltd., Perth, has exited the Sempla Energy-led Port Arthur LNG gas export development project in Texas.
Woodside joined the project 3 years ago but is now citing lower-than-expected returns than would justify the investment as the reason for walking away.
Woodside CEO Peter Coleman said the Port Arthur project fell below the company’s expected investment returns and Woodside needed to place its money elsewhere.
The export facility was expected to come on stream in 2023.
Coleman said Woodside’s focus remained on unlocking the huge resources offshore Western Australia, which includes the proposed $20.5-billion Browse LNG project. Coleman added that Browse has been given a new lease on life as partners in the existing North West Shelf Gas Project LNG terminal on the Burrup Peninsula have recently agreed terms for processing third-party gas.
Woodside expects a preliminary tolling agreement between the NWS participants and the Browse JV during this year’s third quarter. Woodside is operator of both projects.
The Browse project proposes that gas from fields in the Browse basin offshore Broome would be piped for 1,000 km south down to the Burrup plant.
ExxonMobil PNG-LNG group signs sale agreement
The ExxonMobil Corp.-led PNG-LNG joint venture in Papua New Guinea has signed a midterm LNG sale and purchase agreement with PetroChina International (Hong Kong) Corp. Ltd. for the supply of LNG from the Southern Highlands project beginning this month.
The midterm agreement is for the supply of about 450,000 tonnes/year of LNG over a 3-year period.
The agreement takes the total contracted volumes from the PNG-LNG project to 7 million tpy. Some 6.6 million tpy is already committed under long-term contracts to JERA, Osaka Gas, Sinopec, and CPC.
Peter Botten, managing director of project participant Oil Search Ltd., said PetroChina has been an active buyer of spot LNG cargoes from the project. The first sale under the new agreement will take place in the next few days.
ExxonMobil, on behalf of the joint venture partners, is negotiating with other parties for potential LNG supply agreements which are expected to be finalized in the near future.
