GENERAL INTERESTQuick Takes
NOAA presents CZMA changes to OCS leasing process
The National Oceanic and Atmospheric Administration has proposed possible changes in the Coastal Zone Management Act aimed at making the federal consistency process more efficient across all stages of US Outer Continental Shelf oil and gas projects. NOAA, a part of the US Department of Commerce, also is considering changes to how it might reduce processing time for appeals and make outcomes more predictable, it said in a Mar. 11 Federal Register notice.
An American Petroleum Institute official welcomed the news. “Offshore federal areas are critical to the continued energy and national security of the nation,” said Erik Milito, API vice-president for upstream and industry operations.
“We appreciate and support efforts to modernize and improve the governance and efficiency of the permitting and approvals process so that unnecessary barriers to oil and natural gas development are minimized and eliminated,” Milito said.
Christopher Guith, senior vice-president at the US Chamber of Commerce’s Global Energy Institute, said the proposal reflects broader Trump administration efforts to make the federal offshore oil and gas leasing less opaque and more predictable.
“These commonsense reforms will help to increase investment in offshore development for wind and natural gas, which benefits all Americans,” he told OGJ via e-mail.
DOE awards grants for CCS technology research
The US Department of Energy has awarded nearly $24 million to eight research projects centered on carbon capture and storage (CCS) technologies, US Sec. of Energy Rick Perry announced last month during a joint press conference with International Energy Agency Executive Director Fatih Birol. “By 2040 the world will still rely on fossil fuels for 77% of its energy use. Our goal is to produce them in a cleaner way,” Perry said. “These projects will allow America, and the world for that matter, to use both coal and natural gas with near-zero emissions.”
“CCS is the most critical thing we can do to solve the world’s energy demand and climate change problems,” Birol told the US Senate Energy and Natural Resources Committee a few hours later. “Solar and wind are penetrating energy markets, but they’re almost exclusively concentrated on power generation. The bulk of energy used in the industrial sector is primarily coal and gas. More CCS research and development would help.”
The selected projects, each of which will receive about $3 million of federal support, will focus on the development of solvent, sorbent, and membrane technologies to address scientific challenges and knowledge gaps associated with reducing carbon capture costs, DOE’s Fossil Energy Office said.
Canadian producer Pengrowth mulls options
Pengrowth Energy Corp. has begun a strategic review “with a view to improving the company’s balance sheet, addressing upcoming debt maturities, and maximizing enterprise value.” It said options might include a sale, merger, or other business combination; disposition of all or some assets; recapitalization and refinancing; and new financing and equity capital.
The company has proved and probable reserves of 446.5 million boe. Its average production in the last 3 months of 2018 was 24,104 boe/d of oil and gas. It reported a fourth-quarter net loss of $503 million (Can.), mostly from noncash items.
Pengrowth’s main assets are the Lindbergh thermal project in the Lloydminster oil fairway of East Central Alberta’s Cold Lake region and the Groundbirch tight gas project in the Montney resource play of northeastern British Columbia.
Assisting with the strategic review are Perella Weinberg Partners LP and Tudor, Pickering, Holt & Co.
Montage emerges from Eclipse, Blue Ridge merger
The deal to combine Eclipse Resources Corp., State College, Pa., and Blue Ridge Mountain Resources Inc., Irving, Tex., has closed (OGJ Online, Aug. 27, 2018). The combine, Montage Resources Corp., creates a large Appalachian energy firm with 227,000 net effective undeveloped core acres across its Utica and Marcellus footprint with liquids-rich and dry gas optionality with added “stacked pay” development opportunities.
Exploration & DevelopmentQuick Takes
India okays 23 bids in small-field round
India’s government has approved the award of 23 contract areas to 14 companies in its second round of discovered small field bidding (OGJ Online, Aug. 8, 2018). The Directorate General of Hydrocarbons received 145 bids for 24 of 25 contract areas on offer from as many as 40 companies bidding alone or in groups. One area is under judicial review.
Ten private companies will be offered revenue-sharing contracts to 15 areas. The private firm awarded the most contracts, with five, is Ganges Geo Resources Pvt. Ltd., Mumbai.
Among state-owned companies, Oil & Natural Gas Corp. was awarded five areas and Oil India Ltd. was awarded two.
One award went to state-owned Indian Oil Corp. Ltd. bidding with private Hindustan Oil Exploration Ltd.
Of the areas awarded, 14 are onshore, and 9 are offshore.
Private Vedanta Ltd., which has been active in recent Indian bid rounds, was awarded two contract areas.
Equinor to link oil find to Visund field systems
Equinor together with partners Petoro, ConocoPhillips, and Repsol will consider linking a recent oil discovery made with the Telesto exploration well in the Tampen area in the northern North Sea to existing infrastructure in Visund field. Resources are estimated at 12-28 million bbl of recoverable oil.
Geological data have been acquired for further analysis, and the well, which was not formation-tested, has been plugged. The licensees will consider linking the discovery to existing infrastructure on the field (OGJ Online Sept. 5, 2018).
Well 34/8-18 S, drilled from the Visund A in production license 120 was spudded Feb. 9 about 2½ km east of Visund A and 155 km west of Floro. Drilled to respective measured and vertical depths of 6,039 m and 3,298 m subsea, the well was terminated in the Lunde formation from the Late Triassic Age. The prospect lies in 335 m of water.
The objective of the well was to prove petroleum in Early Jurassic reservoir rocks (the Statfjord group). It encountered an oil column of about 115 m in the upper and lower part of the Statfjord group, with effective reservoirs of 17 m and 20 m, respectively, in sandstone mainly with moderate reservoir quality.
In the upper part of the Lunde formation in the Upper Triassic, about 15 m of aquiferous sandstone with poor reservoir quality was encountered. The oil-water contact was encountered in the lower Statfjord group at about 3,170 m subsea. This is the 26th exploration well drilled in the license. The Visund A platform will now drill development wells in Visund field.
Drilling & ProductionQuick Takes
BP lets contract for Tortue gas field
BP PLC has let a contract to TechnipFMC for the engineering, procurement, construction, installation, and commissioning of a floating production, storage, and offloading unit to be deployed offshore on the maritime border of Mauritania and Senegal, moving forward Phase 1 of the Greater Tortue Ahmeyim natural gas project. The award is a continuation to the front-end engineering design contract awarded in April 2018.
The initial subsea infrastructure connects the first four wells consolidated through production pipelines leading to this FPSO. Liquids are removed, and the export gas is transported via pipeline to the LNG hub terminal where the gas is liquefied. The project will provide LNG for export, as well as make gas available for domestic use in both Mauritania and Senegal. The start of gas production is expected in first-half 2022. BP Gas Marketing will buy LNG offtake from Greater Tortue Ahmeyim Phase 1. TechnipFMC puts the contract’s value at $0.5-1 billion.
Tortue Ahmeyim field development is in the C-8 block offshore Mauritania and the Saint-Louis Profond block offshore Senegal. BP operates Tortue with 61%. Partners are Kosmos 29%, Senegal-state Petrosen 5%, and Mauritania state firm SMHPM 5%. Mauritania and Senegal agreed to joint development of the field in early 2018 and the partners made a final investment decision to proceed with Phase 1 of the natural gas project in December (OGJ Online, Dec. 21, 2018).
Zarubezhneft, Uzbekneftegaz plan EOR JV
Zarubezhneft, Moscow, and Uzbekneftegaz, Tashkent, have targeted three old oil fields in Uzbekistan’s Ferghana Valley for enhanced recovery and plan to form a joint venture to do the work.
Zarubezhneft said it will apply its development-management technologies and use modern equipment to boost production from South Alamyshik, Khartum, and East Khartum fields. It didn’t specify technologies or production goals.
Under a memorandum of understanding signed last June, specialists from both companies studied the targeted fields as well as Boston, Namangan, Tergachi, and Shorbulak fields.
Pearl to boost Khor Mor flow in Kurdistan
Pearl Petroleum Co. Ltd., Sharjah, signed a sales agreement with the Kurdistan Regional Government enabling it to increase production at Khor Mor field in the Kurdish region of Iraq to 650 MMscfd of natural gas by 2021 from 400 MMscfd at present.
The company is adding two production trains at the Khor Mor gas plant and drilling wells in the current expansion. It plans to further boost production to 900 MMscfd by 2022.
Pearl Petroleum also is expanding production at Chemchemal field. Crescent Petroleum and Dana Gas PJSC, both of Sharjah, jointly operate the fields. They’re 35% partners in Pearl Gas. Other partners are OMV, MOL, and RWEST.
PROCESSINGQuick Takes
ExxonMobil to add polypropylene unit at Baton Rouge
ExxonMobil Corp. will build a polypropylene unit at its facility at Baton Rouge that will expand production capacity along the US Gulf Coast by as much as 450,000 tonnes/year.
Construction on the project—which will create as many as 600 jobs during the build and 65 permanent jobs once completed—will begin later this year, with the new unit scheduled to start production by 2021, ExxonMobil said.
The operator also confirmed it has awarded an engineering, procurement, and construction contract for the project to Baton Rouge-based Turner Industries Group LLC and Jacobs Engineering Group Inc., Dallas, both of which will use local workers to design and construct the new unit.
ExxonMobil’s integrated operations in Baton Rouge currently include its 502,000-b/d refinery and chemical, lubricants, and polyethylene plants.
The new Baton Rouge polypropylene unit comes in addition to ExxonMobil’s previously announced plans to invest $20 billion to build and expand manufacturing operations in the USGC region as part of its Growing the Gulf initiative. Alongside a new aviation lubricants blending, packaging, and distribution site in the Baton Rouge area, Growing the Gulf projects include refining and chemical expansions at ExxonMobil’s Beaumont and Baytown, Tex., operations.
ExxonMobil and SABIC also have created a joint venture to advance development of the Gulf Coast Growth Ventures project, a 1.8 million-tpy ethane cracker currently planned for construction in San Patricio County, Tex.
“Growth in feedstock supply along with the increase in global demand for chemical products continues to drive our strategic investments and expansion along the [USGC],” said John Verity, president of ExxonMobil Chemical Co.
McKee appointed ExxonMobil Chemical president
Karen McKee has been appointed president of ExxonMobil Chemical Co. effective Apr. 1. McKee currently serves as senior vice-president for basic chemicals, integration, and growth. McKee joined Exxon Chemical Co. in the UK in 1990, where she held assignments in chemical manufacturing and refining.
She was appointed vice-president of the adhesion industry global business unit in 2007 and became vice-president of operations for lubricants and specialties and subsequently for fuels, lubricants, and specialties. McKee was appointed vice-president of basic chemicals in 2014. She assumed her current position in 2017.
McKee succeeds John Verity, who has elected to retire after 38 years of service.
Slavneft-Yanos boosts volumes at Yaroslavl refinery
JSC Slavneft-Yaroslavnefteorgsintez (Slavneft-Yanos), part of OAO NGK Slavneft—a joint venture of Gazprom Neft PJSC and PJSC Rosneft—ramped up crude oil throughputs by 1.5% in 2018 to more than 317,000-b/d at its 300,000-b/d refinery in Yaroslavl, Russia. The boost in 2018 crude throughputs establishes the Yaroslavl refinery as one of the three largest in Russia, Gazprom Neft and Slavneft-Yanos said.
Alongside increasing crude runs, the refinery raised light product yields by 1.5% to 8.7 million tonnes/year and production of aviation kerosine by 35.5% to more than 1.7 million tpy.
Lubricant production at the site in 2018 totaled 309,000 tpy, with the company’s lubricants range enhanced by new offerings produced at the plant’s new Group III base oils unit, output from which reached 100,000 tpy over the course of the year following the unit’s 2017 commissioning as part of a governmental import-substitution program (OGJ Online, June 21, 2017).
The Yaroslavl plant also produced 2.5 million tpy of automotive gasoline in 2018, together with more than 3.9 million tpy of diesel, 97,900 tpy of aromatic hydrocarbons, 482,000 tpy of petroleum bitumen, and 103,000 tpy of liquefied gases.
With the refinery’s recent investment program now having enabled the site to switch to 100% production of Euro 5-quality motor fuels, Gazprom Neft said Slavneft-Yanos, as part of a new development strategy, plans to further modernize production capacity to increase the refinery’s conversion rate and light-product yield, as well as achieve greater production efficiency.
Baystar breaks ground on Bayport polyethylene unit
Bayport Polymers LLC (Baystar)—an equal joint venture of Total SA’s Total Petrochemicals & Refining USA Inc. and the Borealis AG-Nova Chemicals Inc. JV Novealis Holdings LLC—has started construction of its previously announced Borstar Bay3 project at its production site in Pasadena, Tex.
Baystar broke ground on the 625,000-tonne/year Borstar polyethylene (PE) unit on Feb. 28, the operator said.
The Borstar PE unit will more than double the site’s existing capacity allowing Baystar to provide its North American customers with a greater range of products, said Baystar Pres. Diane Chamberlain. The unit is scheduled for startup in 2021.
First announced in May 2018, the Borstar PE plant project comes as part of Baystar’s strategy to help meet growing global demand for PE by taking advantage of competitively priced ethane feedstock from US shale production and easy export access to markets abroad and follows official start of construction on Baystar’s 1 million-tpy ethane steam cracker at Total’s 200,000-b/d integrated refining complex in Port Arthur, Tex.
The $1.7-billion ethane steam cracker—which will supply feedstock both for Baystar’s existing 400,000-tpy PE unit as well as the new Borstar unit—remains on schedule for commissioning in late 2020.
TRANSPORTATIONQuick Takes
Chevron begins gas flow from Wheatstone LNG project
Chevron Australia has begun supplying gas for domestic use in Western Australia from its Wheatstone project facilities near Onslow in the northwest of the state. Besides producing LNG for export, the Wheatstone plant has the capacity to supply 200 terajoules/day of sales gas into the domestic grid for decades.
This equates to about 20% of Western Australia’s forecast domestic demand in 2019.
When added to Chevron’s Gorgon facilities on Barrow Island, the two facilities will be able to produce a total of 500 terajoules/day of gas to market.
Total buys 10% interest in Arctic LNG 2
Total SA acquired from Novatek a direct 10% interest in the 19.8 million-tonne/year Arctic LNG 2 project near Russia’s Gydan Peninsula. Arctic LNG 2 envisages building three 6.6 million-tpy LNG trains on gravity-based structure platforms in the Gulf of Ob. The facility’s production will be delivered to international markets by a fleet of ice-class LNG carriers that will be able to use the northern sea route, with a transshipment terminal in Kamchatka for cargoes destined for Asia and one close to Murmansk for cargoes destined for Europe.
The project is based on the hydrocarbon resources of Utrenneye field. As of yearend 2018, Utrenneye field’s 2P reserves under the Russian classification system totaled 1,978 billion cu m of natural gas and 105 million tons of liquids.
Front-end engineering and design work on Arctic LNG 2 ended in October 2018, confirming preliminary project-cost estimates of $20-21 billion. The 10% sale will close by the end of this year’s first quarter. The project’s final investment decision is expected to be taken in this year’s second half, with plans to start the first liquefaction train in 2023.
Considering Total’s 19.4% stake in Novatek and Novatek’s intention to retain 60% of the project, Total’s overall economic interest in Arctic LNG 2 will be roughly 21.6%. Should Novatek decide to reduce its participation below 60%, Total will have the possibility to increase its direct share to as much as 15%.
Novatek and Total also agreed that Total will have the opportunity to acquire a 10-15% direct interest in all Novatek’s future LNG projects on the Yamal and Gydan peninsulas.
India commissions Ennore LNG terminal
India’s first East Coast regas project, Ennore LNG terminal, was commissioned by Indian Oil Corp. Ltd. (IOC). IOC, through its joint venture company Indian Oil LNG Pvt. Ltd., set up the 5-million tonne/year LNG import terminal at Kamarajar Port, Ennore. The Ennore terminal is the first LNG terminal on the east coast in South India that will serve customers in the southern and eastern region. To supply natural gas to various consumers, IOC is laying a 1,244-km pipeline for evacuation of gas from Ennore terminal.
“IOC has already secured captive customers for 2 million tpy of capacity. The Ennore terminal will also help fast-track IOC’s city gas distribution plan, as gas from the terminal will be supplied to consumers around Chennai and Madurai,” Wood Mackenzie’s senior analyst Kaushik Chatterjee said.
“Indian regas capacity had constrained imports in recent years. Both Dahej and Hazira operated at maximum levels through much of 2018. The commissioning of Ennore will be the first in a series of regas projects coming online in 2019; Mundra and Jaigarh FSRU are next,” Chatterjee said.
“One additional terminal is under construction at Dhamra on India’s east coast and is expected to be completed in 2022. Furthermore, Dahej’s capacity is being increased by 2.5 million tpy to 17.5 million tpy, while the completion of the Kochi pipeline and Dabhol breakwater are also likely by 2020,” Chatterjee said. “Once all these terminals and enhancements are completed, India’s regas capacity will reach 56.5 million tpy by 2025 from the existing 25.5 million tpy. Beyond this, India’s ability to import significant volumes of LNG could be enhanced further if several other proposed regas terminals proceed,” the senior analyst said.
DOE authorizes LNG exports from Calcasieu Pass
The US Department of Energy issued a long-term order authorizing exports of US-produced LNG to Venture Global Calcasieu Pass LLC (VGCP) from an export terminal it is building in Cameron Parish, La. The order will allow VGCP to export as much as 1.7 billion bcfd of gas as LNG to any countries that do not have a free-trade agreement with the US and are not prohibited from trading with the US under US law or policy, DOE said.
It is required under the 1938 Natural Gas Act to determine if proposed exports of gas to a non-FTA country are in the US national interest before they will be allowed. DOE’s authorization came after the US Federal Energy Regulatory Commission issued a Feb. 22 order permitting the siting and construction of the project and the associated Trans Cameron East Lateral pipeline.
Including this authorization, DOE has authorized a total of 24.74 bcfd of LNG exports to non-FTA countries from the US.
Officials at Arlington, Va.-based Venture Global LNG said the project’s construction would begin soon under a contract with Kiewit Construction Co., employing 1,500. It has 20-year binding sales and purchase agreements with Shell, BP, Edison, Galp, Repsol, and PGNiG. Venture Global LNG also is developing the 20 million-tonne/year Plaquemines LNG export facility and associated Gator Express Pipeline in Plaquemines Parish.
Queensland gives nod to Arrow’s Surat project
The Queensland government gas given the thumbs up for Arrow Energy’s proposed $10-billion (Aus.) Surat gas project that is expected to come on stream in 2020 to produce gas for LNG exports as well as sales gas for domestic markets.
Arrow, a joint venture of Royal Dutch Shell PLC and China’s PetroChina, is expected to bring 5 tcf (5,000 petajoules) to market during the next 27 years.
The Queensland government has granted 14 petroleum leases in southwest Queensland dedicated to the project.
In December 2017 Arrow announced a 27-year sales agreement with Queensland Curtis LNG (QCLNG), the two-train Shell-operated LNG plant on Curtis Island near Gladstone that provided a market for Arrow’s Surat gas tenements. The leases cover 2,500 sq km on blocks between Dalby and Chinchilla.
Arrow’s use of the QCLNG infrastructure, including processing facilities and pipelines, will transport the gas to market quickly and reduce the project’s environmental footprint.
Construction for the Arrow Energy project is expected to begin this year although the Shell-PetroChina JV has yet to make a final investment decision.
Arrow Chief Executive Mingyang Qian would not commit to a timeframe for the final investment decision, which is still subject to shareholder approvals, but he did say that the government’s approval for the project was a big step in that direction.
The project has now received state and federal government environmental approvals, met native title requirements, and is proceeding with binding land access compensation agreements with landholders.