OGJ Newsletter
GENERAL INTERESTQuick Takes
Parent firms plan Wintershall-DEA merger
Wintershall Group, Kassel, Germany, and DEA Deutsche Erdoel AG, Hamburg, are to be merged into an independent oil and gas exploration and production company operating as Wintershall DEA.
BASF, Wintershall’s parent, and LetterOne, DEA’s parent, have signed a letter of intent to merge the companies to create one of Europe’s largest independent operators.
They plan to list Wintershall DEA through an initial public offering, subject to further negotiations and a definitive agreement.
If the deal proceeds, initial ownership in Wintershall DEA will be BASF 67% and LetterOne 33%, excluding Wintershall’s gas transportation business. At closing, Wintershall DEA will issue a bond reflecting the value of those assets to BASF, to be converted within 36 months into new shares in the company.
Wintershall in 2016 produced 48 million bbl of oil and 117 million boe of natural gas from 440 million bbl of proved oil reserves and 1.182 billion boe of gas reserves.
It has interests in Germany, Norway, the UK, Denmark, the Netherlands, Libya, Argentina, Russia, and the UAE.
DEA’s 2016 production totaled 22 million bbl of oil and 28 million boe of gas. It estimated total oil and gas reserves at 483 million boe.
DEA’s interests are in Germany, Norway, Denmark, Egypt, Algeria, Libya, Turkmenistan, and Mexico.
The companies had combined net income in 2016 of €326 million on sales of €4.3 billion.
Joint venture starts work as Spirit Energy
“Spirit Energy Ltd.” is the name of the European oil and gas joint venture combining Centrica PLC’s exploration and production business with Bayerngas Norge AS.
The company has begun trading as an independent oil and gas operator after receiving regulatory approvals of the transaction, first reported in July (OGJ Online, July 17, 2017).
Centrica owns 69% of Spirit Energy. Bayerngas Norge’s former shareholders, led by Stadtwerke Munchen Group, own 31%.
The joint venture produces about 50 million boe/year of oil and natural gas from 27 fields in the UK, the Netherlands, Norway, and Denmark. It holds more than 70 exploration licenses.
Chris Cox, formerly managing director of Centrica E&P, is chief executive officer.
BKV to buy more Marcellus shale assets
An affiliate of BKV Oil & Gas Capital Partners LP, Denver, has entered an agreement to expand its leasehold in the Marcellus shale in Pennsylvania.
The Kalnin Ventures LLC fund will acquire the Northeast Marcellus holdings of Warren Resources Inc., Dallas, for $105 million and possibly two further payments of $3.75 million each, depending on gas prices.
The Wyoming County properties include 35 producing wells and a further 23 proved and undeveloped well locations in the lower Marcellus.
Proved reserves covered by the transaction are estimated at 292 bcf.
The deal will be the sixth acquisition in 30 months in the northeastern Marcellus shale for BKV, the sole investor in which is Banpu PCL, a coal mining and power-generation company based in Thailand (OGJ Online, Oct. 6, 2017).
At closing, BKV will operate more than 115 producing wells and have interests in 330 gross wells on more than 60,000 net acres.
Novatek to acquire Chernichnoye gas field
PAO Novatek, Moscow, has agreed to acquire rights to Chernichnoye gas and condensate field under development in Russia’s Tyumen Region from Oil Company Mangazeya JSC, Krasnoselkup, Russia, for undisclosed terms.
The acquisition covers Mangazeya unit OOO Chernichnoye, which holds the hydrocarbon exploration and production license for the field in the Yamalo-Nenets Autonomous District.
Mangazeya expects production from Chernichnoye field to peak by 2020 at 3.7 billion cu m/year of gas and more than 133,000 tonnes/year of condensate.
The field is close to Novatek’s transportation and processing system.
Eclipse buying Pennsylvania interests
Eclipse Resources Corp., College Station, Pa., and affiliates have entered separate agreements to purchase oil and gas interests and midstream assets in Tioga and Potter counties, Pa.
Eclipse and wholly owned Eclipse Resources-PA LP agreed to acquire oil and gas interests on 44,500 net acres from Travis Peak Resources LLC, Austin, for stock worth $93.7 million.
Eclipse says the acreage has been delineated by 22 Utica shale wells. Its acquisition includes a well producing 6.5 MMcfd of dry gas net to its interest and will add 87 net drilling locations based on 16,000-ft laterals in a program it calls “super-lateral” development.
The midstream acquisition, involving Eclipse Resources Midstream LP, covers all outstanding equity interests of Cardinal NE Holdings LLC, a unit of Cardinal Midstream, Dallas, and includes gathering rights associated with the acreage acquisition. Eclipse will pay $18.3 million cash.
Exploration & DevelopmentQuick Takes
Airborne gravity survey launched for southern gulf
CGG will complete as many as five additional areas in the southern Gulf of Mexico through 2018. The program will total 200,000 line-km of multiclient airborne gravity and magnetic survey. The company completed its first area, AOI 1, in December 2016 and has processed and interpreted about 38,000 line-km over the gulf’s Perdido foldbelt.
CGG said the newly acquired Perdido foldbelt data correlates discoveries along the flanks of basement topography. The data and interpretation will help operators map the often-difficult-to-image crystalline basement to construct an improved Earth model. The airborne survey also collected continuous data through the transition zone from marine environment to onshore.
Ultra Petroleum tests Pinedale play in Wyoming
Ultra Petroleum Corp. has produced 1.1 bcf of natural gas equivalent in 30 days from its Warbonnet 9-23-A-1H well, which the operator successfully completed in late October on the East Flank of Wyoming’s Pinedale anticline.
The well targeted the Lower Lance A section with a 10,300-ft lateral. The Lance pool is a 6,000-ft section of fluvial and alluvial sedimentary rocks that are Upper Cretaceous through Tertiary in age. The region has stack pay potential in the upper Mesaverde group, Lance formation, and lower Wagon Wheel formation. Ultra says average well depths are 13,500 ft with more than 5,000 ft of pay in 16 producing intervals.
Ultra has proven production in the Lance and Mesaverde formations and reports an additional 1,600 horizontal locations in Wyoming’s Sublette County, the company said in a Dec. 5 investor day presentation.
The Warbonnet well was turned in line to sales on Nov. 1, the company said. On Nov. 15, Ultra reported flowback parameters including a gas flow rate of 38 MMcfd, a condensate flow rate of 700 b/d, and a flowing casing pressure of 3,000 psi. Since completion, the well reached a maximum 24-hr IP rate of 51 MMcfed and was flowing at a 30-day IP rate of 36 MMcfed as of early December, 7% of which was field condensate.
Ultra is drilling two additional extended horizontal wells: Warbonnet 9-23-M-1H and 9-23-A-2H. Both are planned as 2-mile lateral horizontal wells along Pinedale’s eastern flank. The WB 9-23-M-1H will test Lower Mesaverde 2,500 ft below WB 9-23-A-1H. The WB 9-23-A-2H is planned as an offset second well, testing the Lower Lance A in the same zone.
Ultra said 728 MMcfed of production in this year’s third quarter. The operator has an extensive vertical drilling program in Pinedale with nearly 5,000 locations remaining.
Ultra reported that the Warbonnet horizontal well cost $9 million. It also said recent wells suggest a return of up to 3 bcf/1,000 ft lateral with a condensate accounting for up to 10-15% of production.
Pinedale Energy Ltd., which also reported on the updated performance of the Warbonnet well, holds a 7.9% working interest in the well with Ultra holding the remainder as operator.
Po Valley logs gas producer in Selva field revival
Po Valley Energy Ltd., Perth, plans to complete its Selva gas field Podere Maiar 1 dir (PM1) well in mid-December with production planned for January 2018. As part of the operator’s plan to revive Eni SPA’s former gas field in northern Italy, Po Valley Energy drilled the PM1 well to 1,330 m TD in the Pliocene (OGJ Online, Oct. 25, 2017).
Schlumberger’s downhole log results confirmed 53 m of gross gas pay. The well encountered the top of the reservoir at 1,245 m TVD—12 m above the level of any previous production wells, including the nearby Selva 6 well. The two main sand levels show high resistivity in the logs, indicating in accordance with sonic, a gas-bearing reservoir, the company said. The PM1 well is in the Podere Gallina permit near Bologna.
In March, Po Valley Energy was awarded the Torre del Moro exploration license where the company planned to evaluate an onshore Mesozoic carbonate structure also in northern Italy (OGJ Online, Mar. 6, 2017). The operator said Torre del Moro exploration target was analogous Eni’s Villa Fortuna field, which has produced 230 million bbl of oil to date.
Po Valley, 63%, and its joint venture partners United Oil & Gas, 20%, and Prospex Oil & Gas, 17%, have agreed to proceed to case, perforate, and complete the well and install downhole production equipment.
APPEA elects Yujnovich as board chair
The Australian Petroleum Production & Exploration Association has elected Zoe Yujnovich as its board chair following the organization’s 2017 annual general meeting in Perth.
Yujnovich serves as chair of Shell Australia and has more than 25 years’ experience in the international resources industry.
She is the first woman to be elected as chair of APPEA’s board.
The national lobby group’s new vice-chair is Michael Abbott, who is the senior vice-president, corporate and legal, of Woodside Energy. He has 25 years’ legal experience and 10 years in senior leadership roles in the oil and gas industry.
Yujnovich said the Australian industry must attract both domestic and foreign investment. To do that the industry has to be more cost-competitive in an environment in which the oil price will remain lower for longer.
Drilling & ProductionQuick Takes
PSA: Eni Norge can restore Goliat production
Eni Norge can restore Goliat field in the Barents Sea to full production, the Norwegian Petroleum Safety Authority (PSA) said.
PSA gave Eni Norge the all-clear after the company fulfilled the conditions of an Oct. 6 order, which followed a September audit of the field’s electrical safety. Eni Norge undertook the required modifications.
Goliat started production in March 2016 (OGJ Online, Mar. 14, 2016). The field is expected to produce 100,000 b/d (65,000 boe/d net to Eni). The field is estimated to contain about 180 million bbl.
Production is accomplished using a subsea system that eventually will total 22 wells, including production wells, water-injection wells, and gas-injection wells.
Goliat platform is on production license 229 in an ice-free area. In what Eni calls the world’s northernmost producing offshore oil field, Goliat was developed with a cylindrical floating production, storage, and offloading vessel built to withstand the harsh Arctic climate.
The FPSO, with 1 million bbl of oil capacity, was floated off Hammerfest, Norway, and towed 85 km northwest to its current location (OGJ Online, Apr. 28, 2015).
DNO triples oil production from Peshkabir field
Norway’s DNO ASA reported tripling its oil production to 15,000 b/d from Peshkabir field in the Tawke license in Iraq’s Kurdistan region after completion of the Peshkabir-3 well testing, stimulation, and cleanup program.
Currently DNO is preparing to drill the Peshkabir-4 well, which will test the Triassic reservoir. DNO the operates Tawke license with a 75% interest. Partner Genel Energy PLC holds 25% interest. The development has been fast tracked (OGJ Online July 11, 2017).
Tawke license contains Tawke and Peshkabir fields. The fields combined year-to-date production has averaged 110,000 b/d.
DNO tested 11 zones in a 1.2-km horizontal section of Cretaceous and Jurassic reservoir with the Peshkabir-3 well. Each zone was tested individually, of which 10 flowed oil and one was gas zone. The oil zones tested an average of 5,340 b/d per zone on a 64⁄64-in. choke.
The highest individual test rate of 7,200 b/d. A combined production test totaled 12,500 b/d from five zones.
Production from Peshkabir-2 well, in operation since May, together with that of Peshkabir-3 well are currently processed through temporary test facilities. The crude is moved by truck to DNO’s adjacent Tawke field for export.
CNPC, Uzbekneftegaz start Karakul phase
A joint venture of China National Petroleum Corp. and Uzbekneftegaz has commissioned the first phase of its three-field Karakul natural gas development near Bukhara in south-central Uzbekistan.
CNPC said the project has design production capacity of 1 billion cu m/year of gas.
Field names are Dengizkul, Khojadavlat, and Sharky Alat.
License extended for block off Congo (former Zaire)
Muanda International Oil Co., a subsidiary of Perenco, has reached an agreement with the government of Congo (former Zaire) extending by 20 years the license covering the Offshore DR Congo Block, reports partner Inpex Corp., Tokyo.
The new expiration date is Nov. 21, 2043.
Ten oil fields on the block produce a total of about 11,000 b/d. Water depths are 4-20 m. Production began in 1975.
Muanda International operates the block with a 50% interest. Inpex subsidiary Teikoku Oil (DR Congo) Co. Ltd. has a 32.28% interest. Chevron Corp. holds 17.72%.
PROCESSING Quick Takes
Kazakhstan revives Atyrau petrochemical complex
Kazakhstan Petrochemical Industries Inc. LLP (KPII) has approved CB&I, Houston, to proceed with project management services for a propane dehydrogenation (PDH) unit and polypropylene plant to be added as part of KPII’s previously delayed, long-planned project to build a gas processing complex in Kazakhstan’s western Atyrau region.
CB&I received notice to proceed with its scope of work on KPII’s project on Dec. 11, the service provider said.
Award of project management services to CB&I follows KPII’s previous contract award to Lummus Technology Inc., a CB&I company, for the license and basic engineering of the PDH unit and polypropylene plant (OGJ Online, Apr. 13, 2011).
The 550,000-tonne/year PDH unit will be equipped with CB&I’s Catofin technology to convert propane to propylene, while the 500,000-tpy polypropylene plant will use CB&I’s Novolen advanced gas-phase technology, according to KPII’s web site.
Part of the first phase of the integrated complex, the PDH unit intends to use gas produced from Tengiz and Kashagan oil fields to produce propylene as feedstock for the polypropylene plant, KPII said.
A second-phase of the complex envisages construction of a polyethylene production plant.
Petrochemicals produced at the complex will be sold to both domestic and export markets.
KPII, which began construction in 2013 on the then $6.3-billion project, at that time anticipated both phases of the complex—including an 800,000-tpy ethylene plant—to be fully operational by 2016, according to the company’s 2013 annual update to investors.
Gazprom Neft commissions Badra gas processing plant
PJSC Gazprom Neft subsidiary Gazprom Neft Badra has commissioned its 1.6 billion-cu m/year natural gas processing plant at Badra field in eastern Iraq (OGJ Online, Aug. 25, 2017).
The full-cycle gas plant, which entered commercial operation on Dec. 6, processes dry feed gas from Badra field, that will be shipped via a 100-km pipeline to the Az-Zubaidiya power station to supply electric power to provinces throughout Iraq as well as to the country’s capital city of Bagdad, Gazprom Neft said.
Gas processed at the site will be used to meet the Badra project’s own needs as fuel for the gas-turbine power plant, which equipped with five gas turbines, is able to produce a total 123.5 Mw of electric power to supply oil and gas processing facilities, drilling rigs, and oil-producing wells.
A 10-Mw overhead power line also will soon begin feeding into the Gazprom Neft Badra accommodation complex, as well as into the town of Badra and neighboring populated areas, said Gazprom Neft, which operates Badra field.
NGLs produced at the Badra project’s gas processing plant additionally will be used to produce LPG to be supplied to the Iraqi state-owned Gas Filling Co.
The gas plant also includes installations for sulfur production and granulation, the operator said.
Startup of the new plant enables Gazprom Neft to monetize all of the hydrocarbons produced at Badra field and ensures an associated petroleum gas utilization rate of at least 95%, according to Alexander Dyukov, Gazprom Neft’s chief executive officer.
Located in the eastern Iraqi province of Wasit, Badra field contains about 3 billion bbl of total oil in place, Gazprom Neft said.
Alongside Gazprom Neft 30%, shareholders in the project include Iraqi Oil Exploration Co. 25%, Korea Gas Corp. 22.5%, Petronas 15%, and TPAO 7.5% (OGJ Online, June 2, 2014).
TRANSPORTATIONQuick Takes
Virginia water control board approves MVP permit
Virginia’s water control board approved certification for upland areas of the proposed 300-mile Mountain Valley natural gas pipeline on Dec. 7. The certification followed the most rigorous regulatory process to which a proposed pipeline ever has been subjected in the Old Dominion, the Department of Environmental Quality division said in a statement following the 5-2 vote.
“DEQ’s technical staff has been diligent to ensure that all appropriate practices are in place to meet all water quality challenges identified,” it said. The department also has worked closely with its attorneys to make sure the agency has met all the requirements of state and federal law for which DEQ is responsible, it said.
The agency conducted its review under authority the federal Clean Water Act grants to states for considering proposed interstate pipelines. “If this project proceeds, DEQ will hold the developers to the highest standards for which they are accountable,” the Virginia agency said.
It is scheduled to consider issuing a similar certification for the proposed Atlantic Coast gas pipeline during public hearings on Dec. 11-12.
Energy officials nudge EastMed gas line
Energy ministers of Cyprus, Greece, Israel, and Italy have set a target completion date of 2025 for the Eastern Mediterranean (EastMed) natural gas pipeline between Israel and Italy.
Meeting in Nicosia, the officials signed a memorandum of understanding for the 2,100-km project.
In a joint statement, they called the pipeline a strategic infrastructure project of shared interest to their countries and Europe. The European Union has designated the pipeline a “project of common interest.”
The pipeline would carry 12-16 billion cu m/year of gas from Leviathan field off Israel and Aphrodite field off Cyprus. Both fields are in deep water (OGJ Online, Mar. 14, 2017).
Development of the fields depends on availability of an export system, a goal made elusive by conflicts among countries in the region.
Earlier this year, countries signing the new MOU issued a declaration of support for the project during a meeting in Tel Aviv with a member of the European Commission (OGJ Online, Apr. 12, 2017).
Ineos shuts Forties oil pipeline following leak
Ineos has shut its 575,000-b/d Forties crude oil pipeline system. Last week during a routine inspection, Ineos contractors discovered a hairline crack in an onshore portion of the Forties system at Red Moss near Netherley, roughly 10 miles southwest of Aberdeen. A repair and oil-spill response team was mobilized Dec. 6, after a very small amount of oil seepage was reported. Measures to contain the seepage were put in place, no oil has been detected entering the environment, and the pipe has been continuously monitored.
Ineos set up a 300-m perimeter around the leak site and a small number of residents were placed in temporary accommodation as a precautionary measure. Pipeline pressure was reduced while a full assessment of the situation was made.
Despite the reduction in pressure, the crack extended to 155 mm from 106 mm, leading to a Dec. 11 controlled shutdown of the pipeline to allow for development of a suitable repair method.
Ineos earlier this quarter completed its purchase of the Forties system and associated facilities in the UK North Sea from BP PLC (OGJ Online, Oct. 31, 2017). The system includes 235 miles of pipeline linking 85 North Sea oil and gas fields to the mainland.
Apache Corp. shut in production at its Forties field following the pipeline shutdown, helping push oil prices higher, Brent crude rising past $65/bbl for the first time since June 2016.