GENERAL INTEREST — Quick Takes
Venado acquiring Eagle Ford properties
Venado Oil & Gas LLC, Austin, has agreed to make its second acquisition in two months of oil and gas properties in the Eagle Ford play of South Texas.
The privately held firm, which last September formed a partnership for Eagle Ford investments with KKR & Co. LP, agreed to buy properties in Zavala, Frio, and Dimmit counties from EXCO Resources Inc. for $300 million.
Production from the acreage is about 4,100 boe/d, 90% oil.
EXCO said proceeds of sale will fund drilling and development of core acreage in the Haynesville and Bossier shales of North Louisiana and East Texas.
Venado last month acquired nonoperated South Texas assets of SM Energy, Denver, for $800 million. The purchase includes 37,500 net acres in the Maverick basin-Eagle Ford play and a 12.5% interest in the Springfield Gathering System.
Net production from the acquired properties in last year's third quarter was 27,260 boe/day-33% oil, 33% natural gas, and 34% NGLs.
Todd Energy buys Shell's interest in Kapuni gas field
Royal Dutch Shell PLC has agreed to sell its 50% interest in Kapuni natural gas field, onshore in Taranaki basin on New Zealand's north island, to its joint venture partner Todd Energy. Financial details were kept confidential.
However, a second part of the deal enables Shell to buy Todd's 50% of the combined operating company Shell Todd Oil Services (STOS). This company operates two other gas ventures in New Zealand-Maui and Pohokura fields-and the arrangement is seen as a way for Shell to simplify its operating structure in the country as it prepares to divest its upstream assets. Shell and Todd have been together in STOS since 1955.
The deal follows an internal review of Shell's New Zealand operations announced in December 2015 in response to the slump in world oil prices as the company looked to refocus its gas and deepwater oil businesses.
Shell has been in New Zealand for a century. Kapuni field, which was New Zealand's first commercial onshore gas field, was discovered in 1959.
Shell still has 84% interest in offshore Maui gas field and 48% in offshore Pohokura oil and gas field. The company says there is no timeline for the sale of these remaining assets.
Lundin completes reorg leading to international spinoff
Lundin Petroleum AB, Stockholm, has completed the reorganization of Lundin Petroleum Group into a spinoff of its assets in Malaysia, France, and the Netherlands after receiving regulatory approvals (OGJ Online, Feb. 13, 2017).
The distribution of the shares of the newly formed International Petroleum Corp. (IPC), on a pro rata basis, to Lundin Petroleum shareholders was conditionally approved by the shareholders of Lundin Petroleum on Mar. 22.
IPC has now received conditional approval for the listing of its shares on the Toronto Stock Exchange and is intending to list on the Nasdaq First North stock exchange. The distribution and first day of trading of IPC's shares on the TSX and Nasdaq First North is expected on Apr. 24.
The Lundin board has determined that the conditions for shareholder approval have been satisfied and that the record date for the IPC share distribution will be Apr. 20. Based on that record date, shares of Lundin will commence trading without the right to the distribution of the IPC shares on Apr. 19.
Each three shares in Lundin will entitle the holder to one common IPC share. If the shareholding in Lundin is not evenly divisible by three, the holder will receive an entitlement to a fraction of a share.
The fractions will be added together with the fractions held by other shareholders into whole shares in IPC, which will be sold on the market. The proceeds will then be paid to the relevant IPC shareholders.
Statoil ASA has indicated to Lundin and IPC that it intends to tender its IPC shares to the offer if the offer is made.
Aramco signs technology MOUs with ADNOC, Masdar
Saudi Aramco has signed memorandums of understanding with Abu Dhabi National Oil Co. (ADNOC) and Masdar, Abu Dhabi's renewable energy company.
The agreement with ADNOC involves identifying technologies that could deliver improved operational performance and efficiency across the oil and natural gas value chain.
The deal with Masdar seeks advancements in clean electricity generation and carbon capture.
Waterous fund buying Northern Blizzard stake
Waterous Energy Fund has agreed to buy two thirds of Northern Blizzard Resources Inc., Calgary, from two private-equity funds for a reported $244 million (Can.).
Northern Blizzard holds 200,000 net acres in several heavy-oil plays along the Alberta-Saskatchewan border, mostly in Saskatchewan.
The buyer was founded earlier this year by Adam Waterous, former head of global investment at Bank of Nova Scotia.
Exploration & Development — Quick Takes
Eni finds gas, condensate in Gamma prospect off Libya
Eni SPA encountered natural gas and condensate in the Metlaoui Group of Eocene age with well B1 16/3 in the Gamma prospect of contract area D, 140 km offshore Tripoli.
Eni says the well, drilled in 150 m of water to a total depth of 2,981 m, has the capacity to deliver more than 7,000 boe/d in production configuration. The firm spudded the well on Jan. 4 (OGJ Online, Jan. 9, 2017).
The discovery, the latest by Eni in Area D following those made in 2015, is 15 km southwest of Bouri field and 5 km north of Bahr Essalam field (OGJ Online, May 26, 2015). Drilling of the Gamma prospect is part of Eni's nearfield exploration strategy, targeting synergies with existing infrastructure.
Eni, through its subsidiary Eni North Africa BV, is operator of contract area D with 100% working interest in the exploration phase. Eni has been in Libya since 1959 and currently produces 350,000 boe/d in equity in the country.
Iranian upstream bidding delayed again
Bidding for Iranian oil and gas projects by non-Iranian companies has encountered another delay.
According to Iranian news reports, Oil Minister Bijan Zanganeh told parliament the Iran Petroleum Contract (IPC) remains under review by the Supreme National Security Council.
The IPC is to replace the unsuccessful buyback contract in place since the 1990s.
National Iranian Oil Co. in January designated 29 foreign companies as qualified to participate in an upstream licensing round originally scheduled for last October.
BOEM issues draft SEIS for proposed gulf lease sales
The US Bureau of Ocean Energy Management released a draft supplemental environmental impact statement for proposed 2018 Gulf of Mexico lease sales that includes a proposal to have a single region-wide sale. The draft contains analyses of potential environmental impacts that could result from having a region-wide lease sale in the gulf, including preliminary results of new air quality modeling, BOEM said on Mar. 30.
In a region-wide sale, it said it would offer all available blocks in the western, central, and eastern gulf planning areas, except for entire or portions of blocks deferred by the 2006 Gulf of Mexico Security Act, which are adjacent to or beyond the US Exclusive Economic Zone in the northern portion of the Eastern Gap, and whole and partial blocks within the Flower Garden Banks National Marine Sanctuary's current boundary.
Such a sale would cover about 95 million acres, BOEM said.
Comments will be accepted through May 15. The new air quality modeling's preliminary results have not been subjected to scientific review.
Drilling & Production — Quick Takes
API notes rise in US shale drilling expenditures in 2015
Oil and gas producers spent an estimated $122.8 billion to drill wells in the US in 2015, 27.2% less than in 2014, the American Petroleum Institute said in its 2015 Joint Association Survey of Drilling Costs.
About 28,809 oil and natural gas wells were drilled in 2015, down 37.6% from 2014 levels. However, the number of shale-gas wells drilled remained relatively unchanged from 2014 to 2015 and shale well expenditures saw an increase of about $119 million.
Expenditures on shale drilling represented 47.7% of costs, nearly half of all spending on drilling in 2015.
The report also shows expenditures on oil accounted for 64.5% of all drilling costs in 2015, and gas expenditures accounted for 24.8% of costs, up from 24.4% in 2014.
Development well expenditures were $109.6 billion in 2015, while exploratory well expenditures were estimated at $5.6 billion.
Top tension risers installed in Moho Nord field
The first of 17 production top tension risers (TTR) have been installed on Total E&P's Moho Nord field offshore Congo (Brazzaville). Total started production at Moho Nord field earlier this year (OGJ Online, Mar. 15, 2017).
Contractor 2H Offshore installed and tensioned up the first TTR and ran pressure tests before the completion drilling phase through the TTR. The installation was done on the tension leg platform in about 800 m of water.
The TLP was designed to allow simultaneous operations during drilling, production, completion, and coiled tubing intervention.
The TTRs were designed for a 25-year lifespan and can be fitted on any of the 27 well slots in the field. The first 17 are to be installed within 5 years.
Moho Nord field was developed through 34 wells tied back to a TLP and to Likouf, a floating production unit. Oil is processed on Likouf and then transported by pipeline to the Djeno onshore terminal.
2H Offshore specializes in the design, structural analysis, and integrity management of riser and conductor systems used in offshore drilling and production.
Nido drills appraisal well off the Philippines
Galoc Production Co. WLL, a subsidiary of Nido Petroleum Ltd., Perth, has spudded an appraisal well in Galoc oil field offshore the Philippines.
The well, Galoc-7, is being drilled by the Odfjell Drilling's Deepsea Metro I ultradeepwater drillship on Block C in Service Contract Area 14.
The plan is to evaluate the untested Galoc Mid Area (GMA) within the field. If successful, development of the GMA would materially increase reserves and production resulting in an extension of the overall field life.
The drillship has been contracted for the one well with an option to drill a sidetrack.
PROCESSING — Quick Takes
Sunoco to sell most of its retail outlets for $3.3 billion
Sunoco LP has agreed to sell a majority of its retail outlets to 7-Eleven Inc. for $3.3 billion in cash plus fuel, merchandise, and other inventories.
The assets being sold include 1,110 convenience stores in 19 geographic regions primarily along the East Coast and in Texas, and the associated trademark and intellectual property of Stripes LLC.
As part of the deal, Sunoco will enter a 15-year take-or-pay fuel-supply agreement with a 7-Eleven subsidiary under which Sunoco will supply 2.2 billion gal/year of fuel. The agreement will have guaranteed annual payments to Sunoco, provided that 7-Eleven will continue to use the Sunoco brand at currently branded Sunoco stores, and includes committed growth in future periods.
In a separate process, 200 convenience stores in North and West Texas, New Mexico, and Oklahoma will be sold. Sunoco's Aloha Petroleum Ltd. business unit in Hawaii will continue to operate its integrated business model within the company. The deal also excludes Sunoco's APlus franchisee-operated stores.
The firm says the deal is a first step in its strategic shift away from company-operated convenience stores to focus on its fuel-supply business.
Led by the Sunoco fuel brand and APlus franchise, Sunoco says it plans to become a leading consolidator in the domestic wholesale fuels business, supplying fuel to a network of more than 8,900 locations of third-party dealers, distributors, and other commercial customers, with an enhanced focus on master limited partnership qualifying income.
Proceeds from the deal, expected to close by the fourth quarter, also will be used to enhance Sunoco's credit and leverage profiles.
Sunoco Logistics Partners LP and Energy Transfer Partners LP late last year agreed to merge in a $20-billion deal that's expected to close this month (OGJ Online, Nov. 21, 2016).
Hanwha Total to expand Daesan integrated complex
Hanwha Total Petrochemicals Co. Ltd. (HTPCL), a 50-50 joint venture of Hanwha Group, Seoul, and Total SA, Paris, will invest $450 million to expand ethylene capacity of its Daesan refining and petrochemicals integrated complex in Chungnam Province, South Korea, about 145 km from Seoul.
Designed to expand ethylene production capacity by 30% to 1.4 million tonnes/year, the expansion also will increase the complex's feedstock flexibility, enabling it to process competitively priced and abundantly available propane supplies resulting from rising US shale gas production, Total said.
Alongside meeting local South Korean demand, increased ethylene production from the complex also will supply China's nearby and rapidly growing market, which continues to import a large portion of its ethylene requirements.
Part of Total's strategy to boost investments in developing petrochemicals based on competitive feedstock and targeting high-growth markets, the ethylene expansion project at Daesan is scheduled to be completed in mid-2019, the French operator said.
The newly proposed ethylene expansion follows a nearly $2-billion upgrade of the complex completed in 2014, which added a second aromatics plant, a condensate fractionation unit, and an aromatics unit (OGJ Online, July 27, 2012).
Total and Hanwha formed HTPCL following Hanwha's 2015 purchase of Samsung Group's petrochemicals business, which included Samsung's 50% interest in the Daesan complex under the former Samsung Total Petrochemicals Co. Ltd. joint venture, according to an Apr. 30, 2015, release from HTPCL.
In addition to its current output of 1 million tpy of ethylene, 1.77 million tpy of paraxylene, and 1.05 million tpy of styrene monomer, the Daesan complex produces polypropylene, polyethylene, ethylene-vinyl acetate copolymer, as well as gasoline, diesel, jet fuel, LPG, fuel oil, and solvents.
Slovnaft plans turnaround at Bratislava refinery
Slovnaft AS, a subsidiary of MOL Group, Budapest, will begin a partial shutdown of its 6.1 million-tonne/year refinery in Bratislava, Slovakia, beginning Apr. 15 for 2 months of routine maintenance.
Part of its regularly scheduled program to ensure reliable operations, the planned turnaround will involve the phased shutdown of 16 production units for extensive technical inspections, maintenance, and equipment aimed at increasing energy efficiency and safety of processing activities at the plant, Slovnaft said.
To be executed by subsidiary Slovnaft Montaze a Opravy AS, the turnaround will require a total investment of more than €57 million, of which €33 million will be spent on repairs and maintenance, and more than €24 million on modernization works.
Slovnaft did not disclose details regarding specific units to be shut down or projects to be executed during the turnaround.
With sufficient stocks already in storage in preparation for the event, supply commitments to refinery customers will not be interrupted during the shutdown period, the company said, adding that it would cover any increased customer demand with production from other MOL Group refineries, or if necessary, by local purchases on export markets.
The Bratislava refinery is scheduled to resume full production rates in mid-June, the operator said.
TRANSPORTATION — Quick Takes
Cyprus-talk restart lifts hope for gas line
Prospects improved for construction of a natural gas pipeline between East Mediterranean fields and Turkey Apr. 11 when negotiations over the reunification of Cyprus resumed after a 54-day break.
Cypriot President Nicos Anastasiades and Turkish Cypriot leader Mustafa Akinci scheduled four meetings during the next month and a half but set no deadline for an agreement.
Nearly 2 years of talks mediated by the United Nations seemed headed for settlement in January when representatives of the island-nation's guarantors-Turkey, Greece, and the UK-joined the negotiations.
But Akinci withdrew in February, citing a legislative decision that he said moved the Greek Cypriot position away from shared governance.
Cyprus has been divided since 1974 between the Turkish north and Greek south.
The government of Turkey has made an end to the Cypriot impasse a condition for addressing a territorial dispute stymying a pipeline to carry gas to Turkey from undeveloped deepwater fields, including Leviathan off Israel and Aphrodite off Cyprus.
Meanwhile, an ambitious alternative project received a boost earlier this month when energy ministers of Italy, Greece, Cyprus, and Israel signed a declaration of support for the proposed Eastern Mediterranean (EastMed) pipeline. They met in Tel Aviv with European Commissioner Miguel Arias Canete.
The 1,900-km EastMed pipeline would link the four countries and have initial capacity of 10 billion cu m/year of gas. Offshore segments would total 1,300 km.
According to IGI Poseidon SA, Athens, a 50-50 venture of DEPA SA of Greece and Edison SPA of Italy, studies confirm that the project is technically feasible, economically viable, and complementary to other export options.
IGI Poseidon is doing preliminary work on the EastMed project with financial help from the European Union's Connecting Europe Facility.
EPP to build Shin Oak NGL pipeline
Enterprise Products Partners LP (EPP) plans to build a 571-mile pipeline to transport natural gas liquids from the Permian basin to the firm's NGL fractionation and storage complex in Mont Belvieu, Tex.
The Shin Oak NGL pipeline will originate at EPP's Hobbs NGL fractionation and storage facility in Gaines County, Tex. The 24-in. OD pipeline will have an initial design capacity of 250,000 b/d, expandable to 600,000 b/d. The project is supported by long-term customer commitments and is expected to be in service in second-quarter 2019.
In addition to mixed NGL supplies aggregated at the Hobbs facility, the Shin Oak pipeline will provide takeaway capacity for mixed NGLs extracted at gas processing plants in the Permian region, including two EPP facilities that began service in 2016 and the Orla I plant that is scheduled to begin operations in second-quarter 2018.
In tandem with EPP's existing NGL pipelines, the pipeline will also increase the company's capacity to transport purity NGL products from Hobbs to Mont Belvieu.
EPP's Mont Belvieu NGL complex has 130 million bbl of underground storage capacity and 670,000 b/d of NGL fractionation capability. The firm is building a ninth fractionator at Mont Belvieu that will increase NGL fractionation capacity by 85,000 b/d following its expected completion in second-quarter 2018.
Mont Belvieu is pipeline-connected to the US petrochemical industry on the Gulf Coast and EPP's LPG and ethane deepwater marine export terminals on the Houston Ship Channel.
KMTP, DCP to develop Gulf Coast Express pipeline
Kinder Morgan Texas Pipeline LLC (KMTP), a subsidiary of Kinder Morgan Inc., and DCP Midstream LP have signed a letter of intent for DCP to participate in the development of the proposed Gulf Coast Express pipeline project that will connect Permian basin gas production with the Texas Gulf Coast.
The project is designed to transport up to 1.7 million dekatherms/day of gas through 430 miles of 42-in. pipeline from the Waha, Tex., area to Agua Dulce, Tex. The pipeline is expected to be in service in second-half 2019, subject to shipper commitments.
A nonbinding open season for firm gas transportation is currently in process. DCP is expected to be a partner and shipper on the proposed pipeline. KMI will build and operate the line.
DCP operates 1.3 bcfd of processing capacity in the targeted Permian supply area. DCP also operates Sand Hills, an NGL pipeline extending from the Permian to Mont Belvieu, Tex. Sand Hills is currently being expanded to 365,000 b/d from 280,000 b/d.
Gas supply for the Gulf Coast Express project is expected to be sourced from multiple locations, including existing receipt points along KMI's KMTP and El Paso Natural Gas pipeline systems in the Permian, a proposed interconnection with the Trans-Pecos pipeline, and additional interconnections to both intrastate and interstate pipeline systems in the Waha area.
Deliveries of gas into the Agua Dulce area will include points into KMTP's existing Gulf Coast network, KMI-owned intrastate affiliates KM Tejas and KM Border pipelines, the Valley Crossing pipeline, the NET Mexico header, and multiple other intrastate and interstate gas pipelines.
Denver-based DCP is managed by its general partner, DCP Midstream GP LP, which is managed by its general partner, DCP Midstream GP LLC, which is wholly owned by DCP Midstream LLC.
DCP Midstream LLC is a joint venture of Phillips 66 and Enbridge Inc. DCP Midstream LLC and DCP Midstream Partners LP agreed to merge their businesses in January (OGJ Online, Jan. 6, 2017).
