GENERAL INTEREST — Quick Takes
ADNOC awards CNPC 8% stake in ADCO concession
Abu Dhabi National Oil Co. (ADNOC) has awarded China National Petroleum Corp. (CNPC) 8% interest in Abu Dhabi's onshore oil concession for a signup bonus of $1.77 billion.
The concession is operated by Abu Dhabi Co. for Onshore Petroleum Operations (ADCO). The agreement covers a 40-year term backdated to Jan. 1, 2015.
The concession—including Bab, Bu Hasa, Shah, and Asab fields—has total resources of 20-30 billion boe over the term of the concession. As of December, overall production in 2016 was expected to average 1.66 million b/d of oil.
"This will be a mutually beneficial partnership that will enable us to maintain strong production levels, as, together, we maximize the returns from what is a very attractive, long-term and sustainable opportunity in our onshore oil fields," said Ahmed Al Jaber, ADNOC director general.
CNPC Chairman Wang Yilin said, "As part of the agreement to enable the optimal, efficient, and sustainable development of the concession, CNPC will play an active role in defining and developing technology applications in mature oil fields by planning to establish a tailor-made technology hub in ADCO."
ADNOC notes the UAE is China's second-largest trading partner in the Middle East with trade between the UAE and China estimated to have increased to $60 billion in 2016, up from $54.8 billion in 2015. About 60% of China's total trade passes through the UAE, where it is then reexported to Africa and Europe.
Participants in the onshore concession and shareholders of ADCO are BP PLC 10%, Total SA 10%, Inpex Corp. 5%, and GS Energy Corp. 3%. BP was awarded its stake in December 2016.
ADNOC says it will continue to explore opportunities with potential partners for the remaining 4% of the overall 40% stake in the concession earmarked for foreign companies.
Saudi renewable energy projects advance
The Saudi government has opened bidder qualification in its push for renewable energy in electric power generation.
The Renewable Energy Project Development Office of the Saudi Ministry of Energy, Industry, and Mineral Resources has requested qualifications for two projects: a 300-Mw photovoltaic facility at Sakaka in Al Jouf Province and a 400-Mw wind farm at Midyan in Tabuk Province.
The request applies to "any company (or consortium of companies) with the technical and financial capabilities to execute projects of this scale," the government said in a press statement.
As part of an economic diversification program called Vision 2030, the National Renewable Energy Program calls for installation of 9.5 Gw of generation capacity fueled by renewable energy by 2023. The government has an interim target of 3.45 Gw of renewable power by 2020 under a related program.
According to the US Central Intelligence Agency World Factbook, Saudi Arabia had 66 Gw of installed capacity in 2014.
Fuel oil and diesel supply about half the energy for Saudi power generation. Natural gas supplies the rest.
During summertime peak demand, oil use for power generation can exceed 900,000 b/d.
Regulator shuts down Calgary gas producer
The Alberta Energy Regulator has suspended licenses of Lexin Resources Ltd., a Calgary-based gas producer-processor, citing concerns that include the company's handling of sour gas.
"Lexin has failed to comply with multiple orders, lacks sufficient staff to manage its more than 1,600 sites, and owes more than $1 million in orphan fund levies and administrative fees and more than $70 million in security for its end-of-life obligations," the AER said in a statement.
"Repeated attempts by the AER to bring the company into compliance have failed. As a result, the AER has little confidence in Lexin's ability to conduct its operations safely and is taking measures to prevent increasing public safety, environmental, and financial risk."
An AER official told CBC News the company is the largest against which the agency has issued such an order.
CBC said the firm operated a sour-gas plant in southern Alberta and had 1,380 wellsites, 201 pipeline licenses, and 81 facilities.
AER transferred management of Lexin's assets to the Orphan Well Association. It ordered Lexin and affiliate LR Processing in August to suspend work at the Mazeppa sour-gas plant.
The agency also secured an interim court order against removal of equipment from Lexin properties for which it issued licenses.
Exploration & Development — Quick Takes
India awards 31 small-field contracts
India has awarded 31 contracts in an offering of revenue-sharing licenses designed to stimulate development of small discoveries. Its Directorate General of Hydrocarbons had offered 46 contract areas under its Discovered Small Fields Bid Round and received 134 electronic bids for 34 areas from 42 companies.
The Cabinet Committee on Economic Affairs approved the award of contracts for 23 areas onshore and 8 offshore.
Awarded contracts singly or as group members are four state-owned companies (called public-sector undertakings), 17 private Indian companies, and one foreign company.
Fifteen of the private companies are new to exploration and production, including the bidder described as foreign, South Asia Consultancy.
State-owned companies receiving contracts are Prize Petroleum Co. Ltd., a wholly owned subsidiary of refiner-marketer Hindustan Petroleum Corp. Ltd.; refiner-marketer Indian Oil Corp. Ltd.; producer Oil India Ltd. (OIL); and Bharat PetroResources Ltd., part of refiner-marketer Bharat Petroleum Corp. Ltd. The contract areas hold discoveries made by state-owned Oil & Natural Gas Corp. and OIL but never developed.
Lukoil makes oil discovery on Block 10 in southern Iraq
PJSC Lukoil and partner Inpex Corp. reported making an oil discovery with the Eridu 1 well on Block 10 in southern Iraq that tested more than 8,000 b/d from the Mishrif horizon.
Block 10 is 150 km west of Basra and covers 5,600 sq km. Rights to explore the block were awarded in the fourth petroleum licensing round in 2012. A 2D seismic survey was conducted on the block in 2014 (OGJ Online, Apr. 11, 2014).
Operator Lukoil Overseas Iraq Exploration BV has 60% and Inpex South Iraq Ltd. has 40%. Plans for 2017 include drilling and testing the Eridu 2 appraisal well.
Rosneft updates Iraqi, Brazilian exploratory work
OJSC Rosneft has started exploratory drilling in Iraq and Brazil.
In Iraq, Rosneft will drill the Salman-1 well on Block 12 to an MD of 4,245 m through the Kurra Chine target horizon. China's Zhongman Petroleum & Natural Gas Group (ZPEC) is the general drilling contractor.
Block 12 is in the Najaf and Muthanna provinces that border Saudi Arabia. It lies 80 km southwest of Samawa and 130 km west of Nasiriyah, and covers part of the Western Desert.
Rosneft also started drilling its first exploratory well in Brazil's Solimoes basin. The company plans to drill at least four wells in its exploration campaign (OGJ Online, Nov. 28, 2016).
In July 2014, Rosneft Brasil and Petroleos Brasileiro SA (Petrobras) signed a memorandum of understanding for detailed analysis of options for monetization of natural gas in the Solimoes basin. In May 2015, Rosneft acquired PetroRio's 55% in the project. The transaction resulted in Rosneft assuming formal operatorship of the project and holding 100% interest.
Wintershall to develop North Sea Skarfjell oil field
Wintershall Norge AS tentatively plans to develop Skarfjell oil field in the Norwegian North Sea with two subsea templates tied back to the nearby Gjoa platform, which lies 16 km northeast of the field.
The field, which contains 60-160 million bbl of oil, will produce from Upper Jurassic Intra Heather sandstones. The operator is defining the concept and is awaiting approval to continue from Norway's Ministry of Petroleum and Energy.
In 2014, Wintershall let a $280-million subsea contract to FMC Technologies for the Maria development in the Norwegian Sea. The subsea tie-back with Kristin, Asgard, and Heidrun platforms was cited as a potential solution for Skarfjell field.
License interests for Skarfjell oil field are Wintershall 35%, Capricorn Norge AS (formerly Agora Oil & Gas AS) 20%, Bayerngas Norge AS 20%, Edison International Norway 15%, and RWE Dea Norge AS 10%.
Drilling & Production — Quick TakesOtakikpo field in Nigeria starts oil flow
Continuous production has begun from Otakikpo Marginal oil field in a coastal swamp about 60 km southeast of Port Hartcourt, Nigeria, reports Lekoil Ltd. Intermittent flow into storage tanks began in December. Since then, a 6-km pipeline has been commissioned to link onshore storage with an offshore loading manifold serving shuttle tankers.
Otakikpo field is in the southern part of oil mining license 11 about 35 km east of the Bonny export terminal. Green Energy International Nigeria Ltd. operates the field under a farmout from the Shell Petroleum Development Co. Nigeria joint venture, which drilled the discovery and appraisal wells in 1980-81. Initial production from two recompleted wells is 5,000 b/d. Lekoil, technical and financial partner, said it is working to double production by the end of the second quarter.
Green Energy International holds 60% interest in the project. Lekoil Nigeria, 90% owned by Lekoil Ltd., holds 40%.
A second development phase envisions further drilling in Otakikpo and installation of a central processing facility.
The operator plans to extract liquids from Otakikpo gas and use dry gas for local power generation.
Kraken heavy oil field FPSO on station
Kraken heavy oil field in the UK North Sea is on schedule for a production start in this year's second quarter following arrival at the field of the floating production, storage, and offloading vessel, reports operator EnQuest PLC (OGJ Online, Nov. 18, 2013).
The FPSO is on station and securely moored, awaiting commissioning of the topsides, reconstruction of the turret area pipeline, and connection of the risers and umbilicals to the swivel stack.
That work will be followed by commissioning of the subsea infrastructure, EnQuest said.
Kraken is in the East Shetland basin, west of the North Viking graben about 125 km east of the Shetland Islands.
Enquest, which has 70.5% interest in the field, expects peak gross production of 50,000 b/d. Cairn Energy PLC holds 29.5%.
Senex sanctions Western Surat coal seam gas project
Senex Energy Ltd., Brisbane, has sanctioned a major investment in the proposed Western Surat Gas Project by committing $50 million (Aus.) to a 30-well coal seam gas (CSG) drilling campaign in southeastern Queensland.
The program follows the success of the Glenora pilot program where a number of wells were brought on line for continuous production early this month. There was immediate gas flow to surface.
Senex is also encouraged by strong gas flows from former Queensland Gas Corp. wells on the Eos block during rehabilitation works.
Senex Energy Chief Executive Officer Ian Davies says the results demonstrate that coal seams in the Glenora and Eos blocks have already been partially dewatered by neighboring operations.
The initial 30-well campaign is expected to yield gas production of 10 terajoules/day by mid-2018.
Davies says this work will increase the understanding of the CSG resource and support an accelerated project timeline. Stage 2 of the program is potentially to drill, complete, and connect another 30-50 wells throughout 2018.
All being well, Senex will be able to transition to a development phase targeting gas production of more than 16 terajoules/day by 2019.
The Glenora and Eos blocks lie in the southeast of the project area, due north of the Gladstone LNG (GLNG) joint venture's producing Roma field.
A pipeline from the Glenora pilot wells to the GLNG low-pressure gathering network was constructed last year. Senex plans to sell raw gas to GLNG subject to agreement of commercial terms.
PROCESSING — Quick TakesQatar commissions Ras Laffan Refinery 2
Qatar Petroleum (QP) subsidiary Qatargas Operating Co. Ltd. has formally commissioned the 146,000-b/d condensate splitter of its Laffan Refinery 2 (LR 2) at the Laffan refining complex in Ras Laffan Industrial City, Doha, Qatar.
The LR 2 project doubles condensate refining capacity of the Laffan complex to 292,000 b/d in line with principles of Qatar Vision 2030, which aims to create a sustainable economy and advance the standard of living in Qatar, Qatargas said.
Designed to operate at reduced emission levels and with zero flaring during normal operation, the condensate refinery also includes a wastewater plant to treat and recycle industrial water from both Laffan Refinery 1 (LR 1) and LR 2 that, post-treatment, is reused as boiler feed water and cooling water to reduce the site's overall water consumption as well as its discharge of any treated industrial water.
LR 2, which first reached commercial startup in late 2016, processes condensate from supergiant North field to produce low-sulfur, Euro 5-quality naphtha, jet fuel, ultralow-sulfur diesel, propane, and butane, Qatargas said.
Operated by Qatargas, the $1.5-billion LR 2 project is a joint venture of QP 84%, Total SA 10%, Cosmo Oil Co. Ltd. 2%, Idemitsu Kosan Co. Ltd. 2%, Mitsui & Co. Ltd. 1%, and Marubeni Corp. 1% (OGJ Online, July 24, 2014).
ExxonMobil plans expansion at Singapore refinery
ExxonMobil Corp. has approved a project to expand production of high-quality lubricant base stocks at affiliate ExxonMobil Asia Pacific Pte. Ltd.'s 592,000-b/d integrated, two-site refining complex on mainland Jurong and Pulau Ayer Chawan, Jurong Island, offshore southwestern Singapore.
The expansion will support production of ExxonMobil's EHC Group II base stocks, which will enable customers to blend lubricants that satisfy more-stringent specifications, help reduce emissions, and improve fuel economy and low-temperature performance, ExxonMobil said.
The EHC Group II slate additionally will allow customers to take advantage of industry base oil interchange and viscosity-grade, read-across guidelines to reduce formulation costs for many engine oil formulations, the company said.
Alongside strengthening reliable global supply of base stocks designed specifically to maximize performance of automotive engine oil grades and finished lubricants across multiple industries, the expansion also will ensure ongoing competitiveness of ExxonMobil's Singaporean business, which includes both the refinery as well as its integrated petrochemical complex on Jurong Island, the operator said.
ExxonMobil plans to begin construction on the expansion during this year's second quarter for a targeted startup sometime in 2019.
The company did not disclose how much it will invest to complete the project, nor did it reveal details regarding capacities or units to be involved in the expansion.
ExxonMobil said a cogeneration project to improve energy efficiency and reduce emissions at the Singapore refinery also remains under way and on-schedule for startup by yearend.
The Singapore projects follow a series of investments ExxonMobil has recently made to upgrade and improve its global downstream operations.
Meridian inks deals for North Dakota refinery
Meridian Energy Group Inc., Belfield, ND, entered into memoranda of understanding with local and regional petroleum product distribution firms that have agreed to purchase and distribute as much as 268 million gal/year of refined products from Meridian's two-phased grassroots 55,000-b/sd high-conversion Davis refinery to be built in the heart of southwestern North Dakota's Bakken shale region, near Belfield, in Billings County, ND (OGJ Online, Dec. 23, 2015).
The MOUs account for more than 67% of production capacity from the Davis refinery's first 27,500-b/sd Phase 1 development as well as a portion of output from the completed 55,000-b/sd refinery that, once fully commissioned, will produce more than 800 million gal/year of refined products, Meridian said.
Alongside ongoing negotiations of distribution agreements with other firms in the region, Meridian also is finalizing negotiations of other agreements to support the refinery's operation, including crude supply and crude-product logistics agreements, the company said.
Further details regarding the MOUs and the distribution firms involved were not disclosed.
Separately, however, Meridian did confirm it has completed a letter of intent with Sequent Energy Management LP, Houston, a subsidiary of Atlanta-based Southern Co. Gas, to deliver the Davis refinery's full requirement of natural gas supplies, which Meridian will use to power most operations at the greenfield site.
With purchase and fabrication of long lead items still ongoing, Meridian plans to break ground on the project shortly after receiving approval of its application for a permit to begin construction from the air-quality division of North Dakota's health department (OGJ Online, Oct. 11, 2016).
While it did not reveal a definitive timetable for the permit's pending approval, the company said it expects Phase 1 of the refinery, or Davis Light, to be commercially operating in early 2018.
The refinery's Phase 2 development, which will expand processing capacity to 55,000-b/sd, is slated for startup sometime in 2019 (OGJ Online, Aug. 24, 2016).
TRANSPORTATION — Quick TakesTurkStream second string construction set to start
Construction will start soon of the TurkStream natural gas pipeline's second string from Russia across the Black Sea to Turkey, as PJSC Gazprom reported a construction contract has been signed.
Allseas Group SA, the offshore pipelaying and subsea construction company, signed the pact in Amsterdam with South Stream Transport BV, the Gazprom subsidiary responsible for construction of TurkStream's offshore section.
The Allseas Pioneer Spirit will lay more than 900 km of 32-in. pipe across the seabed in as much as 2,200 m of water.
The construction contract for the pipeline's first string was signed in 2016 and included an option for the second string.
The first string is intended for Turkish consumers. The second string will deliver gas to southern and southeastern Europe.
Each string will have throughput capacity of 15.75 billion cu m/year (OGJ Online, Sept. 30, 2016).
Canada's NEB plans hearing on Wyndwood pipeline
Canada's National Energy Board is planning for a public hearing this spring regarding the Wyndwood Pipeline expansion project in northeastern British Columbia. The meeting's date and location have not been set.
Westcoast Energy Inc. filed a project application last October that envisions a 28-km natural gas line southwest of Chetwynd.
The project would enable Westcoast to provide incremental firm transportation service from receipt points along the Fort St. John Mainline to accommodate increasing gas production from the Montney formation.
Westcoast received bids in 2015 and entered into expansion service agreements with shippers for 50 MMcfd of incremental firm service. The agreements average 12 years.
Estimated cost of the expansion project is $170.3 million (Can.). Westcoast's proposed construction start date is May 1, and the planned in-service date is first-quarter 2018. Westcoast is doing business as Spectra Energy Transmission.
The pipeline loop would be primarily routed contiguous to the existing pipeline. It would extend near Stone Creek to Westcoast's existing Compressor Station No. 2 at Willow Flats. No incremental land or work space would be required for modifications for the compressor station.
The proposed line would have an outside diameter of 914 mm compared with the existing line's 762 mm.
In January, NEB received 16 applications to participate in the hearing. It has granted "intervenor status" to 14 applications. NEB will consider evidence from local landowners, indigenous groups, companies, and federal departments as it decides whether to approve the project.
NEB is providing as much as $250,000 to support "meaningful participation" in the hearing process by intervenors.
After Westcoast replies to intervenor evidence at the hearing, NEB will close the record and make a decision within 12 weeks.
TransCanada holds Canadian Mainline open season
TransCanada Corp. has launched an open season for binding commitments on a revised, long-term, fixed-price proposal to flow natural gas along the Canadian Mainline from the Empress receipt point in Alberta to the Dawn hub in southern Ontario.
The launch follows ongoing discussions with Western Canadian Sedimentary Basin producers, and is expected to close on Mar. 9 at 11 a.m. MST. The targeted in-service date is Nov. 1.
"We are pleased to offer this opportunity for WCSB producers to compete with emerging supplies of natural gas from the Marcellus and Utica basins," said Stephen Clark, TransCanada's senior vice-president and general manager, Canadian natural gas pipelines.
"TransCanada continues to offer a 10-year term and a targeted total subscription of 1.5 petajoules/day at a simplified single rate toll of 77¢/gigajoule," added Clark. "While we have held extensive discussions with customers and have received a positive response, it is important that these threshold conditions are met for TransCanada to advance this offering."
The proposal does not impact current contracts that are already in place on the Canadian Mainline system.
