OGJ Newsletter

Feb. 19, 2018
International news for oil and gas professionals


Canada to overhaul energy-project review

Canada proposes to overhaul its vetting and regulation of energy projects and give new prominence to environmental review.

The Liberal government has proposed legislation that would replace and realign functions of the National Energy Board (NEB) and Canadian Environmental Assessment Agency.

The new Impact Assessment Agency of Canada would "work in partnership with federal regulators to deliver a single, consistent, and predictable assessment process for designated projects and coordinate upfront work and consultations with indigenous peoples," said Jim Carr, minister of natural resources.

"It will look at how a project could affect not just our environment but also communities and health, the rights of indigenous peoples, jobs, and the economy over the long run."

The NEB's replacement, the Canadian Energy Regulator, will "have an expanded mandate to review traditional and renewable sources of energy," Carr said.

For "major new projects," he added, the Canadian Energy Regulator "will work with the new Impact Assessment Agency to provide its own recommendations in a single, final report."

BOEM awards 81 leases from August OCS sale

The US Bureau of Ocean Energy Management reported the award of 81 leases totaling nearly $110.9 million from all apparent high bids in the Gulf of Mexico region-wide Lease Sale 249 on Aug. 17, 2017. The leases were issued after BOEM completed the required evaluation to make sure the public received fair market value for the tracts, BOEM said.

Total E&P USA Inc. submitted the highest accepted bid, $12,100,717, for Garden Banks Block 1003, BOEM said.

It said that during the sale, 27 companies participated, and 99 bids were received totaling $137,006,181 on 90 tracts covering 508,096.16 acres. High bids totaling $121,143,055 were offered in the sale. BOEM said. Seven bids totaling $9,294,188 were rejected, and two others were withdrawn, it noted. More detailed information is available at BOEM's web site.

Pin Oak adds Utica-Point Pleasant assets

Pin Oak Energy Partners LLC, Akron, Ohio, has acquired 70,000 net acres and midstream properties in the northern Utica-Point Pleasant gas play of Ohio and Pennsylvania from multiple sellers.

The acquired lease interests, 90% held by production, are in Mahoning, Trumbull, and Guernsey counties, Ohio, and Mercer County, Pa. Associated pipeline rights-of-way are included.

Midstream properties include gas processing facilities and taps into interstate pipelines.

Pin Oak also acquired 33 vertical conventional wells producing from Cambro-Ordovician Knox Group formations at depths averaging 8,500 ft with offset and deeper potential.

Exploration & DevelopmentQuick Takes

Eni discovers Zohr-like gas column offshore Cyprus

Eni SPA is assessing the range of gas volumes in place but has said Calypso 1 NFW exploration well has discovered a "Zohr-like" gas play on Block 6 offshore Cyprus. The well, which was drilled in 2,074 m of water to a final depth of 3,872 m, encountered an extended gas column in Miocene and Cretaceous-age rocks. The operator said the Cretaceous sequence has excellent reservoir characteristics.

Partner Total SA has executed an intensive and detailed collection of fluids and rock samples from the Calypso well.

Eni operates Block 6 with 50% interest. Total holds the remainder. Both companies are active in Cyprus, Egypt, and Lebanon, where the consortium (including OAO Novatek) have signed exploration agreements for Lebanon's Blocks 4 and 9 (OGJ Online, Dec. 19, 2018).

For comparison, Zohr gas field is on Egypt's Shorouk block and was brought on stream in December (OGJ Online, Dec. 20, 2017). Eni estimates Zohr has resources of more than 30 tcf, or about 5.5 billion boe.

Wintershall expands German, Dutch exploration

Following its successful 13-well drilling campaign last summer, Wintershall Holding GMBH is expanding production in the western part of Germany's largest existing onshore oil field. The wells are connected to the Cretaceous Bentheim sandstone, which lies at a depth of 700-900 m. To date, the operator has invested a total €30 million.

The production expansion at its Emlichheim site is in Lower Saxony, County of Bentheim. "With a 3D seismic survey, we're now laying the foundation for developing additional oil reserves on the German-Dutch border," said Andreas Scheck, head of Wintershall Deutschland. Reservoir simulations have revealed additional untapped reserves in Emlichheim oil field, and the operator's seismic survey is set to be completed by the end of February. The company reported that Emlichheim field in Lower Saxony, which has produced 10 million tonnes of crude in the last 70 years, is now benefitting from advanced steam flooding technology. The operator reported in 2015 that it could produce an additional 500,000 tonnes of crude after applying steam to the Gildehaus formation, which lies just above Bentheim (OGJ Online, Feb. 12, 2015).

Wintershall's cross-border exploration area encompasses 37 sq km on the German and the Dutch side. In addition to the main Emlichheim field, Wintershall suggested that recoverable oil reserves still exist in the Haselaar district where production was carried out in the 1960s.

Spirit Energy gets nod for Tethys drilling in N. Sea

Spirit Energy Ltd. can drill an exploration well on Block 35/9 in the North Sea, the Petroleum Safety Authority Norway said.

Spirit Energy, the operator for production license 682, has consent to drill exploration well 35/9-14 in the Tethys prospect in 365 m of water. The well will be identical to, but 30 m away from, well 35/9-13, which was plugged in 2017 because of technical problems.

The Songa Enabler CAT D-type semisubmersible drilling rig is scheduled to start drilling this month for 30 days with the possibility of sidetrack and well testing.

Spirit Energy is a European oil and gas joint venture of Centrica PLC's exploration and production business and Bayerngas Norge AS (OGJ Online, Dec. 11, 2017).

Premier group gets license off Indonesia

Premier Oil PLC, London, and partners will acquire 3D seismic data during the first 3-years of the Andaman II license in the North Sumatra basin offshore Aceh, Indonesia.

The government awarded the license to a joint venture of Premier, operator with a 40% interest, and Mubadala Petroleum, Abu Dhabi, and Kris Energy, Cayman Islands, with 30% interests each.

Premier said it has identified numerous leads exhibiting direct hydrocarbon indicators in existing 2D seismic data.

LLOG units start drilling in Buckskin deepwater field

Units of LLOG Exploration Co. LLC, Convington, La., have reported that development drilling has begun at the Buckskin field project in the deepwater Gulf of Mexico. The field, which lies on Keathley Canyon Blocks 785, 828, 829, 830, 871, and 872 in 6,800 ft of water, was delineated by multiple prior wells.

The initial phase of this large-scale project will consist of two development wells drilled on Keathley Canyon 829 and a 6-mile subsea tieback to the Lucius platform at Keathley Canyon 875. Drilling and completion of the first two wells, which will be drilled to 29,000 ft, will be followed by installation of subsea facilities.

Start of production from Buckskin, which is estimated to contain 5 billion bbl of oil in place, is expected in mid-2019. In order to fully develop the field, additional wells and subsea facilities will be required after the initial phase.

Two LLOG affiliates, Buckstone Development Co. LLC and LLOG Deepwater Development Co. I LLC, own a combined 33.8% working interest in the Buckskin development. LLOG Exploration Offshore LLC is project operator.

Additional partners are Repsol E&P USA Inc. 22.5%, Beacon Offshore Energy Buckskin LLC 18.7%, Navitas Buckskin US LLC 7.5%, and two entities managed by Ridgewood Energy Corp.-Ridgewood Buckskin LLC and ILX Prospect Buckskin LLC-each of which owns 8.75%.

LLOG Pres. and CEO Scott Gutterman said, "The start of drilling at Buckskin is a significant milestone for LLOG, given the size of the field and the fact that it is our first development in the Lower Tertiary trend."

Drilling & ProductionQuick Takes

BP begins production from Egypt's Atoll gas field

BP PLC said natural gas production has started 7 months ahead of schedule from Atoll Phase 1 project offshore Egypt on the North Damietta concession in the East Nile Delta. BP holds 100% interest in the concession.

The project is producing 350 MMscfd of gas and 10,000 b/d of condensate. Atoll is BP's first new project to come on stream during 2018. A total of 13 projects started through 2016-17.

Bob Dudley, BP group chief executive, said longstanding partnerships in Egypt allowed BP to fast-track Atoll's development and deliver gas 33 months after discovery in March 2015.

Atoll's main reservoir contains an estimated 1.5 tcf of gas and 31 million bbl of condensate (OGJ Online, June 20, 2016). Additional segments are under evaluation.

The Atoll wells were drilled by Ensco PLC's DS-6 ultradeepwater drillship.

The Atoll Phase 1 project, nearly a $1-billion investment, involved recompletion of the original exploration well as a producing well and the drilling of two additional production wells.

Production is exported to the existing onshore West Harbor gas processing plant. Subsea infrastructure was installed and onshore equipment was upgraded ahead of schedule.

BP Egypt, in collaboration with the Gulf of Suez Petroleum Co., BP's joint venture company with the Egyptian General Petroleum Co., has produced almost 40% of Egypt's total oil production today and currently produces almost 10% of Egypt's annual oil and condensate.

Energean lets contract for Karish gas field drilling

Energean Oil & Gas subsidiary Energean Israel has let a contract to Stena Drilling, Aberdeen, for development drilling in Karish field offshore Israel. The Karish development program, which targets supplying gas to the growing Israeli market, includes the drilling of three development wells and production from a floating production, storage, and offloading vessel 90 km offshore. The start of gas production is expected in 2021.

Stena Drilling, a subsidiary of Stena AB, Gothernburg, Sweden, will deploy the Stena Forth DP Class 3 ultradeepwater drillship to drill the development wells during first-quarter 2019, subject to Energean's final investment decision regarding Karish and Tanin gas fields.

The Stena Forth drillship will be mobilized from Las Palmas, Spain.

In December, Energean Oil & Gas and its subsidiaries increased to 13 the total number of licenses held in the East Mediterranean (OGJ Online, Dec. 14, 2017). The blocks, awarded by Israeli Petroleum Commissioner, are in the immediate vicinity of Energean's Karish and Tanin developments (OGJ Online, Jun. 20, 2017).

Test planned of Balcombe well in England

Angus Energy PLC, London, will begin testing a sidetracked appraisal of the Balcombe oil field discovery in southern England "at the earliest opportunity" after becoming operator via farm-in.

It has entered a definitive agreement to form a new partnership with the existing licensees, Cuadrilla Balcombe Ltd. and Lucas Bolney Ltd., through acquisition of a 25% interest in PEDL 244. Cuadrilla now owns 75%, Lucas Bolney the remainder.

Angus Energy Weald Basin No. 3 Ltd. agreed to pay £2 million initially and £2 million following Oil and Gas Authority approval of the deal and to conduct and pay for testing of the Balcombe-2Z horizontal well.

If testing is successful, Angus will pay for submission of a field development plan.

The well is in a conventional reservoir and will not be hydraulically fractured, a possibility that has provoked local opposition (OGJ Online, Sept. 6, 2013).

Angus says the license covers the center of the thickest section of the Jurassic Kimmeridge Clay in the Weald basin.

The Conoco Balcombe-1 discovery cut 568 m of the formation, including thick micritic limestone layers, in 1986.

Drilling of the Balcome-2 well and Balcombe-2Z sidetrack was completed in September 2013, with vertical depth of 2,200 ft and 1,714 ft of horizontal penetration of Kimmeridge Upper Limestone.

The field is 8 km southeast of Crawley near the village of Balcombe. Oil occurs on the downthrown side of the Borde Hill Fault with dip closure to the east and west at the Upper Jurassic level.

The test will assess flowing production rates for oil and gas, flowing bottomhole and wellhead pressures, GOR, fluid qualities, and shut-in bottomhole pressure over about a month.

After Angus acquires its interest, Cuadrilla Balcombe will hold 56.25%, and Lucas Bolney will hold 18.75%.

Lilis Energy Kudu No. 2H reaches 1,475 boe/d

Reporting on wells in the Permian basin, Lilis Energy Inc., San Antonio, said its Kudu No. 2H reached a 24-hr initial production rate of 1,475 boe/d on a three-stream basis, at 299 boe/d/1,000 ft. The well is currently producing at 75% liquids on a three-stream basis.

The Kudu No. 2H is Lilis' eighth successful operating horizontal Wolfcamp B well in the Permian's Delaware basin. The Kudu No. 2H's 4,935-ft lateral was completed with 25 stages of 200-ft plug-to-plug spacing with 2,006 lb/ft of sand.

Lilis is currently flowing back two additional wells and has two wells awaiting completion, including a Wolfcamp B in the eastern portion of its Texas acreage and a Wolfcamp XY in the western portion of its Texas acreage.

For 2018, the company plans to run a two-rig operated drilling program in the Delaware basin targeting 14 gross/11 net wells. A deal to acquire Delaware basin acreage from OneEnergy Partners Operating LLC is pending (OGJ Online, Feb. 1, 2018).

International rig count rises 6 units in January

The international rig count increased by 6 units month-over-month to 960 in January from the 954 rigs counted in December 2017, and up 27 from the 933 counted a year ago, according to Baker Hughes data.

The international offshore rig count for January was 196, up 5 from the 191 counted in the previous month, and down 10 from the 206 counted in January 2017.

The worldwide rig count for January was 2,175, up 86 from the 2,089 counted in December 2017, and up 257 from the 1,918 counted in January 2017 (OGJ Online, Jan. 15, 2017).

Latin America lost 4 units in January to 191, up 15 year-over-year.

In North America, the average US rig count for January was 937, up 7 from the 930 counted in December 2017, and up 254 from the 683 counted in January 2017. The average Canadian rig count for January 2018 was 278, up 73 from the 205 counted in December 2017, and down 24 from the 302 counted in January 2017.

The Asia-Pacific region was up 5 units during the month to 222 and up 24 rigs compared with its January 2017 average.

Africa was up 3 units during the month to 80, up 1 year-over-year.

Europe dropped 3 units in January to 84, down 14 units year-over-year.

The Middle East was up 5 units month-over-month at 383, up 1 from its January 2017 average.


Targa to add Texas processing, fractionation

Targa Resources Corp. plans to build two 250-MMcfd cryogenic natural gas processing plants to support rising production in the Midland basin of the Permian basin.

The first plant is scheduled for startup in first-quarter 2019, with commissioning of the second plant to follow during third-quarter 2019, Targa said.

The operator did not disclose precise locations for the proposed plants.

Separately, Targa said it will add a 100,000-b/d fractionation train in Mont Belvieu, Tex., as part of recently announced development joint ventures (DevCo JVs) with investment vehicles affiliated with Stonepeak Infrastructure Partners, which in addition to owning Targa's 25% interest in the Gulf Coast Express pipeline and a 20% interest in the Grand Prix pipeline, will own 100% interest in the proposed fractionator (OGJ Online, Jan. 3, 2018; Oct. 5, 2017).

The DevCo JV will own and fund the fractionation train, while Targa will fund 100% of associated brine, storage, and other infrastructure required to support the fractionator's operation.

At an estimated cost of $350 million, the Mont Belvieu fractionation expansion and related infrastructure are scheduled for startup in first-quarter 2019, Targa said.

Including the two Midland basin gas plants and fractionation assets in Mont Belvieu, Targa said its estimated net-growth capex for 2018-announced projects is now about $1.6 billion.

Targa has a series of capacity additions planned through 2019 as part of a broader program to expand Permian midstream capabilities (OGJ Online, Aug. 25, 2017).

South Korea's GS Caltex plans olefins complex

GS Caltex Corp., Seoul, a 50-50 joint venture of GS Energy Corp. and Chevron Corp., is investing 2 trillion won to build an olefins production complex near an existing refining and petrochemical operations at Yeosu in the South Korean province of Jeollanam-do.

Scheduled to begin construction in 2019, the mixed-feed cracking complex will be designed to produce 700,000 tonnes/year of ethylene and 500,000 tpy of polyethylene.

While it did not disclose a firm construction timeline or startup date for the cracker, GS Caltex said its decision to invest in the proposed project comes as part of a broader program to diversify the company's business portfolio, which currently focuses on its refining and aromatics businesses.

The company said it expects the expansion of its petrochemical business and ultimate integration with existing refining and aromatics operations will generate more than 400 billion won annually once completed.

This latest proposed expansion follows GS Caltex's more than 5 trillion-won investment between 2006 and 2013 in upgrades to its facilities, as well as an additional 12 trillion-won investment from 2000 to 2017 on projects to increase its overall operational competitiveness, the company said.

Alongside a 790,000-b/sd refinery, GS Caltex's Yeosu current operations also include plants for production of 2.8 million tpy of aromatics and 180,000 tpy of polypropylene.

Arkoma STACK play due gas gathering, processing

Valiant Midstream LLC, Oklahoma City, has started construction on a natural gas gathering system and cryogenic gas processing plant in the heart of the Arkoma STACK play in southeast Oklahoma.

Scheduled for startup in multiple phases beginning in second-quarter 2018, initial system infrastructure will span Hughes, Coal, and Atoka counties, as well as portions of Pittsburg, Pontotoc, and Seminole counties, and will provide midstream services to multiple oil and gas producers targeting liquids-rich stacked pay zones, including the highly prolific Woodford formation, Valiant said.

The initial phase of the project will include the installation of a 200-MMcfd cryogenic processing plant and a high-pressure trunk line spanning through the basin's fairway with a gathering system consisting of 12-in. to 24-in. steel pipeline, five gas compression facilities, and condensate stabilization.

The processing plant will provide access to multiple residue gas pipelines and will offer Valiant's customers market flexibility, enhanced netbacks, and assurance of flow.

Under long-term contracts, Valiant will provide gathering and processing services for anchor customers Corterra Energy LLC and Canyon Creek Energy-Arkoma LLC (CCEA), both of Tulsa, which together have committed more than 1.8 million gross acres in an area of mutual interest to the project.

Combined, Corterra and Canyon Creek currently control close to 500,000 gross acres across the reemerging Arkoma Stack play, according to Valiant.

Valiant, which plans an initial investment of $200 million to the Arkoma Stack, said it will increase its investment as producers' needs develop across the basin.

Ukrainian processor lets contract for ULSD unit

PJSC UkrGasVydobuvannya (UGV) has let a contract to Honeywell UOP LLC to provide hydrotreating catalyst for production of ultralow-sulfur diesel (ULSD) at its Shebelynka gas, condensate, and processing department's 500,000 tonne/year processing plant at Andreyevka in eastern Ukraine's Kharkov region.

The processing plant is now using Honeywell UOP's proprietary HYT-4118 catalyst to produce diesel that complies with the Euro 5 emissions standard, which specifies a sulfur content of less than 10 ppm for transportation fuels, the company said.

Tailored to remove sulfur from petroleum feeds for making distillate, the HYT-4118 catalyst is designed for use in low to medium-pressure ULSD hydrotreating units, providing high activity and stability for longer cycle lengths with low-hydrogen consumption. The catalyst is equipped to treat a range of feedstock, including straight-run diesel, light-cycle oils, light coker gas oils, and other cracked feedstocks, Honeywell UOP said.

UGV's main processing asset, the Shebelynka plant in 2017 processed 510,250 tpy of raw materials to produce 133,820 tpy of gasoline and 97,380 tpy of diesel.

The largest natural gas producer in Central and Eastern Europe, UGV accounts for 75% of Ukrainian gas production.